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Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-10 · 179 added, 163 removed, 266 unchanged (56% of the section changed)

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The following discussion is intended to assist you in understanding our present business and the results of operations together with our present financial condition.

This section should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q for the period ended June 30, 2020 (this “Report”), as well as our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 28, 2020.

This section should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q for the period ended September 30, 2020 (this “Report”), as well as our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on February 28, 2020.

Executive Overview

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We believe that the current economic conditions will continue to impact our businesses through at least the remainder of the year.

The extent and duration of impact on our future results of operations, liquidity and financial condition is uncertain and may be significant.

The extent and duration of the impact on our future results of operations, liquidity and financial condition is uncertain and may be significant.

However, we believe that we and our subsidiaries have sufficient available liquidity to meet anticipated cash requirements for at least the next twelve months.

Debt Issuances

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(together the “Issuers”) issued an additional $600 million in aggregate principal amount of 4.750% senior unsecured notes due 2024 (the “New 2024 Notes”) and an additional $250 million in aggregate principal amount of 5.250% senior unsecured notes due 2027 (the “New 2027 Notes,” and together with the New 2024 Notes, the “New Notes”).

The proceeds from the New Notes, together with cash on hand, were used to redeem all of our prior outstanding $1.35 billion principal amount of 5.875% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses.

The proceeds from the New Notes, together with cash

on hand, were used to redeem all of our prior outstanding $1.35 billion principal amount of 5.875% senior unsecured notes due 2022, and to pay accrued interest, related fees and expenses.

Results of Operations

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In addition to the summarized financial results below, refer to Note 12, “Segment Reporting,” to the condensed consolidated financial statements for a reconciliation of each of our reporting segment’s results of continuing operations to our consolidated results.

The comparability of our summarized consolidated financial results presented below is affected primarily by the performance of the Investment Funds (as defined below), our Holding Company’s realized and unrealized equity investment gains and losses and the results of operations of our Energy segment, impacted by the demand and pricing for its products.

The comparability of our summarized consolidated financial results presented below is affected primarily by the sale of Ferrous Resources Ltd.

(“Ferrous Resources”) in August 2019, the performance of the Investment Funds (as defined below), the results of operations of our Energy segment, impacted by the demand and pricing for its products, and our Holding Company’s realized and unrealized gains and losses on certain equity investments.

Refer to our respective segment discussions and “Other Consolidated Results of Operations,” below for further discussion.

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Attributable to Icahn Enterprises

Three Months Ended June 30,

Three Months Ended September 30,

(in millions)

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Attributable to Icahn Enterprises

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

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We invest our proprietary capital through various private investment funds (“Investment Funds”).

As of June 30, 2020 and December 31, 2019, we had investments with a fair market value of approximately $4.6 billion and $4.3 billion, respectively, in the Investment Funds.

As of June 30, 2020 and December 31, 2019, the total fair market value of investments in the Investment Funds made by Mr.

As of September 30, 2020 and December 31, 2019, we had investments with a fair market value of approximately $4.0 billion and $4.3 billion, respectively, in the Investment Funds.

As of September 30, 2020 and December 31, 2019, the total fair market value of investments in the Investment Funds made by Mr.

Icahn and his affiliates (excluding us) was approximately $4.8 billion and $4.5 billion, respectively.

During the six months ended June 30, 2020, we invested $ 750 million in the Investment Funds, net of redemptions, and affiliates of Mr.

During the nine months ended September 30, 2020, we invested $750 million in the Investment Funds, net of redemptions, and affiliates of Mr.

Icahn (excluding us) contributed approximately $1.2 billion of primarily like-kind investments in the Investment Funds.

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Changes in general market conditions coupled with changes in exposure to short and long positions have significant impact on our Investment segment’s results of operations and the comparability of results of operations year over year and as such, future results of operations will be impacted by our future exposures and future market conditions, which may not be consistent with prior trends.

Refer to the “Investment Segment Liquidity” section of our “Liquidity and Capital Resources” discussion for additional information regarding our Investment segment’s exposure as of June 30, 2020.

For the three months ended June 30, 2020 and 2019, our Investment Funds’ returns were 11.7% and (3.1%), respectively, and for the six months ended June 30, 2020 and 2019, our Investment Funds’ returns were (7.9%) and (8.8%), respectively.

For the three months ended September 30, 2020 and 2019, our Investment Funds’ returns were (11.8%) and (7.4%), respectively, and for the nine months ended September 30, 2020 and 2019, our Investment Funds’ returns were (18.8%) and (15.6%), respectively.

Our Investment Funds’ returns represent a weighted-average composite of the average returns, net of expenses.

The following table sets forth the performance attribution for the Investment Funds’ returns.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Long positions

Short positions

The following table presents net income (loss) for our Investment segment for the three and six months ended June 30, 2020 and 2019.

Three Months Ended June 30,

Six Months Ended June 30,

The following table presents net income (loss) for our Investment segment for the three and nine months ended September 30, 2020 and 2019.

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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Short positions

Three Months Ended June 30, 2020 and 2019

For the three months ended June 30, 2020, the Investment Funds’ positive performance was driven by net gains in their long positions, offset in part by net losses in their short positions.

The positive performance of our Investment segment’s long positions was driven by gains from a consumer, cyclical sector investment of $998 million, two energy sector investments aggregating $906 million and aggregate gains from four other consumer, cyclical sector investments of $552 million.

The aggregate performance of investments with net gains across various other sectors accounted for an additional positive performance of our Investment segment’s long positions.

The negative performance of our Investment segment’s short positions was driven primarily by the negative performance of broad market hedges of approximately $2.1 billion and aggregate losses from short positions across various sectors, offset in part the positive performance of our Investment segment’s short exposure to commercial mortgage-backed securities through credit default swap contracts of $534 million.

For the three months ended June 30, 2019, the Investment Funds' negative performance was driven by net losses in their short positions offset in part by net gains in their long positions.

The negative performance of our Investment segment's short positions was driven by the negative performance of broad market hedges of $476 million and the aggregate performance of short positions with net losses across various sectors.

The positive performance of our Investment segment's long positions was driven by gains from a consumer, cyclical sector investment of $472 million offset in part by losses from a consumer, non-cyclical sector investment with a loss of $288 million and the aggregate performance of investments with net losses across various other sectors.

Six Months Ended June 30, 2020 and 2019

For the six months ended June 30, 2020, the Investment Funds’ negative performance was driven by net losses in their long positions, offset in part by net gains in their short positions.

