UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

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

For the Quarterly Period Ended June 30, 2009

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to ____________.

Commission File Number: 001-32384

 

MACQUARIE INFRASTRUCTURE COMPANY LLC

(Exact Name of Registrant as Specified in Its Charter)

Delaware		43-2052503
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

125 West 55^th Street
New York, New York 10019

(Address of Principal Executive Offices) (Zip Code)

(212) 231-1000

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report): N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o		Accelerated Filer x		Non-accelerated Filer o		Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

There were 44,962,809 limited liability company interests without par value outstanding at August 5, 2009.

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MACQUARIE INFRASTRUCTURE COMPANY LLC

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			1
Consolidated Condensed Balance Sheets as of June 30, 2009 (Unaudited) and December 31, 2008			1
Consolidated Condensed Statements of Operations for the Quarters and Six Months Ended June 30, 2009 and 2008 (Unaudited)			3
Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (Unaudited)			4
Notes to Consolidated Condensed Financial Statements (Unaudited)			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3. Quantitative and Qualitative Disclosure About Market Risk			60
Item 4. Controls and Procedures			60
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			61
Item 1A. Risk Factors			61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			61
Item 3. Defaults Upon Senior Securities			61
Item 4. Submission of Matters to a Vote of Security Holders			61
Item 5. Other Information			61
Item 6. Exhibits			61

 

Macquarie Infrastructure Company LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Company LLC.

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PART I
  
FINANCIAL INFORMATION

Item 1. Financial Statements

MACQUARIE INFRASTRUCTURE COMPANY LLC
  
CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)

		June 30, 2009				December 31, 2008
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	38,052			$	68,231
Restricted cash			1,972				1,063
Accounts receivable, less allowance for doubtful accounts of $4,229 and $2,230, respectively			55,170				62,240
Dividends receivable			—				7,000
Other receivables			22				132
Inventories			14,370				15,968
Prepaid expenses			6,720				9,156
Deferred income taxes			3,774				3,774
Land – available for sale			11,931				11,931
Income tax receivable			—				489
Other			11,035				13,440
Total current assets			143,046				193,424
Property, equipment, land and leasehold improvements, net			653,448				673,981
Restricted cash			16,016				19,939
Equipment lease receivables			34,754				36,127
Investment in unconsolidated business			200,408				184,930
Goodwill			516,182				586,249
Intangible assets, net			769,176				812,184
Deferred financing costs, net of accumulated amortization			19,987				23,383
Other			4,345				4,033
Total assets		$	2,357,362			$	2,534,250

 
 
See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC
  
CONSOLIDATED CONDENSED BALANCE SHEETS – (continued)
($ In Thousands, Except Share Data)

		June 30, 2009				December 31, 2008
		(Unaudited)
LIABILITIES AND MEMBERS'/STOCKHOLDERS' EQUITY
Current liabilities:
Due to manager – related party		$	879			$	3,521
Accounts payable			44,895				47,886
Accrued expenses			27,460				29,448
Current portion of notes payable and capital leases			5,949				2,724
Current portion of long-term debt			312,476				201,344
Fair value of derivative instruments			49,817				51,441
Customer deposits			5,671				5,457
Other			9,680				10,785
Total current liabilities			456,827				352,606
Notes payable and capital leases, net of current portion			2,041				2,274
Long-term debt, net of current portion			1,156,461				1,327,800
Deferred income taxes			46,545				65,042
Fair value of derivative instruments			60,226				105,970
Other			47,561				46,297
Total liabilities			1,769,661				1,899,989
Commitments and Contingencies			—				—
Members’/stockholders' equity:
LLC interests, no par value; 500,000,000 authorized; 44,962,809 LLC interests issued and outstanding at June 30, 2009 and 44,948,694 LLC interests issued and outstanding at December 31, 2008			957,406				956,956
Accumulated other comprehensive loss			(61,029	)			(97,190	)
Accumulated deficit			(312,912	)			(230,928	)
Total members’/stockholders' equity			583,465				628,838
Noncontrolling interests			4,236				5,423
Total equity			587,701				634,261
Total liabilities and equity		$	2,357,362			$	2,534,250

 
 
See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and per Share Data)

		Quarter Ended								Six Months Ended
		June 30, 2009				June 30, 2008				June 30, 2009				June 30, 2008
Revenue
Revenue from product sales		$	89,430			$	166,834			$	178,622			$	326,159
Revenue from product sales – utility			21,414				31,858				41,581				61,257
Service revenue			68,798				86,672				142,350				175,457
Financing and equipment lease income			1,205				1,179				2,397				2,373
Total revenue			180,847				286,543				364,950				565,246
Costs and expenses
Cost of product sales			50,008				119,501				99,275				228,018
Cost of product sales – utility			15,793				26,679				30,610				51,014
Cost of services			24,682				32,289				56,139				65,545
Selling, general and administrative			53,207				61,645				112,686				125,502
Fees to manager-related party			851				4,509				1,313				9,135
Goodwill impairment			53,200				—				71,200				—
Depreciation			9,270				6,315				22,420				13,038
Amortization of intangibles			12,532				10,904				42,797				21,643
Total operating expenses			219,543				261,842				436,440				513,895
Operating (loss) income			(38,696	)			24,701				(71,490	)			51,351
Other income (expense)
Interest income			34				297				108				770
Interest expense			(26,619	)			(25,676	)			(57,222	)			(51,502	)
Equity in earnings and amortization charges of investees			10,028				8,641				15,477				6,552
Gain (loss) on derivative instruments			19,724				(581	)			(12,501	)			(886	)
Other (expense) income, net			(157	)			463				1,424				655
Net (loss) income before income taxes and noncontrolling interests			(35,686	)			7,845				(124,204	)			6,940
Benefit (provision) for income taxes			5,689				364				41,348				(1,000	)
Net (loss) income before noncontrolling interests			(29,997	)			8,209				(82,856	)			5,940
Net loss attributable to noncontrolling interest			(1,039	)			(129	)			(872	)			(408	)
Net (loss) income		$	(28,958	)		$	8,338			$	(81,984	)		$	6,348
Basic (loss) earnings per share:		$	(0.64	)		$	0.19			$	(1.82	)		$	0.14
Weighted average number of shares outstanding: basic			44,951,176				44,941,440				44,949,942				44,939,910
Diluted (loss) earnings per share:		$	(0.64	)		$	0.19			$	(1.82	)		$	0.14
Weighted average number of shares outstanding: diluted			44,951,176				44,954,123				44,949,942				44,951,408
Cash distributions declared per share		$	—			$	0.645			$	—			$	1.280

 
 
See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC
  
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)

		Six Months Ended
		June 30, 2009				June 30, 2008
Operating activities
Net (loss) income before noncontrolling interests		$	(82,856	)		$	5,940
Adjustments to reconcile net (loss) income before noncontrolling interests to net cash provided by operating activities:
Non-cash goodwill impairment			71,200				—
Depreciation and amortization of property and equipment			33,498				18,549
Amortization of intangible assets			42,797				21,643
Equity in earnings and amortization charges of investees			(15,477	)			(6,552	)
Equity distributions from investees			7,000				6,552
Amortization of debt financing costs			3,396				3,350
Non-cash derivative loss, net of non-cash interest expense			12,501				1,045
Base management fees to be settled in LLC interests			851				—
Equipment lease receivable, net			1,176				1,113
Deferred rent			852				1,071
Deferred taxes			(42,092	)			(278	)
Other non-cash (income) expenses, net			(245	)			587
Changes in other assets and liabilities, net of acquisitions:
Restricted cash			(277	)			(266	)
Accounts receivable			7,069				(9,661	)
Inventories			1,598				(3,222	)
Prepaid expenses and other current assets			5,865				3,320
Due to manager-related party			(3,493	)			(1,161	)
Accounts payable and accrued expenses			(5,121	)			7,057
Income taxes payable			98				(850	)
Other, net			(1,487	)			353
Net cash provided by operating activities			36,853				48,590
Investing activities
Acquisitions of businesses and investments, net of cash acquired			—				(41,914	)
Purchases of property and equipment			(12,176	)			(39,975	)
Return of investment in unconsolidated business			—				7,447
Other			92				229
Net cash used in investing activities			(12,084	)			(74,213	)

 
 
See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC
  
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS – (continued)
(Unaudited)
($ In Thousands)

		Six Months Ended
		June 30, 2009				June 30, 2008
Financing activities
Proceeds from long-term debt			—				5,000
Proceeds from line of credit facilities			3,600				70,650
Offering and equity raise costs paid			—				(65	)
Distributions paid to holders of LLC interests			—				(57,528	)
Distributions paid to noncontrolling shareholders			(314	)			(292	)
Payment of long-term debt			(60,806	)			(80	)
Debt financing costs paid			—				(1,846	)
Change in restricted cash			3,292				(354	)
Payment of notes and capital lease obligations			(720	)			(875	)
Net cash (used in) provided by financing activities			(54,948	)			14,610
Net change in cash and cash equivalents			(30,179	)			(11,013	)
Cash and cash equivalents, beginning of period			68,231				57,473
Cash and cash equivalents, end of period		$	38,052			$	46,460
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities:
Accrued purchases of property and equipment		$	1,238			$	872
Acquisition of equipment through capital leases		$	129			$	490
Issuance of LLC interests to independent directors		$	450			$	450
Taxes paid		$	541			$	2,237
Interest paid		$	51,794			$	48,572

 
 
See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Description of Business

Macquarie Infrastructure Company LLC, a Delaware limited liability company, was formed on April 13, 2004. Macquarie Infrastructure Company LLC, both on an individual entity basis and together with its consolidated subsidiaries, is referred to in these financial statements as the Company. The Company owns, operates and invests in a diversified group of infrastructure businesses in the United States. Macquarie Infrastructure Management (USA) Inc. is the Company’s manager and is referred to in these financial statements as the Manager. The Manager is a subsidiary of the Macquarie Group of companies, which is comprised of Macquarie Group Limited and its subsidiaries and affiliates worldwide. Macquarie Group Limited is headquartered in Australia and is listed on the Australian Stock Exchange.

