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 September 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 45,112,604 limited liability company interests without par value outstanding at November 4, 2009.

TABLE OF CONTENTS

MACQUARIE INFRASTRUCTURE COMPANY LLC

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			1
Consolidated Condensed Balance Sheets as of September 30, 2009 (Unaudited) and December 31, 2008			1
Consolidated Condensed Statements of Operations for the Quarters and Nine Months Ended September 30, 2009 and 2008 (Unaudited)			3
Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 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			28
Item 3. Quantitative and Qualitative Disclosure About Market Risk			57
Item 4. Controls and Procedures			57
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			58
Item 1A. Risk Factors			58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			58
Item 3. Defaults Upon Senior Securities			58
Item 4. Submission of Matters to a Vote of Security Holders			58
Item 5. Other Information			58
Item 6. Exhibits			58

 

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.

TABLE OF CONTENTS

PART I
  
FINANCIAL INFORMATION

Item 1. Financial Statements

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

		September 30, 2009				December 31, 2008
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	56,217			$	68,231
Restricted cash			2,452				1,063
Accounts receivable, less allowance for doubtful accounts of $2,167 and $2,230, respectively			54,495				62,240
Dividends receivable			—				7,000
Other receivables			20				132
Inventories			14,762				15,968
Prepaid expenses			9,096				9,156
Deferred income taxes			3,774				3,774
Land – available for sale			—				11,931
Income tax receivable			—				489
Other			11,203				13,440
Total current assets			152,019				193,424
Property, equipment, land and leasehold improvements, net			663,555				673,981
Restricted cash			16,016				19,939
Equipment lease receivables			34,031				36,127
Investment in unconsolidated business			201,585				184,930
Goodwill			516,182				586,249
Intangible assets, net			760,050				812,184
Deferred financing costs, net of accumulated amortization			18,385				23,383
Other			3,052				4,033
Total assets		$	2,364,875			$	2,534,250

 
 
See accompanying notes to the consolidated condensed financial statements.

TABLE OF CONTENTS

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

		September 30, 2009				December 31, 2008
		(Unaudited)
LIABILITIES AND MEMBERS’/STOCKHOLDERS’ EQUITY
Current liabilities:
Due to manager – related party		$	1,696			$	3,521
Accounts payable			49,173				47,886
Accrued expenses			27,750				29,448
Current portion of notes payable and capital leases			9,585				2,724
Current portion of long-term debt			315,549				201,344
Fair value of derivative instruments			50,228				51,441
Customer deposits			5,673				5,457
Other			9,382				10,785
Total current liabilities			469,036				352,606
Notes payable and capital leases, net of current portion			1,990				2,274
Long-term debt, net of current portion			1,152,985				1,327,800
Deferred income taxes			51,998				65,042
Fair value of derivative instruments			64,507				105,970
Other			46,869				46,297
Total liabilities			1,787,385				1,899,989
Commitments and contingencies			—				—
Members’/stockholders’ equity:
LLC interests, no par value; 500,000,000 authorized; 45,112,604 LLC interests issued and outstanding at September 30, 2009 and 44,948,694 LLC interests issued and outstanding at December 31, 2008			958,258				956,956
Accumulated other comprehensive loss			(53,630	)			(97,190	)
Accumulated deficit			(331,260	)			(230,928	)
Total members’/stockholders’ equity			573,368				628,838
Noncontrolling interests			4,122				5,423
Total equity			577,490				634,261
Total liabilities and equity		$	2,364,875			$	2,534,250

 
 
See accompanying notes to the consolidated condensed financial statements.

TABLE OF CONTENTS

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

		Quarter Ended								Nine Months Ended
		September 30, 2009				September 30, 2008				September 30, 2009				September 30, 2008
Revenue
Revenue from product sales		$	103,017			$	152,060			$	281,639			$	478,219
Revenue from product sales – utility			26,056				36,060				67,637				97,317
Service revenue			72,264				87,714				214,614				263,171
Financing and equipment lease income			1,190				1,164				3,587				3,537
Total revenue			202,527				276,998				567,477				842,244
Costs and expenses
Cost of product sales			61,349				109,801				160,624				337,819
Cost of product sales – utility			19,406				31,161				50,016				82,175
Cost of services			26,562				33,070				82,701				98,615
Selling, general and administrative			54,782				57,426				167,468				182,928
Fees to manager – related party			1,639				2,737				2,952				11,872
Goodwill impairment			—				—				71,200				—
Depreciation			7,177				7,101				29,597				20,139
Amortization of intangibles			9,126				10,563				51,923				32,206
Total operating expenses			180,041				251,859				616,481				765,754
Operating income (loss)			22,486				25,139				(49,004	)			76,490
Other income (expense)
Interest income			8				268				116				1,038
Interest expense			(24,639	)			(26,114	)			(81,861	)			(77,616	)
Equity in earnings and amortization charges of investees			1,178				4,051				16,655				10,603
Loss on derivative instruments			(17,371	)			(765	)			(29,872	)			(1,651	)
Other income, net			269				6				1,693				661
Net (loss) income before income taxes and noncontrolling interests			(18,069	)			2,585				(142,273	)			9,525
(Provision) benefit for income taxes			(327	)			(2,254	)			41,021				(3,254	)
Net (loss) income before noncontrolling interests			(18,396	)			331				(101,252	)			6,271
Net loss attributable to noncontrolling interests			(48	)			(167	)			(920	)			(575	)
Net (loss) income		$	(18,348	)		$	498			$	(100,332	)		$	6,846
Basic (loss) earnings per share:		$	(0.41	)		$	0.01			$	(2.23	)		$	0.15
Weighted average number of shares outstanding: basic			45,006,771				44,948,694				44,969,093				44,942,859
Diluted (loss) earnings per share:		$	(0.41	)		$	0.01			$	(2.23	)		$	0.15
Weighted average number of shares outstanding: diluted			45,006,771				44,962,809				44,969,093				44,955,236
Cash distributions declared per share		$	—			$	0.645			$	—			$	1.925

