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Delaware		6512		13-3398766
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Delaware		6512		20-1059842
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Delaware		6512		13-3398767
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

				Proposed Maximum		Proposed Maximum
Title of Each Class of		Amount to be		Offering Price		Aggregate		Amount of
Securities to be Registered		Registered(1)		Per Unit(1)		Offering Price(1)		Registration Fee(2)
71/8% Senior Notes due 2013		$480,000,000		100%		$480,000,000		$56,496
Guarantees(3)		—		—		—		—

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended.
(2)	Pursuant to Rule 457(f)(2) of the Securities Act of 1933, as amended, the registration fee has been estimated based on the book value of the securities to be received by the registrant in exchange for the securities to be issued hereunder in the exchange offer described herein.
(3)	Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable with respect to the guarantees.

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The information in this Preliminary Prospectus is not complete and may be changed. We may not exchange these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This Preliminary Prospectus is not an offer to exchange these securities and is not soliciting offers to exchange these securities in any State where the exchange is not permitted.

•	The terms of the new notes are substantially identical to the outstanding notes, except that the transfer restrictions and registration rights relating to the outstanding notes will not apply to the new notes and the new notes will not provide for the payment of liquidated damages under circumstances related to the timing and completion of the exchange offer.
•	Expires 5:00 p.m., New York City time, on                     , 2005, unless extended.
•	We will exchange your validly tendered unregistered notes for an equal principal amount of a new series of notes which have been registered under the Securities Act of 1933.
•	The exchange offer is not subject to any condition other than that the exchange offer not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission and other customary conditions.
•	You may withdraw your tender of notes at any time before the exchange offer expires.
•	The exchange of notes should not be a taxable exchange for U.S. federal income tax purposes.
•	We will not receive any proceeds from the exchange offer.
•	The new notes will not be traded on any national securities exchange and, therefore, we do not anticipate that an active public market in the new notes will develop.

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		Page
PROSPECTUS			1
RISK FACTORS			12
FORWARD-LOOKING STATEMENTS			28
INDUSTRY DATA			28
USE OF PROCEEDS			29
THE EXCHANGE OFFER			30
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA OF AMERICAN REAL ESTATE PARTNERS, L.P. AND SUBSIDIARIES			38
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA			49
SELECTED SUPPLEMENTAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA			51
MANAGEMENT’S DISCUSSION AND ANALYSIS OF SUPPLEMENTAL FINANCIAL CONDITION AND RESULTS OF OPERATIONS			54
BUSINESS			69
REGULATION			89
MANAGEMENT			101
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			106
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			108
DESCRIPTION OF PREFERRED UNITS AND OF CERTAIN INDEBTEDNESS AND OTHER OBLIGATIONS			112
DESCRIPTION OF NOTES			116
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES			149
PLAN OF DISTRIBUTION			153
LEGAL MATTERS			153
EXPERTS			154
WHERE YOU CAN FIND MORE INFORMATION			155
INCORPORATION OF AREP DOCUMENTS BY REFERENCE			155
INDEX TO FINANCIAL STATEMENTS			F-1
EX-12.1: RATIO OF EARNINGS TO FIXED CHARGES
EX-23.1: CONSENT OF GRANT THORNTON LLP
EX-23.2: CONSENT OF KPMG LLP
EX-23.3: CONSENT OF GRANT THORNTON LLP
EX-23.4: CONSENT OF GRANT THORNTON LLP
EX-23.5: CONSENT OF GRANT THORNTON LLP
EX-23.6: CONSENT OF KPMG LLP
EX-23.7: CONSENT OF PANNELL KERR FORSTER OF TEXAS P.C.
EX-23.8: CONSENT OF KPMG LLP
EX-23.9: CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC.

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	•	exchanges its private notes in the exchange offer for the purpose of participating in a distribution of the new notes, or
	•	resells new notes that were received by it for its own account in the exchange offer,

	•	the number of holders of the new notes;
	•	our performance; and
	•	the market for similar securities and the interest of securities dealers in making a market in the new notes.

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	•	received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and
	•	was insolvent or rendered insolvent by reason of such incurrence; or
	•	was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or
	•	intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

	•	the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; or
	•	the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or
	•	it could not pay its debts as they become due.

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	•	to exercise, directly or through any trustee or nominee, any right conferred by such securities, or
	•	to receive any dividends or interest upon such securities or any remuneration, in any form, from its affiliated casino licensee for services rendered or otherwise.

	•	pay to the unsuitable person any dividend, interest, or any distribution whatsoever;
	•	recognize any voting right of the unsuitable person with respect to such securities;
	•	pay the unsuitable person remuneration in any form; or
	•	make any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

	•	the lesser of the cost paid by the holder or the fair market value of the notes, in each case, plus accrued and unpaid interest and liquidated damages, if any, to the earlier of the date of redemption, or earlier as may be required by the Nevada gaming authorities or the finding of unsuitability by the Nevada gaming authorities; or
	•	such other lesser amount as may be ordered by the Nevada gaming authorities.

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	•	to exercise, directly or indirectly, any right conferred by the notes or the indenture; or
	•	to receive from us any interest, dividends or any other distributions or payments, or any remuneration in any form, relating to the notes, except the redemption price we refer to above.

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	•	potential changes in the tax or regulatory environment which impose additional restrictions or increase operating costs;
	•	our properties use significant amounts of electricity, natural gas and other forms of energy, and energy price increases may reduce our working capital;
	•	our Nevada properties use significant amounts of water and a water shortage may adversely affect our operations;

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	•	an increase in the cost of health care benefits for our employees could have a negative impact on our profitability;
	•	some of our employees are covered by collective bargaining agreements and we may incur higher costs or work slow-downs or stoppages due to union activities;
	•	our reliance on slot machine revenues and the concentration of manufacturing of slot machines in certain companies could impose additional costs on us; and
	•	our insurance coverage may not be adequate to cover all possible losses and our insurance costs may increase.

	•	we compete with many world class destination resorts with greater name recognition, different attractions, amenities and entertainment options;
	•	we compete with the continued growth of gaming on Native American tribal lands;
	•	the existence of legalized gambling in other jurisdictions may reduce the number of visitors to our properties;
	•	certain states have legalized, and others may legalize, casino gaming in specific venues, including race tracks and/or in specific areas, including metropolitan areas from which we traditionally attract customers; and
	•	our properties also compete and will in the future compete with all forms of legalized gambling.

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	•	unexpected drilling conditions;
	•	pressure or irregularities in formation;
	•	equipment failures or repairs;
	•	fires or other accidents;
	•	adverse weather conditions;
	•	pipeline ruptures or spills; and
	•	shortages or delays in the availability of drilling rigs and the delivery of equipment.

	We may experience difficulty finding and acquiring additional reserves and be unable to compensate for the depletion of our proved reserves.

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	Difficulties in exploration and development could adversely affect our financial condition.

	Oil and gas prices are likely to be volatile.

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	There is inherent uncertainty in estimates of reserves which may affect future net cash flows.

	Operating hazards and uninsured risks are inherent to the oil and gas industry.

	Our use of hedging arrangements could reduce our income.

	Government regulations impose costs on abandoning oil and gas facilities.

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	The oil and gas industry is highly competitive.

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

	Our investments may be subject to significant uncertainties.

	•	fluctuation of interest rates;
	•	lack of control in minority investments;
	•	worsening of general economic and market conditions;
	•	lack of diversification;
	•	inexperience with non-real estate areas;
	•	fluctuation of U.S. dollar exchange rates; and
	•	adverse legal and regulatory developments that may affect particular businesses.

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	•	file a registration statement with the Securities and Exchange Commission with respect to the exchange of the private notes for new notes, or the exchange offer registration statement, no later than 180 days after the date we issued the private notes;
	•	use all commercially reasonable efforts to have the exchange offer registration statement declared effective by the SEC on or prior to 300 days after the issuance date; and
	•	commence the offer to exchange new notes for the private notes and use all commercially reasonable efforts to issue on or prior to 30 business days, or longer if required by the federal securities laws, after the date on which the exchange offer registration statement was declared effective by the SEC, new notes in exchange for all private notes tendered prior to that date in the exchange offer.

	•	will not be able to tender its private notes in the exchange offer;
	•	will not be able to rely on the interpretations of the staff of the SEC; and
	•	must comply with the registration and prospectus delivery requirements of the Securities Act of 1933 in connection with any sale or transfer of the private notes unless such sale or transfer is made pursuant to an exemption from these requirements.

	•	you are not our “affiliate” (as defined in Rule 405 under the Securities Act of 1933);
	•	any new notes to be received by you will be acquired in the ordinary course of your business;
	•	you have no arrangement or understanding with any person to participate in the distribution of the new notes in violation of the provisions of the Securities Act of 1933;
	•	if you are not a broker-dealer, you are not engaged in, and do not intend to engage in, a distribution of new notes; and
	•	if you are a broker-dealer, you acquired the private notes for your own account as a result of market-making or other trading activities (and as such, you are a “participating broker-dealer”), you have not entered into any arrangement or understanding with American Real Estate Partners, L.P. or an affiliate

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		of American Real Estate Partners, L.P. to distribute the new notes and you will deliver a prospectus meeting the requirements of the Securities Act of 1933 in connection with any resale of the new notes.

	(1) the offering of the new notes has been registered under the Securities Act of 1933;
	(2) the new notes generally will not be subject to transfer restrictions or have registration rights; and
	(3) certain provisions relating to liquidated damages on the private notes provided for under certain circumstances will be eliminated.

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	•	notify the exchange agent of any extension orally or in writing; and
	•	notify the registered holders of the private notes by means of a press release or other public announcement, each before 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

	•	to delay accepting any private notes;
	•	to extend the exchange offer; or
	•	if any conditions listed below under “— Conditions” are not satisfied, to terminate the exchange offer by giving oral or written notice of the delay, extension or termination to the exchange agent.

	•	complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal;
	•	have the signatures thereof guaranteed if required by the letter of transmittal; and
	•	mail or otherwise deliver the letter of transmittal or such facsimile to the exchange agent, at the address listed below under “— Exchange Agent” for receipt prior to the expiration date.

	•	the exchange agent must receive certificates for the private notes along with the letter of transmittal into its account at the Depository Trust Company pursuant to the procedure described under “— Book-Entry Transfer” before the expiration date;
	•	the exchange agent must receive a timely confirmation of a book-entry transfer, if the procedure is available, into its account at the Depository Trust Company pursuant to the procedure described under “— Book-Entry Transfer” before the expiration date; or
	•	you must comply with the procedures described under “Guaranteed Delivery Procedures.”

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	•	make appropriate arrangements to register ownership of your private notes in your name; or
	•	obtain a properly completed bond power from the registered holder.

	•	by a registered holder who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instruction” on the letter of transmittal; or
	•	for the account of an “Eligible Institution” which is either:

	•	a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.;
	•	a commercial bank or trust company located or having an office or correspondent in the United States; or
	•	otherwise an “eligible guarantor institution” within meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934.

	•	All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of the tendered private notes will be determined by us in our sole discretion, which determination will be final and binding;
	•	We reserve the absolute right to reject any and all private notes not properly tendered or any private notes the acceptance of which would, in our judgment or the judgment of our counsel, be unlawful;
	•	We also reserve the absolute right to waive any irregularities or conditions of tender as to particular private notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any

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		defects or irregularities in connection with tenders of private notes must be cured within such time as we shall determine;
	•	Although we intend to notify holders of defects or irregularities with respect to any tender of private notes, neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to tenders of private notes, nor shall any of them incur any liability for failure to give such notification; and
	•	Tenders of private notes will not be deemed to have been made until such irregularities have been cured or waived. Any private notes received by the exchange agent that we determine are not properly tendered or the tender of which is otherwise rejected by us and as to which the defects or irregularities have not been cured or waived by us will be returned by the exchange agent to the tendering holder unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

	(1) the tender is made through an Eligible Institution;
	(2) prior to the expiration date, the exchange agent receives from such Eligible Institution a properly completed and duly executed notice of guaranteed delivery, by facsimile transmittal, mail or hand delivery

	•	stating the name and address of the holder, the certificate number or numbers of such holder’s private notes and the principal amount of such private notes tendered;
	•	stating that the tender is being made thereby; and

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	•	guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or a facsimile thereof, together with the certificate(s) representing the private notes to be tendered in proper form for transfer, or confirmation of a book-entry transfer into the exchange agent’s account at the Depository Trust Company of private notes delivered electronically, and any other documents required by the letter of transmittal, will be deposited by the Eligible Institution with the exchange agent; and

(3) such properly completed and executed letter of transmittal, or a facsimile thereof, together with the certificate(s) representing all tendered private notes in proper form for transfer, or confirmation of a book-entry transfer into the exchange agent’s account at the Depository Trust Company of private notes delivered electronically and all other documents required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date.

	•	specify the name of the person who deposited the private notes to be withdrawn;
	•	identify the private notes to be withdrawn, including the certificate number or number and principal amount of such private notes or, in the case of private notes transferred by book-entry transfer, the name and number of the account at the Depository Trust Company to be credited; and
	•	be signed in the same manner as the original signature on the letter of transmittal by which such private notes were tendered, including any required signature guarantee.

	•	the exchange offer violates applicable law, rules or regulations or an applicable interpretation of the staff of the SEC;
	•	an action or proceeding has been instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer;
	•	there has been proposed, adopted or enacted any law, rule or regulation that, in our reasonable judgment would impair materially our ability to consummate the exchange offer; or
	•	all governmental approvals which we deem necessary for the completion of the exchange offer have not been obtained.

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	•	refuse to accept any private notes and return all tendered private notes to you;
	•	extend the exchange offer and retain all private notes tendered before the exchange offer expires, subject, however, to your rights to withdraw the private notes; or
	•	waive the unsatisfied conditions with respect to the exchange offer and accept all properly tendered private notes that have not been withdrawn.

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	•	to a person whom the seller reasonably believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A under the Securities Act of 1933;
	•	in a transaction meeting the requirements of Rule 144 under the Securities Act of 1933;
	•	outside the United States to a foreign person in a transaction meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act of 1933;
	•	in accordance with another exemption from the registration requirements of the Securities Act of 1933 and based upon an opinion of counsel if we so request;
	•	to us; or
	•	pursuant to an effective registration statement.

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	(i) The Acquisitions; and
	(ii) The issuance of $480.0 million of Senior Notes due 2013 at an interest rate of 71/8% per annum in February 2005.

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				Historical(1)
																												Pro Forma				Pro Forma
				AREP				NEG								GB				Intercompany				Historical				Adjustments				Intercompany
				(Supplemental)(2)				Holding				Panaco				Holdings				Adjustments				Combined				Acquisitions(1)(2)				Adjustments(3)				Pro Forma
				(In thousands)
ASSETS
Current Assets
	Cash and cash equivalents			$	1,250,074			$	10,999			$	9,721			$	14,929			$				$	1,285,723			$	(180,000	)		$				$	1,105,723
	Investment in U.S. Government and Agency obligations				68,894																				68,894												68,894
	Marketable equity and debt securities				68,497																				68,497												68,497
	Due from brokers				147,223																				147,223												147,223
	Restricted cash				28,537																				28,537												28,537
	Receivables and other assets				52,567				19,992				25,642				16,421				(11,549	)			103,073												103,073
	Real estate leased to others under the financing method				3,740																				3,740												3,740
	Properties held for sale				33,995																				33,995												33,995
	Current portion of investment in debt securities of affiliates				5,429																(5,429	)			—												—
	Current portion of deferred tax asset				2,685								3,567												6,252												6,252
		Total current assets			1,661,641				30,991				38,930				31,350				(16,978	)			1,745,934				(180,000	)			—				1,565,934
	Investment in U.S. Government and Agency obligations				5,533																				5,533												5,533
	Other investments				244,602																				244,602				466,000				(466,000	)			244,602
	Land and construction-in- progress				106,000																				106,000												106,000
	Real estate leased to others:
	Accounted for under the financing method				75,949																				75,949												75,949
	Accounted for under the operating method, net				51,127																				51,127												51,127
	Oil and gas properties, net				180,241				245,216				96,319												521,776												521,776
Hotel, casino and resort operating properties, net:
	Hotel and Casino				288,890												168,237								457,127												457,127
	Hotel and resorts				46,041																				46,041												46,041
	Deferred finance costs and other assets				24,831				4,052				19,632				17,467								65,982												65,982
	Long-term portion of investment in debt securities of affiliates				91,864																(91,864	)			—												—
	Investment in NEG Holding LLC				97,693																(97,693	)			—												—
	Equity interest in GB Holdings, Inc.				9,138																(9,138	)			—												—
	Equity investment				—				2,170																2,170												2,170
	Deferred tax asset				52,147								21,340												73,487												73,487
		Total		$	2,935,697			$	282,429			$	176,221			$	217,054			$	(215,673	)		$	3,395,728			$	286,000			$	(466,000	)		$	3,215,728

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				Historical(1)
																												Pro Forma				Pro Forma
				AREP				NEG								GB				Intercompany				Historical				Adjustments				Intercompany
				(Supplemental)(2)				Holding				Panaco				Holdings				Adjustments				Combined				Acquisitions(1)(2)				Adjustments(3)				Pro Forma
				(In thousands)
LIABILITIES AND PARTNERS’/ SHAREHOLDERS’ EQUITY
Current Liabilities
	Current portion of mortgages payable			$	4,205			$				$				$				$				$	4,205			$				$				$	4,205
	Mortgages on properties held for sale				20,372																				20,372												20,372
	Due to affiliate				10,000																(10,000	)			—												—
	Line of credit				—												4,000								4,000												4,000
	Current portion note payable				—												43,741								43,741												43,741
	Current portion of long-term debt				—								5,429								(5,429	)			—												—
	Accounts payable and other liabilities				96,814				35,699				15,029				22,500				(207	)			169,835												169,835
	Securities sold not yet purchased				83,750																				83,750												83,750
		Total current liabilities			215,141				35,699				20,458				70,241				(15,636	)			325,903				—				—				325,903
	Other liabilities				28,133				13,782				2,258				5,881				(1,342	)			48,712												48,712
	Mortgages payable:
	Real estate leased to others				55,614																				55,614												55,614
	Senior secured notes payable and credit facility				215,000																				215,000												215,000
	Senior unsecured notes payable, net				350,679																				350,679												350,679
	Senior unsecured notes payable				480,000																				480,000												480,000
	Long-term debt, net of current portion				—				66,834				31,214				66,259				(95,138	)			69,169												69,169
	Asset retirement obligation				3,999				3,116				33,600												40,715												40,715
	Preferred limited partnership units				108,006																				108,006												108,006
		Total long-term liabilities			1,241,431				83,732				67,072				72,140				(96,480	)			1,367,895				—				—				1,367,895
	Warrants in Atlantic Coast Entertainment Holdings, Inc.				—												43,587				(43,587	)			—												—
Commitments and contingencies
Minority interests					—																16,808				16,808												16,808
Partners’/Shareholders Equity					’
	Limited partners equity				1,383,913																				1,383,913				466,000				(6,773	)			1,843,140
	General partner equity				107,133																				107,133								(433,230	)			(326,097	)
	Treasury units at cost				(11,921	)																			(11,921	)											(11,921	)
	Shareholders’ equity				—				162,998				88,691				31,086				(76,778	)			205,997				(180,000	)			(25,997	)			—
	Partners’/ Shareholders’ equity				1,479,125				162,998				88,691				31,086				(76,778	)			1,685,122				286,000				(466,000	)			1,505,122
		Total		$	2,935,697			$	282,429			$	176,221			$	217,054			$	(215,673	)		$	3,395,728			$	286,000			$	(466,000	)		$	3,215,728

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			Historical(1)
			AREP				NEG								GB				Intercompany				Historical				Debt
			(Supplemental)(2)				Holding				Panaco				Holdings				Adjustments				Combined				Offering(5)				Pro Forma
			(In thousands, except unit and per unit data)
Revenues:
	Hotel and casino operating income		$	82,838			$				$				$	39,965			$	(136	)		$	122,667			$				$	122,667
	Land, house and condominium sales			8,279																				8,279								8,279
	Interest income on financing leases			1,966																				1,966								1,966
	Interest income on U.S. Government and Agency obligations and other investments			12,902								132				107				(602	)			12,539								12,539
	Rental income			2,035																				2,035								2,035
	Hotel and resort operating income			5,563																				5,563								5,563
	Oil and gas operating income			15,422				25,490				12,707												53,619								53,619
	Accretion of investment in NEG Holding LLC			9,893																(9,893	)			—								—
	NEG management fee			2,108																(2,108	)			—								—
	Dividend and other income			4,206																				4,206								4,206
	Equity in losses of equity method investees			(986	)															986				—								—
				144,226				25,490				12,839				40,072				(11,753	)			210,874				—				210,874
Expenses:
	Hotel and casino operating expenses			57,624												37,468				(304	)			94,788								94,788
	Cost of land, house and condominium sales			7,047																				7,047								7,047
	Hotel and resort operating expenses			5,405																				5,405								5,405
	Oil and gas operating expenses			2,866				6,449				5,551								(2,108	)			12,758								12,758
	Interest expense			19,265				916				604				2,451				(1,074	)			22,162				3,575				25,737
	Depreciation, depletion and amortization			16,167				6,688				4,842				4,026								31,723								31,723
	General and administrative expenses			7,610																				7,610								7,610
	Property expenses			952																				952								952
				116,936				14,053				10,997				43,945				(3,486	)			182,445				3,575				186,020
	Operating income (loss)			27,290				11,437				1,842				(3,873	)			(8,267	)			28,429				(3,575	)			24,854
Other gains and (losses):
	Other losses			(180	)																			(180	)							(180	)
	Unrealized gains on securities sold short			21,704																				21,704								21,704
	Gain on sales and disposition of real estate and other assets			186												4								190								190
	Debt restructuring/ reorganization costs			—												(24	)							(24	)							(24	)
	Change in fair value of derivative contracts			(9,813	)			(22,620	)			(6,336	)											(38,769	)							(38,769	)
	Minority interest			—																932				932								932
	Income (loss) from continuing operations before income taxes			39,187				(11,183	)			(4,494	)			(3,893	)			(7,335	)			12,282				(3,575	)			8,707
	Income tax (expense) benefit			(4,782	)							1,624				(247	)							(3,405	)							(3,405	)
	Income (loss) from continuing operations		$	34,405			$	(11,183	)		$	(2,870	)		$	(4,140	)		$	(7,335	)		$	8,877			$	(3,575	)		$	5,302
Income from continuing operations attributable to:
	Limited partners		$	38,940																											$	10,416
	General partner			(4,535	)																											(5,114	)
			$	34,405																											$	5,302
Income from continuing operations per LP unit:
Basic earnings:
	Income from continuing operations per LP unit		$	0.84																											$	0.17
	Weighted average units outstanding			46,098,284																												62,167,250
Diluted earnings:
	Income from continuing operations per LP unit		$	0.81																											$	0.17
	Weighted average units and equivalent partnership units outstanding			49,857,622																												62,167,250

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																							Other Pro Forma Adjustments
																											Panaco
			Historical(1)																								Intercompany
																											and
			AREP				NEG				GB				Intercompany				Historical								Bankruptcy				Debt				Prior Debt
			(Supplemental)(2)				Holding				Holdings				Adjustments				Combined				Panaco(1)				Adjustment(4)				Offering(5)				Offering(6)				Pro Forma
			(In thousands, except unit and per unit data)
Revenues:
	Hotel and casino operating income		$	299,981			$				$	171,243			$	(359	)		$	470,865			$				$				$				$				$	470,865
	Land, house and condominium sales			26,591																26,591																				26,591
	Interest income on financing leases			9,880																9,880																				9,880
	Interest income on U.S. Government and Agency obligations and other investments			44,376				449				422				(156	)			45,091				684				(684	)											45,091
	Rental income			7,916																7,916																				7,916
	Hotel and resort operating income			16,211																16,211																				16,211
	Accretion of investment in NEG Holding LLC			34,432												(34,432	)			—																				—
	NEG management fee			6,887												(6,887	)			—																				—
	Dividend and other income			3,616																3,616				48																3,664
	Equity in losses of equity method investees			(2,113	)			(519	)							2,113				(519	)																			(519	)
	Oil and gas operating income			58,419				78,727												137,146				51,234																188,380
				506,196				78,657				171,665				(39,721	)			716,797				51,966				(684	)			—				—				768,079
Expenses:
	Hotel and casino operating expenses			227,603								154,252				(639	)			381,216																				381,216
	Cost of land, house and condominium sales			18,486																18,486																				18,486
	Hotel and resort operating expenses			12,730																12,730																				12,730
	Interest expense			49,669				2,716				11,115				(4,754	)			58,746				2,517				(2,321	)			35,263				12,285				106,490
	Depreciation, depletion and amortization			68,291				21,647				14,898								104,836				25,965																130,801
	General and administrative expenses			20,952																20,952																				20,952
	Property expenses			4,340																4,340																				4,340
	Oil and gas operating expenses			13,816				25,172								(6,162	)			32,826				18,095				(725	)											50,196
	Provision for loss on real estate			3,150																3,150																				3,150
				419,037				49,535				180,265				(11,555	)			637,282				46,577				(3,046	)			35,263				12,285				728,361
	Operating income (loss)			87,159				29,122				(8,600	)			(28,166	)			79,515				5,389				2,362				(35,263	)			(12,285	)			39,718
Other gains and (losses):
	Gain on sale of other assets			1,680																1,680																				1,680
	Gain on sale of marketable equity and debt securities and other investments			40,159																40,159																				40,159
	Unrealized losses on securities sold short			(23,619	)															(23,619	)																			(23,619	)
	Impairment loss on equity interest in GB Holdings, Inc.			(15,600	)															(15,600	)																			(15,600	)
	Gain on retirement/ restructuring of debt			—																—				51,268				(51,268	)											—
	Gain on restructuring of payables			—																—				12,495				(12,495	)											—
	Gain (loss) on sale and disposition of real estate and other assets			5,262								(152	)							5,110				(76	)															5,034
	Severance tax refund			4,468																4,468																				4,468
	Debt restructuring/ reorganization costs			—								(3,084	)							(3,084	)			(7,355	)			7,355												(3,084	)
	Minority interest			(812	)											2,886				2,074																				2,074

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																							Other Pro Forma Adjustments
																											Panaco
			Historical(1)																								Intercompany
																											and
			AREP				NEG				GB				Intercompany				Historical								Bankruptcy				Debt				Prior Debt
			(Supplemental)(2)				Holding				Holdings				Adjustments				Combined				Panaco(1)				Adjustment(4)				Offering(5)				Offering(6)				Pro Forma
			(In thousands, except unit and per unit data)
	Income (loss) from continuing operations before income taxes			98,697				29,122				(11,836	)			(25,280	)			90,703				61,721				(54,046	)			(35,263	)			(12,285	)			50,830
	Income tax (expense) benefit			(17,326	)							(986	)							(18,312	)			22,877																4,565
	Income (loss) from continuing operations		$	81,371			$	29,122			$	(12,822	)		$	(25,280	)		$	72,391			$	84,598			$	(54,046	)		$	(35,263	)		$	(12,285	)		$	55,395
Income from continuing operations attributable to:
	Limited partners		$	71,456																																			$	45,997
	General partner			9,915																																				9,398
			$	81,371																																			$	55,395
Income from continuing operations per LP unit:
Basic earnings:
	Income from continuing operations per LP unit		$	1.55																																			$	0.74
	Weighted average units outstanding			46,098,284																																				62,167,250
Diluted earnings:
	Income from continuing operations per LP unit		$	1.48																																			$	0.74
	Weighted average units and equivalent partnership units outstanding			51,542,312																																				62,167,250

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			Historical(1)
			AREP				NEG								Intercompany				Historical
			(Supplemental)(2)				Holding				GB Holdings				Adjustments				Combined
			(In $000’s)
Revenues:
	Hotel and casino operating income		$	262,811			$				$	167,749			$	(191	)		$	430,369
	Land, house and condominium sales			13,265																13,265
	Interest income on financing leases			13,115																13,115
	Interest income on U.S. Government and Agency																			—
	obligations and other investments			22,592				587				627				(115	)			23,691
	Rental income			7,092																7,092
	Hotel and resort operating income			12,376																12,376
	Accretion of investment in NEG Holding LLC			30,142												(30,142	)			—
	NEG management fee			6,629												(6,629	)			—
	Dividend and other income			3,211				125												3,336
	Equity in losses of equity method investees			(3,466	)			(102	)							3,466				(102	)
	Oil and gas operating income			20,899				77,606												98,505
				388,666				78,216				168,376				(33,611	)			601,647
Expenses:
	Hotel and casino operating expenses			216,857								156,556				(191	)			373,222
	Cost of land, house and condominium sales			9,129																9,129
	Hotel and resort operating expenses			8,773																8,773
	Interest expense			27,057				1,538				12,581				(7,147	)			34,029
	Depreciation, depletion and amortization			40,571				23,686				14,123								78,380
	General and administrative expenses			14,081																14,081
	Property expenses			4,472																4,472
	Oil and gas operating expenses			5,028				23,080								(6,629	)			21,479
	Provision for loss on real estate			750																750
				326,718				48,304				183,260				(13,967	)			544,315
	Operating income (loss)			61,948				29,912				(14,884	)			(19,644	)			57,332
Other gains and (losses):
	Gain (loss) on sale of marketable equity and debt securities and other investments			2,607				(954	)											1,653
	Loss on sale of other assets			(1,503	)							(28	)							(1,531	)
	Write-down of equity securities available for sale			(19,759	)															(19,759	)
	Gain on sale and disposition of real estate			7,121																7,121
	Debt restructuring/reorganization costs			—								(1,843	)							(1,843	)
	Minority interest			(1,266	)											3,987				2,721
	Income (loss) from continuing operations before income taxes			49,148				28,958				(16,755	)			(15,657	)			45,694
	Income tax benefit (expense)			16,750								(958	)							15,792
	Income (loss) from continuing operations		$	65,898			$	28,958			$	(17,713	)		$	(15,657	)		$	61,486
Income from continuing operations attributable to:
	Limited partners		$	48,573															$	44,249
	General partner			17,325																17,237
			$	65,898															$	61,486
Income from continuing operations per LP unit:
Basic earnings:
	Income from continuing operations per LP unit		$	1.00															$	0.72
	Weighted average units outstanding			46,098,284																57,856,905
Diluted earnings:
	Income from continuing operations per LP unit		$	0.94															$	0.70
	Weighted average units and equivalent partnership units outstanding			54,489,943																66,248,564

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				Historical(1)
																Intercompany				Historical
				AREP				NEG Holding				GB Holdings				Adjustments				Combined
				(In thousands)
Revenues:
	Hotel and casino operating income			$	250,023			$				$	$189,917			$	(28	)			439,912
	Land, house and condominium sales				76,024																76,024
	Interest income on financing leases				14,722																14,722
	Interest income on U.S. Government and Agency obligations and other investments				30,569				1,791				1,067				(546	)			32,881
	Rental income				6,852																6,852
	Hotel and resort operating income				12,921																12,921
	Accretion of investment in NEG Holding LLC				32,879												(32,879	)			—
	NEG management fee				7,637												(7,637	)			—
	Dividend and other income				2,720				175												2,895
	Equity in earnings of equity method investees				305												(305	)			—
	Oil and gas operating income				—				35,901												35,901
					434,652				37,867				190,984				(41,395	)			622,108
Expenses:
	Hotel and casino operating expenses				217,938								170,567				(28	)			388,477
	Cost of land, house and condominium sales				54,640																54,640
	Hotel and resort operating expenses				10,536																10,536
	Interest expense				27,297				96				12,195				(7,578	)			32,010
	Depreciation, depletion and amortization				23,646				15,509				13,292								52,447
	General and administrative expenses				14,134																14,134
	Property expenses				3,862																3,862
	Oil and gas operating expenses				—				16,556								(7,637	)			8,919
	Provision for loss on real estate				3,212																3,212
	Loss on impairment of fixed assets				—								1,282								1,282
					355,265				32,161				197,336				(15,243	)			569,519
	Operating income(loss)				79,387				5,706				(6,352	)			(26,152	)			52,589
Other gains and (losses):
	Gain on sale of marketable equity and debt securities and other investments				—				8,712												8,712
	Loss on sale of other assets				(353	)							(185	)							(538	)
	Write-down of equity securities available for sale				(8,476	)															(8,476	)
	Gain on sale and disposition of real estate				8,990																8,990
	Unrealized loss on financial instruments/short sale				—				(347	)											(347	)
	Loss on limited partnership interests				(3,750	)															(3,750	)
	Dividend expense				—				(145	)											(145	)
	Minority interest				(1,943	)											1,648				(295	)
	Income(loss) from continuing operations before income taxes				73,855				13,926				(6,537	)			(24,504	)			56,740
	Income tax expense				(10,096	)							(784	)							(10,880	)
	Income(loss) from continuing operations			$	63,759			$	13,926			$	(7,321	)		$	(24,504	)		$	45,860
Income(loss) from continuing operations attributable to:
	Limited partners			$	56,369															$	38,826
	General partner				7,390																7,034
				$	63,759															$	45,860
Income(loss) from continuing operations per LP unit:
Basic earnings:
	Income from continuing operations			$	1.12															$	0.59
	Weighted average units outstanding				46,098,284																57,856,905
Diluted earnings:
		Income(loss) from continuing operations per LP unit		$	1.00															$	0.57
	Weighted average units and equivalent partnership units outstanding				56,466,698																68,225,319

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	•	The membership interest in NEG Holding for 11,344,828 Depositary Units valued at $329.0 million.
	•	100% of the equity of Panaco for 4,310,345 Depositary Units valued at $125.0 million.
	•	Approximately 41.2% of the outstanding common stock of GB Holdings and approximately 11.3% of the fully diluted common stock of Atlantic Holdings for 413,793 Depositary Units valued at $12.0 million, plus 206,897 units valued at $6.0 million if certain earnings targets are met during 2005 and 2006.

(a)	Pro Forma Condensed Consolidated Balance Sheet at March 31, 2005

	•	The elimination of AREP’s $97.7 million investment in NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of AREP’s $9.1 million equity interest in GB Holdings, since GB Holdings is now consolidated.
	•	The elimination of AREP’s $63.9 million investment in the Atlantic Holdings 3% Notes due 2008 or the Atlantic Holdings Notes, and the elimination of the corresponding debt of Atlantic Holdings.
	•	The elimination of $2.2 million of deferred consent fees for both AREP and GB Holdings related to AREP’s consent, in July 2004, to an exchange of GB Holdings 11% notes due 2005 for the Atlantic Holdings Notes.
	•	The elimination of AREP’s share of warrants in Atlantic Holdings, valued at $33.8 million. The warrants owned by AREP after the Acquisitions represent approximately 77.5% of the outstanding warrants. The remaining approximate 22.5% of the warrants in Atlantic Holdings, valued at $9.8 million, have been reclassified to minority interests.
	•	The recording of the minority interest in GB Holdings of $7.0 million.
	•	The elimination of AREP’s $36.6 million investment in the outstanding term loans of Panaco, Inc., or the Panaco Debt, plus accrued interest and the elimination of the corresponding debt of Panaco.
	•	The elimination of a $10.0 million receivable/payable between AREP and Panaco.

(b)	Pro Forma Condensed Consolidated Statement of Earnings for the Three Months Ended March 31, 2005

	•	The elimination of AREP’s $9.9 million accretion of investment in NEG Holding, since NEG Holding is now consolidated.

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	•	The elimination of AREP’s $1.0 million equity in losses of GB Holdings, since GB Holdings is now consolidated.
	•	The elimination of AREP’s $2.1 million management fee from NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of a $0.1 million administrative charge between ACEP and GB Holdings.
	•	The elimination of $0.2 million of amortization of deferred consent fees between AREP and GB Holdings.
	•	The elimination of $0.5 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates.
	•	The recording of a credit to minority interest expense on GB Holdings of $0.9 million.
	•	The elimination of $0.6 million of interest expense/income recorded by Panaco/ AREP on the term loans of Panaco.

(c)	Pro Forma Condensed Consolidated Statement of Earnings for the Year Ended December 31, 2004

	•	The elimination of AREP’s $34.4 million accretion of investment in NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of AREP’s $2.1 million equity in losses of GB Holdings, since GB Holdings is now consolidated.
	•	The elimination of AREP’s $6.2 million management fee from NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of a $0.3 million administrative charge between ACEP and GB Holdings.
	•	The elimination of $0.3 million of amortization of deferred consent fees between AREP and GB Holdings.
	•	The elimination of $4.8 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates.
	•	The recording of a credit to minority interest expense on GB Holdings of $2.9 million.

(d)	Pro Forma Condensed Consolidated Statement of Earnings for the Year Ended December 31, 2003

	•	The elimination of AREP’s $30.1 million accretion of investment in NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of AREP’s $3.5 million equity in losses of GB Holdings, since GB Holdings is now consolidated.
	•	The elimination of AREP’s $6.6 million management fee from NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of a $0.2 million administrative charge between ACEP, a consolidated subsidiary of AREP and GB Holdings.
	•	The elimination of $0.1 million of interest income and expense between NEG Holding and NEG, Inc., a consolidated subsidiary of AREP.
	•	The elimination of $7.0 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates.
	•	The recording of a credit to minority interest expense on GB Holdings of $4.0 million, representing 22.5% of the loss of GB Holdings.

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	•	The elimination of AREP’s $32.9 million accretion of investment in NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of AREP’s $0.3 million equity in earnings of GB Holdings, since GB Holdings is now consolidated.
	•	The elimination of AREP’s $7.6 million management fee from NEG Holding, since NEG Holding is now consolidated.
	•	The elimination of $0.5 million of interest income and expense between NEG Holding and NEG.
	•	The elimination of $7.0 million of related party interest expense paid by GB Holdings to Mr. Icahn and affiliates.
	•	The recording of a debit to minority interest on GB Holdings of $2.9 million, representing 22.5% of the loss of GB Holdings.

	Pro Forma Condensed Consolidated Balance Sheet at March 31, 2005

	•	The elimination of AREP’s $466 million pro forma investment in the Acquisitions.
	•	The allocation of the change in equity as a result of the transaction between the general partner and the limited partners.

	•	The reduction of interest expense and interest income that results from the effect of its bankruptcy.
	•	The elimination of related party interest expense following emergence from bankruptcy in November 2004.
	•	The elimination of $0.7 million management fee paid to AREP, following emergence from bankruptcy.
	•	The elimination of $51.3 million of gain on retirement/restructuring of debt, $12.5 million gain on restructuring of payables and $7.4 million debt restructuring/reorganization costs related to the emergence from bankruptcy.

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			Three Months Ended
			March 31,								Year Ended December 31,
			2005				2004				2004				2003				2002				2001				2000
			(In $000’s, except per unit amounts)
Total revenues			$	130,623			$	102,219			$	452,012			$	368,946			$	434,652			$	414,545			$	378,179
Operating income			$	25,670			$	24,142			$	88,837			$	68,979			$	79,387			$	63,938			$	66,356
Other gains (losses):
	Gain on sale of marketable equity and debt securities			—				28,857				40,159				2,607				—				6,749				—
	Unrealized gains (losses) on securities sold short			21,704				—				(23,619	)			—				—				—				—
	Impairment loss on equity interest in GB Holdings, Inc.			—				—				(15,600	)			—				—				—				—
	(Loss) gain on sale of other assets			(180	)			(4	)			—				(1,503	)			(353	)			27				—
	Gain on sales and disposition of real estate			186				6,047				5,262				7,121				8,990				1,737				6,763
	Write-down of marketable equity and debt securities and other investments			—				—				—				(19,759	)			(8,476	)			—				—
	(Loss) gain on limited partnership interests			—				—				—				—				(3,750	)			—				3,461
	Minority interest			—				—				—				—				(1,943	)			(450	)			(2,747	)
Income from continuing operations before income taxes				47,380				59,042				95,039				57,445				73,855				72,001				73,833
Income tax (expense) benefit				(7,650	)			(6,169	)			(16,763	)			1,573				(10,096	)			25,664				379
Income from continuing operations				39,730				52,873				78,276				59,018				63,759				97,655				74,212
Discontinued operations:
	Income from discontinued operations			957				3,218				7,500				7,653				6,937				7,944				6,260
	Gain on sales and disposition of real estate			18,723				6,929				75,197				3,353				—				—				—
Total income from discontinued operations				19,680				10,147				82,697				11,006				6,937				7,944				6,260
Net earnings			$	59,410			$	63,020			$	160,973			$	70,024			$	70,696			$	105,609			$	80,472
Net Earnings Attributable to:
	Limited partners		$	58,228			$	57,608			$	152,507			$	59,360			$	63,168			$	66,190			$	72,225
	General partner			1,182				5,412				8,466				10,664				7,528				39,419				8,247
Net earnings			$	59,410			$	63,020			$	160,973			$	70,024			$	70,696			$	105,609			$	80,472

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				Three Months Ended
				March 31,								Year Ended December 31,
				2005				2004				2004				2003				2002(1)				2001(1)				2000(1)
				(In $000’s except per unit amounts)
Net earnings per limited partnership unit:
	Basic earnings:
		Income from continuing operations		$	0.84			$	1.03			$	1.55			$	1.00			$	1.12			$	1.17			$	1.35
		Income from discontinued operations			0.42				0.22				1.76				0.24				0.15				0.17				0.13
	Basic earnings per LP Unit			$	1.26			$	1.25			$	3.31			$	1.24			$	1.27			$	1.34			$	1.48
Weighted average limited partnership units outstanding					46,098,284				46,098,284				46,098,284				46,098,284				46,098,284				46,098,284				46,098,284
	Diluted earnings:
		Income from continuing operations		$	0.81			$	0.93			$	1.48			$	0.94			$	1.00			$	1.05			$	1.18
		Income from discontinued operations			0.39				0.19				1.57				0.19				0.12				0.14				0.11
	Diluted earnings per LP Unit			$	1.20			$	1.12			$	3.05			$	1.13			$	1.12			$	1.19			$	1.29
Weighted average limited partnership units and equivalent partnership units outstanding					49,857,622				52,499,303				51,542,312				54,489,943				56,466,698				55,599,112				56,157,079
Other financial data:
Capital expenditures (excluding property acquisitions)				$	4,781			$	1,658			$	16,221			$	33,324			$	21,896			$	68,199			$	52,598

						At December 31,
		At March 31,
		2005				2004				2003				2002(1)				2001(1)				2000(1)
		(In $000’s)
Balance Sheet Data:
Cash and cash equivalents		$	1,245,762			$	762,708			$	487,498			$	79,540			$	83,975			$	172,621
Hotel, casino and resort operating properties			334,931				339,492				340,229				335,121				339,201				264,566
Investment in U.S. Government and Agency obligations			5,533				102,331				61,573				336,051				313,641				475,267
Other investments			244,602				245,948				50,328				54,216				10,529				4,289
Total assets			2,775,685				2,263,057				1,646,606				1,706,031				1,721,100				1,566,597
Mortgages payable			4,205				91,896				180,989				171,848				166,808				182,049
Senior secured notes payable — 7.85%			215,000				215,000				—				—				—				—
Senior unsecured notes payable — 8 1/8%			830,679				350,598				—				—				—				—
Senior unsecured notes payable — 7 1/8%			480,000				—				—				—				—				—
Liability for preferred limited partnership units(1)			108,006				106,731				101,649				—				—				—
Partners’ equity		$	1,360,142			$	1,303,126			$	1,270,214			$	1,245,437			$	1,136,452			$	1,154,400

(1)

On July 1, 2003, we adopted Statement of Financial Accounting Standards No. 150 (SFAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 requires that a financial instrument, which is an unconditional obligation, be classified as a liability. Previous guidance required an entity to include in equity financial instruments that the entity could redeem in either cash or stock. Pursuant to SFAS 150, our preferred units, which are an unconditional obligation, have been reclassified from “Partners’ equity” to a liability account in the consolidated balance sheets and the preferred pay-in-kind distribution for the period from July 1, 2003 to December 31, 2003 of $2.4 million and all future distributions have been and will be recorded as “Interest expense” in the consolidated statements of earnings.

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			Three Months Ended March 31,												Year Ended December 31,
			2005				2004				2005				2004				2004				2003				2003				2002
			(Supplemental)				(Supplemental)				(Pro Forma)				(Supplemental)				(Pro Forma)				(Supplemental)				(Pro Forma)				(Pro Forma)
			(In $000’s, except per unit amounts)
Total revenues			$	144,226			$	116,452			$	210,874			$	506,196			$	768,079			$	388,666			$	601,647			$	622,108
Operating income			$	27,290			$	22,533			$	24,854			$	87,159			$	39,718			$	61,948			$	57,332			$	52,589
Other gains (losses):
	Gain on sale of marketable equity and debt securities			—				28,857				—				40,159				40,159				2,607				1,653				8,712
	Unrealized gains (losses) on securities sold short			21,704				—				21,704				(23,619	)			(23,619	)			—				—				(347	)
	Change in fair market value of derivative contract			(9,813	)			—				(38,769	)			—				—				—				—				—
	Impairment loss on equity interest in GB Holdings, Inc.			—				—				—				(15,600	)			(15,600	)			—				—				—
	(Loss) gain on sale of other assets			(180	)			(4	)			(180	)			1,680				1,680				(1,503	)			(1,531	)			(538	)
	Gain on sales and disposition of real estate			186				6,047				190				5,262				5,034				7,121				7,121				8,990
	Write-down of marketable equity and debt securities and other investments			—				—				—				—				—				(19,759	)			(19,759	)			(8,476	)
	Loss on limited partnership interests			—				—				—				—				—				—				—				(3,750	)
	Debt restructuring/ reorganization costs			—				—				(24	)			—				(3,084	)			—				(1,843	)			—
	Severance tax refund			—				—				—				4,468				4,468				—				—				—
	Dividend expense			—				—				—				—				—				—				—				(145	)
	Minority interest			—				(39	)			932				(812	)			2,074				(1,266	)			2,721				(295	)
Income from continuing operations before income taxes				39,187				57,394				8,707				98,697				50,830				49,148				45,694				56,740
Income tax (expense) benefit				(4,782	)			(5,966	)			(3,405	)			(17,326	)			4,565				16,750				15,792				(10,880	)
Income from continuing operations			$	34,405			$	51,428			$	5,302			$	81,371			$	55,395			$	65,898			$	61,486			$	45,860

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				Three Months Ended March 31,												Year Ended December 31,
				2005				2004				2005				2004				2004				2003				2003				2002
				(Supplemental)				(Supplemental)				(Pro Forma)				(Supplemental)				(Pro Forma)				(Supplemental)				(Pro Forma)				(Pro Forma)
				(In $000’s, except per unit amounts)
	Discontinued operations:
		Income from discontinued operations			957				3,218								7,500								7,653
		Gain on sales and disposition of real estate			18,723				6,929								75,197								3,353
Total income from discontinued operations					19,680				10,147								82,697								11,006
Net earnings				$	54,085			$	61,575							$	164,068							$	76,904
Net earnings attributable to:
	Limited partners			$	58,228			$	57,608							$	152,507							$	59,360
	General partner				(4,143	)			3,967								11,561								17,544
Net earnings				$	54,085			$	61,575							$	164,068							$	76,904
Net earnings per limited partnership unit:
	Basic earnings:
		Income from continuing operations		$	0.84			$	1.03			$	0.17			$	1.55			$	0.74			$	1.00			$	0.72			$	0.59
		Income from discontinued operations			0.42				0.22								1.76								0.24
		Basic earnings per LP unit		$	1.26			$	1.25							$	3.31							$	1.24
Weighted average limited partnership units outstanding					46,098,284				46,098,284				62,167,250				46,098,284				62,167,250				46,098,284				57,856,905				57,856,905
	Diluted earnings:
		Income from continuing operations		$	0.81			$	0.93			$	0.17			$	1.48			$	0.74			$	0.94			$	0.70			$	0.57
		Income from discontinued operations			0.39				0.19								1.57								0.19
	Diluted earnings per LP unit			$	1.20			$	1.12							$	3.05							$	1.13
Weighted average limited partnership units outstanding					49,857,622				52,499,303				62,167,250				51,542,312				62,167,250				54,489,942				66,248,564				68,225,319
Other financial data:
	Capital expenditures (excluding property acquisitions)			$	25,852			$	6,106							$	63,749			$	150,854			$	33,957			$	86,841			$	60,776
	Book value per unit															$	30.97			$	23.76

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			At March 31,								At December 31,
			2005				2005 (Pro				2004				2004 (Pro				2003
			(Supplemental)				Forma)				(Supplemental)				Forma)				(Supplemental)
			(In $000’s)
Balance Sheet Data:
	Cash and cash equivalents		$	1,250,074			$	1,105,723			$	768,918			$	1,097,810			$	504,369
	Hotel, casino and resort operating properties			334,931				503,168				339,492				511,132				340,229
	Oil and gas properties			180,241				521,776				168,136				506,900				168,921
	Investment in U.S. Government and Agency Obligations			74,427				74,427				102,331				102,331				61,573
	Other investments			244,602				244,602				245,948				245,948				50,328
	Total assets			2,935,697				3,215,728				2,408,189				3,179,167				1,831,573
	Mortgages payable			80,191				80,191				91,896				91,896				180,989
	Senior secured note payable 7.85% due 2012			215,000				215,000				215,000				215,000				—
	Senior unsecured notes payable 81/8% due 2012			350,679				350,679				350,598				830,598				—
	Senior unsecured notes payable 71/8% due 2013			480,000				480,000				—				—				—
	Liability for preferred limited partnership units			108,006				108,006				106,731				106,731				101,649
	Partner’s equity			1,479,125				1,505,122				1,427,435				1,477,355				1,393,347
	Capital Expenditures:
	As reported		$	25,852				N/A			$	63,750			$	63,750			$	33,957
	Panaco			N/A				N/A				1,994				N/A				N/A
	GB Holdings, Inc.			N/A				N/A				17,378				N/A				N/A
	NEG Holding			N/A				N/A				67,732				N/A				N/A
			$	25,852				N/A			$	63,750			$	150,854			$	33,957

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	Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

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			Less Than												After
			1 Year				1-3 Years				3-5 Years				5 Years				Total
Mortgages payable			$	4.2			$	8.9			$	29.3			$	37.8			$	80.2
Acquisition of TransTexas				180.0				—				—				—				180.0
Senior secured notes payable				—				—				—				215.0				215.0
Senior unsecured notes payable				—				—				—				833.0				833.0
Senior debt interest				78.3				159.5				159.5				211.3				608.6
Construction and development obligations				44.5				15.8				—				—				60.3
	Total		$	307.0			$	184.2			$	188.8			$	1,297.1			$	1,977.1

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	Distributions

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	Cash and Cash Equivalents

	Acquisitions

	•	$27.5 million aggregate principal amount of term notes issued by TransTexas, or the TransTexas Notes, for $28.2 million in cash, which included $0.7 million of accrued interest through December 6, 2004;
	•	All of the membership interests of Mid River, the assets of which consist of $38.0 million principal amount of term loans outstanding under the term loan and security agreement, dated as of November 16, 2004, among Panaco, as borrower, the lenders (as defined therein) and Mid River as administrative agent, or the Panaco Debt, and $0.1 million of accrued interest, through December 6, 2004, for $38.1 million in cash; and

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	•	$37.0 million principal amount of 3% notes due 2008 issued by Atlantic Coast Entertainment Holdings LLC, or Atlantic Holdings, or the Atlantic Holdings Notes, for $36.0 million in cash.

	Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of

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	Commitments and Contingencies — Litigation

	Marketable Equity and Debt Securities and Investment in U.S. Government and Agency Obligations

	Mortgages and Notes Receivable

	Revenue Recognition

	Casino Revenues and Promotional Allowances

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	Natural Gas Production Imbalances

	Hedging Agreements

	Oil and Natural Gas Properties

	Accounting for Asset Retirement Obligations

	Income Taxes

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	Properties

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	•	American Casino & Entertainment Properties LLC. On May 26, 2004, our subsidiary, American Casino & Entertainment Properties LLC, or ACEP, acquired two Las Vegas hotels and casinos, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder for aggregate consideration of $125.9 million. At that date, AREH transferred 100% of the common stock of Stratosphere Corporation, which owns and operates the Stratosphere Hotel in Las Vegas, Nevada, to ACEP.
	•	Grand Harbor and Oak Harbor. In July 2004, we acquired Grand Harbor and Oak Harbor, two waterfront communities in Vero Beach, Florida. The communities include three golf courses, a tennis complex, fitness center, beach club and an assisted living facility. In addition, we acquired approximately 400 acres of land to the north of Grand Harbor which currently has entitlements to build approximately 600 homes and an 18 hole golf course. The total purchase price was approximately $75.0 million.
	•	NEG Holding LLC. We currently own 50.01% of the outstanding common stock of NEG, and all of its approximately $148.6 million aggregate principal amount of notes. NEG owns a membership interest in NEG Holding LLC. NEG Holding owns 100% of NEG Operating LLC, an oil and gas exploration and production company. We have entered into an agreement to acquire the other membership interest in NEG Holding for an aggregate of up to 11,344,828 of depositary units, valued at $29.00 per unit, or an aggregate of up to $329 million. The number of depositary units is subject to reduction based upon NEG Holding’s oil and gas reserve reports, as of January 21, 2005, to be prepared by an independent reserve engineering firm.
	•	TransTexas Gas Corporation. On December 6, 2004, we purchased $27.5 million aggregate principal amount of term notes issued by TransTexas, or the TransTexas Notes, which constitutes 100% of the outstanding term notes of TransTexas. On April 6, 2005, we completed the acquisition of 100% of the equity of TransTexas, an oil and gas exploration and production company, for a purchase price of $180.0 million in cash.
	•	Panaco, Inc. On December 6, 2004, we purchased $38.0 million aggregate principal amount of term loans issued by Panaco, which constitutes 100% of the outstanding term loans of Panaco, or the Panaco Debt. We have entered into an agreement to acquire 100% of the equity of Panaco, an oil and gas exploration and production company, for up to 4,310,345 depositary units, valued at $29.00 per unit, or an aggregate of up to $125.0 million.
	•	GB Holdings, Inc. We currently own approximately 36.3% of the outstanding common stock of GB Holdings. On December 27, 2004, we purchased $37.0 million principal amount of the 3% notes due September 2008 issued by GB Holdings’ subsidiary, Atlantic Holdings, bringing our ownership of that debt to approximately $63.9 million principal amount, or approximately 96.4% of the principal amount outstanding. The notes may be paid in full, at the option of the holders of a majority of their principal amount, with common stock of Atlantic Holdings. Atlantic Holdings owns 100% of ACE Gaming LLC, the owner and operator of The Sands Hotel and Casino located in Atlantic City, New Jersey. We have entered into an agreement to acquire an additional approximate 41.2% of the outstanding

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		common stock of GB Holdings and approximately 11.3% of the fully diluted common stock of Atlantic Holdings for an aggregate of 413,793 depositary units, valued at $29.00 per unit, or an aggregate of $12.0 million plus up to an additional 206,897 depositary units, valued at $29.00 per unit, or an additional $6.0 million, if Atlantic Holdings meets certain earnings targets during 2005 and 2006. On May 17, 2005, we (1) converted $28.8 million in principal amount of the Atlantic Holdings Notes into 1,898,181 shares of Atlantic Holdings common stock and (2) exercised warrants to acquire 997,620 shares of Atlantic Holdings common stock. Also on May 17, 2005, affiliates of Mr. Icahn exercised warrants to acquire 1,133,283 shares of Atlantic Holdings common stock. As a result of these transactions AREP and the affiliates of Mr. Icahn collectively own approximately 58.3% of the outstanding common stock of Atlantic Holding. Upon completion of this acquisition, we will own approximately 77.5% of the outstanding GB Holdings common stock and approximately 58.3% of the common stock of Atlantic Holdings.

	Oil and Gas

	NEG Holding LLC

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	Panaco, Inc.

	Gaming and Entertainment

	GB Holdings, Inc. (The Sands)

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	Unitholder Approval

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	Stratosphere

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	Arizona Charlie’s Decatur

	Arizona Charlie’s Boulder

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	The Sands Hotel and Casino

	•	The indenture for the 11% secured notes due September 2005 was amended to remove certain provisions and covenants and release the liens on The Sands Hotel and Casino’s assets that secured the notes;
	•	The Sands Hotel and Casino’s assets were transferred to a wholly-owned subsidiary of Atlantic Holdings, ACE Gaming; and
	•	The 3% notes due September 2008 were secured by a pledge of all of the assets of ACE Gaming, including The Sands Hotel and Casino.

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	National Energy Group, Inc.

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				Oil (including
				Natural Gas								Natural Gas
				Liquids)				Natural Gas				Equivalent
				(MBbls)				(MMcf)				(MMcfe)				% of Total
Area:
	Eagle Bay				2,210				8,909				22,166				37.4	%
	Southwest Bonus				264				12,994				14,579				24.6
	Other Areas				44				22,209				22,475				38.0
		Total			2,518				44,112				59,220				100.0	%

				Oil (including
				Natural Gas								Natural Gas
				Liquids)				Natural Gas				Equivalent
				(MBbls)				(MMcf)				(MMcfe)				% of Total
Area:
	Eagle Bay				869				3,122				8,336				73.8	%
	Southwest Bonus				44				2,143				2,407				21.3
	Other Areas				6				523				559				4.9
		Total			919				5,788				11,302				100.0	%

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			Oil (including
			Natural Gas								Natural Gas
			Liquids)				Natural Gas				Equivalent
			(in MBbls)				(in MMcf)				(MMcfe)				PV 10%
															(in thousands)
Proved Developed Reserves				2,411				26,179				40,645			$	143,750
Proved Undeveloped Reserves				107				17,933				18,575				21,397
	Total Proved Reserves			2,518				44,112				59,220			$	165,147

			Year Ended								Year Ended
			January 31,								December 31,
			2002				2003				2003				2004
Production:
	Natural Gas (MMcf)			22.5				10.7				6.5				5.8
	Natural Gas Liquids (MMgals)			40.1				31.3				12.7				13.1
	Condensate and oil (MBbls)			1,286.0				860.0				454.0				370.0
Average sales prices:
	Gas (dry) (per Mcf)		$	3.89			$	3.38			$	5.03				5.33
	Natural Gas Liquids (per gallon)			0.36				0.33				0.50				.64
	Condensate and oil (per Bbl)			23.63				25.93				31.12				31.21
Average lifting cost per Mcfe(1)				0.49				0.59				0.61				.58

(1)	Condensate and oil are converted to a common unit of measure on the basis of six Mcf of natural gas to one barrel of condensate or oil. The components of production costs may vary substantially among wells depending on the methods of recovery employed and other factors.

				Oil								Natural Gas								Total
				Gross				Net				Gross				Net				Gross				Net
Area:
	Eagle Bay				1				.75				7				5.25				8				6.0
	Southwest Bonus				0				0				23				21.00				23				21.0
	Other areas				3				.42				11				7.98				14				8.40
		Total			4				1.17				41				34.23				45				35.40

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	Leasehold Acreage

												Undeveloped
				Developed Acreage								Acreage
				Gross				Net				Gross				Net
Area:
	Eagle Bay				3,231				2,412				6,227				3,799
	Southwest Bonus				4,434				4,300				529				352
	Other areas				7,825				5,532				28,744				22,069
		Total			15,490				12,244				35,500				26,220

	Drilling Activity

				Year Ended January 31,																Eleven Months
																				Ended								Year Ended
																				December 31,								December 31,
				2002								2003								2003								2004
				Gross				Net				Net				Gross				Net				Gross				Net				Gross
Exploratory Wells(1):
	Productive(2)				1				1				—				—				0				0				4.55				5
	Non-Productive				1				1				—				—				0				0				.79				3
		Total			2				2				—				—				0				0				5.34				8
Development Wells(1):
	Productive(2)				12				11				—				—				1.4				2				1				1
	Non-Productive				1				1				—				—				0				0				0				0
		Total			13				12				—				—				1.4				2				1				1

(1)	The number of net wells is the sum of the fractional working interests owned in gross wells.
(2)	Productive wells consist of producing wells and wells capable of production, including gas wells awaiting pipeline connection. Wells that are completed in more than one producing zone are counted as one well.

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	Transportation, Processing and Marketing

	Panaco

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	•	the purchase for approximately $205.8 million of an aggregate of approximately $278.1 million principal amount of secured bank debt of WestPoint Stevens Inc. Approximately $193.6 million principal amount is secured by a first priority lien of certain assets of WestPoint, and approximately $84.5 million principal amount is secured by a second priority lien. WestPoint currently is operating as a debtor in possession under Chapter 11 of the U.S. Bankruptcy Code;
	•	the purchase of an aggregate of approximately $71.8 million of secured bank debt of Union Power Partners L.P. and Panda Gila River L.P., independent power producers, for a purchase price of approximately $39.3 million. No interest is currently being received on this debt;
	•	the sale, for $82.3 million, of approximately $86.9 million principal amount of corporate debt securities which we purchased for approximately $45.1 million, recognizing a gain of $37.2 million; and
	•	the short sale of approximately 2.5 million shares of common stock of a company in bankruptcy.

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	Real Estate

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	Hotel and Casino Operations

	Rental Real Estate

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		Number of				Average Net Effective
Type of Property		Properties				Rent Per Square Foot(1)
Retail			27			$	4.54
Industrial			11			$	2.51
Office			18			$	10.01
Supermarkets			4			$	6.44
Banks			3			$	3.11
Other			4				N/A

(1)	Based on net-lease rentals.

			Number of
Location of Property			Properties
United States:
	Southeast			34
	Northeast			13
	South Central			3
	Southwest			1
	North Central			15
	Northwest			1

	Real Estate Development

	Hotel and Casino Operations

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	Rental Real Estate and Real Estate Development

	Environmental Matters

	Other Property Matters

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	Nevada

	Introduction

	Policy Concerns of Gaming Laws

	•	preventing unsavory or unsuitable persons from being directly or indirectly involved with gaming at any time or in any capacity;
	•	establishing and maintaining responsible accounting practices and procedures;
	•	maintaining effective controls over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs, and safeguarding assets and revenue, providing reliable recordkeeping and requiring the filing of periodic reports with the Nevada Gaming Authorities;
	•	preventing cheating and fraudulent practices; and
	•	providing a source of state and local revenue through taxation and licensing fees.

	Owner and Operator Licensing Requirements

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	Our Registration Requirements

	Individual Licensing Requirements

	Consequences of Violating Gaming Laws

	Requirements for Beneficial Securities Holders

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	•	voting on all matters voted on by stockholders or interest holders;
	•	making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and
	•	other activities that the Nevada Gaming Commission may determine to be consistent with such investment intent.

	Consequences of Being Found Unsuitable

	•	pay that person any dividend or interest upon any voting securities;
	•	allow that person to exercise, directly or indirectly, any voting right held by that person;
	•	pay remuneration in any form to that person for services rendered or otherwise; or
	•	fail to pursue all lawful efforts to require the unsuitable person to relinquish such person’s voting securities including, if necessary, the immediate purchase of the voting securities for cash at fair market value.

	Gaming Laws Relating to Securities Ownership

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	•	pays to the unsuitable person any dividend, interest or any distribution whatsoever;
	•	recognizes any voting right by the unsuitable person in connection with the securities;
	•	pays the unsuitable person remuneration in any form; or
	•	makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

	Approval of Public Offerings

	Approval of Changes in Control

	•	merger;
	•	consolidation;
	•	stock or asset acquisitions;
	•	management or consulting agreements; or
	•	any act or conduct by a person by which the person obtains control of us.

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	Approval of Defensive Tactics

	•	assure the financial stability of corporate gaming operators and their affiliates;
	•	preserve the beneficial aspects of conducting business in the corporate form; and
	•	promote a neutral environment for the orderly governance of corporate affairs.

	Fees and Taxes

	•	a percentage of gross revenues received;
	•	the number of gaming devices operated; or
	•	the number of table games operated.

	Foreign Gaming Investigations

	•	knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation;
	•	fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations;

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	•	engages in any activity or enters into any association that is unsuitable because it poses an unreasonable threat to the control of gaming in Nevada, reflects, or tends to reflect, discredit or disrepute upon the State of Nevada or gaming in Nevada, or is contrary to the gaming policies of Nevada;
	•	engages in activities or enters into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees; or
	•	employs, contracts with or associates with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the ground of unsuitability.

	License for Conduct of Gaming and Sale of Alcoholic Beverages

	New Jersey

	Introduction

	New Jersey Gaming Regulations

	•	the granting and renewal of casino licenses;
	•	the suitability of the approved hotel facility, and the amount of authorized casino space and gaming units permitted therein;
	•	the qualification of natural persons and entities related to the casino licensee;
	•	the licensing of certain employees and vendors of casino licensees;
	•	the rules of the games;
	•	the selling and redeeming of gaming chips;
	•	the granting and duration of credit and the enforceability of gaming debts;
	•	management control procedures, accounting and cash control methods and reports to gaming agencies;
	•	the security standards;

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	•	the manufacture and distribution of gaming equipment; and
	•	the simulcasting of horse races by casino licensees, advertising, entertainment and alcoholic beverages.

	Casino Control Commission

	Casino License

	Control Persons

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	Financial Sources

	Institutional Investors

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	Ownership and Transfer of Securities

	Conservatorship

	Oil and Gas

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	Exploration and Production

	Environmental Protection and Occupational Safety

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Name		Age				Position
Carl C. Icahn			69			Chairman of the Board
William A. Leidesdorf			59			Director
James L. Nelson			55			Director
Jack G. Wasserman			68			Director
Keith A. Meister			31			Chief Executive Officer of API and Chief Executive Officer and President of AREP Finance
Jon F. Weber			46			President of API
Martin L. Hirsch			49			Executive Vice President and Director of Acquisitions and Development
John P. Saldarelli			63			Vice President, Chief Financial Officer, Secretary and Treasurer

Name		Age				Position
Bob Alexander			72			President and Chief Executive Officer, National Energy Group, Inc.
Richard P. Brown			57			President, Chief Executive Officer and Director, American Casino & Entertainment Properties LLC

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	Executive Compensation

			Annual Compensation
															All Other
(a)							Salary				Bonus				Compensation
Name and Principal Position			Year				($)				($)				($)(3)
Keith A. Meister(2)				2004				227,308				—				—
	President and Chief Executive Officer			2003				73,150				—				—
	2002			—				—				—
Martin L. Hirsch(2)(3)				2004				295,000				200,000				4,000
	Executive Vice President and Director of Acquisitions and Development			2003				269,923				50,000				4,000
				2002				231,000				24,500				3,667
John P. Saldarelli(2)(3)				2004				191,100				22,932				3,819
	Vice President, Chief Financial Officer, Secretary and			2003				182,200				18,200				4,000
	Treasurer			2002				182,000				8,400				3,666
Richard P. Brown				2004				461,155				250,000				8,335
	President and Chief Executive Officer,			2003				316,154				20,000				8,315
	American Casino & Entertainment Properties LLC			2002				274,988				20,000				6,459
Bob Alexander				2004				300,000				175,000				—
	President and Chief Executive Officer, National Energy			2003				300,000				150,000				—
	Group, Inc.			2002				300,000				—				—

(1)	Pursuant to applicable regulations, certain columns of the Summary Compensation Table and each of the remaining tables have been omitted, as there has been no compensation awarded to, earned by or paid to any of the named executive officers by us, or by API, which was subsequently reimbursed by us, required to be reported in those columns or tables, excepted as noted below.
(2)	On August 18, 2003, Keith A. Meister was elected President and Chief Executive Officer. Mr. Meister devotes approximately 50% of his time to the performance of services for AREP and its subsidiaries. Messrs. Saldarelli and Hirsch devote all of their time to the performance of services for AREP and its subsidiaries.
(3)	Represent matching contributions under AREP’s 401(k) plan. In 2004, AREP made matching contributions to the employee’s individual plan account in the amount of one-third (1/3) of the first six (6%) percent of gross salary contributed by the employee.

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		Beneficial								Beneficial
		Ownership of				Percent				Ownership of				Percent
Name of Beneficial Owner		Depositary Units				of Class				Preferred Units				of Class
Carl C. Icahn(1)			39,896,836	(2)			86.5%				9,346,044				86.5%	(2)
William A. Leidesdorf			—				—				—				—
James L. Nelson			—				—				—				—
Jack G. Wasserman			—				—				—				—
Keith A. Meister			—				—				—				—
Jon F. Weber			—				—				—				—
Martin L. Hirsch			—				—				—				—
John P. Saldarelli			—				—				—				—
Bob Alexander			—				—				—				—
Richard P. Brown			—				—				—				—
All directors and executive officers, as a group (ten persons)			39,896,836	(2)			86.5%				9,346,044				86.5%	(2)

(1)	Carl C. Icahn, through affiliates, is the beneficial owner of the 39,896,836 depositary units set forth above and may also be deemed to be the beneficial owner of the 700 depositary units owned of record by API Nominee Corp., which in accordance with state law are in the process of being turned over to the relevant state authorities as unclaimed property; however, Mr. Icahn disclaims such beneficial ownership. The foregoing is exclusive of a 1.99% ownership interest which API holds by virtue of its 1% general partner interest in each of us and AREH. Furthermore, pursuant to a registration rights agreement entered into by affiliates of Mr. Icahn we have agreed to pay any expenses incurred in connection with two demand and unlimited piggy-back registrations requested by affiliates of Mr. Icahn.
(2)	Does not include up to 16,275,863 depositary units that may be issued upon the closing of the pending Acquisitions. If all such units were issued, then Mr. Icahn would be the beneficial owner of 46,172,699 depositary units, representing approximately 90.1% of the depositary units.

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	Preferred and Depositary Units

	Oil and Gas

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	Purchase Agreements

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	Hotel and Casino Operations

	Partnership Provisions Concerning Property Management

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	•	Property Management and Asset Management Services. To the extent that we acquire any properties requiring active management (e.g., operating properties that are not net-leased) or asset management services, including on site services, we may enter into management or other arrangements with API or its affiliates. Generally, it is contemplated that under property management arrangements, the entity managing the property would receive a property management fee (generally 3% to 6% of gross rentals for direct management, depending upon the location) and under asset management arrangements, the entity managing the asset would receive an asset management fee (generally .5% to 1% of the appraised value of the asset for asset management services, depending upon the location) in payment for its services and reimbursement for costs incurred.
	•	Brokerage and Leasing Commissions. We also may pay affiliates of API real estate brokerage and leasing commissions (which generally may range from 2% to 6% of the purchase price or rentals depending on location; this range may be somewhat higher for problem properties or lesser-valued properties).
	•	Lending Arrangements. API or its affiliates may lend money to, or arrange loans for, us. Fees payable to API or its affiliates in connection with such activities include mortgage brokerage fees (generally .5% to 3% of the loan amount), mortgage origination fees (generally .5% to 1.5% of the loan amount) and loan servicing fees (generally .10% to .12% of the loan amount), as well as interest on any amounts loaned by API or its affiliates to us.
	•	Development and Construction Services. API or its affiliates may also receive fees for development services, generally 1% to 4% of development costs, and general contracting services or construction management services, generally 4% to 6% of construction costs.

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	•	will be the general unsecured obligation of each of the Issuers;
	•	will be pari passu in right of payment to all existing and future senior Indebtedness of each of the Issuers;
	•	will be senior in right of payment to any future subordinated Indebtedness of each of the Issuers; and
	•	will be effectively subordinated to the secured Indebtedness of the Issuers to the extent of the value of the collateral securing such Indebtedness. As of March 31, 2005, the Issuers did not have any secured Indebtedness.

	•	will be the general unsecured obligation of AREH;
	•	will be pari passu in right of payment to all existing and future senior Indebtedness of AREH;
	•	will be senior in right of payment to any future subordinated Indebtedness of AREH; and
	•	will be effectively subordinated to the secured Indebtedness of AREH to the extent of the value of the collateral securing such Indebtedness. As of March 31, 2005, AREH had $80.2 million of secured Indebtedness.

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	(1) upon the substitution of a successor to AREH or other release as described under the heading “Certain Covenants — Merger, Consolidation or Sale of Assets”; and
	(2) upon legal defeasance or satisfaction and discharge of the indenture as provided below under the captions “— Covenant Defeasance” and “— Satisfaction and Discharge.”

	(1) at least 65% of the aggregate principal amount of notes issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by AREP and its Subsidiaries (including any Guarantor)); and
	(2) the redemption occurs within 60 days of the date of the closing of such Equity Offering.

Year		Percentage
2009			103.563	%
2010			101.781	%
2011 and thereafter			100.000	%

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	(1) fails to apply for a license, qualification or a finding of suitability within 30 days (or such shorter period as may be required by the applicable Gaming Authority) after being requested to do so by the Gaming Authority; or
	(2) is denied such license or qualification or not found suitable; AREP shall then have the right, at its option:
	(1) to require each such holder or Beneficial Owner to dispose of its notes within 30 days (or such earlier date as may be required by the applicable Gaming Authority) of the occurrence of the event described in clause (1) or (2) above, or
	(2) to redeem the notes of each such holder or Beneficial Owner, in accordance with Rule 14e-1 of the Exchange Act, if applicable, at a redemption price equal to the lowest of:

	(a) the principal amount thereof, together with accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the date of redemption, the date 30 days after such holder or Beneficial Owner is required to apply for a license, qualification or finding of suitability (or such shorter period that may be required by any applicable Gaming Authority) if such holder or Beneficial Owner fails to do so (“Application Date”) or of the date of denial of license or qualification or of the finding of unsuitability by such Gaming Authority;
	(b) the price at which such holder or Beneficial Owner acquired the notes, together with accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the date of redemption, the Application Date or the date of the denial of license or qualification or of the finding of unsuitability by such Gaming Authority; and
	(c) such other lesser amount as may be required by any Gaming Authority.

	(1) to exercise, directly or indirectly, through any trustee or nominee or any other person or entity, any right conferred by the notes, the Note Guarantee or the indenture; or
	(2) to receive any interest, Liquidated Damages, dividend, economic interests or any other distributions or payments with respect to the notes and the Note Guarantee or any remuneration in any form with respect to the notes and the Note Guarantee from the Issuers, any Note Guarantor or the trustee, except the redemption price referred to above.

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	(1) accept for payment all notes or portions of notes properly tendered and not withdrawn pursuant to the Change of Control offer;
	(2) deposit with the paying agent an amount equal to the Change of Control payment in respect of all notes or portions of notes properly tendered; and
	(3) deliver or cause to be delivered to the trustee the notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of notes or portions of notes being purchased by the Issuers.

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	(1) declare or pay any dividend or make any other distribution on account of AREP’s or any of its Subsidiaries’ (including any Guarantor’s) Equity Interests or to the holders of AREP’s or any of its Subsidiaries’ (including AREH’s) Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of AREP or to AREP or a Subsidiary of AREP (including AREH));
	(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving AREP) any Equity Interests of AREP; or
	(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of AREP or any Guarantor that is contractually subordinated to the notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among AREP and any of its Subsidiaries (including any Guarantor)), except a payment of interest, Other Liquidated Damages or principal at the Stated Maturity on such subordinated Indebtedness (all such payments and other actions set forth in these clauses (1) through (3) (except as excluded therein) above being collectively referred to as “Restricted Payments”),

	(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;
	(2) AREP or any Guarantor would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four-quarter period for which financial statements are available, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; and
	(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by AREP and its Subsidiaries (including any Guarantor) after May 12, 2004 (excluding Restricted Payments permitted by clauses (2), (3), (4), (6) and (8) of the next succeeding paragraph) is less than the sum, without duplication, of:

	(a) 50% of the Consolidated Net Income of AREP for the period (taken as one accounting period) from July 1, 2006 to the end of AREP’s most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); provided, however, that to the extent any payments of Tax Amounts were not deducted in the calculation of Consolidated Net Income during the applicable period, for purposes of this clause (a), such payments of Tax Amounts will be deducted from Consolidated Net Income, plus
	(b) 100% of the aggregate net cash proceeds received by AREP since May 12, 2004 as a contribution to its equity capital or from the issue or sale of Equity Interests of AREP (excluding Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of AREP that have been converted into or exchanged for such Equity Interests (other than Equity Interests or Disqualified Stock or debt securities sold to a Subsidiary of AREP (including AREH)).

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	(1) the payment of any dividend or the consummation of any irrevocable redemption or payment within 60 days after the date of declaration of the dividend or giving of the redemption notice or becoming irrevocably obligated to make such payment, as the case may be, if at the date of declaration or notice or becoming irrevocably obligated to make such payment, the dividend or payment would have complied with the provisions of the indenture;
	(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of AREP (including any Guarantor)) of, Equity Interests (other than Disqualified Stock) or from the substantially concurrent contribution of equity capital to AREP; provided, however, that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3)(b) of the preceding paragraph;
	(3) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of AREP or any Guarantor that is contractually subordinated to the notes with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness;
	(4) the declaration or payment of any dividend or distribution by a Subsidiary of AREP (including any Guarantor) to the holders of its Equity Interests; provided, that if any such dividend or distribution is paid to an Affiliate of the Principal (other than AREP or any of its Subsidiaries (including any Guarantor)), that any such dividend or distribution is paid on a pro rata basis to all holders (including AREP or any of its Subsidiaries (including any Guarantor)) that hold securities whose terms (either contractually or by law) entitle them to the same distribution upon which such dividend or distribution is paid;
	(5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of AREP or any Subsidiary of AREP (including any Guarantor) held by any member of AREP’s (or any of its Subsidiaries’ (including any Guarantors)) management pursuant to any management equity subscription agreement, stock option agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.0 million;
	(6) for so long as AREP is a partnership or otherwise a pass-through entity for federal income tax purposes for any period, AREP may make cash distributions to its equity holders or partners in an amount not to exceed the Tax Amount for such period; provided that a distribution of the Tax Amount shall be made no earlier than 20 days prior to the due date for such tax (or the date that quarterly estimated taxes are required to be paid) that would be payable by AREP if it were a Delaware corporation;
	(7) the purchase, redemption or retirement for value of Capital Stock of AREP not owned by the Principal or any Affiliate of the Principal, provided that (a) AREP would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four-quarter period for which financial statements are available, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) after giving effect to such purchase, redemption or retirement, the Partners’ Equity is at least $1.0 billion;
	(8) the payment of dividends on the Preferred Units in the form of additional Preferred Units or other Capital Stock of AREP (that is not Disqualified Stock) or the payment of cash dividends on the Preferred Units in lieu of fractional Preferred Units; provided that the aggregate amount of cash under this clause (8) does not exceed $100,000 in any calendar year;

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	(9) the purchase, redemption or retirement for value of the Preferred Units on or before March 31, 2010, provided that (a) AREP would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the most recently ended four-quarter period for which financial statements are available, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) after giving effect to such purchase, redemption or retirement, the Partners’ Equity is at least $1.0 billion; and
	(10) other Restricted Payments in an aggregate amount not to exceed $50.0 million since the date of the indenture.

	(1) the incurrence by AREP or any Guarantor of Indebtedness represented by the notes to be issued on the date of the indenture and the exchange notes to be issued pursuant to the registration rights agreement;
	(2) the incurrence by AREP or any Guarantor of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was incurred under the first paragraph of this covenant or clauses (1), (2) or (9) of this paragraph or any Existing Indebtedness;
	(3) the incurrence by AREP or any Guarantor of intercompany Indebtedness between or among AREP and any of its Subsidiaries (including AREH) or the issuance of Disqualified Stock by any Guarantor to AREP;
	(4) the incurrence by AREP or any Guarantor of Hedging Obligations that are incurred in the normal course of business;

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	(5) the incurrence by AREP or any Guarantor of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days;
	(6) the incurrence by AREP or any Guarantor of the Existing Indebtedness;
	(7) Indebtedness arising from any agreement entered into by AREP or AREH providing for indemnification, purchase price adjustment or similar obligations, in each case, incurred or assumed in connection with an asset sale;
	(8) Indebtedness of AREP or any Guarantor attributable to Bad Boy Guarantees; and
	(9) the incurrence by AREP or any Guarantor of additional Indebtedness in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (9), not to exceed $10.0 million at any one time outstanding.

	(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

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	(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and
	(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

	(a) the Fair Market Value of such assets at the date of determination; and
	(b) the amount of the Indebtedness of the other Person.

	(1) Liens on any Principal Property acquired after the Issuance Date to secure or provide for the payment of the purchase price or acquisition cost thereof;
	(2) Liens on Principal Property acquired after the Issuance Date existing at the time such Principal Property is acquired;
	(3) Liens on any Principal Property acquired from a corporation merged with or into AREP or any Guarantor;
	(4) Liens in favor of AREP or any Guarantor;
	(5) Liens in existence on any Principal Property on the Issuance Date;
	(6) Liens on any Principal Property constituting unimproved real property constructed or improved after the Issuance Date to secure or provide for the payment or cost of such construction or improvement;
	(7) Liens in favor of, or required by, governmental authorities;
	(8) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insure carriers under insurance arrangements;
	(9) Liens for taxes, assessments or governmental charges or statutory liens of landlords, carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business or in the improvement or repair of any Principal Property not yet due or which are being contested in good faith by appropriate proceedings;
	(10) any judgment attachment or judgment Lien not constituting an Event of Default;
	(11) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business and in the improvement or repair of any Principal Property and which obligations are not expressly prohibited by the indenture;
	(12) Liens to secure Indebtedness of AREP or any Guarantor attributable to Bad Boy Guarantees;
	(13) Liens in favor of the trustee and required by the covenant “Maintenance of Interest Coverage”;
	(14) Liens to secure margin Indebtedness; provided that such Liens are secured solely by the applicable margin securities; or
	(15) any extension, renewal, substitution or replacement (or successive extensions, renewals, substitutions or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (i) through (xiv), inclusive;

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	(1) either: (a) AREP is the surviving entity, or (b) the Person formed by or surviving any such consolidation or merger (if other than AREP) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership entity organized or existing under the laws of the United States, any state of the United States or the District of Columbia;
	(2) the Person formed by or surviving any such consolidation or merger (if other than AREP) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of AREP under the notes, the indenture and the registration rights agreement and upon such assumption such Person will become the successor to, and be substituted for, AREP thereunder and all references to AREP in each thereof shall then become references to such Person and such Person shall thereafter be able to exercise every right and power of AREP thereunder;
	(3) immediately after such transaction no Default or Event of Default exists;

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	(4) AREP or the Person formed by or surviving any such consolidation or merger (if other than AREP), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock; and
	(5) AREP has delivered to the trustee an Officers’ Certificate and opinion of counsel, which may be an opinion of in-house counsel of AREP or an Affiliate, each stating that such transaction complies with the terms of the indenture.

	(1) an Affiliate that has no material assets or liabilities where the primary purpose of such transaction is to change AREP into a corporation or other form of business entity or to change the jurisdiction of formation of AREP and such transaction does not cause the realization of any material federal or state tax liability that will be paid by AREP or any of its Subsidiaries (including AREH). For purposes of this paragraph, the term material refers to any assets, liabilities or tax liabilities that are greater than 5.0% of the Tangible Net Worth of AREP and its Subsidiaries (including AREH) on a consolidated basis; or
	(2) any Person; provided that AREP receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of such relevant agreement of at least $1.0 billion for such merger or consolidation or the sale, assignment, transfer, conveyance or other disposition of all or substantially all of AREP’s properties or assets. In any transaction referred to in this clause (2), and subject to the terms and conditions thereof, the trustee shall, without the need of any action by the noteholders, (x) confirm that such Person shall not be liable for and release such Person from, any obligation of AREP’s under the indenture and the notes and (y) release any Guarantor from all obligations under its Note Guarantee if such Guarantor was directly or indirectly sold, assigned, transferred, conveyed or otherwise disposed of to such Person in such transaction.

(1) either: (a) AREH is the surviving entity, or (b) the Person formed by or surviving any such consolidation or merger (if other than AREH) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership entity organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

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	(2) the Person formed by or surviving any such consolidation or merger (if other than AREH) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of AREH under the Note Guarantee (and becomes a Guarantor), the notes, the indenture and the registration rights agreement, and upon such assumption such Person will become the successor to, and be substituted for, AREH thereunder, and all references to AREH in each thereof shall than become references to such Person and such Person shall thereafter be able to exercise every right and power of AREH thereunder;
	(3) immediately after such transaction no Default or Event of Default exists;
	(4) AREH or the Person formed by or surviving any such consolidation or merger (if other than AREP), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock; and
	(5) AREH has delivered to the trustee an Officers’ Certificate and opinion of counsel which may be an opinion of in-house counsel of AREP or an Affiliate, each stating that such transaction complies with the terms of the indenture.

	(1) an Affiliate that has no material assets or liabilities where the primary purpose of such transaction is to change AREH into a corporation or other form of business entity or to change the jurisdiction of formation of AREH and such transaction does not cause the realization of any material federal or state tax liability that will be paid by AREH or any of its Subsidiaries. For purposes of this paragraph, the term material refers to any assets, liabilities or tax liabilities that are greater than 5.0% of the Tangible Net Worth of AREP and its Subsidiaries (including AREH) on a consolidated basis;
	(2) any Person; provided that AREP receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of such relevant agreement of at least $1.0 billion for such merger or consolidation or the sale, assignment, transfer, conveyance or other disposition of all or substantially all of AREH’s properties or assets; or
	(3) any Person; provided that AREH receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of such relevant agreement of at least $1.0 billion for such merger or consolidation or the sale, assignment, transfer, conveyance or other disposition of all or substantially all of AREH’s properties or assets and AREH remains a Subsidiary of AREP.

	(1) any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among AREP, AREH or any one or more Guarantors; or

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	(2) any sale, assignment, transfer, conveyance or other disposition of Cash Equivalents, including, without limitation, any investment or capital contribution of Cash Equivalents, or any purchase of property and assets, including, without limitation, securities, debt obligations or Capital Stock, with Cash Equivalents.

	(1) the Affiliate Transaction is on terms that are not materially less favorable to AREP or the relevant Subsidiary (including any Guarantor) than those that would have been obtained in a comparable transaction by AREP or such Subsidiary (including any Guarantor) with an unrelated Person as determined in good faith by the Board of Directors of AREP; and
	(2) AREP delivers to the trustee:

	(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million, a resolution of the Board of Directors of AREP set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of AREP; and
	(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to AREP or such Subsidiary (including any Guarantor) of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of recognized standing.

	(1) any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by AREP or any of its Subsidiaries (including any Guarantor) in the ordinary course of business and payments pursuant thereto including payments or reimbursement of payments by API with respect to any such agreement, plan or arrangement entered into by API with respect to or for the benefit of officers or directors of API (other than any such agreements, plans or arrangements entered into by AREP or any of its Subsidiaries (including AREH) with Carl Icahn (other than employee benefit plans and officer or director indemnification agreements generally applicable to officers and directors of API, AREP or its Subsidiaries (including AREH));
	(2) transactions between or among AREP, any Guarantor and/or their respective Subsidiaries (except any Subsidiaries of which Carl Icahn or Affiliates of Carl Icahn (other then AREP, AREH or their Subsidiaries) own more than 10% of the Voting Stock);
	(3) payment (or reimbursement of payments by API) of directors’ fees to Persons who are not otherwise Affiliates of AREP;
	(4) any issuance of Equity Interests (other than Disqualified Stock) and Preferred Unit Distributions of AREP to Affiliates of AREP;
	(5) Restricted Payments that do not violate the provisions of the indenture described above under the caption “— Restricted Payments”;
	(6) transactions between AREP and/or any of its Subsidiaries (including any Guarantor), on the one hand, and other Affiliates, on the other hand, for the provision of goods or services in the ordinary course of business by such other Affiliates; provided that such other Affiliate is in the business of providing such goods or services in the ordinary course of business to unaffiliated third parties and the terms and pricing for such goods and services overall are not less favorable to AREP and/or its

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	Subsidiaries (including AREH) than the terms and pricing upon which such goods and services are provided to unaffiliated third parties;
	(7) the provision or receipt of accounting, financial, management, information technology and other ancillary services to or from Affiliates, provided that AREP or its Subsidiaries (including any Guarantor) in the case of the provision of such services, are paid a fee not less than its out of pocket costs and allocated overhead (including a portion of salaries and benefits) and in the case of the receipt of such services, paid a fee not more than such Person’s out-of-pocket costs and allocated overhead (including a portion of salaries and benefits), in each case, as determined by AREP in its reasonable judgment;
	(8) the license of a portion of office space pursuant to a license agreement, dated as of February 1, 1997, between AREP and an Affiliate of API and any renewal thereof;
	(9) the payment to API and reimbursements of payments made by API of expenses relating to AREP’s, AREH’s or any Guarantors’ status as a public company;
	(10) services provided and payments received by NEG from NEG Operating LLC, TransTexas Gas Corporation and Panaco, Inc. pursuant to the NEG Management Agreements;
	(11) the pledge by NEG of its interest in the Capital Stock of NEG Holding LLC pursuant to the NEG Credit Agreement;
	(12) the exchange by AREH of its GB Securities for other securities of GB Holdings, Inc.; provided that such exchange is on terms no less favorable to AREH as the exchange of GB Securities offered to other non-Affiliated Persons;
	(13) payments by AREH, AREP or any Subsidiary to API in connection with services provided to AREH, AREP or any Subsidiary in accordance with the AREP Partnership Agreement; and
	(14) the Acquisitions.

	(1) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Issuers were required to file such reports; and
	(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Issuers were required to file such reports.

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	(1) default in payment when due and payable, upon redemption or otherwise, of principal or premium, if any, on the notes;
	(2) default for 30 days or more in the payment when due of interest or Liquidated Damages on the notes;
	(3) failure by the Issuers to call or cause to be called for redemption or to purchase or cause to be called any notes, in each case when required under the indenture;
	(4) failure by AREP or any Guarantor for 30 days after written notice from the trustee to comply with the provisions described under the captions “— Restricted Payments” or “— Incurrence of Indebtedness and Issuance of Preferred Stock”;
	(5) failure by AREP or any Guarantor for 30 days after written notice from the trustee to comply with the provisions described under the captions “— Maintenance of Interest Coverage” or “— Maintenance of Total Unencumbered Assets”;
	(6) failure by the Issuers or any Guarantor for 60 days after notice from the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding to comply with any of their other agreements in the indenture or the notes or the Note Guarantee;
	(7) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuers or any Guarantor or default on any Guarantee by the Issuers or AREH of Indebtedness, whether such Indebtedness or Guarantee now exists or is created after the Issuance Date, which default (a) is caused by a failure to pay when due at final maturity (giving effect to any grace period or waiver related thereto) the principal of such Indebtedness (a “Payment Default”) or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness as to which AREP or any Guarantor is obligated to pay, together with the principal amount of any other such Indebtedness under which a Payment Default then exists or with respect to which the maturity thereof has been so accelerated or which has not been paid at maturity as to which AREP or any Guarantor is obligated to pay, aggregates $10.0 million or more;
	(8) failure by the Issuers or any Guarantor to pay final judgments aggregating in excess of $10.0 million, which final judgments remain unpaid, undischarged or unstayed for a period of more than 60 days after such judgment becomes a final judgment;
	(9) except as permitted by the indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or AREH or any other Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee; and
	(10) certain events of bankruptcy or insolvency with respect to AREP or any Guarantor that is a Significant Subsidiary.

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	(1) the Issuers must irrevocably deposit, or cause to be deposited, with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient to pay the principal of, premium, if any, interest and Liquidated Damages, if any, due on the outstanding notes on the stated maturity date or on the applicable redemption date, as the case may be, in accordance with the terms of the indenture;
	(2) no Default or Event of Default shall have occurred and be continuing with respect to certain Events of Default on the date of such deposit;
	(3) such Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture) to which the Issuers or any of their Subsidiaries is a party or by which the Issuers or any of their Subsidiaries is bound;

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	(4) the Issuers shall have delivered to the trustee an opinion of counsel, which may be an opinion of in-house counsel to AREP or an Affiliate, containing customary assumptions and exceptions, to the effect that upon and immediately following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally under any applicable law;
	(5) the Issuers shall have delivered to the trustee an Officers’ Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of AREP or others; and
	(6) the Issuers shall have delivered to the trustee an Officers’ Certificate and an opinion of counsel in the United States, which may be an opinion of in-house counsel to AREP or an Affiliate (which opinion of counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Covenant Defeasance have been complied with.

	(1) either:

	(a) all notes that have been authenticated, except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has been deposited in trust and thereafter repaid to AREP, have been delivered to the trustee for cancellation; or
	(b) all notes that have not been delivered to the trustee for cancellation (1) have become due and payable by reason of the mailing of a notice of redemption or otherwise, (2) will become due and payable within one year or (3) are to be called for redemption within 12 months under arrangements reasonably satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the reasonable expense of the Issuers, and the Issuers or any Guarantor have irrevocably deposited or caused to be deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the notes not delivered to the trustee for cancellation for principal and premium, if any, and accrued but unpaid interest to the date of maturity or redemption;

	(2) no Default of Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which the Issuers are a party or by which the Issuers are bound;
	(3) the Issuers have paid or caused to be paid all sums payable by it under the indenture; and
	(4) the Issuers or any Guarantor have delivered irrevocable instructions to the trustee under the indenture to apply the deposited money toward the payment of the notes at maturity or the redemption date, as the case may be.

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	(1) reduce the principal amount of notes whose holders must consent to an amendment, supplement or waiver;
	(2) reduce the principal of or change the fixed maturity of any note or alter or waive the provisions with respect to the redemption of the notes;
	(3) reduce the rate of or change the time for payment of interest on any note;
	(4) waive a Default or Event of Default in the payment of principal of, premium or interest on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration);
	(5) make any note payable in money other than that stated in the notes;
	(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of notes to receive payments of principal of or premium, if any, or interest on the notes;
	(7) release AREH or any other Guarantor from any of its obligations under its Note Guarantee or the indenture, except in accordance with the terms of the indenture; or
	(8) make any change in the foregoing amendment and waiver provisions.

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	(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or
	(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

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	(1) DTC (a) notifies the Issuers that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, the Issuers fail to appoint a successor depositary;
	(2) the Issuers, at their option, notify the trustee in writing that it elects to cause the issuance of the Certificated Notes; or
	(3) there has occurred and is continuing a Default or Event of Default with respect to the notes.

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	(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and
	(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

	(1) AREP’s purchase of Gascon Partners’ membership interest of NEG Holding LLC pursuant to a purchase agreement with Gascon Partners dated January 21, 2005 or, alternatively, if AREP does not obtain the consent of NEG Operating’s bank lenders or refinance such debt, AREP’s purchase of all of the general partnership interests of Gascon Partners;
	(2) National Onshore LP’s merger with TransTexas Gas Corporation pursuant to an agreement and plan of Merger dated January 21, 2005;
	(3) National Offshore LP’s merger with Panaco, Inc. pursuant to an agreement and plan of merger dated January 21, 2005;
	(4) AREP’s purchase of approximately 41.2% of the outstanding common stock of GB Holdings, Inc. and warrants to purchase approximately 11.3% of the fully diluted common stock of Atlantic Coast Entertainment Holdings, Inc. pursuant to a purchase agreement with Cyrus, LLC dated January 21, 2005; and
	(5) the transactions contemplated by clauses (1) through (4), above, including but not limited to the registration rights agreement to be entered into between AREP and the other signatories thereto.

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	(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;
	(2) with respect to a partnership, the Board of Directors of the general partner of the partnership;
	(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof or the Board of Directors of the managing member; and
	(4) with respect to any other Person, the board or committee of such Person serving a similar function.

	(1) in the case of a corporation, corporate stock;
	(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;
	(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and
	(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

	(1) United States dollars;
	(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;
	(3) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better;

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	(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;
	(5) commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and, in each case, maturing within one year after the date of acquisition; and
	(6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.

	(1) provision for taxes based on income or profits of AREP and the Guarantors or any payments of Tax Amounts by AREP for such period, to the extent that such provision for taxes or such payments of Tax Amounts were deducted in computing such Net Income of AREP or any Guarantor; plus
	(2) the Fixed Charges of AREP or any Guarantor for such period, to the extent that such Fixed Charges of AREP and such Guarantor were deducted in computing such Net Income of AREP and such Guarantor; plus
	(3) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of AREP and any Guarantor for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Net Income of AREP and any Guarantor; minus
	(4) non-cash items increasing such Net Income of AREP and any Guarantor for such period, other than the accrual of revenue in the ordinary course of business,

	(1) the sale, lease, transfer, conveyance or other disposition by AREP or AREH (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of AREP or AREH to any “person” (as that term is used in Section 13(d) of the Exchange Act) other than the Principal or a Related Party; provided, however, that (x) if AREP or AREH receives consideration in Cash Equivalents and marketable securities with an aggregate Fair Market Value determined at the time of the execution of each relevant agreement of at least $1.0 billion for such sale, lease, transfer, conveyance or other disposition of properties or assets, then such transaction shall not be deemed a Change of Control and (y) any sale, assignment, transfer or other disposition of Cash Equivalents, including, without limitation, any investment or capital contribution of Cash Equivalents or purchase of property, assets or Capital Stock with Cash Equivalents, will not constitute a sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets for purposes of this clause (1);
	(2) the adoption of a plan relating to the liquidation or dissolution of AREP;
	(3) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person” (as defined above), other than the Principal or the Related

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	Parties, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of a Controlling Entity of AREP, measured by voting power rather than number of shares;
	(4) the first day on which a majority of the members of the Board of Directors of the Controlling Entity are not Continuing Directors; or
	(5) for so long as AREP is a partnership, upon any general partner of AREP ceasing to be an Affiliate of the Principal or a Related Party.

	(1) the Net Income of any Person that is accounted for by the equity method of accounting or that is a Subsidiary will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Subsidiary of the Person;
	(2) the Net Income of any of its Subsidiaries will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders; and
	(3) the cumulative effect of a change in accounting principles will be excluded.

	(1) was a member of such Board of Directors on the date of the indenture; or
	(2) was nominated for election or elected to such Board of Directors with the approval of the Principal or any of the Related Parties or with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

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	(1) acquisitions that have been made by the specified Person, including through mergers or consolidations, or any Person acquired by the specified Person, and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period;
	(2) the Cash Flow of AREP and the Guarantors attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;
	(3) the Fixed Charges of AREP and the Guarantors attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that such Fixed Charges of AREP and the Guarantors are equal to or less than the Cash Flow of AREP and the Guarantors from the related discontinued operation excluded under clause (3) for such period; and
	(4) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the

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	entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).