Macquarie Infrastructure Company Trust, or the Trust, a Delaware statutory trust, was also formed on April 13, 2004. Prior to December 21, 2004 and the completion of the initial public offering, the Trust was a wholly-owned subsidiary of the Manager. On June 25, 2007, all of the outstanding shares of trust stock issued by the Trust were exchanged for an equal number of limited liability company, or LLC, interests in the Company, and the Trust was dissolved. Prior to this exchange of trust stock for LLC interests and the dissolution of the Trust, all interests in the Company were held by the Trust. The Company continues to be an operating entity with a Board of Directors and other corporate governance responsibilities generally consistent with that of a Delaware corporation.

The Company owns its businesses through its wholly-owned subsidiary, Macquarie Infrastructure Company Inc., or MIC Inc. The Company’s businesses operate predominantly in the United States, and comprise the following:

The Energy-Related Businesses:

The Aviation-Related Businesses:

During the year ended December 31, 2008, the Company completed the following acquisitions:

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MACQUARIE INFRASTRUCTURE COMPANY LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

2. Basis of Presentation

The unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of consolidated condensed financial statements in conformity with GAAP requires estimates and assumptions. Management evaluates these estimates and judgments on an ongoing basis. Actual results may differ from the estimates and assumptions used in the financial statements and notes. Operating results for the quarter and six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

The consolidated balance sheet at December 31, 2008 has been derived from audited financial statements but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. Certain reclassifications were made to the financial statements for the prior period to conform to current period presentation.

The interim financial information contained herein should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2008 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 27, 2009.

3. New Accounting Pronouncements

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles”, or SFAS No. 168. SFAS No. 168 sets forth the Accounting Standards Codification that will be the single source of authoritative U.S. GAAP for all nongovernmental entities. The Codification supersedes all existing non-SEC accounting and reporting standards. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not believe that the adoption of SFAS No. 168 will have a material impact on the Company’s financial statements.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, “Subsequent Events”, or SFAS No. 165, which sets forth the accounting and disclosure requirements for subsequent events; events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. SFAS No. 165 requires disclosure of the date through which subsequent events have been evaluated. If the subsequent events are not recognized in the financial statements, SFAS No. 165 also requires disclosure of the nature and effect of such in the financial statements. The Company adopted SFAS No. 165 in the second quarter of 2009. The adoption did not have a material impact on the Company’s financial statements.

In April 2009, the FASB issued FASB Staff Position 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, or FSP SFAS No. 157-4. FSP SFAS No. 157-4 provides additional guidance in estimating fair value when the volume and level of activity for the asset or liability has significantly decreased compared with normal market activity. It also provides guidance on identifying circumstances that indicate a non-orderly transaction and measuring fair value in such conditions. The guidance provided by FSP SFAS No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and is applied prospectively. The adoption of FSP SFAS No. 157-4 did not have a material impact on the Company’s financial statements.

In April 2009, the FASB issued FASB Staff Position 107-1 and APB Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments”, or FSP SFAS No. 107-1 and APB 28-1. FSP SFAS No. 107-1 and APB 28-1 requires disclosures about fair value of financial instruments for interim reporting periods in addition to the current requirement to make disclosure in annual financial statements. This also

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MACQUARIE INFRASTRUCTURE COMPANY LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

3. New Accounting Pronouncements  – (continued)

requires disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments and description of changes in the method and significant assumptions.

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and variable rate senior debt, are carried at cost, which approximates their fair value because of either the short-term maturity, or variable or competitive interest rates assigned to these financial instruments.

In April 2009, the FASB issued FASB Staff Position 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”, or FSP SFAS No. 141(R)-1. FSP SFAS No. 141(R)-1 amends the provisions for SFAS No. 141(R) and rescinds the distinction between contractual and noncontractual contingencies arising from business combinations. It requires a contingency acquired in a business combination be initially recognized and measured at fair value on the acquisition date if the fair value can be determined during the measurement period. Acquired contingencies whose fair value cannot be determined during the measurement period would be recognized if it is probable that an asset existed or liability had been incurred at the acquisition date and the amount for the asset or liability can be reasonably estimated. FSP SFAS No. 141(R)-1 is effective for the reporting periods beginning after December 15, 2008. The impact of the adoption did not have a material impact on the Company’s financial results of operations and financial condition.

In December 2008, the FASB issued FASB Staff Position 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”, or FSP SFAS No. 132(R)-1. FSP SFAS No. 132(R)-1 requires additional disclosures surrounding how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies, the fair value of each major categories of plan assets, the inputs and valuation techniques used to measure the fair value of plan assets, and the significant concentration of risks in plan assets. The disclosure requirement under FSP SFAS No. 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company does not believe FSP SFAS No. 132(R)-1 will have a material impact on its financial statements.

In November 2008, the FASB ratified Emerging Issues Task Force 08-7, “Accounting for Defensive Intangible Assets”, or EITF 08-7. EITF 08-7 applies to acquired intangible assets that the acquirer does not intend to actively use, but intends to hold to prevent its competitors from obtaining access to the asset. EITF 08-7 clarifies that defensive intangible assets are separately identifiable and requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting, which should be amortized over the period the asset diminishes in value. Defensive intangibles must be recognized at fair value in accordance with SFAS No. 141(R), and Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”, or SFAS No. 157. EITF 08-7 is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. The Company adopted EITF 08-7 on January 1, 2009. The impact of the adoption did not have a material impact on the Company’s financial results of operations and financial condition.

In November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-6, “Equity Method Investment Accounting Considerations”, or EITF 08-6. EITF 08-6 concludes that the cost basis of a new equity-method investment would be determined using a cost-accumulation model, which would continue the practice of including transaction costs in the cost of investment and would exclude the value of contingent consideration unless it is required to be recognized under other literature, such as Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies”. Equity-method investment should be subject to other-than-temporary impairment analysis. It also requires a gain or loss to be recognized on the portion of the investor’s ownership sold. EITF 08-6 is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. The Company adopted EITF 08-6 on January 1, 2009. The impact of the adoption did not have a material impact on the Company’s financial results of operations and financial condition.

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MACQUARIE INFRASTRUCTURE COMPANY LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

3. New Accounting Pronouncements  – (continued)

In April 2008, the FASB issued FASB Staff Position 142-3, “Determination of the Useful Life of Intangible Assets”, or FSP SFAS No. 142-3. FSP SFAS No. 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, or SFAS No. 142. Companies estimating the useful life of a recognized intangible asset must now consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension as adjusted for SFAS No. 142’s entity-specific factors. FSP SFAS No. 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early adoption is prohibited. The Company adopted FSP SFAS No. 142-3 on January 1, 2009. The impact of the adoption did not have a material impact on the Company’s financial results of operations and financial condition.

In February 2008, the FASB issued FASB Staff Position 157-1, “Application of SFAS No. 157 to SFAS No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under FAS No. 13”, or FSP SFAS No. 157-1, and FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157”, or FSP SFAS No. 157-2, affecting the implementation of SFAS No. 157. FSP SFAS No. 157-1 excludes Statement of Financial Accounting Standards No. 13, “Accounting for Leases”, or SFAS No. 13, and other accounting pronouncements that address fair value measurements under SFAS No. 13, from the scope of SFAS No. 157. However, the scope of this exception does apply to assets acquired and liabilities assumed in a business combination that are required to be measured at fair value in accordance with SFAS No. 141(R) regardless of whether those assets and liabilities are related to leases. FSP SFAS No. 157-2 delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. On January 1, 2009, the Company adopted SFAS No. 157 for all nonfinancial assets and liabilities. Major categories of nonfinancial assets and liabilities to which this accounting standard applies include, but are not limited to, the Company’s property, equipment, land and leasehold improvements, intangible assets and goodwill. See Note 7, “Nonfinancial Assets Measured at Fair Value”, for further discussion.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosure about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”, or SFAS No. 161, which requires companies with derivative instruments to disclose information about how and why a company uses derivative instruments; how derivative instruments and related hedged items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect a company’s financial position, financial performance and cash flows. The required disclosures include the fair value of derivative instruments and their gains or losses in tabular format, information about credit-risk-related contingent features in derivative agreements, counterparty credit risk, and the Company’s strategies and objectives for using derivative instruments. SFAS No. 161 is effective for periods beginning after November 15, 2008. The Company adopted SFAS No. 161 on January 1, 2009. The impact of the adoption did not have a material impact on the Company’s financial results of operations and financial condition. See Note 9, “Derivative Instruments”, for further discussion.

