ICAHN ENTERPRISES LP

Previous wording

Icahn Enterprises owns a 99% limited partner interest in Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”). Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is indirectly owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in each of Icahn Enterprises and Icahn Enterprises Holdings as of June 30, 2024 representing an aggregate 1.99% general partner interest in Icahn Enterprises and Icahn Enterprises Holdings. Mr. Icahn and his affiliates owned approximately 85% of Icahn Enterprises’ outstanding depositary units as of June 30, 2024.

Current wording

Icahn Enterprises owns a 99% limited partner interest in Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”). Icahn Enterprises Holdings and its subsidiaries own substantially all of our assets and liabilities and conduct substantially all of our operations. Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), which is indirectly owned and controlled by Mr. Carl C. Icahn, owns a 1% general partner interest in each of Icahn Enterprises and Icahn Enterprises Holdings as of September 30, 2024 representing an aggregate 1.99% general partner interest in Icahn Enterprises and Icahn Enterprises Holdings. Mr. Icahn and his affiliates owned approximately 86% of Icahn Enterprises’ outstanding depositary units as of September 30, 2024.

Previous wording

Within our Energy segment, a fire commenced at the Wynnewood refinery during severe weather in the early morning hours of April 28, 2024. The fire was extinguished shortly after it started, with no employees or contractors injured. Operations at the Coffeyville refinery was not impacted by the fire. After further assessment of this incident, it was determined the damages were limited to pipe racks and pumps in the area of the naphtha processing units, which impacted service to the other units. CVR Energy, Inc. (“CVI”), our majority owned subsidiary in our Energy segment, estimates the impact from the downtime and increased expenses with this incident in the second quarter of 2024 was approximately $50 million in reduction to CVI’s income before taxes, excluding the potential impact of any successful insurance recovery.

Current wording

Within our Energy segment, a fire commenced at the Wynnewood refinery during severe weather in the early morning hours of April 28, 2024. The fire was extinguished shortly after it started, with no employees or contractors injured. After further assessment of this incident, it was determined the damages were limited to pipe racks and pumps in the naphtha processing units. Operations at the Coffeyville Refinery were not impacted by the fire. CVR Energy, Inc. (“CVI”), our majority owned subsidiary in our Energy segment, incurred additional expenses related to this incident in the third quarter of 2024 of approximately $6 million, excluding insurance recoveries. All necessary repairs have been completed and the plant was fully operational in July 2024.

Previous wording

As previously disclosed, we are considering, with CVI, potential strategic transactions available to CVI and its subsidiaries, which may include the acquisition of additional entities, assets or businesses, including the acquisition of material amounts of refining assets through negotiated mergers and/or stock or asset purchase agreements by CVI or its subsidiaries, and/or strategic options involving CVR Partners, LP, a controlled subsidiary of CVI. There is no assurance that any of the aforementioned or previously disclosed or other transactions will develop or materialize, or if they do, as to their timing.

Current wording

As previously disclosed, we are considering, with CVI, potential strategic transactions available to CVI and its subsidiaries, which may include the acquisition of additional entities, assets or businesses, including the acquisition of material amounts of refining assets through negotiated mergers and/or stock or asset purchase agreements by CVI or its subsidiaries, and/or strategic options involving CVR Partners, LP, a controlled subsidiary of CVI. There is no assurance that any of the aforementioned or previously disclosed or other transactions will develop or materialize, or if they do, as to their timing. On November 8, 2024, we delivered a proposal to CVI’s board regarding a potential tender offer by one or more of our subsidiaries to acquire up to 15 million additional shares of CVI’s common stock.

Previous wording

See “Investment Funds Distributions and Redemptions” below under “Liquidity and Capital Resources.”

Current wording

See “Investment Funds Redemptions and Distributions” below under “Liquidity and Capital Resources.”

Previous wording

The conflict in the Middle East and the ongoing Russian/Ukraine conflict, can significantly impact the global oil, fertilizer, and agriculture markets. Such conflicts pose significant geopolitical risks to global markets, raise concerns of major implications, such as enforcement of sanctions, can contribute to further oil inventory tightening and price volatility, and can disrupt the production and trade of fertilizer, grains, and feedstock supply through several means, including trade restrictions and supply chain disruptions. The ultimate outcome of these conflicts and any associated market disruptions are difficult to predict and may affect our business, operations, and cash flows in unforeseen ways.