The negative performance of our Investment segment’s long positions was driven by losses from a consumer, non-cyclical sector investment of $637 million, aggregate losses from three technology sector investments of $745 million and an energy sector investment of $130 million.

Three Months Ended September 30, 2020 and 2019

For the three months ended September 30, 2020, the Investment Funds’ negative performance was driven by net losses in their short positions and, to a lesser extent, net losses in their long positions.

The negative performance of our Investment segment’s short positions was driven primarily by the negative performance of broad market hedges of $677 million, losses from a consumer, non-cyclical sector investment of $156 million and the aggregate performance of various other short positions with net losses aggregating $161 million across various sectors.

The negative performance of our Investment segment’s short positions was partially offset by net gains from its short exposure to commercial mortgage-backed securities through credit default swap contracts of $71 million.

The negative performance of our Investment Segment’s long positions was driven by losses from an energy sector investment of $699 million, offset in part by gains from a consumer, cyclical sector investment of $257 million.

Net losses in long positions were further offset in part by the aggregate performance of investments with net gains across various other sectors.

For the three months ended September 30, 2019, the Investment Funds’ negative performance was driven by net losses in their long positions and, to a lesser extent, losses in their short positions.

The negative performance of our Investment segment’s long positions was driven by losses from a consumer, cyclical sector investment, an Energy sector investment and a technology sector investment aggregating $441 million.

The aggregate performance of investments with net losses across various other sectors accounted for an additional negative performance of our Investment segment’s long positions.

The positive performance of our Investment segment’s short positions was driven by the positive performance of their short exposure to commercial mortgage-backed securities through credit default swap contracts of $1.3 billion, offset in part primarily by the negative performance of broad market hedges.

For the six months ended June 30, 2019, the Investment Funds' negative performance was driven by net losses in their short positions offset in part by net gains in their long positions.

The negative performance of our Investment segment's short positions was driven by the negative performance of broad market hedges of approximately $1.7 billion and the aggregate performance of short positions with net losses across various sectors.

The positive performance of our Investment segment's long positions was driven by gains from two consumer, cyclical sector investments, a technology sector investment and an energy sector investment with gains aggregating approximately $1.1 billion.

Losses in long positions were offset in part by gains from a financial sector investment, a consumer, cyclical sector investment and a technology sector investment aggregating $377 million.

The negative performance of our Investment segment’s short positions was driven by the negative performance of broad market hedges of $209 million offset in part by the aggregate performance of short positions with net gains across various sectors.

Nine Months Ended September 30, 2020 and 2019

For the nine months ended September 30, 2020, the Investment Funds’ negative performance was driven by net losses in their long positions.

The negative performance of our Investment segment’s long positions was driven by losses from an energy sector investment of $758 million, a consumer, non-cyclical sector investment of $637 million and aggregate losses from two technology sector investments of $536 million.

The aggregate performance of investments with net losses across various other sectors accounted for an additional negative performance of our Investment segment’s long positions.

The negative performance of our Investment segment’s long positions was partially offset by net gains from a consumer, cyclical sector investment of $284 million.

The performance of our Investment segment’s short positions was driven by the positive performance of their short exposure to commercial mortgage-backed securities

through credit default swap contracts of approximately $1.4 billion, offset in part primarily by the negative performance of broad market hedges of $910 million and the aggregate performance of various other short positions with net losses across various sectors.

For the nine months ended September 30, 2019, the Investment Funds’ positive performance was driven by net gains in their long positions offset in part by net losses in their short positions.

The positive performance of our Investment segment’s long positions was driven by gains from a consumer, non-cyclical sector investment and two energy sector investments with gains aggregating approximately $1.3 billion.

The aggregate performance of investments with net gains across various other sectors accounted for an additional positive performance of our Investment segment’s long positions.

The positive performance of long positions was offset in part by losses from a consumer, non-cyclical sector investment with a loss of $456 million.

Gains in long positions were offset in part by losses from a basic materials sector investment, a consumer, cyclical sector investment and a consumer, non-cyclical sector investment with losses aggregating $537 million.

The negative performance of our Investment segment’s short positions was driven by the negative performance of broad market hedges of $650 million, offset in part by the aggregate performance of multiple short positions with net gains across various sectors.

Our Energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses.

The petroleum business accounted for approximately 90% and 93% of our Energy segment’s net sales for the six months ended June 30, 2020 and 2019, respectively.

The petroleum business accounted for approximately 91% and 93% of our Energy segment’s net sales for the nine months ended September 30, 2020 and 2019, respectively.

The results of operations of the petroleum business are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks that are processed and blended into petroleum products, such as gasoline, diesel fuel and jet fuel, that are produced by a refinery (“refined products”).

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Refer to Note 16, “Commitments and Contingencies,” to the condensed consolidated financial statements for further discussion of RINs.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

Cost of goods sold

Three Months Ended June 30, 2020 and 2019

Net sales for our Energy segment decreased by approximately $1.0 billion (60%) for the three months ended June 30, 2020 as compared to the comparable prior year period, primarily due to a decrease in our petroleum business’ net sales which decreased $979 million.

Three Months Ended September 30, 2020 and 2019

Net sales for our Energy segment decreased by approximately $617 million (38%) for the three months ended September 30, 2020 as compared to the comparable prior year period, primarily due to a decrease in our petroleum business’ net sales which decreased $607 million.

The decrease in the petroleum business’ net sales was primarily due to a decrease in sales of distillates as well as a decrease in gasoline sales attributable to a decrease in volumes and unfavorable pricing conditions.

During the quarter, one of our petroleum business’ refineries came online after a full, planned maintenance that began in the first quarter of 2020.

In addition, reduced utilization for the majority of the second quarter of 2020 at both refineries, which was due to the current market dynamics resulting from government actions to address the COVID-19 pandemic, have also contributed to the decline in volumes.

These decreases were the result of reduced demand and excess supply attributable to the current market dynamics resulting from government actions to address the COVID-19 pandemic.

Our nitrogen fertilizer business’ net sales decreased $10 million primarily due to a decrease in urea ammonium nitrate (“UAN”) sales due to unfavorable pricing, partially offset by an increase in volumes.

Cost of goods sold for our Energy segment decreased by $841 million (57%) for the three months ended June 30, 2020 as compared to the comparable prior year period.

Cost of goods sold for our Energy segment decreased by $400 million (28%) for the three months ended September 30, 2020 as compared to the comparable prior year period.

The decrease was primarily due to our petroleum business as a result of lower cost of consumed crude oil.

The lower cost of consumed crude oil was due to a decrease in volumes resulting from the scheduled maintenance and reduced utilizations, as discussed above, and lower crude oil prices.