In December 2007, the FASB issued SFAS No. 160, which requires noncontrolling interests (previously referred to as minority interests) to be treated as a separate component of equity, not as a liability or other item outside of permanent equity. SFAS No. 160 is effective for periods beginning on or after December 15, 2008 and will be applied prospectively to all noncontrolling interests with comparative period information reclassified. The Company adopted SFAS No. 160 on January 1, 2009. The adoption of SFAS No. 160 did not have a material impact on the Company’s financial results of operations and financial condition.

In December 2007, the FASB revised Statement of Financial Accounting Standards No. 141, “Business Combinations”, or SFAS No. 141(R). The revised standard includes various changes to the business

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MACQUARIE INFRASTRUCTURE COMPANY LLC
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

3. New Accounting Pronouncements  – (continued)

combination rules. Some of the changes include immediate expensing of acquisition-related costs rather than capitalization, and 100% of the fair value of assets and liabilities acquired being recorded, even if less than 100% of a controlled business is acquired. SFAS No. 141(R) is effective for business combinations consummated in periods beginning on or after December 15, 2008. The Company expects the revised standard to have the following material impacts on its financial statements compared with existing business combination rules: (1) increased selling, general and administrative costs due to immediate expensing of acquisition costs, resulting in lower net income; (2) lower cash provided by operating activities and lower cash used in investing activities in the statements of cash flows due to the immediate expensing of acquisition costs, which under existing rules are included as cash out flows in investing activities as part of the purchase price of the business; and (3) 100% of fair values recorded for assets and liabilities including noncontrolling interests of a controlled business on the balance sheet resulting in larger assets, liability and equity balances compared with existing business combination rules. There were no new business combinations during the first six months of 2009.

On January 1, 2009, the Company adopted SFAS No. 141(R). Although there were no new acquisitions during the first six months of 2009, the Company used the fair value guidance from SFAS No. 141(R) to perform the Company’s goodwill impairment analysis in accordance with SFAS No. 142. See Note 7, “Nonfinancial Assets Measured at Fair Value”, for further discussion.

4. (Loss) Earnings Per Share

Following is a reconciliation of the basic and diluted number of shares used in computing (loss) earnings per share:

		Quarter Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
Weighted average number of shares outstanding: basic			44,951,176				44,941,440				44,949,942				44,939,910
Dilutive effect of restricted stock unit grants			—				12,683				—				11,498
Weighted average number of shares outstanding: diluted			44,951,176				44,954,123				44,949,942				44,951,408

The effect of potentially dilutive shares for the quarter and six months ended June 30, 2009 is calculated by assuming that the 128,205 restricted stock unit grants provided to the independent directors on June 4, 2009 and the 14,115 restricted stock unit grants provided to the independent directors on May 27, 2008 had been fully converted to shares on those dates. However, the restricted stock unit grants were anti-dilutive for the quarter and six months ended June 30, 2009, due to the Company’s net loss for those periods.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

5.  Property, Equipment, Land and Leasehold Improvements

Property, equipment, land and leasehold improvements at June 30, 2009 and December 31, 2008 consist of the following ($ in thousands):

		June 30, 2009				December 31, 2008
Land(1)		$	59,968			$	56,039
Easements			5,624				5,624
Buildings			29,716				34,128
Leasehold and land improvements			322,212				301,623
Machinery and equipment			328,096				321,240
Furniture and fixtures			10,778				9,952
Construction in progress			20,645				48,520
Property held for future use			1,540				1,540
			778,579				778,666
Less: accumulated depreciation			(125,131	)			(104,685	)
Property, equipment, land and leasehold improvements, net(2)		$	653,448			$	673,981

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, or SFAS No. 144, the Company recognized non-cash impairment charges primarily relating to leasehold and land improvements, buildings, machinery and equipment and furniture and fixtures, which are summarized below for the following businesses ($ in thousands):

		2009								2008
		Quarter Ended June 30				Six Months Ended June 30				Quarter and Year Ended December 31
Property, equipment, land and leasehold improvements, net
Airport Services Business(1)		$	2,200			$	7,521			$	13,754
Airport Parking Business(2)			—				6,385				19,145
Total		$	2,200			$	13,906			$	32,899

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

6.  Intangible Assets

Intangible assets at June 30, 2009 and December 31, 2008 consist of the following ($ in thousands):

		Weighted Average Life (Years)				June 30, 2009				December 31, 2008
Contractual arrangements			30.9			$	774,309			$	802,419
Non-compete agreements			2.5				9,515				9,515
Customer relationships			10.7				78,596				78,596
Leasehold rights			12.5				3,330				3,542
Trade names			Indefinite				15,401				15,401
Technology			5.0				460				460
							881,611				909,933
Less: Accumulated amortization							(112,435	)			(97,749	)
Intangible assets, net						$	769,176			$	812,184

As a result of decline in the performance of certain asset groups during the quarter and six months ended June 30, 2009 and the quarter ended December 31, 2008, the Company evaluated such asset groups for impairment under SFAS No. 144 and determined that the asset groups were impaired. The Company estimated the fair value of each of the impaired asset groups using either discounted cash flows or third party appraisals. Accordingly, the Company recognized non-cash impairment charges related to contractual arrangements at the airport services business during the above periods and customer relationships, leasehold rights and trademarks at the airport parking business during the quarter ended December 31, 2008. These charges are recorded in amortization of intangibles in the consolidated condensed statement of operations.

The change in goodwill from December 31, 2008 to June 30, 2009 is as follows ($ in thousands):

Balance at December 31, 2008		$	586,249
Impairment of airport services business' goodwill			(71,200	)
Prior period acquisition purchase price adjustments			31
Other			1,102
Balance at June 30, 2009		$	516,182

The Company tests for goodwill impairment at the reporting unit level on an annual basis and between annual tests if a triggering event indicates impairment. The decline in the Company’s stock price, particularly over the latter part of 2008 and the first half of 2009, has caused the book value of the Company to exceed its market capitalization. In accordance with SFAS No. 142, the Company performed goodwill impairment tests during the first two quarters of 2009 and fourth quarter of 2008. The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the test. The first step of the process consists of estimating the fair value of each reporting unit based on a discounted cash flow model using cash flow forecasts and comparing those estimated fair values with the carrying values, which includes the allocated goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an implied fair value of goodwill. The determination of a reporting unit’s “implied fair value” of goodwill requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit in accordance with SFAS No. 141(R). Any unallocated fair value represents the “implied fair value” of goodwill, which is compared to its corresponding carrying value. If the corresponding carrying value is higher than the “implied fair value”, goodwill is written down to reflect the impairment. Based on the testing performed, the Company recorded goodwill impairment charges at the airport services business during 2009 and 2008 and at the airport parking business to write off all of its goodwill during 2008.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

6.  Intangible Assets  – (continued)

For the quarter and six months ended June 30, 2009 and the quarter and year ended December 31, 2008, the following non-cash impairment charges were recorded at the following businesses ($ in thousands):

		2009								2008
		Quarter Ended June 30				Six Months Ended June 30				Quarter and Year Ended December 31
Intangible Assets(1)
Airport Services Business		$	2,962			$	23,326			$	21,712
Airport Parking Business			—				—				8,134
Total		$	2,962			$	23,326			$	29,846
Goodwill
Airport Services Business		$	53,200			$	71,200			$	52,000
Airport Parking Business			—				—				138,751
Total		$	53,200			$	71,200			$	190,751

While management has a plan to return the Company’s business fundamentals to levels that support the book value per common share, there is no assurance that the plan will be successful, or that the market price of the common stock will increase to such levels in the foreseeable future. Discount rates used in recent cash flow analysis have increased and projected cash flows relating to the Company’s reporting units generally declined in the latter half of 2008 and first half of 2009 primarily as the result of negative macroeconomic factors. There is no assurance that discount rates will not increase or that the earnings, book values or projected earnings and cash flows of the Company’s individual reporting units will not decline. Management will continue to monitor the relationship of the Company’s market capitalization to its book value, the differences for which management attributes to both negative macroeconomic factors and Company specific factors, and management will continue to evaluate the carrying value of goodwill and other intangible assets. Accordingly, an additional impairment charge to goodwill and other intangible assets may be required in the foreseeable future if the Company’s common stock price continues to trade below book value per common share or the book value exceeds its estimated fair value of an individual reporting unit.