Current wording

The conflict in the Middle East and the ongoing Russian/Ukraine conflict can significantly impact the global oil, fertilizer, and agriculture markets. Such conflicts pose significant geopolitical risks to global markets, raise concerns of major implications, such as enforcement of sanctions, can contribute to further oil price volatility, and can disrupt the production and trade of fertilizer, grains, and feedstock supply through several means, including trade restrictions and supply chain disruptions. The ultimate outcome of these conflicts and any associated market disruptions are difficult to predict and may affect our business, operations, and cash flows in unforeseen ways.

Previous wording

We invest our proprietary capital through various private investment funds (“Investment Funds”). As of June 30, 2024 and December 31, 2023, we had investments with a fair market value of approximately $2.9 billion and $3.2 billion, respectively in the Investment Funds. As of June 30, 2024 and December 31, 2023, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us and Brett Icahn) was approximately $1.9 billion and $2.1 billion, respectively.

Current wording

We invest our proprietary capital through various private investment funds (“Investment Funds”). As of September 30, 2024 and December 31, 2023, we had investments with a fair market value of approximately $2.7 billion and $3.2 billion, respectively in the Investment Funds. As of September 30, 2024 and December 31, 2023, the total fair market value of investments in the Investment Funds made by Mr. Icahn and his affiliates (excluding us and Brett Icahn) was approximately $1.5 billion and $2.1 billion, respectively.

Previous wording

Our Investment segment’s results of operations are reflected in net income in the condensed consolidated statements of operations. Our Investment segment’s net income (loss) is driven by the amount of funds allocated to the Investment Funds and the performance of the underlying investments in the Investment Funds. Future funds allocated to the Investment Funds may increase or decrease based on the contributions and redemptions by our Holding Company, Mr. Icahn and his affiliates and by Brett Icahn, Mr. Icahn’s son. Additionally, historical performance results of the Investment Funds are not indicative of future results as past market conditions, investment opportunities and investment decisions may not occur in the future. 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, 2024.

Current wording

Our Investment segment’s results of operations are reflected in net income in the condensed consolidated statements of operations. Our Investment segment’s net income (loss) is driven by the amount of funds allocated to the Investment Funds and the performance of the underlying investments in the Investment Funds. Future funds allocated to the Investment Funds may increase or decrease based on the contributions and redemptions by our Holding Company, Mr. Icahn and his affiliates and by Brett Icahn, Mr. Icahn’s son. Additionally, historical performance results of the Investment Funds are not indicative of future results as past market conditions, investment opportunities and investment decisions may not occur in the future. 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”

Previous wording

For the three months ended June 30, 2024 and 2023, our Investment Funds’ returns were (8.1)% and (5.4)%, respectively. For the six months ended June 30, 2024 and 2023, our Investment Funds’ returns were (8.8)% and (9.3)%,

Current wording

For the three months ended September 30, 2024 and 2023, our Investment Funds’ returns were 7.6% and (4.4)%, respectively. For the nine months ended September 30, 2024 and 2023, our Investment Funds’ returns were (1.9)% and (13.3)%, respectively. Our Investment Funds’ returns represent a weighted-average composite of the average returns, net of expenses.

Previous wording

The following tables set forth the performance attribution and net income (loss) for the Investment Funds’ returns for the three and six months ended June 30, 2024 and 2023, respectively, and includes performance of all investment and derivative position types including the impact of the use of leverage through options, short sales, swaps, forwards and other derivative instruments.

Current wording

The following tables set forth the performance attribution and net income (loss) for the Investment Funds’ returns for the three and nine months ended September 30, 2024 and 2023, respectively, and includes performance of all investment and derivative position types including the impact of the use of leverage through options, short sales, swaps, forwards and other derivative instruments.

Previous wording

For the three months ended June 30, 2024, the Investment Funds’ negative performance was primarily driven by net losses in long positions, which includes the impact of derivatives, offset in part by net gains in short positions. The negative performance of our Investment segment’s long positions was driven primarily by net losses from the healthcare and energy sectors of $861 million. The positive performance of our Investment segment’s short positions was driven by net gains in the energy sector of $485 million.

Current wording

For the three months ended September 30, 2024, the Investment Funds’ positive performance was primarily driven by net gains in long positions, which includes the impact of derivatives, offset in part by net losses in short positions. The positive performance of our Investment segment’s long positions was driven primarily by net gains from the healthcare and utilities sectors of $332 million. The negative performance of our Investment segment’s short positions was primarily driven by losses from the materials and utilities sectors of $158 million and losses from the broad market hedges of $129 million, partially offset by gains in the energy sector of $157 million.

Previous wording

For the six months ended June 30, 2023, the Investment Funds’ negative performance was primarily driven by net losses in short positions. The negative performance of our Investment segment’s short positions was driven primarily by losses from a broad market hedge of $618 million and the aggregate performance of short equity and short credit positions with net losses across various sectors of $128 million.

