UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 
 FORM 10-Q 
  (Mark One)x

          

          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended June 30, 2009 OR  o

          

          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from ___________ to ____________. Commission File Number: 001-32384 
 MACQUARIE INFRASTRUCTURE COMPANY LLC (Exact Name of Registrant as Specified in Its Charter)  Delaware

          

          43-2052503(State or Other Jurisdiction of Incorporation or Organization)

          

          (IRS Employer Identification No.)
 125 West 55th Street New York, New York 10019 (Address of Principal Executive Offices) (Zip Code) (212) 231-1000 (Registrants Telephone Number, Including Area Code) (Former Name, Former Address and Former Fiscal Year if Changed Since Last Report): N/A 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes o No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):  Large Accelerated Filer o

          

          Accelerated Filer x

          

          Non-accelerated Filer o

          

          Smaller Reporting Company o
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x There were 44,962,809 limited liability company interests without par value outstanding at August 5, 2009.
     TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC TABLE OF CONTENTS  PagePART I. FINANCIAL INFORMATIONItem 1.Financial Statements





1Consolidated Condensed Balance Sheets as of June 30, 2009 (Unaudited) and December 31, 2008





1Consolidated Condensed Statements of Operations for the Quarters and Six Months Ended June 30, 2009 and 2008 (Unaudited)





3Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (Unaudited)





4Notes to Consolidated Condensed Financial Statements (Unaudited)





6Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations





31Item 3.Quantitative and Qualitative Disclosure About Market Risk





60Item 4.Controls and Procedures





60PART II. OTHER INFORMATIONItem 1.Legal Proceedings





61Item 1A.Risk Factors





61Item 2.Unregistered Sales of Equity Securities and Use of Proceeds





61Item 3.Defaults Upon Senior Securities





61Item 4.Submission of Matters to a Vote of Security Holders





61Item 5.Other Information





61Item 6.Exhibits





61
 
 Macquarie Infrastructure Company LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Company LLC.
 i    TABLE OF CONTENTS PART I   FINANCIAL INFORMATION Item 1. Financial Statements MACQUARIE INFRASTRUCTURE COMPANY LLC  CONSOLIDATED CONDENSED BALANCE SHEETS ($ In Thousands, Except Share Data)  June 30,2009

          

          December 31, 2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

          

          $

          38,052

          

          

          $

          68,231Restricted cash

          

          

          1,972

          

          

          

          1,063Accounts receivable, less allowance for doubtful accounts of $4,229 and $2,230, respectively

          

          

          55,170

          

          

          

          62,240Dividends receivable

          

          

          

          

          

          

          7,000Other receivables

          

          

          22

          

          

          

          132Inventories

          

          

          14,370

          

          

          

          15,968Prepaid expenses

          

          

          6,720

          

          

          

          9,156Deferred income taxes

          

          

          3,774

          

          

          

          3,774Land  available for sale

          

          

          11,931

          

          

          

          11,931Income tax receivable

          

          

          

          

          

          

          489Other

          

          

          11,035

          

          

          

          13,440Total current assets

          

          

          143,046

          

          

          

          193,424Property, equipment, land and leasehold improvements, net

          

          

          653,448

          

          

          

          673,981Restricted cash

          

          

          16,016

          

          

          

          19,939Equipment lease receivables

          

          

          34,754

          

          

          

          36,127Investment in unconsolidated business

          

          

          200,408

          

          

          

          184,930Goodwill

          

          

          516,182

          

          

          

          586,249Intangible assets, net

          

          

          769,176

          

          

          

          812,184Deferred financing costs, net of accumulated amortization

          

          

          19,987

          

          

          

          23,383Other

          

          

          4,345

          

          

          

          4,033Total assets

          

          $

          2,357,362

          

          

          $

          2,534,250
 See accompanying notes to the consolidated condensed financial statements.
 1    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC   CONSOLIDATED CONDENSED BALANCE SHEETS  (continued) ($ In Thousands, Except Share Data)  June 30,2009

          

          December 31, 2008(Unaudited)LIABILITIES AND MEMBERS'/STOCKHOLDERS' EQUITYCurrent liabilities:Due to manager  related party

          

          $

          879

          

          

          $

          3,521Accounts payable

          

          

          44,895

          

          

          

          47,886Accrued expenses

          

          

          27,460

          

          

          

          29,448Current portion of notes payable and capital leases

          

          

          5,949

          

          

          

          2,724Current portion of long-term debt

          

          

          312,476

          

          

          

          201,344Fair value of derivative instruments

          

          

          49,817

          

          

          

          51,441Customer deposits

          

          

          5,671

          

          

          

          5,457Other

          

          

          9,680

          

          

          

          10,785Total current liabilities

          

          

          456,827

          

          

          

          352,606Notes payable and capital leases, net of current portion

          

          

          2,041

          

          

          

          2,274Long-term debt, net of current portion

          

          

          1,156,461

          

          

          

          1,327,800Deferred income taxes

          

          

          46,545

          

          

          

          65,042Fair value of derivative instruments

          

          

          60,226

          

          

          

          105,970Other

          

          

          47,561

          

          

          

          46,297Total liabilities

          

          

          1,769,661

          

          

          

          1,899,989Commitments 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

          

          

          

          956,956Accumulated other comprehensive loss

          

          

          (61,029

          )

          

          

          (97,190

          )Accumulated deficit

          

          

          (312,912

          )

          

          

          (230,928

          )Total members/stockholders' equity

          

          

          583,465

          

          

          

          628,838Noncontrolling interests

          

          

          4,236

          

          

          

          5,423Total equity

          

          

          587,701

          

          

          

          634,261Total liabilities and equity

          

          $

          2,357,362

          

          

          $

          2,534,250
 See accompanying notes to the consolidated condensed financial statements.
 2    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) ($ In Thousands, Except Share and per Share Data)  Quarter Ended

          

          Six Months EndedJune 30, 2009

          

          June 30, 2008

          

          June 30, 2009

          

          June 30, 2008RevenueRevenue from product sales

          

          $

          89,430

          

          

          $

          166,834

          

          

          $

          178,622

          

          

          $

          326,159Revenue from product sales  utility

          

          

          21,414

          

          

          

          31,858

          

          

          

          41,581

          

          

          

          61,257Service revenue

          

          

          68,798

          

          

          

          86,672

          

          

          

          142,350

          

          

          

          175,457Financing and equipment lease income

          

          

          1,205

          

          

          

          1,179

          

          

          

          2,397

          

          

          

          2,373Total revenue

          

          

          180,847

          

          

          

          286,543

          

          

          

          364,950

          

          

          

          565,246Costs and expensesCost of product sales

          

          

          50,008

          

          

          

          119,501

          

          

          

          99,275

          

          

          

          228,018Cost of product sales  utility

          

          

          15,793

          

          

          

          26,679

          

          

          

          30,610

          

          

          

          51,014Cost of services

          

          

          24,682

          

          

          

          32,289

          

          

          

          56,139

          

          

          

          65,545Selling, general and administrative

          

          

          53,207

          

          

          

          61,645

          

          

          

          112,686

          

          

          

          125,502Fees to manager-related party

          

          

          851

          

          

          

          4,509

          

          

          

          1,313

          

          

          

          9,135Goodwill impairment

          

          

          53,200

          

          

          

          

          

          

          

          71,200

          

          

          

          Depreciation

          

          

          9,270

          

          

          

          6,315

          

          

          

          22,420

          

          

          

          13,038Amortization of intangibles

          

          

          12,532

          

          

          

          10,904

          

          

          

          42,797

          

          

          

          21,643Total operating expenses

          

          

          219,543

          

          

          

          261,842

          

          

          

          436,440

          

          

          

          513,895Operating (loss) income

          

          

          (38,696

          )

          

          

          24,701

          

          

          

          (71,490

          )

          

          

          51,351Other income (expense)Interest income

          

          

          34

          

          

          

          297

          

          

          

          108

          

          

          

          770Interest expense

          

          

          (26,619

          )

          

          

          (25,676

          )

          

          

          (57,222

          )

          

          

          (51,502

          )Equity in earnings and amortization charges of investees

          

          

          10,028

          

          

          

          8,641

          

          

          

          15,477

          

          

          

          6,552Gain (loss) on derivative instruments

          

          

          19,724

          

          

          

          (581

          )

          

          

          (12,501

          )

          

          

          (886

          )Other (expense) income, net

          

          

          (157

          )

          

          

          463

          

          

          

          1,424

          

          

          

          655Net (loss) income before income taxes and noncontrolling interests

          

          

          (35,686

          )

          

          

          7,845

          

          

          

          (124,204

          )

          

          

          6,940Benefit (provision) for income taxes

          

          

          5,689

          

          

          

          364

          

          

          

          41,348

          

          

          

          (1,000

          )Net (loss) income before noncontrolling interests

          

          

          (29,997

          )

          

          

          8,209

          

          

          

          (82,856

          )

          

          

          5,940Net loss attributable to noncontrolling interest

          

          

          (1,039

          )

          

          

          (129

          )

          

          

          (872

          )