7.  Nonfinancial Assets Measured at Fair Value

On January 1, 2009, the Company adopted SFAS No. 157 for nonfinancial assets measured at fair value on a nonrecurring basis. The following major categories of nonfinancial assets were measured at fair value at June 30, 2009:

						Fair Value Measurements Using												Total Gains (Losses)
Description		June 30, 2009				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Quarter Ended June 30, 2009				Six Months Ended June 30, 2009
		($ in Thousands)
Property, Equipment, Land and Leasehold Improvements, net		$	60,555			$	—			$	55,433			$	5,122			$	(2,200	)		$	(13,906	)
Intangible Assets			14,430				—				—				14,430				(2,962	)			(23,326	)
Goodwill			377,343				—				—				377,343				(53,200	)			(71,200	)
Total		$	452,328			$	—			$	55,433			$	396,895			$	(58,362	)		$	(108,432	)

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

7.  Nonfinancial Assets Measured at Fair Value  – (continued)

The Company estimated the fair value of each of the impaired asset groups using either discounted cash flows or third party appraisals. In accordance with SFAS No. 144, property, equipment, land and leasehold improvements with a carrying amount of $74.5 million were written down to its fair value of $60.6 million during the six months ended June 30, 2009. This resulted in a non-cash impairment charge of $2.2 million and $13.9 million for the quarter and six months ended June 30, 2009, respectively, which is recorded in depreciation expense for the airport services business and cost of services for the airport parking business in the consolidated condensed statement of operations.

Additionally, intangible assets with carrying amounts of $37.7 million were written down to their fair value of $14.4 million during the six months ended June 30, 2009. This resulted in a non-cash impairment charge of $2.9 million and $23.3 million for the quarter and six months ended June 30, 2009, respectively, which is recorded in amortization expense in the consolidated condensed statement of operations.

In accordance with SFAS No. 142 and as discussed in Note 6, “Intangible Assets”, the Company performed goodwill impairment analysis during the six months ended June 30, 2009. As a result of the analysis, goodwill with a carrying amount of $448.5 million was written down to its implied fair value of $377.3 million during the six months ended June 30, 2009, resulting in a non-cash impairment charge of $53.2 million and $71.2 million for the quarter and six months ended June 30, 2009, respectively. This non-cash impairment charge was included in goodwill impairment in the consolidated condensed statement of operations.

The significant unobservable inputs used for all fair value measurements in the above table included forecasted cash flows of the airport services business and its asset groups, the discount rate and, in the case of goodwill, the terminal value. The cash flows for this business were developed using actual cash flows from 2008 and 2009, forecasted jet fuel volumes from the Federal Aviation Administration, forecasted consumer price indices and forecasted LIBOR rates based on proprietary models using various published sources. The discount rate was developed using a capital asset pricing model.

Model inputs included:

The terminal value was based on observed earnings before interest, taxes, depreciation and amortization, or EBITDA, and multiples historically paid in transactions for comparable businesses.

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(Unaudited)

8.  Long-Term Debt

At June 30, 2009 and December 31, 2008, the Company’s long-term debt consists of the following ($ in thousands):

		June 30, 2009				December 31, 2008
MIC Inc. revolving credit facility		$	66,400			$	69,000
Gas production and distribution			169,000				169,000
District energy			150,000				150,000
Airport services			882,379				939,800
Airport parking			201,158				201,344
Total			1,468,937				1,529,144
Less: Current portion			(312,476	)			(201,344	)
Long-term portion		$	1,156,461			$	1,327,800

Effective April 14, 2009, MIC Inc. elected to reduce the available principal on its revolving credit facility from $300.0 million to $97.0 million. At March 31, 2009, MIC Inc. reclassified its revolving credit facility from long-term debt to current portion of long-term debt on the consolidated condensed balance sheet, due to its maturity on March 31, 2010. The Company believes that, at or before the maturity date, it will be able to prepay amounts under the facility from cash on hand, or refinance or extend the facility on terms that can be supported by the performance of the Company and the cash distributed by its businesses.

On February 25, 2009, the airport services business amended its credit facility to provide the business additional financial flexibility over the near and medium term. The business used $50.0 million in cash contributed by the Company to pay down $44.6 million of the outstanding term loan debt under the facility and $5.2 million of interest rate swap breakage fees, of which $1.1 million was paid to Macquarie Bank Limited, a related party. Additionally, under the amended terms, the business will apply all excess cash flow from the business to prepay additional debt whenever the leverage ratio (debt to adjusted EBITDA) is equal to or greater than 6.0x to 1.0 for the trailing twelve months and will use 50% of excess cash flow to prepay debt whenever the leverage ratio is equal to or greater than 5.5x to 1.0 and below 6.0x to 1.0. For the quarter ended June 30, 2009, the airport services business used $17.5 million of excess cash flow to prepay $16.0 million of the outstanding principal balance of the term loan debt under the facility and $1.5 million in interest rate swap breakage fees.

On August 3, 2009, the airport services business used $6.6 million of excess cash flow to prepay $6.0 million of the outstanding principal balance of the term loan debt under this facility and $563,000 in interest rate swap breakage fees.

At June 30, 2009, the airport parking business has $201.2 million of total debt due on or before September 9, 2009. This debt is secured by assets and collateral of the airport parking business. Creditors of this business do not have recourse to any assets of the Company or any assets of the Company’s other businesses, other than approximately $6.2 million in lease and interest rate swap guarantees as of August 6, 2009. There is one remaining interest rate swap payment of approximately $800,000. The interest rate swap expires September 15, 2009.

The airport parking business is currently in default under its credit facilities. In addition, the airport parking business does not have sufficient liquidity or capital resources to pay its maturing debt obligations and the Company does not expect that the airport parking business will be able to refinance its debt as it matures. The Company has no intention of contributing any further capital to this business other than potentially for obligations that the Company has guaranteed that are described in the preceeding paragraph. As a result, there is doubt regarding the ability of the airport parking business to continue as a going concern. The business is working cooperatively with lenders to pursue strategic alternatives, including asset sales, restructuring plans, filing for protection under bankruptcy laws or liquidating the business.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

8.  Long-Term Debt  – (continued)

The airport parking business signed a forbearance agreement with the lenders under its primary credit facility on June 10, 2009 that expires on August 31, 2009. Material terms of the forbearance agreement are that during the forbearance period:

The forbearance agreement will expire or be terminated at the earliest of August 31, 2009 or the date that the business is in default under the agreement, an event of default occurs under the underlying credit facility (other than as a result of a default covered by the forbearance agreement) or creditors exercise rights or remedies with respect to debt of the business in excess of $500,000 or such debt is accelerated.

9.  Derivative Instruments

The Company and its businesses have in place variable-rate debt. Management believes that it is prudent to limit the variability of a portion of its interest payments. To meet this objective, the Company enters into interest rate swap agreements to manage fluctuations in cash flows resulting from interest rate risk on a majority of its debt with a variable-rate component.

At June 30, 2009, the Company had $1.5 billion of debt, $1.3 billion of which was economically hedged with interest rate swaps, $118.4 million of which was unhedged and $6.2 million of which incurred interest at fixed rates.

On February 25, 2009, the airport services business paid down $44.6 million of term loan debt under its credit facility and reduced the notional amount of interest rate swaps used to hedge the interest payments on that debt by a corresponding amount. This resulted in the payment to counterparties of $5.2 million of interest rate swap breakage fees which were recorded as interest expense in the consolidated condensed statement of operations. As a result of the amendment to the credit facility, $22.7 million of accumulated other comprehensive loss in the consolidated condensed balance sheet related to derivatives was reclassified to loss on derivative instruments in the consolidated condensed statement of operations. For the quarter ended June 30, 2009, the airport services business used $17.5 million of excess cash flow to prepay $16.0 million of the outstanding principal balance of the term loan debt under the facility and $1.5 million in interest rate swap breakage fees. The Company expects to record interest rate swap breakage fees and corresponding reclassifications from accumulated other comprehensive loss to loss on derivative instruments as the airport services business continues to pay down its debt. See Note 8 “Long-Term Debt” for further discussion.

As of February 25, 2009, due to the amendment of the credit facility for the airport services business and effective April 1, 2009 for businesses other than the airport services business, the Company elected to discontinue hedge accounting. As a result, the Company will reclassify into earnings the $94.9 million of net derivative losses included in accumulated other comprehensive loss over the remaining life of the existing interest rate swaps and $38.3 million of net derivative losses over the next 12 months. The Company will also record all future movements in the fair value of the interest rate swaps directly through earnings.