Current wording

For the three months ended September 30, 2023, the Investment Funds’ negative performance was primarily driven by net losses in short positions. The negative performance of our Investment segment’s short positions was driven primarily by losses from several energy sector investments totaling $401 million and the negative performance of certain credit default swap positions of $102 million, offset in part by gains from a broad market hedge of $179 million and the aggregate performance of short equity and credit positions with net gains across various sectors of $158 million. The negative performance of our Investment segment’s long positions was driven primarily by losses from one healthcare sector investment of $115 million and two utility sector investments of $95 million, offset in part by gains on one energy sector investment of $98 million.

Previous wording

For the six months ended June 30, 2024, the Investment Funds’ negative performance was primarily driven by net losses in long and short positions. The negative performance of our Investment segment’s long positions was driven primarily by net losses from the healthcare and energy sectors of $482 million, offset in part by gains in the utilities sector of $134 million. The negative performance of our Investment segment’s short positions was driven primarily by net losses in broad market hedges of $163 million.

Current wording

For the nine months ended September 30, 2024, the Investment Funds’ negative performance was primarily driven by net losses in short positions, offset in part by net gains in long positions. The negative performance of our Investment segment’s short positions was driven primarily by net losses in broad market hedges of $292 million and net losses in the utilities and materials sectors of $205 million, offset in part by gains from the energy sector of $211 million. The

Previous wording

For the three months ended June 30, 2023, the Investment Funds’ negative performance was primarily driven by net losses in long positions. The negative performance of our Investment segment’s long positions was driven primarily by losses from one consumer, cyclical investment of $110 million, one healthcare sector investment of $104 million and the aggregate performance of long positions with net losses across various sectors of $93 million. The negative performance of our Investment segment’s short positions was driven by the negative performance of short broad market hedges of $253 million.

Current wording

For the nine months ended September 30, 2023, the Investment Funds’ negative performance was primarily driven by net losses in short and long positions. The negative performance of our Investment segment’s short positions was driven primarily by losses from a broad market hedge of $439 million, and several energy segment investments of $226 million as well as the aggregate performance of short equity positions with net losses across various sectors of $239 million. The negative performance of our Investment segment’s long positions was driven primarily by the negative performance of one healthcare sector investment of $163 million and one material sector investment of $145 million as well as the aggregate performance of investments with net losses across various sectors.

Previous wording

Our Energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses. The petroleum business accounted for approximately 93% and 91% of our Energy segment’s net sales for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Our Energy segment is primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing businesses. The petroleum business accounted for approximately 93% and 92% of our Energy segment’s net sales for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

In addition to recent market conditions, such as the ongoing conflict in the Middle East and the impact of the Russia/Ukraine conflict, there are long-term factors that may impact the demand for and inventory of Refined Products. These factors include mandated renewable fuels standards, proposed climate change laws and regulations, and increased mileage and emissions standards for vehicles. The petroleum business is also subject to the EPA’s Renewable Fuel Standard (“RFS”), which, each year, absent exemptions or waivers, requires the operating companies in our Energy segment to blend “renewable fuels” with their transportation fuels, purchase renewable identification numbers (“RINs”), to the extent available, in lieu of blending, or face liability. The price of RINs has been extremely volatile and the future cost of RINs for the petroleum business is difficult to estimate. Additionally, the cost of RINs is dependent upon a variety of factors, which include but are not limited to the availability of RINs for purchase, the actions of RINs market participants including non-obligated parties, the price at which RINs can be purchased, transportation fuel and renewable diesel production levels and pricing, the mix of the petroleum business’ petroleum products, the refining margin of the petroleum business and other factors, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which the petroleum business’ obligated-party subsidiaries may be entitled. The costs to comply with the RFS are also impacted by, and dependent upon the outcome of, the numerous lawsuits filed by multiple refiners including the petroleum business’ obligated-party subsidiaries, biofuels groups and others. Refer to Note 18, “Commitments and Contingencies,” to the consolidated financial statements for further discussion of RINs.