          

          

          (408

          )Net (loss) income

          

          $

          (28,958

          )

          

          $

          8,338

          

          

          $

          (81,984

          )

          

          $

          6,348Basic (loss) earnings per share:

          

          $

          (0.64

          )

          

          $

          0.19

          

          

          $

          (1.82

          )

          

          $

          0.14Weighted average number of shares outstanding: basic

          

          

          44,951,176

          

          

          

          44,941,440

          

          

          

          44,949,942

          

          

          

          44,939,910Diluted (loss) earnings per share:

          

          $

          (0.64

          )

          

          $

          0.19

          

          

          $

          (1.82

          )

          

          $

          0.14Weighted average number of shares outstanding: diluted

          

          

          44,951,176

          

          

          

          44,954,123

          

          

          

          44,949,942

          

          

          

          44,951,408Cash distributions declared per share

          

          $

          

          

          

          $

          0.645

          

          

          $

          

          

          

          $

          1.280
 See accompanying notes to the consolidated condensed financial statements.
 3    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) ($ In Thousands)  Six Months EndedJune 30,2009

          

          June 30,2008Operating activitiesNet (loss) income before noncontrolling interests

          

          $

          (82,856

          )

          

          $

          5,940Adjustments 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

          

          

          

          18,549Amortization of intangible assets

          

          

          42,797

          

          

          

          21,643Equity in earnings and amortization charges of investees

          

          

          (15,477

          )

          

          

          (6,552

          )Equity distributions from investees

          

          

          7,000

          

          

          

          6,552Amortization of debt financing costs

          

          

          3,396

          

          

          

          3,350Non-cash derivative loss, net of non-cash interest expense

          

          

          12,501

          

          

          

          1,045Base management fees to be settled in LLC interests

          

          

          851

          

          

          

          Equipment lease receivable, net

          

          

          1,176

          

          

          

          1,113Deferred rent

          

          

          852

          

          

          

          1,071Deferred taxes

          

          

          (42,092

          )

          

          

          (278

          )Other non-cash (income) expenses, net

          

          

          (245

          )

          

          

          587Changes 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

          

          

          

          3,320Due to manager-related party

          

          

          (3,493

          )

          

          

          (1,161

          )Accounts payable and accrued expenses

          

          

          (5,121

          )

          

          

          7,057Income taxes payable

          

          

          98

          

          

          

          (850

          )Other, net

          

          

          (1,487

          )

          

          

          353Net cash provided by operating activities

          

          

          36,853

          

          

          

          48,590Investing activitiesAcquisitions 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

          

          

          

          

          

          

          7,447Other

          

          

          92

          

          

          

          229Net cash used in investing activities

          

          

          (12,084

          )

          

          

          (74,213

          )
 See accompanying notes to the consolidated condensed financial statements.
 4    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS  (continued) (Unaudited) ($ In Thousands)  Six Months EndedJune 30,2009

          

          June 30,2008Financing activitiesProceeds from long-term debt

          

          

          

          

          

          

          5,000Proceeds from line of credit facilities

          

          

          3,600

          

          

          

          70,650Offering 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

          )

          

          

          14,610Net change in cash and cash equivalents

          

          

          (30,179

          )

          

          

          (11,013

          )Cash and cash equivalents, beginning of period

          

          

          68,231

          

          

          

          57,473Cash and cash equivalents, end of period

          

          $

          38,052

          

          

          $

          46,460Supplemental disclosures of cash flow information:Non-cash investing and financing activities:Accrued purchases of property and equipment

          

          $

          1,238

          

          

          $

          872Acquisition of equipment through capital leases

          

          $

          129

          

          

          $

          490Issuance of LLC interests to independent directors

          

          $

          450

          

          

          $

          450Taxes paid

          

          $

          541

          

          

          $

          2,237Interest paid

          

          $

          51,794

          

          

          $

          48,572
 See accompanying notes to the consolidated condensed financial statements.
 5    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Description of Business Macquarie Infrastructure Company LLC, a Delaware limited liability company, was formed on April 13, 2004. Macquarie Infrastructure Company LLC, both on an individual entity basis and together with its consolidated subsidiaries, is referred to in these financial statements as the Company. The Company owns, operates and invests in a diversified group of infrastructure businesses in the United States. Macquarie Infrastructure Management (USA) Inc. is the Companys manager and is referred to in these financial statements as the Manager. The Manager is a subsidiary of the Macquarie Group of companies, which is comprised of
Macquarie Group Limited and its subsidiaries and affiliates worldwide. Macquarie Group Limited is headquartered in Australia and is listed on the Australian Stock Exchange. Macquarie Infrastructure Company Trust, or the Trust, a Delaware statutory trust, was also formed on April 13, 2004. Prior to December 21, 2004 and the completion of the initial public offering, the Trust was a wholly-owned subsidiary of the Manager. On June 25, 2007, all of the outstanding shares of trust stock issued by the Trust were exchanged for an equal number of limited liability company, or LLC, interests in the Company, and the Trust was dissolved. Prior to this exchange of trust stock for LLC interests and the dissolution of the Trust, all interests in the Company were held by the Trust. The Company continues to be an operating entity with
a Board of Directors and other corporate governance responsibilities generally consistent with that of a Delaware corporation. The Company owns its businesses through its wholly-owned subsidiary, Macquarie Infrastructure Company Inc., or MIC Inc. The Companys businesses operate predominantly in the United States, and comprise the following: The Energy-Related Businesses: (i)

          a 50% interest in a bulk liquid storage terminal business  provides bulk liquid storage and handling services in North America and is one of the largest participants in this industry in the U.S., based on capacity; (ii)

          a gas production and distribution business  a full-service gas energy company, making gas products and services available in Hawaii; and (iii)

          a district energy business  operates the largest district cooling system in the U.S. and serves various customers in Chicago, Illinois and Las Vegas, Nevada. The Aviation-Related Businesses: (i)

          an airport services business  operates a network of fixed base operations, or FBOs, in the U.S. FBOs provide products and services like fuel and aircraft parking for owners and operators of private jets; and (ii)

          an airport parking business  a provider of off-airport parking services in the U.S., with 31 facilities in 20 major airport markets. During the year ended December 31, 2008, the Company completed the following acquisitions: 

          On March 4, 2008, the Company completed the acquisition of 100% of the equity in entities that own and operate three FBOs in Farmington and Albuquerque, New Mexico and Sun Valley, Idaho, collectively referred to as SevenBar. 