As a result of the Company’s decision to discontinue hedge accounting in accordance with SFAS No. 133, the Company incurred a $6.3 million non-cash derivative loss due to the change in the fair value of these

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

9.  Derivative Instruments  – (continued)

interest rate swaps from February 25, 2009 to March 31, 2009 for the airport services business. During the second quarter of 2009, the Company recorded non-cash gains of $28.5 million primarily due to the change in fair value of the interest rate swaps.

In March 2009, the airport services business, gas production and distribution business, and district energy business entered into interest rate basis swap contracts with their existing counterparties. These contracts effectively changed the interest rate index on the Company’s existing swap contracts through March 2010 from the 90-day LIBOR rate to the 30-day LIBOR rate plus a margin of 19.50 basis points for the airport services business and 24.75 basis points for the gas production and distribution and district energy businesses. This transaction, adjusted for the prepayments of outstanding principal balance on the term loan debt at the airport services business, will lower the effective cash interest expense on these businesses’ debt by approximately $2.2 million through March 2010.

The Company’s derivative instruments are recorded on the balance sheet at fair value with changes in fair value of interest rate swaps recorded directly through earnings. The Company measures derivative instruments at fair value using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize observable (“level 2”) inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals.

The Company’s fair value measurements of its derivative instruments and the related location of the liabilities associated with the hedging instruments within the consolidated condensed balance sheet at June 30, 2009 and December 31, 2008 were as follows:

		Liabilities at Fair Value(1)
		Interest Rate Swap Contracts Not Designated as Hedging Instruments Under SFAS No. 133(2)				Interest Rate Swap Contracts Designated as Hedging Instruments Under SFAS No. 133
Balance Sheet Location		June 30, 2009				December 31, 2008
		($ in Thousands)
Fair value of derivative instruments – current liabilities		$	(49,817	)		$	(51,441	)
Fair value of derivative instruments – non-current liabilities			(60,226	)			(105,970	)
Total interest rate swap contracts		$	(110,043	)		$	(157,411	)

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

9.  Derivative Instruments  – (continued)

The Company’s hedging activities and the related location within the consolidated condensed financial statements were as follows:

		Derivatives Designated as Hedging Instruments Under SFAS No. 133(1)																								Derivatives Not Designated as Hedging Instruments Under SFAS No. 133(1)
		Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion) for the Quarter Ended June 30,								Amount of Gain/(Loss) Reclassified from OCI into Income (Effective Portion) for the Quarter Ended June 30,								Amount of Gain/(Loss) Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Quarter Ended June 30,								Amount of Gain/(Loss) Recognized in Gain (Loss) on Derivative Instruments for the Quarter Ended June 30,
Financial Statement Account		2009				2008				2009				2008				2009				2008				2009(2)				2008
		($ in Thousands)
Interest Expense		$	—			$	—			$	—			$	(8,141	)		$	—			$	—			$	(17,397	)		$	—
Gain (loss) on Derivative Instruments			—				—				—				(600	)			—				19				19,724				—
Accumulated Other Comprehensive Gain			—				48,758				—				—				—				—				—				—
Total		$	—			$	48,758			$	—			$	(8,741	)		$	—			$	19			$	2,327			$	—

		Derivatives Designated as Hedging Instruments Under SFAS No. 133(1)																								Derivatives Not Designated as Hedging Instruments Under SFAS No. 133(1)
		Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion) for the Six Months Ended June 30,								Amount of Gain/(Loss) Reclassified from OCI into Income (Effective Portion) for the Six Months Ended June 30,								Amount of Gain/(Loss) Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Six Months Ended June 30,								Amount of Gain/(Loss) Recognized in Gain (Loss) on Derivative Instruments for the Six Months Ended June 30,
Financial Statement Account		2009				2008				2009(2)				2008				2009				2008				2009(3)				2008
		($ in Thousands)
Interest Expense		$	—			$	—			$	(17,953	)		$	(9,854	)		$	—			$	—			$	(17,397	)		$	—
Gain (loss) on Derivative Instruments			—				—				(25,154	)			(755	)			(84	)			(131	)			12,737				—
Accumulated Other Comprehensive Gain (Loss)			2,549				(5,072	)			—				—				—				—				—				—
Total		$	2,549			$	(5,072	)		$	(43,107	)		$	(10,609	)		$	(84	)		$	(131	)		$	(4,660	)		$	—

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

9.  Derivative Instruments  – (continued)

With the exception of the interest rate swap at the Company’s airport parking business, all of the Company’s derivative instruments were collateralized by all of the assets of the respective businesses. The interest rate swap at the Company’s airport parking business is guaranteed by the Company. As of August 6, 2009, the Company paid $2.5 million in guaranteed interest rate swap payments, on behalf of the airport parking business, and is expected to make one final payment of approximately $800,000.

10.  Comprehensive (Loss) Income

Comprehensive (loss) income includes primarily the change in fair value of derivative instruments which qualified for hedge accounting.

The difference between net (loss) income and comprehensive (loss) income for the quarter and six months ended June 30, 2009 and 2008 was as follows ($ in thousands):

		Quarter Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
Net (loss) income		$	(28,958	)		$	8,338			$	(81,984	)		$	6,348
Unrealized gain (loss) in fair value of derivatives, net of taxes			—				29,097				1,498				(3,415	)
Reclassification of realized losses into earnings, net of taxes			8,673				5,318				34,663				6,555
Comprehensive (loss) income		$	(20,285	)		$	42,753			$	(45,823	)		$	9,488

For further discussion on derivative instruments and hedging activities, see Note 9, “Derivative Instruments”.

11.  Members’/Stockholders’ Equity

The Company is authorized to issue 500,000,000 LLC interests. Each outstanding LLC interest of the Company is entitled to one vote on any matter with respect to which holders of LLC interests are entitled to vote.

12.  Reportable Segments

The Company’s operations are broadly classified into the energy-related businesses and the aviation- related businesses.

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12.  Reportable Segments  – (continued)

The energy-related businesses consist of two reportable segments: the gas production and distribution business and the district energy business. The energy-related businesses also includes a 50% investment in a bulk liquid storage terminal business, or IMTT, which is accounted for under the equity method. Financial information for IMTT is presented below ($ in thousands) (unaudited):

		As of and for the Quarter Ended June 30,								As of and for the Six Months Ended June 30,
		2009				2008				2009				2008
Revenue		$	81,974			$	78,230				168,777			$	156,624
EBITDA excluding non-cash items(1)			33,165				29,552				71,946				59,557
Interest expense, net			7,551				5,173				14,612				9,892
Depreciation and amortization expense			13,454				10,323				26,278				20,657
Capital expenditures paid			41,482				54,674				81,424				113,180
Property, equipment, land and leasehold improvements, net			953,907				823,461				953,907				823,461
Total assets balance			1,041,219				897,980				1,041,219				897,980

The aviation-related businesses consist of two reportable segments: the airport services business and the airport parking business. All of the business segments are managed separately and management has chosen to organize the Company around the distinct products and services offered.

Energy-Related Businesses:

IMTT provides bulk liquid storage and handling services in North America through ten terminals located on the East, West and Gulf Coasts, the Great Lakes region of the United States and partially owned terminals in Quebec and Newfoundland, Canada. IMTT derives its revenue from storage and handling petroleum products, various chemicals, renewable fuels, and vegetable and animal oils. Based on storage capacity, IMTT operates one of the largest third-party bulk liquid storage terminal businesses in the United States.

The revenue from the gas production and distribution business reportable segment is included in revenue from product sales and includes distribution and sales of synthetic natural gas, or SNG, and liquefied petroleum gas, or LPG. Revenue is primarily a function of the volume of SNG and LPG consumed by customers and the price per thermal unit or gallon charged to customers. Because both SNG and LPG are derived from petroleum, revenue levels, without organic operating growth, will generally track global oil prices. The utility revenue of the gas production and distribution business includes fuel adjustment charges, or FACs, through which changes in fuel costs are passed through to customers.

The revenue from the district energy business reportable segment is included in service revenue and financing and equipment lease income. Included in service revenue is capacity charge revenue, which relates to monthly fixed contract charges, and consumption revenue, which relates to contractual rates applied to actual usage. Financing and equipment lease income relates to direct financing lease transactions and equipment leases to the business’ various customers. The district energy business provides its services to buildings throughout the downtown Chicago area and to a casino and shopping mall located in Las Vegas, Nevada.

Aviation-Related Businesses:

The airport services business reportable segment principally derives income from fuel sales and from other airport services. Airport services revenue includes fuel-related services, de-icing, aircraft hangarage and other aviation services. All of the revenue of the airport services business is generated in the United States. The airport services business operated 72 FBOs as of June 30, 2009.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

12.  Reportable Segments  – (continued)

The revenue from the airport parking business reportable segment is included in service revenue and primarily consists of fees from off-airport parking and ground transportation to and from the parking facilities and the airport terminals. The airport parking business operates 31 off-airport parking facilities located in 20 major airport markets across the United States.

Selected information by reportable segment is presented in the following tables. The tables do not include financial data for equity and cost investments.