	(1) the interest expense of AREP, and any Guarantor for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus
	(2) the interest expense of AREP and any Guarantor that was capitalized during such period; plus
	(3) any interest on Indebtedness of another Person that is guaranteed by AREP or any Guarantor (other than Bad Boy Guarantees unless such Bad Boy Guarantee is called upon) or secured by a Lien on assets of AREP or any additional Guarantor, whether or not such Guarantee or Lien is called upon; provided that for purposes of calculating interest with respect to Indebtedness that is Guaranteed or secured by a Lien, the principal amount of Indebtedness will be calculated in accordance with the last two paragraphs of the definition of Indebtedness; plus
	(4) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred equity of AREP, other than dividends on preferred stock to the extent payable in Equity Interests of AREP (other than Disqualified Stock) or dividends on preferred equity payable to AREP, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory income tax rate of AREP (however, for so long as AREP is a partnership or otherwise a pass-through entity for federal income tax purposes, the combined federal, state and local income tax rate shall be the rate that was utilized to calculate the Tax Amount of AREP to the extent that the Tax Amount was actually distributed with respect to such period (and if less than the Tax Amount is distributed, such rate shall be proportionately reduced) and if no Tax Amount was actually distributed with respect to such period, such combined federal, state and local income tax rate shall be zero), expressed as a decimal; provided that this clause (4) will not include any Preferred Unit Distribution paid in additional Preferred Units,

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	(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;
	(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and
	(3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.

	(1) in respect of borrowed money;
	(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);
	(3) in respect of banker’s acceptances;
	(4) representing Capital Lease Obligations;
	(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or
	(6) representing any Hedging Obligations,

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	(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, and Other Liquidated Damages, incurred in connection therewith);
	(2) in the case of any Indebtedness other than notes redeemed in accordance with “— Mandatory Disposition Pursuant to Gaming Laws,” such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and
	(3) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the holders of notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged.

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	(1) any corporation, association or other business entity of which more than 50% of the total Voting Stock is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and
	(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

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	(1) acquired the private notes at their original issue price for cash,
	(2) exchange the private notes for new notes in this exchange offer, and
	(3) held the private notes and hold the new notes as “capital assets” (generally, for investment) as defined in the Internal Revenue Code of 1986, as amended, the Code.

	•	A broker-dealer, a dealer in securities or a financial institution;
	•	An S corporation;
	•	A bank;
	•	A thrift;
	•	An insurance company;
	•	A tax-exempt organization;
	•	A partnership or other pass-through entity;
	•	Subject to the alternative minimum tax provisions of the Code;
	•	Holding the private notes or the new notes as part of a hedge, straddle or other risk reduction or constructive sale transaction;
	•	A person with a “functional currency” other than the U.S. dollar; or
	•	A United States expatriate.

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	•	a citizen or resident of the United States;
	•	a corporation organized under the laws of the United States or any political subdivision thereof;
	•	an estate the income of which is subject to U.S. federal income tax regardless of its sources; or
	•	a trust if a court within the United States can exercise primary supervision over the administration of the trust and one or more U.S. persons has authority to control all substantial decisions of the trust, or if the trust was in existence on August 20, 1996, and treated as a domestic trust on August 19, 1996, and it has elected to continue to be treated as a U.S. person.

	•	when it accrues, if you use the accrual method of accounting for United States federal income tax purposes; or
	•	when you receive it, if you use the cash method of accounting for United States federal income tax purposes.

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	•	the IRS notifies us or our paying agent that the TIN you provided is incorrect;
	•	you underreport interest and dividend payments that you receive on your tax return and the IRS notifies us or our paying agent that withholding is required; or
	•	you fail to certify under penalties of perjury that you are not subject to backup withholding.

	•	you do not own, actually or constructively, 10% or more of our capital or profits interests;
	•	you are not a controlled foreign corporation with respect to which we are a “related person” within the meaning of Section 864(d)(4) of the Code;
	•	you are not a bank receiving interest described in Section 881(c)(3)(A) of the Code;
	•	such interest is not effectively connected with the conduct by you of a trade or business in the United States; and
	•	either (i) you represent that you are not a United States person for United States federal income tax purposes and you provide your name and address to us or our paying agent on a properly executed IRS Form W-8BEN (or a suitable substitute form) signed under penalties of perjury, or (ii) a securities clearing organization, bank, or other financial institution that holds customers’ securities in the ordinary course of its business holds the new note on your behalf, certifies to us or our paying agent under penalties of perjury that it has received IRS Form W-8BEN (or a suitable substitute form) from you or from another qualifying financial institution intermediary, and provides a copy of the Form W-8BEN (or a suitable substitute form) to us or our paying agent. United States Federal Income or Withholding Tax If Interest Is Not Portfolio Interest. If you do not claim, or do not qualify for, the benefit of the portfolio interest exemption described above, you may be subject to a 30% withholding tax on the gross amount of interest payments, unless reduced or eliminated by an applicable income tax treaty.

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	•	may not rely on the applicable interpretation of the staff of the Commission’s position contained in Exxon Capital Holdings Corp., SEC no-action letter (May 13, 1988), Morgan, Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983); and
	•	must also be named as a selling noteholder in connection with the registration and prospectus delivery requirements of the Securities Act relating to any resale transaction.

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	•	Annual Report on Form 10-K for the year ended December 31, 2004, filed on March 15, 2005.
	•	Amended Annual Report on Form 10-K/ A for the year ended December 31, 2004, filed on April 14, 2005.
	•	Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed on May 10, 2005.
	•	Current Reports on Form 8-K, filed on AREP on January 5, 2005, January 27, 2005, February 2, 2005, February 10, 2005, April 7, 2005, May 10, 2005, May 27, 2005, June 3, 2005, and June 20, 2005.

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American Real Estate Partners, L.P.
	Report of Independent Registered Public Accounting Firm			F-4
	Report of Independent Registered Public Accounting Firm			F-5
	Consolidated Balance Sheets as of March 31, 2005 (unaudited), December 31, 2004 and 2003			F-6
	Consolidated Statements of Earnings for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-7
	Consolidated Statements of Changes in Partners’ Equity and Comprehensive Income for the three months ended March 31, 2005 (unaudited), and the years ended December 31, 2004, 2003 and 2002			F-8
	Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002			F-9
	Notes to Consolidated Financial Statements			F-14
	Schedule III — Real Estate Owned and Revenues Earned (by tenant or guarantor, as applicable)			F-52
American Real Estate Partners, L.P. Supplemental Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm			F-63
	Report of Independent Registered Public Accounting Firm			F-64
	Supplemental Consolidated Balance Sheets as of March 31, 2005 (unaudited), December 31, 2004 and 2003			F-65
	Supplemental Consolidated Statements of Earnings for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-66
	Supplemental Consolidated Statements of Changes in Partners’ Equity and Comprehensive Income for the three months ended March 31, 2005 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-68
	Supplemental Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-70
	Notes to Supplemental Consolidated Financial Statements			F-75
American Real Estate Holdings Limited Partnership
	Report of Independent Registered Public Accounting Firm			F-118
	Report of Independent Registered Public Accounting Firm			F-119
	Consolidated Balance Sheets as of March 31, 2005 (unaudited), December 31, 2004 and 2003			F-120
	Consolidated Statements of Earnings for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-121
	Consolidated Statements of Changes in Partners’ Equity and Comprehensive Income for the three months ended March 31, 2005 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-122
	Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-123
	Notes to Consolidated Financial Statements			F-125
American Real Estate Holdings Limited Partnership Supplemental Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm			F-159
	Report of Independent Registered Public Accounting Firm			F-160
	Supplemental Consolidated Balance Sheets as of March 31, 2005 (unaudited), December 31, 2004 and 2003			F-161
	Supplemental Consolidated Statements of Earnings for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-162

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	Supplemental Consolidated Statements of Changes in Partners’ Equity and Comprehensive Income for the three months ended March 31, 2005 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-163
	Supplemental Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002			F-164
	Notes to Supplemental Consolidated Financial Statements			F-166
American Property Investors, Inc.
	Independent Auditors’ Report			F-207
	Balance Sheet as of December 31, 2004			F-208
	Notes to Financial Statements			F-209
NEG Holding LLC
	Report of Independent Registered Public Accounting Firm			F-212
	Report of Independent Registered Public Accounting Firm			F-213
	Consolidated Balance Sheets as of December 31, 2004 and 2003			F-214
	Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002			F-215
	Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002			F-216
	Consolidated Statements of Members’ Equity for the years ended December 31, 2004, 2003 and 2002			F-217
	Notes to Consolidated Financial Statements			F-218
	Consolidated Balance Sheet as of March 31, 2005 (unaudited)			F-233
	Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004 (unaudited)			F-234
	Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)			F-235
	Consolidated Statements of Members’ Equity for the three months ended March 31, 2005 (unaudited)			F-236
	Notes to Consolidated Financial Statements for the three months ended March 31, 2005 and 2004 (unaudited)			F-237
Panaco, Inc.
	Report of Independent Registered Public Accounting Firm			F-242
	Balance Sheets as of December 31, 2004 and Debtor-In-Possession as of December 31, 2003			F-243
	Statements of Operations for the years ended December 31, 2004, 2003 and 2002			F-244
	Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2004, 2003 and 2002			F-245
	Statement of Cash Flows for the years ended December 31, 2004, 2003 and 2002			F-246
	Notes to Financial Statements			F-247
	Balance Sheet as of March 31, 2005 (unaudited)			F-264
	Statements of Operations for the three months ended March 31, 2005 and 2004 (unaudited)			F-265
	Statements of Changes in Shareholders’ Equity as December 31, 2004 and March 31, 2005 (unaudited)			F-266
	Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)			F-267
	Notes to Financial Statements for the three months ended March 31, 2005 and 2004 (unaudited)			F-268
GB Holdings, Inc. and Subsidiaries
	Report of Independent Registered Public Accounting Firm			F-274
	Consolidated Balance Sheets as of December 31, 2004 and 2003			F-275
	Consolidated Statement of Operations for the years ended December 31, 2004, 2003 and 2002			F-276

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Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002			F-277
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002			F-278
Notes to Consolidated Financial Statements			F-279
Schedule II: Valuation and Qualifying Accounts			F-294
Condensed Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004			F-295
Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004 (unaudited)			F-296
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)			F-297
Notes to Condensed Consolidated Financial Statements			F-298

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	/s/ GRANT THORNTON LLP

F-4

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	/s/ KPMG LLP

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				March 31,				December 31,
				2005				2004				2003
				(Unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents (Note 2)			$	1,245,762			$	762,708			$	487,498
	Investment in U.S. government and agency obligations (Note 4)				68,894				96,840				52,583
	Marketable equity and debt securities (Note 5)				68,497				2,248				55,826
	Due from brokers (Note 6)				147,223				123,001				—
	Restricted cash				28,537				19,856				15,058
	Receivables and other current assets				43,066				51,575				43,420
	Real estate leased to others:
		Current portion of lease amortization for leases accounted for under the financing method (Note 8)			3,740				3,912				5,738
	Properties held for sale (Notes 9 and 15)				33,995				58,021				128,813
	Current portion of investment in debt securities of affiliates (Note 12)				10,429				10,429				—
	Current portion of deferred tax asset (Note 23)				2,685				2,685				2,982
		Total current assets			1,652,828				1,131,275				791,918
Investment in U.S. government and agency obligations (Note 4)					5,533				5,491				8,990
Other investments (Note 7)					244,602				245,948				50,328
Land and construction-in-progress (Note 15)					106,000				106,537				43,459
Real estate leased to others:
	Accounted for under the financing method (Notes 8, 15 and 16)				75,949				85,281				131,618
	Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16)				51,127				49,118				76,443
Hotel, casino and resort operating properties, net of accumulated depreciation:
	American Casino & Entertainment Properties LLC (Notes 10 and 17)				288,890				289,360				298,703
	Hotel and resorts (Notes 9 and 11)				46,041				50,132				41,526
Deferred finance costs and other assets, net					24,669				21,038				3,833
Long-term portion of investment in debt securities of affiliates (Note 12)					114,364				115,075				24,696
Investment in NEG Holding LLC (Note 14)					97,693				87,800				69,346
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13)					9,138				10,603				30,854
Deferred tax asset (Note 23)					58,851				65,399				74,892
		Total		$	2,775,685			$	2,263,057			$	1,646,606
LIABILITIES AND PARTNERS’ EQUITY
Current Liabilities:
	Current portion of mortgages payable (Notes 8, 9 and 16)			$	4,205			$	3,700			$	4,892
	Mortgages on properties held for sale (Notes 9 and 16)				20,372				27,477				82,861
	Accounts payable, accrued expenses and other current liabilities (Note 20)				76,100				81,793				45,774
	Securities sold not yet purchased (Note 6)				83,750				90,674				—
	Credit facility due affiliates (Notes 14 and 17)				—				—				25,000
		Total current liabilities			184,427				203,644				158,527
Other liabilities					21,817				23,239				22,980
Long-term portion of mortgages payable (Notes 8, 9 and 16)					55,614				60,719				93,236
Senior secured notes payable and credit facility (Note 18)					215,000				215,000				—
Senior unsecured notes payable-81/8% due 2012-net of unamortized discount of $2,321 and $2,402 at March 31, 2005 and December 31, 2004 (Note 19)					350,679				350,598				—
Senior unsecured notes payable-71/8% due 2013					480,000				—				—
Preferred limited partnership units:
	$10 liquidation preference, 5% cumulative pay-in-kind; 10,900,000 authorized; 10,800,397, 10,286,264 and 9,796,607 issued and outstanding as of March 31, 2005 and December 31, 2004 and 2003 (Note 24)				108,006				106,731				101,649
		Total long-term liabilities			1,231,116				756,287				217,865
Commitments and contingencies (Notes 3 and 24):
Partners’ Equity:
Limited partners:
	Depositary units; 47,850,000 authorized; 47,235,484 outstanding				1,383,913				1,328,031				1,184,870
	General partner				(11,850	)			(12,984	)			97,265
Treasury units at cost:
	1,137,200 depositary units (Note 28)				(11,921	)			(11,921	)			(11,921	)
	Partners’ equity (Notes 2 and 3)				1,360,142				1,303,126				1,270,214
		Total		$	2,775,685			$	2,263,057			$	1,646,606

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			Three Months Ended
			March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)
Revenues:
	Hotel and casino operating income (Note 10)		$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
	Land, house and condominium sales			8,279				5,014				26,591				13,265				76,024
	Interest income on financing leases			1,966				2,936				9,880				13,115				14,722
	Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7)			13,554				4,889				44,418				22,583				30,569
	Rental income			2,035				2,027				7,916				7,092				6,852
	Hotel and resort operating income (Note 11)			5,563				1,335				16,211				12,376				12,921
	Accretion of investment in NEG Holding LLC (Note 14)			9,893				7,904				34,432				30,142				32,879
	NEG management fee			3,275				2,619				11,563				7,967				7,637
	Dividend and other income (Notes 5 and 7)			4,206				834				3,133				3,061				2,720
	Equity in (loss) earnings of GB Holdings, Inc. (Note 13)			(986	)			(348	)			(2,113	)			(3,466	)			305
				130,623				102,219				452,012				368,946				434,652
Expenses:
	Hotel and casino operating expenses (Note 10)			57,624				54,243				227,603				216,857				217,938
	Cost of land, house and condominium sales			7,047				3,358				18,486				9,129				54,640
	Hotel and resort operating expenses (Note 11)			5,405				1,424				12,730				8,773				10,536
	Interest expense (Notes 15, 16, 17, 18, 19 and 22)			19,161				6,181				46,099				21,103				27,297
	Depreciation and amortization			7,154				7,422				29,815				24,802				23,646
	General and administrative expenses (Note 3)			7,610				4,364				20,952				14,081				14,134
	Property expenses			952				1,085				4,340				4,472				3,862
	Provision for losses on real estate			—				—				3,150				750				3,212
				104,953				78,077				363,175				299,967				355,265
	Operating income			25,670				24,142				88,837				68,979				79,387
Other gains and (losses):
	(Loss) on sale of other assets			(180	)			(4	)			—				(1,503	)			(353	)
	Gain on sale of marketable equity and debt securities			—				28,857				40,159				2,607				—
	Unrealized losses on securities sold short (Note 6)			21,704				—				(23,619	)			—				—
	Impairment loss on equity interest in GB Holdings, Inc. (Note 13)			—				—				(15,600	)			—				—
	Write-down of marketable equity and debt securities and other investments (Note 5)			—				—				—				(19,759	)			(8,476	)
	Gain on sales and disposition of real estate (Note 15)			186				6,047				5,262				7,121				8,990
	Loss on limited partnership interests			—				—				—				—				(3,750	)
	Minority interest in net earnings of Stratosphere Corporation (Note 10)			—				—				—				—				(1,943	)
	Income from continuing operations before income taxes			47,380				59,042				95,039				57,445				73,855
	Income tax (expense) benefit (Note 23)			(7,650	)			(6,169	)			(16,763	)			1,573				(10,096	)
	Income from continuing operations			39,730				52,873				78,276				59,018				63,759
Discontinued operations:
	Income from discontinued operations			957				3,218				7,500				7,653				6,937
	Gain on sales and disposition of real estate			18,723				6,929				75,197				3,353				—
	Total income from discontinued operations			19,680				10,147				82,697				11,006				6,937
	Net earnings		$	59,410			$	63,020			$	160,973			$	70,024			$	70,696
Net earnings attributable to (Note 1):
	Limited partners		$	58,228			$	57,608			$	152,507			$	59,360			$	63,168
	General partner			1,182				5,412				8,466				10,664				7,528
			$	59,410			$	63,020			$	160,973			$	70,024			$	70,696
Net earnings per limited partnership unit (Notes 2 and 21):
Basic earnings:
	Income from continuing operations		$	0.84			$	1.03			$	1.55			$	1.00			$	1.12
	Income from discontinued operations		$	0.42				0.22				1.76				0.24				0.15
	Basic earnings per LP unit		$	1.26			$	1.25			$	3.31			$	1.24			$	1.27
	Weighted average limited partnership units outstanding			46,098,284				46,098,284				46,098,284				46,098,284				46,098,284
Diluted earnings:
	Income from continuing operations		$	0.81			$	0.93			$	1.48			$	0.94			$	1.00
	Income from discontinued operations			0.39				0.19				1.57				0.19				0.12
	Diluted earnings per LP unit		$	1.20			$	1.12			$	3.05			$	1.13			$	1.12
	Weighted average limited partnership units and equivalent partnership units outstanding			49,857,622				52,499,303				51,542,312				54,489,943				56,466,698

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							Limited Partners’
							Equity
			General
			Partner’s												Held in Treasury								Total
			Equity				Depositary				Preferred												Partners’
			(Deficit)				Units				Units				Amounts				Units				Equity
			(In $000’s)
Balance, December 31, 2001			$	58,846			$	996,701			$	92,198			$	(11,921	)			1,137				1,135,824
Comprehensive income:
	Net earnings			7,528				63,168				—				—				—				70,696
	Reclassification of unrealized loss on sale of debt securities			211				10,384				—				—				—				10,595
	Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable			131				6,451				—				—				—				6,582
	Net unrealized losses on securities available for sale			(5	)			(237	)			—				—				—				(242	)
	Comprehensive income			7,865				79,766				—				—				—				87,631
	Net adjustment for acquisition of minority interest (Note 10)			21,151				—				—				—				—				21,151
	Pay-in-kind distribution (Note 22)			—				(4,610	)			4,610				—				—				—
	Capital contribution to American Casino (Note 10)			831				—				—				—				—				831
Balance, December 31, 2002				88,693				1,071,857				96,808				(11,921	)			1,137				1,245,437
Comprehensive income:
	Net earnings			10,664				59,360				—				—				—				70,024
	Reclassification of unrealized loss on sale of debt securities			15				746				—				—				—				761
	Net unrealized gains on securities available for sale			183				8,991				—				—				—				9,174
	Sale of marketable equity securities available for sale			(6	)			(274	)			—				—				—				(280	)
	Comprehensive income			10,856				68,823				—				—				—				79,679
	Pay-in-kind distribution (Note 22)			—				(2,391	)			2,391				—				—				—
	Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 23)			524				46,581				—				—				—				47,105
	Capital distribution (Note 10)			(2,808	)			—				—				—				—				(2,808	)
	Reclassification of Preferred LP units to liabilities (Note 22)			—				—				(99,199	)			—				—				(99,199	)
Balance, December 31, 2003				97,265				1,184,870				—				(11,921	)			1,137				1,270,214
Comprehensive income:
	Net earnings			8,466				152,507				—				—				—				160,973
	Reclassification of unrealized gains on marketable securities sold			(190	)			(9,378	)			—				—				—				(9,568	)
	Net unrealized gains on securities available for sale			1				32				—				—				—				33
	Comprehensive income			8,277				143,161				—				—				—				151,438
	Capital distribution from American Casino (Note 10)			(17,916	)			—				—				—				—				(17,916	)
	Capital contribution to American Casino (Note 10)			22,800				—				—				—				—				22,800
	Arizona Charlie’s acquisition (Note 10)			(125,900	)			—				—				—				—				(125,900	)
	Change in deferred tax asset related to acquisition of Arizona Charlie’s			2,490				—				—				—				—				2,490
Balance, December 31, 2004				(12,984	)			1,328,031				—				(11,921	)			1,137				1,303,126
Comprehensive income:
	Net earnings			1,182				58,228				—				—				—				59,410
	Net unrealized losses on securities available for sale			(48	)			(2,346	)			—				—				—				(2,394	)
	Comprehensive income			1,134				55,882				—				—				—				57,016
Balance, March 31, 2005			$	(11,850	)		$	1,383,913			$	—			$	(11,921	)		$	1,137			$	1,360,142

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				Three Months Ended
				March 31,								Years Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)
Cash flows from operating activities:
	Income from continuing operations			$	39,730			$	52,873			$	78,276			$	59,018			$	63,759
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization			7,154				7,422				29,815				24,802				23,646
		Preferred LP unit interest expense			1,286				1,225				5,082				2,450				—
		Gain on sale of marketable equity securities			—				(28,857	)			(40,159	)			(2,607	)			—
		Unrealized losses on securities sold short			(21,704	)			—				23,619				—				—
		Impairment loss on equity interest in GB Holdings, Inc.			—				—				15,600				—				—
		Gain on sales and disposition of real estate			(186	)			(6,047	)			(5,262	)			(7,121	)			(8,990	)
		Loss on limited partnership interests											—				—				3,750
		Loss on sale of assets			180				4				96				1,503				353
		Provision for loss on real estate			—				—				3,150				750				3,212
		Write-down of marketable equity and debt securities and other investments			—				—				—				19,759				8,476
		Minority interest in net earnings of Stratosphere Corporation			—				—				—				—				1,943
		Equity in losses (earnings) of GB Holdings, Inc.			986				348				2,113				3,466				(305	)
		Deferred gain amortization			(510	)			(510	)			(2,038	)			(2,038	)			(2,038	)
		Accretion of investment in NEG Holding LLC			(9,893	)			(7,904	)			(34,432	)			(30,142	)			(32,879	)
		Deferred income tax expense (benefit)			6,548				1,615				13,946				(5,875	)			9,785
	Changes in operating assets and liabilities:
		(Increase) decrease in receivables and other assets			8,457				(6,755	)			(10,234	)			(299	)			2,944
		Increase in due from brokers			(2,518	)			—				(123,001	)			—				—
		Increase (decrease) in land and construction-in-progress			5,950				(455	)			(1,626	)			(4,106	)			24,215
		Increase in restricted cash			(8,682	)			—				(4,798	)			(13,095	)			—
		Increase (decrease) in accounts payable, accrued expenses and other liabilities			(505	)			12,717				92,476				(37,328	)			271

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				Three Months Ended
				March 31,								Years Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)
		Net cash provided by continuing operations			26,293				25,676				42,623				9,137				98,142
	Total income from discontinued operations				19,680				10,147				82,697				11,006				6,937
	Depreciation and amortization				31				210				1,244				5,129				4,464
	Net gain from property transactions				(18,723	)			(6,929	)			(75,197	)			(3,353	)			—
		Net cash provided by discontinued operations			988				3,428				8,744				12,782				11,401
		Net cash provided by operating activities			27,281				29,104				51,367				21,919				109,543
Cash flows from investing activities:
	Increase (decrease) in other investments				—				351				2,942				(28,491	)			(23,200	)
	Repayments of mezzanine loans included in other investments				—				—				49,130				12,200				23,000
	Net proceeds from the sales and disposition of real estate				4,650				11,346				16,790				15,290				20,513
	Principal payments received on leases accounted for under the financing method				908				1,112				4,219				5,310				5,941
	Principal payments received on investments in debt securities of affiliates				2,700				—				—				—				—
	Purchase of debt securities included in other investments				—				—				(245,166	)			—				—
	Purchase of debt securities of affiliates				—				—				(65,500	)			—				—
	Purchase of Atlantic Holdings debt included in debt securities due from affiliates				—				—				(36,000	)			—				—
	Acquisition of Arizona Charlies’				—				—				(125,900	)			—				—
	Additions to hotel, casino and resort operating property				(4,781	)			(1,492	)			(16,203	)			(32,911	)			(21,715	)
	Acquisition of hotel and resort operating property				—				—				(16,463	)			—				—
	Acquisitions of rental real estate				—				(14,583	)			(14,583	)			—				(18,226	)
	Acquisition of land and construction in progress				—				—				(61,845	)			—				—
	Additions to rental real estate				—				(166	)			(18	)			(413	)			(181	)
	(Increase) decrease in investment in U.S. Government and Agency Obligations (Note 2)				27,903				(61,077	)			(40,757	)			274,478				(22,410	)

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				Three Months Ended
				March 31,								Years Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)
	Increase in marketable equity and debt securities				(66,250	)			—				—				(45,140	)			(4,415	)
	Increase in restricted cash				—				(219,313	)			—				—				—
	Proceeds from sale of marketable equity and debt securities				—				64,471				90,614				3,843				—
	Decrease in note receivable from affiliate				—				—				—				250,000				—
	Decrease in minority interest in Stratosphere Corp.				—				—				—				—				(44,744	)
	Decrease in investment in Stratosphere Corp.				—				—				—				788				—
	Investment in NEG, Inc.				—				—				—				(148,101	)			—
	Guaranteed payment from NEG Holding LLC				—				—				15,979				18,229				21,653
	Priority distribution from NEG Holding LLC				—				—				—				40,506				—
	Decrease in due to affiliate				—				—				—				—				(68,491	)
	Other				—				(50	)			(194	)			560				197
		Net cash (used in) provided by investing activities from continuing operations			(34,870	)			(219,401	)			(442,955	)			366,148				(132,078	)
Cash flows from investing activities from discontinued operations:
	Net proceeds from the sales and disposition of real estate				36,582				7,392				134,789				5,336				—
	Net cash (used in) provided by investing activities				1,712				(212,009	)			(308,166	)			371,484				(132,078	)
Cash flows from financing activities:
Partners’ Equity:
	Distributions to members				—				—				(17,916	)			—				—
	Member’s contribution				—				—				22,800				—				—
	Contributions to American Casino				—				—				—				—				598
Debt:
	Repayment of credit facilities				—				—				—				(2,904	)			(5,000	)
	Proceeds from credit facility				—				—				—				7,780				17,220
	Proceeds from Senior Notes Payable				480,000				215,000				565,409				—				—
	Decrease in due to affiliates				(16,602	)			—				(24,925	)			—				—
	Proceeds from mortgages payable				—				—				10,000				20,000				12,700
	Payments on mortgages payable				—				—				—				(3,837	)			(462	)

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				Three Months Ended
				March 31,								Years Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)
	Periodic principal payments				(1,003	)			(1,738	)			(5,248	)			(6,484	)			(7,198	)
	Debt issuance costs				(8,334	)			(7,515	)			(18,111	)			—				—
	Other				—				—				—				—				242
		Net cash provided by financing activities			454,061				205,747				532,009				14,555				18,100
	Net increase (decrease) in cash and cash equivalents				483,054				22,842				275,210				407,958				(4,435	)
	Cash and cash equivalents, beginning of year				762,708				500,593				487,498				79,540				83,975
	Cash and cash equivalents at end of year			$	1,245,762			$	523,435			$	762,708			$	487,498			$	79,540
Supplemental information:
	Cash payments for interest, net of amounts capitalized			$	9,517			$	5,667			$	44,258			$	65,110			$	37,176
Supplemental schedule of noncash investing and financing activities:
	Reclassification of real estate to operating lease			$	3,068			$	—			$	—			$	5,065			$	13,403
	Reclassification from hotel and resort operating properties				—				(6,395	)			(6,428	)			—				—
	Reclassification of real estate from financing lease				(358	)			—				(1,920	)			(5,065	)			(13,503	)
	Reclassification of real estate from operating lease				(411	)			(14,353	)			(38,452	)			(126,263	)			—
	Reclassification of real estate to property held for sale				716				20,748				46,800				126,263				100
	Reclassification from properties held for sale				(3,015	)			—				—				—				—
	Decrease in other investments				—				—				—				(3,453	)			—
	Decrease in deferred income				—				—				—				2,565				—
	Increase in real estate accounted for under the operating method				—				—				—				888				—
	Reclassification from marketable equity and debt securities				—				—				—				—				(20,494	)
	Reclassification from receivable and other assets				—				—				—				(1,631	)			—
	Reclassification to other investments				—				—				—				1,631				20,494
				$	—			$	—			$	—			$	—			$	—

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		Three Months Ended
		March 31,								Years Ended December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Net unrealized gains (losses) on securities available for sale		$	(2,394	)		$	2,378			$	33			$	9,174			$	(242	)
Increase in equity and debt securities		$	805			$	300			$	1,740			$	1,200			$	2,890
Contribution of note from NEG Holding LLC		$	—			$	—			$	—			$	10,940			$	—
Change in tax asset related to acquisition		$	—			$	—			$	2,490			$	—			$	—

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1.	Description of Business and Basis of Presentation

2.	Summary of Significant Accounting Policies

F-14

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F-15

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	Other investments

F-16

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	Revenue and Expense Recognition

F-17

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3.	Related Party Transactions

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4.	Investment in U.S. Government and Agency Obligations

		March 31,								December 31,
		2005								2004								2003
		Cost				Carrying				Cost				Carrying				Cost				Carrying
		Basis				Value				Basis				Value				Basis				Value
		(Unaudited)
Available for Sale:
Matures in:
less than 1 year		$	68.9			$	68.9			$	96.8			$	96.8			$	52.8			$	52.6
2-5 years			5.6				5.5				5.6				5.5				9.0				9.0
		$	74.5			$	74.4			$	102.4			$	102.3			$	61.8			$	61.6

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5.	Marketable Equity and Debt Securities (in $millions)

			March 31,								December 31,
			2005								2004								2003
			Cost				Carrying				Cost				Carrying				Cost				Carrying
			Basis				Value				Basis				Value				Basis				Value
			(Unaudited)
Available for Sale:
Philip Service Corporation(a):
	Equity		$	—			$	—			$	—			$	—			$	—			$	—
Corporate bonds(b)				—				—				—				—				45.1				51.6
Other				72.4				68.5				2.2				2.2				1.3				4.2
	Total		$	72.4			$	68.5			$	2.2			$	2.2			$	46.4			$	55.8

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6.	Due from Brokers

7.	Other Investments (in $000’s)

		Balance at				Balance at
		March 31,				December 31,
		2005				2004				2003
		(Unaudited)
Peninsula/ Hampton & Alex Hotel(a) and(b)		$	—			$	—			$	42,030
WestPoint Stevens(c)			205,850				205,850				—
Union Power Partners L.P. and Panda Gila River L.P.(d)			37,973				39,316				—
Other			779				782				8,298
		$	244,602			$	245,948			$	50,328

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8.	Real Estate Leased to Others Accounted for Under the Financing Method

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Minimum lease payments receivable		$	87,846			$	97,725			$	161,785
Unguaranteed residual value			43,422				48,980				74,651
			131,268				146,705				236,436
Less unearned income			51,579				57,512				99,080
			79,689				89,193				137,356
Less current portion of lease amortization			3,740				3,912				5,738
		$	75,949			$	85,281			$	131,618

Year Ending December 31,		Amount
2005		$	11,941
2006			11,746
2007			10,832
2008			9,476
2009			9,255
Thereafter			44,475
		$	97,725

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9.	Real Estate Leased to Others Accounted for Under the Operating Method

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land		$	13,286			$	13,666			$	24,040
Commercial Buildings			52,672				45,972				83,252
			65,958				59,638				107,292
Less accumulated depreciation			14,831				10,520				30,849
		$	51,127			$	49,118			$	76,443

Year Ending December 31,		Amount
2005		$	7,186
2006			6,232
2007			5,649
2008			5,383
2009			5,001
Thereafter			19,753
		$	49,204

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Leased to others		$	40,035			$	74,444			$	146,416
Vacant			450				450				2,550
			40,485				74,894				148,966
Less accumulated depreciation			6,490				16,873				20,153
		$	33,995			$	58,021			$	128,813

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		Three Months Ended
		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Rental income		$	1,462			$	5,871			$	15,658			$	23,093			$	21,073
Hotel and resort operating income			709				1,064				3,868				6,128				5,676
			2,171				6,935				19,526				29,221				26,749
Mortgage interest expense			399				1,726				3,858				7,208				6,737
Depreciation and amortization			31				210				1,244				5,130				4,464
Property expenses			147				1,107				3,123				3,549				3,409
Hotel and resort operating expenses			637				674				3,801				5,681				5,202
			1,214				3,717				12,026				21,568				19,812
Income from discontinued operations		$	957			$	3,218			$	7,500			$	7,653			$	6,937

10.	Hotel and Casino Operating Properties

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F-26

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				Three Months Ended
				March 31,								Year Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)								(In $000’s)
Hotel and casino operating income:
	Casino			$	47,729			$	42,592			$	167,972			$	147,888			$	143,057
	Hotel				15,793				13,888				54,653				47,259				44,263
	Food and beverage				17,076				16,701				66,953				59,583				56,349
	Tower, retail, and other income				8,206				7,976				33,778				30,336				28,247
	Gross revenues				88,804				81,157				323,356				285,066				271,916
	Less promotional allowances				(5,966	)			(6,148	)			(23,375	)			(22,255	)			(21,893	)
	Net revenues			$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
Hotel and casino operating expenses:
	Casino			$	15,900			$	15,696			$	61,985			$	61,284			$	59,879
	Hotel				6,023				5,596				24,272				22,074				20,142
	Food and beverage				12,376				11,620				48,495				44,990				43,393
	Other operating expenses				3,619				3,151				14,131				13,524				14,505
	Selling, general, and administrative				19,706				18,180				78,720				74,985				80,019
		Total expenses		$	57,624			$	54,243			$	227,603			$	216,857			$	217,938

		March 31,				December 31,
		2005				2004				2003
		(Unaudited)
Land and improvements, including land held for development		$	47,274			$	47,210			$	47,041
Building and improvements			221,847				221,314				220,280
Furniture, fixtures and equipment			112,379				108,595				98,586
Construction in progress			7,577				7,348				7,224
			389,077				384,467				373,131
Less accumulated depreciation and amortization			100,187				95,107				74,428
		$	288,890			$	289,360			$	298,703

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Years Ending December 31,		(In $000s)
2005		$	5,877
2006			4,778
2007			3,615
2008			2,177
2009			1,224
Thereafter			959
Total Payments		$	18,630

11.	Hotel and Resort Operating Properties

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12.	Investment in Debt Securities of Affiliates (in $000’s):

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Atlantic Holdings/GB Holdings(a)		$	60,650			$	60,004			$	24,696
TransTexas(b)			27,500				27,500				—
Panaco(c)			36,643				38,000				—
		$	124,793			$	125,504			$	24,696
Less current portion			(10,429	)			(10,429	)			—
		$	114,364			$	115,075			$	24,696

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13.	Equity Interest in GB Holdings, Inc.

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	•	$26,914,500 principal amount of the Atlantic Holdings Notes;
	•	$3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and
	•	3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings, representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis.

14.	National Energy Group

a.	National Energy Group, Inc.

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b.	Investment in NEG Holding LLC

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Current assets		$	30,991			$	23,146			$	33,415
Noncurrent assets(1)			251,438				237,127				190,389
Total assets		$	282,429			$	260,273			$	223,804
Current liabilities		$	35,699			$	22,456			$	14,253
Noncurrent liabilities			83,732				63,636				48,514
Total liabilities			119,431				86,092				62,767
Members’ equity			162,998				174,181				161,037
Total liabilities and members’ equity		$	282,429			$	260,273			$	223,804

(1)	Primarily oil and gas properties

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		Three Months Ended
		March 31,								Year Ended December 31,
		2005				2004				2004				2003				2002
		(Unaudited)								(in $000’s)
Total revenues		$	2,870			$	25,569			$	78,727			$	77,606			$	35,900
Costs and expenses			(13,137	)			(11,044	)			(47,313	)			(46,766	)			(32,064	)
Operating income			(10,267	)			14,525				31,414				30,840				3,836
Other income (expense)			(916	)			(358	)			(2,292	)			30				10,090
Net income		$	(11,183	)		$	14,167			$	29,122			$	30,870			$	13,926

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Investment in Holding LLC at beginning of period		$	87,800			$	69,346			$	108,880
Priority distribution from Holding LLC			—				—				(51,446	)
Guaranteed payment from Holding LLC			—				(15,978	)			(18,230	)
Accretion of investment in Holding LLC			9,893				34,432				30,142
Investment in Holding LLC at end of period		$	97,693			$	87,800			$	69,346

	1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis.
	2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006.
	3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon.
	4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon.
	5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts.

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15.	Significant Property Transactions

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16.	Mortgages Payable

														Balance at
										Balance at				December 31,
						Annual Principal				March 31,
Range of Interest Rates		Range of Maturities				and Interest Payment				2005				2004				2003
										(Unaudited)
5.630%-8.250%			10/15/07-10/01/14			$	9,373			$	80,191			$	91,896			$	180,989
Less current portion and mortgages on properties held for sale											(24,577	)			(31,177	)			(87,753	)
										$	55,614			$	60,719			$	93,236

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Year Ending December 31,		Amount
2005		$	4,759
2006			5,116
2007			11,428
2008			24,385
2009			7,211
2010-2014			38,997
		$	91,896

17.	Senior Notes and Credit Facilities Due Affiliates

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18.	Senior Secured Notes Payable and Credit Facility

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19.	Senior Unsecured Notes Payable

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20.	Accounts Payable, Accrued Expenses and Other Current Liabilities

		March 31,				December 31,
		2005				2004				2003
Accrued liabilities		$	11,617			$	11,463			$	11,951
Accrued payroll			10,984				11,113				12,507
Due to Panaco, Inc.			—				16,242				—
Other			53,499				42,975				21,316
		$	76,100			$	81,793			$	45,774

21.	Earnings Per Limited Partnership Unit

	Net Income Per Unit

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			Three Months Ended
			March 31,								Year Ended December 31,
			2005				2004				2004				2003				2002
			In $000’s (except per unit data)
Attributable to Limited Partners:
	Basic income from continuing operations		$	38,940			$	47,663			$	71,476			$	48,588			$	56,380
Add Preferred LP Unit distribution				1,259				1,201				4,981				4,792				4,518
	Income before discontinued operations			40,199				48,864				76,457				53,380				60,898
	Income from discontinued operations			19,288				9,945				81,031				10,772				6,788
	Diluted earnings		$	59,487			$	58,809			$	157,488			$	64,152			$	67,686
	Weighted average limited partnership units outstanding			46,098,284				46,098,284				46,098,284				46,098,284				46,098,284
	Dilutive effect of redemption of Preferred LP Units			3,759,338				6,401,019				5,444,028				8,391,659				10,368,414
	Weighed average limited partnership units and equivalent partnership units outstanding			49,857,622				52,499,303				51,542,312				54,489,943				56,466,698
Basic earnings:
	Income from continuing operations		$	0.84			$	1.03			$	1.55			$	1.00			$	1.12
	Income from discontinued operations			0.42				0.22				1.76				0.24				0.15
Basic earnings per LP unit			$	1.26			$	1.25			$	3.31			$	1.24			$	1.27
Diluted earnings:
	Income from continuing operations		$	0.81			$	0.93			$	1.48			$	0.94			$	1.00
	Income from discontinued operations			0.39				0.19				1.57				0.19				0.12
Diluted earnings per LP unit			$	1.20			$	1.12			$	3.05			$	1.13			$	1.12

22.	Preferred Units

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23.	Income Taxes (in $000’s)

			December 31,
			2004				2003
The difference between the book basis and the tax basis of the net assets of the Company, not directly subject to income taxes, is as follows:
	Book basis of AREH net assets excluding American Casino and NEG		$	1,319,566			$	1,149,418
	Excess of tax over book			120,820				79,238
	Tax basis of net assets		$	1,440,386			$	1,228,656

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a.	Corporate Income Taxes

		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Current		$	(1,102	)		$	(4,554	)		$	(2,626	)		$	(4,302	)		$	(311	)
Deferred			(6,548	)			(1,615	)			(14,137	)			5,875				(9,785	)
		$	(7,650	)		$	(6,169	)		$	(16,763	)		$	1,573			$	(10,096	)

							December 31,
			March 31,
			2005				2004				2003
Deferred tax assets:
	Depreciation		$	38,424			$	39,209			$	39,858
	Net operating loss carryforwards			30,741				32,176				30,942
	Investment in Holding LLC			1,927				5,333				18,845
	Other			5,032				5,954				5,962
				76,124				82,672				95,607
	Valuation allowance			(14,588	)			(14,588	)			(17,733	)
	Subtotal			61,536				68,084				77,874
	Less current portion			(2,685	)			(2,685	)			(2,982	)
	Net deferred tax assets		$	58,851			$	65,399			$	74,892

		Year Ended December 31,
		2004				2003				2002
Federal statutory rate			35.0%				35.0%				35.0%
Tax deduction not given book benefit			0.0%				5.0%				0.0%
Income not subject to taxation			(25.3)%				(15.0)%				(22.9)%
Valuation allowance			(1.7)%				(27.3)%				(0.5)%
Other			1.2%				0.1%				0.3%
			9.2%				(2.2)%				11.9%

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	Corporate Income Taxes

24.	Commitments and Contingencies

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25.	Employee Benefit Plans

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26.	Fair Value of Financial Instruments

	Other Investments

		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Net				Estimated				Net				Estimated				Net				Estimated
		Investment				Fair Value				Investment				Fair Value				Investment				Fair Value
Total		$	244,602			$	247,600			$	245,948			$	248,900			$	50,328			$	55,000

	Mortgages Payable

		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Carrying				Estimated				Carrying				Estimated				Carrying		Estimated
		Value				Value				Value				Fair Value				Value		Fair Value
Total		$	80,191			$	81,955			$	91,896			$	93,900			$180,989		$	185,000

	Limitations

27.	Segment Reporting

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				Three Months Ended								Year Ended
				March 31,								December 31,
				2005				2004				2004				2003				2002
Revenues:
Hotel & casino operating properties				$	81,852			$	74,661			$	297,868			$	259,345			$	250,328
Land, house and condominium sales					8,279				5,014				26,591				13,265				76,024
Rental real estate					4,001				4,963				17,796				20,207				21,574
Hotel & resort operating properties					5,563				1,335				16,211				12,376				12,921
Oil & gas operating properties					13,168				10,523				45,995				38,109				40,516
Other investments					11,092				4,763				34,241				13,874				15,283
	Subtotal				123,955				101,259				438,702				357,176				416,646
	Reconciling items				6,668	(1)			960	(1)			13,310	(1)			11,770	(1)			18,006	(1)
		Total revenues		$	130,623			$	102,219			$	452,012			$	368,946			$	434,652
Net earnings:
Segment earnings:
Hotel & casino operating properties				$	24,228			$	20,418			$	70,265			$	42,488			$	32,390
Land, house and condominium sales					1,232				1,656				6,355				4,136				21,384
Oil & gas operating properties					10,113				8,092				34,849				30,879				33,411
Rental real estate					3,049				3,878				12,863				14,368				14,206
Hotel and resort operating properties					158				(89	)			2,674				4,220				2,679
Other investments					11,092				4,763				34,241				13,874				15,283
		Total segment earnings			49,872				38,718				161,247				109,965				119,353
Interest income					6,668				960				13,310				11,770				18,006
Interest expense					(19,161	)			(6,181	)			(46,099	)			(21,103	)			(27,297	)
General and administrative expenses					(4,555	)			(1,933	)			(9,806	)			(6,851	)			(7,029	)
Depreciation and amortization				$	(7,154	)		$	(7,422	)		$	(29,815	)		$	(24,802	)		$	(23,646	)
Operating Income				$	25,670			$	24,142			$	88,837			$	68,979			$	79,387
Gain on sales and disposition of real estate from continuing operations					186				6,047				5,262				7,121				8,990
(Loss) gain on sale of assets					(180	)			(4	)			—				(1,503	)			(353	)
Loss on sale of limited partnership interests					—				—				—				—				(3,750	)
Write-down of marketable equity and debt securities and other investments					—				—				—				(19,759	)			(8,476	)
Gain on sale of marketable equity securities					—				28,857				40,159				2,607				—
Unrealized losses on securities sold short					21,704				—				(23,619	)			—				—
Impairment loss on equity interest in GB Holdings, Inc.					—				—				(15,600	)			—				—

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		Three Months Ended								Year Ended
		March 31,								December 31,
		2005				2004				2004				2003				2002
Minority interest in net earnings of Stratosphere Corp.			—				—				—				—				(1,943	)
Income tax (expense) benefit			(7,650	)			(6,169	)			(16,763	)			1,573				(10,096	)
Income from discontinued operations			19,680				10,147				82,697				11,006				6,937
General partner’s share of net income			1,182				5,412				(8,466	)			(10,664	)			(7,528	)
Net earnings-limited partners’ unitholders		$	58,228			$	57,608			$	152,507			$	59,360			$	63,168

(1)	Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable.

							December 31,
			March 31,
			2005				2004				2003				2002
			(Unaudited)
Assets:
Rental real estate			$	164,811			$	196,332			$	340,062			$	359,700
Hotel and casino operating properties				288,890				289,360				298,703				290,775
Land and construction-in-progress				106,000				106,537				43,459				40,415
Hotel and resort operating properties				46,041				50,132				41,526				44,346
Other investments				466,252				472,103				231,050				479,104
				1,071,994				1,114,464				954,800				1,214,340
Reconciling items				1,703,691				1,148,593				691,806				491,691
	Total		$	2,775,685			$	2,263,057			$	1,646,606			$	1,706,031
Real estate investment capital expenditures:
Acquisitions:
Rental real estate			$	—			$	14,583			$	—			$	18,226
Land and construction-in-progress				—				61,845				—				—
Hotel and casino operating properties				—				125,900				—				—
Hotel and resort operating properties				—				16,463				—				—
			$	—			$	218,791			$	—			$	18,226
Developments:
Rental real estate			$	—			$	18			$	413			$	181
Land and construction-in-progress				—				17,947				—				1,138
Hotel and casino operating properties				4,711				13,589				31,844				19,133
Hotel and resort operating properties				70				2,614				1,067				2,582
			$	4,781			$	34,168			$	33,324			$	23,034

28.	Repurchase of Depositary Units

29.	Subsequent Events

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30.	Quarterly Financial Data (unaudited) (in $000’s, Except Per Unit Data)

			Three Months Ended(1)
			March 31,								June 30,								September 30,								December 31,
			2004				2003				2004				2003				2004				2003				2004				2003
Revenues			$	102,218			$	92,416			$	117,367			$	89,531			$	118,487			$	94,423			$	113,940			$	92,576
Operating Income			$	24,138			$	16,110			$	26,629			$	15,635			$	23,968			$	16,962			$	14,102			$	20,272
Gains (losses) on property transactions				6,047				1,138				(226	)			(272	)			(10	)			501				(549	)			5,754
Loss on sale of assets				—				—				—				—				—				(311	)			—				(1,192	)
Gain on sale of marketable equity and debt securities				28,857				—				8,310				—				—				2,168				2,992				439
Unrealized losses on securities sold short				—				—				—				—				—				—				(23,619	)			—
Impairment loss on equity interest in GB Holdings, Inc.				—				—				—				—				—				—				(15,600	)			—
Write-down of marketable equity and debt securities				—				(961	)			—				(18,798	)			—				—				—				—
Income (loss) from continuing operations before income tax				59,042				16,287				34,713				(3,435	)			23,958				19,320				(22,674	)			25,273
Income tax (expense) benefit				(6,169	)			(3,892	)			(3,088	)			(3,167	)			(3,637	)			(3,577	)			(3,869	)			12,209
Income (loss) from continuing operations				52,873				12,395				31,625				(6,602	)			20,321				15,743				(26,543	)			37,482
Income from discontinued operations				10,147				1,997				50,161				3,815				10,702				3,210				11,687				1,984
Net earnings (loss)			$	63,020			$	14,392			$	81,786			$	(2,787	)		$	31,023			$	18,953			$	(14,856	)		$	39,466
Net Earnings (loss) per limited Partnership unit(2):
Basic earnings:
	Income (loss) from continuing operations		$	1.03			$	0.15			$	0.65			$	(0.21	)		$	0.43			$	0.25			$	(0.56	)		$	0.81
	Income from discontinued operations			0.22				0.05				1.06				0.08				0.23				0.07				0.24				0.04
Basic earnings (loss) per LP unit			$	1.25			$	0.20			$	1.71			$	(0.13	)		$	0.66			$	0.32			$	(0.32	)		$	0.85
Diluted earnings:
	Income (loss) from continuing operations		$	0.93			$	0.15			$	0.60			$	(0.21	)		$	0.41			$	0.23			$	(0.56	)		$	0.71
	Income from discontinued operations			0.19				0.03				0.94				0.08				0.20				0.06				0.24				0.04
Diluted earnings (loss) per LP unit			$	1.12			$	0.18			$	1.54			$	(0.13	)		$	0.61			$	0.29			$	(0.32	)		$	0.75

(1)	All quarterly amounts have been reclassified for the effects of reporting discontinued operations.
(2)	Net earnings (loss) per unit is computed separately for each period and, therefore, the sum of such quarterly per unit amounts may differ from the total for the year.