Current wording

In addition to geopolitical conditions, such as the ongoing conflict in the Middle East and the impact of the Russia/Ukraine conflict, there are long-term factors that may impact the demand for and inventory of Refined Products. These factors include mandated renewable fuels standards, proposed and enacted climate change laws and regulations, and increased mileage and emissions standards for vehicles. The petroleum business is also subject to the EPA’s Renewable Fuel Standard (“RFS”), which, each year, absent exemptions or waivers, requires the operating companies in our Energy segment to blend “renewable fuels” with their transportation fuels, purchase renewable identification numbers (“RINs”), to the extent available, in lieu of blending, or face liability. The price of RINs has been extremely volatile and the future cost of RINs for the petroleum business is difficult to estimate. Additionally, the cost of RINs is dependent upon a variety of factors, which include but are not limited to the availability of RINs for purchase, the actions of RINs market participants including non-obligated parties, the price at which RINs can be purchased, transportation fuel and renewable diesel production levels and pricing, the mix of the petroleum business’ petroleum products, the refining margin of the petroleum business and other factors, all of which can vary significantly from period to period, as well as certain waivers or exemptions to which the petroleum business’ obligated-party subsidiaries may be entitled. The costs to comply with the RFS are also impacted by, and dependent upon the outcome of, the numerous lawsuits filed by multiple refiners including the petroleum business’ obligated-party subsidiaries, biofuels groups and others. Refer to Note 18, “Commitments and Contingencies,” to the consolidated financial statements for further discussion of RINs.

Previous wording

Since 2022, our Energy segment has focused significant efforts on decarbonization initiatives including but not limited to the completion of the renewable diesel unit (“RDU”), the creation of an Environmental, Social and Governance (“ESG”) committee and the publication of multiple ESG reports. In addition, our Energy segment achieved mechanical completion of the renewable stock feeder pretreater project at its Wynnewood Refinery in the fourth quarter of 2023 with the unit becoming operational during the first quarter of 2024. Our Energy segment expects to continue to explore options to decarbonize its business in areas with attractive economics, without sole reliance on government subsidies.

Current wording

In recent years, our Energy segment has focused on several decarbonization initiatives including completion of construction of the renewable diesel and renewable feedstock pre-treatment units at the Wynnewood Refinery, creation of an Environmental, Social and Governance (“ESG”) committee and the publication of ESG reports and restructuring to better align with management and financial reporting. Our Energy segment expects to continue to explore options to decarbonize its business in areas with attractive economics, without sole reliance on government subsidies.

Previous wording

Net sales for our Energy segment decreased by $271 million (12%) for the three months ended June 30, 2024 as compared to the comparable prior year period due to a decrease in our petroleum business’ net sales, which decreased $221 million, as well as a decrease in our nitrogen fertilizer business’ net sales by $50 million over the comparable period. The decrease in the petroleum business’ net sales was due to lower refined product prices resulting from elevated inventory levels and reduced demand along with fewer sales as a result of the Wynnewood Refinery fire during the current period. The decrease in our nitrogen fertilizer business’ net sales was primarily due to a decrease in urea ammonium nitrate (“UAN”) and ammonia pricing conditions primarily due to lower natural gas prices in the current period.

Current wording

Net sales for our Energy segment decreased by $688 million (27%) for the three months ended September 30, 2024 as compared to the comparable prior year period due to a decrease in our petroleum business’ net sales of $683 million, as well as a decrease in our nitrogen fertilizer business’ net sales by $5 million over the comparable period. The decrease in the petroleum business’ net sales was due to lower refined product prices resulting from elevated inventory levels and reduced demand along with a decline in sales as a result of the Wynnewood Refinery fire and an unplanned outage at the Coffeyville Refinery. The decrease in our nitrogen fertilizer business’ net sales was primarily due to a decrease in urea ammonium nitrate (“UAN”) sales volumes, offset in part by favorable UAN and ammonia pricing conditions in the current period.

Previous wording

Cost of goods sold for our Energy segment decreased by $68 million (3%) for the three months ended June 30, 2024 as compared to the comparable prior year period. The decrease was primarily due to declines in our petroleum business as a result of a decrease in net sales, offset in part by a decline in RFS expense of $51 million which includes a favorable RINs liability revaluation of $2 million and a favorable derivatives impact of $20 million in the current period compared to losses in the three months ended June 30, 2023. Gross margin for our Energy segment decreased by $203 million for the three months ended June 30, 2024 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 2% and 11% for the three months ended June 30, 2024 and 2023, respectively. The decrease in gross margin as a percentage of net sales was primarily attributable to the petroleum business, which was primarily due to lower refining margins driven by increased inventory levels and lower demand in the current year.