 
 
See accompanying notes to the consolidated condensed financial statements.

TABLE OF CONTENTS

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

		Nine Months Ended
		September 30, 2009				September 30, 2008
Operating activities
Net (loss) income before noncontrolling interests		$	(101,252	)		$	6,271
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			43,227				28,359
Amortization of intangible assets			51,923				32,206
Equity in earnings and amortization charges of investees			(16,655	)			(10,603	)
Equity distributions from investees			7,000				10,603
Amortization of debt financing costs			4,998				4,941
Non-cash derivative loss, net of non-cash interest expense			29,872				1,897
Base management fee to be settled in LLC interests			1,639				—
Equipment lease receivable, net			2,009				1,621
Deferred rent			1,265				1,535
Deferred taxes			(41,892	)			1,904
Other non-cash expenses, net			167				658
Changes in other assets and liabilities, net of acquisitions:
Restricted cash			(756	)			24
Accounts receivable			7,188				(3,436	)
Inventories			776				(2,027	)
Prepaid expenses and other current assets			2,830				4,944
Due to manager – related party			(2,613	)			(2,958	)
Accounts payable and accrued expenses			1,655				(110	)
Income taxes payable			(537	)			(1,530	)
Other, net			(2,635	)			828
Net cash provided by operating activities			59,409				75,127
Investing activities
Acquisitions of businesses and investments, net of cash acquired			—				(53,338	)
Proceeds from sale of investment, net of cash divested			—				1,861
Purchases of property and equipment			(19,981	)			(52,587	)
Return of investment in unconsolidated business			—				10,397
Other			115				223
Net cash used in investing activities			(19,866	)			(93,444	)

 
 
See accompanying notes to the consolidated condensed financial statements.

TABLE OF CONTENTS

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

		Nine Months Ended
		September 30, 2009				September 30, 2008
Financing activities
Proceeds from long-term debt			10,000				5,000
Proceeds from line of credit facilities			9,250				87,800
Offering and equity raise costs paid			—				(65	)
Distributions paid to holders of LLC interests			—				(86,520	)
Distributions paid to noncontrolling interests			(381	)			(363	)
Payment of long-term debt			(72,859	)			(120	)
Debt financing costs paid			—				(1,874	)
Change in restricted cash			3,292				(501	)
Payment of notes and capital lease obligations			(859	)			(1,629	)
Net cash (used in) provided by financing activities			(51,557	)			1,728
Net change in cash and cash equivalents			(12,014	)			(16,589	)
Cash and cash equivalents, beginning of period			68,231				57,473
Cash and cash equivalents, end of period		$	56,217			$	40,884
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities:
Accrued purchases of property and equipment		$	209			$	1,226
Acquisition of equipment through capital leases		$	129			$	490
Issuance of LLC interests to manager for payment of base management fee		$	851			$	—
Issuance of LLC interests to independent directors		$	450			$	450
Taxes paid		$	1,167			$	3,044
Interest paid		$	72,265			$	73,148

 
 
See accompanying notes to the consolidated condensed financial statements.

TABLE OF CONTENTS

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:

TABLE OF CONTENTS

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 nine months ended September 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 April 2009, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Codification (ASC) 825-10-65 Financial Instruments (formerly FSP SFAS No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”). This guidance requires disclosures about the fair value of financial instruments for interim reporting periods in addition to the current requirement to make disclosure in annual financial statements. This guidance also 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 February 2008, the FASB issued ASC 820 Fair Value Measurements and Disclosures (formerly FSP SFAS No. 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 SFAS No. 13”, and FSP SFAS No. 157-2, “Effective Date of FASB Statement No. 157”) affecting the implementation of SFAS No. 157. This guidance excludes ASC 840-10 Leases (formerly SFAS No. 13, “Accounting for Leases”), 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 ASC 805-10 Business Combinations (formerly SFAS No. 141(R), “Business Combinations”) regardless of whether those assets and liabilities are related to leases. This guidance delayed 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.

TABLE OF CONTENTS

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

3. New Accounting Pronouncements  – (continued)

In March 2008, the FASB issued ASC 815-10 Derivatives and Hedging (formerly SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities — an amendment of SFAS No. 133”), 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 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. This guidance is effective for periods beginning after November 15, 2008. The Company adopted this guidance on January 1, 2009. Since this guidance requires only additional disclosures concerning derivatives and hedging activities, 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 revised ASC 805-10 Business Combinations (formerly SFAS No. 141(R)). The revised standard includes various changes to the business 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. This guidance is effective for business combinations consummated in periods beginning on or after December 15, 2008. For any business combinations completed after January 1, 2009, the Company expects the revised standard to have the following material impacts on its financial statements compared with previously applicable 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 previous rules were 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 previous business combination rules.