Cost of goods sold for our petroleum business was also lower due to higher derivative gains of $16 million and a $5 million decrease in the net cost of RINs.

Gross margin for our Energy segment decreased by $170 million for the three months ended June 30, 2020 as compared to the comparable prior year period.

Gross margin as a percentage of net sales was 4% and 12% for the three months ended June 30, 2020 and 2019, respectively.

The decrease in the gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to unfavorable market pricing and crack spreads, offset in part by higher derivative gains over the comparable periods.

Six Months Ended June 30, 2020 and 2019

Net sales for our Energy segment decreased by approximately $1.4 billion (43%) for the six months ended June 30, 2020 as compared to the comparable prior year period, primarily due to a decrease in our petroleum business’ net sales which decreased approximately $1.3 billion.

During 2020, full scheduled maintenance at one refinery as well as reduced utilization for the majority of the second quarter of 2020 at both refineries, which was due to the current market dynamics resulting from government actions to address the COVID-19 pandemic, have contributed to the decline in volumes.

The lower cost of consumed crude oil was due to a decrease in volumes, as discussed above, and lower crude oil prices offset in part by lower derivative gains of $5 million and a $38 million increase in the net cost of RINs.

Gross margin for our Energy segment decreased by $217 million for the three months ended September 30, 2020 as compared to the comparable prior year period.

Gross margin as a percentage of net sales was (3)% and 11% for the three months ended September 30, 2020 and 2019, respectively.

The decrease in the gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to unfavorable market pricing and crack spreads as well as lower derivative gains over the comparable periods.

Nine Months Ended September 30, 2020 and 2019

Net sales for our Energy segment decreased by approximately $2.0 billion (41%) for the nine months ended September 30, 2020 as compared to the comparable prior year period, primarily due to a decrease in our petroleum business’ net sales which decreased approximately $1.9 billion.

The decrease in the petroleum business’ net sales was primarily due to a decrease in gasoline sales as well as a decrease in sales of distillates attributable to a decrease in volumes and unfavorable pricing conditions.

These decreases were the result of reduced demand and excess supply attributable to the current market dynamics resulting from government actions to address the COVID-19 pandemic.

Additionally, during 2020, scheduled maintenance at one refinery has contributed to the decline in volumes.

Our nitrogen fertilizer business’ net sales decreased $58 million primarily due to a decrease in UAN sales due to unfavorable pricing, partially offset by an increase in volumes.

Cost of goods sold for our Energy segment decreased by $895 million (32%) for the six months ended June 30, 2020 as compared to the comparable prior year period.

Cost of goods sold for our Energy segment decreased by approximately $1.3 billion (31%) for the nine months ended September 30, 2020 as compared to the comparable prior year period.

The decrease was primarily due to our petroleum business as a result of lower cost of consumed crude oil.

The lower cost of consumed crude oil was due to a decrease in volumes resulting from the scheduled maintenance and reduced utilizations, as discussed above, and lower crude oil prices.

Cost of goods sold for our petroleum business was also lower due to higher derivative gains of $45 million, offset in part by a $58 million write-down of inventory to net realizable value in the first quarter of 2020.

Gross margin for our Energy segment decreased by $473 million for the six months ended June 30, 2020 as compared to the comparable prior year period.

Gross margin as a percentage of net sales was (5)% and 12% for the six months ended June 30, 2020 and 2019, respectively.

The lower cost of consumed crude oil was due to a decrease in volumes resulting from the scheduled maintenance, as discussed above, and lower crude oil prices.

Cost of goods sold for our petroleum business was also lower due to higher derivative gains of $54 million, offset in part by a $58 million write-down of inventory to net realizable value in the first quarter of 2020 and a $40 million increase in the net cost of RINs.

Gross margin for our Energy segment decreased by $688 million for the nine months ended September 30, 2020 as compared to the comparable prior year period.

Gross margin as a percentage of net sales was (4)% and 12% for the nine months ended September 30, 2020 and 2019, respectively.

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Therefore, we discuss the combined results of our automotive net sales and automotive services labor revenues below.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

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Cost of goods sold and other expenses from operations

Three Months Ended June 30, 2020 and 2019

Net sales and other revenue from operations for our Automotive segment for the three months ended June 30, 2020 decreased by $157 million (21%) as compared to the comparable prior year period.

Three Months Ended September 30, 2020 and 2019

Net sales and other revenue from operations for our Automotive segment for the three months ended September 30, 2020 decreased by $84 million (11%) as compared to the comparable prior year period.

The decrease was attributable to a decrease in aftermarket parts sales of $55 million (14%) and a decrease in automotive services revenues of $29 million (8%).

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Store closures related to the transformation plan accounted for another $48 million decrease in aftermarket parts sales.

The decrease in automotive services revenues represent a decrease on a primarily organic basis.

The decrease in automotive services revenues represents a decrease on a primarily organic basis.

The COVID-19 pandemic, and the impacts of the actions taken by governments and others, have significantly contributed to the decline in revenues, in particular the automotive services revenues and commercial sales revenues which, until March 2020, were experiencing growth on an organic basis.

Cost of goods sold and other expenses from operations for the three months ended June 30, 2020 decreased by $96 million (18%) as compared to the comparable prior year period.

Cost of goods sold and other expenses from operations for the three months ended September 30, 2020 decreased by $68 million (13%) as compared to the comparable prior year period.

The decrease was due to lower sales volumes as described above.

Gross margin on net sales and other revenue from operations for the three months ended June 30, 2020 decreased by $61 million (29%) as compared to the comparable prior year period.

Gross margin as a percentage of net sales and other revenue from operations was 26% and 29% for the three months ended June 30, 2020 and 2019, respectively.

Our Automotive segment has experienced some margin rate contraction for its aftermarket parts businesses due to the effect of stores that were in the process of closing down and the shift in aftermarket parts sales from retail to commercial, as well as from the negative impact from the COVID-19 pandemic, as described above.

Six Months Ended June 30, 2020 and 2019

Net sales and other revenue from operations for our Automotive segment for the six months ended June 30, 2020 decreased by $215 million (15%) as compared to the comparable prior year period.

Gross margin on net sales and other revenue from operations for the three months ended September 30, 2020 decreased by $16 million (8%) as compared to the comparable prior year period.

Gross margin as a percentage of net sales and other revenue from operations was 29% and 28% for the three months ended September 30, 2020 and 2019, respectively.

Due to the COVID-19 pandemic, our Automotive segment accelerated planned store closures, shifting our Automotive segment’s business from a majority attributable to aftermarket parts sales to a majority attributable to higher margin automotive services.