Current wording

Cost of goods sold for our Energy segment decreased by $134 million (7%) for the three months ended September 30, 2024 as compared to the comparable prior year period. The decrease was primarily due to declines in our petroleum business as a result of a decrease in net sales and increased RFS expenses of $187 million which includes unfavorable RINs liability revaluation of $232 million, offset in part by a favorable derivatives impact of $97 million in the current period compared to losses in the three months ended September 30, 2023. Gross margin for our Energy segment decreased by $554 million for the three months ended September 30, 2024 as compared to the comparable prior year period. Gross margin as a percentage of net sales was (4%) and 19% for the three months ended September 30, 2024 and 2023, respectively. The decrease in gross margin as a percentage of net sales was primarily attributable to the petroleum business, as a result of lower refining margins driven by increased inventory levels and lower demand in the current year.

Previous wording

Net sales for our Energy segment decreased by $694 million (15%) for the six months ended June 30, 2024 as compared to the comparable prior year period due to a decrease in our petroleum business’ net sales, which decreased $546 million, as well as a decrease in our nitrogen fertilizer business’ net sales, which decreased $148 million over the comparable periods. The decrease in the petroleum business’ net sales was due to lower refined product prices resulting from elevated inventory levels and reduced demand along with fewer sales as a result of the Wynnewood Refinery fire during the current period. The decrease in our nitrogen fertilizer business’ net sales was primarily due to lower product sales prices attributable to natural gas prices reducing input costs and driving an overall decrease in the market prices.

Current wording

Net sales for our Energy segment decreased by $1.4 billion (20%) for the nine months ended September 30, 2024 as compared to the comparable prior year period due to a decrease in our petroleum business’ net sales, which decreased $1.2 billion, as well as a decrease in our nitrogen fertilizer business’ net sales, which decreased $154 million over the comparable periods. The decrease in the petroleum business’ net sales was due to lower refined product prices resulting from elevated inventory levels and reduced demand along with a decline in sales as a result of the Wynnewood Refinery fire and an unplanned outage at the Coffeyville Refinery. The decrease in our nitrogen fertilizer business’ net sales was primarily due to unfavorable UAN and ammonia pricing conditions and sales volumes.

Previous wording

Cost of goods sold for our Energy segment decreased by $281 million (7%) for the six months ended June 30, 2024 as compared to the comparable prior year period. The decrease was primarily due to declines in our petroleum business as a result of a decrease in net sales and lower derivative performance of $37 million, offset in part by a decline in RFS expense of $136 million which includes a favorable RINs liability revaluation of $37 million. Gross margin for our Energy segment decreased by $413 million for the six months ended June 30, 2024 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 5% and 13% for the six months ended June 30, 2024 and 2023, 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 lower crack spreads and lower derivative performance, offset in part by favorable RINs liability revaluation.

Current wording

Cost of goods sold for our Energy segment decreased by $415 million (7%) for the nine months ended September 30, 2024 as compared to the comparable prior year period. The decrease was primarily due to declines in our petroleum business as a result of a decrease in net sales and increased RFS expenses of $52 million, which includes unfavorable RINs liability revaluation of $196 million, offset in part by a favorable derivatives impact of $61 million. Gross margin for our Energy segment decreased by $967 million for the nine months ended September 30, 2024 as compared to the comparable prior year period. Gross margin as a percentage of net sales was 2% and 15% for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the gross margin as a percentage of net sales was primarily attributable to the petroleum business, as a result of lower refining margins driven by increased inventory levels and lower demand in the current year.

Previous wording

Our Automotive segment has been in the process of a multi-year transformation plan. As part of this plan, during the year ended December 31, 2022, our Automotive segment completed the separation of certain of its Automotive Services and Aftermarket Parts businesses into two separate operating companies. In January 2023, Auto Plus filed a voluntary bankruptcy petition seeking relief under Chapter 11 of the Bankruptcy Code, which has reduced our Automotive segment’s assets, reduced the sales of our Automotive segment in the three and six months ended June 30, 2024 and

Current wording

Our Automotive segment has been in the process of a multi-year transformation plan. As part of this plan, our Automotive segment completed the separation of certain of its Automotive Services and Aftermarket Parts businesses into two separate operating companies. Auto Plus, which operated the majority of our Aftermarket Parts business, began operating in locations owned and leased by the Aftermarket Services business.

Previous wording

Our Automotive segment’s results include AEP PLC LLC (“AEP PLC”), which acquired $10 million in assets, mainly comprised of Aftermarket Parts inventory from the Auto Plus auction.

Current wording

Our Automotive segment’s results also include AEP PLC LLC (“AEP PLC”), which acquired $10 million in assets, mainly comprised of Aftermarket Parts inventory from the Auto Plus auction. We are in the process of selling the remaining inventory which we expect will be complete by the end of 2024 and which would remove us from the Aftermarket Parts business.