          On July 31, 2008, the Company completed the acquisition of the Newark SkyPark airport parking facility, an off-airport parking facility at Newark Liberty International Airport in New Jersey.
 6    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 2. Basis of Presentation The unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of consolidated condensed
financial statements in conformity with GAAP requires estimates and assumptions. Management evaluates these estimates and judgments on an ongoing basis. Actual results may differ from the estimates and assumptions used in the financial statements and notes. Operating results for the quarter and six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. The consolidated balance sheet at December 31, 2008 has been derived from audited financial statements but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. Certain reclassifications were made to the financial statements for the prior period to conform to current period presentation. The interim financial information contained herein should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2008 included in the Companys Annual Report on Form 10-K, as filed with the SEC on February 27, 2009. 3. New Accounting Pronouncements In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles, or SFAS No. 168. SFAS No. 168 sets forth the Accounting Standards Codification that will be the single source of authoritative U.S. GAAP for all nongovernmental entities. The Codification supersedes all existing non-SEC accounting and reporting standards. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not believe that the adoption of SFAS No.
168 will have a material impact on the Companys financial statements. In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events, or SFAS No. 165, which sets forth the accounting and disclosure requirements for subsequent events; events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. SFAS No. 165 requires disclosure of the date through which subsequent events have been evaluated. If the subsequent events are not recognized in the financial statements, SFAS No. 165 also requires disclosure of the nature and effect of such in the financial statements. The Company adopted SFAS No. 165 in the
second quarter of 2009. The adoption did not have a material impact on the Companys financial statements. In April 2009, the FASB issued FASB Staff Position 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, or FSP SFAS No. 157-4. FSP SFAS No. 157-4 provides additional guidance in estimating fair value when the volume and level of activity for the asset or liability has significantly decreased compared with normal market activity. It also provides guidance on identifying circumstances that indicate a non-orderly transaction and measuring fair value in such conditions. The guidance provided by FSP SFAS No. 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009, and is applied prospectively. The adoption of FSP SFAS No. 157-4 did not have a material impact on the Companys financial statements. In April 2009, the FASB issued FASB Staff Position 107-1 and APB Opinion No. 28-1, Interim Disclosures about Fair Value of Financial Instruments, or FSP SFAS No. 107-1 and APB 28-1. FSP SFAS No. 107-1 and APB 28-1 requires disclosures about fair value of financial instruments for interim reporting periods in addition to the current requirement to make disclosure in annual financial statements. This also
 7    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 3. New Accounting Pronouncements   (continued) requires disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments and description of changes in the method and significant assumptions. The Companys financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and variable rate senior debt, are carried at cost, which approximates their fair value because of either the short-term maturity, or variable or competitive interest rates assigned to these financial instruments. In April 2009, the FASB issued FASB Staff Position 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, or FSP SFAS No. 141(R)-1. FSP SFAS No. 141(R)-1 amends the provisions for SFAS No. 141(R) and rescinds the distinction between contractual and noncontractual contingencies arising from business combinations. It requires a contingency acquired in a business combination be initially recognized and measured at fair value on the acquisition date if the fair value can be determined during the measurement period. Acquired contingencies whose fair value cannot be
determined during the measurement period would be recognized if it is probable that an asset existed or liability had been incurred at the acquisition date and the amount for the asset or liability can be reasonably estimated. FSP SFAS No. 141(R)-1 is effective for the reporting periods beginning after December 15, 2008. The impact of the adoption did not have a material impact on the Companys financial results of operations and financial condition. In December 2008, the FASB issued FASB Staff Position 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets, or FSP SFAS No. 132(R)-1. FSP SFAS No. 132(R)-1 requires additional disclosures surrounding how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies, the fair value of each major categories of plan assets, the inputs and valuation techniques used to measure the fair value of plan assets, and the significant concentration of risks in plan assets. The disclosure requirement under FSP SFAS No. 132(R)-1 is effective
for fiscal years ending after December 15, 2009. The Company does not believe FSP SFAS No. 132(R)-1 will have a material impact on its financial statements. In November 2008, the FASB ratified Emerging Issues Task Force 08-7, Accounting for Defensive Intangible Assets, or EITF 08-7. EITF 08-7 applies to acquired intangible assets that the acquirer does not intend to actively use, but intends to hold to prevent its competitors from obtaining access to the asset. EITF 08-7 clarifies that defensive intangible assets are separately identifiable and requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting, which should be amortized over the period the asset diminishes in value. Defensive intangibles must be recognized at
fair value in accordance with SFAS No. 141(R), and Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or SFAS No. 157. EITF 08-7 is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. The Company adopted EITF 08-7 on January 1, 2009. The impact of the adoption did not have a material impact on the Companys financial results of operations and financial condition. In November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-6, Equity Method Investment Accounting Considerations, or EITF 08-6. EITF 08-6 concludes that the cost basis of a new equity-method investment would be determined using a cost-accumulation model, which would continue the practice of including transaction costs in the cost of investment and would exclude the value of contingent consideration unless it is required to be recognized under other literature, such as Statement of Financial Accounting Standards No. 5, Accounting for Contingencies. Equity-method investment should be subject to
other-than-temporary impairment analysis. It also requires a gain or loss to be recognized on the portion of the investors ownership sold. EITF 08-6 is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. The Company adopted EITF 08-6 on January 1, 2009. The impact of the adoption did not have a material impact on the Companys financial results of operations and financial condition.
 8    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 3. New Accounting Pronouncements   (continued) In April 2008, the FASB issued FASB Staff Position 142-3, Determination of the Useful Life of Intangible Assets, or FSP SFAS No. 142-3. FSP SFAS No. 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, or SFAS No. 142. Companies estimating the useful life of a recognized intangible asset must now consider their historical experience in renewing or extending similar arrangements or, in the absence of
historical experience, must consider assumptions that market participants would use about renewal or extension as adjusted for SFAS No. 142s entity-specific factors. FSP SFAS No. 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early adoption is prohibited. The Company adopted FSP SFAS No. 142-3 on January 1, 2009. The impact of the adoption did not have a material impact on the Companys financial results of operations and financial condition. In February 2008, the FASB issued FASB Staff Position 157-1, Application of SFAS No. 157 to SFAS No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under FAS No. 13, or FSP SFAS No. 157-1, and FASB Staff Position 157-2, Effective Date of FASB Statement No. 157, or FSP SFAS No. 157-2, affecting the implementation of SFAS No. 157. FSP SFAS No. 157-1 excludes Statement of Financial Accounting Standards No. 13, Accounting for Leases, or SFAS No. 13, and other accounting pronouncements that address fair value
measurements under SFAS No. 13, from the scope of SFAS No. 157. However, the scope of this exception does apply to assets acquired and liabilities assumed in a business combination that are required to be measured at fair value in accordance with SFAS No. 141(R) regardless of whether those assets and liabilities are related to leases. FSP SFAS No. 157-2 delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. On January 1, 2009, the Company adopted SFAS No. 157 for all nonfinancial assets and liabilities. Major categories of nonfinancial assets and liabilities to which this accounting standard applies include, but are not limited to, the Companys property, equipment, land and leasehold improvements, intangible assets and goodwill. See Note 7, Nonfinancial Assets Measured at Fair
Value, for further discussion. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, Disclosure about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133, or SFAS No. 161, which requires companies with derivative instruments to disclose information about how and why a company uses derivative instruments; how derivative instruments and related hedged items are accounted for under SFAS No. 133 and how derivative instruments and related hedged items affect a companys financial position, financial performance and cash flows. The required disclosures include the fair value of
derivative instruments and their gains or losses in tabular format, information about credit-risk-related contingent features in derivative agreements, counterparty credit risk, and the Companys strategies and objectives for using derivative instruments. SFAS No. 161 is effective for periods beginning after November 15, 2008. The Company adopted SFAS No. 161 on January 1, 2009. The impact of the adoption did not have a material impact on the Companys financial results of operations and financial condition. See Note 9, Derivative Instruments, for further discussion. In December 2007, the FASB issued SFAS No. 160, which requires noncontrolling interests (previously referred to as minority interests) to be treated as a separate component of equity, not as a liability or other item outside of permanent equity. SFAS No. 160 is effective for periods beginning on or after December 15, 2008 and will be applied prospectively to all noncontrolling interests with comparative period information reclassified. The Company adopted SFAS No. 160 on January 1, 2009. The adoption of SFAS No. 160 did not have a material impact on the Companys financial results of operations and financial condition. In December 2007, the FASB revised Statement of Financial Accounting Standards No. 141, Business Combinations, or SFAS No. 141(R). The revised standard includes various changes to the business
 9    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 3. New Accounting Pronouncements   (continued) combination rules. Some of the changes include immediate expensing of acquisition-related costs rather than capitalization, and 100% of the fair value of assets and liabilities acquired being recorded, even if less than 100% of a controlled business is acquired. SFAS No. 141(R) is effective for business combinations consummated in periods beginning on or after December 15, 2008. The Company expects the revised standard to have the following material impacts on its financial statements compared with existing business combination rules: (1) increased selling, general and administrative costs due to immediate expensing of acquisition costs, resulting in
lower net income; (2) lower cash provided by operating activities and lower cash used in investing activities in the statements of cash flows due to the immediate expensing of acquisition costs, which under existing rules are included as cash out flows in investing activities as part of the purchase price of the business; and (3) 100% of fair values recorded for assets and liabilities including noncontrolling interests of a controlled business on the balance sheet resulting in larger assets, liability and equity balances compared with existing business combination rules. There were no new business combinations during the first six months of 2009. On January 1, 2009, the Company adopted SFAS No. 141(R). Although there were no new acquisitions during the first six months of 2009, the Company used the fair value guidance from SFAS No. 141(R) to perform the Companys goodwill impairment analysis in accordance with SFAS No. 142. See Note 7, Nonfinancial Assets Measured at Fair Value, for further discussion. 4. (Loss) Earnings Per Share Following is a reconciliation of the basic and diluted number of shares used in computing (loss) earnings per share:  Quarter Ended June 30,

          

          Six Months Ended June 30,2009

          

          2008

          

          2009

          

          2008Weighted average number of shares outstanding: basic

          

          

          44,951,176

          

          

          

          44,941,440

          

          

          

          44,949,942

          

          

          

          44,939,910Dilutive effect of restricted stock unit grants

          

          

          

          

          

          

          12,683

          

          

          

          

          

          

          

          11,498Weighted average number of shares outstanding: diluted

          

          

          44,951,176

          

          

          

          44,954,123

          

          

          

          44,949,942

          

          

          

          44,951,408
 The effect of potentially dilutive shares for the quarter and six months ended June 30, 2009 is calculated by assuming that the 128,205 restricted stock unit grants provided to the independent directors on June 4, 2009 and the 14,115 restricted stock unit grants provided to the independent directors on May 27, 2008 had been fully converted to shares on those dates. However, the restricted stock unit grants were anti-dilutive for the quarter and six months ended June 30, 2009, due to the Companys net loss for those periods.
 10    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 5.  Property, Equipment, Land and Leasehold Improvements Property, equipment, land and leasehold improvements at June 30, 2009 and December 31, 2008 consist of the following ($ in thousands):  June 30, 2009

          

          December 31, 2008Land(1)

          

          $

          59,968

          

          

          $

          56,039Easements

          

          

          5,624

          

          

          

          5,624Buildings

          

          

          29,716

          

          

          

          34,128Leasehold and land improvements

          

          

          322,212

          

          

          

          301,623Machinery and equipment

          

          

          328,096

          

          

          

          321,240Furniture and fixtures

          

          

          10,778

          

          

          

          9,952Construction in progress

          

