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Macquarie Infrastructure Company Reports Second Quarter 2009 Financial Results

Macquarie Infrastructure Company (NYSE: MIC), reported its financial results for the second quarter of 2009 including 4% growth in the amount of cash generated by its businesses. MIC also provided guidance to the market that:

  • Cash generated by its gas production and distribution and bulk liquid storage businesses for 2009 would be higher than previously anticipated due to improved operating results and lower capital expenditures;
  • Flight activity by general aviation jet aircraft appears to be stabilizing and, combined with the benefits of a cost reduction program at MIC’s airport services business, reaffirms management’s belief that no additional capital will be required by this business; and,
  • Its holding company level debt, including the refinance of any balance remaining at the existing March 2010 maturity date, would be fully repaid by the end of 2010, a year earlier than had been forecast at its shareholder meeting in June.

Cash generation was driven by strong performance at MIC’s gas production and distribution and bulk liquid storage businesses. Rate increases on contract renewals along with capital expenditure management drove improved performance at the bulk liquid storage business. Continued solid performance at the gas production and distribution business was attributed primarily to successful margin management in its non-utility operations. The Company’s 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.

Results for the airport services business reflect a stabilizing level of general aviation activity overall. General aviation jet flight movements, as measured by take-offs and landings, have been declining throughout the past year, although the rate of decline slowed in the second quarter. Quarterly gross profit reflected a normal decline associated with seasonal reductions in de-icing services and activity at recreational destinations. The decrease in cash generation was partially offset by additional reductions in selling, general and administrative expenses.

MIC reported a net loss of $29.0 million for the quarter. The quarterly earnings again reflect a number of non-cash items including:

  • a $58.3 million of pre-tax non-cash impairments in its airport services business that were a result of a decline in the value of certain sites within the airport services business due to lower levels of activity at those locations; partially offset by,
  • a net $19.7 million of non-cash gains in the value of interest rate hedges.

Through six months MIC reported a net loss of $82.0 million.

“While there is much more work to be done to increase shareholder value, I am pleased with the progress made in the second quarter,” said James Hooke, Chief Executive Officer of MIC. “Our businesses continue to generate attractive amounts of cash and we are using the cash to reduce indebtedness and to take advantage of growth opportunities in our bulk liquid storage business.”

MIC recorded consolidated revenue for the second quarter of 2009 of $180.8 million compared with $286.5 million in 2008. The 37% decrease was primarily the result of lower cost of jet fuel in 2009 versus 2008. The lower cost of jet fuel was also a substantial contributor to a decline in revenue of 35% for the six month period. Year to date revenue through June 30, 2009 totaled $365.0 million.

An analysis of gross profit removes the volatility in revenue associated with costs that are typically passed through to customers of infrastructure businesses. Gross profit for the quarter decreased 16% to $90.4 million from $108.1 million in 2008. The decline in gross profit was driven by a reduction in the volume of jet fuel sold compared with the same period in 2008, partially offset by margin expansion in certain businesses. Gross profit for the six months ended June 30 of $178.9 million was 19% lower than the first half of 2008.

The Company believes that its financial results under Generally Accepted Accounting Principles (“GAAP”) alone do not reflect all of the items that management considers in estimating the amount of cash available to reduce debt, make distributions or reinvest in growth projects. As a result MIC discloses “cash available before debt reduction” (“CADR”). The estimation of CADR begins with cash from operations and adjusts for changes in working capital and certain items of dividend income and cash expenditures for the quarter and year to date periods. Results for the Company’s airport parking business have been excluded from both periods as management is pursuing a number of strategic alternatives including a sale of the business, a restructuring or a filing for protection under bankruptcy laws.

MIC’s CADR for the second quarter totaled $31.2 million compared with $30.1 million on the same basis in the second quarter of 2008. The increase in CADR is primarily the result of improved performance at the Company’s bulk liquid storage and gas production and distribution businesses.

Cash Generation

The tables below summarize MIC’s CADR, by segment, for the quarter and year to date periods ended June 30, 2009. CADR for the second quarter of 2009 increased by approximately 4% compared with cash available for distribution reported in second quarter of 2008.