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																																											Part 2 — Revenues earned for the Year Ended
															Part 1 — Real Estate Owned at December 31, 2004 — Accounted for Under the:																												December 31, 2004
															Operating Method																				Financing Method
																															Rent due and
																															Accrued or																Expended for
																							Amount								Received in								Minimum Lease				Total				Interest,
																							Carried at								Advance at								Payments Due				Revenue				Depreciation,				Net Income
							No. of				Amount of				Initial Cost				Cost of				Close of				Reserve for				End of				Net				and Accrued at				Applicable				Taxes, and				Applicable
			State				Locations				Encumbrances				to Company				Improvements				Period				Depreciation				Period				Investment				End of Period				to Period				Other Expenses				to Period
COMMERCIAL PROPERTY LAND AND BUILDING
	Acme Markets, Inc. and FPBT of Penn			PA				1																																			$	329,559	(3)		$	13,739	(3)		$	315,820
	Alabama Power Company			AL				5																																				44,889				(13,675	)			58,564
	Amer Stores, Eckerd & Marburn			NJ				1																																				45,454	(3)			8,518	(3)			36,936
	Atrium			VA				1																																				2,002,409	(3)			1,682,710	(3)			319,699
	Best Products Co., Inc.			VA				1							$	3,376,815			$	(350,000	)		$	3,026,815			$	257,538																114,217				487,522				(373,305	)
	Chesebrough-Pond ’s Inc.			CT				1																																				54,839	(3)			(9,000	)(3)			63,839
	Collins Foods International, Inc.			OR				3																																				10,379	(3)			1,300	(3)			9,079
	Collins Foods International, Inc.			CA				1																																				5,637	(3)			0	(3)			5,637
	Dillon Companies, Inc.			MO				1																																				23,369	(3)			0	(3)			23,369
	Dragon court			MA				1								3,744,706				37,571				3,782,277				308,037																143,148				718,750				(575,602	)
	Duke Power Co.			NC				1								3,464,225								3,464,225				458,819																797,177				114,705				682,472
	Easco Corp.			NC				1								1,046,012								1,046,012	(2)			66,634																396,250				8,244				388,006
	European American Bank and Trust Co.			NY				1																																				158,491	(3)			175,603	(3)			(17,112	)
	Farwell Bldg			MN				1																																				600,675	(3)			(215,173	)(3)			815,848
	First National Supermarkets, Inc.			CT				1			$	19,576,538																							$	18,937,655								1,779,799				1,148,329				631,470
	Fisher Scientific Company			IL				1																																				56,086	(3)			0	(3)			56,086
	Forte Hotels International, Inc.			NJ				1																																				441,288	(3)			7,747	(3)			433,541
	Fox Grocery Company			WV				1								1,919,486								1,919,486				13,375																211,197				13,375				197,822
	Gino’s, Inc.			OH				1								314,012								314,012				28,019																34,489				10,090				24,399
	Golf Road			IL				1																																				364,321	(3)			(9,173	)(3)			373,494
	Grand Union Co.			NY				1								874,765								874,765				104,090			$	45												108,000				20,818				87,182
	Grand Union Co.			VA				1																																				13,828	(3)			1,805	(3)			12,023
	Whalen			NY				1								7,934,020								7,934,020	(2)			226,925																12,050				813,152				(801,102	)
	Gunite			IN				1																																				0	(3)			66,930	(3)			(66,930	)
	G.D. Searle & Co.			MN				1								339,358								339,358				172,501				(3,083	)											37,000				2,562				34,438
	G.D. Searle & Co.			IL				1																																				37,168	(3)			8,550	(3)			28,618
	Integra A Hotel and Restaurant Co.			AL				2																																				127,984	(3)			2,646	(3)			125,338
	Integra A Hotel and Restaurant Co.			IN				1																																				45,272	(3)			204	(3)			45,068
	Integra A Hotel and Restaurant Co.			OH				1																																				39,770	(3)			0	(3)			39,770
	Integra A Hotel and Restaurant Co.			MO				1								414,887								414,887				17,105																91,818				10,376				81,442
	Integra A Hotel and Restaurant Co.			TX				1								438,097				(2,616	)			435,481	(2)			16,744																103,960				0				103,960
	Integra A Hotel and Restaurant Co.			MI				1																																				62,475	(3)			204	(3)			62,271
	Intermountain Color			KY				1								560,444								560,444				523,715																97,802				5,453				92,349
	J.C. Penney Company, Inc.			MA				1								2,484,262								2,484,262				1,987,410				(41,707	)											250,244				3,850				246,394
	Kings Buffet			FL				1								910,425								910,425				42,803				(279	)											117,000				39,061				77,939
	K-Mart Corporation			LA				1																																				0				31,394				(31,394	)
	K-Mart Corporation			WI				1																																				0	(3)			65,866	(3)			(65,866	)
	K-Mart Corporation			MN				1																																				0	(3)			85,348	(3)			(85,348	)
	K-Mart Corporation			IA				1																												973,484								93,963				26,423				67,540
	K-Mart Corporation			FL				1								2,636,000								2,636,000	(2)			1,899,765																251,420				6,815				244,605
	K-Mart Corporation			FL																																								0				735				(735	)
	K-Mart Corporation			IL				1								600,000								600,000				31,732																62,322				58,800				3,522
	Kobacker Stores, Inc.			MI				2								112,225								112,225								1,068				106,341			$	2,412				24,142				461				23,681
	Kobacker Stores, Inc.			KY				1								88,364								88,364								769				64,103				1,115				15,853				231				15,622
	Kobacker Stores, Inc.			OH				4								198,031								198,031								1,851				187,753				4,117				48,933				461				48,472
	Landmark Bancshares Corporation			MO				1																												3,303,464								482,092				0				482,092
	Louisiana Power and Light Company			LA				6								5,636,053								5,636,053				637,447																1,240,853				154,203				1,086,650
	Louisiana Power and Light Company			LA				7								7,015,989								7,015,989				727,786																1,299,275				174,669				1,124,606
	Marsh Supermarkets, Inc.			IN				1								5,001,933								5,001,933				3,229,039																506,300				131,479				374,821
	Mid-South			TN				1																																				771,125	(3)			535,186	(3)			235,939
	Montgomery Ward, Inc.			PA				1																																				156,267	(3)			(12,221	)(3)			168,488

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																																											Part 2 — Revenues earned for the Year Ended
															Part 1 — Real Estate Owned at December 31, 2004 — Accounted for Under the:																												December 31, 2004
															Operating Method																				Financing Method
																															Rent Due
																															and Accrued																Expended for
																							Amount								or Received								Minimum Lease				Total				Interest,
																							Carried at								in Advance at								Payments Due				Revenue				Depreciation,				Net Income
							No. of				Amount of				Initial Cost				Cost of				Close of				Reserve for				End of				Net				and Accrued at				Applicable				Taxes, and				Applicable
			State				Locations				Encumbrances				to Company				Improvements				Period				Depreciation				Period				Investment				End of Period				to Period				Other Expenses				to Period
COMMERCIAL PROPERTY LAND AND BUILDING
	Montgomery Ward, Inc.			NJ				1																																				113,765	(3)			3,227	(3)			110,538
	Morrison, Inc.			AL				1																																				0	(3)			44,213	(3)			(44,213	)
	Morrison, Inc.			GA				1																																				91,680				29,053				62,627
	Morrison, Inc.			VA				1								904,766								904,766	(2)			32,502																0				39,460				(39,460	)
	Morrison, Inc.			VA				1								861,134								861,134				46,236																0				21,793				(21,793	)
	North Carolina National Bank			SC				2								1,450,047								1,450,047				671,374																56,238				80,407				(24,169	)
	North Carolina National Bank			SC				1								153,365								153,365	(2)			103,365																0				3,851				(3,851	)
	Occidental Petroleum Corp.			CA				1																																				0				38				(38	)
	Ohio Power Co. Inc.			OH				1																												3,053,550								290,655				0				290,655
	Park West			KY				1																																				641,691	(3)			428,744	(3)			212,947
	Park West UPS			KY				1																																				932,538	(3)			596,187	(3)			336,351
	Penske Corp.			OH				1																																				0	(3)			65,756	(3)			(65,756	)
	Pneumo Corp.			OH				1								1,629,713								1,629,713				123,285																243,750				54,793				188,957
	Portland General Electric Company			OR				1				31,096,664																								45,903,530								3,984,278				2,526,316				1,457,962
	Rayovac			WI				1				14,855,137				22,065,852								22,065,852	(2)			2,243,143																2,788,657				1,224,533				1,564,124
	Safeway Stores, Inc.			LA				1																																				48,984	(3)			1,545	(3)			47,439
	Sams			MI				1								8,844,225								8,844,225	(2)			2,380,429																1,245,569				4,241				1,241,328
	Smith’s Management Corp.			NV				1																																				0				810				(810	)
	Southland Corporation			FL				4								862,367								862,367				516,348																100,359				3,313				97,046
	Staples			NY				1																																				136,332	(3)			21,304	(3)			115,028
	Stone Container			WI				1				5,696,064				9,028,574								9,028,574	(2)			1,526,831				(75,748	)											903,041				670,448				232,593
	Stop & Shop			NY				1																																				137,100	(3)			0	(3)			137,100
	Stop & Shop			NJ				1																																				55,565	(3)			45	(3)			55,520
	Stop “N Shop Co., Inc.			VA				1								2,158,099								2,158,099				115,294																109,255				207,934				(98,679	)
	Super Foods Services, Inc.			MI				1				3,819,320																								8,303,219								895,025				356,606				538,419
	Telecom Properties, Inc.			OK				1																																				0				506				(506	)
	Telecom Properties, Inc.			KY				1								340,321								340,321				3,544																36,000				3,686				32,314
	The A&P Company			MI				1																																				0	(3)			72,842	(3)			(72,842	)
	Tire Distribution Systems Inc.			TN				1																																				4,583	(3)			150	(3)			4,433
	Tops Market			NY				1								262,357								262,357				30,311				(15,727	)											31,453				6,062				25,391
	Toys “R” Us, Inc.			TX				1																																				0				5,077				(5,077	)
	Waban			NY				1																																				261,122	(3)			22,972	(3)			238,150
	Wetterau, Inc.			PA				1								400,000								400,000	(2)																			0				44,785				(44,785	)
	Wetterau, Inc.			NJ				1								747,116								747,116				57,759																150,800				25,671				125,129
	Wickes Companies, Inc.			CA				1																																				66,565	(3)			(12,192	)(3)			78,757
RESIDENTIAL PROPERTY LAND AND BUILDING
	Crown Cliffs			AL				1				6,926,225				11,550,899				112,579				11,663,478	(1)(2)			4,107,054																2,078,098				1,650,167				427,931
COMMERCIAL PROPERTY  — LAND
	Foodarama Supermarkets, Inc.			NY				1																																				13,232	(3)			4,002	(3)			9,230
	Foodarama Supermarkets, Inc.			PA				1																																				12,000	(3)			4,002	(3)			7,998
	Gino’s, Inc.			PA				1																																				6,751	(3)			4,002	(3)			2,749
	Gino’s, Inc.			MA				1																																				6,751	(3)			4,002	(3)			2,749
	Gino’s, Inc.			NJ				1																																				6,751	(3)			4,002	(3)			2,749
	J.C. Penney Company, Inc.			NY				1																																				917	(3)			0	(3)			917

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																																											Part 2 — Revenues Earned for the Year Ended
															Part 1 — Real Estate Owned at December 31, 2004 — Accounted for Under the:																												December 31, 2004
															Operating Method																				Financing Method
																															Rent Due
																															and Accrued																Expended for
																							Amount								or Received								Minimum Lease								Interest,
																							Carried at								in Advance at								Payments Due				Total Revenue				Depreciation,				Net Income
							No. of				Amount of				Initial Cost to				Cost of				Close of				Reserve for				End of				Net				and Accrued at				Applicable to				Taxes, and				Applicable to
			State				Locations				Encumbrances				Company				Improvements				Period				Depreciation				Period				Investment				End of Period				Period				Other Expenses				Period
COMMERCIAL PROPERTY LAND AND BUILDING
COMMERCIAL PROPERTY — BUILDING
	AT&T			CA				1								2,569,705				2,830				2,572,535	(2)			82,237																462,931				153,631				309,300
	Bank of America			GA				1																												2,581,575								265,158				23,000				242,158
	Baptist Hospital 1			TN				1																																				614,762				506,345				108,417
	Baptist Hospital 2			TN				1																																				228,172				184,120				44,052
	Harwood Square			IL				1								6,952,206				257,158				7,209,364	(2)			4,186,890																795,016				57,952				737,064
	Safeway Stores, Inc.			CA				1																																				13,885	(3)			0	(3)			13,885
	Toys “R” Us, Inc.			RI				1																												745,050				10,430				72,394				0				72,394
	United Life & Accident Ins. Co.			NH				1																												2,894,284				(43,667	)			252,370				5,207				247,163
	Wickes Companies, Inc.			PA				1																												2,138,678								527,221				902				526,319
	North Moore			NY				1				9,925,579								14,583,060				14,583,060				416,659				(49,172	)											1,122,237				1,110,043				12,194
												91,895,527				119,890,855				14,640,582				134,531,437				27,392,745				(181,983	)			89,192,686				(25,593	)			33,514,240				16,644,625				16,869,615
LESS HELD FOR SALE-OPERATING REAL ESTATE												(27,477,426	)			(74,523,721	)			(369,951	)			(74,893,672	)			(16,872,519	)															(15,657,963	)			(8,085,219	)			(7,572,744	)
												64,418,101				45,367,134				14,270,631				59,637,765				10,520,226				(181,983	)			89,192,686				(25,593	)			17,856,277				8,559,406				9,296,871
LESS CURRENT PORTION												(3,700,000	)																							(3,912,000	)
HOTEL AND RESORT OPERATING PROPERTIES
	New Seabury			MA												37,087,739				954,952				38,042,691				9,148,267																9,848,167				10,056,181				(208,014	)
	Holiday Inn			FL																																								1,602,255	(3)			1,297,717	(3)			304,538
	Bayswater			FL												5,310,365				79,105				5,389,470				719,824																3,002,000				2,618,000				384,000
	Grand Harbor			FL																16,893,964				16,893,964				326,262																5,626,869				7,169,226				(1,542,357	)
												0				42,398,104				17,928,021				60,326,125				10,194,353				0				0				0				20,079,291				21,141,124				(1,061,833	)
LESS HELD FOR SALE-HOTEL AND RESORT																																												(3,868,700	)			(3,942,003	)			73,303
											$	60,718,101			$	87,765,238			$	32,198,652			$	119,963,890			$	20,714,579			$	(181,983	)		$	85,280,686			$	(25,593	)		$	34,066,868			$	25,758,527			$	8,308,341

(1)	The Company owns a 70% interest in the joint venture which owns this property.
(2)	Such properties are being classified as held for sale at 12/31/04.
(3)	Sold in 2004 and included in discontinued operations.

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Balance — January 1, 2004		$	161,158
Additions during period			32,866
Reclassifications during period from financing leases			1,919
Write downs			(350	)
Reclassifications during period to assets held for sale			(74,720	)
Disposals during period			(909	)
Balance — December 31, 2004		$	119,964

Balance — January 1, 2004		$	43,189
Depreciation during period			5,274
Disposals during period			(42	)
Reclassifications during period to assets held for sale			(27,706	)
Balance — December 31, 2004		$	20,715

Balance — January 1, 2004		$	137,356
Reclassifications during period to operating properties			(1,919	)
Disposals during period			(42,044	)
Amortization of unearned income			9,880
Minimum lease rentals received			(14,080	)
Balance — December 31, 2004		$	89,193

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	4.	Net income applicable to the period in Schedule III is reconciled with net earnings as follows:

Net income applicable to financing and operating leases and hotel and resort operating properties			$	8,308
Net income applicable to hotel and casino operations				36,649	(1)
Net income applicable to land, house and condominium sales				6,355
Net income applicable to oil and gas operations				28,186	(2)
Add:
	Interest income on U.S. Government and Agency Obligations and other investments			44,418
	Dividend and unallocated other income			3,133
				127,049
Deduct expenses not allocated:
	General and administrative expenses			9,806
	Non-mortgage interest expense			37,195
	Other			7,974
				54,975
Operating income after income taxes				72,074
Gain on sale of marketable equity and debt securities				40,159
Gain on sale of real estate				5,262
Impairment loss on equity interest in GB Holdings, Inc.				(15,600	)
Unrealized losses in securities sold sort				(23,619	)
Income from continuing operations				78,276
Discontinued Operations:
	Total Income from discontinued operations			82,697
Net Earnings			$	160,973

(1)	Includes depreciation expense of $23,516 and $10,100 of income tax expense.
(2)	Includes income tax expense of $6,663.

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Balance — January 1, 2003		$	303,460
Additions during period			1,675
Reclassifications during period from financing leases			5,065
Reclassifications during period to held for sale			(146,416	)
Disposals during period			(2,626	)
Balance December 31, 2003		$	161,158

Balance — January 1, 2003		$	54,978
Depreciation during period			8,605
Reclassifications during period to held for sale			(20,153	)
Disposals during period			(241	)
Balance — December 31, 2003		$	43,189

Balance — January 1, 2003		$	155,458
Reclassifications during period to operating properties			(5,065	)
Disposals during period			(7,708	)
Amortization of unearned income			13,115
Minimum lease rentals received			(18,444	)
Balance — December 31, 2003		$	137,356

Net income applicable to financing and operating leases and hotel and resort operating properties		$	12,397
Net income applicable to hotel and casino operations			24,064	(1)
Net income applicable to land, house and condominium sales			4,136
Net income applicable to NEG, Inc.			19,522	(2)

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Add:
	Interest income on U.S. Government and Agency Obligations and other investments			22,583
	Dividend and unallocated other income			3,061
				85,763
Deduct expenses not allocated:
	General and administrative expenses			6,850
	Nonmortgage interest expense			2,449
	Other			5,912
				15,211
Operating income after income taxes				70,552
Gain on sale of real estate				7,121
Write down of marketable equity and debt securities and other investments				(19,759	)
Loss on sale of other assets				(1,503	)
Gain on sale of marketable equity and debt securities				2,607
Income from continuing operations				59,018
	Total income from discontinued operations			11,006
	Net earnings		$	70,024

(1)	Includes depreciation expense of $20,222 and income tax benefit of $1,798.
(2)	Includes income tax expense of $225 and interest expense of $11,165.

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Balance — January 1, 2002		$	273,887
Additions during period			20,886
Reclassifications during period from financing leases			13,503
Write downs			(1,992	)
Disposals during period			(2,824	)
Balance — December 31, 2002		$	303,460

Balance — January 1, 2002		$	48,057
Depreciation during period			7,105
Disposals during period			(184	)
Balance — December 31, 2002		$	54,978

Balance — January 1, 2002		$	176,757
Reclassifications during period			(13,503	)
Write downs			(257	)
Disposals during period			(1,560	)
Amortization of unearned income			14,722
Minimum lease rentals received			(20,663	)
Other			(38	)
Balance — December 31, 2002		$	155,458

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Net income applicable to financing and operating leases and hotel and resort operating properties			$	13,198
Net income applicable to hotel and casino operations				6,845	(1)
Net income applicable to land, house and condominium sales				20,384
Net income applicable to NEG Inc.				9,415	(2)
Add:
	Interest income on U.S. Government and Agency Obligations and other investments			30,569
	Dividend and unallocated other income			2,720
				83,131
Deduct expenses not allocated:
	General and administrative expenses			7,029
	Non-mortgage interest expense			5,306
	Other			1,505
				13,840
Operating income after income taxes				69,291
Gain on sale of real estate				8,990
Write down of equity securities				(8,476	)
Loss on sale of other assets				(353	)
Loss on limited partnership interests				(3,750	)
Minority interest in net earnings of Stratosphere Corporation				(1,943	)
Income from continuing operations				63,759
	Total income from discontinued operations			6,937
	Net earnings		$	70,696

(1)	Includes depreciation expense of $20,209 and income tax expense of $4,970.
(2)	Includes income tax expense of $5,068 and interest expense of $18,964.

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		Amount at Which
		Carried at Close				Reserve for
State		of Year				Depreciation
Florida		$	24,057			$	1,606
Illinois			600				32
Indiana			5,002				3,229
Kentucky			989				527
Louisiana			12,621				1,365
Massachusetts			44,310				11,444
Michigan			112				0
Minnesota			339				173
Missouri			415				17
New Jersey			747				58
New York			15,751				551
North Carolina			3,464				459
Ohio			2,142				151
South Carolina			1,450				671
Virginia			6,046				419
West Virginia			1,919				13
		$	119,964			$	20,715

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		Net
State		Investment
Connecticut		$	18,938
Georgia			2,583
Iowa			973
Kentucky			64
Michigan			8,410
Missouri			3,303
New Hampshire			2,894
Ohio			3,241
Oregon			45,903
Pennsylvania			2,139
Rhode Island			745
		$	89,193

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	/s/ GRANT THORNTON LLP

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	/s/ KPMG LLP

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								December 31,
				March 31,
				2005				2004				2003
				(In $000’s except per unit amounts)
				(Unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents (Note 2)			$	1,250,074			$	768,918			$	504,369
	Investment in U.S. government and agency obligations (Note 4)				68,894				96,840				52,583
	Marketable equity and debt securities (Note 5)				68,497				2,248				55,826
	Due from brokers (Note 6)				147,223				123,001				—
	Restricted cash				28,537				19,856				15,058
	Receivables and other current assets				52,567				59,274				51,780
	Real estate leased to others:
		Current portion of lease amortization for leases accounted for under the financing method (Note 8)			3,740				3,912				5,738
	Properties held for sale (Notes 9 and 15)				33,995				58,021				128,813
	Current portion of investment in debt securities of affiliates (Note 12)				5,429				5,429				—
	Current portion of deferred tax asset (Note 23)				2,685				2,685				2,982
		Total current assets			1,661,641				1,140,184				817,149
Investment in U.S. government and agency obligations (Note 4)					5,533				5,491				8,990
Other investments (Note 7)					244,602				245,948				50,328
Land and construction-in-progress (Note 15)					106,000				106,537				43,459
Real estate leased to others:
	Accounted for under the financing method (Notes 8, 15 and 16)				75,949				85,281				131,618
	Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16)				51,127				49,118				76,443
Oil and gas properties, net (Notes 2 and 14)					180,241				168,136				168,921
Hotel, casino and resort operating properties, net of accumulated depreciation:
	American Casino & Entertainment Properties LLC (Notes 10 and 17)				288,890				289,360				298,703
	Hotel and resorts (Notes 9 and 11)				46,041				50,132				41,526
Deferred finance costs and other assets, net					24,831				21,200				4,095
Long-term portion of investment in debt securities of affiliates (Note 12)					91,864				92,575				24,696
Investment in NEG Holding LLC (Note 14)					97,693				87,800				69,346
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13)					9,138				10,603				30,854
Deferred tax asset (Note 23)					52,147				55,824				65,445
		Total		$	2,935,697			$	2,408,189			$	1,831,573
LIABILITIES AND PARTNERS’ EQUITY
Current Liabilities:
	Current portion of mortgages payable (Notes 8, 9 and 16)			$	4,205			$	3,700			$	4,892
	Mortgages on properties held for sale (Notes 9 and 16)				20,372				27,477				82,861
	Accounts payable, accrued expenses and other current liabilities (Note 20)				96,814				95,877				55,880
	Securities sold not yet purchased (Note 6)				83,750				90,674				—
	Other debt due to affiliates (Notes 14 and 17)				10,000				—				30,000
		Total current liabilities			215,141				217,728				173,633
Other liabilities					28,133				26,048				29,127
Long-term portion of mortgages payable (Notes 8, 9 and 16)					55,614				60,719				93,236
Senior secured notes payable (Note 18)					215,000				215,000				—
Senior unsecured notes payable 81/8% due 2012 — net of unamortized discount of $2,321 and $2,402 at March 31, 2005 and December 31, 2004 (Note 19)					350,679				350,598				—
Senior unsecured notes payable — 71/8% due 2013 (Note 19)					480,000				—				—
Asset retirement obligation (Note 2)					3,999				3,930				3,477
Due to affiliates (Notes 14 and 17)					—				—				27,500
Preferred limited partnership units:
	$10 liquidation preference, 5% cumulative pay-in-kind; 10,400,000 authorized; 10,800,397, 10,286,264 and 9,796,607 issued and outstanding as of March 31, 2005, December 31, 2004 and 2003 (Note 22)				108,006				106,731				101,649
		Total long-term liabilities			1,241,431				763,026				254,989
	Minority interest (Note 14)				—				—				9,604
Commitments and contingencies (Notes 3 and 24):
Partners’ Equity:
	Limited partners:
	Depositary units; 47,850,000 authorized; 47,235,484 outstanding				1,383,913				1,328,031				1,184,870
	General partner				107,133				111,325				220,398
	Treasury units at cost:
		1,137,200 depositary units (Note 28)			(11,921	)			(11,921	)			(11,921	)
	Partners’ equity (Notes 2 and 3)				1,479,125				1,427,435				1,393,347
		Total		$	2,935,697			$	2,408,189			$	1,831,573

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Table of Contents

			Three Months Ended
			March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(In $000’s except unit and per unit amounts)
			(Unaudited)
Revenues:
	Hotel and casino operating income (Note 10)		$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
	Land, house and condominium sales			8,279				5,014				26,591				13,265				76,024
	Interest income on financing leases			1,966				2,936				9,880				13,115				14,722
	Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7)			12,902				4,944				44,376				22,592				30,569
	Rental income			2,035				2,027				7,916				7,092				6,852
	Hotel and resort operating income (Note 11)			5,563				1,335				16,211				12,376				12,921
	Oil and gas operating income (Notes 2 and 14)			15,422				15,333				58,419				20,899				—
	Accretion of investment in NEG Holding LLC (Note 14)			9,893				7,904				34,432				30,142				32,879
	NEG management fee			2,108				1,464				6,887				6,629				7,637
	Dividend and other income (Notes 5 and 7)			4,206				834				3,616				3,211				2,720
	Equity in (loss) earnings of GB Holdings, Inc. (Note 13)			(986	)			(348	)			(2,113	)			(3,466	)			305
				144,226				116,452				506,196				388,666				434,652
Expenses:
	Hotel and casino operating expenses (Note 10)			57,624				54,243				227,603				216,857				217,938
	Cost of land, house and condominium sales			7,047				3,358				18,486				9,129				54,640
	Oil and gas operating expense (Notes 2 and 14)			2,866				3,858				13,816				5,028				—
	Hotel and resort operating expenses (Note 11)			5,405				1,424				12,730				8,773				10,536
	Interest expense (Notes 15, 16, 17, 18, 19 and 22)			19,265				7,191				49,669				27,057				27,297
	Depreciation, depletion and amortization			16,167				18,396				68,291				40,571				23,646
	General and administrative expenses (Note 3)			7,610				4,364				20,952				14,081				14,134
	Property expenses			952				1,085				4,340				4,472				3,862
	Provision for losses on real estate			—				—				3,150				750				3,212
				116,936				93,919				419,037				326,718				355,265
	Operating income			27,290				22,533				87,159				61,948				79,387
Other gains and (losses):
	Gain (loss) on sale of other assets			(180	)			(4	)			1,680				(1,503	)			(353	)
	Gain on sale of marketable equity and debt securities			—				28,857				40,159				2,607				—
	Unrealized gains (losses) on securities sold short (Note 6)			21,704				—				(23,619	)			—				—
	Change in fair market value of derivative contract			(9,813	)			—				—				—				—
	Impairment loss on equity interest in GB Holdings, Inc. (Note 13)			—				—				(15,600	)			—				—

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				Three Months Ended
				March 31,								Years Ended December 31,
				2005				2004				2004				2003				2002
				(In $000’s except unit and per unit amounts)
				(Unaudited)
	Write-down of marketable equity and debt securities and other investments (Note 5)				—				—				—				(19,759	)			(8,476	)
	Gain on sales and disposition of real estate (Note 15)				186				6,047				5,262				7,121				8,990
	Loss on limited partnership interests				—				—				—				—				(3,750	)
	Severance tax refund				—				—				4,468				—				—
	Minority interest (Notes 10 and 14)				—				(39	)			(812	)			(1,266	)			(1,943	)
	Income from continuing operations before income taxes				39,187				57,394				98,697				49,148				73,855
	Income tax (expense) benefit (Note 23)				(4,782	)			(5,966	)			(17,326	)			16,750				(10,096	)
	Income from continuing operations				34,405				51,428				81,371				65,898				63,759
Discontinued operations:
	Income from discontinued operations				957				3,218				7,500				7,653				6,937
	Gain on sales and disposition of real estate				18,723				6,929				75,197				3,353				—
		Total income from discontinued operations			19,680				10,147				82,697				11,006				6,937
	Net earnings			$	54,085			$	61,575			$	164,068			$	76,904			$	70,696
Net earnings attributable to (Note 1):
Limited partners				$	58,228			$	57,608			$	152,507			$	59,360			$	63,168
	General partner				(4,143	)			3,967				11,561				17,544				7,528
				$	54,085			$	61,575			$	164,068			$	76,904			$	70,696
Net earnings per limited partnership unit (Notes 2 and 21):
Basic earnings:
	Income from continuing operations			$	0.84			$	1.03			$	1.55			$	1.00			$	1.12
	Income from discontinued operations				0.42				0.22				1.76				0.24				0.15
	Basic earnings per LP unit			$	1.26			$	1.25			$	3.31			$	1.24			$	1.27
	Weighted average limited partnership units outstanding				46,098,284				46,098,284				46,098,284				46,098,284				46,098,284
Diluted earnings:
	Income from continuing operations			$	0.81			$	0.93			$	1.48			$	0.94			$	1.00
	Income from discontinued operations			$	0.39				0.19				1.57				0.19				0.12
	Diluted earnings per LP unit			$	1.20			$	1.12			$	3.05			$	1.13			$	1.12
	Weighted average limited partnership units and equivalent partnership units outstanding				49,857,622				52,499,303				51,542,312				54,489,943				56,466,698

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Table of Contents

							Limited Partners’ Equity
			General
			Partner’s												Held in Treasury								Total
			Equity				Depositary				Preferred												Partners’
			(Deficit)				Units				Units				Amounts				Units				Equity
			(In $000’s)
Balance, December 31, 2001			$	58,846			$	996,701			$	92,198			$	(11,921	)		$	1,137			$	1,135,824
Comprehensive income:
	Net earnings			7,528				63,168				—				—				—				70,696
	Reclassification of unrealized loss on sale of debt securities			211				10,384				—				—				—				10,595
	Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable			131				6,451				—				—				—				6,582
	Net unrealized losses on securities available for sale			(5	)			(237	)			—				—				—				(242	)
	Comprehensive income			7,865				79,766				—				—				—				87,631
	Net adjustment for acquisition of minority interest (Note 10)			21,151				—				—				—				—				21,151
	Pay-in-kind distribution (Note 22)			—				(4,610	)			4,610				—				—				—
	Capital contribution to American Casino (Note 10)			831				—				—				—				—				831
Balance, December 31, 2002				88,693				1,071,857				96,808				(11,921	)			1,137				1,245,437
Comprehensive income:
	Net earnings			17,544				59,360				—				—				—				76,904
	Reclassification of unrealized loss on sale of debt securities			15				746				—				—				—				761
	Net unrealized gains on securities available for sale			183				8,991				—				—				—				9,174
	Sale of marketable equity securities available for sale			(6	)			(274	)			—				—				—				(280	)
	Comprehensive income			17,736				68,823				—				—				—				86,559
	Pay-in-kind distribution (Note 22)			—				(2,391	)			2,391				—				—				—
	Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 23)			524				46,581				—				—				—				47,105
	Capital distribution (Note 10)			(2,808	)			—				—				—				—				(2,808	)
	Reclassification of Preferred LP units to liabilities (Note 22)			—				—				(99,199	)			—				—				(99,199	)
	Net adjustment for TransTexas acquisition (Note 14)			116,253				—				—				—				—				116,253
Balance, December 31, 2003				220,398				1,184,870				—				(11,921	)			1,137				1,393,347

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Table of Contents

							Limited Partners’ Equity
			General
			Partner’s												Held in Treasury								Total
			Equity				Depositary				Preferred												Partners’
			(Deficit)				Units				Units				Amounts				Units				Equity
			(In $000’s)
Comprehensive income:
	Net earnings			11,561				152,507				—				—				—				164,068
	Reclassification of unrealized gains on marketable securities sold			(190	)			(9,378	)			—				—				—				(9,568	)
	Net unrealized gains on securities available for sale			1				32				—				—				—				33
	Comprehensive income			11,372				143,161				—				—				—				154,533
	Capital distribution from American Casino (Note 10)			(17,916	)			—				—				—				—				(17,916	)
	Capital contribution to American Casino (Note 10)			22,800				—				—				—				—				22,800
	Arizona Charlie’s acquisition (Note 10)			(125,900	)			—				—				—				—				(125,900	)
	Distribution Change in deferred tax asset related to acquisition of Arizona Charlie’s			2,490				—				—				—				—				2,490
	Distribution to General Partner relating to TransTexas’ purchase of minority interest and treasury shares (Note 14)			(1,919	)			—				—				—				—				(1,919	)
Balance, December 31, 2004				111,325				1,328,031				—				(11,921	)			1,137				1,427,435
Comprehensive income:
	Net earnings			(4,143	)			58,228				—				—				—				54,085
	Net unrealized losses on securities available for sale			(49	)			(2,346	)															(2,395	)
	Comprehensive income			(4,192	)			55,882																51,690
Balance, March 31, 2005 (unaudited)			$	107,133			$	1,383,913			$	—			$	(11,921	)		$	1,137			$	1,479,125

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Table of Contents

			Three Months Ended
			March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)
Cash flows from operating activities:
Income from continuing operations			$	34,405			$	51,428			$	81,371			$	65,898			$	63,759
Adjustments to reconcile net earnings to net cash provided by operating activities:
	Depreciation, depletion and amortization			16,099				18,316				67,959				41,173				23,646
	Change in fair market value of derivative contracts			9,813				2,050				1,659				(373	)			—
	Note discount amortization			26				71				281				95				—
	Accretion of discount on asset retirement obligation			69				80				332				96				—
	Preferred LP interest expense			1,286				1,225				5,082				2,450				—
	Gain on sale of marketable equity securities			—				(28,857	)			(40,159	)			(2,607	)			—
	Unrealized (gains) losses on securities sold short			(21,704	)			—				23,619				—				—
	Impairment loss on equity interest in GB Holdings, Inc.			—				—				15,600				—				—
	Gain on sales and disposition of real estate			(186	)			(6,047	)			(5,262	)			(7,121	)			(8,990	)
	Loss on limited partnership interests			—				—				—				—				3,750
	Loss (gain) on sale of assets			180				4				(1,584	)			1,511				353
	Provision for loss on real estate			—				—				3,150				750				3,212
	Write-down of marketable equity and debt securities and other investments			—				—				—				19,759				8,476
	Minority interest			—				39				812				1,266				1,943
	Equity in losses (earnings) of GB Holdings, Inc.			986				348				2,113				3,466				(305	)
	Deferred gain amortization			(510	)			(510	)			(2,038	)			(2,038	)			(2,038	)
	Accretion of investment in NEG Holding LLC			(9,893	)			(7,904	)			(34,432	)			(30,142	)			(32,879	)
	Deferred income tax expense (benefit)			3,678				1,412				14,296				(22,256	)			9,785
Changes in operating assets and liabilities:
	Decrease (increase) in receivables and other assets			5,639				(8,414	)			(10,442	)			3,762				2,944
	Increase in due from brokers			(2,518	)							(123,001	)			—				—
	Decrease (increase) in land and construction-in-progress			5,950				(455	)			(1,626	)			(4,106	)			24,215
	Increase in restricted cash			(8,682	)			—				(4,798	)			(13,095	)			—

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Table of Contents

			Three Months Ended
			March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)
	Increase (decrease) in accounts payable, accrued expenses and other liabilities			1,404				13,046				96,280				(38,346	)			271
	Net cash provided by continuing operations			36,042				35,832				89,212				20,142				98,142
Total income from discontinued operations				19,680				10,147				82,697				11,006				6,937
	Depreciation and amortization			31				210				1,244				5,129				4,464
	Net gain from property transactions			(18,723	)			(6,929	)			(75,197	)			(3,353	)			—
	Net cash provided by discontinued operations			988				3,428				8,744				12,782				11,401
	Net cash provided by operating activities			37,030				39,260				97,956				32,924				109,543
Cash flows from investing activities:
	Cash related to combination of TransTexas accounted for as a pooling of interest			—				—				—				15,312				—
	Increase (decrease) in other investments			—				—				2,942				(28,491	)			(23,200	)
	Repayments of mezzanine loans included in other investments			—				—				49,130				12,200				23,000
	Decrease in mortgages and notes receivable			—				351				—				—				—
	Net proceeds from the sales and disposition of real estate			4,650				11,346				16,790				15,290				20,513
	Proceeds from sale of other assets			19				64				3,779				—				—
	Principal payments received on leases accounted for under the financing method			908				1,112				4,219				5,310				5,941
	Principal payments received on investments in debt securities of affiliates			2,700				—				—				—				—
	Purchase of debt securities included in other investments			—				—				(245,166	)			—				—
	Purchase of debt securities of affiliates			—				—				(65,500	)			—				—
	Purchase of Atlantic Holdings debt included in debt securities due from affiliates			—				—				(36,000	)			—				—
	Acquisition of Arizona Charlies’			—				—				(125,900	)			—				—

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			Three Months Ended
			March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)
	Additions to hotel, casino and resort operating property			(4,781	)			—				(16,203	)			(32,911	)			(21,715	)
	Acquisition of hotel and resort operating property			—				(1,492	)			(16,463	)			—				—
	Acquisitions of rental real estate			—				(14,583	)			(14,583	)			—				(18,226	)
	Acquisition of land and construction in progress			—				—				(61,845	)			—				—
	Additions to rental real estate			—				(166	)			(18	)			(413	)			(181	)
	Additions to oil and gas operating property			(21,071	)			(6,106	)			(47,528	)			(633	)			—
	Decrease (increase) in investment in U.S. Government and Agency Obligations (Note 2)			27,903				(61,077	)			(40,757	)			274,478				(22,410	)
	Increase in marketable equity and debt securities			(66,250	)			—				—				(45,140	)			(4,415	)
	Proceeds from sale of marketable equity and debt securities			—				64,471				90,614				3,843				—
	Decrease in note receivable from affiliate			—				—				—				250,000				—
	Acquisition of minority interest in TransTexas			—				—				(4,136	)			—				—
	Decrease in minority interest in Stratosphere Corp.			—				—				—				—				(44,744	)
	Decrease in investment in Stratosphere Corp.			—				—				—				788				—
	Investment in NEG, Inc.			—				—				—				(148,101	)			—
	Guaranteed payment from NEG Holding LLC			—				—				15,979				18,229				21,653
	Priority distribution from NEG Holding LLC			—				—				—				40,506				—
	Decrease in due to affiliate			—				—				—				—				(68,491	)
	Increase in restricted cash			—				(219,313	)			—				—				—
	Other			—				(50	)			(194	)			560				197
	Net cash (used in) provided by investing activities from continuing operations			(55,922	)			(225,443	)			(490,840	)			380,827				(132,078	)
Cash flows from investing activities from discontinued operations:
	Net proceeds from the sales and disposition of real estate			36,582				7,392				134,789				5,336				—
	Net cash (used in) provided by investing activities			(19,340	)			(218,051	)			(356,051	)			386,163				(132,078	)

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Table of Contents

				Three Months Ended
				March 31,								Years Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)
Cash flows from financing activities:
	Partners’ Equity:
		Distributions to members			—				—				(17,916	)			—				—
		Member’s contribution			—				—				22,800				—				—
		Contributions to American Casino			—				—				—				—				598
	Debt:
		Repayment of credit facilities			—				—				—				(2,904	)			(5,000	)
		Proceeds from credit facility			—				—				—				7,780				17,220
		Proceeds from Senior Notes Payable			480,000				215,000				565,409				—				—
		Decrease in due to affiliates			(6,602	)			—				(24,925	)			—				—
		Proceeds from mortgages payable			—				—				10,000				20,000				12,700
		Payments on mortgages payable			—				—				—				(3,837	)			(462	)
		Periodic principal payments			(1,598	)			(3,721	)			(14,613	)			(15,297	)			(7,198	)
		Debt issuance costs			(8,334	)			(7,515	)			(18,111	)			—				—
	Other				—				—				—				—				242
	Net cash provided by financing activities				463,466				203,764				522,644				5,742				18,100
	Net increase (decrease) in cash and cash equivalents				481,156				24,973				264,549				424,829				(4,435	)
	Cash and cash equivalents, beginning of period				768,918				517,464				504,369				79,540				83,975
	Cash and cash equivalents at end of period			$	1,250,074			$	542,437			$	768,918			$	504,369			$	79,540
Supplemental information:
	Cash payments for interest, net of amounts capitalized			$	9,612			$	5,667			$	48,015			$	65,253			$	37,176
Supplemental schedule of noncash investing and financing activities:
	Reclassification of real estate to operating lease			$	3,068			$	—			$	—			$	5,065			$	13,403
	Reclassification from hotel and resort operating properties				—				(6,395	)			(6,428	)			—				—
	Reclassification of real estate from financing lease				(358	)			—				(1,920	)			(5,065	)			(13,503	)
	Reclassification of real estate from operating lease				(411	)			(14,353	)			(38,452	)			(126,263	)			—
	Reclassification of real estate to property held for sale				716				20,748				46,800				126,263				100

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		Three Months Ended
		March 31,								Years Ended December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Reclassification of real estate from properties held for sale			(3,015	)			—				—				—				—
Decrease in other investments			—				—				—				(3,453	)			—
Decrease in deferred income			—				—				—				2,565				—
Increase in real estate accounted for under the operating method			—				—				—				888				—
Reclassification from marketable equity and debt securities			—				—				—				—				(20,494	)
Reclassification from receivable and other assets			—				—				—				(1,631	)
Reclassification to other investments			—				—				—				1,631				20,494
		$	—			$	—			$	—			$	—			$	—
Net unrealized (losses) gains on securities available for sale		$	(2,394	)		$	2,378			$	33			$	9,174			$	(242	)
Increase in equity and debt securities		$	805			$	300			$	1,740			$	1,200			$	2,890
Contribution of note from NEG Holding LLC		$	—			$	—			$	—			$	10,940			$	—
Change in tax asset related to acquisition		$	—			$	—			$	2,490			$	—			$	—

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1.	Description of Business and Basis of Presentation

F-75

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2.	Summary of Significant Accounting Policies

F-76

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	Oil and Natural Gas Properties

F-77

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	Other Investments

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	Revenue and Expense Recognition

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	Natural Gas Production Imbalances

	Hedging Agreements

										Fixed
Type Contract		Production Month				Volume per Month				Price				Floor				Ceiling
Fixed price			April-June 2004				300,000 MMBTU			$	5.44				—				—
Fixed price			July-Sept 2004				300,000 MMUTU			$	5.34				—				—
No cost collars			Oct-Dec 2004				300,000 MMBTU				—			$	5.25			$	5.90
No cost collars			Jan-Dec 2004				25,000 Bbls				—			$	28.72			$	31.90
No cost collars			Jan-Dec 2005				15,000 Bbls				—			$	42.50			$	46.00
No cost collars			Jan-Dec 2005				400,000 MMBTU				—			$	6.00			$	8.35
No cost collars			March-Dec 2005				9,000 Bbls				—			$	44.50			$	48.00
No cost collars			March-Dec 2005				210,000 MMBTU				—			$	6.05			$	7.30
No cost collars			Jan-Dec 2006				14,000 Bbls				—			$	41.65			$	45.25
No cost collars			Jan-Dec 2006				430,000 MMBTU				—			$	6.00			$	7.25

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		March 31,				December 31,
		2005				2004
Realized (cash payments)		$	232,695			$	3,906,325
Valuation loss			9,812,799				1,658,809
		$	10,045,494			$	5,565,134

	Accounting for Asset Retirement Obligations

		2005				2004				2003
Balance, beginning of period		$	3,930			$	3,477			$	3,375
Accretion expense			69				332				96
Additions			—				121				6
Balance, end of period		$	3,999			$	3,930			$	3,477

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	Recently Issued Pronouncements

3.	Related Party Transactions

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											December 31,
			March 31, 2005								2004								2003
			Cost				Carrying				Cost				Carrying				Cost				Carrying
			Basis				Value				Basis				Value				Basis				Value
			(Unaudited)
Available for Sale:
Matures in:
	less than 1 year		$	68.9			$	68.9			$	96.8			$	96.8			$	52.8			$	52.6
	2-5 years			5.6				5.5				5.6				5.5				9.0				9.0
			$	74.5			$	74.4			$	102.4			$	102.3			$	61.8			$	61.6

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5.	Marketable Equity and Debt Securities (in $Millions)

											December 31,
			March 31, 2005								2004								2003
			Cost				Carrying				Cost				Carrying				Cost				Carrying
			Basis				Value				Basis				Value				Basis				Value
			(Unaudited)
Available for Sale:
Philip Service Corporation(a):
	Equity		$	—			$	—			$	—			$	—			$				$	—
Corporate bonds(b)				—				—				—				—				45.1				51.6
Other(c)				72.4				68.5				2.2				2.2				1.3				4.2
	Total		$	72.4			$	68.5			$	2.2			$	2.2			$	46.4			$	55.8

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6.	Due from Brokers

7.	Other Investments (in $000’s)

						Balance at
		Balance at				December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Peninsula/ Hampton & Alex Hotel(a) and (b)		$	—			$	—			$	42,030
WestPoint Stevens(c)			205,850				205,850				—
Union Power Partners L.P. and Panda Gila River L.P.(d)			37,973				39,316				—
Other			779				782				8,298
		$	244,602			$	245,948			$	50,328

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8.	Real Estate Leased to Others Accounted for Under the Financing Method

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Minimum lease payments receivable		$	87,846			$	97,725			$	161,785
Unguaranteed residual value			43,422				48,980				74,651
			131,268				146,705				236,436
Less unearned income			51,579				57,512				99,080
			79,689				89,193				137,356
Less current portion of lease amortization			3,740				3,912				5,738
		$	75,949			$	85,281			$	131,618

Year Ending December 31,		Amount
2005		$	11,941
2006			11,746
2007			10,832
2008			9,476
2009			9,255
Thereafter			44,475
		$	97,725

9.	Real Estate Leased to Others Accounted for Under the Operating Method

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land		$	13,286			$	13,666			$	24,040
Commercial Buildings			52,672				45,972				83,252
			65,958				59,638				107,292
Less accumulated depreciation			14,831				10,520				30,849
		$	51,127			$	49,118			$	76,443

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Year Ending December 31,		Amount
2005		$	7,186
2006			6,232
2007			5,649
2008			5,383
2009			5,001
Thereafter			19,753
		$	49,204

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Leased to others		$	40,035			$	74,444			$	146,416
Vacant			450				450				2,550
			40,485				74,894				148,966
Less accumulated depreciation			6,490				16,873				20,153
		$	33,995			$	58,021			$	128,813

		Three Months
		Ended March 31,								Years Ended December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Rental income		$	1,462			$	5,871			$	15,658			$	23,093			$	21,073
Hotel and resort operating income			709				1,064				3,868				6,128				5,676
			2,171				6,935				19,526				29,221				26,749
Mortgage interest expense			399				1,726				3,858				7,208				6,737
Depreciation and amortization			31				210				1,244				5,130				4,464
Property expenses			147				1,107				3,123				3,549				3,409
Hotel and resort operating expenses			637				674				3,801				5,681				5,202
			1,214				3,717				12,026				21,568				19,812
Income from discontinued operations		$	957			$	3,218			$	7,500			$	7,653			$	6,937

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10.	Hotel and Casino Operating Properties

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				Three Months Ended
				March 31,								Year Ended December 31,
				2005				2004				2004				2003				2002
				(Unaudited)								(In $000’s)
Hotel and casino operating income:
	Casino			$	47,729			$	42,592			$	167,972			$	147,888			$	143,057
	Hotel				15,793				13,888				54,653				47,259				44,263
	Food and beverage				17,076				16,701				66,953				59,583				56,349
	Tower, retail, and other income				8,206				7,976				33,778				30,336				28,247
		Gross revenues			88,804				81,157				323,356				285,066				271,916
		Less promotional allowances			(5,966	)			(6,148	)			(23,375	)			(22,255	)			(21,893	)
		Net revenues		$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
Hotel and casino operating expenses:
	Casino			$	15,900			$	15,696			$	61,985			$	61,284			$	59,879
	Hotel				6,023				5,596				24,272				22,074				20,142
	Food and beverage				12,376				11,620				48,495				44,990				43,393
	Other operating expenses				3,619				3,151				14,131				13,524				14,505
	Selling, general, and administrative				19,706				18,180				78,720				74,985				80,019
		Total expenses		$	57,624			$	54,243			$	227,603			$	216,857			$	217,938

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land and improvements, including land held for development		$	47,274			$	47,210			$	47,041
Building and improvements			221,847				221,314				220,280
Furniture, fixtures and equipment			112,379				108,595				98,586
Construction in progress			7,577				7,348				7,224
			389,077				384,467				373,131
Less accumulated depreciation and amortization			100,187				95,107				74,428
		$	288,890			$	289,360			$	298,703

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		(In $000s)
Years ending December 31,
2005		$	5,877
2006			4,778
2007			3,615
2008			2,177
2009			1,224
Thereafter			959
Total Payments		$	18,630

11.	Hotel and Resort Operating Properties

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12.	Investment in Debt Securities of Affiliates (in $000’s):

						December 31,
		March 31,
		2005				2004				2003
Atlantic Holdings/ GB Holdings(a)		$	60,650			$	60,004			$	24,696
Panaco(b)			36,643				38,000				—
			97,293				98,004				24,696
Less current portion			(5,429	)			(5,429	)			—
		$	91,864			$	92,575			$	24,696

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	•	$26,914,500 principal amount of the Atlantic Holdings Notes;
	•	$3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and
	•	3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings, representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis.