Revenue from external customers for the Company’s reportable segments was as follows ($ in thousands) (unaudited):

		Quarter Ended June 30, 2009
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	18,390			$	—			$	71,040			$	—			$	89,430
Product sales – utility			21,414				—				—				—				21,414
			39,804				—				71,040				—				110,844
Service Revenue
Other services			—				743				40,004				—				40,747
Cooling capacity revenue			—				5,110				—				—				5,110
Cooling consumption revenue			—				5,502				—				—				5,502
Parking services			—				—				—				17,439				17,439
			—				11,355				40,004				17,439				68,798
Financing and Lease Income
Financing and equipment lease			—				1,205				—				—				1,205
			—				1,205				—				—				1,205
Total Revenue		$	39,804			$	12,560			$	111,044			$	17,439			$	180,847

		Quarter Ended June 30, 2008
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	23,723			$	—			$	143,111				—			$	166,834
Product sales – utility			31,858				—				—				—				31,858
			55,581				—				143,111				—				198,692
Service Revenue
Other services			—				717				55,634				—				56,351
Cooling capacity revenue			—				4,828				—				—				4,828
Cooling consumption revenue			—				6,073				—				—				6,073
Parking services			—				—				—				19,420				19,420
			—				11,618				55,634				19,420				86,672
Financing and Lease Income
Financing and equipment lease			—				1,179				—				—				1,179
			—				1,179				—				—				1,179
Total Revenue		$	55,581			$	12,797			$	198,745				19,420			$	286,543

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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12.  Reportable Segments  – (continued)

		Six Months Ended June 30, 2009
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	39,465			$	—			$	139,157			$	—			$	178,622
Product sales – utility			41,581				—				—				—				41,581
			81,046				—				139,157				—				220,203
Service Revenue
Other services			—				1,499				89,068				—				90,567
Cooling capacity revenue			—				10,007				—				—				10,007
Cooling consumption revenue			—				7,730				—				—				7,730
Parking services			—				—				—				34,046				34,046
			—				19,236				89,068				34,046				142,350
Financing and Lease Income
Financing and equipment lease			—				2,397				—				—				2,397
			—				2,397				—				—				2,397
Total Revenue		$	81,046			$	21,633			$	228,225			$	34,046			$	364,950

		Six Months Ended June 30, 2008
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	46,682			$	—			$	279,477			$	—			$	326,159
Product sales – utility			61,257				—				—				—				61,257
			107,939				—				279,477				—				387,416
Service Revenue
Other services			—				1,449				118,218				—				119,667
Cooling capacity revenue			—				9,634				—				—				9,634
Cooling consumption revenue			—				7,841				—				—				7,841
Parking services			—				—				—				38,315				38,315
			—				18,924				118,218				38,315				175,457
Financing and Lease Income
Financing and equipment lease			—				2,373				—				—				2,373
			—				2,373				—				—				2,373
Total Revenue		$	107,939			$	21,297			$	397,695			$	38,315			$	565,246

In accordance with GAAP, we have disclosed EBITDA excluding non-cash items for the Company and each of our operating segments in Note 12, “Reportable Segments”, to our consolidated financial statements as a key performance metric relied on by management in evaluating our performance in accordance with FASB issued Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information”, or SFAS No. 131. EBITDA excluding non-cash items is defined as earnings before interest, taxes, depreciation and amortization and non-cash items, principally goodwill impairments and unrealized gains and losses on derivative instruments. We consider EBITDA excluding non-cash items to be important in the overall assessment of our operating businesses individually and in consolidation. We believe our presentation of EBITDA excluding non-cash items provides additional insight

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

12.  Reportable Segments  – (continued)

into the performance of our operating companies and their ability to service or reduce debt, to fund growth capital projects and/or support distributions up to our holding company.

For the quarter and six months ended June 30, 2008, the Company used EBITDA. The following tables, for the quarter and six months ended June 30, 2008, have been conformed to current periods’ presentation reflecting EBITDA excluding non-cash items.

EBITDA excluding non-cash items for the Company’s reportable segments is shown in the below table ($ in thousands) (unaudited). Allocation of corporate expense and the federal tax effect have been excluded from the tables as they are eliminated on consolidation.

		Quarter Ended June 30, 2009
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total Reportable Segments
Net income (loss)(1)		$	4,518			$	3,514			$	(30,876	)		$	(1,609	)		$	(24,453	)
Interest income			(2	)			(1	)			(31	)			—				(34	)
Interest expense			2,205				2,472				16,487				4,464				25,628
Provision (benefit) for income taxes			2,908				2,296				(20,844	)			(1,204	)			(16,844	)
Depreciation			1,520				1,502				7,750				862				11,634
Amortization of intangibles			212				341				11,979				—				12,532
Goodwill impairment			—				—				53,200				—				53,200
Unrealized (gains) losses on derivative instruments			(3,452	)			(5,199	)			(11,520	)			327				(19,844	)
EBITDA excluding non-cash items		$	7,909			$	4,925			$	26,145			$	2,840			$	41,819

		Quarter Ended June 30, 2008
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total Reportable Segments
Net income (loss)		$	1,728			$	708			$	3,400			$	(1,699	)		$	4,137
Interest income			(8	)			(5	)			(154	)			(27	)			(194	)
Interest expense			2,368				2,613				15,597				3,776				24,354
Provision (benefit) for income taxes			1,113				247				2,295				(1,270	)			2,385
Depreciation			1,450				1,476				4,865				1,289				9,080
Amortization of intangibles			214				341				9,622				727				10,904
Unrealized losses (gains) on derivative instruments			129				(48	)			356				(81	)			356
EBITDA excluding non-cash items		$	6,994			$	5,332			$	35,981			$	2,715			$	51,022

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

12.  Reportable Segments  – (continued)

		Six Months Ended June 30, 2009
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total Reportable Segments
Net income (loss)(1)		$	7,633			$	1,868			$	(81,176	)		$	(7,053	)		$	(78,728	)
Interest income			(13	)			(4	)			(78	)			(7	)			(102	)
Interest expense			4,510				5,039				36,765				8,488				54,802
Provision (benefit) for income taxes			4,913				1,221				(54,798	)			(5,277	)			(53,941	)
Depreciation			2,996				2,965				19,424				8,113				33,498
Amortization of intangibles			426				678				41,693				—				42,797
Goodwill impairment			—				—				71,200				—				71,200
Unrealized (gains) losses on derivative instruments			(2,802	)			(3,430	)			18,084				327				12,179
EBITDA excluding non-cash items		$	17,663			$	8,337			$	51,114			$	4,591			$	81,705

		Six Months Ended June 30, 2008
		Energy-related Businesses								Aviation-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total Reportable Segments
Net income (loss)		$	3,582			$	(305	)		$	9,342			$	(3,704	)		$	8,915
Interest income			(24	)			(25	)			(332	)			(63	)			(444	)
Interest expense			4,695				5,177				31,613				7,699				49,184
Provision (benefit) for income taxes			2,305				(107	)			6,306				(2,771	)			5,733
Depreciation			2,904				2,952				10,134				2,559				18,549
Amortization of intangibles			428				682				18,990				1,543				21,643
Unrealized losses (gains) on derivative instruments			150				(18	)			555				(158	)			529
EBITDA excluding non-cash items		$	14,040			$	8,356			$	76,608			$	5,105			$	104,109

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

12.  Reportable Segments  – (continued)

Reconciliation of reportable segments EBITDA excluding non-cash items to consolidated net (loss) income before income taxes and noncontrolling interests ($ in thousands) (unaudited):

		Quarter Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
Total reportable segments EBITDA excluding non-cash items		$	41,819			$	51,022			$	81,705			$	104,109
Interest income			34				297				108				770
Interest expense			(26,619	)			(25,676	)			(57,222	)			(51,502	)
Depreciation(1)			(11,634	)			(9,080	)			(33,498	)			(18,549	)
Amortization of intangibles(2)			(12,532	)			(10,904	)			(42,797	)			(21,643	)
Selling, general and administrative – corporate			(1,417	)			(1,236	)			(3,186	)			(2,369	)
Fees to manager			(851	)			(4,509	)			(1,313	)			(9,135	)
Equity in earnings and amortization charges of investees			10,028				8,641				15,477				6,552
Goodwill impairment			(53,200	)			—				(71,200	)			—
Unrealized losses (gains) on derivative instruments			19,724				(581	)			(12,501	)			(886	)
Other (expense) income, net			(1,038	)			(129	)			223				(407	)
Total consolidated net (loss) income before income taxes and noncontrolling interests		$	(35,686	)		$	7,845			$	(124,204	)		$	6,940

Capital expenditures for the Company's reportable segments were as follows ($ in thousands) (unaudited):

		Quarter Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
Gas production and distribution		$	1,716			$	2,675			$	3,581			$	4,429
District energy			1,784				451				3,403				1,967
Airport services			1,635				9,381				4,880				19,582
Airport parking			109				13,760				312				13,997
Total		$	5,244			$	26,267			$	12,176			$	39,975