On January 1, 2009, the Company adopted this guidance. Although the Company did not complete any new business combinations during the first nine months of 2009, the Company used the guidance from this pronouncement to perform goodwill impairment analysis. 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 September 30,								Nine Months Ended September 30,
		2009				2008				2009				2008
Weighted average number of shares outstanding: basic			45,006,771				44,948,694				44,969,093				44,942,859
Dilutive effect of restricted stock unit grants			—				14,115				—				12,377
Weighted average number of shares outstanding: diluted			45,006,771				44,962,809				44,969,093				44,955,236

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

TABLE OF CONTENTS

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

5. Property, Equipment, Land and Leasehold Improvements

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

		September 30, 2009				December 31, 2008
Land(1)		$	71,899			$	56,039
Easements			5,624				5,624
Buildings			29,728				34,128
Leasehold and land improvements			327,441				301,623
Machinery and equipment			335,046				321,240
Furniture and fixtures			10,860				9,952
Construction in progress			16,038				48,520
Property held for future use			1,561				1,540
			798,197				778,666
Less: accumulated depreciation			(134,642	)			(104,685	)
Property, equipment, land and leasehold improvements, net(2)		$	663,555			$	673,981

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):

		Nine Months Ended September 30, 2009(1)				Quarter and Year Ended December 31, 2008(1)
Airport Services(2)		$	7,521			$	13,754
Airport Parking(3)			6,385				19,145
Total		$	13,906			$	32,899

TABLE OF CONTENTS

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

6. Intangible Assets

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

		Weighted Average Life (Years)				September 30, 2009				December 31, 2008
Contractual arrangements			31.3			$	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							(121,561	)			(97,749	)
Intangible assets, net						$	760,050			$	812,184

As a result of a decline in the performance of certain asset groups during the first six months of 2009 and the quarter ended December 31, 2008, the Company evaluated such asset groups for impairment 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 first six months of 2009 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 September 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 September 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. The Company performed goodwill impairment tests during the first six months 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. 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 the first six months of 2009 and the quarter ended December 31, 2008 and at the airport parking business to write off all of its goodwill during the quarter ended December 31, 2008.

TABLE OF CONTENTS

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

6. Intangible Assets  – (continued)

For the nine months ended September 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):

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

The following major categories of nonfinancial assets at the impaired asset groups were written down to fair value during the first six months of 2009:

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

TABLE OF CONTENTS

MACQUARIE INFRASTRUCTURE COMPANY LLC
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. Property, equipment, land and leasehold improvements with a carrying amount of $74.5 million were written down to fair value of $60.6 million during the first six months of 2009. This resulted in a non-cash impairment charge of $13.9 million 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 first six months of 2009. This resulted in a non-cash impairment charge of $23.3 million, which is recorded in amortization of intangibles expense in the consolidated condensed statement of operations.

As discussed in Note 6, “Intangible Assets”, the Company performed goodwill impairment analyses during the first six months of 2009. As a result of these analyses, goodwill with a carrying amount of $448.5 million was written down to its implied fair value of $377.3 million resulting in a non-cash impairment charge of $71.2 million. 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.

TABLE OF CONTENTS

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

8. Long-Term Debt

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

		September 30, 2009				December 31, 2008
MIC Inc. revolving credit facility		$	66,400			$	69,000
Gas production and distribution			179,000				169,000
District energy			150,000				150,000
Airport services			872,029				939,800
Airport parking			201,105				201,344
Total			1,468,534				1,529,144
Less: Current portion			(315,549	)			(201,344	)
Long-term portion		$	1,152,985			$	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 in the consolidated condensed balance sheet, due to its maturity on March 31, 2010. The Company has accumulated the excess cash generated by the gas production and distribution and district energy businesses as a means of repaying a portion of the amount due under the facility.

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. 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 and nine months ended September 30, 2009, the airport services business used $13.2 million and $80.5 million, respectively, of excess cash flow to prepay $12.0 million and $72.6 million, respectively, of the outstanding principal balance of the term loan debt under the facility and $1.2 million and $7.9 million, respectively, in interest rate swap breakage fees.

On November 4, 2009, the airport services business used $9.9 million of excess cash flow from the third quarter of 2009 to prepay $9.0 million of the outstanding principal balance of the term loan debt under this facility and incurred $914,000 in interest rate swap breakage fees.

At September 30, 2009, the airport parking business had $201.1 million of total debt that was due on 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 $5.3 million in a lease guarantee as of November 5, 2009. During September 2009, the Company made the final interest rate swap payment that was guaranteed by the Company on behalf of the airport parking business.

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.