QTD CADR at June 30, 2009 ($ Millions)

Airport

Services

District

Energy

  TGC 

MIC LLC

 Total 

Parking
Cash from operations 8.3 3.0 4.0 6.4

21.7

-1.6

Working capital 1.8

0.2

0.2 -5.3

-3.1

-0.4
Cash from operations adjustments 0.8 -0.1 1.5 -1.7

0.5

0.2
Cash from investing and financing activities -0.9 0.0

-0.4

13.4

12.1

-0.5

Total cash available before debt reduction 10.0

3.1

5.3

12.8 31.2

-2.3

CADR includes the cash generated and retained by the bulk liquid storage business for the funding of previously approved growth capital expenditures. MIC’s 50% interest in this CADR is shown in the “MIC LLC” column above as a $13.4 million component of cash from investing and financing activities and a $1.5 million component of cash from operations.

Of the $10.0 million in CADR generated by the airport services business during the second quarter, $8.0 million was applied to the pre-payment of the business’ debt facility and $0.8 million was applied to the payment of related interest rate swap breakage fees.

A combined $8.4 million, or $0.19 per share, of CADR was generated by the district energy and gas production and distribution businesses in the second quarter. This cash, along with cash retained during the first quarter, is available to repay a portion of the debt outstanding under the MIC Inc. revolving credit facility.

CADR is also adjusted for changes in working capital since these effects are believed to be temporary. For the quarter these adjustments decreased CADR by approximately $3.1 million.

Cash from investing and financing adjustments recorded in the Total column include a net $4.9 million of cash capital expenditures and a $1.6 million tax adjustment attributable to the gas production and distribution business.

YTD CADR at June 30, 2009 ($ Millions)

Airport

Services

District

Energy

 TGC 

MIC LLC

 Total 

Parking
Cash from operations 20.0 4.8

   10.2

4.7

  39.7

-2.9
Working capital -4.7 0.3 1.7 -1.5 -4.2 -0.7
Cash from operations adjustments 0.9 -0.2 1.6 -1.6

0.7

0.2
Cash from investing and financing activities 2.8 0.0 -1.2 18.1

19.7

-1.1
Total cash available before debt reduction 19.0 4.9 12.3 19.7

55.9

-4.5

Through six months the amount of cash available before debt reduction declined by 10% compared with the first half of 2008.

MIC believes that disclosure of EBITDA excluding non-cash items for the Company and each of its operating segments, individually and in consolidation, is meaningful in that it is a key metric relied on by management in evaluating the performance of these entities. EBITDA excluding non-cash items is defined as net income (loss) before interest, taxes, depreciation and amortization and non-cash items, principally goodwill impairments and unrealized gains and losses on derivative instruments. The presentation of EBITDA excluding non-cash items provides additional insight into the performance of the operating companies and their ability to service or reduce debt, to fund existing growth capital projects and/or support distributions up to the MIC holding company.

For the quarter and six months ended June 30, 2008, MIC reported EBITDA. The following tables, reflecting results of operations for the Company’s businesses for the quarter and six months ended June 30, 2008, have been conformed to current period's presentation reflecting EBITDA excluding non-cash items.

Energy-Related Businesses

Bulk Liquid Storage Terminal Business

($000) 2Q’09 2Q’08 %Change 1H’09 1H’08 %Change
Terminal Revenue 77,752 72,899 6.7 161,562 147,123 9.8

Terminal Gross Profit

39,738 33,456 18.8 85,099 69,138 23.1

EBITDA excluding
 non-cash items*

33,165 29,552 12.2 71,946 59,557 20.8

* See attached tables for a reconciliation of EBITDA excluding non-cash items to net income

Terminal revenue and terminal gross profit increased as a result of an 8% increase in average storage rates and increases in rented storage capacity resulting from tank construction projects completed in the second half of 2008.

Cash flow from operating activities through the second quarter increased to $66.8 million from $41.6 million in 2008. Excess cash flows generated in both the quarter and year to date periods were retained for reinvestment in approved growth projects.

Maintenance and environmental capital expenditures totaled $8.4 million and $16.7 million for the quarter and year to date periods, respectively. The business has revised its forecast spend on maintenance capital expenditures for the full-year 2009 to approximately $55.0 million, from $65.0 to $67.0 million. The decrease reflects primarily the deferral of certain infrastructure-related projects, as well as a deferral of a small number of tank cleanings and inspections.

The business has received a commitment letter for a $30.0 million term loan from a U.S. bank. The commitment is subject to final documentation, completion of due diligence and satisfaction of customary closing conditions. The proceeds of the loan would be used to fund a portion of the growth projects currently underway in the business. The key provisions of the debt would include an interest rate margin of an average of 4.0% over LIBOR and a maturity of June 2012. The bank, in its capacity as agent, may also syndicate up to an additional $170.0 million of financing on the same terms, for a potential total of $200.0 million of proceeds.

Gas Production and Distribution Business

($000) 2Q’09 2Q’08 % Change 1H’09 1H’08 % Change
Revenue 39,804 55,581 (28.4) 81,046 107,939 (24.9)
Gross Profit 13,471 11,316 19.0 28,095 22,704 23.7

EBITDA excluding
 non-cash items*

7,909 6,994 13.1 17,663 14,040 25.8

* See attached tables for a reconciliation of EBITDA excluding non-cash items to net income

The Company’s gas production and distribution business received interim approval of its August 2008 rate case from the Hawaii Public Utilities Commission during the quarter. The approval allowed the business to commence billing utility customers at new rates on June 11, 2009 and thereafter. The new rates are expected to generate an additional $9.5 million in revenue annually. The rate increase was the first for the utility portion of the business since 2001.

The year on year increase in gross profit was primarily the result of improved contribution margin in the unregulated operations generated by a stable customer base and falling LPG prices.

District Energy Business

($000) 2Q’09 2Q’08 % Change 1H’09 1H’08 % Change
Revenue 12,560 12,797 (1.9) 21,633

21,297

1.6

Gross Profit 4,268 4,721 (9.6) 6,973 7,342 (5.0)

EBITDA excluding
 non-cash items*

4,925 5,332 (7.6) 8,337 8,356 (0.2)

* See attached tables for a reconciliation of EBITDA excluding non-cash items to net income

Capacity revenue, based on the number of tons of cooling under contract, grew with an increase in the number of customers connected to the system and the step-up in inflation-linked rate escalators over the prior comparable period.

A cooler second quarter this year compared with 2008 reduced cooling demand and consumption revenue and contributed to a decrease in gross profit. The cooler summer in Chicago is likely to result in lower full-year gross profit, although the impact on EBITDA excluding non-cash items is expected to be mitigated by associated reductions in maintenance and repairs.

Aviation-Related Businesses

Airport Services

($000) 2Q’09 2Q’08 % Change 1H’09 1H’08 % Change
Revenue 111,044 198,745 (44.1) 228,225 397,695 (42.6)
Gross Profit 68,799 87,963 (21.8) 143,810 183,231 (21.5)

EBITDA excluding
 non-cash items*

26,145 35,981 (27.3) 51,114 76,608 (33.3)

* See attached tables for a reconciliation of EBITDA excluding non-cash items to net income

The sequential decline in gross profit (2Q’09 compared with 1Q’09) reflects normal seasonal shifts in activity at recreational destinations and reduced de-icing services partially offset by additional expense reductions. Annualized savings now exceed $27.0 million relative to a normalized second quarter of 2008.

General aviation jet aircraft flight movements at the 68 airports at which the airport services business operates decreased by approximately 22% during the second quarter of 2009 compared with the second quarter of 2008. Industry-wide, general aviation flight movements declined by over 25% during the same period, according to data compiled by the Federal Aviation Administration.

The volume of general aviation jet fuel sold by the business declined by 22% in the second quarter of 2009 compared with the second quarter of 2008. Weighted average margins on fuel sales decreased 1.5% in the quarter, although margins on retail sales increased slightly. The decline reflects, in part, an increase in the proportion of fuel sales to base tenants who typically have agreements to buy fuel at a discount compared with transient aircraft.

The airport services business generated $10.0 million of CADR in the second quarter. In June, approximately $8.0 million of CADR, after interest rate swap breakage fees of $0.8 million, was used to reduce the business’ term loan principal. The business made an additional $6.0 million pre-payment of loan principal and paid swap breakage fees of $0.6 million during the first week of August using excess cash on its balance sheet.

Year to date the business has reduced the principal on its term loan facility by $66.6 million. Including the August pre-payment the ratio of debt to EBITDA , as adjusted, (leverage, as defined in the term loan agreement) of the airport services business is 7.67 times compared with a maximum allowable under its debt facility of 8.25 times.

Airport Parking Business

($000) 2Q’09 2Q’08 % Change 1H’09 1H’08 % Change
Revenue 17,439 19,420 (10.2) 34,046 38,315 (11.1)
Gross Profit 3,826 4,076 (6.1) 47 7,394 (99.4)

EBITDA excluding
 non-cash items*

2,840 2,715 4.6 4,591 5,105 (10.1)

* See attached tables for a reconciliation of EBITDA excluding non-cash items to net income

Lot utilization, as measured by the number of cars exiting the airport parking business’ facilities, declined 8.5% compared with the second quarter in 2008 and 14.3% year to date. The decline in volume and revenue was partially offset by a fractional increase in average revenue per car in the quarter and an approximately 8% increase in the first half year.

A year over year decline in gross profit was partially offset by decreased rent expense resulting from the purchase of a previously leased property in the first quarter of 2008.

The airport parking business does not have sufficient liquidity or capital resources to pay the aggregate principal amount of its maturing debt obligations and is not expected to be able to refinance its primary debt facility when it matures in September of 2009. MIC does not intend to contribute additional capital to this business other than potentially via obligations that it has guaranteed. Without substantial concessions from its lenders it is likely that this business will default on its obligations and there is doubt regarding the business’ ability to continue as a going concern.

The airport parking business’ impact on MIC going forward is limited to approximately $6.2 million comprising an estimated $0.8 million final interest rate swap guarantee payment and potential payments under a single lease agreement of up to an estimated $5.4 million.

Impairment of Certain Intangible and Long-Lived Assets

MIC recorded non-cash pre-tax impairment charges in the second quarter of 2009 of $58.3 million to write down the carrying value of certain intangible and long-lived assets and a portion of the goodwill related to its airport services business in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”) and Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). These standards require the Company to evaluate intangible assets and long-lived assets for impairment whenever a triggering event occurs.

Per SFAS No. 142 and SFAS No. 144, the Company is required to consider the fair value of its reporting units in its evaluation of impairment. Factors considered in determining fair value for purposes of SFAS 142 include, among other things, the Company’s market capitalization as determined by quoted market prices for its common stock, market values of the Company’s reporting units based on common market multiples for comparable companies, estimations of future discounted cash flows and discount rates that appropriately reflect not only the Company’s businesses, but also the current overall macroeconomic environment.

The Company will continue to monitor the valuation of goodwill, intangibles and other long-lived assets in light of prevailing market conditions.

Conference Call and WEBCAST

When: Management has scheduled a conference call for 11:00 a.m. Eastern Time on Thursday, August 6, 2009 to review the Company’s results.

How: To listen to the conference call please dial +1(888) 293-6979 (domestic) or +1(719) 457-2713 (international) at least 10 minutes prior to the scheduled start time. Interested parties can also listen to a live webcast of the call. The webcast will be accessible via the Company’s website at www.macquarie.com/mic. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the webcast.

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company website the morning of August 6, 2009 prior to the conference call. A link to the materials will be located on the homepage of the MIC website.

Replay: For interested individuals unable to participate in the conference call, a replay will be available after 2:00 p.m. on August 6, 2009 through August 20, 2009, at +1(888) 203-1112 (domestic) or +1(719) 457-0820 (international), Passcode: 3826141. An online archive of the webcast will be available on the Company’s website for one year following the call.

About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic, everyday services, to customers in the United States. Its ongoing businesses consist of three energy-related businesses including a 50% indirect interest in a bulk liquid storage terminal business (International-Matex Tank Terminals), a gas production and distribution business (The Gas Company in Hawaii) and a district energy business (Thermal Chicago) as well as an aviation-related airport services business (Atlantic Aviation). The Company is managed by a wholly-owned subsidiary of the Macquarie Group. For additional information, please visit the Macquarie Infrastructure Company website at www.macquarie.com/mic.

Forward-Looking Statements

This filing contains forward-looking statements. We may, in some cases, use words such as "project”, "believe”, "anticipate”, "plan”, "expect”, "estimate”, "intend”, "should”, "would”, "could”, "potentially”, or "may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this report are subject to a number of risks and uncertainties, some of which are beyond our control including, among other things: changes in general economic or business conditions, our ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement our strategy, our shared decision-making with co-investors over investments including the distribution of dividends, our regulatory environment establishing rate structures and monitoring quality of service, demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks, fuel and gas costs, our ability to recover increases in costs from customers, reliance on sole or limited source suppliers, foreign exchange fluctuations, risks or conflicts of interests involving our relationship with the Macquarie Group and changes in U.S. federal tax law.

Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware could also cause our actual results to differ. In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this release may not occur. These forward-looking statements are made as of the date of this release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

“Macquarie Group” refers to the Macquarie Group of companies, which comprises Macquarie Group Limited and its worldwide subsidiaries and affiliates. 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. MIC-G

MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)
June 30, 2009December 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
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

MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and per Share Data)
Quarter EndedSix Months Ended
June 30, 2009June 30, 2008June 30, 2009June 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

MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)
Six Months Ended
June 30, 2009June 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)
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

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

Quarter Ended
June 30,

Change
Favorable/(Unfavorable)

Six Months Ended
June 30,

Change
Favorable/(Unfavorable)

20092008$%20092008$%
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
NM - Not meaningful

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF CONSOLIDATED NET (LOSS) INCOME TO CONSOLIDATED EBITDA EXCLUDING NON-CASH ITEMS

Quarter Ended
June 30,

Change
Favorable/(Unfavorable)

Six Months
Ended June 30,

Change
Favorable/(Unfavorable)

20092008$%20092008$%
Net (loss) income $ (28,958) $ 8,338 $ (81,984) $ 6,348
Interest expense, net 26,585 25,379 57,114 50,732
(Benefit) provision for income taxes (5,689) (364) (41,348) 1,000
Depreciation (1) 9,270 6,315 22,420 13,038
Depreciation - cost of services (1) 2,364 2,765 11,078 5,511
Amortization (2) 12,532 10,904 42,797 21,643
Goodwill impairment 53,200 - 71,200 -
(Gain) loss on derivative instruments (19,724) 581 12,501 886

50% share of IMTT unrealized (gains)
 losses on derivative instruments

(12,611) (9,005) (14,264) (145)
EBITDA excluding non-cash items $ 36,969 $ 44,913 (7,944) (17.7) $ 79,514 $ 99,013 (19,499) (19.7)

____________________________________

(1) Depreciation - cost of services includes depreciation expense for our district energy business and airport parking business, which are reported in cost of services in our consolidated condensed statements of operations. Depreciation and Depreciation - cost of services do not include step-up depreciation expense of $1.7 million for each quarter in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated condensed statements of operations.

(2) Amortization does not include step-up amortization expense of $283,000 for each quarter related to intangible assets in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated condensed statements of operations.

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF SEGMENT NET (LOSS) INCOME TO EBITDA EXCLUDING NON-CASH ITEMS AND SEGMENT REVENUE TO CONTRIBUTION MARGIN

Energy–Related Business: Bulk Liquid Storage Terminal Business

Quarter Ended

Six Months Ended

June 30,

Change

June 30,

Change

20092008

Favorable/(Unfavorable)

20092008

Favorable/(Unfavorable)

$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Terminal revenue 77,752 72,899 4,853 6.7 161,562 147,123 14,439 9.8
Environmental response revenue 4,222 5,331 (1,109) (20.8) 7,215 9,501 (2,286) (24.1)
Total revenue 81,974 78,230 3,744 4.8 168,777 156,624 12,153 7.8
Costs and expenses
Terminal operating costs 38,014 39,443 1,429 3.6 76,463 77,985 1,522 2.0
Environmental response operating costs 4,130 4,166 36 0.9 7,930 7,895 (35) (0.4)
Total operating costs 42,144 43,609 1,465 3.4 84,393 85,880 1,487 1.7
Terminal gross profit 39,738 33,456 6,282 18.8 85,099 69,138 15,961 23.1
Environmental response gross profit (loss) 92 1,165 (1,073) (92.1) (715) 1,606 (2,321) (144.5)
Gross profit 39,830 34,621 5,209 15.0 84,384 70,744 13,640 19.3
General and administrative expenses 6,583 6,365 (218) (3.4) 12,567 13,195 628 4.8
Depreciation and amortization 13,454 10,323 (3,131) (30.3) 26,278 20,657 (5,621) (27.2)
Operating income 19,793 17,933 1,860 10.4 45,539 36,892 8,647 23.4
Interest expense, net (7,551) (5,173) (2,378) (46.0) (14,612) (9,892) (4,720) (47.7)
Other (expense) income (10) 1,194 (1,204) (100.8) (168) 1,751 (1,919) (109.6)
Unrealized gains on derivative instruments 25,222 18,010 7,212 40.0 28,528 290 28,238 NM
Provision for income taxes (14,959) (12,418) (2,541) (20.5) (23,898) (11,462) (12,436) (108.5)
Noncontrolling interest (72) 102 (174) (170.6) 297 257 40 15.6
Net income 22,423 19,648 2,775 14.1 35,686 17,836 17,850 100.1
Reconciliation of net income to EBITDA excluding non-cash items:
Net income 22,423 19,648 35,686 17,836
Interest expense, net 7,551 5,173 14,612 9,892
Provision for income taxes 14,959 12,418 23,898 11,462
Depreciation and amortization 13,454 10,323 26,278 20,657
Unrealized gains on derivative instruments (25,222) (18,010) (28,528) (290)
EBITDA excluding non-cash items 33,165 29,552 3,613 12.2 71,946 59,557 12,389 20.8

______________________________________

NM - Not meaningful

Energy–Related Business: Gas Production and Distribution Business

Quarter Ended

Six Months Ended

June 30,

Change

June 30,

Change

20092008

Favorable/(Unfavorable)

20092008

Favorable/(Unfavorable)

$$$%$$$%

($ In Thousands) (Unaudited)

Contribution margin

Revenue - utility 21,414 31,858 (10,444 ) (32.8 ) 41,581 61,257 (19,676 ) (32.1 )
Cost of revenue - utility 13,045 24,078 11,033 45.8 25,330 45,802 20,472 44.7
Contribution margin - utility 8,369 7,780 589 7.6 16,251 15,455 796 5.2
Revenue - non-utility 18,390 23,723 (5,333 ) (22.5 ) 39,465 46,682 (7,217 ) (15.5 )
Cost of revenue - non-utility 8,131 15,344 7,213 47.0 17,617 29,768 12,151 40.8
Contribution margin - non-utility 10,259 8,379 1,880 22.4 21,848 16,914 4,934 29.2
Total contribution margin 18,628 16,159 2,469 15.3 38,099 32,369 5,730 17.7
Production 1,356 1,295 (61 ) (4.7 ) 2,592 2,512 (80 ) (3.2 )
Transmission and distribution 3,801 3,548 (253 ) (7.1 ) 7,412 7,153 (259 ) (3.6 )
Gross profit 13,471 11,316 2,155 19.0 28,095 22,704 5,391 23.7
Selling, general and administrative expenses 5,473 4,423 (1,050 ) (23.7 ) 10,407 8,836 (1,571 ) (17.8 )
Depreciation and amortization 1,732 1,664 (68 ) (4.1 ) 3,422 3,332 (90 ) (2.7 )
Operating income 6,266 5,229 1,037 19.8 14,266 10,536 3,730 35.4
Interest expense, net (2,203 ) (2,360 ) 157 6.7 (4,497 ) (4,671 ) 174 3.7
Other (expense) income (89 ) 101 (190 ) (188.1 ) (25 ) 172 (197 ) (114.5 )
Unrealized gains (losses) on derivative instruments 3,452 (129 ) 3,581 NM 2,802 (150 ) 2,952 NM
Provision for income taxes (2,908 ) (1,113 ) (1,795 ) (161.3 ) (4,913 ) (2,305 ) (2,608 ) (113.1 )
Net income (1) 4,518 1,728 2,790 161.5 7,633 3,582 4,051 113.1
Reconciliation of net income to EBITDA excluding non-cash items:
Net income (1) 4,518 1,728 7,633 3,582
Interest expense, net 2,203 2,360 4,497 4,671
Provision for income taxes 2,908 1,113 4,913 2,305
Depreciation and amortization 1,732 1,664 3,422 3,332
Unrealized (gains) losses on derivative instruments (3,452 ) 129 (2,802 ) 150
EBITDA excluding non-cash items 7,909 6,994 915 13.1 17,663 14,040 3,623 25.8

_____________________________________

NM - Not meaningful
(1) Corporate allocation expense and the federal tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.

Energy–Related Business: District Energy Business

Quarter Ended

Six Months Ended

June 30,

Change

June 30,

Change

20092008

Favorable/(Unfavorable)

20092008

Favorable/(Unfavorable)

$$$%$$$%
($ In Thousands) (Unaudited)
Cooling capacity revenue 5,110 4,828 282 5.8 10,007 9,634 373 3.9
Cooling consumption revenue 5,502 6,073 (571 ) (9.4 ) 7,730 7,841 (111 ) (1.4 )
Other revenue 743 717 26 3.6 1,499 1,449 50 3.5
Finance lease revenue 1,205 1,179 26 2.2 2,397 2,373 24 1.0
Total revenue 12,560 12,797 (237 ) (1.9 ) 21,633 21,297 336 1.6
Direct expenses — electricity 3,784 3,826 42 1.1 5,388 5,002 (386 ) (7.7 )
Direct expenses — other (1) 4,508 4,250 (258 ) (6.1 ) 9,272 8,953 (319 ) (3.6 )
Direct expenses — total 8,292 8,076 (216 ) (2.7 ) 14,660 13,955 (705 ) (5.1 )
Gross profit 4,268 4,721 (453 ) (9.6 ) 6,973 7,342 (369 ) (5.0 )
Selling, general and administrative expenses 716 766 50 6.5 1,354 1,758 404 23.0
Amortization of intangibles 341 341 - - 678 682 4 0.6
Operating income 3,211 3,614 (403 ) (11.2 ) 4,941 4,902 39 0.8
Interest expense, net (2,471 ) (2,608 ) 137 5.3 (5,035 ) (5,152 ) 117 2.3
Other income 45 46 (1 ) (2.2 ) 94 110 (16 ) (14.5 )
Unrealized gains on derivative instruments 5,199 48 5,151 NM 3,430 18 3,412 NM
Income tax (provision) benefit (2,296 ) (247 ) (2,049 ) NM (1,221 ) 107 (1,328 ) NM
Noncontrolling interest (174 ) (145 ) (29 ) (20.0 ) (341 ) (290 ) (51 ) (17.6 )
Net income (loss) (2) 3,514 708 2,806 NM 1,868 (305 ) 2,173 NM
Reconciliation of net income (loss) to EBITDA excluding non-cash items:
Net income (loss) (2) 3,514 708 1,868 (305 )
Interest expense, net 2,471 2,608 5,035 5,152
Income tax provision (benefit) 2,296 247 1,221 (107 )
Depreciation 1,502 1,476 2,965 2,952
Amortization of intangibles 341 341 678 682
Unrealized gains on derivative instruments (5,199 ) (48 ) (3,430 ) (18 )
EBITDA excluding non-cash items 4,925 5,332 (407 ) (7.6 ) 8,337 8,356 (19 ) (0.2 )

______________________________________

NM - Not meaningful

(1) Includes depreciation expense of $1.5 million for each of the quarters ended June 30, 2009 and 2008, and $3.0 million for each of the six month periods ended June 30, 2009 and 2008.

(2) Corporate allocation expense and the federal tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.

Aviation-Related Business: Airport Services Business

Quarter Ended
June 30,

Change

Six Months Ended
June 30,

Change

20092008

Favorable/(Unfavorable)

20092008

Favorable/(Unfavorable)

$$$%$$$%
($ In Thousands) (Unaudited)
Revenue
Fuel revenue 71,040 143,111 (72,071 ) (50.4 ) 139,157 279,477 (140,320 ) (50.2 )
Non-fuel revenue 40,004 55,634 (15,630 ) (28.1 ) 89,068 118,218 (29,150 ) (24.7 )
Total revenue 111,044 198,745 (87,701 ) (44.1 ) 228,225 397,695 (169,470 ) (42.6 )
Cost of revenue
Cost of revenue-fuel 39,468 101,914 62,446 61.3 76,935 193,796 116,861 60.3
Cost of revenue-non-fuel 2,777 8,868 6,091 68.7 7,480 20,668 13,188 63.8
Total cost of revenue 42,245 110,782 68,537 61.9 84,415 214,464 130,049 60.6
Fuel gross profit 31,572 41,197 (9,625 ) (23.4 ) 62,222 85,681 (23,459 ) (27.4 )
Non-fuel gross profit 37,227 46,766 (9,539 ) (20.4 ) 81,588 97,550 (15,962 ) (16.4 )
Gross profit 68,799 87,963 (19,164 ) (21.8 ) 143,810 183,231 (39,421 ) (21.5 )
Selling, general and administrative expenses (1) 42,569 52,308 9,739 18.6 92,483 106,933 14,450 13.5
Goodwill impairment 53,200 - (53,200 ) NM 71,200 - (71,200 ) NM
Depreciation and amortization 19,729 14,487 (5,242 ) (36.2 ) 61,117 29,124 (31,993 ) (109.9 )
Operating (loss) income (46,699 ) 21,168 (67,867 ) NM (80,990 ) 47,174 (128,164 ) NM
Interest expense, net (16,456 ) (15,443 ) (1,013 ) (6.6 ) (36,687 ) (31,281 ) (5,406 ) (17.3 )
Other (expense) income (85 ) 326 (411 ) (126.1 ) (213 ) 310 (523 ) (168.7 )
Unrealized gains (losses) on derivative instruments 11,520 (356 ) 11,876 NM (18,084 ) (555 ) (17,529 ) NM
Benefit (provision) for income taxes 20,844 (2,295 ) 23,139 NM 54,798 (6,306 ) 61,104 NM
Net (loss) income (2) (30,876 ) 3,400 (34,276 ) NM (81,176 ) 9,342 (90,518 ) NM
Reconciliation of net (loss) income to EBITDA excluding non-cash items:
Net (loss) income (2) (30,876 ) 3,400 (81,176 ) 9,342
Interest expense, net 16,456 15,443 36,687 31,281
(Benefit) provision for income taxes (20,844 ) 2,295 (54,798 ) 6,306
Depreciation and amortization 19,729 14,487 61,117 29,124
Goodwill impairment 53,200 - 71,200 -
Unrealized (gains) losses on derivative instruments (11,520 ) 356 18,084 555
EBITDA excluding non-cash items 26,145 35,981 (9,836 ) (27.3 ) 51,114 76,608 (25,494 ) (33.3 )
NM - Not meaningful
(1) Includes $2.4 million increase in the bad debt reserve in the first quarter of 2009 due to the deterioration of accounts receivable aging and $1.2 million in debt amendment costs incurred in February 2009.
(2) Corporate allocation expense and the federal tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.

Aviation–Related Business: Airport Parking Business

Quarter Ended

Six Months Ended

June 30,

Change

June 30,

Change

20092008

Favorable/(Unfavorable)

20092008

Favorable/(Unfavorable)

$$$%$$$%
($ In Thousands) (Unaudited)
Revenue 17,439 19,420 (1,981 ) (10.2 ) 34,046 38,315 (4,269 ) (11.1 )
Direct expenses (1) 13,613 15,344 1,731 11.3 33,999 30,921 (3,078 ) (10.0 )
Gross profit 3,826 4,076 (250 ) (6.1 ) 47 7,394 (7,347 ) (99.4 )
Selling, general and administrative expenses 3,032 2,912 (120 ) (4.1 ) 5,256 5,606 350 6.2
Amortization of intangibles - 727 727 NM - 1,543 1,543 NM
Operating income (loss) 794 437 357 81.7 (5,209 ) 245 (5,454 ) NM
Interest expense, net (4,464 ) (3,749 ) (715 ) (19.1 ) (8,481 ) (7,636 ) (845 ) (11.1 )
Other (expense) income (29 ) (11 ) (18 ) (163.6 ) 474 61 413 NM
Unrealized (losses) gains on derivative instruments (327 ) 81 (408 ) NM (327 ) 158 (485 ) NM
Benefit for income taxes 1,204 1,270 (66 ) (5.2 ) 5,277 2,771 2,506 90.4
Noncontrolling interest 1,213 273 940 NM 1,213 697 516 74.0
Net loss (2) (1,609 ) (1,699 ) 90 5.3 (7,053 ) (3,704 ) (3,349 ) (90.4 )
Reconciliation of net loss to EBITDA excluding non-cash items:
Net loss (2) (1,609 ) (1,699 ) (7,053 ) (3,704 )
Interest expense, net 4,464 3,749 8,481 7,636
Benefit for income taxes (1,204 ) (1,270 ) (5,277 ) (2,771 )
Depreciation (1) 862 1,289 8,113 2,559
Amortization of intangibles - 727 - 1,543
Unrealized losses (gains) on derivative instruments 327 (81 ) 327 (158 )
EBITDA excluding non-cash items 2,840 2,715 125 4.6 4,591 5,105 (514 ) (10.1 )

_________________________________________

NM - Not meaningful
(1) Includes depreciation expense of $862,000 and $1.3 million for the quarters ended June 30, 2009 and 2008, respectively, and $8.1 million and $2.6 million for the six month periods ended June 30, 2009 and 2008, respectively. Depreciation expense for the six months period ended June 30, 2009 includes a non-cash impairment charge of $6.4 million.
(2) Corporate allocation expense and other intercompany fees and the federal tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.

Contacts:

Macquarie Infrastructure Company
Investor enquiries
Jay A. Davis, 212-231-1825
Investor Relations
or
Media enquiries
Alex Doughty, 212-231-1310
Corporate Communications

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