          

          20,645

          

          

          

          48,520Property held for future use

          

          

          1,540

          

          

          

          1,540778,579

          

          

          

          778,666Less: accumulated depreciation

          

          

          (125,131

          )

          

          

          (104,685

          )Property, equipment, land and leasehold improvements, net(2)

          

          $

          653,448

          

          

          $

          673,981
  (1)

          In April 2008, the airport parking business acquired land, that was previously leased, for $13.5 million. The business also reversed the $1.5 million accrued rent liability in relation to this land, resulting in a net book value of approximately $12.0 million. The business has taken steps to effect the sale of the land, and the Company has classified the land as land-available for sale, in the consolidated balance sheets. The business expects to complete the sale during 2009. (2)

          Includes $876,000 and $2.1 million of capitalized interest for the six months ended June 30, 2009 and the year ended December 31, 2008, respectively. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or SFAS No. 144, the Company recognized non-cash impairment charges primarily relating to leasehold and land improvements, buildings, machinery and equipment and furniture and fixtures, which are summarized below for the following businesses ($ in thousands):  2009

          

          2008Quarter Ended June 30

          

          Six Months Ended June 30

          

          Quarter and Year Ended December 31Property, equipment, land and leasehold improvements, netAirport Services Business(1)

          

          $

          2,200

          

          

          $

          7,521

          

          

          $

          13,754Airport Parking Business(2)

          

          

          

          

          

          

          6,385

          

          

          

          19,145Total

          

          $

          2,200

          

          

          $

          13,906

          

          

          $

          32,899
  (1)

          Reported in depreciation expense in the consolidated condensed statement of operations. (2)

          Reported in cost of services in the consolidated condensed statement of operations.
 11    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 6.  Intangible Assets Intangible assets at June 30, 2009 and December 31, 2008 consist of the following ($ in thousands):  Weighted Average Life (Years)

          

          June 30, 2009

          

          December 31, 2008Contractual arrangements

          

          

          30.9

          

          

          $

          774,309

          

          

          $

          802,419Non-compete agreements

          

          

          2.5

          

          

          

          9,515

          

          

          

          9,515Customer relationships

          

          

          10.7

          

          

          

          78,596

          

          

          

          78,596Leasehold rights

          

          

          12.5

          

          

          

          3,330

          

          

          

          3,542Trade names

          

          

          Indefinite

          

          

          

          15,401

          

          

          

          15,401Technology

          

          

          5.0

          

          

          

          460

          

          

          

          460881,611

          

          

          

          909,933Less: Accumulated amortization

          

          

          

          

          

          

          (112,435

          )

          

          

          (97,749

          )Intangible assets, net

          

          

          

          

          

          $

          769,176

          

          

          $

          812,184
 As a result of decline in the performance of certain asset groups during the quarter and six months ended June 30, 2009 and the quarter ended December 31, 2008, the Company evaluated such asset groups for impairment under SFAS No. 144 and determined that the asset groups were impaired. The Company estimated the fair value of each of the impaired asset groups using either discounted cash flows or third party appraisals. Accordingly, the Company recognized non-cash impairment charges related to contractual arrangements at the airport services business during the above periods and customer relationships, leasehold rights and trademarks at the airport
parking business during the quarter ended December 31, 2008. These charges are recorded in amortization of intangibles in the consolidated condensed statement of operations. The change in goodwill from December 31, 2008 to June 30, 2009 is as follows ($ in thousands):  Balance at December 31, 2008

          

          $

          586,249Impairment of airport services business' goodwill

          

          

          (71,200

          )Prior period acquisition purchase price adjustments

          

          

          31Other

          

          

          1,102Balance at June 30, 2009

          

          $

          516,182
 The Company tests for goodwill impairment at the reporting unit level on an annual basis and between annual tests if a triggering event indicates impairment. The decline in the Companys stock price, particularly over the latter part of 2008 and the first half of 2009, has caused the book value of the Company to exceed its market capitalization. In accordance with SFAS No. 142, the Company performed goodwill impairment tests during the first two quarters of 2009 and fourth quarter of 2008. The goodwill impairment test is a two-step process, which requires management to make judgments in determining what assumptions to use in the test. The first
step of the process consists of estimating the fair value of each reporting unit based on a discounted cash flow model using cash flow forecasts and comparing those estimated fair values with the carrying values, which includes the allocated goodwill. If the estimated fair value is less than the carrying value, a second step is performed to compute the amount of the impairment by determining an implied fair value of goodwill. The determination of a reporting units implied fair value of goodwill requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit in accordance with SFAS No. 141(R). Any unallocated fair value represents the implied fair value of goodwill, which is compared to its corresponding carrying value. If the corresponding carrying value is higher than the implied fair value, goodwill is written down to reflect the impairment. Based on the testing performed, the
Company recorded goodwill impairment charges at the airport services business during 2009 and 2008 and at the airport parking business to write off all of its goodwill during 2008.
 12    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 6.  Intangible Assets   (continued) For the quarter and six months ended June 30, 2009 and the quarter and year ended December 31, 2008, the following non-cash impairment charges were recorded at the following businesses ($ in thousands):  2009

          

          2008Quarter Ended June 30

          

          Six Months Ended June 30

          

          Quarter and Year Ended December 31Intangible Assets(1)Airport Services Business

          

          $

          2,962

          

          

          $

          23,326

          

          

          $

          21,712Airport Parking Business

          

          

          

          

          

          

          

          

          

          

          8,134Total

          

          $

          2,962

          

          

          $

          23,326

          

          

          $

          29,846GoodwillAirport Services Business

          

          $

          53,200

          

          

          $

          71,200

          

          

          $

          52,000Airport Parking Business

          

          

          

          

          

          

          

          

          

          

          138,751Total

          

          $

          53,200

          

          

          $

          71,200

          

          

          $

          190,751
  (1)

          Reported in amortization of intangibles expense in the consolidated condensed statement of operations. While management has a plan to return the Companys business fundamentals to levels that support the book value per common share, there is no assurance that the plan will be successful, or that the market price of the common stock will increase to such levels in the foreseeable future. Discount rates used in recent cash flow analysis have increased and projected cash flows relating to the Companys reporting units generally declined in the latter half of 2008 and first half of 2009 primarily as the result of negative macroeconomic factors. There is no assurance that discount rates will not increase or that the earnings, book values or
projected earnings and cash flows of the Companys individual reporting units will not decline. Management will continue to monitor the relationship of the Companys market capitalization to its book value, the differences for which management attributes to both negative macroeconomic factors and Company specific factors, and management will continue to evaluate the carrying value of goodwill and other intangible assets. Accordingly, an additional impairment charge to goodwill and other intangible assets may be required in the foreseeable future if the Companys common stock price continues to trade below book value per common share or the book value exceeds its estimated fair value of an individual reporting unit. 7.  Nonfinancial Assets Measured at Fair Value On January 1, 2009, the Company adopted SFAS No. 157 for nonfinancial assets measured at fair value on a nonrecurring basis. The following major categories of nonfinancial assets were measured at fair value at June 30, 2009:  Fair Value Measurements Using

          

          Total Gains (Losses)Description

          

          June 30, 2009

          

          Quoted Prices in Active Markets for Identical Assets (Level 1)

          

          Significant Other Observable Inputs (Level 2)

          

          Significant Unobservable Inputs (Level 3)

          

          Quarter Ended June 30, 2009

          

          Six Months Ended June 30, 2009($ in Thousands)Property, Equipment, Land and Leasehold Improvements, net

          

          $

          60,555

          

          

          $

          

          

          

          $

          55,433

          

          

          $

          5,122

          

          

          $

          (2,200

          )

          

          $

          (13,906

          )Intangible Assets

          

          

          14,430

          

          

          

          

          

          

          

          

          

          

          

          14,430

          

          

          

          (2,962

          )

          

          

          (23,326

          )Goodwill

          

          

          377,343

          

          

          

          

          

          

          

          

          

          

          

          377,343

          

          

          

          (53,200

          )

          

          

          (71,200

          )Total

          

          $

          452,328

          

          

          $

          

          

          

          $

          55,433

          

          

          $

          396,895

          

          

          $

          (58,362

          )

          