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14.	Oil and Gas Operating Properties

	a.     National Energy Group, Inc.

	b.     NEG Investment in NEG Holding LLC

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Current assets		$	30,991			$	23,146			$	33,415
Noncurrent assets(1)			251,438				237,127				190,389
Total assets		$	282,429			$	260,273			$	223,804
Current liabilities		$	35,699			$	22,456			$	14,253
Noncurrent liabilities			83,732				63,636				48,514
Total liabilities			119,431				86,092				62,767
Members’ equity			162,998				174,181				161,037
Total liabilities and members’ equity		$	282,429			$	260,273			$	223,804

(1)	Primarily oil and gas properties

		Three Months Ended
		March 31,								Year Ended December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Total revenues		$	2,870			$	25,569			$	78,727			$	77,606			$	35,900
Costs and expenses			(13,137	)			(11,044	)			(47,313	)			(46,766	)			(32,064	)
Operating income			(10,267	)			14,525				31,414				30,840				3,836
Other income (expense)			(916	)			(358	)			(2,292	)			30				10,090
Net (loss) income		$	(11,183	)		$	14,167			$	29,122			$	30,870			$	13,926

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						December 31,
		March 31,
		2005				2004				2003
Investment in Holding LLC at beginning of period		$	87,800			$	69,346			$	108,880
Priority distribution from Holding LLC			—				—				(51,446	)
Guaranteed payment from Holding LLC			—				(15,978	)			(18,230	)
Accretion of investment in Holding LLC			9,893				34,432				30,142
Investment in Holding LLC at end of period		$	97,693			$	87,800			$	69,346

	1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis.
	2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006.
	3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon.
	4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon.

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	5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts.

	c.     TransTexas Gas Corporation

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			December 31,
			2004				2003
Proved Properties			$	221,351			$	182,193
Unproved Properties				—				—
Other property and equipment				540				2,369
	Total			221,891				184,562
Less: Accumulated depreciation, depletion and amortization				(53,755	)			(15,641	)
			$	168,136			$	168,921

			2004				2003
Development costs			$	14,284			$	556
Exploration costs				33,202				—
	Total		$	47,486			$	556
Depletion rate per MCFe			$	4.70			$	4.39

	d.     Supplemental Reserve Information (Unaudited)

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			December 31,
			2004								2003
			Oil and								Oil and
			Condensate								Condensate
			(barrels)				Gas (MCF)				(barrels)				Gas (MCF)
Proved Reserves:
	Beginning of period			3,124,112				38,655,526				1,120,400				41,440,700
Increase (decrease) during the period attributable to:
	Revisions of previous estimates			234,521				(5,630,633	)			2,351,163				(308,688	)
	Extensions and discoveries			78,453				16,875,613				—				—
	Sales of reserves			—				—				—				—
	Production			(918,905	)			(5,788,974	)			(347,451	)			(2,476,486	)
	End of period			2,518,181				44,111,532				3,124,112				38,655,526
Proved developed reserves:
	Beginning of period			2,755,522				21,557,712				431,400				15,802,000
	End of period(1)			2,410,912				26,179,029				2,755,522				21,557,712

(1)	includes proved developed non-producing reserves for 2004 and 2003 of 788,042 and 57,441 barrels of oil and 10,479,632 and 4,586,423 mcf of gas, respectively.

	Standardized Measure Information

Future cash inflows		$	354,725,200			$	313,032,000
Future production costs			78,680,400				59,113,600
Future development costs			54,721,925				35,690,500
Future income taxes			—				—
Future net cash flows			221,322,875				218,227,900
Annual discount (10%) for estimated timing of cash flows			60,105,800				53,790,300
Standardized measure of discounted future net cash flows		$	161,217,075			$	164,437,600

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		2004				2003
Beginning of period		$	164,437,600			$	101,803,900
Sales, net of production costs			(47,635,549	)			(16,761,000	)
Net change in prices, net of production costs			(14,353,925	)			31,943,125
Revisions of quantity estimates			(17,464,167	)			44,507,391
Extensions and discoveries			74,451,060				—
Development costs incurred			14,056,670				556,000
Change in estimated future development costs			(28,921,504	)			4,930,232
Accretion of discount			16,443,760				3,393,463
Changes in production rates and other			203,130				(5,935,511	)
End of period		$	161,217,075			$	164,437,600

	e.     See Note 29 pertaining to additional oil and gas acquisitions

15.	Significant Property Transactions

	a. In September 2002, the Company purchased an industrial building located in Nashville, Tennessee for approximately $18.2 million. The building was constructed in 2001 and is fully leased to two tenants, Alliance Healthcare and Jet Equipment & Tools Inc., with leases expiring in 2011. The annual net operating income was anticipated to be approximately $1.6 million increasing to approximately $1.9 million by 2011. In October 2002, the Company closed a $12.7 million non-recourse mortgage loan on the Nashville, Tennessee property. The loan bore interest at 6.4% per annum and was due to mature in ten years. Required payments were interest only for the first three years and then principal amortization would commence based on a thirty-year amortization schedule. In June 2004, the Company sold the property for a selling price of $19.2 million. A gain of approximately $1.4 million was recognized in the year ended December 31, 2004 and is included in discontinued operations in the Consolidated Statements of Earnings.
	At December 31, 2003, the property had a carrying value of approximately $18,066,000 and was encumbered by a non-recourse mortgage in the amount of $12,700,000.
	b. In October 2002, the Company sold a property located in North Palm Beach, Florida for a selling price of $3.5 million. A gain of approximately $2.4 million was recognized in the year ended December 31, 2002.
	c. In October 2003, the Company sold a property located in Columbia, Maryland to its tenant for a selling price of $11 million. A gain of approximately $5.8 million was recognized in the year ended December 31, 2003.

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d. In the year ended December 31, 2004, of the 57 properties, the Company sold nine financing lease properties for approximately $43.6 million. The properties were encumbered by mortgage debt of approximately $26.8 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $38.3 million; therefore, the Company recognized a gain on sale of approximately $5.3 million in the year ended December 31, 2004, which is included in income from continuing operations in the Supplemental Consolidated Statements of Earnings.

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16.	Mortgages Payable

										Balance At				Balance At December 31,
						Annual Principal				March 31,
Range of Interest Rates		Range of Maturities				and Interest Payment				2005				2004				2003
										(Unaudited)
5.630%-8.25%			10/15/07-10/01/14			$	9,373			$	80,191			$	91,896			$	180,989
Less current portion and mortgages on properties held for sale											(24,577	)			(31,177	)			(87,753	)
										$	55,614			$	60,719			$	93,236

Year Ending December 31,		Amount
2005		$	4,759
2006			5,116
2007			11,428
2008			24,385
2009			7,211
2010-2014			38,997
		$	91,896

17.	Due to Affiliates

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18.	Senior Secured Notes Payable and Credit Facility

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19.	Senior Unsecured Notes Payable

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20.	Accounts Payable, Accrued Expenses and Other Current Liabilities

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Accrued liabilities		$	11,617			$	11,463			$	11,951
Accrued payroll			10,984				11,113				12,507
Due to Panaco, Inc.			—				16,242				—
Other			74,213				57,059				31,422
		$	96,814			$	95,877			$	55,880

21.	Earnings Per Limited Partnership Unit

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	Net Income Per Unit

			Three Months Ended
			March 31,								December 31,
			2005				2004				2004				2003				2002
			(In $000’s except per unit data)
Attributable to Limited Partners:
Basic income from continuing operations			$	38,940			$	47,663			$	71,476			$	48,588			$	56,380
Add Preferred LP Unit distribution				1,259				1,201				4,981				4,792				4,518
Income before discontinued operations				40,199				48,864				76,457				53,380				60,898
Income from discontinued operations				19,288				9,945				81,031				10,772				6,788
Diluted earnings				59,487				58,809			$	157,488			$	64,152			$	67,686
Weighted average limited partnership units outstanding				46,098,284				46,098,284				46,098,284				46,098,284				46,098,284
Dilutive effect of redemption of Preferred LP Units				3,759,338				6,401,019				5,444,028				8,391,659				10,368,414
Weighed average limited partnership units and equivalent partnership units outstanding				49,857,622				52,499,303				51,542,312				54,489,943				56,466,698
Basic earnings:
	Income from continuing operations		$	0.84			$	1.03			$	1.55			$	1.00			$	1.12
	Income from discontinued operations			0.42				0.22				1.76				0.24				0.15
	Basic earnings per LP unit		$	1.26			$	1.25			$	3.31			$	1.24			$	1.27
Diluted earnings:
	Income from continuing operations		$	0.81			$	0.93			$	1.48			$	0.94			$	1.00
	Income from discontinued operations			0.39				0.19				1.57				0.19				0.12
	Diluted earnings per LP unit		$	1.20			$	1.12			$	3.05			$	1.13			$	1.12

22.	Preferred Units

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23.	Income Taxes (in $000’s)

		December 31,
		2004				2003
Book basis of AREH net assets excluding American Casino, TransTexas and NEG		$	1,319,566			$	1,149,418
Excess of tax over book			120,820				79,238
Tax basis of net assets		$	1,440,386			$	1,228,656

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		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Current		$	(1,105	)		$	(4,655	)		$	(3,030	)		$	(5,506	)		$	(311	)
Deferred			(3,677	)			(1,311	)			(14,296	)			22,256				(9,785	)
		$	(4,782	)		$	(5,966	)		$	(17,326	)		$	16,750			$	(10,096	)

							December 31,
			March 31,
			2005				2004				2003
			(Unaudited)
Deferred tax assets:
	Depreciation, depletion and amortization		$	49,607			$	54,489			$	54,439
	Net operating loss carryforwards			55,724				53,610				51,997
	Investment in Holding LLC			1,927				5,333				18,845
	Other			11,955				9,458				8,841
				119,213				122,890				134,122
	Valuation allowance			(64,381	)			(64,381	)			(65,695	)
	Net deferred tax assets			54,832				58,509				68,427
	Less current portion			(2,685	)			(2,685	)			(2,982	)
	Non-current net deferred tax assets		$	52,147			$	55,824			$	65,445

		Year Ended December 31,
		2004				2003				2002
Federal statutory rate			35.0	%			35.0	%			35.0	%
Tax deduction not given book benefit			1.0				5.6				0.0
Income not subject to taxation			(24.2	)			(15.2	)			(22.3	)
Valuation allowance			(2.3	)			(51.8	)			(0.5	)
Other			0.0				(1.4	)			0.3
			9.5	%			(27.8	)%			12.5	%

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24.	Commitments and Contingencies

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25.	Employee Benefit Plans

26.	Fair Value of Financial Instruments

	Other Investments

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		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Net				Estimated				Net				Estimated				Net				Estimated
		Investment				Fair Value				Investment				Fair Value				Investment				Fair Value
Total		$	244,602			$	247,600			$	245,948			$	248,900			$	50,328			$	55,000

	Mortgages Payable

		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Carrying				Estimated				Carrying				Estimated				Carrying				Estimated
		Value				Fair Value				Value				Fair Value				Value				Fair Value
Total		$	80,191			$	81,955			$	91,896			$	93,900			$	180,989			$	185,000

	Limitations

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				March 31,								December 31,
				2005				2004				2004				2003				2002
Revenues:
	Hotel & casino operating properties			$	81,852			$	74,661			$	297,868			$	259,345			$	250,328
	Land, house and condominium sales				8,279				5,014				26,591				13,265				76,024
	Rental real estate				4,001				4,963				17,796				20,207				21,714
	Hotel & resort operating properties				5,563				1,335				16,211				12,376				12,921
	Oil & gas operating properties				27,423				24,701				99,738				57,670				40,516
	Other investments				10,440				4,818				34,724				14,024				15,283
	Subtotal				137,558				115,492				492,928				376,887				416,646
	Reconciling items				6,668	(1)			960	(1)			13,268	(1)			11,779	(1)			18,006	(1)
		Total revenues		$	144,226			$	116,452			$	506,196			$	388,666			$	434,652
Net earnings:
Segment earnings:
	Hotel & casino operating properties			$	24,228			$	20,418			$	70,265			$	42,488			$	32,390
	Land, house and condominium sales				1,232				1,656				6,355				4,136				21,384
	Oil & gas operating properties				21,502				18,412				74,776				45,412				33,411
	Rental real estate				3,049				3,878				12,863				14,368				14,206
	Hotel and resort operating properties				158				(89	)			2,674				4,220				2,679
	Other investments				10,440				4,818				34,724				14,024				15,283
		Total segment earnings			60,609				49,093				201,657				124,648				119,353
	Interest income				6,668				960				13,268				11,779				18,006
	Interest expense				(19,265	)			(7,191	)			(49,669	)			(27,057	)			(27,297	)
	General and administrative expenses				(4,555	)			(1,933	)			(9,806	)			(6,851	)			(7,029	)
	Depreciation, depletion, and amortization				(16,167	)			(18,396	)			(68,291	)			(40,571	)			(23,646	)
	Operating income				27,290				22,533				87,159				61,948				79,387
	Gain on sales and disposition of real estate from continuing operations				186				6,047				6,942				7,121				8,990
	(Loss) gain on sale of assets				(180	)			(4	)			—				(1,503	)			(353	)
	Loss on sale of limited partnership interests				—				—				—				—				(3,750	)
	Write-down of marketable equity and debt securities and other investments				—				—				—				(19,759	)			(8,476	)
	Gain on sale of marketable equity securities				—				28,857				40,159				2,607				—
	Unrealized losses on securities sold short				21,704				—				(23,619	)			—				—
	Change in fair value of derivative contract				(9,813	)			—				—				—				—
	Impairment loss on equity interest in GB Holdings, Inc.				—				—				(15,600	)			—				—
	Severance tax refund				—				—				4,468				—				—
	Minority interest				—				(39	)			(812	)			(1,266	)			(1,943	)

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		March 31,								December 31,
		2005				2004				2004				2003				2002
Income tax (expense) benefit			(4,782	)			(5,966	)			(17,326	)			16,750				(10,096	)
Income from discontinued operations			19,680				10,147				82,697				11,006				6,937
General partner’s share of net (income) loss			4,143				(3,967	)			(11,561	)			(17,544	)			(7,528	)
Net earnings — limited partners’ unitholders		$	58,228			$	57,608			$	152,507			$	59,360			$	63,168

(1)	Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable.

27.	Segment Reporting

								December 31,
				March 31,
				2005				2004				2003				2002
Assets:
	Rental real estate			$	164,811			$	196,332			$	340,062			$	359,700
	Oil and gas properties				180,241				168,136				168,921				—
	Hotel and casino operating properties				288,890				289,360				298,703				290,775
	Land and construction-in-progress				106,000				106,537				43,459				40,415
	Hotel and resort operating properties				46,041				50,132				41,526				44,346
	Other investments				466,252				444,603				231,050				479,104
					1,252,235				1,255,100				1,123,721				1,214,340
	Reconciling items				1,683,462				1,153,089				707,852				491,691
		Total		$	2,935,697			$	2,408,189			$	1,831,573			$	1,706,031
Real estate investment capital expenditures:
Acquisitions:
	Rental real estate			$	—			$	14,583			$	—			$	18,226
	Land and construction-in-progress				—				61,845				—				—
	Hotel and casino operating properties				—				125,900				—				—
	Hotel and resort operating properties				—				16,463				—				—
				$	—			$	218,791			$	—			$	18,226
Developments:
	Rental real estate			$	—			$	18			$	413			$	181
	Oil and gas operating properties				21,071				47,529				633				—
	Land and construction-in-progress				—				17,947				—				1,138
	Hotel and casino operating properties				4,711				13,589				31,844				19,133
	Hotel and resort operating properties				70				2,614				1,067				2,582
				$	25,852			$	81,697			$	33,957			$	23,034

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28.	Repurchase of Depositary Units

29.	Subsequent Events

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30.	Quarterly Financial Data (Unaudited) (in $000’s, Except Per Unit Data)

			Three Months Ended(1)
			March 31,								June 30,								September 30,								December 31,
			2004				2003				2004				2003				2004				2003				2004				2003
Revenues			$	116,403			$	92,416			$	131,185			$	89,531			$	131,748			$	98,154			$	126,860			$	108,565
Operating Income			$	22,532			$	16,110			$	26,979			$	15,635			$	24,211			$	11,988			$	13,437			$	18,215
Gains (losses) on property transactions				6,047				1,138				(226	)			(272	)			1,354				501				(233	)			5,754
Loss on sale of assets				—				—				—				—				—				(311	)			—				(1,192	)
Gain on sale of marketable equity and debt securities				28,857				—				8,310				—				—				2,168				2,992				439
Unrealized losses on securities sold short				—				—				—				—				—				—				(23,619	)			—
Impairment loss on equity interest in GB Holdings, Inc.				—				—				—				—				—				—				(15,600	)			—
Write-down of marketable equity and debt securities				—				(961	)			—				(18,798	)			—				—				—				—
Severance tax refund				—				—				4,468				—				—				—				—				—
Minority interest				(39	)			—				(487	)			—				(123	)			459				(163	)			(1,725	)
Income (loss) from continuing operations before income tax				57,397				16,287				39,044				(3,435	)			25,442				14,805				(23,186	)			21,491
Income tax (expense) benefit				(5,966	)			(3,892	)			(3,695	)			(3,167	)			(3,839	)			(3,577	)			(3,826	)			27,386
Income (loss) from continuing operations				51,431				12,395				35,349				(6,602	)			21,603				11,228				(27,012	)			48,877
Income from discontinued operations				10,143				1,997				50,161				3,815				10,702				3,210				11,691				1,984
Net earnings (loss)			$	61,574			$	14,392			$	85,510			$	(2,787	)		$	32,305			$	14,438			$	(15,321	)		$	50,861
Net Earnings (loss) per limited Partnership unit(2):
Basic earnings:
	Income (loss) from continuing operations		$	1.03			$	.15			$	.65			$	(.21	)		$	.43			$	.25			$	(.56	)		$	.81
	Income from discontinued operations			.22				.05				1.06				.08				.23				.07				.24				.04
Basic earnings (loss) per LP unit			$	1.25			$	.20			$	1.71			$	(.13	)		$	.66			$	.32			$	(.32	)		$	.85
Diluted earnings:
	Income (loss) from continuing operations		$	.93			$	.15			$	.60			$	(.21	)		$	.41			$	.23			$	(.56	)		$	.71
	Income from discontinued operations			.19				.03				.94				.08				.20				.06				.24				.04
Diluted earnings (loss) per LP unit			$	1.12			$	.18			$	1.54			$	(.13	)		$	.61			$	.29			$	(.32	)		$	.75

(1)	All quarterly amounts have been reclassified for the effects of reporting discontinued operations.
(2)	Net earnings (loss) per unit is computed separately for each period and, therefore, the sum of such quarterly per unit amounts may differ from the total for the year.

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	/s/ GRANT THORNTON LLP

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	/s/ KPMG LLP

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					March 31,				December 31,
					2005				2004				2003
					(Unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents (Note 2)				$	1,245,635			$	762,581			$	487,374
	Investment in U.S. government and agency obligations (Note 4)					68,894				96,840				52,583
	Marketable equity and debt securities (Note 5)					68,497				2,248				55,826
	Due from brokers (Note 6)					147,223				123,001				—
	Restricted cash					28,537				19,856				15,058
	Receivables and other current assets					40,817				53,186				41,169
	Real estate leased to others:
		Current portion of lease amortization for leases accounted for under the financing method				3,740				3,912				5,738
	Properties held for sale (Notes 9 and 15)					33,995				58,021				128,813
	Current portion of investment in debt securities of affiliates (Note 12)					10,429				10,429				—
	Current portion of deferred tax asset (Note 21)					2,685				2,685				2,982
			Total current assets			1,650,452				1,132,759				789,543
Investment in U.S. government and agency obligations (Note 4)						5,533				5,491				8,990
Other investments (Note 7)						244,602				245,948				50,328
Land and construction-in-progress (Note 15)						106,000				106,537				43,459
Real estate leased to others:
	Accounted for under the financing method (Notes 8, 15 and 16)					75,949				85,281				131,618
	Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16)					51,127				49,118				76,443
Hotel, casino and resort operating properties, net of accumulated depreciation:
		American Casino & Entertainment Properties LLC (Notes 10 and 17)				288,890				289,360				298,703
		Hotel and resorts (Notes 9 and 11)				46,041				50,132				41,526
Deferred finance costs and other assets, net						8,230				7,973				3,833
Long-term portion of investment in debt securities of affiliates (Note 12)						114,364				115,075				24,696
Investment in NEG Holding LLC (Note 14)						97,693				87,800				69,346
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13)						9,138				10,603				30,854
Due from American Real Estate Partners, L.P.						21,804				20,107				18,044
Deferred tax asset (Note 21)						58,851				65,399				74,892
			Total		$	2,778,674			$	2,271,583			$	1,662,275
LIABILITIES AND PARTNERS’ EQUITY
Current Liabilities:
	Current portion of mortgages payable (Notes 8, 9 and 16)				$	4,205			$	3,700			$	4,892
	Mortgages on properties held for sale (Notes 9 and 16)					20,372				27,477				82,861
	Accounts payable, accrued expenses and other current liabilities (Note 20)					76,100				81,793				45,773
	Securities sold not yet purchased (Note 6)					83,750				90,674				—
	Credit facility due affiliates (Notes 14 and 17)					—				—				25,000
			Total current liabilities			184,427				203,644				158,526
Other liabilities						21,806				23,239				22,980
Long-term portion of mortgages payable (Notes 8, 9 and 16)						55,614				60,719				93,236
Senior secured notes payable (Note 18)						215,000				215,000				—
Senior unsecured notes payable — American Real Estate Partners, L.P. — net of unamortized discount of $15,062 and $9,575 (Note 19)						817,938				343,425				—
			Total long-term liabilities			1,110,358				642,383				116,216
Commitments and contingencies (Notes 3 and 22):
Partners’ Equity:
	Limited partner					1,469,050				1,411,300				1,373,657
	General partner					14,839				14,256				13,876
		Partners’ equity (Notes 2 and 3)				1,483,889				1,425,556				1,387,533
			Total		$	2,778,674			$	2,271,583			$	1,662,275

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			Three Months
			Ended March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)
Revenues:
	Hotel and casino operating income (Note 10)		$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
	Land, house and condominium sales			8,279				5,014				26,591				13,265				76,024
	Interest income on financing leases			1,966				2,936				9,880				13,115				14,722
	Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7)			13,554				4,889				44,418				22,583				30,569
	Rental income			2,035				2,027				7,916				7,092				6,852
	Hotel and resort operating income (Note 11)			5,563				1,335				16,211				12,376				12,921
	Accretion of investment in NEG Holding LLC (Note 14)			9,893				7,904				34,432				30,142				32,879
	NEG management fee			3,275				2,619				11,563				7,967				7,637
	Dividend and other income (Notes 5 and 7)			4,206				834				3,133				3,061				2,720
	Equity in (loss) earnings of GB Holdings, Inc. (Note 13)			(986	)			(348	)			(2,113	)			(3,466	)			305
				130,623				102,219				452,012				368,946				434,652
Expenses:
	Hotel and casino operating expenses (Note 10)			57,624				54,243				227,603				216,857				217,938
	Cost of land, house and condominium sales			7,047				3,358				18,486				9,129				54,640
	Hotel and resort operating expenses (Note 11)			5,405				1,424				12,730				8,773				10,536
	Interest expense (Notes 15, 16, 17, 18 and 19)			18,307				4,956				41,659				18,654				27,297
	Depreciation and amortization			6,691				7,422				29,144				24,801				23,646
	General and administrative expenses (Note 3)			7,610				4,364				20,952				14,081				14,134
	Property expenses			952				1,085				4,340				4,472				3,862
	Provision for losses on real estate			—				—				3,150				750				3,212
				103,636				76,852				358,064				297,517				355,265
Operating income				26,987				25,367				93,948				71,428				79,387
Other gains and (losses):
	Loss on sale of other assets			(180	)			(4	)			—				(1,503	)			(353	)
	Gain on sale of marketable equity and debt securities			—				28,857				40,159				2,607				—
	Unrealized gains (losses) on securities sold short (Note 6)			21,704				—				(23,619	)			—				—
	Impairment loss on equity interest in GB Holdings, Inc. (Note 13)			—				—				(15,600	)			—				—
	Write-down of marketable equity and debt securities and other investments (Note 5)			—				—				—				(19,759	)			(8,476	)
	Gain on sales and disposition of real estate (Note 15)			186				6,047				5,262				7,121				8,990
	Minority interest in net earnings of Stratosphere Corporation (Note 10)			—				—				—				—				(1,943	)
Income from continuing operations before income taxes				48,697				60,267				100,150				59,894				77,605
	Income tax (expense) benefit (Note 21)			(7,650	)			(6,169	)			(16,763	)			1,573				(10,096	)
	Income from continuing operations			41,047				54,098				83,387				61,467				67,509
Discontinued operations:
	Income from discontinued operations			957				3,218				7,500				7,653				6,937
	Gain on sales and disposition of real estate			18,723				6,929				75,197				3,353				—
Total income from discontinued operations				19,680				10,147				82,697				11,006				6,937
Net earnings			$	60,727			$	64,245			$	166,084			$	72,473			$	74,446
Net earnings attributable to (Note 1):
	Limited partners		$	60,120			$	63,603			$	164,423			$	71,748			$	73,702
	General partner			607				642				1,661				725				744
			$	60,727			$	64,245			$	166,084			$	72,473			$	74,446

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			General				Limited				Total
			Partner’s				Partner’s				Partners’
			Equity				Equity				Equity
Balance, December 31, 2001			$	11,477			$	1,136,268			$	1,147,745
Comprehensive income:
	Net earnings			744				73,702				74,446
	Reclassification of unrealized loss on sale of debt securities			106				10,489				10,595
	Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable			66				6,516				6,582
	Net unrealized losses on securities available for sale			(2	)			(240	)			(242	)
	Comprehensive income			914				90,467				91,381
Net adjustment for acquisition of minority interest (Note 10)				212				20,939				21,151
Capital contribution to American Casino (Note 10)				8				823				831
Balance, December 31, 2002				12,611				1,248,497				1,261,108
Comprehensive income:
	Net earnings			725				71,748				72,473
	Reclassification of unrealized loss on sale of debt securities			8				753				761
	Net unrealized gains on securities available for sale			92				9,082				9,174
	Sale of marketable equity securities available for sale			(3	)			(277	)			(280	)
	Comprehensive income			822				81,306				82,128
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 21)				471				46,634				47,105
Capital distribution (Note 10)				(28	)			(2,780	)			(2,808	)
Balance, December 31, 2003				13,876				1,373,657				1,387,533
Comprehensive income:
	Net earnings			1,661				164,423				166,084
	Reclassification of unrealized gains on marketable securities sold			(96	)			(9,472	)			(9,568	)
	Net unrealized losses on securities available for sale			—				33				33
	Comprehensive income			1,565				154,984				156,549
Capital distribution from American Casino (Note 10)				(179	)			(17,737	)			(17,916	)
Capital contribution to American Casino (Note 10)				228				22,572				22,800
Arizona Charlie’s acquisition (Note 10)				(1,259	)			(124,641	)			(125,900	)
Change in deferred tax asset related to acquisition of Arizona Charlie’s				25				2,465				2,490
Balance, December 31, 2004				14,256				1,411,300				1,425,556
Comprehensive income:
	Net earnings			607				60,120				60,727
	Net unrealized losses on securities available for sale			(24	)			(2,370	)			(2,394	)
Comprehensive income				583				57,750				58,333
Balance, March 31, 2005			$	14,839			$	1,469,050			$	1,483,889

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						Three Months Ended
						March 31,								Years Ended December 31,
						2005				2004				2004				2003				2002
						(Unaudited)
Cash flows from operating activities:
	Income from continuing operations					$	41,047			$	54,098			$	83,387			$	61,467			$	67,509
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization					6,691				7,422				29,144				24,801				23,646
		Gain on sale of marketable equity securities					—				(28,857	)			(40,159	)			(2,607	)			—
		Unrealized losses on securities sold short					(21,704	)			—				23,619				—				—
		Impairment loss on equity interest in GB Holdings, Inc.					—				—				15,600				—				—
		Gain on sales and disposition of real estate					(186	)			(6,047	)			(5,262	)			(7,121	)			(8,990	)
		Loss on sale of other assets					180				4				96				1,503				353
		Provision for loss on real estate					—				—				3,150				750				3,212
		Write-down of marketable equity and debt securities and other investments					—				—				—				19,759				8,476
		Minority interest in net earnings of Stratosphere Corporation					—				—				—				—				1,943
		Equity in losses (earnings) of GB Holdings, Inc.					986				348				2,113				3,466				(305	)
		Deferred gain amortization					(510	)			(510	)			(2,038	)			(2,038	)			(2,038	)
		Accretion of investment in NEG Holding LLC					(9,893	)			(7,904	)			(34,432	)			(30,142	)			(32,879	)
		Deferred income tax expense (benefit)					6,548				1,615				13,946				(5,875	)			9,785
		Changes in operating assets and liabilities:
			(Increase) decrease in receivables and other assets				8,457				(6,755	)			(9,825	)			(299	)			2,943
			Increase in due from brokers				(2,518	)			—				(123,001	)			—				—
			(Increase) decrease in land and construction-in-progress				5,950				(455	)			(1,626	)			(4,105	)			24,215
			(Increase) decrease in restricted cash				(8,682	)			13,095				(4,350	)			(13,095	)			—
			Increase (decrease) in accounts payable, accrued expenses and other liabilities				8				12,841				92,476				(37,328	)			271
				Net cash provided by continuing operations			26,374				38,895				42,838				9,136				98,141
		Total income from discontinued operations					19,680				10,147				82,697				11,006				6,937
			Depreciation and amortization				31				210				1,244				5,130				4,464
			Net gain from property transactions				(18,723	)			(6,929	)			(75,197	)			(3,353	)			—
				Net cash provided by discontinued operations			988				3,428				8,744				12,783				11,401
				Net cash provided by operating activities			27,362				42,323				51,582				21,919				109,542
Cash flows from investing activities:
	(Increase) decrease in other investments						—				351				2,942				(28,491	)			(23,200	)
	Repayments of mezzanine loans included in other investments						—				—				49,130				12,200				23,000
	Net proceeds from the sales and disposition of real estate						4,650				11,346				16,790				15,290				20,513
	Principal payments received on leases accounted for under the financing method						908				1,112				4,219				5,310				5,941
	Principal payments received on investment in debt securities of affiliates						2,700				—				—				—				—
	Purchase of debt securities included in other investments						—				—				(245,166	)			—				—
	Purchase of debt securities of affiliates						—				—				(65,500	)			—				—
	Purchase of Atlantic Holdings debt included in debt securities due from affiliates						—				—				(36,000	)			—				—
	Acquisition of Arizona Charlies’						—				—				(125,900	)			—				—
	Additions to hotel, casino and resort operating property						(4,781	)			(1,492	)			(16,203	)			(32,911	)			(21,715	)
	Acquisition of hotel and resort operating property						—				—				(16,463	)			—				—
	Acquisitions of rental real estate						—				(14,583	)			(14,583	)			—				(18,226	)
	Acquisition of land and construction in progress						—				—				(61,845	)			—				—
	Additions to rental real estate						—				(166	)			(18	)			(413	)			(181	)
	(Increase) decrease in investment in U.S. Government and Agency Obligations (Note 2)						27,903				(61,077	)			(40,757	)			274,478				(22,410	)
	Increase in marketable equity and debt securities						(66,250	)			—				—				(45,140	)			(4,415	)
	Proceeds from sale of marketable equity and debt securities						—				64,471				90,614				3,843				—
	Increase in restricted cash						—				(219,313	)			—				—				—
	Decrease in note receivable from affiliate						—				—				—				250,000				—
	Decrease in minority interest in Stratosphere Corp.						—				—				—				—				(44,744	)
	Decrease in investment in Stratosphere Corp.						—				—				—				788				—
	Guaranteed payment from NEG Holding LLC						—				—				15,979				18,229				21,653
	Priority distribution from NEG Holding LLC						—				—				—				40,506				—
	Increase (decrease) in due to affiliate						—				—				7,597				—				(68,491	)
	Investment in NEG, Inc.						—				—				—				(148,101	)			—
	Other						—				(50	)			(194	)			560				197
				Net cash (used in) provided by investing activities from continuing operations			(34,870	)			(219,401	)			(435,358	)			366,148				(132,078	)

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					Three Months Ended
					March 31,								Years Ended December 31,
					2005				2004				2004				2003				2002
	Cash flows from investing activities from discontinued operations:
		Net proceeds from the sales and disposition of real estate				36,582				7,392				134,789				5,336				—
			Net cash provided by (used in) investing activities			1,712				(212,009	)			(300,569	)			371,484				(132,078	)
Cash flows from financing activities:
	Partners’ Equity:
		Distributions to members				—				—				(17,916	)			—				—
		Member’s contribution				—				—				22,800				—				—
		Contributions to American Casino				—				—				—				—				598
	Debt:
		Repayment of credit facilities				—				—				—				(2,904	)			(5,000	)
		Proceeds from credit facility				—				—				—				7,780				17,220
		Proceeds from Senior Notes Payable				474,000				215,000				557,594				—				—
		Decrease in due to affiliates				(10,683	)			—				(24,925	)			—				—
		Proceeds from mortgages payable				—				—				10,000				20,000				12,700
		Payments on mortgages payable				—				—				—				(3,837	)			(462	)
		Periodic principal payments				(1,003	)			(1,738	)			(5,248	)			(6,484	)			(7,198	)
		Debt issuance costs				(8,334	)			(7,515	)			(18,111	)			—				—
		Other				—				—				—				—				242
			Net cash provided by financing activities			453,980				205,747				524,194				14,555				18,100
Net increase (decrease) in cash and cash equivalents						483,054				36,061				275,207				407,958				(4,436	)
Cash and cash equivalents, beginning of period						762,581				487,374				487,374				79,416				83,852
Cash and cash equivalents at end of period					$	1,245,635			$	523,435			$	762,581			$	487,374			$	79,416
Supplemental information:
	Cash payments for interest, net of amounts capitalized				$	8,663			$	4,442			$	44,258			$	65,110			$	37,176
Supplemental schedule of noncash investing and financing activities:
Reclassification of real estate to operating lease					$	3,068			$	—			$	—			$	5,065			$	13,403
Reclassification from hotel and resort operating properties						—				(6,395	)			(6,428	)			—				—
Reclassification of real estate from financing lease						(358	)			—				(1,920	)			(5,065	)			(13,503	)
Reclassification of real estate from operating lease						(411	)			(14,353	)			(38,452	)			(126,263	)			—
Reclassification of real estate to property held for sale						716				20,748				46,800				126,263				100
Reclassification of real estate from property held for sale						(3,015	)			—				—				—				—
Decrease in other investments						—				—				—				(3,453	)			—
Decrease in deferred income						—				—				—				2,565				—
Increase in real estate accounted for under the operating method						—				—				—				888				—
Reclassification from marketable equity and debt securities						—				—				—				—				(20,494	)
Reclassification from receivable and other assets						—				—				—				(1,631	)
Reclassification to other investments						—				—				—				1,631				20,494
					$	—			$	—			$	—			$	—			$	—
Net unrealized (losses) gains on securities available for sale					$	(2,394	)		$	2,378			$	33			$	9,174			$	(242	)
Increase in equity and debt securities					$	805			$	300			$	1,740			$	1,200			$	2,890
Contribution of note from NEG Holding LLC					$	—			$	—			$	—			$	10,940			$	—
Change in tax asset related to acquisition					$	—			$	—			$	2,490			$	—			$	—
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy					$	—			$	—			$	—			$	47,105			$	—

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1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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	Other investments.

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	Revenue and Expense Recognition-

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3.	RELATED PARTY TRANSACTIONS

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4.	INVESTMENT IN U.S. GOVERNMENT AND AGENCY OBLIGATIONS

											December 31,
			March 31,
			2005								2004								2003
			(unaudited)
			Cost				Carrying				Cost				Carrying				Cost				Carrying
			Basis				Value				Basis				Value				Basis				Value
Available for Sale:
Matures in:
	less than 1 year		$	68.9			$	68.9			$	96.8			$	96.8			$	52.8			$	52.6
	2-5 years			5.6				5.5				5.6				5.5				9.0				9.0
			$	74.5			$	74.4			$	102.4			$	102.3			$	61.8			$	61.6

5.	MARKETABLE EQUITY AND DEBT SECURITIES (IN $ MILLIONS)

												December 31,
				March 31,
				2005								2004								2003
				(unaudited)
				Cost				Carrying				Cost				Carrying				Cost				Carrying
				Basis				Value				Basis				Value				Basis				Value
Available for Sale:
	Philip Service Corporation(a):
		Equity		$	—			$	—			$	—			$	—			$	—			$	—
	Corporate bonds(b)				—				—				—				—				45.1				51.6
	Other				72.4				68.5				2.2				2.2				1.3				4.2
		Total		$	72.4			$	68.5			$	2.2			$	2.2			$	46.4			$	55.8

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6.	DUE FROM BROKERS

	a. $147,223 at March 31, 2005 (unaudited) and $123,001 at December 31, 2004 — Due From Brokers — Net proceeds from short sales of equity securities and cash collateral held by brokerage institutions against our short sales.
	b. $83,750 at March 31, 2005 (unaudited) and $90,674 at December 31, 2004 — Securities Sold Not Yet Purchased — Our obligation to cover the short sales of equity securities described above. The Company recorded unrealized losses on securities sold short of $23.6 million in the year ended December 31, 2004 reflecting an increase in price in the securities sold short. This amount has been recorded in the consolidated statements of earnings for the year then ended in the respective caption. The Company recorded unrealized gains on securities sold short of $21.7 million in the three months ended March 31, 2005 (unaudited) reflecting a decrease in price of the securities sold short. This amount has

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	been recorded in the consolidated statements of earnings for the three months ended March 31, 2005 in the respective caption.

7.	OTHER INVESTMENTS (in $000’s)

						Balance at
		March 31,				December 31,
		2005				2004				2003
		(Unaudited)
Peninsula/ Hampton & Alex Hotel (a) and (b)		$	—			$	—			$	42,030
WestPoint Stevens (c)			205,850				205,850				—
Union Power Partners L.P. and Panda Gila River L.P. (d)			37,973				39,316				—
Other			779				782				8,298
		$	244,602			$	245,948			$	50,328

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8.	REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD

						December 31,
		March 31,
		2005				2004				2003
		(unaudited)
Minimum lease payments receivable		$	87,846			$	97,725			$	161,785
Unguaranteed residual value			43,422				48,980				74,651
			131,268				146,705				236,436
Less unearned income			51,579				57,512				99,080
			79,689				89,193				137,356
Less current portion of lease amortization			3,740				3,912				5,738
		$	75,949			$	85,281			$	131,618

Year Ending December 31,		Amount
2005		$	11,941
2006			11,746
2007			10,832
2008			9,476
2009			9,255
Thereafter			44,475
		$	97,725

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9.	REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land		$	13,286			$	13,666			$	24,040
Commercial Buildings			52,672				45,972				83,252
			65,958				59,638				107,292
Less accumulated depreciation			14,831				10,520				30,849
		$	51,127			$	49,118			$	76,443

Year Ending December 31,		Amount
2005		$	7,186
2006			6,232
2007			5,649
2008			5,383
2009			5,001
Thereafter			19,753
		$	49,204

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Leased to others		$	40,035			$	74,444			$	146,416
Vacant			450				450				2,550
			40,485				74,894				148,966
Less accumulated depreciation			6,490				16,873				20,153
		$	33,995			$	58,021			$	128,813

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		Three Months End
		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Rental income		$	1,462			$	5,871			$	15,658			$	23,093			$	21,073
Hotel and resort operating income			709				1,064				3,868				6,128				5,676
			2,171				6,935				19,526				29,221				26,749
Mortgage interest expense			399				1,726				3,858				7,208				6,737
Depreciation and amortization			31				210				1,244				5,130				4,464
Property expenses			147				1,107				3,123				3,549				3,409
Hotel and resort operating expenses			637				674				3,801				5,681				5,202
			1,214				3,717				12,026				21,568				19,812
Income from discontinued operations		$	957			$	3,218			$	7,500			$	7,653			$	6,937

10.	HOTEL AND CASINO OPERATING PROPERTIES

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			Three Months Ended
			March 31,								Year Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)								(in $000’s)
Hotel and casino operating income:
	Casino		$	47,729			$	42,592			$	167,972			$	147,888			$	143,057
	Hotel			15,793				13,888				54,653				47,259				44,263
	Food and beverage			17,076				16,701				66,953				59,583				56,349
	Tower, retail, and other income			8,206				7,976				33,778				30,336				28,247
Gross revenues				88,804				81,157				323,356				285,066				271,916
Less promotional allowances				(5,966	)			(6,148	)			(23,375	)			(22,255	)			(21,893	)
Net revenues			$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
Hotel and casino operating expenses:
	Casino		$	15,900			$	15,696			$	61,985			$	61,284			$	59,879
	Hotel			6,023				5,596				24,272				22,074				20,142
	Food and beverage			12,376				11,620				48,495				44,990				43,393
	Other operating expenses			3,619				3,151				14,131				13,524				14,505
	Selling, general, and administrative			19,706				18,180				78,720				74,985				80,019
Total expenses			$	57,624			$	54,243			$	227,603			$	216,857			$	217,938

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land and improvements, including land held for development		$	47,274			$	47,210			$	47,041
Building and improvements			221,847				221,314				220,280
Furniture, fixtures and equipment			112,379				108,595				98,586
Construction in progress			7,577				7,348				7,224
			389,077				384,467				373,131
Less accumulated depreciation and amortization			100,187				95,107				74,428
		$	288,890			$	289,360			$	298,703

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		(in $000’s)
Years ending December 31,
2005		$	5,877
2006			4,778
2007			3,615
2008			2,177
2009			1,224
Thereafter			959
Total payments		$	18,630

11.	HOTEL AND RESORT OPERATING PROPERTIES

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12.	INVESTMENT IN DEBT SECURITIES OF AFFILIATES (in $000’s):

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Atlantic Holdings/GB Holdings(a)		$	60,650			$	60,004			$	24,696
TransTexas(b)			27,500				27,500				—
Panaco(c)			36,643				38,000				—
			124,793				125,504				24,696
Less current portion			(10,429	)			(10,429	)			—
		$	114,364			$	115,075			$	24,696

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13.	EQUITY INTEREST IN GB HOLDINGS, INC.

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	•	$26,914,500 principal amount of the Atlantic Holdings Notes;
	•	$3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and
	•	3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis.

14.	NATIONAL ENERGY GROUP

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Current assets		$	30,991			$	23,146			$	33,415
Noncurrent assets(1)			251,438				237,127				190,389
Total assets		$	282,429			$	260,273			$	223,804
Current liabilities		$	35,699			$	22,456			$	14,253
Noncurrent liabilities			83,732				63,636				48,514
Total liabilities			119,431				86,092				62,767
Members’ equity			162,998				174,181				161,037
Total liabilities and members’ equity		$	282,429			$	260,273			$	223,804

(1)	Primarily oil and gas properties

		Three Months Ended
		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)								(In $000’s)
Total revenues		$	2,870			$	25,569			$	78,727			$	77,606			$	35,900
Costs and expenses			(13,137	)			(11,044	)			(47,313	)			(46,766	)			(32,064	)
Operating income			(10,267	)			14,525				31,414				30,840				3,836
Other income (expense)			(916	)			(358	)			(2,292	)			30				10,090
Net income		$	(11,183	)		$	14,167			$	29,122			$	30,870			$	13,926

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Investment in Holding LLC at beginning of period		$	87,800			$	69,346			$	108,880
Priority distribution from Holding LLC			—				—				(51,446	)
Guaranteed payment from Holding LLC			—				(15,978	)			(18,230	)
Accretion of investment in Holding LLC			9,893				34,432				30,142
Investment in Holding LLC at end of period		$	97,693			$	87,800			$	69,346

	1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority

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	distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis.
	2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006.
	3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon.
	4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon.
	5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts.

15.	SIGNIFICANT PROPERTY TRANSACTIONS

	a. In September 2002, the Company purchased an industrial building located in Nashville, Tennessee for approximately $18.2 million. The building was constructed in 2001 and is fully leased to two tenants, Alliance Healthcare and Jet Equipment & Tools Inc., with leases expiring in 2011. The annual net operating income was anticipated to be approximately $1.6 million increasing to approximately $1.9 million by 2011. In October 2002, the Company closed a $12.7 million non-recourse mortgage loan on the Nashville, Tennessee property. The loan bore interest at 6.4% per annum and was due to mature in ten years. Required payments were interest only for the first three years and then principal amortization would commence based on a thirty-year amortization schedule. In June 2004, the Company sold the property for a selling price of $19.2 million. A gain of approximately $1.4 million was recognized in the year ended December 31, 2004 and is included in discontinued operations in the Consolidated Statements of Earnings.
	At December 31, 2003, the property had a carrying value of approximately $18,066,000 and was encumbered by a non-recourse mortgage in the amount of $12,700,000.
	b. In October 2002, the Company sold a property located in North Palm Beach, Florida for a selling price of $3.5 million. A gain of approximately $2.4 million was recognized in the year ended December 31, 2002.
	c. In October 2003, the Company sold a property located in Columbia, Maryland to its tenant for a selling price of $11 million. A gain of approximately $5.8 million was recognized in the year ended December 31, 2003.

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	d. In the year ended December 31, 2004, the Company sold 57 rental real estate properties for approximately $245 million which were encumbered by mortgage debt of approximately $94 million which was repaid from the sale proceeds.
	In the year ended December 31, 2004, of the 57 properties, the Company sold nine financing lease properties for approximately $43.6 million. The properties were encumbered by mortgage debt of approximately $26.8 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $38.3 million; therefore, the Company recognized a gain on sale of approximately $5.3 million in the year ended December 31, 2004, which is included in income from continuing operations in the Consolidated Statements of Earnings.
	In the year ended December 31, 2004, of the 57 properties, the Company sold 48 operating and held for sale properties for approximately $201.8 million. The properties were encumbered by mortgage debt of approximately $67 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $126.6 million. The Company recognized a gain on sale of approximately $75.2 million in year ended December 31, 2004, which is included in income from discontinued operations in the Consolidated Statements of Earnings.
	In the three months ended March 31, 2005 (unaudited), the Company sold four rental real estate properties and a golf resort for approximately $51.9 million which were encumbered by mortgage debt of approximately $10.7 million repaid from the sale proceeds.
	Of the five properties, the Company sold one financing lease property for approximately $8.4 million encumbered by mortgage debt of approximately $3.8 million. The carrying value of this property was approximately $8.2 million; therefore, the Company recognized a gain on sale of approximately $0.2 million in the three months ended March 31, 2005 (unaudited), which is included in income from continuing operations. The Company sold four operating properties for approximately $43.5 million encumbered by mortgage debt of approximately $6.9 million. The carrying value of these properties was approximately $24.8 million. The Company recognized a gain on sale of approximately $18.7 million in the three months ended March 31, 2005 (unaudited), which is included in income from discontinued operations.
	At March 31, 2005, the Company had 11 properties under contract or as to which letters of intent had been executed by potential purchasers, all of which contracts or letters of intent are subject to purchaser’s due diligence and other closing conditions. Selling prices for the properties covered by the contracts or letters of intent would total approximately $45.5 million. These properties are encumbered by mortgage debt of approximately $25.3 million. At March 31, 2005, the carrying value of these properties is approximately $29.1 million. In accordance with generally accepted accounting principles, only the real estate operating properties under contract or letter of intent, but not the financing lease properties, were reclassified to “Properties Held for Sale” and the related income and expense reclassified to “Income from Discontinued Operations.”
	e. In January 2004, in conjunction with its reinvestment program, the Company purchased a 34,422 square foot commercial condominium unit (“North Moore Condos”) located in New York City for approximately $14.5 million. The unit contains a Citibank branch, a furniture store and a restaurant. Current annual rent income from the three tenants is approximately $1,289,000. The Company obtained mortgage financing of $10 million for this property in April 2004. The mortgage bears interest at the rate of 5.73% per annum, and matures in March 2014. Annual debt service is $698,760.
	f. In July 2004, the Company purchased two Vero Beach, Florida waterfront communities, Grand Harbor and Oak Harbor (“Grand Harbor”), including their respective golf courses, tennis complex, fitness center, beach club and clubhouses. The acquisition also included properties in various stages of development, including land for future residential development, improved lots and finished residential

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	units ready for sale. The purchase price was approximately $75 million, which included approximately $62 million of land and construction in progress. The Company plans to invest in the further development of these properties and the enhancement of the existing infrastructure.