Previous wording

Net sales and other revenues from operations for our Automotive segment for the three months ended June 30, 2024 decreased by $44 million (11%) as compared to the comparable prior year period. The decrease was primarily attributable to a decrease in Automotive Services of $29 million (7%), mainly due to reduced consumer spending on automotive repairs and maintenance. The decrease in the Automotive segment’s net sales was also partially due to a decrease in Aftermarket Parts revenue of $15 million (75%), mainly due to the winding down of the Aftermarket Parts business.

Current wording

Net sales and other revenues from operations for our Automotive segment for the three months ended September 30, 2024 decreased by $71 million (17%) as compared to the comparable prior year period. The decrease was primarily attributable to a decrease in Automotive Services of $51 million (13%), mainly due to reduced consumer spending on automotive repairs and maintenance and operational challenges such as insuffcient tire inventory in certain locations, which had an adverse impact on our tire sales in the current period. The decrease was also partially due to a decrease in Aftermarket Parts revenue of $20 million (83%), mainly due to the winding down of the Aftermarket Parts business.

Previous wording

Cost of goods sold and other expenses from operations for the three months ended June 30, 2024 decreased by $39 million (13%) as compared to the comparable prior year period. The decrease was primarily driven by cost reduction efforts and lower net sales mainly due to reduced consumer spending on automotive repairs and maintenance. Gross margin on net sales and other revenue from operations for the three months ended June 30, 2024 decreased by $5 million (4%) from the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 31% and 29% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Cost of goods sold and other expenses from operations for the three months ended September 30, 2024 decreased by $19 million (6%) as compared to the comparable prior year period. The decrease was primarily driven by lower net sales mainly due to reduced consumer spending on automotive repairs and maintenance and a decline in tire sales in the current period. Gross margin on net sales and other revenue from operations for the three months ended September 30, 2024 decreased by $52 million (39%) from the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 22% and 31% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Net sales and other revenues from operations for our Automotive segment for the six months ended June 30, 2024 decreased by $116 million (14%) as compared to the comparable prior year period. The decrease was attributable to a decrease in Aftermarket Parts sales of $74 million (80%), mainly due to the deconsolidation of Auto Plus as of January 31, 2023. The decrease in the Automotive segment’s net sales was also partially due to a decrease in Automotive Services of $42 million (6%), mainly due to reduced consumer spending on automotive repairs and maintenance.

Current wording

Net sales and other revenues from operations for our Automotive segment for the nine months ended September 30, 2024 decreased by $187 million (15%) as compared to the comparable prior year period. The decrease was primarily driven by a decrease in Aftermarket Parts sales of $94 million (81%), mainly due to the deconsolidation of Auto Plus as of January 31, 2023. The decrease was also partially due to a decrease in Automotive Services of $93 million (8%), mainly due to reduced consumer spending on automotive repairs and maintenance.