          $

          (108,432

          )
 13    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 7.  Nonfinancial Assets Measured at Fair Value   (continued) The Company estimated the fair value of each of the impaired asset groups using either discounted cash flows or third party appraisals. In accordance with SFAS No. 144, property, equipment, land and leasehold improvements with a carrying amount of $74.5 million were written down to its fair value of $60.6 million during the six months ended June 30, 2009. This resulted in a non-cash impairment charge of $2.2 million and $13.9 million for the quarter and six months ended June 30, 2009, respectively, which is recorded in depreciation expense for the airport services business and cost of services for the airport parking business in the consolidated
condensed statement of operations. Additionally, intangible assets with carrying amounts of $37.7 million were written down to their fair value of $14.4 million during the six months ended June 30, 2009. This resulted in a non-cash impairment charge of $2.9 million and $23.3 million for the quarter and six months ended June 30, 2009, respectively, which is recorded in amortization expense in the consolidated condensed statement of operations. In accordance with SFAS No. 142 and as discussed in Note 6, Intangible Assets, the Company performed goodwill impairment analysis during the six months ended June 30, 2009. As a result of the analysis, goodwill with a carrying amount of $448.5 million was written down to its implied fair value of $377.3 million during the six months ended June 30, 2009, resulting in a non-cash impairment charge of $53.2 million and $71.2 million for the quarter and six months ended June 30, 2009, respectively. This non-cash impairment charge was included in goodwill impairment in the consolidated condensed statement of operations. The significant unobservable inputs used for all fair value measurements in the above table included forecasted cash flows of the airport services business and its asset groups, the discount rate and, in the case of goodwill, the terminal value. The cash flows for this business were developed using actual cash flows from 2008 and 2009, forecasted jet fuel volumes from the Federal Aviation Administration, forecasted consumer price indices and forecasted LIBOR rates based on proprietary models using various published sources. The discount rate was developed using a capital asset pricing model. Model inputs included: 

          a risk free rate equal to the rate on 20 year U.S. treasury securities; 

          a risk premium based on the risk premium for the U.S equity market overall; 

          the observed beta of comparable listed companies; 

          a small company risk premium based on historical data provided by Ibbotsons; and 

          a specific company risk premium based on the uncertainty in the current market conditions. The terminal value was based on observed earnings before interest, taxes, depreciation and amortization, or EBITDA, and multiples historically paid in transactions for comparable businesses.
 14    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 8.  Long-Term Debt At June 30, 2009 and December 31, 2008, the Companys long-term debt consists of the following ($ in thousands):  June 30, 2009

          

          December 31, 2008MIC Inc. revolving credit facility

          

          $

          66,400

          

          

          $

          69,000Gas production and distribution

          

          

          169,000

          

          

          

          169,000District energy

          

          

          150,000

          

          

          

          150,000Airport services

          

          

          882,379

          

          

          

          939,800Airport parking

          

          

          201,158

          

          

          

          201,344Total

          

          

          1,468,937

          

          

          

          1,529,144Less: Current portion

          

          

          (312,476

          )

          

          

          (201,344

          )Long-term portion

          

          $

          1,156,461

          

          

          $

          1,327,800
 Effective April 14, 2009, MIC Inc. elected to reduce the available principal on its revolving credit facility from $300.0 million to $97.0 million. At March 31, 2009, MIC Inc. reclassified its revolving credit facility from long-term debt to current portion of long-term debt on the consolidated condensed balance sheet, due to its maturity on March 31, 2010. The Company believes that, at or before the maturity date, it will be able to prepay amounts under the facility from cash on hand, or refinance or extend the facility on terms that can be supported by the performance of the Company and the cash distributed by its businesses. On February 25, 2009, the airport services business amended its credit facility to provide the business additional financial flexibility over the near and medium term. The business used $50.0 million in cash contributed by the Company to pay down $44.6 million of the outstanding term loan debt under the facility and $5.2 million of interest rate swap breakage fees, of which $1.1 million was paid to Macquarie Bank Limited, a related party. Additionally, under the amended terms, the business will apply all excess cash flow from the business to prepay additional debt whenever the leverage ratio (debt to adjusted EBITDA) is equal to or greater than 6.0x
to 1.0 for the trailing twelve months and will use 50% of excess cash flow to prepay debt whenever the leverage ratio is equal to or greater than 5.5x to 1.0 and below 6.0x to 1.0. For the quarter ended June 30, 2009, the airport services business used $17.5 million of excess cash flow to prepay $16.0 million of the outstanding principal balance of the term loan debt under the facility and $1.5 million in interest rate swap breakage fees. On August 3, 2009, the airport services business used $6.6 million of excess cash flow to prepay $6.0 million of the outstanding principal balance of the term loan debt under this facility and $563,000 in interest rate swap breakage fees. At June 30, 2009, the airport parking business has $201.2 million of total debt due on or before September 9, 2009. This debt is secured by assets and collateral of the airport parking business. Creditors of this business do not have recourse to any assets of the Company or any assets of the Companys other businesses, other than approximately $6.2 million in lease and interest rate swap guarantees as of August 6, 2009. There is one remaining interest rate swap payment of approximately $800,000. The interest rate swap expires September 15, 2009. The airport parking business is currently in default under its credit facilities. In addition, the airport parking business does not have sufficient liquidity or capital resources to pay its maturing debt obligations and the Company does not expect that the airport parking business will be able to refinance its debt as it matures. The Company has no intention of contributing any further capital to this business other than potentially for obligations that the Company has guaranteed that are described in the preceeding paragraph. As a result, there is doubt regarding the ability of the airport parking business to continue as a going concern. The
business is working cooperatively with lenders to pursue strategic alternatives, including asset sales, restructuring plans, filing for protection under bankruptcy laws or liquidating the business.
 15    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 8.  Long-Term Debt   (continued) The airport parking business signed a forbearance agreement with the lenders under its primary credit facility on June 10, 2009 that expires on August 31, 2009. Material terms of the forbearance agreement are that during the forbearance period: 

          lenders forbear from exercising rights and remedies for certain designated defaults including any breaches of certain financial covenants and the non-payment of interest; 

          interest will accrue at the current interest rate (LIBOR plus 190 basis points) and will be deferred and capitalized; 

          payments on the swap rate agreement will not be made by the airport parking business; 

          the business cannot sell, lease or dispose of assets or properties or incur debt, in each case, other than in the ordinary course of business; and 

          certain limitations on capital expenditures and other payments, including to the Company. The forbearance agreement will expire or be terminated at the earliest of August 31, 2009 or the date that the business is in default under the agreement, an event of default occurs under the underlying credit facility (other than as a result of a default covered by the forbearance agreement) or creditors exercise rights or remedies with respect to debt of the business in excess of $500,000 or such debt is accelerated. 9.  Derivative Instruments The Company and its businesses have in place variable-rate debt. Management believes that it is prudent to limit the variability of a portion of its interest payments. To meet this objective, the Company enters into interest rate swap agreements to manage fluctuations in cash flows resulting from interest rate risk on a majority of its debt with a variable-rate component. At June 30, 2009, the Company had $1.5 billion of debt, $1.3 billion of which was economically hedged with interest rate swaps, $118.4 million of which was unhedged and $6.2 million of which incurred interest at fixed rates. On February 25, 2009, the airport services business paid down $44.6 million of term loan debt under its credit facility and reduced the notional amount of interest rate swaps used to hedge the interest payments on that debt by a corresponding amount. This resulted in the payment to counterparties of $5.2 million of interest rate swap breakage fees which were recorded as interest expense in the consolidated condensed statement of operations. As a result of the amendment to the credit facility, $22.7 million of accumulated other comprehensive loss in the consolidated condensed balance sheet related to derivatives was reclassified to loss on derivative
instruments in the consolidated condensed statement of operations. For the quarter ended June 30, 2009, the airport services business used $17.5 million of excess cash flow to prepay $16.0 million of the outstanding principal balance of the term loan debt under the facility and $1.5 million in interest rate swap breakage fees. The Company expects to record interest rate swap breakage fees and corresponding reclassifications from accumulated other comprehensive loss to loss on derivative instruments as the airport services business continues to pay down its debt. See Note 8 Long-Term Debt for further discussion. As of February 25, 2009, due to the amendment of the credit facility for the airport services business and effective April 1, 2009 for businesses other than the airport services business, the Company elected to discontinue hedge accounting. As a result, the Company will reclassify into earnings the $94.9 million of net derivative losses included in accumulated other comprehensive loss over the remaining life of the existing interest rate swaps and $38.3 million of net derivative losses over the next 12 months. The Company will also record all future movements in the fair value of the interest rate swaps directly through earnings. As a result of the Companys decision to discontinue hedge accounting in accordance with SFAS No. 133, the Company incurred a $6.3 million non-cash derivative loss due to the change in the fair value of these
 16    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 9.  Derivative Instruments   (continued) interest rate swaps from February 25, 2009 to March 31, 2009 for the airport services business. During the second quarter of 2009, the Company recorded non-cash gains of $28.5 million primarily due to the change in fair value of the interest rate swaps. In March 2009, the airport services business, gas production and distribution business, and district energy business entered into interest rate basis swap contracts with their existing counterparties. These contracts effectively changed the interest rate index on the Companys existing swap contracts through March 2010 from the 90-day LIBOR rate to the 30-day LIBOR rate plus a margin of 19.50 basis points for the airport services business and 24.75 basis points for the gas production and distribution and district energy businesses. This transaction, adjusted for the prepayments of outstanding principal balance on the term loan debt at the
airport services business, will lower the effective cash interest expense on these businesses debt by approximately $2.2 million through March 2010. The Companys derivative instruments are recorded on the balance sheet at fair value with changes in fair value of interest rate swaps recorded directly through earnings. The Company measures derivative instruments at fair value using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize observable (level 2) inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals. The Companys fair value measurements of its derivative instruments and the related location of the liabilities associated with the hedging instruments within the consolidated condensed balance sheet at June 30, 2009 and December 31, 2008 were as follows:  Liabilities at Fair Value(1)Interest Rate Swap Contracts Not Designated as Hedging Instruments Under SFAS No. 133(2)