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

12.  Reportable Segments  – (continued)

Property, equipment, land and leasehold improvements, goodwill and total assets for the Company's reportable segments as of June 30 were as follows ($ in thousands) (unaudited):

		Property, Equipment, Land and Leasehold Improvements								Goodwill								Total Assets
		2009(1)				2008				2009(2)				2008				2009				2008
Gas production and distribution		$	143,251			$	139,014			$	120,193			$	120,193			$	336,565			$	324,803
District energy			146,837				144,820				18,646				18,647				228,510				231,070
Airport services			289,275				314,033				377,343				504,174				1,505,430				1,800,772
Airport parking			74,085				101,955				—				133,772				191,676				289,853
Total		$	653,448			$	699,822			$	516,182			$	776,786			$	2,262,181			$	2,646,498

Reconciliation of reportable segments total assets to consolidated total assets ($ in thousands) (unaudited):

		As of June 30,
		2009				2008
Total assets of reportable segments		$	2,262,181			$	2,646,498
Investment in IMTT			200,408				204,159
Corporate and other			(105,227	)			(3,774	)
Total consolidated assets		$	2,357,362			$	2,846,883

Reconciliation of reportable segments goodwill to consolidated goodwill ($ in thousands) (unaudited):

		As of June 30,
		2009				2008
Goodwill of reportable segments		$	516,182			$	776,786
Corporate and other			—				(1,102	)
Total consolidated goodwill		$	516,182			$	775,684

13.  Related Party Transactions

Management Services Agreement with Macquarie Infrastructure Management (USA) Inc. (The Manager)

As of June 30, 2009, the Manager held 3,173,123 LLC interests of the Company, which were acquired concurrently with the closing of the initial public offering in December 2004 and also by reinvesting performance fees in the Company. In addition, the Macquarie Group held LLC interests acquired in open market purchases.

The Company entered into a management services agreement, or Management Agreement, with the Manager pursuant to which the Manager manages the Company’s day-to-day operations and oversees the management teams of the Company’s operating businesses. In addition, the Manager has the right to appoint the Chairman of the Board of the Company, and an alternate, subject to minimum equity ownership, and to assign, or second, to the Company, on a permanent and wholly-dedicated basis, employees to assume the role of Chief Executive Officer and Chief Financial Officer and second or make other personnel available as required.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13.  Related Party Transactions  – (continued)

In accordance with the Management Agreement, the Manager is entitled to a quarterly base management fee based primarily on the Company’s market capitalization, and a performance fee, based on the performance of the Company’s stock relative to a U.S. utilities index. For the six months ended June 30, 2009 and June 30, 2008, the Company incurred base management fees of $1.3 million and $9.1 million, respectively. The unpaid portion of the fees at the end of each reporting period is included in due to manager-related party in the consolidated condensed balance sheets. The base management fee for the first quarter of 2009 was paid in cash during the second quarter of 2009. The base management fee for the second quarter of 2009 will be reinvested in shares of LLC interests during the third quarter of 2009.

The Manager is not entitled to any other compensation and all costs incurred by the Manager, including compensation of seconded staff, are paid by the Manager out of its management fee. However, the Company is responsible for other direct costs including, but not limited to, expenses incurred in the administration or management of the Company and its subsidiaries and investments, income taxes, audit and legal fees, acquisitions and dispositions and its compliance with applicable laws and regulations. During the six months ended June 30, 2009 and June 30, 2008, the Manager charged the Company $136,000 and $145,000, respectively, for reimbursement of out-of-pocket expenses. The unpaid portion of the out-of-pocket expenses at the end of the reporting period is included in due to manager-related party in the consolidated condensed balance sheet.

Advisory and Other Services from the Macquarie Group

The Macquarie Group, and wholly-owned subsidiaries within the Macquarie Group, including Macquarie Bank Limited, or MBL, and Macquarie Capital (USA) Inc., or MCUSA (formerly Macquarie Securities (USA) Inc.), have provided various advisory and other services and incurred expenses in connection with the Company’s equity raising activities, acquisitions and debt structuring for the Company and its businesses. Underwriting fees are recorded in members’/stockholders’ equity as a direct cost of equity offerings. Advisory fees and out-of-pocket expenses relating to acquisitions are capitalized as a cost of the related acquisitions. Debt arranging fees are deferred and amortized over the term of the credit facility. Amounts relating to these transactions comprise the following ($ in thousands):

As of June 30, 2009

Airport parking business restructuring advice			— advisory services from MCUSA			$	200
			— reimbursement of out-of-pocket expenses to MCUSA				3
Airport services business debt amendment			— debt arranging services from MCUSA				970

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13.  Related Party Transactions  – (continued)

Long-Term Debt

At June 30, 2009, MIC Inc. has a $97.0 million revolving credit facility with various financial institutions, including MBL. Amounts relating to the portion of this revolving credit facility from MBL comprise the following ($ in thousands):

Six Months Ended June 30, 2009

Revolving credit facility commitment provided by Macquarie Group during the period January 1, 2009 through April 13, 2009(1)		$	66,667
Revolving credit facility commitment provided by Macquarie Group during the period April 14, 2009 through June 30, 2009			21,556
Portion of revolving credit facility commitment from Macquarie Group drawn down, as of June 30, 2009			14,755
Macquarie Group portion of the principal payments made to the revolving credit facility during the six months ended June 30, 2009			578
Interest expense on Macquarie Group portion of the drawn down commitment, for the six months ended June 30, 2009			366
Commitment fees to the Macquarie Group, for the six months ended June 30, 2009			81

Derivative Instruments and Hedging Activities

The Company has derivative instruments in place to fix the interest rate on certain outstanding variable-rate term loan facilities. MBL has provided interest rate swaps for the airport services business and the gas production and distribution business. At June 30, 2009, the airport services business had $839.4 million of its variable-rate term loans hedged, of which MBL was providing the interest rate swaps for a notional amount of $323.2 million. The remainder of the swaps are from an unrelated third party. During the six months ended June 30, 2009, the airport services business made net payments to MBL of $6.9 million in relation to these swaps.

As discussed in Note 8, “Long-Term Debt”, for the quarter ended June 30, 2009, the airport services business paid $1.5 million in interest rate swap breakage fees, of which $319,000 was paid to MBL.

At June 30, 2009, the gas production and distribution business had hedged $160.0 million of its term loans, of which MBL was providing the interest rate swaps for a notional amount of $48.0 million. The remainder of the swaps are from an unrelated third party. During the six months ended June 30, 2009, the gas production and distribution business made net payments to MBL of $834,000 in relation to these swaps.

Other Transactions

On March 30, 2009, the gas production and distribution business entered into licensing agreements with Utility Service Partners, Inc. and America’s Water Heater Rentals, LLC, both indirect subsidiaries of Macquarie Group Limited, to enable these entities to offer products and services to the gas production and distribution business customer base. No payments were made under these arrangements during the six months ended June 30, 2009.

On August 29, 2008, Macquarie Global Opportunities Partners completed the acquisition of the jet membership, retail charter and fuel management business units previously owned by Sentient Jet Holdings, LLC. The new company is called Sentient Flight Group (referred to hereafter as “Sentient”). Sentient is an

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13.  Related Party Transactions  – (continued)

existing customer of the Company’s airport services business. For the six months ended June 30, 2009, the airport services business recorded $3.5 million in revenue from Sentient. As of June 30, 2009, the airport services business had a $3,000 receivable from Sentient, which is included in accounts receivable in the consolidated condensed balance sheets.

In addition, the Company and various of its subsidiaries have entered into a licensing agreement with the Macquarie Group related to the use of the Macquarie name and trademark. The Macquarie Group does not charge the Company any fees for this license.

During the third quarter of 2009, the Company has engaged MGL to provide consulting services to improve the efficiency on the recovery of accounts receivable at the airport services business. As of August 6, 2009 the Company incurred approximately $83,000 in fees and out-of-pocket expenses.

14.  Income Taxes

The Company expects to incur a net operating loss for federal consolidated tax return purposes for the year ending December 31, 2009. The Company believes that it will be able to utilize the projected federal and certain state consolidated 2009 and prior year losses. Accordingly, the Company has not provided a valuation allowance against any deferred tax assets generated in 2009, except as noted below.

The Company and its subsidiaries file separate and combined state income tax returns. In calculating its consolidated projected effective state tax rate for 2009, the Company has taken into consideration an expected need to provide a valuation allowance for certain state income tax net operating loss carryforwards, the utilization of which is not assured beyond a reasonable doubt. In addition, the Company and its subsidiaries expect to incur certain expenses that will not be deductible in determining state taxable income. Accordingly, these expenses have also been excluded in projecting the Company’s effective state tax rate.