16.	MORTGAGES PAYABLE

										Balance at				Balance at December 31,
						Annual Principal and				March 31,
Range of Interest Rates		Range of Maturities				Interest Payment				2005				2004				2003
										(Unaudited)
5.630% — 8.250%			10/15/07–10/01/14			$	9,373			$	80,191			$	91,896			$	180,989
Less current portion and mortgages on properties held for sale											(24,577	)			(31,177	)			(87,753	)
										$	55,614			$	60,719			$	93,236

Year Ending December 31,		Amount
2005		$	4,759
2006			5,116
2007			11,428
2008			24,385
2009			7,211
2010 — 2014			38,997
		$	91,896

	a. See Note 15a. for Mid-South Logistics financing in October 2002.
	b. On May 16, 2003, the Company executed a mortgage note secured by a distribution facility located in Windsor Locks, Connecticut and obtained funding in the principal amount of $20 million. The loan bears interest at 5.63% per annum and matures on June 1, 2013. Annual debt service is approximately $1,382,000 based on a 30 year amortization schedule.
	c. See Note 15e. for North Moore Condo financing in April 2004.

17.	SENIOR NOTES AND CREDIT FACILITIES DUE AFFILIATES

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18.	SENIOR SECURED NOTES PAYABLE AND CREDIT FACILITY

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20.	ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

		March 31,				December 31,
		2005				2004				2003
Accrued liabilities		$	11,617			$	11,463			$	11,951
Accrued payroll			10,984				11,113				12,507
Due to Panaco, Inc.			—				16,242				—
Other			53,499				42,975				21,315
		$	76,100			$	81,793			$	45,773

21.	INCOME TAXES (in $000’s)

			December 31,
			2004				2003
The difference between the book basis and the tax basis of the net assets of the Company, not directly subject to income taxes, is as follows:
	Book basis of AREH net assets excluding American Casino and NEG		$	1,319,566			$	1,149,418
	Excess of tax over book			120,820				79,238
	Tax basis of net assets		$	1,440,386			$	1,228,656

	(i) The Company’s corporate subsidiaries recorded the following income tax (expense) benefit attributable to continuing operations for American Casino and NEG for the three months ended

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	March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002 (in $000’s):

		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Current		$	(1,102	)		$	(4,554	)		$	(2,626	)		$	(4,302	)		$	(311	)
Deferred			(6,548	)			(1,615	)			(14,137	)			5,875				(9,785	)
		$	(7,650	)		$	(6,169	)		$	(16,763	)		$	1,573			$	(10,096	)

	(ii) The tax effect of significant differences representing net deferred tax assets (the difference between financial statement carrying values and the tax basis of assets and liabilities) for the Company is as follows at March 31, 2005 (unaudited), December 31, 2004 and 2003 (in $000’s):

			March 31,				December 31,
			2005				2004				2003
Deferred tax assets:
	Depreciation		$	38,424			$	39,209			$	39,858
	Net operating loss carryforwards			30,741				32,176				30,942
	Investment in Holding LLC			1,927				5,333				18,845
	Other			5,032				5,954				5,962
				76,124				82,672				95,607
	Valuation allowance			(14,588	)			(14,588	)			(17,733	)
	Subtotal			61,536				68,084				77,874
	Less current portion			(2,685	)			(2,685	)			(2,982	)
	Net deferred tax assets — non current		$	58,851			$	65,399			$	74,892

	(iii) The provision (benefit) for income taxes differs from the amount computed at the federal statutory rate as a result of the following:

		Year Ended December 31,
		2004				2003				2002
Federal statutory rate			35.0	%			35.0	%			35.0	%
Tax deduction not given book benefit			0.0	%			5.0	%			0.0	%
Income not subject to taxation			(25.3	)%			(15.0	)%			(22.9	)%
Valuation allowance			(1.7	)%			(27.3	)%			(0.5	)%
Other			1.2	%			0.1	%			0.3	%
			9.2	%			(2.2	)%			11.9	%

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22.	COMMITMENTS AND CONTINGENCIES

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23.	EMPLOYEE BENEFIT PLANS

24.	FAIR VALUE OF FINANCIAL INSTRUMENTS

	Other Investments

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		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Net				Estimated				Net				Estimated				Net				Estimated
		Investment				Fair Value				Investment				Fair Value				Investment				Fair Value
Total		$	244,602			$	247,600			$	245,948			$	248,900			$	50,328			$	55,000

	Mortgages Payable

		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Carrying				Estimated				Carrying				Estimated				Carrying				Estimated
		Value				Fair Value				Value				Fair Value				Value				Fair Value
Total		$	80,191			$	81,955			$	91,896			$	93,900			$	180,989			$	185,000

	Limitations

25.	SEGMENT REPORTING

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				March 31,								December 31,
				2005				2004				2004				2003				2002
Revenues:
	Hotel & casino operating properties			$	81,852			$	74,661			$	297,868			$	259,345			$	250,328
	Land, house and condominium sales				8,279				5,014				26,591				13,265				76,024
	Rental real estate				4,001				4,963				17,796				20,207				21,574
	Hotel & resort operating properties				5,563				1,335				16,211				12,376				12,921
	Oil & gas operating properties				13,168				10,523				45,995				38,109				40,516
	Other investments				11,092				4,763				34,241				13,874				15,283
	Subtotal				123,955				101,259				438,702				357,176				416,646
Reconciling items(1)					6,668	(1)			960	(1)			13,310	(1)			11,770	(1)			18,006	(1)
		Total revenues		$	130,623			$	102,219			$	452,012			$	368,946			$	434,652

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				March 31,								December 31,
				2005				2004				2004				2003				2002
				(unaudited)
Net earnings:
Segment earnings:
	Hotel & casino operating properties			$	24,228			$	20,418			$	70,265			$	42,488			$	32,390
	Land, house and condominium sales				1,232				1,656				6,355				4,136				21,384
	Oil & gas operating properties				10,113				8,092				34,849				30,879				33,411
	Rental real estate				3,049				3,878				12,863				14,368				14,206
	Hotel and resort operating properties				158				(89	)			2,674				4,219				2,679
	Other investments				11,092				4,763				34,241				13,874				15,283
		Total segment earnings			49,872				38,718				161,247				109,964				119,353
Interest income					6,668				960				13,310				11,770				18,006
Interest expense					(18,307	)			(4,956	)			(41,659	)			(18,654	)			(27,297	)
General and administrative expenses					(4,555	)			(1,933	)			(9,806	)			(6,851	)			(7,029	)
Depreciation and amortization					(6,691	)			(7,422	)			(29,144	)			(24,801	)			(23,646	)
	Operating Income				26,987				25,367				93,948				71,428				79,387
Gain on sales and disposition of real estate from continuing operations					186				6,047				5,262				7,121				8,990
(Loss) on sale of other assets					(180	)			(4	)			—				(1,503	)			(353	)
Write-down of marketable equity and debt securities and other investments					—				—				—				(19,759	)			(8,476	)
Gain on sale of marketable equity securities					—				28,857				40,159				2,607				—
Unrealized losses on securities sold short					21,704				—				(23,619	)			—				—
Impairment loss on equity interest in GB Holdings, Inc.					—				—				(15,600	)			—				—
Minority interest in net earnings of Stratosphere Corp					—				—				—				—				(1,943	)
Income tax (expense) benefit					(7,650	)			(6,169	)			(16,763	)			1,573				(10,096	)
Income from discontinued operations					19,680				10,147				82,697				11,006				6,937
General partner’s share of net income					(607	)			(642	)			(1,661	)			(725	)			(744	)
Net earnings-limited partners				$	60,120			$	63,603			$	164,423			$	71,748			$	73,702

(1)	Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable.

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				March 31,				December 31,
				2005				2004				2003				2002
				(Unaudited)
Assets:
	Rental real estate			$	164,811			$	196,332			$	340,062			$	359,700
	Hotel and casino operating properties				288,890				289,360				298,703				290,775
	Land and construction-in-progress				106,000				106,537				43,459				40,415
	Hotel and resort operating properties				46,041				50,132				41,526				44,346
	Other investments				466,252				472,103				231,050				479,104
					1,071,994				1,114,464				954,800				1,214,340
	Reconciling items				1,706,680				1,157,119				707,475				510,945
		Total		$	2,778,674			$	2,271,583			$	1,662,275			$	1,725,285
Real estate investment capital expenditures:
Acquisitions:
	Rental real estate			$	—			$	14,583			$	—			$	18,226
	Land and construction-in-progress				—				61,845				—				—
	Hotel and casino operating properties				—				125,900				—				—
	Hotel and resort operating properties				—				16,463				—				—
				$	—			$	218,791			$	—			$	18,226
Developments:
	Rental real estate			$	—			$	18			$	413			$	181
	Land and construction-in-progress				—				17,947				—				1,138
	Hotel and casino operating properties				4,711				13,589				31,844				19,133
	Hotel and resort operating properties				70				2,614				1,067				2,582
				$	4,781			$	34,168			$	33,324			$	23,034

26.	SUBSEQUENT EVENTS

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	/s/ GRANT THORNTON LLP

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	/s/ KPMG LLP

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					March 31,				December 31,
					2005				2004				2003
					(Unaudited)
ASSETS
Current Assets:
	Cash and cash equivalents (Note 2)					1,249,947			$	768,791			$	504,245
	Investment in U.S. government and agency obligations (Note 4)					68,894				96,840				52,583
	Marketable equity and debt securities (Note 5)					68,497				2,248				55,826
	Due from brokers (Note 6)					147,223				123,001				—
	Restricted cash					28,537				19,856				15,058
	Receivables and other current assets					50,318				60,885				49,529
	Real estate leased to others:
		Current portion of lease amortization for leases accounted for under the financing method				3,740				3,912				5,738
	Properties held for sale (Notes 9 and 15)					33,995				58,021				128,813
	Current portion of investment in debt securities of affiliates (Note 12)					5,429				5,429				—
	Current portion of deferred tax asset (Note 21)					2,685				2,685				2,982
			Total current assets			1,659,265				1,141,668				814,774
Investment in U.S. government and agency obligations (Note 4)						5,533				5,491				8,990
Other investments (Note 7)						244,602				245,948				50,328
Land and construction-in-progress (Note 15)						106,000				106,537				43,459
Real estate leased to others:
	Accounted for under the financing method (Notes 8, 15 and 16)					75,949				85,281				131,618
	Accounted for under the operating method, net of accumulated depreciation (Notes 9, 15 and 16)					51,127				49,118				76,443
Oil and gas properties, net						180,241				168,136				168,921
Hotel, casino and resort operating properties, net of accumulated depreciation:
		American Casino & Entertainment Properties LLC (Notes 10 and 17)				288,890				289,360				298,703
		Hotel and resorts (Notes 9 and 11)				46,041				50,132				41,526
Deferred finance costs and other assets, net						8,392				8,135				4,095
Long-term portion of investment in debt securities of affiliates (Note 12)						91,864				92,575				24,696
Investment in NEG Holding LLC (Note 14)						97,693				87,800				69,346
Equity interest in GB Holdings, Inc. (The Sands Hotel and Casino)(Note 13)						9,138				10,603				30,854
Due from American Real Estate Partners, L.P.						21,804				20,107				18,044
Deferred tax asset (Note 21)						52,147				55,824				65,445
			Total		$	2,938,686			$	2,416,715			$	1,847,242
LIABILITIES AND PARTNERS’ EQUITY
Current Liabilities:
	Current portion of mortgages payable (Notes 8, 9 and 16)				$	4,205			$	3,700			$	4,892
	Mortgages on properties held for sale (Notes 9 and 16)					20,372				27,477				82,861
	Due to affiliates					10,000				—				—
	Accounts payable, accrued expenses and other current liabilities (Note 20)					96,813				95,877				55,879
	Securities sold not yet purchased (Note 6)					83,750				90,674				—
	Credit facility due affiliates (Notes 14 and 17)					—				—				30,000
			Total current liabilities			215,140				217,728				173,632
Other liabilities						28,122				26,048				29,127
Long-term portion of mortgages payable (Notes 8, 9 and 16)						55,614				60,719				93,236
Senior secured notes payable (Note 18)						215,000				215,000				—
Senior unsecured notes payable — American Real Estate Partners, L.P. — net of unamortized discount of $9,575 (Note 19)						817,938				343,425				—
Asset retirement obligation						3,999				3,930				3,477
Due to affiliate						—				—				27,500
			Total long-term liabilities			1,120,673				649,122				153,340
Commitments and contingencies (Notes 3 and 22):
	Minority Interest					—				—				9,604
Partners’ Equity:
	Limited partner					1,463,778				1,411,300				1,373,657
	General partner					139,095				138,565				137,009
		Partners’ equity (Notes 2 and 3)				1,602,873				1,549,865				1,510,666
			Total			2,938,686			$	2,416,715			$	1,847,242

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			Three Months
			Ended March 31,								Years Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited) (In $000’s)
Revenues:
	Hotel and casino operating income (Note 10)		$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
	Land, house and condominium sales			8,279				5,014				26,591				13,265				76,024
	Interest income on financing leases			1,966				2,936				9,880				13,115				14,722
	Interest income on U.S. Government and Agency obligations and other investments (Notes 2 and 7)			12,902				4,944				44,376				22,592				30,569
	Rental income			2,035				2,027				7,916				7,091				6,852
	Hotel and resort operating income (Note 11)			5,563				1,335				16,211				12,376				12,921
	Oil and gas operating income			15,422				15,333				58,419				20,899				—
	Accretion of investment in NEG Holding LLC (Note 14)			9,893				7,904				34,432				30,142				32,879
	NEG management fee			2,108				1,464				6,887				6,629				7,637
	Dividend and other income (Notes 5 and 7)			4,206				834				3,616				3,211				2,720
	Equity in (loss) earnings of GB Holdings, Inc. (Note 13)			(986	)			(348	)			(2,113	)			(3,466	)			305
				144,226				116,452				506,196				388,665				434,652
Expenses:
	Hotel and casino operating expenses (Note 10)			57,624				54,243				227,603				216,857				217,938
	Cost of land, house and condominium sales			7,047				3,358				18,486				9,129				54,640
	Hotel and resort operating expenses (Note 11)			5,405				1,424				12,730				8,773				10,536
	Oil and gas operating expenses			2,866				3,858				13,816				5,028				—
	Interest expense (Notes 15, 16, 17, 18 and 19)			18,411				5,966				45,229				24,608				27,297
	Depreciation and amortization			15,704				18,396				67,620				40,570				23,646
	General and administrative expenses (Note 3)			7,610				4,364				20,952				14,081				14,134
	Property expenses			952				1,085				4,340				4,472				3,862
	Provision for losses on real estate							—				3,150				750				3,212
				115,619				92,694				413,926				324,268				355,265
Operating income				28,607				23,758				92,270				64,397				79,387
Other gains and (losses):
	Gain (loss) on sale of other assets			(180	)			(4	)			1,680				(1,503	)			(353	)
	Gain on sale of marketable equity and debt securities			—				—				40,159				2,607				—
	Unrealized losses on securities sold short (Note 6)			21,704				—				(23,619	)			—				—
	Change in fair market value of derivative contract			(9,813	)			—				—				—				—
	Impairment loss on equity interest in GB Holdings, Inc. (Note 13)			—				—				(15,600	)			—				—
	Write-down of marketable equity and debt securities and other investments (Note 5)			—				28,857				—				(19,759	)			(8,476	)
	Gain on sales and disposition of real estate (Note 15)			186				6,047				5,262				7,121				8,990
	Severance tax refund			—				—				4,468				—				—
	Minority interest in net earnings of Stratosphere Corporation (Note 10)			—				(39	)			(812	)			(1,266	)			(1,943	)
Income from continuing operations before income taxes				40,504				58,619				103,808				51,597				77,605
	Income tax (expense) benefit (Note 21)			(4,782				(5,966	)			(17,326	)			16,750				(10,096	)
	Income from continuing operations			35,722				52,653				86,482				68,347				67,509
Discontinued operations:
	Income from discontinued operations			957				3,218				7,500				7,653				6,937
	Gain on sales and disposition of real estate			18,723				6,929				75,197				3,353				—
Total income from discontinued operations				19,680				10,147				82,697				11,006				6,937
Net earnings			$	55,402			$	62,800			$	169,179			$	79,353			$	74,446
Net earnings attributable to (Note 1):
	Limited partners		$	54,848			$	62,172			$	167,487			$	78,559			$	73,702
	General partner		$	554			$	628				1,692				794				744
			$	55,402			$	62,800			$	169,179			$	79,353			$	74,446

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			General				Limited				Total
			Partner’s				Partner’s				Partners’
			Equity				Equity				Equity
Balance, December 31, 2001			$	11,477			$	1,136,268			$	1,147,745
Comprehensive income:
	Net earnings			744				73,702				74,446
	Reclassification of unrealized loss on sale of debt securities			106				10,489				10,595
	Adjustment to reverse unrealized loss on investment securities reclassified to notes receivable			66				6,516				6,582
	Net unrealized losses on securities available for sale			(2	)			(240	)			(242	)
	Comprehensive income			914				90,467				91,381
Net adjustment for acquisition of minority interest (Note 10)				212				20,939				21,151
Capital contribution to American Casino (Note 10)				8				823				831
Balance, December 31, 2002				12,611				1,248,497				1,261,108
Comprehensive income:
	Net earnings			794				78,559				79,353
	Reclassification of unrealized loss on sale of debt securities			8				753				761
	Net unrealized gains on securities available for sale			92				9,082				9,174
	Sale of marketable equity securities available for sale			(3	)			(277	)			(280	)
	Comprehensive income			891				88,117				89,008
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy (Note 21)				471				46,634				47,105
Capital contribution to TransTexas				123,064				(6,811	)			116,253
Capital distribution (Note 10)				(28	)			(2,780	)			(2,808	)
Balance, December 31, 2003				137,009				1,373,657				1,510,666
Comprehensive income:
	Net earnings			1,692				167,487				169,179
	Reclassification of unrealized gains on marketable securities sold			(96	)			(9,472	)			(9,568	)
	Net unrealized losses on securities available for sale			—				33				33
	Comprehensive income			1,596				158,048				159,644
Capital distribution from American Casino (Note 10)				(179	)			(17,737	)			(17,916	)
Capital contribution to American Casino (Note 10)				228				22,572				22,800
Capital contribution to TransTexas				1,145				(3,064	)			(1,919	)
Arizona Charlie’s acquisition (Note 10)				(1,259	)			(124,641	)			(125,900	)
Change in deferred tax asset related to acquisition of Arizona Charlie’s				25				2,465				2,490
Balance, December 31, 2004				138,565				1,411,300				1,549,865
Comprehensive income:
	Net earnings			554				54,848				55,402
	Net unrealized loss on securities available for sale			(24	)			(2,370	)			(2,394	)
	Comprehensive income			530				52,478				53,008
Balance, March 31, 2005			$	139,095			$	1,463,778			$	1,602,873

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						Three Months Ended
						March 31,								Years Ended December 31,
						2005				2004				2004				2003				2002
						(Unaudited)								(In $000’s)
Cash flows from operating activities:
	Income from continuing operations					$	35,722			$	52,653			$	86,482			$	68,347			$	67,509
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization					15,636				18,316				67,288				41,172				23,646
		Change in fair market value of restrictive contracts					9,813				2,050				1,659				(373	)			—
		Note discount amortization					26				71				281				95				—
		Accretion of discount in asset retirement obligation					69				80				332				96				—
		Gain on sale of marketable equity securities					—				(28,857	)			(40,159	)			(2,607	)			—
		Unrealized losses on securities sold short					(21,704	)			—				23,619				—				—
		Impairment loss on equity interest in GB Holdings, Inc.					—								15,600				—				—
		Gain on sales and disposition of real estate					(186	)			(6,047	)			(5,262	)			(7,121	)			(8,990	)
		Loss on sale of other assets					180				4				(1,584	)			1,511				353
		Provision for loss on real estate					—				—				3,150				750				3,212
		Minority interest					—				39				812				1,266				—
		Write-down of marketable equity and debt securities and other investments					—				—				—				19,759				8,476
		Minority interest in net earnings of Stratosphere Corporation					—				—				—				—				1,943
		Equity in losses (earnings) of GB Holdings, Inc.					986				348				2,113				3,466				(305	)
		Deferred gain amortization					(510	)			(510	)			(2,038	)			(2,038	)			(2,038	)
		Accretion of investment in NEG Holding LLC					(9,893	)			(7,904	)			(34,432	)			(30,142	)			(32,879	)
		Deferred income tax expense (benefit)					3,678				1,412				14,509				(21,052	)			9,785
		Changes in operating assets and liabilities:
			(Increase) decrease in receivables and other assets				5,639				(8,414	)			(10,033	)			3,762				2,943
			Increase in due from brokers				(2,518	)			—				(123,001	)			—				—
			Increase (decrease) in land and construction-in-progress				5,950				(455	)			(1,626	)			(4,105	)			24,215
			Increase in restricted cash				(8,682	)			13,095				(4,350	)			(13,095	)			—
			Increase (decrease) in accounts payable, accrued expenses and other liabilities				1,917				13,170				96,067				(39,550	)			271
				Net cash provided by continuing operations			36,123				49,051				89,427				20,141				98,141
		Total income from discontinued operations					19,680				10,147				82,697				11,006				6,937
			Depreciation and amortization				31				210				1,244				5,130				4,464
			Net gain from property transactions				(18,723	)			(6,929	)			(75,197	)			(3,353	)			—
				Net cash provided by discontinued operations			988				3,428				8,744				12,783				11,401
				Net cash provided by operating activities			37,111				52,479				98,171				32,924				109,542
Cash flows from investing activities:
	Cash associated with acquisition						—				—				—				15,312				—
	Purchase of minority interest						—				—				(4,136	)			—				—
	Increase (decrease) in other investments						—				—				2,942				(28,491	)			(23,200	)
	Repayments of mezzanine loans included in other investments						—				—				49,130				12,200				23,000
	Net proceeds from the sales and disposition of real estate						4,650				11,346				16,790				15,290				20,513
	Proceeds from sale of other assets						19				64				3,779				—				—
	Principal payments received on investments in debt securities of affiliates						2,700				—				—				—				—
	Principal payments received on leases accounted for under the financing method						908				1,112				4,219				5,310				5,941
	Purchase of debt securities included in other investments						—				—				(245,166	)			—				—
	Purchase of debt securities of affiliates						—				—				(65,500	)			—				—
	Purchase of Atlantic Holdings debt included in debt securities due from affiliates						—				—				(36,000	)			—				—
	Acquisition of Arizona Charlies’						—				—				(125,900	)			—				—
	Additions to hotel, casino and resort operating property						(4,781	)			(1,492	)			(16,203	)			(32,911	)			(21,715	)
	Acquisition of hotel and resort operating property						—				—				(16,463	)			—				—
	Acquisitions of rental real estate						—				(14,583	)			(14,583	)			—				(18,226	)
	Acquisition of land and construction in progress						—				—				(61,845	)			—				—
	Additions to rental real estate						—				(166	)			(18	)			(413	)			(181	)
	Additions to oil gas operating property						(21,071	)			(6,106	)			(47,528	)			(633	)			—
	Decrease (increase) in investment in U.S. Government and Agency Obligations (Note 2)						27,903				(61,077	)			(40,757	)			274,478				(22,410	)
	Increase in marketable equity and debt securities						(66,250	)			—				—				(45,140	)			(4,415	)
	Proceeds from sale of marketable equity and debt securities						—				64,471				90,614				3,843				—
	Decrease in note receivable from affiliate						—				—				—				250,000				—
	Decrease in mortgages and note receivable						—				351				—				—				—
	Decrease in minority interest in Stratosphere Corp. —						—				—				—				—				(44,744	)
	Decrease in investment in Stratosphere Corp. —						—				—				—				788				—
	Guaranteed payment from NEG Holding LLC						—				—				15,979				18,229				21,653
	Priority distribution from NEG Holding LLC						—				—				—				40,506				—
	Increase (decrease) in due to affiliate						—				—				7,597				—				(68,491	)
	Increase in restricted cash						—				(219,313	)			—				—				—
	Investment in NEG, Inc.						—				—				—				(148,101	)			—
	Other						—				(50	)			(194	)			560				197
				Net cash (used in) provided by investing activities from continuing operations			(55,922	)			(225,443	)			(483,243	)			380,827				(132,078	)

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					Three Months Ended
					March 31,								Years Ended December 31,
					2005				2004				2004				2003				2002
					(Unaudited)
	Cash flows from investing activities from discontinued operations:
		Net proceeds from the sales and disposition of real estate			$	36,582			$	7,392				134,789				5,336				—
			Net cash (used in) provided by investing activities			(19,340	)			(218,051	)			(348,454	)			386,163				(132,078	)
Cash flows from financing activities:
	Partners’ Equity:
		Distributions to members				—				—				(17,916	)			—				—
		Member’s contribution				—				—				22,800				—				—
		Contributions to American Casino				—				—				—				—				598
	Debt:
		Repayment of credit facilities				—				—				—				(2,904	)			(5,000	)
		Proceeds from credit facility				—				—				—				7,780				17,220
		Proceeds from Senior Notes Payable				474,000				215,000				557,594				—				—
		Decrease in due to affiliates				(683	)			—				(24,925	)			—				—
		Proceeds from mortgages payable				—				—				10,000				20,000				12,700
		Payments on mortgages payable				—				—				—				(3,837	)			(462	)
		Periodic principal payments				(1,598	)			(3,721	)			(14,613	)			(15,297	)			(7,198	)
		Debt issuance costs				(8,334	)			(7,515	)			(18,111	)			—				—
		Other				—				—				—				—				242
			Net cash provided by financing activities			463,385				203,764				514,829				5,742				18,100
Net increase (decrease) in cash and cash equivalents						481,156				38,192				264,546				424,829				(4,436	)
Cash and cash equivalents, beginning of year						768,791				504,245				504,245				79,416				83,852
Cash and cash equivalents at end of year					$	1,249,947			$	542,437			$	768,791			$	504,245			$	79,416
Supplemental information:
	Cash payments for interest, net of amounts capitalized				$	8,758			$	4,442			$	48,015			$	65,253			$	37,176
Supplemental schedule of noncash investing and financing activities:
Reclassification of real estate to operating lease					$	3,068			$	—			$	—			$	5,065			$	13,403
Reclassification from hotel and resort operating properties						—				(6,395	)			(6,428	)			—				—
Reclassification of real estate from financing lease						(358	)			—				(1,920	)			(5,065	)			(13,503	)
Reclassification of real estate from operating lease						(411	)			(14,353	)			(38,452	)			(126,263	)			—
Reclassification of real estate to property held for sale						716				20,748				46,800				126,263				100
Decrease in other investments						—				—				—				(3,453	)			—
Decrease in deferred income						—				—				—				2,565				—
Increase in real estate accounted for under the operating method						—				—				—				888				—
Reclassification from properties held for sale						(3,015	)			—				—				—				—
Reclassification from marketable equity and debt securities						—				—				—				—				(20,494	)
Reclassification from receivable and other assets						—				—				—				(1,631	)
Reclassification to other investments						—				—				—				1,631				20,494
					$	—			$	—			$	—			$	—			$	—
Net unrealized (losses) gains on securities available for sale					$	(2,394	)		$	2,378			$	33			$	9,174			$	(242	)
Increase in equity and debt securities					$	805			$	300			$	1,740			$	1,200			$	2,890
Contribution of note from NEG Holding LLC						—				—			$	—			$	10,940			$	—
Change in tax asset related to acquisition						—				—			$	2,490			$	—			$	—
Change in deferred tax asset valuation allowance related to book-tax differences existing at time of bankruptcy						—				—			$	—			$	47,105			$	—

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1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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	Oil and Natural Gas Properties

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	Other investments.

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	Revenue and Expense Recognition-

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						Fixed
Type contract		Production Month		Volume per month		price				Floor				Ceiling
Fixed price		April-June 2004		300,000 MMBTU		$	5.44				—				—
Fixed price		July-Sept 2004		300,000 MMUTU		$	5.34				—				—
No cost collars		Oct-Dec 2004		300,000 MMBTU			—			$	5.25			$	5.50
No cost collars		Jan-Dec 2004		25,000 Bbls			—			$	28.72			$	31.90
No cost collars		Jan-Dec 2005		15,000 Bbls			—			$	42.50			$	46.50
No cost collars		Jan-Dec 2005		400,000 MMBTU			—			$	6.00			$	8.35
No cost collars		March-Dec 2005		9,000 Bbls			—			$	44.50			$	48.00
No cost collars		March-Dec 2005		210,000 MMBTU			—			$	6.05			$	7.30
No cost collars		Jan-Dec 2006		14,000 Bbls			—			$	41.65			$	45.25
No cost collars		Jan-Dec 2006		430,000 MMBTU			—			$	6.00			$	7.25

		March 31,				December 31,
		2005				2004
Realized (cash payments)		$	232,695			$	3,906,325
Valuation loss			9,812,799				1,658,809
		$	10,045,494			$	5,565,134

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		2005				2004				2003
Balance, beginning of period		$	3,930			$	3,477			$	3,375
Accretion expense			69				332				96
Additions			—				121				6
Balance, end of period		$	3,999			$	3,930			$	3,477

	Recently Issued Pronouncements

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3.	RELATED PARTY TRANSACTIONS

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4.	INVESTMENT IN U.S. GOVERNMENT AND AGENCY OBLIGATIONS

											December 31,
			March 31, 2005								2004								2003
			Cost				Carrying				Cost				Carrying				Cost				Carrying
			Basis				Value				Basis				Value				Basis				Value
			(Unaudited)
Available for Sale:
Matures in:
	less than 1 year		$	68.9			$	68.9			$	96.8			$	96.8			$	52.8			$	52.6
	2-5 years			5.6				5.5				5.6				5.5				9.0				9.0
			$	74.5			$	74.4			$	102.4			$	102.3			$	61.8			$	61.6

5.	MARKETABLE EQUITY AND DEBT SECURITIES (IN $ MILLIONS)

												December 31,
				March 31, 2005								2004								2003
				Cost				Carrying				Cost				Carrying				Cost				Carrying
				Basis				Value				Basis				Value				Basis				Value
Available for Sale:
	Philip Service Corporation(a):
		Equity		$	—			$	—			$	—			$	—			$	—			$	—
	Corporate bonds(b)				—				—				—				—				45.1				51.6
	Other				72.4				68.5				2.2				2.2				1.3				4.2
		Total		$	72.4			$	68.5			$	2.2			$	2.2			$	46.4			$	55.8

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6.	DUE FROM BROKERS

	a. $147,223 at March 31, 2005 (unaudited) and $123,001 at December 31, 2004 — Due From Brokers — Net proceeds from short sales of equity securities and cash collateral held by brokerage institutions against our short sales.
	b. $83,750 at March 31, 2005 (unaudited) and $90,674 at December 31, 2004 — Securities Sold Not Yet Purchased — Our obligation to cover the short sales of equity securities described above. The Company recorded unrealized losses on securities sold short of $23.6 million in the year ended December 31, 2004 reflecting an increase in price in the securities sold short. This amount has been

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recorded in the consolidated statements of earnings for the year then ended in the respective caption. The Company recorded unrealized gains on securities sold short of $21.7 million in the three months ended March 31, 2005 (unaudited) reflecting a decrease in price of the securities sold short. This amount has been recorded in the consolidated statements of earnings for the three months ended March 31, 2005 in the respective caption.

7.	OTHER INVESTMENTS (in $000’s)

						Balance at
						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Peninsula/ Hampton & Alex Hotel (a) and (b)		$	—			$	—			$	42,030
WestPoint Stevens (c)			205,850				205,850				—
Union Power Partners L.P. and Panda Gila River L.P. (d)			37,973				39,316				—
Other			779				782				8,298
		$	244,602			$	245,948			$	50,328

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8.	REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Minimum lease payments receivable		$	87,846			$	97,725			$	161,785
Unguaranteed residual value			43,422				48,980				74,651
			131,268				146,705				236,436
Less unearned income			51,579				57,512				99,080
			79,689				89,193				137,356
Less current portion of lease amortization			3,740				3,912				5,738
		$	75,949			$	85,281			$	131,618

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Year Ending December 31,		Amount
2005		$	11,941
2006			11,746
2007			10,832
2008			9,476
2009			9,255
Thereafter			44,475
		$	97,725

9.	REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land		$	13,286			$	13,666			$	24,040
Commercial Buildings			52,672				45,972				83,252
			65,958				59,638				107,292
Less accumulated depreciation			14,831				10,520				30,849
		$	51,127			$	49,118			$	76,443

Year Ending December 31,		Amount
2005		$	7,186
2006			6,232
2007			5,649
2008			5,383
2009			5,001
Thereafter			19,753
		$	49,204

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Leased to others		$	40,035			$	74,444			$	146,416
Vacant			450				450				2,550
			40,485				74,894				148,966
Less accumulated depreciation			6,490				16,873				20,153
		$	33,995			$	58,021			$	128,813

		Three Months Ended
		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Rental income		$	1,462			$	5,871			$	15,658			$	23,093			$	21,073
Hotel and resort operating income			709				1,064				3,868				6,128				5,676
			2,171				6,935				19,526				29,221				26,749
Mortgage interest expense			399				1,726				3,858				7,208				6,737
Depreciation and amortization			31				210				1,244				5,130				4,464
Property expenses			147				1,107				3,123				3,549				3,409
Hotel and resort operating expenses			637				674				3,801				5,681				5,202
			1,214				3,717				12,026				21,568				19,812
Income from discontinued operations		$	957			$	3,218			$	7,500			$	7,653			$	6,937

10.	HOTEL AND CASINO OPERATING PROPERTIES

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			Three Months Ended
			March 31,								Year Ended December 31,
			2005				2004				2004				2003				2002
			(Unaudited)								(In $000’s)
Hotel and casino operating income:
	Casino		$	47,729			$	42,592			$	167,972			$	147,888			$	143,057
	Hotel			15,793				13,888				54,653				47,259				44,263
	Food and beverage			17,076				16,701				66,953				59,583				56,349
	Tower, retail, and other income			8,206				7,976				33,778				30,336				28,247
Gross revenues				88,804				81,157				323,356				285,066				271,916
Less promotional allowances				(5,966	)			(6,148	)			(23,375	)			(22,255	)			(21,893	)
Net revenues			$	82,838			$	75,009			$	299,981			$	262,811			$	250,023
Hotel and casino operating expenses:
	Casino		$	15,900			$	15,696			$	61,985			$	61,284			$	59,879
	Hotel			6,023				5,596				24,272				22,074				20,142
	Food and beverage			12,376				11,620				48,495				44,990				43,393
	Other operating expenses			3,619				3,151				14,131				13,524				14,505
	Selling, general, and administrative			19,706				18,180				78,720				74,985				80,019
Total expenses			$	57,624			$	54,243			$	227,603			$	216,857			$	217,938

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Land and improvements, including land held for development		$	47,274			$	47,210			$	47,041
Building and improvements			221,847				221,314				220,280
Furniture, fixtures and equipment			112,379				108,595				98,586
Construction in progress			7,577				7,348				7,224
			389,077				384,467				373,131
Less accumulated depreciation and amortization			100,187				95,107				74,428
		$	288,890			$	289,360			$	298,703

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		(In $000’s)
Years ending December 31,
2005		$	5,877
2006			4,778
2007			3,615
2008			2,177
2009			1,224
Thereafter			959
Total payments		$	18,630

11.	HOTEL AND RESORT OPERATING PROPERTIES

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12.	INVESTMENT IN DEBT SECURITIES OF AFFILIATES (in $000’s):

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Atlantic Holdings/GB Holdings(a)		$	60,650			$	60,004			$	24,696
Panaco(c)			36,643				38,000				—
			97,293				98,004				24,696
Less current portion			(5,429	)			(5,429	)			—
		$	91,864			$	92,575			$	24,696

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13.	EQUITY INTEREST IN GB HOLDINGS, INC.

	•	$26,914,500 principal amount of the Atlantic Holdings Notes;
	•	$3,620,753 in cash representing accrued interest on the GB Notes and $100 per $1,000 in principal amount of the GB Notes; and
	•	3,627,711 warrants, which under certain conditions will allow the Company to purchase approximately 998,000 shares of common stock at $.01 per share of Atlantic Holdings representing approximately 10% of the outstanding common stock of Atlantic Holdings, on a fully diluted basis.

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14.	NATIONAL ENERGY GROUP

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Current assets		$	30,991			$	23,146			$	33,415
Noncurrent assets(1)			251,438				237,127				190,389
Total assets		$	282,429			$	260,273			$	223,804
Current liabilities		$	35,699			$	22,456			$	14,253
Noncurrent liabilities			83,732				63,636				48,514
Total liabilities			119,431				86,092				62,767
Members’ equity			162,998				174,181				161,037
Total liabilities and members’ equity		$	282,429			$	260,273			$	223,804

(1)	Primarily oil and gas properties

		Three Months Ended
		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)								(In $000’s)
Total revenues		$	2,870			$	25,569			$	78,727			$	77,606			$	35,900
Costs and expenses			(13,137	)			(11,044	)			(47,313	)			(46,766	)			(32,064	)
Operating income			(10,267	)			14,525				31,414				30,840				3,836
Other income (expense)			(916	)			(358	)			(2,292	)			30				10,090
Net income		$	(11,183	)		$	14,167			$	29,122			$	30,870			$	13,926

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						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Investment in Holding LLC at beginning of period		$	87,800			$	69,346			$	108,880
Priority distribution from Holding LLC			—				—				(51,446	)
Guaranteed payment from Holding LLC			—				(15,978	)			(18,230	)
Accretion of investment in Holding LLC			9,893				34,432				30,142
Investment in Holding LLC at end of period		$	97,693			$	87,800			$	69,346

	1. Guaranteed payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding priority distribution amount. The priority distribution amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of NEG’s 10.75% Senior Notes. As of March 31, 2005 (unaudited) and December 31, 2004, the priority distribution amount was $148.6 million which equals the amount of NEG’s 10.75% Senior Notes due the Company. The guaranteed payments will be made on a semi-annual basis.
	2. The priority distribution amount is to be paid to NEG. Such payment is to occur by November 6, 2006.
	3. An amount equal to the priority distribution amount and all guaranteed payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by NEG to Gascon, is to be paid to Gascon.
	4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the guaranteed payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the guaranteed payments), less any distributions previously made by NEG to Gascon, is to be paid to Gascon.
	5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of NEG’s and Gascon’s respective capital accounts.

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			December 31,
			2004				2003
Proved Properties			$	221,351			$	182,193
Unproved Properties				—				—
Other property and equipment				540				2,369
	Total			221,891				184,562
Less: Accumulated depreciation, depletion and amortization				(53,755	)			(15,641	)
			$	168,136			$	168,921

			2004				2003
Development costs			$	14,284			$	556
Exploration costs				33,202				—
	Total		$	47,486			$	556
Depletion rate per MCFe			$	4.70			$	4.39

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			December 31,
			2004								2003
			Oil and								Oil and
			Condensate								Condensate
			(barrels)				Gas (MCF)				(barrels)				Gas (MCF)
Proved Reserves:
	Beginning of period			3,124,112				38,655,526				1,120,400				41,440,700
Increase (decrease) during the period attributable to:
	Revisions of previous estimates			234,521				(5,630,633	)			2,351,163				(308,688	)
	Extensions and discoveries			78,453				16,875,613				—				—
	Sales of reserves			—				—				—				—
	Production			(918,905	)			(5,788,974	)			(347,451	)			(2,476,486	)
	End of period			2,518,181				44,111,532				3,124,112				38,655,526
Proved developed reserves:
	Beginning of period			2,755,522				21,557,712				431,400				15,802,000
	End of period(1)			2,410,912				26,179,029				2,755,522				21,557,712

(1)	includes proved developed non-producing reserves for 2004 and 2003 of 788,042 and 57,441 barrels of oil and 10,479,632 and 4,586,423 mcf of gas, respectively.

		2004				2003
Future cash inflows		$	354,725,200			$	313,032,000
Future production costs			78,680,400				59,113,600
Future development costs			54,721,925				35,690,500
Future income taxes			—				—
Future net cash flows			221,322,875				218,227,900
Annual discount (10%) for estimated timing of cash flows			60,105,800				53,790,300
Standardized measure of discounted future net cash flows		$	161,217,075			$	164,437,600

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		2004				2003
Beginning of period		$	164,437,600			$	101,803,900
Sales, net of production costs			(47,635,549	)			(16,761,000	)
Net change in prices, net of production costs			(14,353,925	)			31,943,125
Revisions of quantity estimates			(17,464,167	)			44,507,391
Extensions and discoveries			74,451,060				—
Development costs incurred			14,056,670				556,000
Change in estimated future development costs			(28,921,504	)			4,930,232
Accretion of discount			16,443,760				3,393,463
Changes in production rates and other			203,130				(5,935,511	)
End of period		$	161,217,075			$	164,437,600

15.	SIGNIFICANT PROPERTY TRANSACTIONS

	a. In September 2002, the Company purchased an industrial building located in Nashville, Tennessee for approximately $18.2 million. The building was constructed in 2001 and is fully leased to two tenants, Alliance Healthcare and Jet Equipment & Tools Inc., with leases expiring in 2011. The annual net operating income was anticipated to be approximately $1.6 million increasing to approximately $1.9 million by 2011. In October 2002, the Company closed a $12.7 million non-recourse mortgage loan on the Nashville, Tennessee property. The loan bore interest at 6.4% per annum and was due to mature in ten years. Required payments were interest only for the first three years and then principal amortization would commence based on a thirty-year amortization schedule. In June 2004, the Company sold the property for a selling price of $19.2 million. A gain of approximately $1.4 million was recognized in the year ended December 31, 2004 and is included in discontinued operations in the Consolidated Statements of Earnings.
	At December 31, 2003, the property had a carrying value of approximately $18,066,000 and was encumbered by a non-recourse mortgage in the amount of $12,700,000.
	b. In October 2002, the Company sold a property located in North Palm Beach, Florida for a selling price of $3.5 million. A gain of approximately $2.4 million was recognized in the year ended December 31, 2002.
	c. In October 2003, the Company sold a property located in Columbia, Maryland to its tenant for a selling price of $11 million. A gain of approximately $5.8 million was recognized in the year ended December 31, 2003.

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	d. In the year ended December 31, 2004, the Company sold 57 rental real estate properties for approximately $245 million which were encumbered by mortgage debt of approximately $94 million which was repaid from the sale proceeds.
	In the year ended December 31, 2004, of the 57 properties, the Company sold nine financing lease properties for approximately $43.6 million. The properties were encumbered by mortgage debt of approximately $26.8 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $38.3 million; therefore, the Company recognized a gain on sale of approximately $5.3 million in the year ended December 31, 2004, which is included in income from continuing operations in the Consolidated Statements of Earnings.
	In the year ended December 31, 2004, of the 57 properties, the Company sold 48 operating and held for sale properties for approximately $201.8 million. The properties were encumbered by mortgage debt of approximately $67 million which was repaid from the sales proceeds. The carrying value of these properties was approximately $126.6 million. The Company recognized a gain on sale of approximately $75.2 million in year ended December 31, 2004, which is included in income from discontinued operations in the Consolidated Statements of Earnings.
	In the three months ended March 31, 2005 (unaudited), the Company sold four rental real estate properties and a golf resort for approximately $51.9 million which were encumbered by mortgage debt of approximately $10.7 million repaid from the sale proceeds.
	Of the five properties, the Company sold one financing lease property for approximately $8.4 million encumbered by mortgage debt of approximately $3.8 million. The carrying value of this property was approximately $8.2 million; therefore, the Company recognized a gain on sale of approximately $0.2 million in the three months ended March 31, 2005 (unaudited), which is included in income from continuing operations. The Company sold four operating properties for approximately $43.5 million encumbered by mortgage debt of approximately $6.9 million. The carrying value of these properties was approximately $24.8 million. The Company recognized a gain on sale of approximately $18.7 million in the three months ended March 31, 2005 (unaudited), which is included in income from discontinued operations.
	At March 31, 2005, the Company had 11 properties under contract or as to which letters of intent had been executed by potential purchasers, all of which contracts or letters of intent are subject to purchaser’s due diligence and other closing conditions. Selling prices for the properties covered by the contracts or letters of intent would total approximately $45.5 million. These properties are encumbered by mortgage debt of approximately $25.3 million. At March 31, 2005, the carrying value of these properties is approximately $29.1 million. In accordance with generally accepted accounting principles, only the real estate operating properties under contract or letter of intent, but not the financing lease properties, were reclassified to “Properties Held for Sale” and the related income and expense reclassified to “Income from Discontinued Operations.”
	e. In January 2004, in conjunction with its reinvestment program, the Company purchased a 34,422 square foot commercial condominium unit (“North Moore Condos”) located in New York City for approximately $14.5 million. The unit contains a Citibank branch, a furniture store and a restaurant. Current annual rent income from the three tenants is approximately $1,289,000. The Company obtained mortgage financing of $10 million for this property in April 2004. The mortgage bears interest at the rate of 5.73% per annum, and matures in March 2014. Annual debt service is $698,760.
	f. In July 2004, the Company purchased two Vero Beach, Florida waterfront communities, Grand Harbor and Oak Harbor (“Grand Harbor”), including their respective golf courses, tennis complex, fitness center, beach club and clubhouses. The acquisition also included properties in various stages of development, including land for future residential development, improved lots and finished residential

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	units ready for sale. The purchase price was approximately $75 million, which included approximately $62 million of land and construction in progress. The Company plans to invest in the further development of these properties and the enhancement of the existing infrastructure.

16.	MORTGAGES PAYABLE

										Balance at				Balance at
										March 31,				December 31,
						Annual Principal and
Range of Interest Rates		Range of Maturities				Interest Payment				2005				2004				2003
										(Unaudited)
5.630% — 8.250%			10/15/07–10/01/14			$	9,373			$	80,191			$	91,896			$	180,989
Less current portion and mortgages on properties held for sale											(24,577	)			(31,177	)			(87,753	)
										$	55,614			$	60,719			$	93,236

Year Ending December 31,		Amount
2005		$	4,759
2006			5,116
2007			11,428
2008			24,385
2009			7,211
2010 — 2014			38,997
		$	91,896

	a. See Note 15a. for Mid-South Logistics financing in October 2002.
	b. On May 16, 2003, the Company executed a mortgage note secured by a distribution facility located in Windsor Locks, Connecticut and obtained funding in the principal amount of $20 million. The loan bears interest at 5.63% per annum and matures on June 1, 2013. Annual debt service is approximately $1,382,000 based on a 30 year amortization schedule.
	c. See Note 15e. for North Moore Condo financing in April 2004.