          

          Interest Rate Swap Contracts Designated as Hedging Instruments Under SFAS No. 133Balance Sheet Location

          

          June 30, 2009

          

          December 31, 2008($ in Thousands)Fair value of derivative instruments  current liabilities

          

          $

          (49,817

          )

          

          $

          (51,441

          )Fair value of derivative instruments  non-current liabilities

          

          

          (60,226

          )

          

          

          (105,970

          )Total interest rate swap contracts

          

          $

          (110,043

          )

          

          $

          (157,411

          )
  (1)

          Fair value measurements at reporting date were all made using significant other observable inputs (level 2). (2)

          As of February 25, 2009 for the airport services business and April 1, 2009 for the other businesses, the Company elected to discontinue hedge accounting.
 17    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 9.  Derivative Instruments   (continued) The Companys hedging activities and the related location within the consolidated condensed financial statements were as follows:  Derivatives Designated as Hedging Instruments Under SFAS No. 133(1)

          

          Derivatives Not Designated as Hedging Instruments Under SFAS No. 133(1)Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion) for the Quarter Ended June 30,

          

          Amount of Gain/(Loss) Reclassified from OCI into Income (Effective Portion) for the Quarter Ended June 30,

          

          Amount of Gain/(Loss) Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Quarter Ended June 30,

          

          Amount of Gain/(Loss) Recognized in Gain (Loss) on Derivative Instruments for the Quarter Ended June 30,Financial Statement Account

          

          2009

          

          2008

          

          2009

          

          2008

          

          2009

          

          2008

          

          2009(2)

          

          2008($ in Thousands)Interest Expense

          

          $

          

          

          

          $

          

          

          

          $

          

          

          

          $

          (8,141

          )

          

          $

          

          

          

          $

          

          

          

          $

          (17,397

          )

          

          $

          Gain (loss) on Derivative Instruments

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          (600

          )

          

          

          

          

          

          

          19

          

          

          

          19,724

          

          

          

          Accumulated Other Comprehensive Gain

          

          

          

          

          

          

          48,758

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          Total

          

          $

          

          

          

          $

          48,758

          

          

          $

          

          

          

          $

          (8,741

          )

          

          $

          

          

          

          $

          19

          

          

          $

          2,327

          

          

          $

          
  (1)

          Substantially all derivatives are interest rate swap contracts. (2)

          For the quarter ended June 30, 2009, loss in derivative instruments primarily represents the change in fair value of interest rate swaps from the discontinuance of hedge accounting as of February 25, 2009 for the airport services business and April 1, 2009 for the Companys other businesses.  Derivatives Designated as Hedging Instruments Under SFAS No. 133(1)

          

          Derivatives Not Designated as Hedging Instruments Under SFAS No. 133(1)Amount of Gain/(Loss) Recognized in OCI on Derivatives (Effective Portion) for the Six Months Ended June 30,

          

          Amount of Gain/(Loss) Reclassified from OCI into Income (Effective Portion) for the Six Months Ended June 30,

          

          Amount of Gain/(Loss) Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Six Months Ended June 30,

          

          Amount of Gain/(Loss) Recognized in Gain (Loss) on Derivative Instruments for the Six Months Ended June 30,Financial Statement Account

          

          2009

          

          2008

          

          2009(2)

          

          2008

          

          2009

          

          2008

          

          2009(3)

          

          2008($ in Thousands)Interest Expense

          

          $

          

          

          

          $

          

          

          

          $

          (17,953

          )

          

          $

          (9,854

          )

          

          $

          

          

          

          $

          

          

          

          $

          (17,397

          )

          

          $

          Gain (loss) on Derivative Instruments

          

          

          

          

          

          

          

          

          

          

          (25,154

          )

          

          

          (755

          )

          

          

          (84

          )

          

          

          (131

          )

          

          

          12,737

          

          

          

          Accumulated Other Comprehensive Gain (Loss)

          

          

          2,549

          

          

          

          (5,072

          )

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          Total

          

          $

          2,549

          

          

          $

          (5,072

          )

          

          $

          (43,107

          )

          

          $

          (10,609

          )

          

          $

          (84

          )

          

          $

          (131

          )

          

          $

          (4,660

          )

          

          $

          
  (1)

          Substantially all derivatives are interest rate swap contracts. (2)

          For the six months ended June 30, 2009, derivative losses included $22.7 million in connection with the $44.6 million pay down of principal debt at the airport services business and amortization of $1.6 million of accumulated other comprehensive loss balance in connection with the interest rate basis swap contracts entered during the first quarter of 2009 by the gas production and distribution business and district energy
 18    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 9.  Derivative Instruments   (continued) business, which are recorded in loss on derivative instruments in the consolidated condensed statement of operations. Interest expense represents cash interest paid on derivative instruments, of which $5.2 million related to the payment of interest rate swap breakage fees, which are recorded in interest expense in the consolidated condensed statement of operations. (3)

          For the six months ended June 30, 2009, loss on derivative instruments primarily represents the change in fair value of interest rate swaps from the discontinuance of hedge accounting as of February 25, 2009 for the airport services business and April 1, 2009 for the Companys other businesses. With the exception of the interest rate swap at the Companys airport parking business, all of the Companys derivative instruments were collateralized by all of the assets of the respective businesses. The interest rate swap at the Companys airport parking business is guaranteed by the Company. As of August 6, 2009, the Company paid $2.5 million in guaranteed interest rate swap payments, on behalf of the airport parking business, and is expected to make one final payment of approximately $800,000. 10.  Comprehensive (Loss) Income Comprehensive (loss) income includes primarily the change in fair value of derivative instruments which qualified for hedge accounting. The difference between net (loss) income and comprehensive (loss) income for the quarter and six months ended June 30, 2009 and 2008 was as follows ($ in thousands):  Quarter Ended June 30,

          

          Six Months Ended June 30,2009

          

          2008

          

          2009

          

          2008Net (loss) income

          

          $

          (28,958

          )

          

          $

          8,338

          

          

          $

          (81,984

          )

          

          $

          6,348Unrealized gain (loss) in fair value of derivatives, net of taxes

          

          

          

          

          

          

          29,097

          

          

          

          1,498

          

          

          

          (3,415

          )Reclassification of realized losses into earnings, net of taxes

          

          

          8,673

          

          

          

          5,318

          

          

          

          34,663

          

          

          

          6,555Comprehensive (loss) income

          

          $

          (20,285

          )

          

          $

          42,753

          

          

          $

          (45,823

          )

          

          $

          9,488
 For further discussion on derivative instruments and hedging activities, see Note 9, Derivative Instruments. 11.  Members/Stockholders Equity The Company is authorized to issue 500,000,000 LLC interests. Each outstanding LLC interest of the Company is entitled to one vote on any matter with respect to which holders of LLC interests are entitled to vote. 12.  Reportable Segments The Companys operations are broadly classified into the energy-related businesses and the aviation- related businesses.
 19    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued) The energy-related businesses consist of two reportable segments: the gas production and distribution business and the district energy business. The energy-related businesses also includes a 50% investment in a bulk liquid storage terminal business, or IMTT, which is accounted for under the equity method. Financial information for IMTT is presented below ($ in thousands) (unaudited):  As of and for the Quarter Ended June 30,

          

          As of and for the Six Months Ended June 30,2009

          

          2008

          

          2009

          

          2008Revenue

          

          $

          81,974

          

          

          $

          78,230

          

          

          

          168,777

          

          

          $

          156,624EBITDA excluding non-cash items(1)

          

          

          33,165

          

          

          

          29,552

          

          

          

          71,946

          

          

          

          59,557Interest expense, net

          

          

          7,551

          

          

          

          5,173

          

          

          

          14,612

          

          

          

          9,892Depreciation and amortization expense

          

          

          13,454

          

          

          

          10,323

          

          

          

          26,278

          

          

          

          20,657Capital expenditures paid

          

          

          41,482

          

          

          

          54,674

          

          

          

          81,424

          

          

          

          113,180Property, equipment, land and leasehold improvements, net

          

          

          953,907

          

          

          

          823,461

          

          

          

          953,907

          

          

          

          823,461Total assets balance

          

          

          1,041,219

          

          

          

          897,980

          

          

          

          1,041,219

          

          

          

          897,980
  (1)