This was offset in part by some margin rate contraction for its existing aftermarket parts businesses due to the effect of the shift in aftermarket parts sales from retail to commercial and the negative impacts from the COVID-19 pandemic.

Nine Months Ended September 30, 2020 and 2019

Net sales and other revenue from operations for our Automotive segment for the nine months ended September 30, 2020 decreased by $299 million (14%) as compared to the comparable prior year period.

The decrease was attributable to a decrease in aftermarket parts sales of $184 million (16%) and a decrease in automotive services revenues of $115 million (11%).

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Cost of goods sold and other expenses from operations for the six months ended June 30, 2020 decreased by $115 million (11%) as compared to the comparable prior year period.

Cost of goods sold and other expenses from operations for the nine months ended September 30, 2020 decreased by $183 million (12%) as compared to the comparable prior year period.

The decrease was due to lower sales volumes as described above.

Gross margin on net sales and other revenue from operations for the six months ended June 30, 2020 decreased by $100 million (24%) as compared to the comparable prior year period.

Gross margin as a percentage of net sales and other revenue from operations was 26% and 29% for the six months ended June 30, 2020 and 2019, respectively.

Gross margin on net sales and other revenue from operations for the nine months ended September 30, 2020 decreased by $116 million (19%) as compared to the comparable prior year period.

Gross margin as a percentage of net sales and other revenue from operations was 27% and 29% for the nine months ended September 30, 2020 and 2019, respectively.

This was offset in part by the acceleration of planned store closures, which resulted in a greater portion of our Automotive segment’s business being derived from higher margin automotive services, as described above.

Food Packaging

Our Food packaging segment’s results of operations are primarily driven by the production and sale of cellulosic, fibrous and plastic casings for the processed meat and poultry industry and derives a majority of its total net sales from customers located outside the United States.

Three Months Ended June 30, 2020 and 2019

Net sales for the three months ended June 30, 2020 increased $6 million (6%) as compared to the comparable prior year period.

The increase was due to an increase in volumes and an increase due to price and product mix, offset in part by the unfavorable effects of foreign exchange.

Cost of goods sold for the three months ended June 30, 2020 increased by $6 million (8%) as compared to the comparable prior year period due to an increase in volumes.

Gross margin as a percentage of net sales was 21% and 23% for the three months ended June 30, 2020 and 2019, respectively.

Six Months Ended June 30, 2020 and 2019

Net sales for the six months ended June 30, 2020 increased $9 million (5%) as compared to the comparable prior year period.

The increase was due to an increase in volumes and an increase due to price and product mix, offset in part by the unfavorable effects of foreign exchange.

Cost of goods sold for the six months ended June 30, 2020 increased by $9 million (6%) as compared to the comparable prior year period due to an increase in volumes.

Gross margin as a percentage of net sales was 21% and 22% for the six months ended June 30, 2020 and 2019, respectively.

Three Months Ended September 30, 2020 and 2019

Net sales for the three months ended September 30, 2020 increased $7 million (7%) as compared to the comparable prior year period.

The increase was due to an increase of $3 million in volumes, an increase of $3 million due to price and product mix and $1 million from the favorable effects of foreign exchange.

Cost of goods sold for the three months ended September 30, 2020 increased by $4 million (5%) as compared to the comparable prior year period due to an increase in volumes.

Gross margin as a percentage of net sales was 20% and 18% for the three months ended September 30, 2020 and 2019, respectively.

Nine Months Ended September 30, 2020 and 2019

Net sales for the nine months ended September 30, 2020 increased $16 million (6%) as compared to the comparable prior year period.

The increase was due to an increase of $10 million in volumes and an increase of $8 million due to

price and product mix, offset in part by $2 million from the unfavorable effects of foreign exchange.

Cost of goods sold for the nine months ended September 30, 2020 increased by $13 million (6%) as compared to the comparable prior year period due to an increase in volumes.

Gross margin as a percentage of net sales was 21% and 21% for the nine months ended September 30, 2020 and 2019, respectively.

The scrap metals business is highly cyclical and is substantially dependent upon the overall economic conditions in the United States and other global markets.

Ferrous and non-ferrous scrap has been historically vulnerable to significant declines in consumption and product pricing during prolonged periods of economic downturn or stagnation.

Three Months Ended June 30, 2020 and 2019

Net sales for the three months ended June 30, 2020 decreased by $61 million (64%) compared to the comparable prior year period due to lower shipping volumes and market selling prices for most grades of metal due to unfavorable market conditions.

Cost of goods sold for the three months ended June 30, 2020 decreased by $54 million (58%) compared to the comparable prior year period due to lower material costs due to lower volumes and market prices, as discussed above.

Gross margin as a percentage of net sales was (15%) and 2% for the three months ended June 30, 2020 and 2019, respectively, primarily due to the lower shipping volumes.

Six Months Ended June 30, 2020 and 2019

Net sales for the six months ended June 30, 2020 decreased by $68 million (36%) compared to the comparable prior year period due to lower shipping volumes and market selling prices for most grades of metal due to unfavorable market conditions.

Cost of goods sold for the six months ended June 30, 2020 decreased by $61 million (33%) compared to the comparable prior year period due to lower material costs due to lower volumes and market prices, as discussed above.

Gross margin as a percentage of net sales was (3)% and 2% for the six months ended June 30, 2020 and 2019, respectively, primarily due to the lower shipping volumes.

Three Months Ended September 30, 2020 and 2019

Net sales for the three months ended September 30, 2020 increased by $1 million (1%) compared to the comparable prior year period.

Cost of goods sold for the three months ended September 30, 2020 decreased by $6 million (7%) compared to the comparable prior year period due to lower material costs.

Gross margin as a percentage of net sales was 6% and (2)% for the three months ended September 30, 2020 and 2019, respectively, primarily due to higher material margins.

Nine Months Ended September 30, 2020 and 2019

Net sales for the nine months ended September 30, 2020 decreased by $67 million (25%) compared to the comparable prior year period due to lower shipping volumes and market selling prices for most grades of metal due to unfavorable market conditions driven by the impact of the COVID-19 pandemic.

Cost of goods sold for the nine months ended September 30, 2020 decreased by $67 million (25%) compared to the comparable prior year period due to lower material costs due to lower volumes and market prices, as discussed above.

Gross margin as a percentage of net sales was less than 1% for each of the nine months ended September 30, 2020 and 2019, respectively.

Real Estate revenues and expenses primarily include sales of residential units, results from club operations, rental operations, and hotel, timeshare and casino operations.