TABLE OF CONTENTS

MACQUARIE INFRASTRUCTURE COMPANY LLC
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 was scheduled to expire on August 31, 2009, was extended through October 15, 2009 and was extended again through November 6, 2009. Material terms of the forbearance agreement are that during the forbearance period:

There is substantial doubt regarding the business’ ability to continue as a going concern. The business has engaged financial advisors to actively solicit a sale of the business. A letter of intent was signed during the quarter with a third party, which is conducting due diligence and with which the business is currently negotiating an asset purchase agreement. The business expects to close a sale transaction in 2010, which will likely occur in connection with a bankruptcy filing and consummation of a Chapter 11 plan. Proceeds generated as a result of the sale would be payable to the lenders of the business and not to the Company. Until an asset purchase agreement is signed and any conditions to closing have been met, including any approval of the sale needed as part of the bankruptcy process, the Company cannot provide assurance regarding the certainty or timing of a sale closing. As previously indicated, the Company has no intention of committing additional capital to this business and the Company’s ongoing liabilities are expected to be no more than $5.3 million in guarantees of a single parking facility lease.

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 September 30, 2009, the Company had $1.5 billion of current and long-term debt, $1.1 billion of which was economically hedged with interest rate swaps, $325.0 million of which was unhedged and $6.1 million of which incurred interest at fixed rates.

For the quarter and nine months ended September 30, 2009, the airport services business used $13.2 million and $80.5 million, respectively, of excess cash flow to prepay $12.0 million and $72.6 million, respectively, of the outstanding principal balance of the term loan debt under the facility and $1.2 million and $7.9 million, respectively, in interest rate swap breakage fees. As a result of the future interest payments that are no longer probable of occurring due to the prepayment of debt, $6.9 million and $37.8 million of accumulated other comprehensive loss in the consolidated condensed balance sheet related to the airport services business’ derivatives was reclassified to loss on derivative instruments in the consolidated condensed statement of operations for the quarter and nine months ended September 30, 2009, respectively. Subject to the mandatory debt prepayment conditions, under the amended debt terms, to the extent future cash flows exceed forecast, the airport services business will repay its debt more quickly than expected, which will result in additional interest rate swap breakage fees and corresponding reclassifications from accumulated other comprehensive loss to loss on derivative instruments. See Note 8 “Long-Term Debt” for further discussion.

TABLE OF CONTENTS

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

9. Derivative Instruments  – (continued)

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 receiving the 90-day LIBOR rate to receiving 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 $1.2 million from October 1, 2009 through March 2010.

As of February 25, 2009, due to the amendment of the credit facility for the airport services business discussed above, and effective April 1, 2009 for the Company’s other businesses, the Company elected to discontinue hedge accounting. From the dates that hedge accounting was discontinued, all movements in the fair value of the interest rate swaps are recorded directly through earnings. As a result of the basis swap contracts discussed above, together with the discontinuance of hedge accounting, the Company will reclassify into earnings the $82.2 million of net derivative losses included in accumulated other comprehensive loss as of September 30, 2009 over the remaining life of the existing interest rate swaps, of which $34.2 million will be reclassified over the next 12 months.

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 since the dates that hedge accounting was discontinued. 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 September 30, 2009 and December 31, 2008 were as follows:

		Liabilities at Fair Value(1)
		Interest Rate Swap Contracts Not Designated as Hedging Instruments(2)				Interest Rate Swap Contracts Designated as Hedging Instruments
Balance Sheet Location		September 30, 2009				December 31, 2008
		($ in Thousands)
Fair value of derivative instruments – current liabilities		$	(50,228	)		$	(51,441	)
Fair value of derivative instruments – non-current liabilities			(64,507	)			(105,970	)
Total interest rate derivative contracts		$	(114,735	)		$	(157,411	)

TABLE OF CONTENTS

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

9. Derivative Instruments  – (continued)

The Company’s hedging activities for the quarter and nine months ended September 30, 2009 and 2008 and the related location within the consolidated condensed financial statements were as follows:

		Derivatives Designated as Hedging Instruments(1)																								Derivatives Not Designated as Hedging Instruments(1)
		Amount of Loss Recognized in OCI on Derivatives (Effective Portion) for the Quarter Ended September 30,								Amount of Loss Reclassified from OCI into Income (Effective Portion) for the Quarter Ended September 30,								Amount of Loss Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Quarter Ended September 30,								Amount of Loss Recognized in Loss on Derivative Instruments for the Quarter Ended September 30,
Financial Statement Account		2009				2008				2009				2008				2009				2008				2009(2)				2008
		($ in Thousands)
Interest Expense		$	—			$	—			$	—			$	(7,800	)		$	—			$	—			$	(16,456	)		$	—
Loss on Derivative Instruments(2)			—				—				—				(701	)			—				(64	)			(17,371	)			—
Accumulated Other Comprehensive Loss			—				(14,858	)			—				—				—				—				—				—
Total		$	—			$	(14,858	)		$	—			$	(8,501	)		$	—			$	(64	)		$	(33,827	)		$	—

		Derivatives Designated as Hedging Instruments(1)																								Derivatives Not Designated as Hedging Instruments(1)
		Amount of Gain/ (Loss) Recognized in OCI on Derivatives (Effective Portion) for the Nine Months Ended September 30,								Amount of Loss Reclassified from OCI into Income (Effective Portion) for the Nine Months Ended September 30,								Amount of Loss Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Nine Months Ended September 30,								Amount of Loss Recognized in Loss on Derivative Instruments for the Nine Months Ended September 30,
Financial Statement Account		2009				2008				2009(2)				2008				2009				2008				2009(3)				2008
		($ in Thousands)
Interest Expense		$	—			$	—			$	(17,953	)		$	(17,654	)		$	—			$	—			$	(33,853	)		$	—
Loss on Derivative Instruments(2)			—				—				(25,154	)			(1,456	)			(84	)			(195	)			(4,634	)			—
Accumulated Other Comprehensive Gain (Loss)			2,549				(19,930	)			—				—				—				—				—				—
Total		$	2,549			$	(19,930	)		$	(43,107	)		$	(19,110	)		$	(84	)		$	(195	)		$	(38,487	)		$	—

TABLE OF CONTENTS

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

9. Derivative Instruments  – (continued)

All of the Company’s derivative instruments are collateralized by all of the assets of the respective businesses. During September 2009, the Company made the final interest rate swap payment that was guaranteed by the Company on behalf of the airport parking business.