17.	SENIOR NOTES AND CREDIT FACILITIES DUE AFFILIATES

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18.	SENIOR SECURED NOTES PAYABLE AND CREDIT FACILITY

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20.	ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

						December 31,
		March 31,
		2005				2004				2003
		(Unaudited)
Accrued liabilities		$	11,617			$	25,547			$	22,057
Accrued payroll			10,984				11,113				12,507
Due to Panaco, Inc.			—				16,242				—
Other			74,213				42,975				21,315
		$	96,814			$	95,877			$	55,879

21.	INCOME TAXES (in $000’s)

			December 31,
			2004				2003
The difference between the book basis and the tax basis of the net assets of the Company, not directly subject to income taxes, is as follows:
	Book basis of AREH net assets excluding American Casino, TransTexas and NEG		$	1,319,566			$	1,149,418
	Excess of tax over book			120,820				79,238
	Tax basis of net assets		$	1,440,386			$	1,228,656

	(i) The Company’s corporate subsidiaries recorded the following income tax (expense) benefit attributable to continuing operations for American Casino, TransTexas and NEG for the three months

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	ended March 31, 2005 and 2004 (unaudited) and the years ended December 31, 2004, 2003 and 2002 (in $000’s):

		March 31,								December 31,
		2005				2004				2004				2003				2002
		(Unaudited)
Current		$	(1,105	)		$	(4,655	)		$	(3,030	)		$	(5,506	)		$	(311	)
Deferred			(3,677	)			(1,311	)			(14,296	)			22,256				(9,785	)
		$	(4,782	)		$	(5,966	)		$	(17,326	)		$	16,750			$	(10,096	)

	(ii) The tax effect of significant differences representing net deferred tax assets (the difference between financial statement carrying values and the tax basis of assets and liabilities) for the Company is as follows at March 31, 2005 (unaudited), December 31, 2004 and 2003 (in $000’s):

							December 31,
			March 31,
			2005				2004				2003
			(Unaudited)
Deferred tax assets:
	Depreciation		$	49,607			$	54,489			$	54,439
	Net operating loss carryforwards			55,724				53,610				51,997
	Investment in Holding LLC			1,927				5,333				18,845
	Other			11,955				9,458				8,841
				119,213				122,890				134,122
	Valuation allowance			(64,381	)			(64,381	)			(65,695	)
	Subtotal			54,832				58,509				68,427
	Less current portion			(2,685	)			(2,685	)			(2,982	)
	Net deferred tax assets — non current		$	52,147			$	55,824			$	65,445

	(iii) The provision (benefit) for income taxes differs from the amount computed at the federal statutory rate as a result of the following:

		Year Ended December 31,
		2004				2003				2002
Federal statutory rate			35.0	%			35.0	%			35.0	%
Tax deduction not given book benefit			1.0				5.6				0.0
Income not subject to taxation			(24.2	)			(15.2	)			(22.3	)
Valuation allowance			(2.3	)			(51.8	)			(0.5	)
Other			0.0				(1.4	)			0.3
			9.5	%			(27.8	)%			12.5	%

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22.	COMMITMENTS AND CONTINGENCIES

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23.	EMPLOYEE BENEFIT PLANS

24.	FAIR VALUE OF FINANCIAL INSTRUMENTS

	Other Investments

		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Net				Estimated				Net				Estimated				Net				Estimated
		Investment				Fair Value				Investment				Fair Value				Investment				Fair Value
Total		$	244,602			$	247,600			$	245,948			$	248,900			$	50,328			$	55,000

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	Mortgages Payable

		At March 31, 2005								At December 31, 2004								At December 31, 2003
		Carrying				Estimated				Carrying				Estimated				Carrying				Estimated
		Value				Fair Value				Value				Fair Value				Value				Fair Value
Total		$	80,191			$	81,955			$	91,896			$	93,900			$	180,989			$	185,000

	Limitations

25.	SEGMENT REPORTING

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				March 31,								December 31,
				2005				2004				2004				2003				2002
Revenues:
	Hotel & casino operating properties			$	81,852			$	74,661			$	297,868			$	259,345			$	250,328
	Land, house and condominium sales				8,279				5,014				26,591				13,265				76,024
	Rental real estate				4,001				4,963				17,796				20,206				21,574
	Hotel & resort operating properties				5,563				1,335				16,211				12,376				12,921
	Oil & gas operating properties				27,423				24,701				99,738				57,670				40,516
	Other investments				10,440				4,818				34,682				14,033				15,283
	Subtotal				137,558				115,492				492,886				376,895				416,646
Reconciling items(1)					6,668	(1)			960	(1)			13,310				11,770	(1)			18,006	(1)
		Total revenues		$	144,226			$	116,452			$	506,196			$	388,665			$	434,652

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				March 31,								December 31,
				2005				2004				2004				2003				2002
				(Unaudited)
Net earnings:
Segment earnings:
	Hotel & casino operating properties			$	24,228			$	20,418			$	70,265			$	42,488			$	32,390
	Land, house and condominium sales				1,232				1,656				6,355				4,136				21,384
	Oil & gas operating properties				11,689				18,412				48,665				35,907				33,411
	Rental real estate				3,049				3,878				12,865				14,368				14,206
	Hotel and resort operating properties				158				(89	)			2,672				4,219				2,679
	Other investments				10,440				4,818				63,790				23,538				15,283
		Total segment earnings			50,796				49,093				201,615				124,656				119,353
Interest income					6,668				960				13,310				11,770				18,006
Interest expense					(18,411	)			(5,966	)			(45,229	)			(24,608	)			(27,297	)
General and administrative expenses					(4,555	)			(1,933	)			(9,806	)			(6,851	)			(7,029	)
Depreciation and amortization					(15,704	)			(18,396	)			(67,620	)			(40,570	)			(23,646	)
	Operating Income				18,794				23,758				92,270				64,397				79,387
Gain on sales and disposition of real estate from continuing operations					186				6,047				5,262				7,121				8,990
(Loss) on sale of other assets					(180	)			(4	)			1,680				(1,503	)			(353	)
Write-down of marketable equity and debt securities and other investments					—				—				—				(19,759	)			(8,476	)
Gain on sale of marketable equity securities					—				28,857				40,159				2,607				—
Unrealized losses on securities sold short					21,704				—				(23,619	)			—				—
Impairment loss on equity interest in GB Holdings, Inc.					—				—				(15,600	)			—				—
Severance tax refund					—				—				4,468				—				—
Minority interest					—				(39	)			(812	)			(1,266	)			(1,943	)
Income tax (expense) benefit					(4,782	)			(5,966	)			(17,326	)			16,750				(10,096	)
Income from discontinued operations					19,680				10,147				82,697				11,006				6,937
General partner’s share of net income					(554	)			(628	)			(1,692	)			(794	)			(744	)
Net earnings-limited partners				$	54,848			$	62,172			$	162,487			$	78,559			$	73,702

(1)	Primarily interest income on U.S. Government and Agency obligations and other short-term investments and Icahn note receivable.

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								December 31,
				March 31,
				2005				2004				2003				2002
				(Unaudited)
Assets:
	Rental real estate			$	164,811			$	196,332			$	340,062			$	359,700
	Oil and gas properties				180,241				168,136				168,921				—
	Hotel and casino operating properties				288,890				289,360				298,703				290,775
	Land and construction-in-progress				106,000				106,537				43,459				40,415
	Hotel and resort operating properties				46,041				50,132				41,526				44,346
	Other investments				466,252				444,603				231,050				479,104
					1,252,235				1,255,100				1,123,721				1,214,340
	Reconciling items				1,686,451				1,161,615				723,521				510,945
		Total		$	2,938,686			$	2,416,715			$	1,847,242			$	1,725,285
Real estate investment capital expenditures:
Acquisitions:
	Rental real estate			$	—			$	14,583			$	—			$	18,226
	Land and construction-in-progress				—				61,845				—				—
	Hotel and casino operating properties				—				125,900				—				—
	Hotel and resort operating properties				—				16,463				—				—
				$	—			$	218,791			$	—			$	18,226
Developments:
	Rental real estate			$	—			$	18			$	413			$	181
	Oil and gas operating properties				21,071				47,529				633				—
	Land and construction-in-progress				—				17,947				—				1,138
	Hotel and casino operating properties				4,711				13,589				31,844				19,133
	Hotel and resort operating properties				70				2,614				1,067				2,582
				$	25,852			$	81,697			$	33,957			$	23,034

26.	SUBSEQUENT EVENTS

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	/s/ Grant Thornton LLP

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			December 31,
			2004
ASSETS
Cash and cash equivalents			$	149,889
Investment in partnerships (Note B)				27,588,000
Accrued interest receivable (Note C)				59,538
			$	27,797,427
LIABILITIES AND STOCKHOLDER’S EQUITY
Accounts payable and accrued expenses			$	15,198
Stockholder’s equity:
	Common stock — $1 par value, 1,216 shares authorized, 216 shares outstanding			216
	Additional paid-in capital			26,228,997
	Note receivable from affiliate (Note C)			(9,500,000	)
	Retained earnings			11,053,016
	Total stockholder’s equity			27,782,229
	Total liabilities and stockholder’s equity		$	27,797,427

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	1.     Organization

2.	Cash and Cash Equivalents

3.	Use of Estimates

4.	Income Taxes

5.	Investments in Partnerships

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Cash and cash equivalents			$	762,708
Investment in U.S. government and agency obligations				96,840
Due from brokers				123,001
Other current assets				148,726
	Total current assets			1,131,275
Other investments				245,948
Land and construction-in-progress				106,537
Real estate leased to others				134,399
Hotel casino and resort operating properties				339,492
Investment in debt securities of affiliates				115,075
Investment in NEG Holding LLC				87,800
Other assets				102,531
	Total assets		$	2,263,057
Accounts payable, accrued expenses and other current liabilities			$	81,793
Securities sold not yet purchased				90,674
Other current liabilities				31,177
	Total current liabilities			203,644
Mortgages payable				60,719
Senior secured notes payable				215,000
Senior unsecured notes payable				350,598
Preferred limited partnership units				106,731
Other liabilities				23,239
	Total liabilities			959,931
Partners’ equity				1,303,126
Total liabilities and partners’ equity			$	2,263,057
General partners equity			$	(12,984	)

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	/s/ Grant Thornton LLP

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	/s/ KPMG LLP

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				December 31,
				2004				2003
ASSETS
Current assets:
	Cash and cash equivalents			$	882,841			$	15,401,433
	Accounts receivable — oil and natural gas sales				18,220,105				13,214,537
	Accounts receivable — joint interest and other (net of allowance of $104,000 in 2004 & 2003)				495,272				485,083
	Notes receivable — other (net of allowance of $790,000 in 2004)				489,389				1,220,960
	Derivative broker deposit				—				1,700,000
	Drilling prepayments				858,114				1,106,871
	Other				2,200,156				286,399
		Total current assets			23,145,877				33,415,283
Oil and natural gas properties, at cost (full cost method):
	Subject to ceiling limitation				573,069,515				507,250,803
	Accumulated depreciation, depletion, and amortization				(343,485,274	)			(322,443,045	)
	Net oil and natural gas properties				229,584,241				184,807,758
Other property and equipment					5,055,490				4,838,114
Accumulated depreciation					(4,063,781	)			(3,746,317	)
	Net other property and equipment				991,709				1,091,797
Note receivable					3,090,000				1,827,000
Equity investment					2,379,108				1,698,000
Other long term assets					1,082,504				964,500
		Total assets		$	260,273,439			$	223,804,338
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
	Accounts payable — trade			$	10,239,384			$	2,879,138
	Accounts payable — affiliate				1,595,235				411,731
	Accounts payable — revenue				4,104,029				3,964,530
	Prepayments from partners				90,186				265,871
	Other				77,593				136,707
	Derivative financial instruments				6,349,714				6,595,475
		Total current liabilities			22,456,141				14,253,452
Long term liabilities:
	Note payable				83,031				592,889
	Gas balancing				897,852				818,621
	Credit facility				51,833,624				43,833,624
	Asset retirement obligation				3,055,240				3,268,381
	Derivative financial instruments				7,766,144				—
Members’ equity					174,181,407				161,037,371
		Total liabilities and members’ equity		$	260,273,439			$	223,804,338

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				Year Ended December 31,
				2004				2003				2002
Revenues:
	Oil and natural gas sales			$	76,677,224			$	75,740,373			$	35,319,918
	Field operations				326,960				297,069				403,933
	Plant operations				1,723,305				1,568,502				177,049
		Total revenue			78,727,489				77,605,944				35,900,900
Costs and expenses:
	Lease operating				13,505,366				11,501,303				8,508,744
	Field operations				334,443				397,669				420,188
	Plant operations				680,066				577,003				68,767
	Oil and natural gas production taxes				5,732,265				5,770,865				1,874,854
	Depreciation, depletion and amortization				21,385,529				23,442,797				15,509,106
	Accretion of asset retirement obligation				261,471				242,752				—
	Amortization of loan cost				494,386				—				—
	General and administrative				4,919,525				4,833,546				5,682,804
		Total costs and expenses			47,313,051				46,765,935				32,064,463
Operating income					31,414,438				30,840,009				3,836,437
Other income (expense):
	Interest expense				(2,222,009	)			(1,538,048	)			(96,491	)
	Interest income and other, net				299,327				472,337				1,245,204
	Interest income from affiliate				149,650				114,867				546,228
	Commitment fee income				—				125,000				175,000
	Equity in loss on investment				(518,892	)			(102,000	)			—
	Dividend expense				—				—				(145,200	)
	Gain (loss) on sale of securities				—				(953,790	)			8,711,915
	Unrealized loss on financial instruments/short sale				—				—				(346,992	)
	Income before cumulative effect of change in accounting principle				29,122,514				28,958,375				13,926,101
	Cumulative effect of change in accounting principle				—				1,911,705				—
Net income				$	29,122,514			$	30,870,080			$	13,926,101

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			Year Ended December 31,
			2004				2003				2002
Operating Activities
Net income			$	29,122,514			$	30,870,080			$	13,926,101
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation, depletion and amortization			21,385,529				23,442,797				15,509,106
	Change in fair market value of derivative contracts			7,520,383				2,987,013				3,608,462
	Unrealized loss on financial instruments/short sale			—				—				346,992
	Gain (loss) on sale of assets			(6,136	)			—				7,058
	Equity in loss on investment			518,892				102,000				—
	Accretion of asset retirement obligation			261,471				242,752				—
	Provision for doubtful account			790,000				—				—
	Amortization of note costs			494,386				—				—
	Cumulative effect of change in accounting principle			—				(1,911,705	)			—
Changes in operating assets and liabilities:
	Accounts receivable			(5,078,989	)			(1,296,013	)			(2,069,815	)
	Notes receivable			(1,258,198	)			(1,831,802	)			(2,774,968	)
	Drilling prepayments			248,758				(380,288	)			(457,565	)
	Derivative broker deposit			1,700,000				100,000				(1,800,000	)
	Other current assets			(2,086,257	)			(26,215	)			912,577
	Accounts payable and accrued liabilities			8,017,822				493,730				(566,450	)
	Net cash provided by operating activities			61,630,175				52,792,349				26,641,498
Investing Activities
Oil and natural gas exploration and development expenditures				(67,487,412	)			(36,034,277	)			(18,106,385	)
Longfellow Ranch acquisition				—				—				(51,037,347	)
Purchases of other property and equipment				(245,250	)			(149,897	)			(222,039	)
Increase in restricted cash				—				—				(346,992	)
Proceeds from sales of oil and natural gas properties				1,202,263				1,436,016				1,434,212
Equity investment				(1,200,000	)			(1,800,000	)			—
Net cash used in investing activities				(67,730,399	)			(36,548,158	)			(68,278,551	)
Financing Activities
Proceeds from Arnos credit facility				—				46,756,377				—
Repayment of Arnos credit facility				—				(46,756,377	)			—
Proceeds from Mizuho credit facility				8,000,000				43,833,624				—
Loan issuance costs				(439,890	)			(951,697	)			—
Guaranteed Payment to member				(15,978,478	)			(18,228,781	)			(21,652,819	)
Priority Amount distribution to member				—				(40,506,072	)			—
Net cash used in financing activities				(8,418,368	)			(15,852,926	)			(21,652,819	)
Increase (decrease) in cash and cash equivalents				(14,518,592	)			391,265				(63,289,872	)
Cash and cash equivalents at beginning of period				15,401,433				15,010,168				78,300,040
Cash and cash equivalents at end of period			$	882,841			$	15,401,433			$	15,010,168
Supplemental Cash Flow Information
Interest paid in cash			$	1,713,136			$	1,537,127			$	96,491
Distribution of member note payable			$	—			$	10,939,750			$	—

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			Members’
			Equity
Balance at December 31, 2001			$	207,568,612
	Guaranteed Payment to member			(21,652,819	)
	Net income			13,926,101
Balance at December 31, 2002			$	199,841,894
	Guaranteed Payment to member			(18,228,781	)
	Priority Amount distribution to member			(51,445,822	)
	Net income			30,870,080
Balance at December 31, 2003			$	161,037,371
	Guaranteed Payment to member			(15,978,478	)
	Net income			29,122,514
Balance at December 31, 2004			$	174,181,407

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1.	Background

		National Energy
		Group, Inc.				Gascon				Total
Current assets		$	11,535,745			$	97,183,477			$	108,719,222
Net oil and natural gas properties			84,983,139				30,573,625				115,556,764
Hedge assets			4,807,689				—				4,807,689
Intercompany receivable			—				4,783,737				4,783,737
Total assets		$	101,326,573			$	132,540,839			$	233,867,412
Current liabilities		$	4,157,430			$	2,657,190			$	6,814,620
Long-term liabilities			940,033				1,377,782				2,317,815
Intercompany payable			4,783,737				—				4,783,737
Members’ equity			91,445,373				128,505,867				219,951,240
Total liabilities and members’ equity		$	101,326,573			$	132,540,839			$	233,867,412

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2.	Significant Accounting Policies

	Consolidation

	Accounting Estimates

	Cash and Cash Equivalents

	Oil and Natural Gas Properties

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	Other Property and Equipment

	Income Taxes

	Financial Instruments

	Accounts Receivable

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	Revenue Recognition

	Natural Gas Production Imbalances

	Comprehensive Income

	Derivatives

		2004				2003				2002
Gross cash receipts		$	1,327,200			$	14,924			$	1,246,080
Gross cash payments		$	13,694,010			$	8,681,198			$	2,430
Valuation loss		$	7,520,383			$	2,987,013			$	3,608,462

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						Production
Date of Contract		Volume/Month				Month				Floor				Ceiling
August 2002			30,000 Bbls				2003			$	23.55			$	26.60
August 2002			300,000  MMBTU				2003			$	3.25			$	4.62
November 2002			300,000  MMBTU				2003			$	3.50			$	4.74
November 2002			300,000  MMBTU				2004			$	3.35			$	4.65
November 2002			300,000  MMBTU				2005			$	3.25			$	4.60
November 2003			45,000 Bbls				2004			$	26.63			$	29.85
February 2005			16,000 Bbls				2006			$	41.75			$	45.40
February 2005			120,000  MMBTU				2006			$	6.00			$	7.28

										Fixed
Type Contract		Production Month				Volume per				Price				Floor				Ceiling
Fixed price			February - March 2004				400,000  MMBTU			$	6.915			$	—			$	—
Fixed price			April - June 2004				400,000  MMBTU			$	5.48			$	—			$	—
Fixed price			July - September 2004				400,000  MMBTU			$	5.38			$	—			$	—
No Cost Collars			October - December 2004				400,000  MMBTU			$	—			$	5.25			$	5.85
No Cost Collars			2005				300,000  MMBTU			$	—			$	4.75			$	5.45
No Cost Collars			2006				500,000  MMBTU			$	—			$	4.50			$	5.00
No Cost Collars			2005				250,000  MMBTU			$	—			$	6.00			$	8.70
No Cost Collars			2005				25,000 Bbls			$	—			$	43.60			$	45.80

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	Recent Accounting Pronouncements

3.	Management Agreement

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4.	Acquisitions

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				Pro Forma
				Year Ended
				December 31,
				2002
				(Unaudited)
Revenues:
	Oil and natural gas sales			$	47,659
	Plant operations				1,515
	Field operations				404
		Total revenue			49,578
Costs and expenses:
	Oil and natural gas production taxes				(2,414	)
	Lease operating				(12,250	)
	Depreciation and depletion				(20,206	)
	Plant operations expense				(529	)
	Field operations				(420	)
	General and administrative				(5,683	)
		Total expense			(41,502	)
Operating income				$	8,076
Net income				$	14,557

5.	Investments/Note Receivable

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6.	Credit Facilities

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7.	Commitments and Contingencies

	(a) $20,500 in post bond premiums alleged to be owed for certain plugging and abandonment liabilities associated with the oil and gas properties sold to Osprey,
	(b) $5,422 in expenses associated with NEG’s bond claim,
	(c) $53,226 in attorneys fees,

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	(d) $24,617 in administrative expenses paid to the American Arbitration Association,
	(e) an order requiring Osprey to post and maintain an acceptable replacement bond,
	(f) a finding that Osprey’s counterclaim in the amount of $15 million was without merit, and
	(g) a ruling that Osprey is entitled to no recovery of any damages or expenses associated with NEG’s bond claim or Osprey’s counterclaim.

8.	Asset Retirement Obligation

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Balance as of January 1, 2003				$	3,034,395
Add:		Accretion			242,752
		Additions			89,548
		Revisions			9,396
Less:		Settlements			(57,008	)
		Dispositions			(50,702	)
Balance as of December 31, 2003				$	3,268,381
Add:		Accretion			261,471
		Additions			93,838
Less:		Revisions			(250,650	)
		Settlements			(24,354	)
		Dispositions			(293,446	)
Balance as of December 31, 2004				$	3,055,240

9.	Distributions under the Holding LLC Operating Agreement

	1. Guaranteed Payments are to be paid to NEG, calculated on an annual interest rate of 10.75% on the outstanding Priority Amount. The Priority Amount includes all outstanding debt owed to entities owned or controlled by Carl C. Icahn, including the amount of the Company’s 10.75% Senior Notes. As of December 31, 2004, the Priority Amount was $148.6 million. The Guaranteed Payments will be made on a semi-annual basis.
	2. The Priority Amount is to be paid to NEG. Such payment is to occur by November 6, 2006.
	3. An amount equal to the Priority Amount and all Guaranteed Payments paid to NEG, plus any additional capital contributions made by Gascon, less any distribution previously made by the Company to Gascon, is to be paid to Gascon.
	4. An amount equal to the aggregate annual interest (calculated at prime plus 1/2% on the sum of the Guaranteed Payments), plus any unpaid interest for prior years (calculated at prime plus 1/2% on the sum of the Guaranteed Payments), less any distributions previously made by the Company to Gascon, is to be paid to Gascon.
	5. After the above distributions have been made, any additional distributions will be made in accordance with the ratio of the NEG’s and Gascon’s respective capital accounts. (Capital accounts as defined in the Holding LLC Operating Agreement).

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10.	Crude Oil and Natural Gas Producing Activities

		Year Ended December 31,
		2004				2003				2002
Acquisition of properties		$	—			$	—			$	49,049,174
Exploration costs			29,006,772				6,950,706				1,072,997
Development costs			38,480,640				29,083,572				16,124,610
Depletion rate per Mcfe		$	1.28			$	1.25			$	1.29

		Year Ended December 31,
		2004				2003				2002
Plains Marketing and Transportation		$	19,786,979			$	15,666,690			$	12,512,767
Crosstex Energy Services, Inc.			5,080,974				9,225,086				4,843,756
Riata Energy, Inc.			29,884,850				30,420,624				—
Seminole Energy Services			19,572,461				7,215,735				—

11.	Supplementary Crude Oil and Natural Gas Reserve Information (Unaudited)

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			Crude Oil				Natural Gas
			(Barrels)				(Thousand
							Cubic Feet)
December 31, 2001				5,158,883				82,431,275
	Purchases of reserves in place			30,436				34,196,450
	Sales of reserves in place			(223,214	)			—
	Extensions and discoveries			28,892				14,403,643
	Revisions of previous estimates			842,776				(636,931	)
	Production			(629,100	)			(7,827,100	)
December 31, 2002				5,208,673				122,567,337
	Purchase of reserves in place			—				—
	Sales of reserves in place			(25,399	)			(744,036	)
	Extensions and discoveries			494,191				61,637,828
	Revisions of previous estimates			(7,092	)			(2,419,969	)
	Production			(628,923	)			(13,436,865	)
December 31, 2003				5,041,450				167,604,295
	Purchase of reserves in place			—				—
	Sales of reserves in place			(15,643	)			(344,271	)
	Extensions and discoveries			445,636				33,350,666
	Revisions of previous estimates			(30,249	)			15,441,298
	Production			(565,100	)			(13,106,103	)
December 31, 2004				4,876,094				202,945,885
Proved developed reserves:
	December 31, 2002			3,539,450				92,382,411
	December 31, 2003			4,096,596				104,207,660
	December 31, 2004			3,798,341				111,126,829

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		December 31,
		2004				2003
Future cash inflows		$	1,466,369,163			$	1,184,869,747
Future production and development costs			(489,331,736	)			(374,829,047	)
Future net cash flows			977,037,427				810,040,700
10% annual discount for estimated timing of cash flows			(442,213,801	)			(353,980,596	)
Standardized measure of discounted future net cash flows		$	534,823,626			$	456,060,104

		Year Ended December 31,
		2004				2003				2002
Purchases of reserves		$	—			$	—			$	102,916,472
Sales of reserves in place			(1,375,463	)			(2,475,742	)			(2,509,704	)
Sales and transfers of crude oil and natural gas produced, net of production costs			(83,004,073	)			(57,424,780	)			(31,115,247	)
Net changes in prices and production costs			31,039,998				44,711,900				112,380,701
Development costs incurred during the period and changes in estimated future development costs			(81,370,910	)			(75,286,532	)			(45,230,813	)
Extensions and discoveries, less related costs			118,570,850				211,324,414				43,640,702
Revisions of previous quantity estimates			49,194,080				(6,789,000	)			8,510,824
Accretion of discount			45,606,010				31,063,232				11,312,180
Changes in production rates (timing) and other			103,030				304,290				(2,394,593	)
Net change		$	78,763,522			$	145,427,782			$	197,510,522

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				March 31, 2005
				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents			$	10,999,200
	Accounts receivable — oil and natural gas sales				17,388,724
	Accounts receivable — joint interest and other				216,496
	Notes receivable — other, (net allowance of $790,000)				488,415
	Drilling prepayments				793,558
	Other				1,104,408
		Total current assets			30,990,801
Oil and natural gas properties, at cost (full cost method):
	Subject to ceiling limitation				594,136,210
	Accumulated depreciation, depletion, and amortization				(349,909,614	)
	Net oil and natural gas properties				244,226,596
	Other property and equipment				5,143,947
	Accumulated depreciation				(4,154,948	)
	Net other property and equipment				988,999
	Note receivable				3,090,000
	Equity investment				2,169,566
	Other long term assets				962,696
		Total assets		$	282,428,658
Current liabilities:
	Accounts payable — trade			$	6,423,198
	Accounts payable — affiliate				369,722
	Accounts payable — revenue				4,158,627
	Prepayments from partners				87,754
	Other current liabilities				806,885
	Derivative financial instruments				23,852,452
		Total current liabilities			35,698,638
Long term liabilities:
	Gas balancing				897,853
	Credit facility				66,833,624
	Asset retirement obligation				3,116,344
	Derivative financial instruments				12,883,768
	Members’ equity				162,998,431
		Total liabilities and members’ equity		$	282,428,658

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				Three Months Ended March 31,
				2005				2004
				(Unaudited)
Revenues:
	Oil and natural gas sales			$	2,346,633			$	25,017,234
	Field operations				80,630				79,161
	Plant operations				442,609				472,786
		Total revenue			2,869,872				25,569,181
Costs and expenses:
	Lease operating				3,883,238				3,126,587
	Field operations				78,371				90,494
	Plant operations				174,442				125,548
	Oil and natural gas production taxes				1,695,128				1,349,374
	Depreciation, depletion and amortization				6,515,506				5,352,006
	Accretion of asset retirement obligation				61,104				63,807
	General and administrative				556,457				824,295
		Total costs and expenses			12,964,246				10,932,111
	Operating income (loss)				(10,094,374	)			14,637,070
Other income (expense):
	Interest expense				(728,809	)			(483,166	)
	Amortization of debt issuance costs				(172,890	)			(111,809	)
	Interest income and other, net				22,639				89,249
	Interest income from affiliate				—				35,803
	Interest in loss of equity investee				(209,542	)			—
		Net income (loss)		$	(11,182,976	)		$	14,167,147

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			Three Months Ended March 31,
			2005				2004
			(Unaudited)
Operating Activities
	Net income (loss)		$	(11,182,976	)		$	14,167,147
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation, depletion and amortization			6,515,506				5,352,006
	Change in fair market value of derivative contracts			22,620,363				(2,688,548	)
	Amortization of debt issuance costs			172,890				111,809
	Interest in loss of equity investee			209,543				—
	Accretion of asset retirement obligation			61,104				63,807
Changes in operating assets and liabilities:
	Accounts receivable			1,111,132				(1,064,720	)
	Notes receivable			—				(1,207,198	)
	Drilling prepayments			64,556				254,227
	Derivative broker deposit			—				1,700,000
	Other current assets			1,095,752				(20,439	)
	Accounts payable and accrued liabilities			(4,343,276	)			1,626,714
	Net cash provided by operating activities			16,324,594				18,294,805
Investing Activities
	Oil and natural gas exploration and development expenditures			(21,189,663	)			(10,869,942	)
	Purchases of other property and equipment			(88,457	)			(38,467	)
	Proceeds from sales of oil and natural gas properties			122,967				—
	Equity investment			—				(1,200,000	)
	Net cash used in investing activities			(21,155,153	)			(12,108,409	)
Financing Activities
	Proceeds from Mizuho credit facility			15,000,000				—
	Proceeds from advance from affiliate			5,000,000				—
	Repayment of advance from affiliate			(5,000,000	)			—
	Loan issuance costs			(53,082	)			(328,599	)
	Net cash (used in) provided by financing activities			14,946,918				(328,599	)
	Increase in cash and cash equivalents			10,116,359				5,857,797
	Cash and cash equivalents at beginning of period			882,841				15,401,433
	Cash and cash equivalents at end of period		$	10,999,200			$	21,259,230
Supplemental Cash Flow Information
	Interest paid in cash		$	247,022			$	148,979

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		Members’
		Equity
		(Unaudited)
Balance at December 31, 2004		$	174,181,407
Net loss for the three months ended March 31, 2005			(11,182,976	)
Balance at March 31, 2005		$	162,998,431

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1.	Background

2.	Basis of Presentation

3.	Recent Accounting Pronouncements

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4.	Derivatives

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5.	Management Fees

6.	Investment in Petrosource

7.	Credit Facilities

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8.	Note Receivable

9.	Commitments and Contingencies

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	(a) $20,500 in post bond premiums alleged to be owed for certain plugging and abandonment liabilities associated with the oil and gas properties sold to Osprey,
	(b) $5,422 in expenses associated with our bond claim,
	(c) $53,226 in attorneys fees,
	(d) $24,617 in administrative expenses paid to the American Arbitration Association,
	(e) an order requiring Osprey to post and maintain an acceptable replacement bond,
	(f) a finding that Osprey’s counterclaim in the amount of $15 million was without merit, and
	(g) a ruling that Osprey is entitled to no recovery of any damages or expenses associated with the Company’s bond claim or Osprey’s counterclaim.

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	/s/ Pannell Kerr Forster of Texas P.C.

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				December 31,
				2004				2003
ASSETS
Current assets
	Cash			$	23,753,000			$	3,152,000
	Restricted cash				—				8,716,000
	Accounts receivable, net of allowance of $5,947,000 and $5,847,000 as of December 31, 2004 and December 31, 2003, respectively				8,641,000				8,233,000
	Accounts receivable — other				1,841,000				—
	Prepaid expenses and other current assets				4,652,000				1,001,000
	Deferred taxes, net				1,943,000				—
		Total current assets			40,830,000				21,102,000
	Property, plant and equipment
	Oil and natural gas properties, successful efforts method of accounting				326,733,000				323,001,000
	Less accumulated depreciation, depletion and amortization				(263,140,000	)			(246,803,000	)
	Oil and natural gas properties, net				63,593,000				76,198,000
	Pipelines and other property, plant and equipment				26,114,000				26,303,000
	Less accumulated depreciation				(17,789,000	)			(16,023,000	)
	Pipelines and other property, plant and equipment, net				8,325,000				10,280,000
Other assets
	Restricted deposits				23,519,000				18,234,000
	Deferred taxes, net				21,341,000				—
		Total assets		$	157,608,000			$	125,814,000
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Liabilities not subject to compromise
	Current liabilities
		Accounts payable and accrued liabilities		$	13,517,000			$	6,506,000
		Accounts payable — related party			555,000				—
		Interest payable — related party			288,000				—
		Interest payable			—				220,000
		Income tax payable			157,000				—
		Current maturities of long-term debt — related party			5,429,000				—
		Revolving credit facility			—				35,272,000
		Total current liabilities			19,946,000				41,998,000
Long-term debt — related party, net of current maturities					32,571,000				—
Deferred credits					263,000				556,000
Asset retirement obligation					49,538,000				43,933,000
		Total liabilities not subject to compromise			102,318,000				86,487,000
Liabilities subject to compromise
	Accounts payable and accrued liabilities				—				19,838,000
	Interest payable				—				3,115,000
	Natural gas imbalance payable				—				1,311,000
	Senior notes due 2004				—				100,000,000
		Total liabilities subject to compromise			—				124,264,000
Commitments and contingencies					—				—
Stockholders’ equity (deficit)
	Preferred shares, $0.01 par value, 5,000,000 shares authorized at December 31, 2003; no shares issued and outstanding at December 31, 2003 (see Note 1)				—				—
	New common shares, $0.01 par value, 1,000,000 shares authorized; 1,000 shares issued and outstanding as of December 31, 2004				—				—
	Old common shares, $0.01 par value, 100,000,000 shares authorized; 24,359,695 shares issued and outstanding as of December 31, 2003				—				247,000
	Additional paid-in capital				121,140,000				69,089,000
	Accumulated deficit				(65,850,000	)			(154,273,000	)
		Total stockholders’ equity (deficit)			55,290,000				(84,937,000	)
		Total liabilities and stockholders’ deficit		$	157,608,000			$	125,814,000

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				Year Ended December 31,
				2004				2003				2002
Oil and natural gas sales				$	51,234,000			$	50,160,000			$	39,065,000
Costs and expenses:
	Lease operating expenses and ad valorem taxes				14,040,000				17,218,000				14,508,000
	Production taxes				711,000				1,021,000				720,000
	Geological and geophysical expenses				76,000				105,000				119,000
	Depletion, depreciation and amortization				19,008,000				12,812,000				36,986,000
	Impairment of oil and natural gas properties				—				—				23,291,000
	General and administrative expenses				2,284,000				2,290,000				3,550,000
	Management fees and other — related party				884,000				—				—
	Bad debt expense				100,000				1,896,000				510,000
	Accretion of asset retirement obligation				3,132,000				2,843,000				—
	Gain on expiration of production payment				—				(2,249,000	)			—
		Total cost and expenses			40,235,000				35,936,000				79,684,000
Operating income (loss)					10,999,000				14,224,000				(40,619,000	)
Other income (expense):
	Interest income				684,000				274,000				500,000
	Other income				48,000				—				—
	Interest expense				(912,000	)			(2,929,000	)			(9,298,000	)
	Interest expense — related party				(1,605,000	)			—				—
	Loss on sale of assets				(76,000	)			—				—
		Total other expense. net			(1,861,000	)			(2,655,000	)			(8,798,000	)
	Income (loss) before reorganization costs, income taxes and cumulative effect of accounting change				9,138,000				11,569,000				(49,417,000	)
	Reorganization costs:
	Deferred debt costs				—				—				(962,000	)
	Professional fees				(3,794,000	)			(2,898,000	)			(1,296,000	)
	Loss on restructuring of debt — related party				(3,561,000	)			—				—
	Gain on restructuring of senior notes due 2004				51,268,000				—				—
	Gain on restructuring of payables				12,495,000				—				—
	Income (loss) before cumulative effect of accounting change				65,546,000				8,671,000				(51,675,000	)
	Income tax benefit, net				22,877,000				—				—
	Cumulative effect of accounting change, net of tax				—				(12,149,000	)			—
	Net income (loss)			$	88,423,000			$	(3,478,000	)		$	(51,675,000	)
Basic and diluted earnings (loss) per share (see Note 2):
	Income (loss) before cumulative effect of accounting change							$	0.36			$	(2.12	)
	Cumulative effect of accounting change, net of tax								(0.50	)			—
	Net loss							$	(0.14	)		$	(2.12	)
	Basic and diluted weighted average common shares outstanding								24,359,695				24,359,695

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		Number of				Number of				Common												Total
		New Common				Old Common				Share Par				Additional				Accumulated				Stockholders’
		Shares				Shares				Value				Paid-In Capital				Deficit				Equity (Deficit)
Balance, December 31, 2001			—				24,359,695			$	247,000			$	69,089,000			$	(99,120,000	)		$	(29,784,000	)
Net loss			—				—				—				—				(51,675,000	)			(51,675,000	)
Balance, December 31, 2002			—				24,359,695				247,000				69,089,000				(150,795,000	)			(81,459,000	)
Net loss			—				—				—				—				(3,478,000	)			(3,478,000	)
Balance, December 31, 2003			—				24,359,695				247,000				69,089,000				(154,273,000	)			(84,937,000	)
Cancellation Old Common Stock			—				(24,359,695	)			(247,000	)			247,000				—				—
Issuance of New Common Stock			1,000				—				—				51,804,000				—				51,804,000
Net income			—				—				—				—				88,423,000				88,423,000
Balance, December 31, 2004			1,000				—			$	—			$	121,140,000			$	(65,850,000	)		$	55,290,000

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			Year Ended December 31,
			2004				2003				2002
Cash flows from operating activities
	Net income (loss)		$	88,423,000			$	(3,478,000	)		$	(51,675,000	)
Adjustments to reconcile net income (loss) to net cash provided from operating activities
	Depletion, depreciation and amortization			19,008,000				12,812,000				36,986,000
	Impairment of oil and natural gas properties			—				—				23,291,000
	Deferred income taxes			(23,284,000	)			—				—
	Loss on sale of assets			76,000				—				—
	Unrealized loss on derivative instruments			903,000				—				—
	Loss on restructuring of debt — related party			3,561,000				—				—
	Gain on restructuring of senior notes due 2004			(51,268,000	)			—				—
	Gain on restructuring of payables			(12,495,000	)			—				—
	Allowance for doubtful accounts			100,000				1,896,000				510,000
	Accretion of asset retirement obligation			3,132,000				2,843,000				—
	Deferred debt costs			—				—				962,000
	Gain on expiration of production payment			—				(2,249,000	)			—
	Cumulative effect of accounting change			—				12,149,000				—
Changes in operating assets and liabilities
	Accounts receivable			(508,000	)			(1,353,000	)			(924,000	)
	Accounts receivable — other			(1,841,000	)			—				—
	Prepaid expenses and other current assets			(3,651,000	)			20,000				(103,000	)
	Accounts payable and accrued liabilities			(3,278,000	)			(5,306,000	)			(3,560,000	)
	Accounts payable — related party			555,000				—				—
	Natural gas imbalance payable			(1,311,000	)			154,000				8,000
	Deferred credits			(293,000	)			(397,000	)			(552,000	)
	Interest payable			1,385,000				(661,000	)			1,132,000
	Income taxes payable			157,000				—				—
	Net cash provided by operating activities			19,371,000				16,430,000				6,075,000
Cash flows from investing activities
	Capital expenditures			(1,994,000	)			(3,875,000	)			(6,494,000	)
	Proceeds from property sale			150,000				—				—
	Increase in restricted deposits			(5,285,000	)			(4,907,000	)			(2,316,000	)
	Asset retirement obligation			(207,000	)			(1,028,000	)			—
	Net cash used in investing activities			(7,336,000	)			(9,810,000	)			(8,810,000	)
Cash flows from financing activities
	Proceeds from borrowings of debt			—				—				8,101,000
Repayment of debt				(150,000	)			(2,450,000	)			(3,250,000	)
Net cash provided by (used in) financing activities				(150,000	)			(2,450,000	)			4,851,000
Net increase in cash				11,885,000				4,170,000				2,116,000
	Decrease (increase) in restricted cash			8,716,000				(8,716,000	)			—
	Cash at beginning of year			3,152,000				7,698,000				5,582,000
	Cash at end of year		$	23,753,000			$	3,152,000			$	7,698,000
Supplemental Disclosure of Cash Flow Information:
	Interest paid		$	1,129,000			$	3,590,000			$	8,166,000
	Income taxes paid		$	272,000			$	—			$	—
Supplemental Non-cash Investing and Financing Activities:
	Oil and natural gas properties for asset retirement obligation		$	2,680,000			$	26,344,000			$	—
	Interest payable — related party converted to debt principal		$	1,317,000			$	—			$	—
	Senior notes due 2004 and accrued interest converted to new common stock and additional paid-in capital		$	51,804,000			$	—			$	—
	Old common stock converted to additional paid-in capital		$	247,000			$	—			$	—

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Note 1 —	Voluntary Petition for Relief Under Chapter 11 Bankruptcy

	•	Revolving Credit Facility: the holder of the claim received a new note, the principal amount of which will be paid over seven years,
	•	Senior Notes: 49% of the Senior Notes were settled for a cash payment equal to 2.5% of the face value of the Senior Notes; 51% of the Senior Notes were converted into 100% of the equity of the reorganized Company,
	•	Unsecured Creditors: received a cash payment equal to 10% of their allowed claim.
	•	Equity: the pre-confirmation shares of common stock (the “Old Common Stock”) are deemed to be of no value and were cancelled. The equity of the reorganized Company became owned by the 51% Senior Note holders.

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Note 2 —	Summary of Significant Accounting Policies

	Nature of business

	Significant Accounting Policies

	Basis of Presentation

	Oil and Natural Gas Properties and Depreciation, Depletion and Amortization

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	Revenue Recognition

	Earnings Per Share

	Cash and Cash Equivalents

	Stock-Based Compensation

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		2004				2003				2002
Net income (loss) — as reported		$	88,423,000			$	(3,478,000	)		$	(51,675,000	)
Plus: stock-based compensation expense determined using the intrinsic value of the option at the measurement date			—				—				—
Less: stock-based employee compensation determined under fair value method for all awards granted to employees			—				(34,000	)			(77,000	)
Net income (loss) — pro forma		$	88,423,000			$	(3,512,000	)		$	(51,752,000	)
Basic and diluted net income (loss) per share — as reported						$	(0.14	)		$	(2.12	)
Basic and diluted net income (loss) per share — pro forma						$	(0.14	)		$	(2.12	)

	Fair Value

	Asset Retirement Obligations

	Restricted cash

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	Accounts Receivable

	Pipelines and Other Property, Plant and Equipment

	Amortization of Deferred Debt Costs

	Natural gas Imbalances

	Derivative Instruments and Hedging Activities

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Date of Contract

Volume/Month

Beginning

Ending

Floor

Ceiling

November 2004

25,000 Bbls

January 2005

December  2005

$

42.50

$

46.00

November 2004

150,000 MMBTU

January 2005

December  2005

$

6.00

$

8.35

	Income Taxes

	Environmental Liabilities

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	Concentration of Credit Risk

	Use of Estimates

	Recently Issued Accounting Pronouncements

Note 3 —	Asset Retirement Obligations

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		2004				2003
ARO at beginning of period		$	43,933,000			$	42,118,000
Revision of estimate			2,680,000				—
Liabilities settled			(207,000	)			(1,028,000	)
Accretion expense			3,132,000				2,843,000
ARO at end of period		$	49,538,000			$	43,933,000

Note 4 —	Restricted Deposits

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Year Ended December 31,
2005		$	3,200,000
2006			3,200,000
2007			3,200,000
2008			3,200,000
2009			3,200,000
Thereafter			2,000,000
		$	18,000,000

Note 5 —	Debt

			2004				2003
Subject to compromise:
	10.625% Senior Notes due 2004		$	—			$	100,000,000
Not subject to compromise:
	Revolving Credit Facility due 2003		$	—			$	35,272,000
	Term loan due 2011 — related party			38,000,000				—
	Total long-term debt			38,000,000				35,272,000
	Less current maturities			(5,429,000	)			(35,272,000	)
	Long-term debt, less current maturities		$	32,571,000			$	—

	Senior Notes

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	Revolving Credit Facility

	Term Loan

	Production Payment

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		Long-Term
Year Ended December 31,		Debt
2005		$	5,429,000
2006			5,429,000
2007			5,429,000
2008			5,429,000
2009			5,429,000
Thereafter			10,855,000
		$	38,000,000

Note 6 —	Major Customers

Note 7 —	Income Taxes

		2004				2003				2002
Current		$	(407,000	)		$	—			$	—
Deferred			23,284,000				—				—
		$	22,877,000			$	—			$	—

		2004				2003				2002
Statutory federal income tax rate expense (benefit)			35	%			35	%			(35	)%
Other			—	%			11	%			1	%
Change in valuation allowance			(70	)%			(46	)%			34	%
			(35	)%			—	%			—	%

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Note 7 —	Income Taxes

				2004				2003
Deferred tax assets
	Net operating loss carryforwards			$	14,917,000			$	38,393,000
	Asset retirement obligation accretion				6,343,000				6,516,000
	Fixed asset basis differences				—				3,152,000
	Allowance for bad debts				2,081,000				2,046,000
	State taxes				795,000				2,615,000
	AMT tax credits				610,000				290,000
		Total deferred tax assets			24,746,000				53,012,000
		Less valuation allowance			—				(53,012,000	)
		Total net deferred tax assets			24,746,000				—
Deferred tax liabilities
	Fixed asset basis differences				(1,324,000	)			—
	Natural gas balancing				(138,000	)			—
		Total deferred tax liabilities			(1,462,000	)			—
		Net deferred tax assets (liabilities)		$	23,284,000			$	—

Note 8 —	Stock Options

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			2004								2003								2002
							Weighted								Weighted								Weighted
							Average								Average								Average
							Exercise								Exercise								Exercise
			Shares				Price				Shares				Price				Shares				Price
Outstanding at beginning of year				100,000			$	1.92				225,000			$	1.92				425,000			$	1.92
	Granted			—				—				—				—				—				—
	Exercised			—				—				—				—				—				—
	Forfeited			—				—				—				—				(200,000	)			1.92
	Cancelled			(100,000	)			1.92				(125,000	)			1.92				—				—
Outstanding at end of year				—				—				100,000				1.92				225,000				1.92
Exercisable at end of year				—				—				60,000			$	1.92				90,000			$	1.92
Unexercisable at end of year				—				—				40,000				1.92				135,000				1.92

Note 9 —	Related Party Transactions

	•	At December 31, 2004, the balance sheet reflects a term loan payable of $38 million, and related interest payable of $0.3 million. During the year ended December 31, 2004, the Company recorded interest expense of $1.6 million and a loss on restructuring of debt of $3.6 million associated with this related party.
	•	The Company entered into a Management Agreement with an entity pursuant to the Bankruptcy Court’s Order confirming the effective date of the Plan. In exchange for management services provided by that entity, the Company pays a monthly fee equal to the actual direct and indirect administrative overhead costs that the entity incurs in operating and administering the Company’s oil and natural gas properties plus 15% of such costs. The Company recorded $0.7 million in management fee expense under this agreement and $0.2 of general and administrative expense for the year ended December 31, 2004. At December 31, 2004 the balance sheet reflects accounts payable of $0.6 million owed under the agreement.

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Note 11 —	Subsequent Events

Note 12 —	Supplemental Information Related to Oil and Natural Gas Producing Activities (Unaudited)

	Capitalized Costs

		2004				2003
Developed oil and natural gas properties		$	326,733,000			$	323,001,000
Unevaluated oil and natural gas properties			—				—
Pipelines and other production equipment			26,114,000				25,554,000
Accumulated depletion, depreciation and amortization			(280,929,000	)			(262,077,000	)
Net capitalized costs(1)		$	71,918,000			$	86,478,000

(1)	Included in net capitalized costs is approximately $30 million of net ARO asset recorded in 2003 relating to the cumulative effect of adopting SFAS No. 143 on January 1, 2003 (see Note 3) and $2.7 million of net ARO asset recorded in 2004 as a result of a revision in estimate.

	Costs Incurred

			2004				2003				2002
Property acquisition costs, proved			$	—			$	—			$	—
Property acquisition costs, unproved				—				—				—
Exploration expenses				—				—				—
Development costs				1,994,000				3,875,000				6,494,000
Asset retirement cost(1)				207,000				1,028,000				—
	Total cost incurred		$	2,201,000			$	4,903,000			$	6,494,000

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(1)	Excluded from asset retirement cost in 2003 is $26.3 million of asset retirement obligation asset recorded in 2003 related to the cumulative effect of adopting SFAS No. 143 on January 1, 2003 (see Note 3). Excluded from asset retirement cost in 2004 is $2.7 million of asset retirement obligation asset recorded in 2004 related to a revision in estimate.

	Results of Operations

				2004				2003				2002
Oil and natural gas revenues				$	51,234,000			$	50,160,000			$	39,065,000
Operating expenses:
	Lease operating expenses and ad valorem taxes				14,040,000				17,218,000				14,508,000
	Production taxes				711,000				1,021,000				720,000
	Geological and geophysical expenses				76,000				105,000				119,000
	Depletion expense				16,441,000				10,007,000				33,589,000
	Depreciation of pipelines and other production equipment				2,567,000				2,468,000				2,468,000
	Accretion expense				3,132,000				2,843,000				—
	Impairment of oil and natural gas properties				—				—				23,291,000
		Results of operations from oil and natural gas producing activities		$	14,267,000			$	16,498,000			$	(35,630,000	)

	Quantities of Oil and Natural gas Reserves

		Oil				Natural gas
		(BBLS)				(MCF)
Proved developed and undeveloped reserves:
Estimated reserves as of December 31, 2001			7,853,303				66,940,028
Production			(916,030	)			(5,621,901	)
Extensions and discoveries			35,901				39,000
Sale of minerals in-place			—				—
Revisions of previous estimates			(270,378	)			(14,058,034	)
Estimated reserves as of December 31, 2002			6,702,796				47,299,093

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		Oil				Natural gas
		(BBLS)				(MCF)
Production			(689,318	)			(5,043,527	)
Extensions and discoveries			151,197				1,026,000
Sale of minerals in-place			(78,761	)			(1,908,300	)
Revisions of previous estimates			(106,515	)			(2,594,770	)
Estimated reserves as of December 31, 2003			5,979,399				38,778,496
Production			(643,404	)			(3,938,379	)
Extensions and discoveries			—				—
Sale of minerals in-place			(43,663	)			(3,695	)
Revisions of previous estimates			(88,733	)			(8,854,673	)
Estimated reserves as of December 31, 2004			5,203,599				25,981,749
Proved developed reserves:
December 31, 2002			2,062,680				8,057,440
December 31, 2003			1,600,376				5,115,501
December 31, 2004			2,746,047				14,145,700

	Standardized Measure of Discounted Future Net Cash Flows

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				2004				2003				2002
Future cash inflows				$	382,805,375			$	425,695,797			$	431,912,125
Future costs:
	Production				(109,972,000	)			(139,335,808	)			(125,247,373	)
	Development and ARO				(103,386,010	)			(89,551,310	)			(91,096,741	)
		Future production and development costs			(213,358,010	)			(228,887,118	)			(216,344,114	)
Net cash flows before tax					169,447,365				196,808,679				215,568,011
Future income tax expense(1)					(32,979,000	)			—				—
Future net cash flows					136,468,365				196,808,679				215,568,011
10% discount for estimated timing of future cash flows					(61,229,531	)			(60,564,618	)			(71,565,128	)
Standardized measure of discounted future net cash flows				$	75,238,834			$	136,244,061			$	144,002,883

(1)	Prior to the year ended December 31, 2004, it was determine by management that the likelihood for the Company to have taxable income in the future was uncertain thus no future income tax expense was provided (see Note 7).