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Results from club and rental operations, and hotel, timeshare and casino operations are included in other revenues from operations in our condensed consolidated statements of operations.

Revenue from our real estate operations for each of the three and six months ended June 30, 2020 were primarily derived from the sale of residential units and rental operations.

Revenue from our real estate operations for each of the three and six months ended June 30, 2019 were primarily derived from club and rental operations.

Revenue from our real estate operations for each of the three and nine months ended September 30, 2020 and 2019 were primarily derived from the sale of residential units and rental operations.

Our Home Fashion segment is significantly influenced by the overall economic environment, including consumer spending, at the retail level, for home textile products.

Three Months Ended June 30, 2020 and 2019

Net sales for the three months ended June 30, 2020 decreased by $7 million (16%) compared to the comparable prior year period due to a decrease in sales from existing businesses of $14 million, primarily as a result of the current economic conditions, offset in part by an increase in sales due to a business acquired in the second quarter of 2019, which accounted for an increase of $7 million in net sales.

Cost of goods sold for the three months ended June 30, 2020 decreased $11 million (28%) compared to the comparable prior year period due to a decrease in sales, as discussed above, as well as a shift to lower cost products, offset in part by an increase from the acquired business.

Gross margin as a percentage of net sales was 24% and 13% for the three months ended June 30, 2020 and 2019, respectively.

The increase is due to the reduction in sales to certain lower margin customers, the business acquired having higher margins than the existing businesses and due to the addition of newly added higher margin products.

Six Months Ended June 30, 2020 and 2019

Net sales for the six months ended June 30, 2020 increased by $4 million (5%) compared to the comparable prior year period due to a business acquired in the second quarter of 2019, which accounted for an increase of $20 million, offset in part by a $16 million decrease from existing businesses, primarily as a result of the current economic conditions.

Cost of goods sold for the six months ended June 30, 2020 decreased by $3 million (4%) compared to the comparable prior year period due to a decrease in sales from existing businesses, as discussed above, as well as a shift to lower cost products, offset in part by an increase from the acquired business.

Gross margin as a percentage of net sales was 21% and 13% for the six months ended June 30, 2020 and 2019, respectively.

Three Months Ended September 30, 2020 and 2019

Net sales for the three months ended September 30, 2020 increased by $2 million (4%) compared to the comparable prior year period.

Cost of goods sold for the three months ended September 30, 2020 decreased $1 million (2%) compared to the comparable prior year period due to a shift to lower cost products.

Gross margin as a percentage of net sales was 21% and 16% for the three months ended September 30, 2020 and 2019, respectively.

The increase is due to the reduction in sales to certain lower margin customers as well as the addition of newly added higher margin products.

Nine Months Ended September 30, 2020 and 2019

Net sales for the nine months ended September 30, 2020 increased by $6 million (4%) compared to the comparable prior year period due to a business acquired in the second quarter of 2019, which accounted for an increase of $21

million, offset in part by a $15 million decrease from existing businesses, primarily as a result of the current economic conditions.

Cost of goods sold for the nine months ended September 30, 2020 decreased by $4 million (3%) compared to the comparable prior year period due to a decrease in sales from existing businesses, as discussed above, as well as a shift to lower cost products, offset in part by an increase from the acquired business.

Gross margin as a percentage of net sales was 21% and 14% for the nine months ended September 30, 2020 and 2019, respectively.

Holding Company

Our Holding Company’s results of operations primarily reflect investment gains and losses from debt and equity investments.

During the three and six months ended June 30, 2020, net gains and losses from investment activities were primarily attributable to unrealized gains and losses from its equity investments.

During the six months ended June 30, 2019, net losses from investment activities were offset in part by realized gains from an equity investment that was sold in the first quarter of 2019.

In addition, our Holding Company’s results of operations reflects the interest expense on its senior unsecured notes for each of the three and six months ended June 30, 2020 and 2019.

Our Holding Company’s results of operations primarily reflect investment gains and losses from equity investments and the interest expense on its senior unsecured notes for each of the three and nine months ended September 30, 2020 and 2019.

Other Consolidated Results of Operations

Gain on Disposition of Assets, Net

In August 2019, we sold Ferrous Resources, resulting in a pretax gain on disposition of assets of $252 million for the three and nine months ended September 30, 2019.

Selling, General and Administrative

Three Months Ended June 30, 2020 and 2019

Our consolidated selling, general and administrative during the three months ended June 30, 2020 decreased by $48 million (14%) as compared the comparable prior year period primarily due to lower occupancy costs for various locations and other general and administrative costs due to the current market conditions for our Automotive segment offset in part by an increase attributable to our Real Estate segment primarily for the accrual of demolition costs relating to a property not in service.

Six Months Ended June 30, 2020 and 2019

Our consolidated selling, general and administrative during the six months ended June 30, 2020 decreased by $76 million (11%) as compared the comparable prior year period primarily due to (i) lower occupancy costs for various locations and other general and administrative costs due to the current market conditions for our Automotive segment and the sale of our former Mining segment in August 2019 offset in part by an increase attributable to our Real Estate segment primarily for the accrual of demolition costs relating to a property not in service.

Three Months Ended September 30, 2020 and 2019

Our consolidated selling, general and administrative during the three months ended September 30, 2020 decreased by $62 million (18%) as compared the comparable prior year period primarily due to lower occupancy costs for various locations and other general and administrative costs due to the current market conditions for our Automotive segment as well as from our Energy segment due to lower deferred compensation costs.

Nine Months Ended September 30, 2020 and 2019

Our consolidated selling, general and administrative during the nine months ended September 30, 2020 decreased by $138 million (13%) as compared the comparable prior year period primarily due to (i) lower occupancy costs for various locations and other general and administrative costs due to the current market conditions for our Automotive segment, (ii) lower deferred compensation costs for our Energy segment and (iii) the sale of our former Mining segment in August 2019, offset in part by an increase attributable to our Real Estate segment primarily for the accrual of demolition costs relating to a property not in service.

Interest Expense

Three Months Ended June 30, 2020 and 2019

Our consolidated interest expense during the three months ended June 30, 2020 increased by $23 million (15%) as compared the comparable prior year period.

Three Months Ended September 30, 2020 and 2019

Our consolidated interest expense during the three months ended September 30, 2020 increased by $18 million (12%) as compared the comparable prior year period.

The increase was primarily due to higher interest expense from our Investment segment attributable to an increase in average due to broker balances over the respective periods as well as higher interest expense from our Energy segment as a result of certain debt offerings in the first quarter of 2020.