10. Comprehensive (Loss) Income

Other comprehensive (loss) income includes primarily the change in fair value of derivative instruments which qualified for hedge accounting until the dates that hedge accounting was discontinued, as discussed in Note 9, “Derivative Instruments”.

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

		Quarter Ended September 30,								Nine Months Ended September 30,
		2009				2008				2009				2008
Net (loss) income		$	(18,348	)		$	498			$	(100,332	)		$	6,846
Unrealized (loss) gain in fair value of derivatives, net of taxes			—				(8,821	)			1,498				(12,236	)
Reclassification of realized losses into earnings, net of taxes			7,399				5,183				42,062				11,738
Comprehensive (loss) income		$	(10,949	)		$	(3,140	)		$	(56,772	)		$	6,348

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.

TABLE OF CONTENTS

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

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 include a 50% investment in a bulk liquid storage terminal business, or IMTT, which is accounted for under the equity method. Financial information for IMTT’s business as a whole is presented below ($ in thousands) (unaudited):

		As of, and for the Quarter Ended September 30,								As of, and for the Nine Months Ended September 30,
		2009				2008				2009				2008
Revenue		$	85,168			$	104,494			$	253,945			$	261,118
EBITDA excluding non-cash items(1)			36,767				40,882				108,713				100,439
Interest expense, net			7,378				6,909				21,990				16,801
Depreciation and amortization expense			13,457				11,303				39,735				31,960
Capital expenditures paid			24,638				48,160				106,062				161,340
Property, equipment, land and leasehold improvements, net			967,323				869,474				967,323				869,474
Total assets balance			1,040,796				950,889				1,040,796				950,889

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 of 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

TABLE OF CONTENTS

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

12. Reportable Segments  – (continued)

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 September 30, 2009.

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 the Company’s equity investment in IMTT.

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

		Quarter Ended September 30, 2009
		Energy-related Businesses								Airport-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	18,680			$	—			$	84,337			$	—			$	103,017
Product sales – utility			26,056				—				—				—				26,056
			44,736				—				84,337				—				129,073
Service Revenue
Other services			—				832				39,843				—				40,675
Cooling capacity revenue			—				5,224				—				—				5,224
Cooling consumption revenue			—				9,400				—				—				9,400
Parking services			—				—				—				16,965				16,965
			—				15,456				39,843				16,965				72,264
Financing and Lease Income
Financing and equipment lease			—				1,190				—				—				1,190
			—				1,190				—				—				1,190
Total Revenue		$	44,736			$	16,646			$	124,180			$	16,965			$	202,527

		Quarter Ended September 30, 2008
		Energy-related Businesses								Airport-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	23,495			$	—			$	128,565				—			$	152,060
Product sales – utility			36,060				—				—				—				36,060
			59,555				—				128,565				—				188,120
Service Revenue
Other services			—				752				52,772				—				53,524
Cooling capacity revenue			—				4,850				—				—				4,850
Cooling consumption revenue			—				10,654				—				—				10,654
Parking services			—				—				—				18,686				18,686
			—				16,256				52,772				18,686				87,714
Financing and Lease Income
Financing and equipment lease			—				1,164				—				—				1,164
			—				1,164				—				—				1,164
Total Revenue		$	59,555			$	17,420			$	181,337				18,686			$	276,998

TABLE OF CONTENTS

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

12. Reportable Segments  – (continued)

		Nine Months Ended September 30, 2009
		Energy-related Businesses								Airport-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	58,145			$	—			$	223,494			$	—			$	281,639
Product sales – utility			67,637				—				—				—				67,637
			125,782				—				223,494				—				349,276
Service Revenue
Other services			—				2,331				128,911				—				131,242
Cooling capacity revenue			—				15,231				—				—				15,231
Cooling consumption revenue			—				17,130				—				—				17,130
Parking services			—				—				—				51,011				51,011
			—				34,692				128,911				51,011				214,614
Financing and Lease Income
Financing and equipment lease			—				3,587				—				—				3,587
			—				3,587				—				—				3,587
Total Revenue		$	125,782			$	38,279			$	352,405			$	51,011			$	567,477

		Nine Months Ended September 30, 2008
		Energy-related Businesses								Airport-related Businesses
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking				Total
Revenue from Product Sales
Product sales		$	70,177			$	—			$	408,042			$	—			$	478,219
Product sales – utility			97,317				—				—				—				97,317
			167,494				—				408,042				—				575,536
Service Revenue
Other services			—				2,201				170,990				—				173,191
Cooling capacity revenue			—				14,484				—				—				14,484
Cooling consumption revenue			—				18,495				—				—				18,495
Parking services			—				—				—				57,001				57,001
			—				35,180				170,990				57,001				263,171
Financing and Lease Income
Financing and equipment lease			—				3,537				—				—				3,537
			—				3,537				—				—				3,537
Total Revenue		$	167,494			$	38,717			$	579,032			$	57,001			$	842,244