	Changes Relating to the Standardized Measure of Discounted Future Net Cash Flows

				2004				2003				2002
Beginning of year balance				$	136,244,061			$	144,002,883			$	89,242,543
Changes due to current year operations:
	Sales, net of production costs				(36,483,000	)			(31,921,000	)			(23,837,000	)
	Sales of minerals in place				(5,365,497	)			(4,264,894	)			—
	Development costs incurred				1,994,000				3,875,000				6,494,000
	Extensions and discoveries, net of future production and development costs				—				1,286,545				358,972
Changes due to revisions of standardized variables:
	Sales prices, net of production costs				56,915,433				15,264,428				115,325,081
	Revisions of previous quantity estimates				(38,312,699	)			(8,306,671	)			(36,822,411	)
	Estimated future development costs				(26,166,440	)			(2,059,901	)			(16,156,317	)
	Income taxes(1)				(24,097,000	)			—				—
	Accretion of discount				13,624,406				14,400,288				8,924,254
	Production rates (timing) and other				(3,114,430	)			3,967,383				473,761
		Net increase (decrease)			(61,005,227	)			(7,758,822	)			54,760,340
		End of year balance		$	75,238,834			$	136,244,061			$	144,002,883

(1)	Prior to the year ended December 31, 2004, it was determine by management that the likelihood for the Company to have taxable income in the future was uncertain thus no future income tax expense was provided (see Note 7).

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ASSETS
					(unaudited)
Current assets
	Cash			$	9,721,125
	Accounts receivable, net of allowance of $5,947,000				7,885,023
	Hedge deposits				3,600,000
	Advances to affiliate				10,000,000
	Prepaid expenses and other current assets				4,552,886
	Deferred taxes, net				3,440,605
		Total current assets			39,199,639
Property, plant and equipment
	Oil and natural gas properties, successful efforts method of accounting				266,150,858
	Less accumulated depreciation, depletion and amortization				(212,470,520)
		Oil and natural gas properties, net			53,680,338
	Pipelines and other property, plant and equipment				22,057,363
	Less accumulated depreciation				(15,036,406)
		Pipelines and other property, plant and equipment, net			7,020,957
Other assets
	Restricted deposits				19,631,786
	Deferred taxes, net				21,340,236
		Total assets		$	140,872,956
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
	Accounts payable and accrued liabilities			$	9,803,917
	Accounts payable — related party				277,292
	Interest payable — related party				207,177
	Hedge liability				4,980,264
	Income tax payable				155,953
	Current maturities of long-term debt — related party				5,428,572
		Total current liabilities			20,853,175
Long-term debt — related party, net of current maturities					31,214,285
Deferred credits					263,250
Asset retirement obligation					33,600,348
Hedge Liability					2,257,960
Commitments and contingencies
Stockholders’ equity
	New Common shares, $0.01 par value, 1,000,000 shares authorized; 1,000 shares issued and outstanding as of March 31, 2005				10
	Additional paid-in capital				121,140,455
	Accumulated deficit				(68,456,527)
		Total stockholders’ equity			52,683,938
		Total liabilities and stockholders’ equity		$	140,872,956

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				Three Months Ended
				March 31,
				2005				2004
				(Unaudited)
Oil and natural gas sales				$	6,474,008			$	12,155,652
Costs and expenses:
	Lease operating expenses				3,132,010				3,144,885
	Production taxes				209,938				191,173
	Geological and geophysical expenses				75,804				14,980
	Depletion, depreciation and amortization				3,662,254				3,729,647
	Bad debt expense				—				120,532
	General and administrative expenses				529,851				421,685
	Management fees and other — related party				1,017,402				—
	Accretion of asset retirement obligation				823,734				758,711
		Total cost and expenses			9,450,993				8,381,613
	Operating income (loss)				(2,976,985	)			3,774,039
Other income (expense):
	Interest income and other				131,721				62,286
	Bankruptcy (costs) benefit				60,000				(1,084,445	)
	Interest expense — related party				(604,444	)			(655,541	)
	Loss on sale of assets				(714,764	)			—
		Total other expense.			(1,127,487	)			(1,677,700	)
	Net Income (loss) before income taxes				(4,104,472	)			2,096,339
	Income tax benefit (expense), net				1,497,722				—
	Net income (loss)			$	(2,606,750	)		$	2,096,339
Basic and diluted earnings (loss) per share (see Note 4):
	Net income (loss) per share			$	(2,606.75	)		$	.09
	Basic and diluted weighted average New common shares outstanding				1,000
	Basic and diluted weighted average Old common shares outstanding								24,359,695

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		New Common
		Shares																Total
										Additional				Accumulated				Stockholders’
		Shares				Amount				Paid-In Capital				Deficit				Equity
		(Unaudited)
Balance, December 31, 2004			1,000			$	10			$	121,140,455			$	(65,849,777	)		$	55,290,688
Net loss for the three month period ended March 31, 2005			—				—				—				(2,606,750	)			(2,606,750	)
Balance, March 31, 2005			1,000			$	10			$	121,140,455			$	(68,456,527	)		$	52,683,938

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			Three Months Ended
			March 31,
			2005				2004
			(Unaudited)
Cash flows from operating activities
	Net income (loss)		$	(2,606,750	)		$	2,096,339
	Adjustments to reconcile net income (loss) to net cash provided from operating activities
	Depletion, depreciation and amortization			3,662,254				3,729,647
	Deferred income taxes			(1,497,722	)			—
	Loss on sale of assets			714,764				—
	Unrealized loss on derivative instruments			6,335,507				—
	Allowance for doubtful accounts			—				120,532
	Accretion of asset retirement obligation			823,734				758,711
Changes in operating assets and liabilities
	Accounts receivable			2,201,089				274,787
	Hedge deposit			(3,600,000	)			—
	Prepaid expenses and other current assets			494,831				676,251
	Accounts payable and accrued liabilities			(3,167,943	)			(1,503,185	)
	Accounts receivable — related party			(10,000,000	)			—
	Natural gas imbalance payable			—				(809,872	)
	Other			(832,578	)			(87,750	)
	Net cash provided by (used in) operating activities			(7,472,814	)			5,255,460
Cash flows from investing activities
	Capital expenditures			(4,683,666	)			(131,013	)
	Proceeds from property sale, net			(518,480	)			150,000
	Increase in restricted deposits			—				(875,437	)
	Net cash used in investing activities			(5,202,146	)			(856,450	)
Cash flows from financing activities Repayment of debt				(1,357,143	)			(150,000	)
	Net cash used in financing activities			(1,357,143	)			(150,000	)
	Net increase (decrease) in cash			(14,032,103	)			4,249,010
	Decrease (increase) in restricted cash			—				(5,272,641	)
	Cash at beginning of period			23,753,229				3,152,122
	Cash at end of period		$	9,721,126			$	2,128,491
Supplemental Disclosure of Cash Flow Information:
	Interest paid		$	682,812			$	641,530
	Income taxes paid		$	—			$	52,000

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Note 1 —	Basis of Presentation

Note 2 —	Voluntary Petition for Relief Under Chapter 11 Bankruptcy

	•	Revolving Credit Facility: the holder of the claim received a new note, the principal amount of which will be paid over seven years,

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	•	Senior Notes: 49% of the Senior Notes were settled for a cash payment equal to 2.5% of the face value of the Senior Notes; 51% of the Senior Notes were converted into 100% of the equity of the reorganized Company,
	•	Unsecured Creditors: received a cash payment equal to 10% of their allowed claim.
	•	Equity: the pre-confirmation shares of common stock (the “Old Common Stock”) are deemed to be of no value and were cancelled. The equity of the reorganized Company became owned by the 51% Senior Note holders.

Note 3 —	Sale of West Delta Property

			Book Value at
			March 10, 2005
Assets transferred to purchaser:
	Net book value of West Delta properties		$	(12,238,020	)
	Escrow account — West Delta			(4,720,060	)
	Cash payment — purchase price adjustment			(518,480	)
Liabilities assumed by purchaser:
	West Delta asset retirement obligation			16,761,796
	Loss on sale of West Delta		$	(714,764	)

Note 4 —	Earnings per Share

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Note 5 —	Derivative Instruments and Hedging Activities

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Date of Contract		Volume/Month				Beginning				Ending				Floor				Ceiling
November 2004			25,000 Bbls				January 2005				December  2005			$	42.50			$	46.00
November 2004			150,000  MMBTU				January 2005				December  2005			$	6.00			$	8.35
February 2005			5,000 Bbls				March 2005				December  2005			$	44.50			$	48.00
February 2005			40,000 MMBTU				March 2005				December  2005			$	6.05			$	7.30
February 2005			17,000 Bbls				January 2006				December  2006			$	41.65			$	45.25
February 2005			140,000  MMBTU				January 2006				December  2006			$	6.00			$	7.25

Note 6 —	Asset Retirement Obligations

		Three Month Period Ended
		March 31,
		2005				2004
ARO at the beginning of the period		$	49,538,410			$	43,932,452
Sales (see note 3)			(16,761,796	)			—
Accretion expense			823,734				758,711
ARO at the end of the period		$	33,600,348			$	44,691,163

Note 7 —	Income Taxes

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Note 8 —	Commitments and Contingencies

	Restricted Deposits

		Year Ended
		December 31,
2005 (remaining)		$	2,400,000
2006			3,200,000
2007			3,200,000
2008			3,200,000
2009			3,200,000
Thereafter			2,000,000
		$	17,200,000

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Note 9 —	Related Party Transactions

	•	At March 31, 2005, the balance sheet reflects a term loan payable of $38.6 million, and related interest payable of $0.2 million. During the three month period ended March 31, 2005, the Company recorded interest expense of $0.6 million associated with this related party.
	•	The Company entered into a Management Agreement with an entity pursuant to the Bankruptcy Court’s Order confirming the effective date of the Plan. In exchange for management services provided by that entity, the Company pays a monthly fee equal to the actual direct and indirect administrative overhead costs that the entity incurs in operating and administering the Company’s oil and natural gas properties plus 15% of such costs. The Company recorded $1.0 million in management fee expense under this agreement for the three month period ended March 31, 2005. At March 31, 2005, the balance sheet reflects accounts payable of $0.3 million owed under the agreement.
	•	As of March 31, 2005, the Company had $10 million in outstanding advances to TransTexas, Inc., an entity owned or controlled by Mr. Icahn. The advances are non-interest bearing.

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	/s/ KPMG LLP

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				As of December 31,
				2004				2003
ASSETS
Current Assets:
	Cash and cash equivalents			$	12,756,000			$	33,454,000
	Accounts receivable, net of allowances of $3,862,000 and $5,918,000, respectively				5,223,000				5,247,000
	Inventories				2,499,000				2,222,000
	Deferred financing costs				2,260,000				762,000
	Insurance deposits				3,017,000				—
	Prepaid expenses and other current assets				1,689,000				3,946,000
		Total current assets			27,444,000				45,631,000
Property and Equipment:
	Land				54,344,000				54,344,000
	Buildings and improvements				88,147,000				88,249,000
	Equipment				73,675,000				64,722,000
	Construction in progress				2,040,000				2,111,000
					218,206,000				209,426,000
	Less — accumulated depreciation and amortization				(46,566,000	)			(40,013,000	)
	Property and equipment, net				171,640,000				169,413,000
Other Assets:
	Obligatory investments, net of allowances of $12,500,000 and $11,340,000, respectively				11,647,000				10,705,000
	Other assets				6,227,000				1,814,000
		Total other assets			17,874,000				12,519,000
				$	216,958,000			$	227,563,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Current portion debt			$	43,741,000			$	—
	Current portion capital leases				248,000				—
	Accounts payable				7,082,000				6,815,000
	Accrued liabilities —
		Payroll and related expenses			4,379,000				4,241,000
		Interest			1,216,000				3,092,000
		Gaming obligations			3,363,000				2,725,000
		Insurance			4,330,000				2,505,000
		Other			2,175,000				2,821,000
		Total current liabilities			66,534,000				22,199,000
	Long-Term Debt, net of current maturities				66,259,000				110,000,000
	Non-current capital leases				432,000				—
	Other Noncurrent Liabilities				4,920,000				3,729,000
	Commitments and Contingencies				—				—
	Warrants in Atlantic Coast Entertainment Holdings, Inc.				43,587,000				—
Shareholders’ Equity:
	Preferred stock, $.01 par value per share; 5,000,000 shares authorized; 0 shares outstanding				—				—
	Common Stock, $.01 par value per share; 20,000,000 shares authorized; 10,000,000 shares issued and outstanding				100,000				100,000
	Additional paid-in capital				81,313,000				124,900,000
	Accumulated deficit				(46,187,000	)			(33,365,000	)
		Total shareholders’ equity			35,226,000				91,635,000
				$	216,958,000			$	227,563,000

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			Year Ended December 31,
			2004				2003				2002
Revenues:
Casino			$	157,643,000			$	154,813,000			$	175,065,000
Rooms				10,908,000				10,994,000				11,143,000
Food and beverage				21,898,000				21,962,000				23,330,000
Other				3,940,000				3,914,000				3,735,000
				194,389,000				191,683,000				213,273,000
Less — promotional allowances				(23,146,000	)			(23,934,000	)			(23,356,000	)
	Net revenues			171,243,000				167,749,000				189,917,000
Expenses:
Casino				50,467,000				52,657,000				59,971,000
Rooms				3,397,000				2,677,000				3,639,000
Food and beverage				7,930,000				8,481,000				10,343,000
Other				870,000				1,297,000				1,222,000
Selling, general and administrative				90,423,000				90,010,000				93,871,000
Depreciation and amortization				14,898,000				14,123,000				13,292,000
Provision for obligatory investments				1,165,000				1,434,000				1,521,000
Loss on impairment of fixed assets				—				—				1,282,000
Loss on disposal of assets				152,000				28,000				185,000
	Total expenses			169,302,000				170,707,000				185,326,000
Income (loss) from operations				1,941,000				(2,958,000	)			4,591,000
Non-operating income (expense):
Interest income				422,000				627,000				1,067,000
Interest expense				(11,115,000	)			(12,581,000	)			(12,195,000
Debt restructuring costs				(3,084,000	)			(1,843,000	)			—
Total non-operating expense, net				(13,777,000	)			(13,797,000	)			(11,128,000	)
Loss before income taxes				(11,836,000	)			(16,755,000	)			(6,537,000	)
Income tax provision				(986,000	)			(958,000	)			(784,000	)
Net loss			$	(12,822,000	)		$	(17,713,000	)		$	(7,321,000	)
Basic/diluted loss per common share			$	(1.28	)		$	(1.77	)		$	(0.73	)
Basic/diluted weighted average common shares outstanding				10,000,000				10,000,000				10,000,000

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		Common Stock
										Additional				Accumulated
		Shares				Amount				Paid-In Capital				Deficit				Total
BALANCE, December 31, 2001			10,000,000			$	100,000			$	124,900,000			$	(8,331,000	)		$	116,669,000
Net Loss			—				—				—				(7,321,000	)			(7,321,000	)
BALANCE, December 31, 2002			10,000,000			$	100,000			$	124,900,000			$	(15,652,000	)		$	109,348,000
Net Loss			—				—				—				(17,713,000	)			(17,713,000	)
BALANCE, December 31, 2003			10,000,000			$	100,000			$	124,900,000			$	(33,365,000	)		$	91,635,000
Net Loss			—				—				—				(12,822,000	)			(12,822,000	)
Dividend to common shareholders in the form of warrants, exercisable for 2,750,000 common shares of Atlantic Coast Entertainment Holdings, Inc.			—				—				(43,587,000	)			—				(43,587,000	)
BALANCE, December 31, 2004			10,000,000			$	100,000			$	81,313,000			$	(46,187,000	)		$	35,226,000

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			Year Ended December 31,
			2004				2003				2002
OPERATING ACTIVITIES:
Net loss			$	(12,822,000	)		$	(17,713,000	)		$	(7,321,000	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization			14,898,000				14,123,000				13,292,000
	Provision for obligatory investments			1,165,000				1,434,000				1,521,000
	Loss on impairment of fixed assets			—				—				1,282,000
	Loss on disposal of assets			152,000				28,000				185,000
	Provision for doubtful accounts			416,000				1,040,000				1,586,000
	Decrease in deferred financing costs			1,229,000				—				—
	Increase in insurance deposits			(3,017,000	)			—				—
	(Increase) decrease in accounts receivable			(392,000	)			(1,312,000	)			2,349,000
	Increase (decrease) in accounts payable and accrued liabilities			360,000				(130,000	)			(3,080,000	)
	Decrease (increase) in prepaid expenses and other current assets			2,187,000				(98,000	)			(426,000	)
	Increase in other noncurrent assets			(929,000	)			(11,000	)			—
	Increase in other noncurrent liabilities			1,178,000				369,000				285,000
	Net cash provided by (used in) operating activities			4,425,000				(2,270,000	)			9,673,000
INVESTING ACTIVITIES:
Purchase of property and equipment				(17,378,000	)			(12,825,000	)			(14,058,000	)
Proceeds from disposition of assets				308,000				110,000				320,000
Proceeds from sale of obligatory investments				202,000				130,000				208,000
Purchase of obligatory investments				(2,308,000	)			(2,336,000	)			(2,496,000	)
	Net cash used in investing activities			(19,176,000	)			(14,921,000	)			(16,026,000	)
FINANCING ACTIVITIES:
Proceeds from long-term debt				758,000				—				—
Repayments of long-term debt				(79,000	)			—				(371,000	)
Cost of issuing long-term debt				(6,626,000	)			—				—
	Net cash used in financing activities			(5,947,000	)			—				(371,000	)
	Net decrease in cash and cash equivalents			(20,698,000	)			(17,191,000	)			(6,724,000	)
	Cash and cash equivalents at beginning of period			33,454,000				50,645,000				57,369,000
	Cash and cash equivalents at end of period		$	12,756,000			$	33,454,000			$	50,645,000
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid			$	10,744,000			$	12,100,000			$	12,128,000
Interest Capitalized			$	86,000			$	300,000			$	766,000
Income Taxes paid			$	1,051,000			$	899,000			$	1,764,000
Dividends to Common Shareholders in the form of Warrants in Atlantic Coast Entertainment Holdings, Inc.			$	43,587,000			$	—			$	—
Issuance of 3% Notes in exchange for 11% Notes			$	66,259,000			$	—			$	—

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(1)	Organization, Business and Basis of Presentation

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(2)	Liquidity Matters

(3)	Summary of Significant Accounting Policies

	Casino revenues, promotional allowances and departmental expenses

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		Year Ended December 31,
		2004				2003				2002
Allocation From:
Rooms		$	6,511,000			$	7,360,000			$	8,274,000
Food and Beverage			16,116,000				16,482,000				17,399,000
Other Operating			2,294,000				2,070,000				1,324,000
		$	24,921,000			$	25,912,000			$	26,997,000
Allocation To:
Casino		$	3,846,000			$	3,815,000			$	4,186,000
Selling, General and Administrative			21,075,000				22,097,000				22,811,000
		$	24,921,000			$	25,912,000			$	26,997,000

	Cash and cash equivalents

	Allowance for doubtful accounts

	Inventories

	Property and equipment

Buildings and improvements		25 - 40 years
Operating equipment		3 - 7 years

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	Deferred financing costs

	Long-lived assets

	Accrued insurance

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	Income taxes

	Loss per share

	Reclassifications

(4)	Long-Term Debt

		As of December 31,
		2004				2003
11% notes, due September 29, 2005(a)		$	43,741,000			$	110,000,000
3% Notes due July 22, 2008(b)			66,259,000				—
Total indebtedness			110,000,000				110,000,000
Less — current maturities			(43,741,000	)			—
Total long-term debt		$	66,259,000			$	110,000,000

(a)		In accordance with its approved plan of reorganization, GB Holdings through its then wholly-owned subsidiaries issued $110 million at 11% interest payable September 29, 2005 (“11% Notes”). Interest on the 11% Notes is payable on March 29 and September 29, beginning March 29, 2001. The outstanding principal is due on September 29, 2005.
		The original indenture for the 11% Notes contained various provisions, which, among other things, restricted the ability of GB Holdings, and GBHC to incur certain senior secured indebtedness beyond certain limitations, and contained certain other limitations on the ability to merge, consolidate, or sell

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		substantially all of their assets, to make certain restricted payments, to incur certain additional senior liens, and to enter into certain sale-leaseback transactions.
		In a Consent Solicitation Statement and Consent Form dated September 14, 2001, Property sought the consent of holders of the 11% Notes to make certain changes to the original indenture (the “Modifications”). The Modifications included, but were not limited to, a deletion of, or changes to, certain provisions the result of which would be (i) to permit GB Holdings and its subsidiaries to incur any additional indebtedness without restriction, to issue preferred stock without restriction, to make distributions in respect of preferred stock and to prepay indebtedness without restriction, to incur liens without restriction and to enter into sale-leaseback transactions without restriction, (ii) to add additional exclusions to the definition of “asset sales” to exclude from the restrictions on “asset sales” sale-leaseback transactions, conveyances or contributions to any entity in which GB Holdings or its subsidiaries has or obtains equity or debt interests, and transactions (including the granting of liens) made in accordance with another provision of the Modifications relating to collateral release and subordination or any documents entered into in connection with an “approved project” (a new definition included as part of the Modifications which includes, if approved by the Board of Directors of GB Holdings, incurrence of indebtedness or the transfer of assets to any person if GB Holdings or any of its subsidiaries has or obtain debt or equity interests in the transferee or any similar, related or associated event, transaction or activity) in which a release or subordination of collateral has occurred including, without limitation, any sale or other disposition resulting from any default or foreclosure, (iii) to exclude from the operation of covenants related to certain losses to collateral, any assets and any proceeds thereof, which have been subject to the release or subordination provisions of the Modifications, (iv) to permit the sale or other conveyances of Casino Reinvestment Development Authority (the “CRDA”) investments in accordance with the terms of a permitted security interest whether or not such sale was made at fair value, (v) to exclude from the operation of covenants related to the deposit into a collateral account of certain proceeds of “asset sales” or losses to collateral any assets and any proceeds thereof, which have been subject to the release or subordination provisions of the Modifications, (vi) to add new provisions authorizing the release or subordination of the collateral securing the 11% Notes in connection with, in anticipation of, as a result of, or in relation to, an “approved project”, and (vii) various provisions conforming the text of the original indenture to the intent of the preceding summary of the Modifications.
(b)		On July 22, 2004, Atlantic Holdings consummated the Consent Solicitation and Offer to Exchange which it commenced and in which Atlantic Holdings offered to exchange its 3% Notes due July 22, 2008 for 11% Notes due September 29, 2005, issued by Property. Pursuant to the Consent Solicitation and Offer to Exchange, an aggregate principal amount of $66,258,970 of 11% Notes, representing 60.2% of the outstanding 11% Notes, were tendered to Atlantic Holdings, on a dollar for dollar basis, in exchange for an aggregate principal amount of $66,258,970 of 3% Notes. At the election of the holders of a majority in principal amount of the outstanding 3% Notes, each $1,000 principal amount of 3% Notes is payable in or convertible into 65.909 shares of Atlantic Holdings Common Stock, subject to adjustments for stock dividends, stock splits, recapitalizations and the like. As a result of the Transaction, the $43.7 million in 11% Notes are no longer secured by any property or equipment of the Company. Holders of the 11% Notes that tendered in the Consent Solicitation and Offer to Exchange also received their pro rata share of the aggregate consent fees ($6.6 million) at the rate of $100 per $1000 principal amount of the 11% Notes tendered, plus accrued interest ($2.3 million) on the 11% Notes tendered, which amounts were paid at the consummation of the Transaction. The exchange is being accounted for as a modification of debt. The consent fees paid are being amortized over the term of the 3% Notes using the effective yield method. All external costs associated with the issuance of the 3% Notes have been expensed. As indicated in the Consent Solicitation and Offer to Exchange, an aggregate of 10,000,000 warrants, issued by Atlantic Holdings, were distributed on a pro rata basis to the shareholders of GB Holdings upon the consummation of the Transaction. Such Warrants allow the holders to purchase, from Atlantic Holdings, at an exercise price of $.01 per share, an aggregate of 2,750,000 shares of Atlantic Holdings Common

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		Stock and are only exercisable following the earlier of (a) either the 3% Notes being paid in cash or upon conversion, in whole or in part, into Atlantic Holdings Common Stock, (b) payment in full of the outstanding principal of the 11% Notes which have not been exchanged, or (c) a determination by a majority of the board of directors of Atlantic Holdings (including at least one independent director of Atlantic Holdings) that the Warrants may be exercised. The fair value of the warrants as of July 22, 2004 (date of issuance) was $43,587,000 (as determined by a third party valuation). An additional $4.9 million in legal, accounting, professionals and state transfer fees were expended related to the Transaction, of which $3.1 million and $1.8 million were charged to debt restructuring costs during 2004 and 2003, respectively.

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(5)	Income Taxes

			Year Ended December 31,
			2004				2003				2002
Federal income tax provision			$				$				$
Current				—				—				—
Deferred				—				—				—
	State income tax provision
Current				(986,000	)			(958,000	)			(784,000	)
Deferred				—				—				—
			$	(986,000	)		$	(958,000	)		$	(784,000	)

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					2004				2003
Deferred tax assets:
	Bad debt reserve				$	1,578,000			$	2,418,000
	Deferred financing costs					—				234,000
	Group insurance					904,000				747,000
	Accrued vacation					603,000				613,000
	Action cash awards accrual					191,000				123,000
	Jackpot accrual					407,000				298,000
	Medical reserve					534,000				408,000
	Debt restructuring costs					—				754,000
	CRDA					6,293,000				5,724,000
	Federal and state net operating loss carryforward					21,962,000				17,004,000
	Workers Compensation					462,000				—
	Grantors trust income					3,713,000				3,616,000
	Credit carryforwards					3,345,000				3,385,000
	Other					770,000				297,000
		Total deferred tax assets				40,762,000				35,621,000
		Less valuation allowance				(24,209,000	)			(17,685,000	)
			Total deferred tax assets after valuation allowance			16,553,000				17,936,000
Deferred tax liabilities:
Noncurrent:
	Depreciation of plant and equipment					(16,336,000	)			(17,812,000	)
	Deferred financing costs					(81,000	)			—
	Other					(11,000	)			—
	Chips and tokens					(125,000	)			(124,000	)
		Total deferred tax liabilities				(16,553,000	)			(17,936,000	)
		Net deferred tax assets (liabilities)			$	—			$	—

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		Years Ended December 31,
		2004				2003				2002
Expected federal benefit			(35.0	)%			(35.0	)%			(35.0	)%
State taxes net of federal benefit			(0.4	)%			(2.2	)%			(1.6	)%
State tax rate correction			0.0	%			3.9	%			0.0	%
Expired tax credit			2.7	%			0.7	%			0.0	%
Permanent differences			0.4	%			0.2	%			0.9	%
Tax credits			(6.2	)%			(5.2	)%			(13.2	)%
Deferred tax valuation allowance			55.2	%			43.3	%			57.8	%
Other			(8.4	)%			0.0	%			3.1	%
			8.3	%			5.7	%			12.0	%

(6)	Transactions with Related Parties

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(7)	New Jersey Regulations and Obligatory Investments

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(8)	Commitments and Contingencies

	Legal Proceedings

	Labor Relations

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(9)	Employee Retirement Savings Plan

(10)	Disclosures about Fair Value of Financial Instruments

			December 31, 2004								December 31, 2003
			Carrying								Carrying
			Amount				Fair Value				Amount				Fair Value
Financial Assets:
	Cash and cash equivalents		$	12,756,000			$	12,756,000			$	33,454,000			$	33,454,000
	Obligatory investments, net			11,647,000				11,647,000				10,705,000				10,705,000
Financial Liabilities:
	Interest payable			2,099,000				2,099,000				3,092,000				3,092,000
	11% Notes			43,741,000				35,430,000				110,000,000				91,300,000
	3% Notes			66,259,000				64,452,000				—				—

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(11)	Leases

				Operating Leases				Capital Leases
2005				$	1,967,000			$	286,000
2006					1,998,000				286,000
2007					1,998,000				188,000
2008					1,998,000				—
2009					1,998,000				—
Thereafter					6,434,000				—
		Total Minimum Lease Payments		$	16,393,000				760,000
Less imputed interest costs									(80,000	)
	Present value of Net Minimum Capital Lease Payments							$	680,000

(12)	Subsequent Events

(13)	Selected Quarterly Financial Data (Unaudited)

		Quarter
		First				Second				Third				Fourth
Year Ended December 31, 2004
Net revenues		$	40,990,000			$	44,570,000			$	44,160,000			$	41,523,000
Income (loss) from operations		$	915,000			$	1,911,000			$	719,000			$	(1,604,000	)
Net loss		$	(3,140,000	)		$	(2,493,000	)		$	(3,124,000	)		$	(4,065,000	)
Net loss per share		$	(0.31	)		$	(0.25	)		$	(0.31	)		$	(0.41	)
Year Ended December 31, 2003
Net revenues		$	39,303,000			$	45,464,000			$	45,211,000			$	37,771,000
Income (loss) from operations		$	(1,298,000	)		$	2,607,000			$	(144,000	)		$	(4,123,000	)
Net loss		$	(4,401,000	)		$	(507,000	)		$	(3,456,000	)		$	(9,349,000	)
Net loss per share		$	(0.44	)		$	(0.05	)		$	(0.35	)		$	(0.93	)

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						Additions
						Amounts
		Balance of				Charged to
		Beginning of				Costs and								Balance at
		Period				Expenses				Deductions				End of Period
Year Ended December 31, 2004:
Allowance for doubtful accounts receivable		$	5,918,000			$	416,000			$	(2,472,000	)(1)		$	3,862,000
Allowance for obligatory investments			11,340,000				1,165,000				(5,000	)(2)			12,500,000
		$	17,258,000			$	1,581,000			$	(2,477,000	)		$	16,362,000
Year Ended December 31, 2003:
Allowance for doubtful accounts receivable		$	11,301,000			$	1,040,000			$	(6,423,000	)(1)		$	5,918,000
Allowance for obligatory investments			10,028,000				1,434,000				(122,000	)(2)			11,340,000
		$	21,329,000			$	2,474,000			$	(6,545,000	)		$	17,258,000
Year Ended December 31, 2002:
Allowance for doubtful accounts receivable		$	14,406,000			$	1,586,000			$	(4,691,000	)(1)		$	11,301,000
Allowance for obligatory investments			9,290,000				1,521,000				(783,000	)(2)			10,028,000
		$	23,696,000			$	3,107,000			$	(5,474,000	)		$	21,329,000

(1)	Represents net write offs of uncollectible accounts.
(2)	Represents write offs of obligatory investments in connection with the contribution of certain obligatory investments to CRDA approved projects.

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				As of
				March 31,				December 31,
				2005				2004
				(Unaudited)
				(In thousands)
ASSETS
Current Assets:
	Cash and cash equivalents			$	14,929			$	12,756
	Accounts receivable, net				4,371				5,100
	Deferred financing costs				2,237				2,260
	Other current assets				9,813				7,328
		Total Current Assets			31,350				27,444
Property and equipment, net					168,237				171,640
Obligatory investments, net					11,830				11,647
Deferred financing costs					3,970				4,509
Other assets					1,667				1,718
		Total Other Assets			17,467				17,874
	TOTAL ASSETS			$	217,054			$	216,958
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Line of credit			$	4,000			$	—
	Current portion of long-term debt				43,741				43,741
	Accounts payable — trade				3,912				3,995
	Accrued expenses				10,261				11,360
	Accrued payroll and related expenses				7,503				6,819
	Related party payables				588				371
	Current portion of capital lease obligation				236				248
		Total Current Liabilities			70,241				66,534
Long-Term Liabilities:
	Long-term debt, less current portion				66,259				66,259
	Capital lease obligations, less current portion				385				432
	Other				5,496				4,920
		Total Long-Term Liabilities			72,140				71,611
Commitments and Contingencies
Warrants in Atlantic Coast Entertainment Holdings, Inc.					43,587				43,587
Shareholders’ Equity:
	Preferred stock, $.01 par value per share; 5,000,000 shares authorized; 0 shares outstanding				—				—
	Common stock, $.01 par value share; 20,000,000 shares authorized; 10,000,000 shares issued and outstanding				100				100
	Additional paid-in capital				81,313				81,313
	Accumulated deficit				(50,327	)			(46,187	)
		Total Shareholders’ Equity			31,086				35,226
		TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	217,054			$	216,958

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			Three Months				Three Months
			Ended				Ended
			March 31, 2005				March 31, 2004
			(In thousands, except per share data)
			(Unaudited)
REVENUES:
Casino			$	37,341			$	38,119
Hotel				2,294				2,288
Food and beverage				4,866				4,990
Other				807				927
	Gross Revenues			45,308				46,324
Less promotional allowances				(5,343	)			(5,334	)
	Net Revenues			39,965				40,990
COSTS AND EXPENSES:
Casino				11,827				12,214
Hotel				703				655
Food and beverage				1,566				2,027
Other operating expenses				209				203
Selling, general and administrative				22,925				21,041
Depreciation and amortization				4,026				3,567
Provision for obligatory investments				238				368
Gain on sale of assets				(4	)			—
	Total Costs And Expenses			41,490				40,075
(LOSS) INCOME FROM OPERATIONS				(1,525	)			915
OTHER INCOME (EXPENSE):
Interest income				107				111
Interest expense				(2,451	)			(3,189	)
Debt restructuring costs				(24	)			(710	)
	Total other expense, net			(2,368	)			(3,788	)
LOSS BEFORE INCOME TAXES				(3,893	)			(2,873	)
Provision for income taxes				247				267
NET LOSS			$	(4,140	)		$	(3,140	)
Basic/diluted loss per common share			$	(0.41	)		$	(0.31	)
Weighted average common shares outstanding				10,000,000				10,000,000

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			Three Months				Three Months
			Ended				Ended
			March 31, 2005				March 31, 2004
			(In thousands)
			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss			$	(4,140	)		$	(3,140	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization				4,026				3,567
Provision for obligatory investments				238				368
Gain on sale of assets				(4	)			—
Changes in operating assets and liabilities:
	Accounts receivable, net			729				94
	Deferred financing costs			595				—
	Other current assets			(2,486	)			900
	Accounts payable and accrued expenses			(281	)			(4,612	)
	Long-term liabilities			576				56
Net Cash Used in Operating Activities				(747	)			(2,767	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment				(571	)			(2,118	)
Purchase of obligatory investments				(553	)			(517	)
Cash proceeds from sale of property and equipment				4				9
Cash proceeds from sale of obligatory investments				132				—
	Net Cash Used in Investing Activities			(988	)			(2,626	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from borrowing on line of credit				4,000				—
Deferred financing fees				(33	)			—
Payments on capital lease obligation				(59	)			—
	Net Cash Provided by Financing Activities			3,908				—
Net increase (decrease) in cash and cash equivalents				2,173				(5,393	)
Cash and cash equivalents — beginning of period				12,756				33,454
Cash and Cash Equivalents — End of Period			$	14,929			$	28,061
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest			$	2,494			$	6,050
Cash paid for income taxes			$	88			$	88
Interest capitalized			$	2			$	28

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(1)	Organization, Business and Basis of Presentation

	Reclassifications

F-298

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(2)	Liquidity Matters

(3)	Related Party Transactions

(4)	Line of Credit

F-299

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(5)	Commitments and Contingencies

F-300

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Item 20.	Indemnification of Directors and Officers.

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Item 21.	Exhibits and Financial Statement Schedules

Exhibit No.				Description
	3	.1		Certificate of Limited Partnership of American Real Estate Holdings Limited Partnership (“AREH”) dated February 17, 1987, as amended pursuant to First Amendment to Certificate of Limited Partnership, dated March 10, 1987 (incorporated by reference to Exhibit 3.4 to Form 10-Q for the quarter ended March 31, 2004 (SEC File No. 1-9516), filed on May 10, 2004).
	3	.2		Amended and Restated Agreement of Limited Partnership of AREH, dated as of July 1, 1987 (incorporated by reference to Exhibit 3.5 to Form 10-Q for the quarter ended March 31, 2004 (SEC File No. 1-9516), filed on May 10, 2004).
	3	.3		Amendment No. 1 to the Amended and Restated Agreement of Limited Partnership of AREH, dated as of August 16, 1996 (incorporated by reference to Exhibit 10.2 to Form 8-K (SEC File No. 1-9516), filed on August 16, 1996).
	3	.4		Amendment No. 2 to the Amended and Restated Agreement of Limited Partnership of AREH, dated as of June 14, 2002 (incorporated by reference to Exhibit 3.9 to Form 10-K for the year ended December 31, 2002 (SEC File No. 1-9516), filed on March 31, 2003).
	3	.5		Certificate of Incorporation of American Real Estate Finance Corp. (incorporated by reference to Exhibit 3.6 to Form S-4 (SEC File No. 1-9516), filed on August 6, 2004).
	3	.6		By-Laws of American Real Estate Finance Corp. (incorporated by reference to Exhibit 3.7 to Form S-4 (SEC File No. 1-9516), filed on August 6, 2004).
	4	.1		Indenture, dated as of February 7, 2005, among American Real Estate Partners, L.P., American Real Estate Finance Corp., AREH, as guarantor and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 4.9 to AREP’s Form 8-K (SEC File No. 1-9516), filed on February 10, 2005).
	4	.2		Form of 71/8% Senior Note due 2013 (incorporated by reference to Exhibit 4.9 to AREP’s Form 8-K (SEC File No. 1-9516), filed on February 10, 2005).
	4	.3		Registration Rights Agreement, dated as of February 7, 2005, among American Real Estate Partners, L.P., American Real Estate Finance Corp., AREH and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 4.11 to AREP’s Form 8-K (SEC File No. 1-9516), filed on February 10, 2005.
	5	.1		Opinion of DLA Piper Rudnick Gray Cary US LLP.(1)
	10	.1		Registration Rights Agreement between AREP and X LP (now known as High Coast Limited Partnership)(incorporated by reference to Exhibit 10.2 to Form 10-K for the year ended December 31, 2004 (SEC File No. 1-9516), filed on March 16, 2005).
	10	.2		Amended and Restated Agency Agreement (incorporated by reference to Exhibit 10.12 to Form 10-K for the year ended December 31, 1994 (SEC File No. 1-9516), filed on March 31, 1995).
	10	.3		Service Mark License Agreement, by and between Becker Gaming, Inc. and Arizona Charlie’s, Inc., dated as of August 1, 2000 (incorporated by reference to ACEP’s Form 10-K (SEC File No. 333-118149), filed on March 16, 2005.
	10	.4		Management Agreement, dated September 12, 2001, by and between National Energy Group, Inc. (“NEG”) and NEG Operating LLC (incorporated by reference to Exhibit 99.4 to NEG’s Form 8-K (SEC File No. 000-19136), filed on September 27, 2001).

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Exhibit No.				Description
	10	.5		Pledge Agreement and Irrevocable Proxy, dated December 29, 2003, made by NEG in favor of Bank of Texas, N.A. (incorporated by reference to Exhibit 10.3 of NEG’s Form 8-K (SEC File No. 000-19036), filed on January 14, 2004).
	10	.6		Credit Agreement, dated as of January 29, 2004, by and among ACEP, certain subsidiaries of ACEP, the several lenders from time to time parties thereto and Bear Stearns Corporate Lending Inc., as Syndication Agent and Administrative Agent (incorporated by reference to Exhibit 10.1 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004).
	10	.7		Pledge and Security Agreement, dated as of May 26, 2004, by and among ACEP, ACEP Finance, certain subsidiaries of ACEP and Bear Sterns Corporate Lending Inc. (incorporated by reference to Exhibit 10.2 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004).
	10	.8		Employment Agreement, effective as of April 1, 2004, by and between ACEP and Richard P. Brown (incorporated by reference to Exhibit 10.4 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on August 12, 2004).
	10	.9		First Amendment to Credit Agreement, dated as of January 29, 2004 by and among ACEP, as the Borrower, certain subsidiaries of the Borrower, as Guarantors, The Several Lenders, Bear Stearns Corporate Lending Inc. as Syndication Agent, and Bear Stearns Corporate Lending Inc., as Administrative Agent, dated as of May 26, 2004, Bear, Stearns & Co. Inc., as Sole Lead Arranger and Sole Bookrunner (incorporated by reference to Exhibit 10.6 to ACEP’s Form S-4 (SEC File No. 333-118149), filed on October 12, 2004).
	10	.10		Management Agreement, dated November 16, 2004, by and between NEG and Panaco, Inc. (“Panaco”) (incorporated by reference to Exhibit 10.13 to NEG’s Form 10-Q (SEC File No. 000-19136), filed on November 15, 2004).
	10	.11		Management Agreement, dated August 28, 2003, by and between NEG and TransTexas Gas Corporation (“TransTexas”) (incorporated by reference to Exhibit 10.1 to NEG’s Form 8-K (SEC File No. 000-19136), filed on September 10, 2003).
	10	.12		Purchase Agreement for Notes Issued by TransTexas, dated December 6, 2004, by and between Thornwood Associates LP (“Thornwood”) and AREP Oil & Gas LLC (“AREP Oil & Gas”) (incorporated by reference to Exhibit 99.1 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004.
	10	.13		Assignment and Assumption Agreement, dated December 6, 2004, by and between Thornwood and AREP Oil & Gas (incorporated by reference to Exhibit 99.2 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004).
	10	.14		Membership Interest Purchase Agreement, dated as of December 6, 2004, by and among AREP Oil & Gas, Arnos Corp., High River and Hopper Investments LLC (incorporated by reference to Exhibit 99.3 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004).
	10	.15		Assignment and Assumption Agreement, dated December 6, 2004, by and among AREP Oil & Gas, Arnos Corp., High River and Hopper Investments LLC (incorporated by reference to Exhibit 99.4 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004).
	10	.16		Amended and Restated Oil & Gas Term Loan Agreement by and among Thornwood and TransTexas, Galveston Bay Pipeline Company and Galveston Bay Processing Corporation and Thornwood, dated August 28, 2003 (incorporated by reference to Exhibit 99.5 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004).
	10	.17		Amended and Restated Security and Pledge Agreement, dated August 2003, by and among TransTexas, Galveston Bay Pipeline Company, Galveston Bay Processing Corporation and Thornwood (incorporated by reference to Exhibit 99.6 to AREP’s Form 8-K (SEC File No. 1-9516, filed on December 10, 2004).

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Exhibit No.				Description
	10	.18		Term Loan and Security Agreement among Panaco, Mid River LLC and Lenders Named Therein, dated as of November 16, 2004 (incorporated by reference to Exhibit 99.7 to AREP’s Form 8-K (SEC File No. 1-9516), filed on December 10, 2004).
	10	.19		Note Purchase Agreement, dated as of December 27, 2004, by and among AREP Sands Holding LLC, Barberry Corp., and Cyprus, LLC (incorporated by reference to Exhibit 99.1 to AREP’s Form 8-K (SEC File No. 1-9516, filed on December 30, 2004).
	10	.20		Amendment No. 1 to Purchase Agreement, dated May 23, 2005 (incorporated by reference to Exhibit 99.1 to Form 8-K (SEC File No. 1-9516) filed on May 23, 2005).
	10	.21		Indenture, dated as of May 12, 2004, among American Real Estate Partners, L.P., American Real Estate Finance Corp., AREH, as guarantor and Wilmington Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to AREP’s Form S-4 (SEC File No. 333-118021), filed on August 6, 2004).
	10	.22		Form of 81/8% Senior Note due 2012 (incorporated by reference to Exhibit 4.1 to AREP’s Form S-4 (SEC File No. 333-118021), filed on August 6, 2004).
	10	.23		Registration Rights Agreement, dated as of May 12, 2004, among AREP, AREP Finance, AREH and Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 4.3 to AREP’s Form S-4 (SEC File No. 333-118021), filed on August 6, 2004.
	12	.1		Ratio of earnings to fixed charges.
	17	.1		Statement of Eligibility of Trustee.(1)
	21			Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to AREH’s Form 10-K (SEC File No. 333-118021), filed on March 31, 2005).
	23	.1		Consent of Grant Thornton LLP.
	23	.2		Consent of KPMG LLP.
	23	.3		Consent of Grant Thornton LLP.
	23	.4		Consent of Grant Thornton LLP.
	23	.5		Consent of Grant Thornton LLP.
	23	.6		Consent of KPMG LLP.
	23	.7		Consent of Pannell Kerr Forster of Texas P.C.
	23	.8		Consent of KPMG LLP.
	23	.9		Consent of Netherland, Sewell & Associates, Inc.
	23	.10		Consent of DLA Piper Rudnick Gray Cary US LLP. (to be included in exhibit 5.1)(1)
	24	.1		Power of Attorney (included on the signature pages to this Form S-4).
	99	.1		Letter of Transmittal.(1)
	99	.2		Notice of Guaranteed Delivery.(1)
	99	.3		Letter to Clients.(1)
	99	.4		Letter to Brokers.(1)
	99	.5		Form of Exchange Agent Agreement by and between AREP and Wilmington Trust Company.(1)

(1)	To be filed by amendment.

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Item 22.	Undertakings

	(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
	(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
	(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

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	AMERICAN REAL ESTATE
	PARTNERS, L.P.

	By:	American Property Investors, Inc.,

	its general partner

	By:	/s/ Keith A. Meister

	Keith A. Meister
	Chief Executive Officer

KNOW BY ALL MEN BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints John P. Saldarelli and Keith A. Meister, and each of them acting singly, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to act, without the other, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, their substitute may lawfully do or cause to be done by virtue hereof.

/s/ Keith A. Meister   Keith A. Meister				Chief Executive Officer (Principal Executive Officer)		June 20, 2005
/s/ John P. Saldarelli   John P. Saldarelli				Treasurer, Chief Financial Officer (Principal Financial Officer)		June 20, 2005
/s/ Jack G. Wasserman   Jack G. Wasserman				Director		June 20, 2005
/s/ William A. Leidesdorf   William A. Leidesdorf				Director		June 20, 2005
/s/ James L. Nelson   James L. Nelson				Director		June 20, 2005
/s/ Carl C. Icahn   Carl C. Icahn				Director		June 20, 2005

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	AMERICAN REAL ESTATE FINANCE CORP.

	By:	/s/ Keith A. Meister

	Keith A. Meister
	Chief Executive Officer

KNOW BY ALL MEN BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints John P. Saldarelli and Keith A. Meister, and each of them acting singly, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to act, without the other, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do an perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, their substitute may lawfully do or cause to be done by virtue hereof.

/s/ Keith A. Meister   Keith A. Meister				Chief Executive Officer (Principal Executive Officer)		June 20, 2005
/s/ John P. Saldarelli   John P. Saldarelli				Treasurer, Chief Financial Officer (Principal Financial and Accounting Officer)		June 20, 2005
/s/ Jack G. Wasserman   Jack G. Wasserman				Director		June 20, 2005
/s/ William A. Leidesdorf   William A. Leidesdorf				Director		June 20, 2005
/s/ James L. Nelson   James L. Nelson				Director		June 20, 2005
/s/ Carl C. Icahn   Carl C. Icahn				Director		June 20, 2005

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	AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP

	By:	American Property Investors, Inc.,

	its general partner

	By:	/s/ Keith A. Meister

	Keith A. Meister
	Chief Executive Officer

KNOW BY ALL MEN BY THESE PRESENTS that each person whose signature appears below hereby constitutes and appoints John P. Saldarelli and Keith A. Meister, and each of them acting singly, as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, to act, without the other, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do an perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, their substitute may lawfully do or cause to be done by virtue hereof.

/s/ Keith A. Meister   Keith A. Meister				Chief Executive Officer (Principal Executive Officer)		June 20, 2005
/s/ John P. Saldarelli   John P. Saldarelli				Treasurer, Chief Financial Officer (Principal Financial and Accounting Officer)		June 20, 2005
/s/ Jack G. Wasserman   Jack G. Wasserman				Director		June 20, 2005
/s/ William A. Leidesdorf   William A. Leidesdorf				Director		June 20, 2005
/s/ James L. Nelson   James L. Nelson				Director		June 20, 2005
/s/ Carl C. Icahn   Carl C. Icahn				Director		June 20, 2005

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