Six Months Ended June 30, 2020 and 2019

Our consolidated interest expense during the six months ended June 30, 2020 increased by $56 million (19%) as compared the comparable prior year period.

The increase was primarily due to higher interest expense from our

Investment segment attributable to an increase in average due to broker balances over the respective periods as well as higher interest expense from our Energy segment as a result of certain debt offerings in the first quarter of 2020.

Nine Months Ended September 30, 2020 and 2019

Our consolidated interest expense during the nine months ended September 30, 2020 increased by $74 million (17%) as compared the comparable prior year period.

Income Tax Expense

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We are a holding company.

Our cash flow and our ability to meet our debt service obligations and make distributions with respect to depositary units likely will depend on the cash flow resulting from divestitures, equity and debt financings, interest income, returns on our interests in the Investment Funds and the payment of funds to us by our subsidiaries in the form of loans, dividends and distributions.

Our cash flow and our ability to meet our debt service obligations and make distributions with respect to depositary units will depend on the cash flow resulting from divestitures, equity and debt financings, interest income, returns on our interests in the Investment Funds 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.

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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.

As of June 30, 2020, our Holding Company had cash and cash equivalents of approximately $1.1 billion and total debt of approximately $5.8 billion.

During the six months ended June 30, 2020, we invested $750 million in the Investment Funds, net of redemptions.

As of June 30, 2020, our Holding Company had investments in the Investment Funds with a total fair market value of approximately $4.6 billion.

As of September 30, 2020, our Holding Company had cash and cash equivalents of approximately $1.1 billion and total debt of approximately $5.8 billion.

During the nine months ended September 30, 2020, we invested $750 million in the Investment Funds, net of redemptions.

As of September 30, 2020, our Holding Company had investments in the Investment Funds with a total fair market value of approximately $4.0 billion.

We may redeem our direct investment in the Investment Funds upon notice.

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Holding Company Borrowings and Availability

September 30,

(in millions)

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

Additionally, each of the senior unsecured notes outstanding as of June 30, 2020, except for the New 2024 Notes and the New 2027 Notes, are subject to optional redemption premiums in the event we redeem any of the notes prior to certain dates as described in the indentures.

As of June 30, 2020 and December 31, 2019, we were in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the indentures.

Additionally, as of June 30, 2020, based on covenants in the indentures governing our senior unsecured notes, we are not permitted to incur additional indebtedness.

Additionally, each of the senior unsecured notes outstanding as of September 30, 2020, except for the New 2024 Notes and the New 2027 Notes, are subject to optional redemption premiums in the event we redeem any of the notes prior to certain dates as described in the indentures.

As of September 30, 2020 and December 31, 2019, we were in compliance with all covenants, including maintaining certain minimum financial ratios, as defined in the indentures.

Additionally, as of September 30, 2020, based on covenants in the indentures governing our senior unsecured notes, we are not permitted to incur additional indebtedness.

2019 At-The-Market Offering

On May 2, 2019, Icahn Enterprises announced the commencement of its “at-the-market” offering pursuant to its Open Market Sale Agreement, pursuant to which Icahn Enterprises may sell its depositary units, from time to time, during the term of the program ending on March 31, 2021, for up to $400 million in aggregate sale proceeds.

During the six months ended June 30, 2020, Icahn Enterprises sold 481,244 depositary units pursuant to this agreement, resulting in gross proceeds of $26 million.

As of June 30, 2020, Icahn Enterprises may sell its depositary units for up to an additional $320 million in aggregate sale proceeds pursuant to this agreement.

During the nine months ended September 30, 2020, Icahn Enterprises sold 1,118,596 depositary units pursuant to this agreement, resulting in gross proceeds of $60 million.

As of September 30, 2020, Icahn Enterprises may sell its depositary units for up to an additional $285 million in aggregate sale proceeds pursuant to this agreement.

No assurance can be made that any or all amounts will be sold during the term of the program.

LP Unit Distributions

During the six months ended June 30, 2020, we declared two quarterly distributions aggregating $4.00 per depositary unit.

During the nine months ended September 30, 2020, we declared three quarterly distributions aggregating $6.00 per depositary unit.

In connection with these distributions, aggregate cash distributions to all depositary unitholders was $483 million, primarily due to Mr.

Icahn and his affiliates’ significant ownership of Icahn Enterprises’ depositary units.

On August 4, 2020, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $2.00 per depositary unit.

The quarterly distribution is payable in either cash or additional depositary units, at the election of each depositary unitholder and will be paid on or about September 29, 2020 to depositary unitholders of record at the close of business on August 21, 2020.

On November 4, 2020, the Board of Directors of the general partner of Icahn Enterprises declared a quarterly distribution in the amount of $2.00 per depositary unit.

The quarterly distribution is payable in either cash or additional depositary units, at the election of each depositary unitholder and will be paid on or about December 29, 2020 to depositary unitholders of record at the close of business on November 24, 2020.

The declaration and payment of distributions is reviewed quarterly by Icahn Enterprises GP’s board of directors based upon a review of our balance sheet and cash flow, our expected capital and liquidity requirements, the provisions of our partnership agreement and provisions in our financing arrangements governing distributions, and keeping in mind that limited partners subject to U.S.

federal income tax have recognized income on our earnings even if they do not receive 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.

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.

Payments of distributions are subject to certain restrictions, including certain restrictions on our subsidiaries which limit their ability to distribute dividends to us.

There can be no assurance as to whether or in what amounts any future distributions might be paid.

Subsequent Events

In October 2020, in connection with Viskase’s equity private placement, we acquired an additional 50,000,000 shares of Viskase common stock for $100 million.

Investment Segment Liquidity

During the six months ended June 30, 2020, we invested $750 million in the Investment Funds, net of redemptions, and affiliates of Mr.

During the nine months ended September 30, 2020, we invested $750 million in the Investment Funds, net of redemptions, and affiliates of Mr.

Icahn (excluding us) contributed approximately $1.2 billion of primarily like-kind investments in the Investment Funds.

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Additionally, our Investment segment liquidity is driven by the investment activities and performance of the Investment Funds.

As of June 30, 2020, the Investment Funds’ had a net short notional exposure of 48%.

As of September 30, 2020, the Investment Funds’ had a net long notional exposure of 8%.

The Investment Funds’ long exposure was 70% (69% long equity and 1% long credit) and its short exposure was 62% (34% short equity and 28% short credit and other).

The notional exposure represents the ratio of the notional exposure of the Investment Funds’ invested capital to the net asset value of the Investment Funds at June 30, 2020.