In accordance with FASB ASC 280 Segment Reporting (formerly SFAS No. 131 or “Disclosures about Segments of an Enterprise and Related Information”), the Company disclosed EBITDA excluding non-cash items for the Company and each of the reportable segments as a key performance metric relied on by management in evaluating the performance of the Company and its segments. 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. The Company’s management considers EBITDA excluding non-cash items to be important in the overall assessment of the Company’s operating businesses individually and on consolidation. The Company’s management believes the presentation of EBITDA excluding non-cash items provides additional insight into the performance of the

TABLE OF CONTENTS

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

12. Reportable Segments  – (continued)

Company’s operating businesses and their ability to service or reduce debt, to fund growth capital projects and/or support distributions up to the holding company.

In 2008, the Company disclosed EBITDA only. The following tables, for the quarter and nine months ended September 30, 2008, have been conformed to the 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 tables ($ 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 September 30, 2009
		Energy-related Businesses								Airport-related Businesses								Total Reportable Segments
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking
Net income (loss)		$	694			$	(764	)		$	(7,612	)		$	(1,210	)		$	(8,892	)
Interest income			(1	)			—				(5	)			(1	)			(7	)
Interest expense			2,213				2,554				15,870				3,193				23,830
Provision (benefit) for income taxes			446				(500	)			(5,137	)			(907	)			(6,098	)
Depreciation			1,508				1,541				5,669				1,011				9,729
Amortization of intangibles			205				345				8,576				—				9,126
Unrealized losses (gains) on derivative instruments			3,194				4,069				10,517				(490	)			17,290
EBITDA excluding non-cash items		$	8,259			$	7,245			$	27,878			$	1,596			$	44,978

		Quarter Ended September 30, 2008
		Energy-related Businesses								Airport-related Businesses								Total Reportable Segments
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking
Net income (loss)		$	1,813			$	1,782			$	253			$	(1,583	)		$	2,265
Interest income			(9	)			(9	)			(143	)			(28	)			(189	)
Interest expense			2,363				2,618				15,894				3,769				24,644
Provision (benefit) for income taxes			1,166				623				170				(1,185	)			774
Depreciation			1,463				1,402				5,638				1,307				9,810
Amortization of intangibles			214				345				9,604				400				10,563
Unrealized losses (gains) on derivative instruments			73				(10	)			578				(88	)			553
EBITDA excluding non-cash items		$	7,083			$	6,751			$	31,994			$	2,592			$	48,420

TABLE OF CONTENTS

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

12. Reportable Segments  – (continued)

		Nine Months Ended September 30, 2009
		Energy-related Businesses								Airport-related Businesses								Total Reportable Segments
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking
Net income (loss)(1)		$	8,327			$	1,104			$	(88,094	)		$	(8,263	)		$	(86,926	)
Interest income			(14	)			(4	)			(83	)			(8	)			(109	)
Interest expense			6,723				7,593				52,635				11,681				78,632
Provision (benefit) for income taxes			5,359				721				(59,467	)			(6,184	)			(59,571	)
Depreciation			4,504				4,506				25,093				9,124				43,227
Amortization of intangibles			631				1,023				50,269				—				51,923
Goodwill impairment			—				—				71,200				—				71,200
Unrealized losses (gains) losses on derivative instruments			392				639				28,601				(163	)			29,469
EBITDA excluding non-cash items		$	25,922			$	15,582			$	80,154			$	6,187			$	127,845

		Nine Months Ended September 30, 2008
		Energy-related Businesses								Airport-related Businesses								Total Reportable Segments
		Gas Production and Distribution				District Energy				Airport Services				Airport Parking
Net income (loss)		$	5,395			$	1,477			$	9,595			$	(5,287	)		$	11,180
Interest income			(33	)			(34	)			(475	)			(91	)			(633	)
Interest expense			7,058				7,795				47,507				11,468				73,828
Provision (benefit) for income taxes			3,471				516				6,476				(3,956	)			6,507
Depreciation			4,367				4,354				15,772				3,866				28,359
Amortization of intangibles			642				1,027				28,594				1,943				32,206
Unrealized losses (gains) on derivative instruments			223				(28	)			1,133				(246	)			1,082
EBITDA excluding non-cash items		$	21,123			$	15,107			$	108,602			$	7,697			$	152,529

TABLE OF CONTENTS

MACQUARIE INFRASTRUCTURE COMPANY LLC
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 September 30,								Nine Months Ended September 30,
		2009				2008				2009				2008
Total reportable segments EBITDA excluding non-cash items		$	44,978			$	48,420			$	127,845			$	152,529
Interest income			8				268				116				1,038
Interest expense			(24,639	)			(26,114	)			(81,861	)			(77,616	)
Depreciation(1)			(9,729	)			(9,810	)			(43,227	)			(28,359	)
Amortization of intangibles(2)			(9,126	)			(10,563	)			(51,923	)			(32,206	)
Selling, general and administrative – corporate			(1,732	)			55				(6,080	)			(2,314	)
Fees to manager			(1,639	)			(2,737	)			(2,952	)			(11,872	)
Equity in earnings and amortization charges of investees			1,178				4,051				16,655				10,603
Goodwill impairment			—				—				(71,200	)			—
Unrealized losses on derivative instruments			(17,371	)			(765	)			(29,872	)			(1,651	)
Other income (expense), net			3				(220	)			226				(627	)
Total consolidated net (loss) income before income taxes and noncontrolling interests		$	(18,069	)		$	2,585			$	(142,273	)		$	9,525