Previous wording

Cost of goods sold and other expenses from operations for the six months ended June 30, 2024 decreased by $82 million (14%) as compared to the comparable prior year period. The decrease was primarily driven by decreased aftermarket parts sales related to the deconsolidation of Auto Plus, in addition to cost reduction efforts and lower net sales mainly related to reduced consumer spending on automotive repairs and maintenance at our Automotive Services business. Gross margin on net sales and other revenue from operations for the six months ended June 30, 2024 decreased by $34 million (14%) from the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 29% and 29% for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Cost of goods sold and other expenses from operations for the nine months ended September 30, 2024 decreased by $100 million (11%) as compared to the comparable prior year period. The decrease was primarily driven by decreased aftermarket parts sales related to the deconsolidation of Auto Plus, in addition to cost reduction efforts and lower net sales mainly related to reduced consumer spending on automotive repairs and maintenance at our Automotive Services business. Gross margin on net sales and other revenue from operations for the nine months ended September 30, 2024 decreased by $87 million (23%) from the comparable prior year period. Gross margin as a percentage of net sales and other revenue from operations was 27% and 30% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Net sales for the six months ended June 30, 2024 decreased $29 million (12%) as compared to the comparable prior year period. The decrease was primarily due to lower volumes of $17 million and a decrease of $12 million in price and product mix. Cost of goods sold for the six months ended June 30, 2024 decreased $15 million (8%) compared to the comparable prior year period primarily due to effects of lower volume and corresponding lower absorption of manufacturing fixed costs. Gross margin as a percentage of net sales was 19% and 23% for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Net sales for the three months ended September 30, 2024 decreased $4 million (4%) as compared to the comparable prior year period. The decrease was primarily due to a decrease of $8 million in price and product mix, offset in part by higher volumes of $4 million. Cost of goods sold for the three months ended September 30, 2024 increased $3 million (4%) compared to the comparable prior year period primarily due to effects of higher volume and lower absorption of manufacturing fixed costs. Gross margin as a percentage of net sales was 15% and 21% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Net sales for the three months ended June 30, 2024 decreased $12 million (10%) as compared to the comparable prior year period. The decrease was primarily due to a decrease of $7 million in price and product mix and lower volumes of $5 million. Cost of goods sold for the three months ended June 30, 2024 decreased $4 million (4%) compared to the comparable prior year period primarily due to effects of lower volume and corresponding lower absorption of manufacturing fixed costs. Gross margin as a percentage of net sales was 18% and 23% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Net sales for the nine months ended September 30, 2024 decreased $33 million (10%) as compared to the comparable prior year period. The decrease was primarily due to a decrease of $19 million in price and product mix and lower volumes of $14 million. Cost of goods sold for the nine months ended September 30, 2024 decreased $12 million (5%) compared to the comparable prior year period primarily due to effects of lower volume and corresponding lower absorption of manufacturing fixed costs. Gross margin as a percentage of net sales was 18% and 22% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Our Real Estate segment consists of investment properties which includes land, retail, office and industrial properties leased to corporate tenants, the development and sale of single-family homes, and the operations of a resort and two country clubs. Sales of single-family homes and investment properties are included in net sales in our consolidated statements of operations. Results from operations at investment properties and our country clubs are included in other revenues from operations in our consolidated statements of operations. Revenue from our real estate operations for the three months ended June 30, 2024 and 2023 was primarily derived from country club and resort operations. Revenue from our real estate operations for the six months ended June 30, 2024 and 2023 was primarily derived from the sale of single-family homes and resort operations.

Current wording

Our Real Estate segment consists of investment properties which includes land, retail, office and industrial properties leased to corporate tenants, the development and sale of single-family homes, and the operations of a resort and two country clubs. Sales of single-family homes and investment properties are included in net sales in our consolidated statements of operations. Results from operations at investment properties and our country clubs are included in other revenues from operations in our consolidated statements of operations. Revenue from our real estate operations for the three months ended September 30, 2024 and 2023 was primarily derived from country club and resort operations. Revenue from our real estate operations for the nine months ended September 30, 2024 and 2023 was primarily derived from the sale of single-family homes and country club operations.

Previous wording

Net sales for the three months ended June 30, 2024 decreased by $3 million (23%) as compared to the comparable prior year period primarily due to the decrease in single-family home sales as inventory is almost sold out in one country club, while the second country club is ramping up its development with sales expected to commence at the end of 2024 to early 2025. Cost of goods sold for the three months ended June 30, 2024 decreased $1 million (13%) compared to the prior year period primarily due to the aforementioned decrease in single-family home sales. Gross margin as a percentage of net sales was 30% and 38% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Net sales for the three months ended September 30, 2024 decreased by $23 million (79%) as compared to the comparable prior year period primarily due to the one time sale of a $17 million investment property in the prior year period and a decrease in single-family home sales as inventory is almost sold out in one country club, while the second country club is ramping up its development with sales expected to commence in 2025. Cost of goods sold for the three months ended September 30, 2024 decreased $15 million (75%) compared to the prior year period primarily due to the aforementioned sale of an investment property in the prior year period. Gross margin as a percentage of net sales was 17% and 31% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Other revenues from operations for the three months ended June 30, 2024 decreased by $1 million (5%) as compared to the comparable prior year period. Other expenses from operations for the three months ended June 30, 2024 were flat compared to the prior year period.

Current wording

Other revenues from operations for the three months ended September 30, 2024 increased by $1 million (5%) as compared to the comparable prior year period. Other expenses from operations for the three months ended September 30, 2024 increased by $1 million (6%) as compared to the comparable prior year period.

Previous wording

Net sales for the six months ended June 30, 2024 decreased by $9 million (45%) as compared to the comparable prior year period primarily due to a decrease in single-family home sales as inventory is almost sold out in one country club, while the second country club is ramping up its development with sales expected to commence at the end of 2024 to early 2025. Cost of goods sold for the six months ended June 30, 2024 decreased $6 million (43%) compared to the prior year period primarily due to decreased home sales. Gross margin as a percentage of net sales was 27% and 30% for the six months ended June 30, 2024 and 2023, respectively.