Of the Investment Funds’ 95% long exposure, 87% was comprised of the fair value of its long positions (with certain adjustments) and 8% was comprised of single name equity forward contracts.

Of the Investment Funds’ 143% short exposure, 18% was comprised of the fair value of our short positions and 125% was comprised of short broad market index swap derivative contracts and short credit default swap contracts.

The notional exposure represents the ratio of the notional exposure of the Investment Funds’ invested capital to the net asset value of the Investment Funds at September 30, 2020.

The Investment Funds’ 70% long exposure was comprised of the fair value of its long positions (with certain adjustments).

Of the Investment Funds’ 62% short exposure, 11% was comprised of the fair value of its short positions and 51% was comprised of short broad market index swap derivative contracts and short credit default swap contracts.

With respect to both our long positions that are not notionalized (70% long exposure) and our short positions that are not notionalized (11% short exposure), each 1% change in exposure as a result of purchases or sales (assuming no change in value) would have a 1% impact on our cash and cash equivalents (as a percentage of net asset value).

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Segment cash and cash equivalents (excluding our Investment segment) consists of the following:

September 30,

(in millions)

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Segment debt consists of the following:

September 30,

(in millions)

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Refer to our Annual Report on Form 10-K for the year ended December 31, 2019 for information concerning terms, restrictions and covenants pertaining to our subsidiaries’ debt.

As of June 30, 2020, all of our subsidiaries were in compliance with all debt covenants.

As of September 30, 2020, all of our subsidiaries were in compliance with all debt covenants.

In January 2020, CVR Energy issued $600 million in aggregate principal amount of 5.25% senior unsecured notes due 2025 and $400 million in aggregate principal amount of 5.75% senior unsecured notes due 2028.

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The remaining net proceeds will be used for CVR Energy’s general corporate purposes, which may include funding (i) acquisitions, (ii) capital projects, and/or (iii) share repurchases or other distributions to CVR Energy’s stockholders.

In October 2020, Viskase entered into a credit agreement providing for a $150 million term loan and a $30 million revolving credit facility.

The proceeds from the new term loan, plus cash received from the equity private placement in October 2020, as discussed in Note 1, “Description of Business,” were used to repay in full Viskase’s existing term loan.

The new term loan and credit facility mature in 2023.

Our segments have additional borrowing availability under certain revolving credit facilities as summarized below:

September 30,

(in millions)

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In view of the uncertainty of the depth and extent of the contraction in oil demand due to the COVID-19 pandemic, combined with the weaker commodity price environment, CVR Energy has remained focused on safe and reliable operations, cash conservation and protecting its balance sheet.

As a result of these factors, and in light of the uncertainty of the current economic environment as we as potential future cash requirements of CVR Energy, the Board of Directors of CVR Energy approved a reduction in its cash dividend for the first quarter of 2020 and elected not to declare a cash dividend for the second quarter of 2020.

These decisions support CVR Energy’s continued focus on financial discipline through a balanced approach of stockholder distributions and strategic investments while providing the flexibility to weather the uncertain environment.

As a result of these factors, and in light of the uncertainty of the current economic environment as well as potential future cash requirements of CVR Energy, the Board of Directors of CVR Energy approved a reduction in its cash dividend for the first quarter of 2020 and elected not to declare a cash dividend for the second and third quarters of 2020.

These decisions support CVR Energy’s continued

focus on financial discipline through a balanced approach of stockholder distributions and strategic investments while providing the flexibility to weather the uncertain environment.

The Board of Directors of CVR Energy will continue to evaluate the economic environment, CVR Energy’s cash needs, and other applicable factors, and may elect to make additional changes to CVR Energy’s dividend in future periods.

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Repurchases, if any, including the timing, price and amount, may be made at the discretion of CVR Energy management and CVR Energy is not obligated to make any repurchases.

CVR Energy did not repurchase any shares of its common stock as of June 30, 2020.

CVR Energy did not repurchase any shares of its common stock as of September 30, 2020.

Due to the market and oil price volatility, coupled with the current economic conditions, CVR Energy does not currently intend to repurchase any stock if these, and other, conditions continue.

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During 2020, CVR Partners repurchased common units on the open market at a cost of $2 million.

As of June 30, 2020, CVR Partners has $9 million remaining under its unit repurchase program.

As of September 30, 2020, CVR Partners has $8 million remaining under its unit repurchase program.

Consolidated Cash Flows

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The following table summarizes cash flow information for Icahn Enterprises’ reporting segments and our Holding Company:

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Net Cash Provided By (Used In)

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Holding Company

Our Holding Company’s cash flows from operating activities for each of the six months ended June 30, 2020 and 2019 were primarily attributable to our semi-annual interest payments on our senior unsecured notes.

The increase in interest payments over the comparable periods is due to the timing of the payment of the semi-annual interest as our recent debt transactions resulted in a change in certain interest payment dates.

Our Holding Company’s cash flows from investing activities for the six months ended June 30, 2020 were primarily due to our investment in the Investment Funds of $750 million (net of redemptions), our purchase of an equity investment for $114 million and contributions and loans to our operating subsidiaries aggregating $130 million, including an investment in our Automotive segment of $115 million.

This was offset in part by dividends from our operating subsidiaries aggregating $93 million, including $85 million from our Energy segment, in the first half of 2020.

Our Holding Company’s cash flows from investing activities for the six months ended June 30, 2019 were primarily due to our sale of a certain equity investment for which we received $458 million as well as the sale of our direct investment in CVR Refining to CVR Energy for $60 million.

During the six months ended June 30, 2019, we also received net cash dividends and distributions from our Energy and Real Estate segments aggregating $126 million and we had aggregate investments in our Automotive segment of $176 million and an investment in our Home Fashion segment of $31 million.

Our Holding Company’s cash flows from financing activities for the six months ended June 30, 2020 included the issuances of additional senior unsecured notes and proceeds from our “at-the-market” offering, offset in part by the repayment of senior unsecured notes and related fees and expenses, as described above, as well as payments on our aggregate quarterly distributions.

Our Holding Company’s cash flows from financing activities for the six months ended June 30, 2019 included the issuances of additional senior unsecured notes and proceeds from our “at-the-market” offering, offset in part by payments on our aggregate quarterly distributions.

Our Holding Company’s cash flows from operating activities for each of the nine months ended September 30, 2020 and 2019 were primarily attributable to our semi-annual interest payments on our senior unsecured notes.

The decrease in interest payments over the comparable periods is due to the timing of the payment of the semi-annual interest as our recent debt transactions resulted in a change in certain interest payment dates as well as a lower weighted average interest rate over the comparative periods.