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

		Quarter Ended September 30,								Nine Months Ended September 30,
		2009				2008				2009				2008
Gas production and distribution		$	1,334			$	2,753			$	4,915			$	7,182
District energy			2,044				1,356				5,447				3,323
Airport services			4,366				7,728				9,246				27,310
Airport parking			61				775				373				14,772
Total		$	7,805			$	12,612			$	19,981			$	52,587

TABLE OF CONTENTS

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

12. Reportable Segments  – (continued)

Property, equipment, land and leasehold improvements, goodwill and assets for the Company’s reportable segments as of September 30, were as follow ($ in thousands) (unaudited):

		Property, Equipment, Land and Leasehold Improvements								Goodwill								Total Assets
		2009(1)				2008				2009(2)				2008				2009				2008
Gas production and distribution		$	143,269			$	140,408			$	120,193			$	120,193			$	347,269			$	327,835
District energy			146,063				145,885				18,646				18,646				230,544				231,382
Airport services			289,157				315,997				377,343				504,794				1,497,028				1,775,287
Airport parking			85,066				101,552				—				138,722				191,017				299,828
Total		$	663,555			$	703,842			$	516,182			$	782,355			$	2,265,858			$	2,634,332

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

		As of September 30,
		2009				2008
Total assets of reportable segments		$	2,265,858			$	2,634,332
Investment in IMTT			201,585				201,209
Corporate and other			(102,568	)			(7,504	)
Total consolidated assets		$	2,364,875			$	2,828,037

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

		As of September 30,
		2009				2008
Goodwill of reportable segments		$	516,182			$	782,355
Corporate and other			—				(1,102	)
Total consolidated goodwill		$	516,182			$	781,253

13. Related Party Transactions

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

As of September 30, 2009, the Manager held 3,322,918 LLC interests of the Company, which were acquired concurrently with the closing of the initial public offering in December 2004 and also by reinvesting base management and performance fees in the Company. In addition, the Macquarie Group held LLC interests acquired in open market purchases.

TABLE OF CONTENTS

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

13. Related Party Transactions  – (continued)

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.

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 nine months ended September 30, 2009 and September 30, 2008, the Company incurred base management fees of $3.0 million and $11.9 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 Manager elected to reinvest the base management fee for the second quarter of 2009 in LLC interests and the Company issued 149,795 LLC interests to the Manager during the third quarter of 2009. The base management fee for the third quarter of 2009 will be reinvested in LLC interests during the fourth 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 nine months ended September 30, 2009 and September 30, 2008, the Manager charged the Company $192,000 and $186,000, 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 expensed as incurred. 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 September 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

During the third quarter of 2009, the Company has engaged Macquarie Group to provide consulting services to improve the efficiency on the recovery of accounts receivable at the airport services business. The Company incurred approximately $159,000 in fees and approximately $70,000 in out-of-pocket expenses.

TABLE OF CONTENTS

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

13. Related Party Transactions  – (continued)

Long-Term Debt

At September 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):

Nine Months Ended September 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 September 30, 2009			21,556
Portion of revolving credit facility commitment from Macquarie Group drawn down, as of September 30, 2009			14,755
Macquarie Group portion of the principal payments made to the revolving credit facility during the nine months ended September 30, 2009			578
Interest expense on Macquarie Group portion of the drawn down commitment, for the nine months ended September 30, 2009			491
Commitment fees to the Macquarie Group, for the nine months ended September 30, 2009			90

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 September 30, 2009, the airport services business had $827.4 million of its variable-rate term loans hedged, of which MBL was providing the interest rate swaps for a notional amount of $317.8 million. The remainder of the swaps are from an unrelated third party. During the nine months ended September 30, 2009, the airport services business made net payments to MBL of $10.7 million in relation to these swaps.

As discussed in Note 8, “Long-Term Debt”, for the nine months ended September 30, 2009, the airport services business paid $7.9 million in interest rate swap breakage fees, of which $1.6 million was paid to MBL.

At September 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 nine months ended September 30, 2009, the gas production and distribution business made net payments to MBL of $1.3 million 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 nine months ended September 30, 2009.

TABLE OF CONTENTS

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

13. Related Party Transactions  – (continued)

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 existing customer of the Company’s airport services business. For the nine months ended September 30, 2009, the airport services business recorded $5.9 million in revenue from Sentient. As of September 30, 2009, the airport services business had a $359,000 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.

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 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 nine months ended September 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 nine months ended September 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 September 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

The Company evaluated and disclosed the following events through November 5, 2009:

Airport Services Business Credit Facility

On November 4, 2009, per the revised terms of the term loan agreement, as described in Note 8, “Long-Term Debt”, the airport services business used $9.9 million of excess cash flow to prepay $9.0 million of the outstanding principal balance of the term loan debt and incurred $914,000 in interest rate swap breakage fees.