Current wording

second country club is ramping up its development with sales expected to commence in 2025. Cost of goods sold for the nine months ended September 30, 2024 decreased $21 million (62%) compared to the prior year period primarily due the aforementioned sale of an investment property in the prior year period. Gross margin as a percentage of net sales was 24% and 31% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Other revenues from operations for the six months ended June 30, 2024 was flat as compared to the comparable prior year period. Other expenses from operations for the six months ended June 30, 2024 increased by $1 million (3%) compared to the prior year period.

Current wording

Other revenues from operations for the nine months ended September 30, 2024 increased by $1 million (2%) as compared to the comparable prior year period. Other expenses from operations for the nine months ended September 30, 2024 increased by $2 million (4%) compared to the prior year period.

Previous wording

Net sales for the three months ended June 30, 2024 decreased by $2 million (4%) as compared to the comparable prior year period mostly due to lower demand from our retail and international businesses. Cost of goods sold for the three months ended June 30, 2024 decreased by $2 million (6%) compared to the comparable prior year period mostly due to lower material costs and improved manufacturing efficiency. Gross margin as a percentage of net sales was 25% and 24% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Net sales for the nine months ended September 30, 2024 decreased $5 million (4%) as compared to the comparable prior year period mostly due to lower demand from our retail and international businesses. Cost of goods sold for the nine months ended September 30, 2024 decreased by $6 million (6%) as compared to the comparable prior year period mostly due to lower material costs and improved manufacturing efficiency. Gross margin as a percentage of net sales was 23% and 21% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Net sales for the six months ended June 30, 2024 increased by $6 million (14%) compared to the comparable prior year period primarily due to higher prescription growth resulting in increased sales. Cost of goods sold for the six months ended June 30, 2024 increased $2 million (8%) compared to the prior year period due to increased sales. Gross margin as a percentage of net sales was 43% and 40% for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Net sales for the three months ended September 30, 2024 increased by $2 million (8%) as compared to the comparable prior year period primarily due to continued higher prescription growth resulting in increased sales. Cost of goods sold for the three months ended September 30, 2024 decreased $2 million (13%) as compared to the comparable prior year period primarily due to improved inventory management. Gross margin as a percentage of net sales was 52% and 40% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Net sales for the three months ended June 30, 2024 increased by $2 million (9%) as compared to the comparable prior year period primarily due to higher prescription growth resulting in increased sales. Cost of goods sold for the three months ended June 30, 2024 were flat compared to the comparable prior year period. Gross margin as a percentage of net sales was 44% and 39% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Net sales for the nine months ended September 30, 2024 increased by $8 million (12%) compared to the comparable prior year period primarily due to continued higher prescription growth resulting in increased sales. Cost of goods sold for the nine months ended September 30, 2024 was flat as compared to the prior year period. Gross margin as a percentage of net sales was 46% and 40% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Our Holding Company’s results of operations primarily reflect the loss on deconsolidation of one of its subsidiaries, credit loss on its related party note receivable, and interest expense on its senior unsecured notes for each of the three and six months ended June 30, 2024 and 2023.

Current wording

Our Holding Company’s results of operations primarily reflect the loss on deconsolidation of one of its subsidiaries, credit loss on its related party note receivable, and interest expense on its senior unsecured notes for each of the three and nine months ended September 30, 2024 and 2023.

Previous wording

** **As discussed in Note 3, “Subsidiary Bankruptcy and Deconsolidation”, to the consolidated financial statements, we deconsolidated Auto Plus effective as of January 31, 2023, resulting in a pretax loss on deconsolidation of subsidiary of $246 million during the six months ended June 30, 2023.

Current wording

** **As discussed in Note 3, “Subsidiary Bankruptcy and Deconsolidation”, to the consolidated financial statements, we deconsolidated Auto Plus effective as of January 31, 2023, resulting in a pretax loss on deconsolidation of subsidiary of $246 million during the nine months ended September 30, 2023.

Previous wording

Our credit loss on related party note receivable of $116 million for thesix months ended June 30, 2023 relates to the note receivable expected to be uncollectible.

Current wording

Our credit loss on related party note receivable of $139 million for thenine months ended September 30, 2023 relates to the note receivable expected to be uncollectible.

Previous wording

Our consolidated selling, general and administrative costs during the three months ended June 30, 2024 decreased by $32 million (15%) as compared to the comparable prior year period primarily due to lower expenses of our Automotive segment of $15 million mainly related to lower marketing expenses in the current period.

Current wording

Our consolidated selling, general and administrative costs during the three months ended September 30, 2024 decreased by $7 million (3%) as compared to the comparable prior year period primarily due to lower expenses of our Automotive segment of $14 million mainly related to the deconsolidation of Auto Plus.