As discussed in Note 7, “Nonfinancial Assets Measured at Fair Value”, during the six months ended June 30, 2009, the Company incurred a charge to earnings of approximately $108.4 million for the write down of certain fixed assets and intangibles. For purposes of determining its effective income tax rate for the quarter and six months ended June 30, 2009, the Company does not consider the write down to be part of ordinary income. Of this amount, approximately $53.4 million is attributable to goodwill and represents a permanent book-tax difference. As a result, no tax benefit has been recognized for this charge.

Uncertain Tax Positions

At December 31, 2008, the Company and its subsidiaries had a reserve of approximately $313,000 for benefits taken during 2008 and prior tax periods attributable to tax positions for which the probability of recognition is not considered to be more likely than not. There was no material change in that reserve as of June 30, 2009.

15.  Legal Proceedings and Contingencies

There are no material legal proceedings other than as disclosed in Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the SEC on February 27, 2009.

16.  Subsequent Events

In accordance with SFAS No. 165, the Company evaluated and disclosed the following events through August 6, 2009:

Airport Parking Business Interest Rate Swap Payments

On August 5, 2009 and July 6, 2009, the Company made interest rate swap payments totaling $1.7 million on behalf of the airport parking business. See Note 8, “Long-Term Debt” for further discussion.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

16.  Subsequent Events  – (continued)

Airport Services Business Credit Facility

On August 3, 2009, per the revised terms of the term loan agreement, as described in Note 8, “Long-Term Debt”, the airport services business used $6.6 million of excess cash flow to prepay $6.0 million of the outstanding principal balance of the term loan debt and $563,000 in interest rate swap breakage fees.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

We own, operate and invest in a diversified group of infrastructure businesses that provide basic, everyday services, such as chilled water for building cooling and gas utility services to businesses and individuals primarily in the U.S. The businesses we own and operate are energy-related businesses, consisting of our bulk liquid storage terminal business, or IMTT, gas production and distribution business, or TGC, and our district energy business, and aviation-related businesses, consisting of our airport services business and our airport parking business. These infrastructure businesses generally operate in sectors with limited competition and barriers to entry resulting from a variety of factors including high initial development and construction costs, the existence of long-term contracts or the requirement to obtain government approvals and lack of immediate cost-efficient alternatives to the services provided. Overall they tend to generate sustainable and growing long-term cash flows. We operate and finance our businesses in a manner that maximizes these cash flows.

The Current Economic Environment and Its Effect on Our Businesses and Strategy

Our energy-related businesses have proven, to date, largely resistant to the economic downturn, primarily due to the contracted or utility-like nature of their revenues combined with the essential services they provide. We believe these businesses are generally able to sustain cash flows during negative business cycles. This is primarily a result of the contracted nature of the revenue streams of the businesses and the contractual or regulatory ability to pass through most cost increases to customers.

The results of our aviation-related businesses have been negatively affected by lower overall economic and aviation activity and perception issues regarding the general aviation sector. In our airport services business, we are aggressively managing operations and reducing debt levels in response to the current economic climate. We implemented a number of measures that have successfully reduced operating expenses beginning in the third quarter of 2008. In the second quarter of 2009, we reduced our ongoing operating costs further primarily through additional rationalization of staffing levels. With the addition of the cost savings achieved in the second quarter of 2009, overall annualized savings now exceeds $27.0 million. Our airport services business is further rationalizing its cost structure to offset any further declines in general aviation activity levels.

The airport parking business does not have sufficient liquidity or capital resources to pay its maturing debt obligations. As a result, we do not expect that the airport parking business will be able to refinance its debt as it matures and management of the business is in active discussions with lenders regarding strategic alternatives.

Management Strategy

MIC Inc. Revolving Credit Facility

At March 31, 2009, we reclassified the MIC Inc. revolving credit facility from long-term debt to current portion of long-term debt on the consolidated condensed balance sheet, due to its maturity on March 31, 2010. We plan to use cash generated from our energy-related businesses combined with existing available cash to prepay amounts under the facility. We believe that we will be able to refinance or extend the facility for the remaining balance on terms that can be supported by the performance of and cash flows from the businesses. We are exploring all options to repay the remaining amounts outstanding under this facility, including continuing intiatives to increase business level cash generation, asset sales or other potential sources of capital.

Airport Parking Business

We have notified the lenders under the business’ credit facilities that we have no intention of contributing any further capital to this business other than potentially obligations that we have guaranteed. The business is in default under its primary credit facility and signed a forbearance agreement with its lenders on June 10, 2009 that expires on August 31, 2009.

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Management Strategy – (continued)

Creditors of this business do not have recourse to any assets of the Company or any assets of the Company’s other businesses, other than approximately $6.2 million in lease and interest rate swap guarantees as of August 6, 2009. There is one remaining interest rate swap payment of approximately $800,000. The interest rate swap expires September 15, 2009.

The airport parking business has engaged financial advisors to solicit a sale of the business. A group of prospective purchasers has begun due diligence. The business is working cooperatively with lenders to pursue strategic alternatives, including asset sales, restructuring plans, filing for protection under bankruptcy laws or liquidating the business.

Distributions

Our Board of Directors has decided to suspend payment of quarterly cash distributions to shareholders in order to reduce both holding company debt and operating company debt at certain businesses where the underlying fundamentals are strong. The suspension is likely to remain in effect until the MIC Inc. revolving credit facility is repaid in full.

Results of Operations

Consolidated

All discussion of our consolidated results and the results for each of our businesses relate to both the quarter and six month periods presented, unless stated otherwise.

Key Factors Affecting Operating Results

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Results of Operations: Consolidated – (continued)

Our consolidated results of operations are as follows ($ in thousands):

		Quarter Ended June 30,								Change Favorable/(Unfavorable)								Six Months Ended June 30,								Change Favorable/(Unfavorable)
		2009				2008				$				%				2009				2008				$				%
Revenue
Revenue from product sales		$	89,430			$	166,834				(77,404	)			(46.4	)		$	178,622			$	326,159				(147,537	)			(45.2	)
Revenue from product sales – utility			21,414				31,858				(10,444	)			(32.8	)			41,581				61,257				(19,676	)			(32.1	)
Service revenue			68,798				86,672				(17,874	)			(20.6	)			142,350				175,457				(33,107	)			(18.9	)
Financing and equipment lease income			1,205				1,179				26				2.2				2,397				2,373				24				1.0
Total revenue			180,847				286,543				(105,696	)			(36.9	)			364,950				565,246				(200,296	)			(35.4	)
Costs and expenses
Cost of product sales			50,008				119,501				69,493				58.2				99,275				228,018				128,743				56.5
Cost of product sales –  utility			15,793				26,679				10,886				40.8				30,610				51,014				20,404				40.0
Cost of services			24,682				32,289				7,607				23.6				56,139				65,545				9,406				14.4
Gross profit			90,364				108,074				(17,710	)			(16.4	)			178,926				220,669				(41,743	)			(18.9	)
Selling, general and administrative			53,207				61,645				8,438				13.7				112,686				125,502				12,816				10.2
Fees to manager-related party			851				4,509				3,658				81.1				1,313				9,135				7,822				85.6
Goodwill impairment			53,200				—				(53,200	)			NM				71,200				—				(71,200	)			NM
Depreciation			9,270				6,315				(2,955	)			(46.8	)			22,420				13,038				(9,382	)			(72.0	)
Amortization of intangibles			12,532				10,904				(1,628	)			(14.9	)			42,797				21,643				(21,154	)			(97.7	)
Total operating expenses			129,060				83,373				(45,687	)			(54.8	)			250,416				169,318				(81,098	)			(47.9	)
Operating (loss) income			(38,696	)			24,701				(63,397	)			NM				(71,490	)			51,351				(122,841	)			NM
Other income (expense)
Interest income			34				297				(263	)			(88.6	)			108				770				(662	)			(86.0	)
Interest expense			(26,619	)			(25,676	)			(943	)			(3.7	)			(57,222	)			(51,502	)			(5,720	)			(11.1	)
Equity in earnings and amortization charges of investees			10,028				8,641				1,387				16.1				15,477				6,552				8,925				136.2
Gain (loss) on derivative instruments			19,724				(581	)			20,305				NM				(12,501	)			(886	)			(11,615	)			NM
Other (expense) income, net			(157	)			463				(620	)			(133.9	)			1,424				655				769				117.4
Net (loss) income before income taxes and noncontrolling interests			(35,686	)			7,845				(43,531	)			NM				(124,204	)			6,940				(131,144	)			NM
Benefit (provision) for income taxes			5,689				364				5,325				NM				41,348				(1,000	)			42,348				NM
Net (loss) income before noncontrolling interests			(29,997	)			8,209				(38,206	)			NM				(82,856	)			5,940				(88,796	)			NM
Noncontrolling interests			(1,039	)			(129	)			910				NM				(872	)			(408	)			464				113.7
Net (loss) income		$	(28,958	)		$	8,338				(37,296	)			NM			$	(81,984	)		$	6,348				(88,332	)			NM