TABLE OF CONTENTS

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, our 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 airport services business have been negatively affected since mid-2008 by lower overall economic and aviation activity and perception issues regarding the general aviation sector. However, the results and activity levels at this business have stabilized over the last two quarters.

The uncertainty and instability in the credit markets appears to be subsiding. This is evident in the increase in the volume of lending activity and the price at which such lending is occurring compared with levels during the height of the global financial crisis. We believe that this improvement in the credit market has had a beneficial impact on the outlook for our businesses, given the significant amount of long-term debt those businesses have outstanding. Despite the improvement, we expect to continue to strengthen our consolidated balance sheet and those of our operating entities through prudent reduction in the amount of long-term debt outstanding, further increasing the likelihood that we will be able to successfully refinance this debt as it matures over approximately the next five years.

Management Strategy

MIC Inc. Revolving Credit Facility

At March 31, 2009 we reclassified the revolving credit facility at our holding company from long-term debt to current portion of long-term debt in our consolidated condensed balance sheet, due to its maturity on March 31, 2010. We have accumulated the excess cash generated by our gas production and distribution and district energy businesses as a means of repaying a portion of the amount due under the facility. With this cash repayment and assuming seasonally normal performance by the gas production and distribution and district energy businesses in the fourth quarter of 2009 and first quarter of 2010, we expect to have less than $30.0 million principal amount outstanding under this facility at the maturity date. We are in discussions with our lenders to convert the facility to a term loan and extend the maturity date. Under these revised terms, we would expect to fully repay the facility over the remainder of 2010. We continue to consider various other options for repayment of the facility including improving business performance, expense reductions, sale of assets sufficient to cover the remaining principal balance at maturity, or other sources of capital. We remain confident that we will be able to refinance or repay the outstanding borrowings under the facility by the current maturity date.

TABLE OF CONTENTS

Management Strategy – (continued)

Airport Parking Business

There is substantial doubt regarding the business’ ability to continue as a going concern. The business has engaged financial advisors to actively solicit a sale of the business. A letter of intent was signed during the quarter with a third party, which is conducting due diligence and with which the business is currently negotiating an asset purchase agreement. The business expects to close a sale transaction in 2010, which will likely occur in connection with a bankruptcy filing and consummation of a Chapter 11 plan. Proceeds generated as a result of the sale would be payable to the lenders of the business and not to us. Until an asset purchase agreement is signed and any conditions to closing have been met, including any approval of the sale needed as part of the bankruptcy process, we cannot provide assurance regarding the certainty or timing of a sale closing. As previously indicated, we have no intention of committing additional capital to this business and our ongoing liabilities are expected to be no more than $5.3 million in guarantees of a single parking facility lease. Creditors of this business do not have recourse to any assets of our holding company or any assets of our other businesses, other than approximately $5.3 million in a lease guarantee as of November 5, 2009.

Distributions

In February 2009, we suspended payment of quarterly cash distributions in order to reduce both holding company debt and operating company debt at certain businesses where the underlying fundamentals were strong. We intend to resume payment of cash distributions when our debt has been reduced to what we believe are sustainable levels, and when we have an acceptable degree of visibility into the functioning of the debt markets and prudent cash reserves.

Income Taxes

We file a consolidated federal income tax return that includes the taxable income of all our businesses, except IMTT. For 2009, we expect to have a federal net operating loss that we can carry forward, along with federal net operating losses from prior years, which we can deduct against future years’ taxable income. Accordingly, we do not expect to have a regular federal income tax liability or make federal tax payments at least through 2010. The cash state and local taxes paid by our businesses is discussed below in the sections entitled Income Taxes for each of our individual businesses.

Results of Operations

Consolidated

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

Key Factors Affecting Operating Results

TABLE OF CONTENTS

Results of Operations: Consolidated – (continued)

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

		Quarter Ended September 30,								Change Favorable/(Unfavorable)								Nine Months Ended September 30,								Change Favorable/(Unfavorable)
		2009				2008				$				%				2009				2008				$				%
		($ In Thousands) (Unaudited)
Revenue
Revenue from product sales		$	103,017			$	152,060				(49,043	)			(32.3	)		$	281,639			$	478,219				(196,580	)			(41.1	)
Revenue from product sales – utility			26,056				36,060				(10,004	)			(27.7	)			67,637				97,317				(29,680	)			(30.5	)
Service revenue			72,264				87,714				(15,450	)			(17.6	)			214,614				263,171				(48,557	)			(18.5	)
Financing and equipment lease income			1,190				1,164				26				2.2				3,587				3,537				50				1.4
Total revenue			202,527				276,998				(74,471	)			(26.9	)			567,477				842,244				(274,767	)			(32.6	)
Costs and expenses
Cost of product sales			61,349				109,801				48,452				44.1				160,624				337,819				177,195				52.5
Cost of product sales – utility			19,406				31,161				11,755				37.7				50,016				82,175				32,159				39.1
Cost of services			26,562				33,070				6,508				19.7				82,701				98,615				15,914				16.1
Gross profit			95,210				102,966				(7,756	)			(7.5	)			274,136				323,635				(49,499	)			(15.3	)
Selling, general and administrative			54,782