Our Holding Company’s cash flows from investing activities for the nine months ended September 30, 2020 were primarily due to our investment in the Investment Funds of $750 million (net of redemptions), aggregate purchases of investments for $177 million and net contributions and loans to our operating subsidiaries of $63 million, including a net investment in our Automotive segment of $60 million.

This was offset in part by net cash dividends and distributions from our Energy and Real Estate segments aggregating $124 million.

Our Holding Company’s cash flows from investing activities for the nine months ended September 30, 2019 were primarily due to our sale of a certain equity investment for which we received $458 million, the sale of Ferrous Resources for which we received $451 million and the sale of our direct investment in CVR Refining to CVR Energy for $60 million.

During the nine months ended September 30, 2019, we also received net cash dividends and distributions from our Energy and Real Estate segments aggregating $176 million and we had aggregate investments in our Automotive segment of $221 million and an investment in our Home Fashion segment of $31 million.

Our Holding Company’s cash flows from financing activities for the nine months ended September 30, 2020 included the issuances of additional senior unsecured notes and proceeds from our “at-the-market” offering, offset in part by the repayment of senior unsecured notes and related fees and expenses, as described above, as well as payments on our aggregate quarterly distributions.

Our Holding Company’s cash flows from financing activities for the nine months ended September 30, 2019 included the issuances of additional senior unsecured notes and proceeds from our “at-the-market” offering, offset in part by payments on our aggregate quarterly distributions.

Investment Segment

Our Investment segment’s cash flows from operating activities for the comparable periods were attributable to its net investment transactions.

Our Investment segment’s cash flows from financing activities for the six months ended June 30, 2020 were attributable to our investment in the Investment Funds of $750 million, net of redemptions, and $1 million from Mr.

Our Investment segment’s cash flows from financing activities for the nine months ended September 30, 2020 were attributable to our investment in the Investment Funds of $750 million, net of redemptions, and $1 million from Mr.

Icahn and his affiliates (excluding us).

Our Investment segment’s cash flows from financing activities for the six months ended June 30, 2019 were attributable to Mr.

Our Investment segment’s cash flows from financing activities for the nine months ended September 30, 2019 were attributable to Mr.

Icahn and his affiliates’ (excluding us) investments in the Investment Funds of $220 million.

Other Operating Segments

Our other operating segments’ cash flows from operating activities included net cash flows from operating activities before changes in operating assets and liabilities of $(11) million and $411 million for the six months ended June 30, 2020 and 2019, respectively.

The change in cash flows from operating activities for the six months ended June 30, 2020 as compared to the comparable prior year period was primarily due to a decline in the operating results of our Energy segment as well as unfavorable changes in working capital also attributable to our Energy segment.

In addition, our cash

flows from operating activities decreased by $77 million as a result of the exclusion of Ferrous Resources in 2020, which was sold in August 2019.

Our other operating segments’ cash flows from operating activities included net cash flows from operating activities before changes in operating assets and liabilities of $6 million and $559 million for the nine months ended September 30, 2020 and 2019, respectively.

The change in cash flows from operating activities for the nine months ended September 30, 2020 as compared to the comparable prior year period was primarily due to a decline in the operating results of our Energy segment as well as unfavorable changes in working capital also attributable to our Energy segment, offset in part by an increase in working capital for our Automotive segment due to inventory reductions over the comparable periods.

In addition, our cash flows from operating activities decreased by $93 million as a result of the exclusion of Ferrous Resources in 2020, which was sold in August 2019.

Our other operating segments’ cash flows from investing activities were primarily due to the purchase of investments of $140 million in 2020 compared to $50 million in 2019 and due to capital expenditures of $155 million in 2020 and $195 million in 2019, primarily within our Energy and Automotive segments for both periods.

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Our other operating segments also had net payments for the acquisitions of businesses in 2020 of $2 million, net of cash acquired, compared to $52 million, net of cash acquired in 2019.

Our other operating segments’ cash flows from continuing financing activities were primarily due to our Energy segment.

Our other operating segments’ cash flows from financing activities were primarily due to our Energy segment.

In 2020, our Energy segment had net proceeds from senior debt transactions of $500 million and in 2019 our Energy segment had payments to acquire the remaining common units of CVR Refining not already owned by CVR Energy of $301 million, including $60 million paid to our Holding Company for our direct ownership in CVR Refining.

In addition, our other operating segments also had net contributions from our Holding Company of $37 million and $81 million for the six months ended June 30, 2020 and 2019, respectively, as described above.

For the six months ended June 30, 2020 and 2019, our Energy segment had distributions to non-controlling interests of $36 million and $56 million, respectively.

In addition, our other operating segments also had net distributions to our Holding Company of $61 million for the nine months ended September 30, 2020 compared to net contributions of $76 million form our Holding Company for the nine months ended September 30, 2019, as described above.

For the nine months ended September 30, 2020 and 2019, our Energy segment had distributions to non-controlling interests of $36 million and $90 million, respectively.

Consolidated Capital Expenditures

Our Energy segment accounts for a significant portion of our capital expenditures.

As a result of the current economic conditions, our Energy segment revised its planned capital expenditures down approximately 30% for 2020, which includes a deferment of the majority of its growth capital projects and significant reductions in the amount of expected maintenance capital expenditures to only include those projects which are critical to continuing safe and reliable operations, or are required to support future activities.

Certain planned maintenance projects have also been deferred.

As a result of the current economic conditions, our Energy segment revised its planned capital expenditures down approximately 10% for 2020, which is subject to further change due to unanticipated changes in the cost, scope, and completion time for capital projects.

Although other subsidiaries of ours have curtailed their capital expenditures, there have been no other material changes to our planned capital expenditures as compared to the estimated capital expenditures for 2020 reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

However, such estimated capital expenditures are subject to further revisions due to the uncertainty of the scope and duration of the impact of the current economic conditions.

However, such estimated capital expenditures are

subject to further revisions due to the uncertainty of the scope and duration of the impact of the current economic conditions.

Consolidated Contractual Commitments and Contingencies

There have been no material changes to our contractual commitments and contingencies during the six months ended June 30, 2020 as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2019 .

There have been no material changes to our contractual commitments and contingencies during the nine months ended September 30, 2020 as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2019 .

Consolidated Off-Balance Sheet Arrangements

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The critical accounting policies and estimates used in the preparation of our condensed consolidated financial statements that we believe affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements presented in this Report are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2020 as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2020 as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

Recently Issued Accounting Standards

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis