##### 



Exhibit 99.1
 Selected Pages of the
Annual Report
on Form 10-K For the Fiscal Year Ended December 31, 2004 LIQUIDITY AND CAPITAL RESOURCES
 While we do not intend to retain significant cash balances in excess of what is required as
prudent reserves and do not have in place any credit facilities at the holding company level, we
believe that we will have sufficient liquidity and capital resources to meet our future liquidity
requirements and the requirements of our dividend policy, based on the following factors and
assuming that we can refinance the Atlantic, AvPorts and Macquarie Parking debt facilities at their
respective maturities:  
    all of our businesses and investments generate, and are expected to continue to
generate, significant operating cash flow;
    the ongoing maintenance capital expenditure associated with our businesses is modest
and readily funded from their respective operating cash flow;
    all significant short-term growth capital expenditure will be funded with the cash
on hand which we raised as part of our initial public offering and concurrent private
placement in December 2004 or from committed undrawn debt facilities; and
    CHL has amortizing debt, with the amortization payments expected to be paid from
operating cash flow. We also have amortizing debt for Thermal Chicago/Northwind
Aladdin and partially amortizing debt for Atlantic. Both the Thermal Chicago/Northwind
Aladdin and Atlantic debt will begin to amortize in 2007, with the amortization
payments expected to be paid from operating cash flow. Atlantic, AvPorts and Macquarie Parking have significant bullet payments due under their
respective credit facilities in 2011, 2007 and 2006. While we believe that we will be able to
refinance the bullet payments prior to their respective maturities, in the event we cannot we may
default on that debt. We have no reason to believe that we will not be able to refinance the debt
when due. The section below discusses the sources and uses of cash of our businesses and investments.




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Our Consolidated Cash Flow We acquired all of our businesses and investments on December 22 and December 23, 2004 using
proceeds from our initial public offering and concurrent private placement. As a consequence, our
consolidated cash flows from operating, financing and investing activities reflect the nine-day
period between December 22, 2004 and December 31, 2004. Any comparisons of our consolidated cash
flows from operating, investing and financing activities for this short period in 2004 to any prior
period would not be meaningful. Therefore we have included a comparison of the cash flows from
operating, financing and investing activities for each of our consolidated businesses in 2004
against 2003, which we believe is a more appropriate approach to explaining the historical
financial performance of the Company. We also discuss the historical cash flows from operating,
investing and financing activities for our toll road business and our investments in MCG and SEW. The cash flows from operating activities of some of our consolidated businesses in 2004
reflect the impact of the acquisition of these businesses by the respective purchasers. In
connection with such acquisitions, some of the businesses, prior to our acquisition, incurred
substantial costs in addition to normal operating costs. As a result, our businesses and we have
recorded in our respective cash flows from operations a number of cash expenses, which we do not
believe are indicative of the ongoing financial performance of our businesses, including:  
    Non-recurring transaction costs incurred by the prior owners related to the sale of
Atlantic ($1.2 million) and Thermal Chicago ($0.8 million) to NACH and MDEH,
respectively;
    bridge financing fees and swap breakage costs incurred by NACH of $6.6 million and
MDEH of $5.9 million, which were expensed when permanent financing was secured for
those businesses;
    payment of a make-whole premium of $10.3 million by the prior owners of Thermal
Chicago, made in connection with the retirement of the existing debt prior to its sale
to MDEH; and
    in our consolidated statement of cash flows, initial formation and acquisition costs
totaling $6 million. Since we do not have a full year of results that consolidate our businesses and investments,
our consolidated statement of cash flows does not reflect the full year performance and
distributions of our cost and equity investments, all of which we expect to make significant
distributions to us. We anticipate receiving or would have received:  
    $3.7 million from our interest in ETT Nevada Inc., for the period January 1, 2004 to
September 29, 2004, when it was acquired indirectly by MDEH, which are not included in
MDEHs 2004 cash flows. The results of ETT Nevada Inc. have been included in the
results of MDEH since its acquisition;
    $1.2 million in interest income from our ownership of MANAs subordinated debt;
    dividends from SEW for the year ended December 31, 2005 of approximately $8.5 million;
    distributions from our toll road business for the year ended December 31, 2005 of
approximately $9.4 million, including a one-time release of a cash deposit of
approximately $1.9 million;
    dividends from MCG for the year ended December 31, 2005 of approximately $3.4
million, including a dividend of approximately $1.7 million paid in February 2005 and
an expected dividend of approximately $1.7 million payable in August 2005, based on the
public statements of MCG management regarding distributions per share for the MCG
fiscal year ended June 30, 2005; and
    cash flow from operating, financing and investing activities for GAH, which was
acquired by NACH on January 14, 2005. Our consolidated results of operations and cash flow from operations also do not fully reflect
the ongoing administrative expenses we expect to incur as a public company, such as accounting,
legal and other consultant fees, SEC and listing fees, directors fees and directors and officers
insurance and management fees. Currently we estimate such incremental
cash fees and expenses to be approximately
$12.2 million per year. We expect that a majority of such fees and expenses will be deductible to
MIC Inc. and hence will reduce MIC Inc.s U.S. federal and state tax payments. 72




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Prior to our acquisition, our businesses incurred a total of $13 million in 2004 for growth
and maintenance capital expenditures. For 2005, we have partially pre-funded our projected growth
capital expenditure requirements from the proceeds of the offering and will also use working
capital debt facilities as a further funding source. We expect to fund the remainder of our
projected capital expenditure requirements for 2005 of $6.2 million from consolidated cash flow
from operations. On a consolidated basis, cash flows used by operating activities totaled $4 million for the
nine days ended December 31, 2004. This is primarily due to the payment of acquisition, offering
and administrative expenses related to the offering. Cash flow used in investing activities
totaled $467.5 million, which reflects the costs to acquire our businesses and investments. Cash
flow provided by financing activities totaled $611.8 million, reflecting the proceeds from the
offering, net of our offering costs and repayment of a small amount of debt at our Atlantic
business. As of December 31, 2004, our consolidated cash and cash equivalent balances totaled $140
million. This includes cash balances in excess of restricted reserve requirements that we acquired
when we purchased our consolidated businesses and Yorkshire Link. Cash
Flow from Operations from Our Consolidated Businesses Our consolidated statement of cash flows includes the cash flow from operations for Atlantic
(NACH), AvPorts (MANA), Macquarie Parking (MAPC) and Thermal Chicago and Northwind Aladdin (MDEH).
In all of these businesses, revenues are either mostly derived from cash sales or are highly
stable. As a result, they do not experience substantial fluctuations in their trade receivables.
The cash flow provided by operations for these businesses for the year ended December 31, 2004 and
the year ended December 31, 2003 is summarized in the table below: Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2004
    
    
    2003($ in thousands)NACH (1)
    
    $
    4,584
    
    
    $
    9,811MANA
    
    $
    5,219
    
    
    $
    3,355MAPC
    
    $
    7,294
    
    
    $
    765MDEH (2)
    
    $
    2,302
    
    
    $
    13,134
   (1)
    
    Includes EAS for the period from January 1, 2004 to July 29, 2004 and NACH for the period
from July 30, 2004 to December 31, 2004.(2)
    
    Includes Thermal Chicago Corporation for the six months ended June 30, 2004 and MDEH for the
six months ended December 31, 2004 and includes ETT Nevada Inc. for the period from September
29, 2004 to December 31, 2004. NACH Cash flow from operations for the year ended December 31, 2004 was significantly reduced by
non-recurring bridge financing fees of $6.6 million and selling costs of $1.2 million as previously
discussed. Cash flow from operations in 2004 was significantly higher than net income primarily due
to non-cash expenses including depreciation and amortization expense of $6 million, non-cash
interest expense and warrant expense related to the sale of EAS to NACH of $5.2 million that is not
expected to recur. Cash flows from operations for the year ended December 31, 2003 were significantly higher than
net income due to the inclusion in net income of the following non-cash expenses: depreciation and
amortization, fair value adjustments for outstanding warrants, non-cash interest expense and
deferred taxes. MANA Cash flow from operations for the year ended December 31, 2004 was $5.2 million. MANAs
segment cash flow from operations in 2004 was significantly higher than net income largely as a
result of $6.5 million of depreciation and amortization expenses and amortization of finance costs.
During the year AvPorts assets and liabilities balances fluctuated in the ordinary course of
business, which also affected cash flows from operations. Apart from $6.3 million of depreciation
and amortization expenses, the other significant impact on the cash flows from operations during
2003 was the increase in accounts receivable of $1.1 million due to a relatively large amount of
receivables outstanding as of December 31, 2003 for costs incurred by AvPorts under certain airport
management contracts. These amounts were collected from the various airport authorities in early
2004. MANAs segment cash flow from operations includes interest expense of $1.2 million related
to the subordinated notes, which were acquired by us. 73




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MAPC For the year ended December 31, 2004 cash flow provided by operations improved by $6.5 million
due largely to the $4.2 million reduction in net losses. Depreciation and amortization expense was
$6.4 million. This accounted for the majority of the difference between net income and cash flow
provided by operations during the year. The other significant impact on the cash flows from
operations during 2004 was the $2.2 million increase in accrued expenses of which $1 million
relates to year-end salary and bonus accruals. MDEH Cash flow from operations for the year ended December 31, 2004 was significantly reduced by
the substantial decrease in net income resulting from the $10.3 million make whole payment to
retire the existing debt of Thermal Chicago in connection with the sale of Thermal Chicago to MDEH,
$5.9 million of bridge financing and swap breakage fees, plus $800,000 of costs incurred by Thermal
Chicagos former owner in connection with its sale. None of these costs are expected to recur.
Depreciation and amortization expense was $5.1 million. This accounted for the majority of the
difference between net income and cash flow provided by operations during the year. The balance
resulted from the conversion of a $2.4 million income tax receivable from an affiliate to equity
and the increase in our deferred taxes of $4.7 million. The difference between net income and cash flow from operations in 2003 resulted from
depreciation and amortization expense and differences between taxation expense for accounting
purposes and taxes actually paid. Taxes actually paid are substantially lower than accounting
taxes due to accelerated depreciation allowances for tax purposes. Cash Flow Used in Investing Activities by Our Consolidated Businesses Our consolidated statement of cash flows include the cash flows used in the investing
activities of NACH, MANA, MAPC and MDEH. The cash flows used in investing activities for these
businesses for the year ended December 31, 2004 and the year ended December 31, 2003 are summarized
in the table below: Year Ended
    
    
    Year EndedDecember 31, 2004
    
    
    December 31, 2003($ in thousands)NACH (1)
    
    $
    (225,134
    )
    
    $
    (4,648
    )MANA
    
    $
    (4,705
    )
    
    $
    (2,563
    )MAPC
    
    $
    (32,737
    )
    
    $
    (73,956
    )MDEH (2)
    
    $
    (169,579
    )
    
    $
    (3,522
    )
   (1)
    
    Includes EAS for the period from January 1, 2004 to July 29, 2004 and NACH for the period
from July 30, 2004 to December 31, 2004.(2)
    
    Includes Thermal Chicago Corporation for the six months ended June 30, 2004 and MDEH for the
six months ended December 31, 2004 and includes ETT Nevada Inc. for the period September 29,
2004 to December 31, 2004. NACH Cash
flow used in investing activities by NACH in 2004 was $225.1 million. Atlantic spent $6.3
million on capital expenditures for the year ended December 31, 2004, of which $2.3 million was
attributable to ongoing capital expenditure and $4 million to the completion of construction of a
hangar at Chicago-Midway. The balance of the cash used in investing activities in 2004 related to
NACHs acquisition of Atlantic for $223 million. The primary use of cash in investing activities for 2003 was $3.3 million for the acquisition
of the New Orleans facilities in December 2003, which was partially offset by cash proceeds of $2
million related to the sale of discontinued operations. Investing activities related to internal
capital expenditures were $3.2 million in 2003, primarily related to the ongoing construction at
Chicago-Midway. Going forward, we anticipate that any significant acquisitions by Atlantic will be funded with
a combination of debt issued by Atlantic or MIC Inc. and equity offerings by us. 74




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MANA Cash flow used in investing activities by MANA for the year ended December 31, 2004 was $4.7
million. This was attributable to capital expenditures, relating mainly to construction of new
hangars at Burlington at a cost of approximately $2.0 million, acquisition of hangars at Louisville
for $1.0 million and the commencement of Metroport upgrade works at a cost of $495,000. MANA also
expended $784,000 to build a new perimeter fence at Republic Airport, which is reimbursable under
the management contract between AvPorts and the airport but had yet to be reimbursed.
Approximately $300,000 of this expenditure was reimbursed in the first quarter of 2005. Of the $2.6 million of cash used in investing activities in 2003, $1.6 million related to
reimbursement by AvPorts of transaction costs incurred by AvPorts owners at the time of the
acquisition of AvPorts by MANA, $500,000 related to a purchase of a hanger at Louisville and a
further $600,000 related to ongoing capital expenditure, which was offset by a $100,000 working
capital adjustment with respect to MANAs acquisition of AvPorts in 2002. MAPC Cash flow used in investing activities by MAPC for the year ended December 31, 2004 was $32.7
million. $30 million was used by MAPC to increase its economic and voting interest in the
underlying Macquarie Parking business to 87.1%. Macquarie Parking also spent approximately $1
million on improvements to its existing sites and the purchase of additional equipment which it
expects will attract new customers and enable the business to increase its parking rates. The primary use of cash in investing activities in 2003 was $67.3 million for the acquisition
of the Avistar business in October 2003 and costs associated with that acquisition. In addition,
Macquarie Parking also purchased the property at its Chicago facility, which it previously leased.
The total cost of this property, excluding transaction costs, was $6.1 million. The majority of
other cash used in investing activities related to the purchase by Macquarie Parking of shuttle
buses and other equipment used in its operations. MDEH Cash flow used in investing activities for MDEH for the year ended December 31, 2004 was
$169.6 million. $164.3 million was used by MDEH to acquire Thermal Chicago and Northwind Aladdin
and $4 million was used to establish the debt service reserve relating to the permanent debt raised
to finance these acquisitions. Approximately $1.1 million was spent on capital expenditure for the
year ended December 31, 2004, which related to ongoing capital expenditure. In 2003, the primary use of cash in investing activities was capital expenditures, mostly
related to the costs of connecting additional customers and to a lesser extent ongoing capital
expenditure. Cash Flows Provided from (Used in) Financing Activities by Our Consolidated Businesses Going forward, our consolidated statement of cash flows will include the cash flows provided
by or used in the financing activities of NACH, MANA, MAPC and MDEH. The cash flows relating to
financing activities for these businesses for the year ended December 31, 2004 and the year ended
December 31, 2003 are summarized in the table below: Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2004
    
    
    2003($ in thousands)NACH (1)
    
    $
    229,904
    
    
    $
    (5,956
    )MANA
    
    $
    (1,547
    )
    
    $
    (719
    )MAPC
    
    $
    24,959
    
    
    $
    65,686MDEH (2)
    
    $
    168,163
    
    
    $
    (11,239
    )
   (1)
    
    Includes EAS for the period from January 1, 2004 to July 29, 2004 and NACH for the period
from July 30, 2004 to December 31, 2004.(2)
    
    Includes Thermal Chicago Corporation for the six months ended June 30, 2004 and MDEH for the
six months ended December 31, 2004 and includes ETT Nevada Inc. for the period September 29,
2004 to December 31, 2004. 75




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NACH Cash flow provided by financing activities, for the year ended December 31, 2004 reflected
primarily the debt and equity raised by NACH to fund the initial acquisition of Atlantic offset by
a $1.5 million repayment of debt at the end of 2004 and the
establishment of a debt service reserve of $3.9 million relating to
the permanent debt raised to finance the acquisition of Atlantic. Cash used in financing activities for NACH in 2003 was approximately $6 million in 2003,
primarily to fund principal repayments on the senior and subordinated debt that was in place at the
time and which was subsequently repaid upon acquisition of EAS by NACH. The acquisition of Atlantic by NACH was initially partially financed with a $130 million
bridge loan facility provided by the Macquarie Group. This bridge facility was refinanced in
October 2004 with a term loan facility of the same amount. The Macquarie Group provided $52
million of the term loan facility. NACH made a prepayment of $1.5 million of the term loan on
December 31, 2004. On January 14, 2005, NACH completed its acquisition of two FBOs in California.
This acquisition was partly funded through an increase in the term loan of $32 million, which was
provided by WestLB AG, New York Branch. This term loan facility, together with the revolving
credit facility discussed below, are secured by all of the assets and stock of NACH and its
subsidiaries and is non-recourse to the company and its other subsidiaries. Details of the term
loan facility are as follows: Amount outstanding as of December 31, 2004
    
    Tranche A $23.5 millionTranche B $105.0 millionAmount outstanding as of March 17, 2005
    
    Tranche A $29.6 millionTranche B $130.9 millionTerm
    
    7 years (matures October 2011)Amortization
    
    Tranche A fully amortizes, commencing at the end of Year 3.Tranche B is payable at maturity.Interest rate type
    
    FloatingInterest rate base
    
    LIBORInterest rate margin
    
    Tranche A  2.25%Tranche B  3.0%Interest rate hedging
    
    Interest rate swap (fixed vs. LIBOR) at 3.35% for years 1-3 and 4.57% for
years 4 and 5 on a notional value of $97.5 million. Interest rate swap
(fixed vs. LIBOR) at 3.73% for years 1-3 and 4.53% for years 4 and 5 on a
notional value of $22.9 million.Debt service reserve
    
    Six months of debt serviceCash sweep
    
    Year 1  no cash sweepYear 2  cash sweep if debt service coverage is less than 1.71 timesYear 3  cash sweep if debt service coverage is less than 1.81 timesYears 4 and 5  cash sweep if debt service coverage is less than 1.51 timesYears 6 and 7  100% cash sweep after mandatory debt serviceDebt service coverage ratio as at December 31, 2004
    
    2.32Debt to EBITDA
    
    Maximum debt to earnings before interest, tax, depreciation and amortization:Year 1  6.0 timesYear 2  5.5 timesYear 3  5.0 timesYear 4  4.5 timesThereafter  4.0 timesDebt to EBITDA ratio as at December 31, 2004
    
    5.98
 We repaid $1.5 million of debt principal at the end of 2004 to comply with our debt covenants.
Depending upon our EBITDA for the 12 months ending March 31, 2005, we may make a further
prepayment of debt principal to stay in compliance with our Debt to EBITDA coverage ratio covenant. We will be unable to repay the amount outstanding under this facility at maturity from cash
flow from operations because we intend to distribute to our shareholders as much cash as possible
and not use such cash to repay subsidiary indebtedness. Therefore, we will need to refinance this
facility at or prior to its maturity. This exposes us to the risk that we may not be able to
refinance this facility and may default. We intend to seek to refinance the facility before the
cash sweep commences in years 6 and 7. We have no reason to believe that we will not be able to
refinance this debt when due. In addition to the term loan facility, Atlantic has entered into a $3 million, two-year
revolving credit facility with Wachovia Bank that may be used to fund working capital requirements
or to provide letters of credit. This facility ranks equally with the term loan. As of March 17,
2005, $966,237 of this facility has been utilized to provide letters of credit pursuant to certain
FBO leases. 76




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MANA Cash flow used in financing activities for the year ended December 31, 2004 was $1.5 million.
This amount resulted mainly from the payment of a dividend by MANA to its shareholders prior to our
acquisition of MANA. Cash flow used in financing activities in 2003 was approximately $719,000. This was due to a
payment for legal expenses incurred in connection with the raising of MANAs debt in 2002. MANA has in place a senior loan that was drawn at the time of MANAs acquisition of AvPorts in
2002. This loan is secured by the assets of AvPorts and the stock of MANA and its subsidiaries and
is recourse only to MANA and its subsidiaries. Details of the $36 million facility are as follows: Amount outstanding as of December 31, 2004
    
    $36 millionTerm
    
    5 years (November 2007)Interest and principal repayments
    
    Interest only during the term of the loan.Repayment of principal at maturity.Interest rate type
    
    FloatingInterest rate base
    
    LIBORInterest rate margin
    
    1-3 years: 1.875%4-5 years: 2.250%Interest rate hedging
    
    Interest rate swap (fixed vs. LIBOR) at 3.55% on a notional value
of $27 millionDebt service reserve
    
    Six months of debt serviceLock-up/cash sweeps
    
    Cash sweep if debt service coverage ratio is less than 1.625 timesDebt service coverage ratio: as at January 31, 2005
    
    4.39
 We will be unable to repay the amount outstanding under this facility at maturity from cash
flow from operations because we intend to distribute to our shareholders as much cash as possible
and not use such cash to repay subsidiary indebtedness. Therefore, we will need to refinance this
facility at or prior to its maturity. This exposes us to the risk that we may not be able to
refinance this facility and may default. We have no reason to believe that we will not be able to
refinance this debt when due. MAPC Cash provided by financing activities for the year ended December 31, 2004 include a $30
million investment by us to enable MAPC to increase its economic and voting interest in
the underlying Macquarie Parking business to 87.1%. Macquarie Parking also deposited a further
$2.3 million into the reserve account associated with the existing senior debt facility. The debt
service reserve account is now fully funded and Macquarie Parking does not expect to make further
significant deposits into this account. In addition, during 2004, Macquarie Parking made a
dividend distribution of $1.75 million prior to our acquisition. Had we owned 87.1% of Macquarie
Parking on January 1, 2004, our share of the distribution would have been $1.5 million. On October 1, 2003, Macquarie Parking entered into a loan for $126 million, which was used to
refinance debt and to partly fund the acquisition of the Avistar business. This loan is secured by
the majority of real estate and other assets of the airport parking business and is recourse only
to Macquarie Parking and its subsidiaries. On December 22, 2003, Macquarie Parking entered into
another loan agreement with the same lender for $4.75 million. Macquarie Parking used the proceeds
of this loan to partly fund the acquisition of land that it formerly leased for operating its
Chicago facility. This loan is secured by the land at the Chicago site. The following table
outlines the key terms of Macquarie Parkings senior debt facilities: Loan
    
    Loan 1
    
    Loan 2Amount outstanding as of
December 31, 2004
    
    $126 million
    
    $4.7 millionTerm
    
    3 years (September 2006)
    
    5 years (January 2009)Extension options
    
    Two 1 year extensions subject to
meeting certain covenants
    
    NoneInterest and principal repayments
    
    Interest only during term of the loan.
Repayment of principal at maturity.
    
    Monthly payment of interest and principal of
$28,675. Repayment of remaining principal
at maturity.Interest rate type
    
    Floating
    
    FixedInterest rate base
    
    1 month LIBOR
    
    N/A
 77




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##### 



Interest rate margin
    
    1-3 years: 3.44%
    
    5.3%4th year: 3.54%5th year: 3.69%Interest rate hedging
    
    1 month LIBOR cap of 4.5% out to 3 years
for a notional amount of $126.0 million
    
    N/ADebt reserves
    
    Various reserves totaling $5.7 million,
currently fully funded
    
    NoneLock-up/cash sweeps
    
    None
    
    None
 We will be unable to repay the amount outstanding under the $126 million facility at maturity
from cash flow from operations because we intend to distribute to our shareholders as much cash as
possible and not use such cash to repay subsidiary indebtedness. Therefore, we will need to
refinance this facility at or prior to its maturity. This exposes us to the risk that we may not
be able to refinance this facility and may default. We have no reason to believe at this time that
we will not be able to refinance the debt when due. MDEH Cash provided by financing activities for the year ended December 31, 2004 by MDEH reflected
the debt and equity raised by MDEH and its subsidiaries to fund the acquisition of Thermal Chicago
Corporation, ETT Nevada, Inc. and the senior debt of Northwind Aladdin. The indirect acquisition of Thermal Chicago by MDEH was initially partially financed with a
$76 million bridge loan facility provided by the Macquarie Group. This bridge loan facility was
refinanced in September 2004 with part of the proceeds from the issuance of $120 million of fixed
rate secured notes due 2023 in a private placement. The notes, together with the revolving credit
facility discussed below, are secured by the assets of MDEHs direct subsidiary MDE and its
subsidiaries, excluding the assets of Northwind Aladdin, and MDEs stock and are recourse only to
MDE and its subsidiaries. The details of the senior secured notes are as follows: Amount outstanding as of
December 31, 2004
    
    $120 millionTerm
    
    December 31, 2023Amortization
    
    Variable quarterly amortization commencing June 30, 2007Interest rate type
    
    FixedInterest rate
    
    6.82% on $100 million and 6.4% on $20 millionDebt service reserve
    
    Six-month debt service reserveDividend payment restriction
    
    No distributions to be made to shareholders of MDE if
debt service coverage ratio is less than 1.25 times for
previous and next 12 months, tested quarterly.Make whole payment
    
    Difference between the outstanding principal balance
and the value of the senior secured notes discounting
remaining payments at a discount rate of 50 basis
points over the U.S. treasury security with a maturity
closest to the weighted average maturity of the senior
secured notes.Debt Service Coverage Ratio at
December 31, 2004
    
    1.44:1
 The terms of the notes also provide that if, nine months after the closing date of the
Northwind Aladdin acquisition, MDE and its subsidiaries are unable to confirm that they are not
subject to regulation by the Public Utilities Commission of Nevada or are unable to obtain a
certificate of public convenience and necessity, the debt service coverage ratio calculation will
be adjusted to exclude from cash flow the revenue, but not the operating, maintenance and capital
expenditure costs, derived from Northwind Aladdins operations unless an indemnity is obtained from
the direct or indirect parent of MDE that satisfies certain creditworthiness requirements. In addition to the senior secured notes, MDE has also entered into a $20 million, three-year
revolving credit facility with La Salle Bank National Association that may be used to fund capital
expenditures or working capital or to provide letters of credit. This facility ranks equally with
the senior secured notes. As of December 31, 2004, $7.1 million of this facility has been utilized
to provide letters of credit to the City of Chicago pursuant to the Use Agreement and in relation
to a single customer contract. Toll Road Business Connect M1-A1 Limited uses its cash flow after funding its operations to make interest and
principal payments on its senior debt, to make interest and principal payments on its subordinated
debt to Macquarie Yorkshire and Balfour Beatty and then to make dividend payments to CHL. CHL then
distributes these dividends to Macquarie Yorkshire (50%) and Balfour Beatty 78




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##### 



(50%). The subordinated debt interest payments received by Macquarie Yorkshire are included in our
consolidated cash flow from operations and subordinated debt principal payments and dividends are
included in our consolidated cash flow from investing activities. Subordinated Loans Cash flow is generated from our toll road business in the form of interest and principal
repayments received from Connect M1-A1 Limited on Macquarie Yorkshires subordinated loans to
Connect M1-A1 Limited. The terms of these subordinated loans are summarized below. The
outstanding amounts and repayment schedule set out below reflect our 50% interest in the
subordinated loans, the balance of which is held by our partner, Balfour Beatty. Senior Subordinated Loan
    
    Junior Subordinated LoanOutstanding balance as of March 31, 2004
    
    £5 million
    
    £2.85 millionInterest rate
    
    U.K. LIBOR + 4% per year payable
semi-annually (minimum 6% per year)
    
    15% per year payable semi-annuallyRedemption premium
    
    65% of principal repaymentsMaturity
    
    September 30, 2016
    
    March 26, 2020Repayment schedule
    
    Semi-annually from March 31, 2005.
    
    Repayment at maturityPayable during year ended December 31,2005-2006
    
    £200,0002007-2011
    
    £300,0002012-2015
    
    £600,0002016
    
    £700,000
 Interest received by Macquarie Yorkshire from the subordinated debt was £837,000 ($1.5
million) for the year ended December 31, 2004. Assuming that payments under the subordinated loans
are made in accordance with the current terms and interest rates remain unchanged, Macquarie
Yorkshire anticipates receiving the following debt payments for the year ended December 31, 2005: Interest
    
    £
    854,000Redemption premium
    
    £
    130,000Principal
    
    £
    200,000Total
    
    £
    1,184,000
    
    
    ($2.2 million)
 Dividends Cash flow is also generated from dividends paid to Macquarie Yorkshire by CHL. The
shareholders agreement for CHL between Macquarie Yorkshire and Balfour Beatty provides for Connect
M1-A1 Limited, subject to the availability of cash and legally distributable reserves, to
distribute all of its net income in the form of semi-annual dividends to CHL. CHL in turn
distributes the cash dividends received to Macquarie Yorkshire and Balfour Beatty. For the year
ended December 31, 2004, CHL paid total dividends to Macquarie Yorkshire of approximately £1.8
($3.2) million and for the year ended December 31, 2005, it is currently anticipated that CHL will
pay total dividends of approximately £2.9 ($5.3) million to Macquarie Yorkshire. The increase in
dividends in 2005 compared to 2004 is largely due to the impact of projected traffic volume growth
on the revenues of Connect M1-A1 Limited. Connect M1-A1 Limiteds Senior Debt Distribution of dividends by Connect M1-A1 Limited to CHL and payments of principal and
interest on Connect M1-A1 Limiteds subordinated loans from Macquarie Yorkshire are subject to the
timely payment of interest and principal and compliance by Connect M1-A1 Limited with covenants
contained in the terms of its senior debt described below. Connect M1-A1 Limited has two non-recourse senior debt facilities both of which are secured by
the assets and pledged stock of Connect M1-A1 Limited which are summarized below: 79




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Commercial Senior Debt Facility
    
    European Investment Bank FacilityOutstanding balance as of March 31, 2004
    
    £207.4 million
    
    £81.6 millionInterest rate
    

U.K. LIBOR plus 0.75% per year increasing
to plus 0.80% from September 30, 2006
and plus 0.90% from September 30, 2020
payable semi-annually. Interest rate swaps
have been entered into in respect of 70%
of the notional principal amount.
    
    9.23% for guaranteed portion and
9.53% for unguaranteed portion.Maturity
    
    March 31, 2024
    
    March 25, 2020Amortization
    
    Semi-annual unequal amortization
    
    Semi-annual unequal amortization
 The covenants in respect of the senior debt are tested semi-annually for the periods ended
March 31 and September 30. In the commercial senior debt facility, the loan life coverage ratio
cannot be less than 1.15:1, and the debt service coverage ratio for the preceding and following
twelve-month period cannot be less than 1.10:1. In the European Investment Bank facility, the loan
life coverage ratio cannot be less than 1.15:1, and the debt service coverage ratio for the
preceding and following twelve-month period cannot be less than 1.13:1. The loan life coverage
ratio is calculated by reference to the expected cash flows of Connect M1-A1 Limited over the life
of the senior debt discounted at the interest rate for the senior debt. If these covenants are not
met for any semi-annual period, subordinated debt and dividend payments from Connect M1-A1 Limited
are required to be suspended until the covenants are complied with. While payments are suspended,
excess cash balances are held by Connect M1-A1 Limited and are not required to be paid towards
reducing the senior debt. At September 30, 2004, the loan life coverage ratio was 1.27:1 under the
commercial senior debt facility and 1.34:1 under the European Investment Bank facility and the debt
service coverage ratio was 1.18:1 for the preceding twelve months and projected at 1.14:1 for the
following twelve months. At
the time of our acquisition of Macquarie Yorkshire, we set aside
£1 million ($1.9 million) of cash acquired to cash
collateralize a letter of credit of the same amount required by a
lender to Connect M1-A1 Limited as security for funding breakage
costs on their fixed rate loan. This cash will be released when
certain financial tests are met by Connect M1-A1 Limited. We
currently anticipated that these tests will be met in December 2005. Investments in MCG and SEW Going forward, our cash flow from operations will include dividends from our investments in
MCG and SEW. The dividends we receive from MCG and SEW are dependent on the performance of the
underlying businesses and compliance with debt covenants. Based on the public statements of MCG
management regarding expected distributions per share for the MCG fiscal years ending June 30, 2005
and June 30, 2006, we expect to receive total dividends from MCG of approximately AUD 4.4 million
($3.4 million) in the year ended December 31, 2005 and AUD
5.5 million ($4.1 million) in the year
ended December 31, 2006, net of applicable Australian withholding taxes. Although these estimates
are based on public guidance provided by the management of MCG, such guidance does not constitute a
guarantee that such dividends will be paid by MCG. For the year ended December 31, 2005, based on
the dividends expected to be paid by SEW during the year, we expect to receive total dividends from
our investment in SEW of approximately £4.6 million ($8.5 million). Included in these expected
dividends for the year ended December 31, 2005 is a non-recurring component of approximately £1.4
million ($2.58 million). Capital Expenditures On a consolidated basis, we expect to incur $6.2 million of ongoing capital expenditure and
$5.6 million of expansion capital expenditure in 2005. $5.4 million of this capital expenditure is
to be financed with proceeds from our recent public offering with the balance funded from cash from
operations and available debt facilities. All of the ongoing and expansion capital expenditure
will be incurred at the operating company level. We have detailed our capital expenditures on a segment-by-segment basis, which we believe is a
more appropriate approach to explaining our capital expenditure requirements on a consolidated
basis. Airport Services Business Ongoing Capital Expenditure Atlantic expects to spend approximately $2.4 million, or $200,000 per FBO, per year on ongoing
capital expenditure. This amount is spent on items such as repainting, replacing equipment as
necessary and any ongoing environmental or required regulatory expenditure, such as installing
safety equipment. This expenditure is funded from cash flow from operations. AvPorts expects to spend approximately $500,000 to $600,000 per year on ongoing capital
expenditure. This expenditure is expected to be funded from cash flows from operations. 80




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Specific
Capital Expenditure We intend to incur a total of approximately $8.7 million of specific capital expenditure in
2005 and 2006 which we intend to fund either from the proceeds of our recent offering or from the
cash that we acquired with our acquisitions of NACH and MANA. NACH: Estimated Cost/AmountRemaining (fromLocation
    
    Item
    
    Expected Timing
    
    December 31, 2004)Teterboro Airport
    
    Ramp construction
    
    Commencing third quarter 2005
    
    $2.0 millionHeadquarters
    
    Accounting system upgrade
    
    Completion in second quarter
2005
    

    $100,000
 MANA: Estimated Cost/AmountRemaining (fromLocation
    
    Item
    
    Expected Timing
    
    December 31, 2004)Burlington International Airport
    
    Replacement of
hangars in exchange
for expected
extension of lease
until 2035
    
    Completion by end of March
2005
    

    $749,000Metroport East 34th Street
Heliport
    
    Upgrade of heliport
in exchange for
10-year operating
agreement
    
    Completion by end of December
2005
    
    $2.8 millionPittsburgh International Airport
    
    Original lease
requires further
capital
expenditure. It is
expected that this
will be fulfilled
through an
expansion of
AvPorts de-icing
facility and the
development of a
new hangar.
    
    Completion by end of June 2006
    
    $2.7 millionVarious
    
    Various items
deferred from
capital expenditure
initially planned
in 2004
    
    Completion by June 2005
    

    $384,000
 Airport Parking Business Ongoing Capital Expenditure Macquarie Parking expects to spend approximately $2.2 million per year on ongoing capital
expenditure. This expenditure relates primarily to the regular replacement of Macquarie Parkings
shuttle buses. Macquarie Parking intends to finance the replacement of its shuttle bus fleet using
cash flow from operations, operating leases or capital leases. Specific Capital Expenditure Macquarie Parking does not expect to spend a material amount on specific capital expenditures
in 2005. District Energy Business Ongoing Capital Expenditure Thermal Chicago expects to spend approximately $1 million per year on capital expenditures
relating to the replacement of parts and minor system modifications. We have already made
modifications that have increased capacity by 2,000 tons and we anticipate adding an additional
1,000 tons in 2005. Ongoing capital expenditures will be funded over the first three years from
available debt facilities and thereafter are expected to be funded from cash flow from operations. 81




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Specific Capital Expenditure We anticipate that Thermal Chicago will spend up to approximately $7 million over the next
three years which, in conjunction with their operational strategy, will add approximately 13,000
tons of additional saleable capacity to the Chicago downtown cooling system. Approximately
$700,000 will also be spent to connect new customers associated with this additional capacity to
the system. A portion of this increased capacity will be used to accommodate four customers who
will convert from interruptible to continuous service in 2006, with the balance sold to new or
existing customers. We anticipate that the expanded capacity sold to new or existing customers
will be under contract or subject to letters of intent prior to Thermal Chicago committing to the
capital expenditure. A permit from environmental agencies will be required in order to undertake
this expansion and potentially from the City of Chicago if expansion of underground piping is
required. Based on recent contract experience, we anticipate that each ton sold under contract
will add approximately $375 to annual revenues with approximately 50% of this increased revenue in
the form of cooling capacity revenue and the balance as cooling consumption revenue. Associated
with this increased capacity will be proportional increases in operating and maintenance expenses
and an approximately $75 per ton increase to annual direct expenses-electricity based on current
electricity prices. Thermal Chicago expects to fund this capital expenditure by drawing on available debt
facilities. Toll Road Business Ongoing Capital Expenditure Ongoing expenditure is required to maintain the condition of Yorkshire Link at the standard
required under the concession on an ongoing basis and to meet the return condition requirements at
the end of the concession when the road is transferred to the U.K. government. Connect M1-A1
Limited anticipates spending approximately £30.6 million, at 2003 prices, on periodic maintenance
over the remaining life of the concession, with most of this expenditure occurring after 2020.
This expenditure generally relates to resurfacing and the maintenance of structures over which
Yorkshire Link runs and is in addition to the general day-to-day operating costs of Yorkshire Link. Commitments and Contingencies The following tables summarize the future obligations of the MIC Inc., the U.S. holding
company for our consolidated businesses, due by period, as of December 31, 2004, under their
various contractual obligations, off-balance sheet arrangements and commitments. Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    one year
    
    
    1-3 years
    
    
    3-5 years
    
    
    3-5 years($ in thousands)Long-term debt (1)
    
    $
    415,168
    
    
    $
    94
    
    
    $
    165,805
    
    
    $
    25,729
    
    
    $
    223,540Capital lease obligations (2)
    
    
    2,529
    
    
    
    1,081
    
    
    
    1,291
    
    
    
    157
    
    
    
    Notes payable
    
    
    728
    
    
    
    161
    
    
    
    463
    
    
    
    60
    
    
    
    44Operating lease obligations (3)
    
    
    328,927
    
    
    
    17,157
    
    
    
    31,030
    
    
    
    30,086
    
    
    
    250,654Purchase obligations (4)
    
    
    26,000
    
    
    
    26,000
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations (5)
    
    $
    773,352
    
    
    $
    44,493
    
    
    $
    198,589
    
    
    $
    56,032
    
    
    $
    474,238
   (1)
    
    The long-term debt represents the consolidated principal obligations to various lenders. The
debt facilities, which are obligations of the operating businesses and have maturities between
2006 and 2020, are subject to certain covenants, the violation of which could result in
acceleration. We believe the likelihood of a debt covenant violation to be remote.(2)
    
    Capital lease obligations are for the lease of certain transportation equipment. Such
equipment could be subject to repossession upon violation of the terms of the lease
agreements. We believe the likelihood of such violation to be remote.(3)
    
    The company is obligated under non-cancelable operating leases for various parking facilities
at MAPC and for real estate leases at MDEH. This represents the minimum annual rentals
required to be paid under such non-cancelable operating leases with terms in excess of one
year.(4)
    
    Purchase obligations include the commitment of NACH to acquire 100% of the membership
interests in GAH for $48.5 million (plus expected transaction costs and reserves of $4.9
million), net of debt of $27.4 million. The transaction closed on January 14, 2005. With the
closing NACH increased its debt by $32 million, reducing its purchase obligation to $21.4 million.(5)
    
    This table does not reflect certain long-term obligations, such as deferred taxes, where we
are unable to estimate the period in which the obligation will be incurred. 82




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Macquarie Yorkshire Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    one year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years(£ in thousands)Loans from Connect M1-A1 Limited
    
    £
    25,384
    
    

    
    
    

    
    
    

    
    
    
    £
    25,384Total contractual cash obligations
    
    £
    25,384
    
    

    
    
    

    
    
    

    
    
    
    £
    25,384
 This table also does not reflect obligations of CHL, as they do not have recourse to
Macquarie Yorkshire. (CHL has long-term obligations of £307.2 million at March 31, 2004,
consisting primarily of long-term debt.) CHL is also obligated, pursuant to the concession, to
maintain Yorkshire Link during the concession period. Not included in this table is managements
estimate of the cost of this obligation, which is approximately £30.6 million over the life of the
concession as measured in current pounds. CRITICAL ACCOUNTING POLICIES The preparation of our financial statements in conformity with U.S. GAAP requires management
to adopt accounting policies and make estimates and judgments that affect the amounts reported in
the financial statements and accompanying notes. We base our estimates on historical information
and experience and on various other assumptions that we believed to be reasonable under the
circumstances. Actual results could differ from these estimates under different assumptions and
judgments and uncertainties, and potentially could result in materially different results under
different conditions. Our critical accounting policies are discussed below. These critical
accounting policies have been reviewed with our independent auditors and the audit committee of the
companys board of directors. Business Combinations Our recent acquisitions and future acquisitions of businesses that we will control will be
accounted for under the purchase method of accounting. The amounts assigned to the identifiable
assets acquired and liabilities assumed in connection with acquisitions were based on estimated
fair values as of the date of the acquisition, with the remainder, if any, to be recorded as
goodwill. The fair values were determined by our management, taking into consideration information
supplied by the management of acquired entities and other relevant information. Such information
included valuations supplied by independent appraisal experts for significant business
combinations. The valuations were generally based upon future cash flow projections for the
acquired assets, discounted to present value. The determination of fair values requires
significant judgment both by management and by outside experts engaged to assist in this process. Goodwill, Intangible Assets and Property and Equipment Significant assets include contract rights, customer relationships, non-compete agreements,
trademarks, domain names, property and equipment and goodwill. Trademarks and domain names are considered to be indefinite life intangibles. Goodwill
represents the excess of the purchase price over the fair value of the assets acquired.
Trademarks, domain names and goodwill are not being amortized. However, we perform impairment
reviews at least annually and more frequently in certain circumstances. The goodwill impairment test is a two-step process, which requires management to make
judgments in determining what assumptions to use in the calculation. The first step of the process
consists of estimating the fair value of each of our reporting units based on a discounted cash
flow model using revenue and profit forecasts and comparing those estimated fair values with the
carrying values, which include 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 will then be compared to its corresponding carrying value.
The impairment test for trademarks and domain names requires the determination of the fair value of
such assets. If the fair value of the trademarks and domain names is less than their carrying
value, an impairment loss will be recognized in an amount equal to the difference. We cannot
predict the occurrence of certain future events that might adversely affect the reported value of
goodwill and/or intangible assets. Such events include, but are not 83




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limited to, strategic decisions made in response to economic and competitive conditions, the
impact of the economic environment on our customer base, and material negative change in
relationship with significant customers. The implied fair value of reporting units is determined by our management and is generally
be based upon future cash flow projections for the reporting unit, discounted to present value. We
will use outside valuation experts when management considers that it is appropriate to do so. Intangibles subject to amortization, including contract rights, customer relationships,
non-compete agreements and technology are amortized using the straight-line method over the
estimated useful lives of the intangible asset after consideration of historical results and
anticipated results based on our current plans. With respect to contract rights in our airport
services business, we take into consideration the history of contract right renewals in determining
our assessment of useful life and the corresponding amortization period. We analyze our contract
rights on a case-by-case basis, with examination of the history of contract renewals as well as
other factors, such as material changes to contract terms or significant new commitments where
applicable. For those contract rights where we have had an extremely long operating history, we
have limited our amortization of our contract rights to a maximum of 40 years. In situations where
the contract right has either been recently acquired, or the operating history combined with the
current contract period is less than 40 years, then the original life of the contract is used. Such estimates are based on managements judgment of its current relationship with the
relevant airport authority and its estimate of future economic and demographic factors at the
airport. Changes to either of these factors could result in an impairment charge, which could have
a material effect on our results of operation and financial condition. Since the majority of our contract terms extend for at least twenty years and our operating
history of these contract rights is extensive, as is our history of renewals and extensions, the
company does not believe that it is likely to have to take a material impairment charge. Customer relationships are essential to our district energy business. Due to the
capital-intensive nature of creating a district cooling system, we require that our customers enter
into long-term contracts. In determining the value of these relationships, we discounted the
expected returns for each contract using a discounted cash flow analysis over the remaining terms
of the contract. We further estimate that it would be unlikely that a customer would terminate its
contract, due to the quality of service currently provided as well as the lack of viable
alternatives. Due to our lack of long-term operating history, we did not consider renewals in our
calculation. With 98 customers currently under contract, it is not reasonably likely that a termination
would result in a material impairment to the value assigned to the customer relationships. Property and equipment are initially stated at cost. Depreciation on property and equipment
will be computed using the straight-line method over the estimated useful lives of the property and
equipment after consideration of historical results and anticipated results based on our current
plans. Our estimated useful lives represent the period the asset is expected to remain in service
assuming normal routine maintenance. We will review the estimated useful lives assigned to
property and equipment when our business experience suggests that they may have changed from our
initial assessment. Factors that lead to such a conclusion may include physical observation of
asset usage, examination of realized gains and losses on asset disposals and consideration of
market trends such as technological obsolescence or change in market demand. We will perform impairment reviews of property and equipment and intangibles subject to
amortization, when events or circumstances indicate that the value of the assets may be impaired.
Indicators include operating or cash flow losses, significant decreases in market value or changes
in the long-lived assets physical condition. When indicators of impairment are present,
management determines whether the sum of the undiscounted future cash flows estimated to be
generated by those assets is less than the carrying amount of those assets. In this circumstance,
the impairment charge is determined based upon the amount by which the carrying value of the assets
exceeds their fair value. The estimates of both the undiscounted future cash flows and the fair
values of assets require the use of complex models which require numerous highly sensitive
assumptions and estimates. Equity Investment in Our Toll Road Business The carrying value of our equity method investment includes an additional intangible asset to
reflect the difference between the purchase price for our 50% investment in the toll road business
and the underlying equity in the net assets of the business. This intangible asset value, which
represents the concession, is recorded at fair value as determined by management, taking into
consideration information supplied by the management of acquired entities and other relevant
information including valuations supplied by independent appraisal experts. The concession is
amortized based on a percentage of usage of the toll road 84




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in the period relative to the total estimated usage over the life of the agreement. In
addition, any loss in value that is other than temporary as a result of a significant change in the
fundamentals or the business will be recognized as an impairment charge. Investment in MCG Our acquisition of shares of MCG is recorded at cost and classified as available for sale
securities on our consolidated balance sheet. Our intention is to hold MCG for an indeterminate
period of time. Since MCG has a readily determinable market value, we record this investment at
cost with unrealized gains and losses reported as a component of other comprehensive income.
Declines in value judged to be other than temporary will be included in investment income (loss).
Management will consider MCGs financial position, results of operations, stock price performance,
analyst research reports and other relevant information in determining whether a decline is other
than temporary. We intend to evaluate our intention to hold this investment on an annual basis. Investment in SEW Our investment in Macquarie Luxembourg, due to our inability to exercise significant influence
over the companys operations, is recorded at cost. As Macquarie Luxembourg will not have a
readily determinable market value, we continue to record the investment at cost. We perform
periodic reviews of the investment, using information supplied by the management of Macquarie
Luxembourg. We further evaluate Macquarie Luxembourg based on future cash flow projections,
discounted to present value. We use outside valuation experts when we consider it appropriate to
do so. Interest Income Our investment in the toll road business also includes loans receivable from Connect M1-A1
Limited. In connection with the purchase of the loans receivable we expect to record a premium
over the face value of the loans. The loans receivable pay periodic interest. We accrue interest
income from the loans receivable. We amortize the premium paid for the loans receivable using an
effective interest rate method. Hedging With respect to our debt facilities and the expected cash flows from our non-US investments,
we have entered into a series of derivatives and forward contracts to hedge our interest rate and
foreign exchange exposure. We have classified each hedge as a cash flow hedge at the time the
hedge was put in place. Changes in the value of the hedges, to the extent effective, are recorded
in other comprehensive income. Changes in the value that represent the ineffective portion of the
hedge is recorded as other income (loss) on the consolidated income statement. Income Taxes We account for income taxes using the asset and liability method of accounting. Under this
method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis and for operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or
settled. Due to our lack of history of earnings, we have established a valuation allowance for our
deferred tax assets. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Currency Risk We are exposed to currency risk on cash flows we receive from our businesses and investments
located outside of the United States and on the translation of earnings. Our current policy is not
to hedge over the long term the currency risk associated with foreign currency denominated income
and cash flows, due to the uncertain size and timing of the distributions we expect to receive.
However, we may from time to time seek to hedge our currency risk for short to medium periods, up
to two years at a time. We have hedged our currency exposures through 2006 through various forward
contracts, which are described below. 85




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Toll Road Business Our cash flows are exposed to the impact of fluctuations in the Pound Sterling/U.S. dollar
exchange rate on the interest income and dividends from Connect M1-A1 Limited and CHL,
respectively. Based on the interest and dividends expected to be received in 2005 by Macquarie
Yorkshire, a hypothetical 1% appreciation in the U.S. dollar against the Pound Sterling would
reduce our interest income from Connect M1-A1 Limited by $18,000 per year and our dividends from
CHL by $53,000 per year. The principal payments we will receive on the subordinated loans are also denominated in
Pounds Sterling and fluctuations in the Pound Sterling/U.S. dollar exchange rate will cause
fluctuations in the actual cash we receive in U.S. dollars. We have entered into various forward exchange contracts to hedge our exposure to the impact of
Pound Sterling/U.S. dollar fluctuations on our expected 2005 and 2006 interest, principal and
dividends for Macquarie Yorkshire. The forward exchange contract rates range from £0.5278 to
£0.5378 per $1.00. Investments in SEW and MCG In relation to our investment in SEW, we are exposed to the impact of the Pound Sterling/U.S.
dollar exchange rate on our dividend income. Based on our expected dividend income from SEW in
2005, a hypothetical 1% appreciation of the U.S. dollar against the Pound Sterling would reduce our
dividend income and cash flows by $85,000 per year. We have entered into various forward exchange contracts to hedge our exposure to the impact of
Pound Sterling/U.S. dollar fluctuations on our expected 2005 and 2006 dividends from SEW. The
forward exchange contract rates range from £0.5238 to £0.5385 per $1.00. In relation to our investment in MCG, we are exposed to the impact of the Australian dollar/
U.S. dollar exchange rate on our dividend income. Based on our expected dividend income from MCG
in 2005, a hypothetical 1% appreciation of the U.S. dollar against the Australian dollar would
reduce our dividend income and cash flows prior to any withholding taxes by $40,000 per year. We have entered into various forward exchange contracts to hedge our exposure to the impact of
Australian dollar/U.S. dollar fluctuations on our expected 2005 and 2006 dividends from MCG. The
forward exchange contract rates range from AU$1.3275 to AU$1.3516 per $1.00. Interest Rate Risk We are exposed to interest rate risk in relation to the borrowings of our businesses. Our
current policy is to enter into derivative financial instruments to fix variable rate interest
payments covering at least half of the interest rate risk associated with the borrowings of our
businesses, subject to the requirements of our lenders. As of March 22, 2005, we have total debt
outstanding at our consolidated businesses of $447.2 million. Of this total debt outstanding,
$124.7 million is fixed rate and $322.5 million is floating. Of the $322.5 million of floating
rate debt, $147.4 million is hedged with interest rate swaps, $126 million is hedged with an
interest rate cap, and $49.1 million is unhedged. Atlantic The senior debt for Atlantic is held by NACH and comprises a partially amortizing $160.5
million floating rate facility maturing in 2011. A 1% increase in the interest rate on the Atlantic debt would result in a $1.6 million
increase in the interest cost per year. A corresponding 1% decrease would result in a $1.6 million
decrease in interest cost per year. Atlantics exposure to interest rate changes through the senior debt has been 75% hedged
through the use of interest rate swaps. These hedging arrangements will partially offset any
additional interest rate expense incurred as a result of increases in interest rates. However, if
interest rates decrease, the value of our hedge instruments will also decrease. A 10% relative
decrease in interest rates would result in a decrease in the fair market value of the hedge
instruments of $2.2 million. A corresponding 10% relative increase would result in a $2.1 million
increase in the fair market value. 86




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AvPorts AvPorts has a $36 million, non-amortizing, floating rate senior debt facility maturing in
2007. The impact of a 1% movement in the interest rate on AvPorts debt results in a $360,000
increase in the interest cost per year. A corresponding 1% decrease results in a $360,000 decrease
in interest cost per year. AvPorts also has in place an interest rate swap with a notional amount of $27 million. This
interest rate swap will partially offset any additional interest rate expense incurred as a result
of increases in interest rates. However, if interest rates decrease, the value of our hedge
instrument will also decrease. A 10% relative decrease in interest rates would result in a
decrease in the fair market value of the interest rate swap of $278,000. A corresponding 10%
relative increase would result in a $274,000 increase in the fair market value. Macquarie Parking Macquarie Parking has two senior debt facilities: a $126 million non-amortizing floating rate
facility maturing in 2006, and a partially amortizing $4.7 million fixed rate facility maturing in
2009. Due to a requirement imposed by our lender we were unable to enter into any interest rate
swap agreements in relation to the $126 million facility. Instead, we purchased an interest rate
cap agreement at a base rate of LIBOR equal to 4.5% for a notional amount of $126 million for the
term of the loan. A 1% increase in the interest rate on the $126 million facility will increase the interest
cost by $1.3 million per year. A 1% decrease in interest rates will result in a $1.3 million
decrease in interest cost per year. Macquarie Parking has a fixed rate exposure on the $4.7 million debt facility and therefore a
10% relative increase in interest rates will decrease the fair market value of the $4.7 million
facility by $91,000. A 10% relative decrease in interest rates will result in a $93,000 increase
in the fair market value. In relation to the interest rate cap instrument, the 30-day LIBOR rate as at December 31, 2004
was 2.4056%, compared to our interest rate cap of a LIBOR rate of 4.5%. As interest rates are
currently much lower than the interest rate cap, we are not currently receiving any payments under
the cap. Thermal Chicago/Northwind Aladdin MDE, a subsidiary of MDEH and the direct holding company for Thermal Chicago and our interest
in Northwind Aladdin, has issued $120 million of aggregate principal amount of fixed rate senior
secured notes maturing December 31, 2023, with variable quarterly amortization commencing June 30,
2007. MDE has a fixed rate exposure on these notes and therefore a 10% relative increase in
interest rates will result in a $6.5 million decrease in the fair market value of the notes. A 10%
relative decrease in interest rates will result in a $7.1 million increase in the fair market value
of the notes. Connect M1-A1 Limited We receive floating rate interest payments on Connect M1-A1 Limiteds senior subordinated
loan. A 1% increase in the interest rate on this loan results in a £50,000 increase in the interest
received per year. A 1% decrease in the interest rate results in a £50,000 decrease in the
interest received per year. We have an exposure to changes in interest rates through Connect M1-A1 Limiteds junior
subordinated loan provided at a fixed rate by Macquarie Yorkshire. For a 10% increase in interest
rates, the fair market value of this loan will decrease by £261,000. For a 10% decrease in interest
rates, the fair market value will increase by £291,000. Connect M1-A1 Limited has floating interest rate exposure on its commercial senior debt
facility. For a 1% increase in the interest rate the interest cost will increase by £2 million per
year. A 1% decrease will result in a decrease in the interest cost of £2 million per year. The interest rate exposure on 70% of the commercial senior debt facility of Connect M1-A1
Limited has been hedged through a combination of five interest rate swaps. These interest swaps
will partially offset any additional expense incurred as a result of an increase in interest rates.
However, if interest rates decrease, the value of Connect M1-A1 Limiteds hedging instruments will
also decrease. The fair market value of these interest rate swaps will decrease by £4.5 million in
the event of a 10% decrease in interest rates. A 10% increase in interest rates will result in a
£4.3 million increase in the fair market value. 87




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Connect M1-A1 Limited has a fixed rate exposure on its European Investment Bank debt facility.
A 10% increase in interest rates will result in a £3.3 million decrease in the fair market value
of the facility. A 10% decrease in interest rates will result in a £3.5 million increase in the
fair market value of the facility. 88