          Refers to earnings before interest, taxes, depreciation, amortization and non-cash items. The aviation-related businesses consist of two reportable segments: the airport services business and the airport parking business. All of the business segments are managed separately and management has chosen to organize the Company around the distinct products and services offered. Energy-Related Businesses: IMTT provides bulk liquid storage and handling services in North America through ten terminals located on the East, West and Gulf Coasts, the Great Lakes region of the United States and partially owned terminals in Quebec and Newfoundland, Canada. IMTT derives its revenue from storage and handling petroleum products, various chemicals, renewable fuels, and vegetable and animal oils. Based on storage capacity, IMTT operates one of the largest third-party bulk liquid storage terminal businesses in the United States. The revenue from the gas production and distribution business reportable segment is included in revenue from product sales and includes distribution and sales of synthetic natural gas, or SNG, and liquefied petroleum gas, or LPG. Revenue is primarily a function of the volume of SNG and LPG consumed by customers and the price per thermal unit or gallon charged to customers. Because both SNG and LPG are derived from petroleum, revenue levels, without organic operating growth, will generally track global oil prices. The utility revenue of the gas production and distribution business includes fuel adjustment charges, or FACs, through which changes in
fuel costs are passed through to customers. The revenue from the district energy business reportable segment is included in service revenue and financing and equipment lease income. Included in service revenue is capacity charge revenue, which relates to monthly fixed contract charges, and consumption revenue, which relates to contractual rates applied to actual usage. Financing and equipment lease income relates to direct financing lease transactions and equipment leases to the business various customers. The district energy business provides its services to buildings throughout the downtown Chicago area and to a casino and shopping mall located in Las Vegas, Nevada. Aviation-Related Businesses: The airport services business reportable segment principally derives income from fuel sales and from other airport services. Airport services revenue includes fuel-related services, de-icing, aircraft hangarage and other aviation services. All of the revenue of the airport services business is generated in the United States. The airport services business operated 72 FBOs as of June 30, 2009.
 20    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued) The revenue from the airport parking business reportable segment is included in service revenue and primarily consists of fees from off-airport parking and ground transportation to and from the parking facilities and the airport terminals. The airport parking business operates 31 off-airport parking facilities located in 20 major airport markets across the United States. Selected information by reportable segment is presented in the following tables. The tables do not include financial data for equity and cost investments. Revenue from external customers for the Companys reportable segments was as follows ($ in thousands) (unaudited):  Quarter Ended June 30, 2009Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          TotalRevenue from Product SalesProduct sales

          

          $

          18,390

          

          

          $

          

          

          

          $

          71,040

          

          

          $

          

          

          

          $

          89,430Product sales  utility

          

          

          21,414

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          21,41439,804

          

          

          

          

          

          

          

          71,040

          

          

          

          

          

          

          

          110,844Service RevenueOther services

          

          

          

          

          

          

          743

          

          

          

          40,004

          

          

          

          

          

          

          

          40,747Cooling capacity revenue

          

          

          

          

          

          

          5,110

          

          

          

          

          

          

          

          

          

          

          

          5,110Cooling consumption revenue

          

          

          

          

          

          

          5,502

          

          

          

          

          

          

          

          

          

          

          

          5,502Parking services

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          17,439

          

          

          

          17,439

          

          

          

          11,355

          

          

          

          40,004

          

          

          

          17,439

          

          

          

          68,798Financing and Lease IncomeFinancing and equipment lease

          

          

          

          

          

          

          1,205

          

          

          

          

          

          

          

          

          

          

          

          1,205

          

          

          

          1,205

          

          

          

          

          

          

          

          

          

          

          

          1,205Total Revenue

          

          $

          39,804

          

          

          $

          12,560

          

          

          $

          111,044

          

          

          $

          17,439

          

          

          $

          180,847
  Quarter Ended June 30, 2008Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          TotalRevenue from Product SalesProduct sales

          

          $

          23,723

          

          

          $

          

          

          

          $

          143,111

          

          

          

          

          

          

          $

          166,834Product sales  utility

          

          

          31,858

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          31,85855,581

          

          

          

          

          

          

          

          143,111

          

          

          

          

          

          

          

          198,692Service RevenueOther services

          

          

          

          

          

          

          717

          

          

          

          55,634

          

          

          

          

          

          

          

          56,351Cooling capacity revenue

          

          

          

          

          

          

          4,828

          

          

          

          

          

          

          

          

          

          

          

          4,828Cooling consumption revenue

          

          

          

          

          

          

          6,073

          

          

          

          

          

          

          

          

          

          

          

          6,073Parking services

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          19,420

          

          

          

          19,420

          

          

          

          11,618

          

          

          

          55,634

          

          

          

          19,420

          

          

          

          86,672Financing and Lease IncomeFinancing and equipment lease

          

          

          

          

          

          

          1,179

          

          

          

          

          

          

          

          

          

          

          

          1,179

          

          

          

          1,179

          

          

          

          

          

          

          

          

          

          

          

          1,179Total Revenue

          

          $

          55,581

          

          

          $

          12,797

          

          

          $

          198,745

          

          

          

          19,420

          

          

          $

          286,543
 21    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued)  Six Months Ended June 30, 2009Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          TotalRevenue from Product SalesProduct sales

          

          $

          39,465

          

          

          $

          

          

          

          $

          139,157

          

          

          $

          

          

          

          $

          178,622Product sales  utility

          

          

          41,581

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          41,58181,046

          

          

          

          

          

          

          

          139,157

          

          

          

          

          

          

          

          220,203Service RevenueOther services

          

          

          

          

          

          

          1,499

          

          

          

          89,068

          

          

          

          

          

          

          

          90,567Cooling capacity revenue

          

          

          

          

          

          

          10,007

          

          

          

          

          

          

          

          

          

          

          

          10,007Cooling consumption revenue

          

          

          

          

          

          

          7,730

          

          

          

          

          

          

          

          

          

          

          

          7,730Parking services

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          34,046

          

          

          

          34,046

          

          

          

          19,236

          

          

          

          89,068

          

          

          

          34,046

          

          

          

          142,350Financing and Lease IncomeFinancing and equipment lease

          

          

          

          

          

          

          2,397

          

          

          

          

          

          

          

          

          

          

          

          2,397

          

          

          

          2,397

          

          

          

          

          

          

          

          

          

          

          

          2,397Total Revenue

          

          $

          81,046

          

          

          $

          21,633

          

          

          $

          228,225

          

          

          $

          34,046

          

          

          $

          364,950
  Six Months Ended June 30, 2008Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          TotalRevenue from Product SalesProduct sales

          

          $

          46,682

          

          

          $

          

          

          

          $

          279,477

          

          

          $

          

          

          

          $

          326,159Product sales  utility

          

          

          61,257

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          61,257107,939

          

          

          

          

          

          

          

          279,477

          

          

          

          

          

          

          

          387,416Service RevenueOther services

          

          

          

          

          

          

          1,449

          

          

          

          118,218

          

          

          

          

          

          

          

          119,667Cooling capacity revenue

          

          

          

          

          

          

          9,634

          

          

          

          

          

          

          

          

          

          

          

          9,634Cooling consumption revenue

          

          

          

          

          

          

          7,841

          

          

          

          

          

          

          

          

          

          

          

          7,841Parking services

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          38,315

          

          

          

          38,315

          

          

          

          18,924

          

          

          

          118,218

          

          

          

          38,315

          

          

          

          175,457Financing and Lease IncomeFinancing and equipment lease

          

          

          

          

          

          

          2,373

          

          

          

          

          

          

          

          

          

          

          

          2,373

          

          

          

          2,373

          

          

          

          

          

          

          

          

          

          

          

          2,373Total Revenue

          

          $

          107,939

          

          

          $

          21,297

          

          

          $

          397,695

          

          

          $

          38,315

          

          

          $

          565,246
 In accordance with GAAP, we have disclosed EBITDA excluding non-cash items for the Company and each of our operating segments in Note 12, Reportable Segments, to our consolidated financial statements as a key performance metric relied on by management in evaluating our performance in accordance with FASB issued Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, or SFAS No. 131. EBITDA excluding non-cash items is defined as earnings before interest, taxes, depreciation and amortization and non-cash items, principally goodwill impairments and
unrealized gains and losses on derivative instruments. We consider EBITDA excluding non-cash items to be important in the overall assessment of our operating businesses individually and in consolidation. We believe our presentation of EBITDA excluding non-cash items provides additional insight
 22    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued) into the performance of our operating companies and their ability to service or reduce debt, to fund growth capital projects and/or support distributions up to our holding company. For the quarter and six months ended June 30, 2008, the Company used EBITDA. The following tables, for the quarter and six months ended June 30, 2008, have been conformed to current periods presentation reflecting EBITDA excluding non-cash items. EBITDA excluding non-cash items for the Companys reportable segments is shown in the below table ($ in thousands) (unaudited). Allocation of corporate expense and the federal tax effect have been excluded from the tables as they are eliminated on consolidation.  Quarter Ended June 30, 2009Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          Total Reportable SegmentsNet income (loss)(1)

          

          $

          4,518

          

          

          $

          3,514

          

          

          $

          (30,876

          )

          

          $

          (1,609

          )

          

          $

          (24,453

          )Interest income

          

          

          (2

          )

          

          

          (1

          )

          

          

          (31

          )

          

          

          

          

          

          

          (34

          )Interest expense

          

          

          2,205

          

          

          

          2,472

          

          

          

          16,487

          

          

          

          4,464

          

          

          

          25,628Provision (benefit) for income taxes

          

          

          2,908

          

          

          

          2,296

          

          

          

          (20,844

          )

          

          

          (1,204

          )

          

          

          (16,844

          )Depreciation

          

          

          1,520

          

          

          

          1,502

          

          

          

          7,750

          

          

          

          862

          

          

          

          11,634Amortization of intangibles

          

          

          212

          

          

          

          341

          

          

          

          11,979

          

          

          

          

          

          

          

          12,532Goodwill impairment

          

          

          

          

          

          

          

          

          

          

          53,200

          

          

          

          

          

          

          

          53,200Unrealized (gains) losses on derivative instruments

          

          

          (3,452

          )

          

          

          (5,199

          )

          

          

          (11,520

          )

          

          

          327

          

          

          

          (19,844

          )EBITDA excluding non-cash items

          

          $

          7,909

          

          

          $

          4,925

          

          

          $

          26,145

          

          

          $

          2,840

          

          

          $

          41,819
  (1)

          Includes non-cash impairment charges of $58.3 million at the airport services business, consisting of $53.2 million related to goodwill, $2.9 million related to intangible assets and $2.2 million related to property, equipment, land and leasehold improvements.  Quarter Ended June 30, 2008Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          Total Reportable SegmentsNet income (loss)

          

          $

          1,728

          

          

          $

          708

          

          

          $

          3,400

          

          

          $

          (1,699

          )

          

          $

          4,137Interest income

          

          

          (8

          )

          

          

          (5

          )

          

          

          (154

          )

          

          

          (27

          )

          

          

          (194

          )Interest expense

          

          

          2,368

          

          

          

          2,613

          

          

          

          15,597

          

          

          

          3,776

          

          

          

          24,354Provision (benefit) for income taxes

          

          

          1,113

          

          

          

          247

          

          

          

          2,295

          

          

          

          (1,270

          )

          

          

          2,385Depreciation

          

          

          1,450

          

          

          

          1,476

          

          

          

          4,865

          

          

          

          1,289

          

          

          

          9,080Amortization of intangibles

          

          

          214

          

          

          

          341

          

          

          

          9,622

          

          

          

          727

          

          

          

          10,904Unrealized losses (gains) on derivative instruments

          

          

          129

          

          

          

          (48

          )

          

          

          356

          

          

          

          (81

          )

          

          

          356EBITDA excluding non-cash items

          

          $

          6,994

          

          

          $

          5,332

          

          

          $

          35,981

          

          

          $

          2,715

          

          

          $

          51,022
 23    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued)  Six Months Ended June 30, 2009Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          Total Reportable SegmentsNet income (loss)(1)

          

          $

          7,633

          

          

          $

          1,868

          

          

          $

          (81,176

          )

          

          $

          (7,053

          )

          

          $

          (78,728

          )Interest income

          

          

          (13

          )

          

          

          (4

          )

          

          

          (78

          )

          

          

          (7

          )

          

          

          (102

          )Interest expense

          

          

          4,510

          

          

          

          5,039

          

          

          

          36,765

          

          

          

          8,488

          

          

          

          54,802Provision (benefit) for income taxes

          

          

          4,913

          

          

          

          1,221

          

          

          

          (54,798

          )

          

          

          (5,277

          )

          

          

          (53,941

          )Depreciation

          

          

          2,996

          

          

          

          2,965

          

          

          

          19,424

          

          

          

          8,113

          

          

          

          33,498Amortization of intangibles

          

          

          426

          

          

          

          678

          

          

          

          41,693

          

          

          

          

          

          

          

          42,797Goodwill impairment

          

          

          

          

          

          

          

          

          

          

          71,200

          

          

          

          

          

          

          

          71,200Unrealized (gains) losses on derivative instruments

          

          

          (2,802

          )

          

          

          (3,430

          )

          

          

          18,084

          

          

          

          327

          

          

          

          12,179EBITDA excluding non-cash items

          

          $

          17,663

          

          

          $

          8,337

          

          

          $

          51,114

          

          

          $

          4,591

          

          

          $

          81,705
  (1)

          Includes non-cash impairment charges of $102.0 million at the airport services business, consisting of $71.2 million related to goodwill, $23.3 million related to intangible assets, $7.5 million related to property, equipment, land and leasehold improvements and $6.4 million at the airport parking business related to property, equipment, land and leasehold improvements.  Six Months Ended June 30, 2008Energy-related Businesses

          

          Aviation-related BusinessesGas Production and Distribution

          

          District Energy

          

          Airport Services

          

          Airport Parking

          

          Total Reportable SegmentsNet income (loss)

          

          $

          3,582

          

          

          $

          (305

          )

          

          $

          9,342

          

          

          $

          (3,704

          )

          

          $

          8,915Interest income

          

          

          (24

          )

          

          

          (25

          )

          

          

          (332

          )

          

          

          (63

          )

          

          

          (444

          )Interest expense

          

          

          4,695

          

          

          

          5,177

          

          

          

          31,613

          

          

          

          7,699

          

          

          

          49,184Provision (benefit) for income taxes

          

          

          2,305

          

          

          

          (107

          )

          

          

          6,306

          

          

          

          (2,771

          )

          

          

          5,733Depreciation

          

          

          2,904

          

          

          

          2,952

          

          

          

          10,134

          

          

          

          2,559

          

          

          

          18,549Amortization of intangibles

          

          

          428

          

          

          

          682

          

          

          

          18,990

          

          

          

          1,543

          

          

          

          21,643Unrealized losses (gains) on derivative instruments

          

          

          150

          

          

          

          (18

          )

          

          

          555

          

          

          

          (158

          )

          

          

          529EBITDA excluding non-cash items

          

          $

          14,040

          

          

          $

          8,356

          

          

          $

          76,608

          

          

          $

          5,105

          

          

          $

          104,109
 24    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued) Reconciliation of reportable segments EBITDA excluding non-cash items to consolidated net (loss) income before income taxes and noncontrolling interests ($ in thousands) (unaudited):  Quarter Ended June 30,

          

          Six Months Ended June 30,2009

          

          2008

          

          2009

          

          2008Total reportable segments EBITDA excluding non-cash items

          

          $

          41,819

          

          

          $

          51,022

          

          

          $

          81,705

          

          

          $

          104,109Interest income

          

          

          34

          

          

          

          297

          

          

          

          108

          

          

          

          770Interest expense

          

          

          (26,619

          )

          

          

          (25,676

          )

          

          

          (57,222

          )

          

          

          (51,502

          )Depreciation(1)

          

          

          (11,634

          )

          

          

          (9,080

          )

          

          

          (33,498

          )

          

          

          (18,549

          )Amortization of intangibles(2)

          

          

          (12,532

          )

          

          

          (10,904

          )

          

          

          (42,797

          )

          

          

          (21,643

          )Selling, general and administrative  corporate

          

          

          (1,417

          )

          

          

          (1,236

          )

          

          

          (3,186

          )

          

          

          (2,369

          )Fees to manager

          

          

          (851

          )

          

          

          (4,509

          )

          

          

          (1,313

          )

          

          

          (9,135

          )Equity in earnings and amortization charges of investees

          

          

          10,028

          

          

          

          8,641

          

          

          

          15,477

          

          

          

          6,552Goodwill impairment

          

          

          (53,200

          )

          

          

          

          

          

          

          (71,200

          )

          

          

          Unrealized losses (gains) on derivative instruments

          

          

          19,724

          

          

          

          (581

          )

          

          

          (12,501

          )

          

          

          (886

          )Other (expense) income, net

          

          

          (1,038

          )

          

          

          (129

          )

          

          

          223

          

          

          

          (407

          )Total consolidated net (loss) income before income taxes and noncontrolling interests

          

          $

          (35,686

          )

          

          $

          7,845

          

          

          $

          (124,204

          )

          

          $

          6,940
  (1)

          Depreciation includes depreciation expense for the Company's district energy business and airport parking business, which are reported in cost of services in the consolidated statement of operations. The Company recorded a non-cash impairment charge of $2.2 million at the airport services business for the quarter ended June 30, 2009. For the six months ended June 30, 2009, the Company recorded non-cash impairment charges of $7.5 million and $6.4 million at the airport services business and airport parking business, respectively. (2)

          The Company recorded a non-cash impairment charges of $2.9 million and $23.3 million at the airport services business for the quarter and six months ended June 30, 2009, respectively. Capital expenditures for the Company's reportable segments were as follows ($ in thousands) (unaudited):  Quarter Ended June 30,

          

          Six Months Ended June 30,2009

          

          2008

          

          2009

          

          2008Gas production and distribution

          

          $

          1,716

          

          

          $

          2,675

          

          

          $

          3,581

          

          

          $

          4,429District energy

          

          

          1,784

          

          

          

          451

          

          

          

          3,403

          

          

          

          1,967Airport services

          

          

          1,635

          

          

          

          9,381

          

          

          

          4,880

          

          

          

          19,582Airport parking

          

          

          109

          

          

          

          13,760

          

          

          

          312

          

          

          

          13,997Total

          

          $

          5,244

          

          

          $

          26,267

          

          

          $

          12,176

          

          

          $

          39,975
 25    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 12.  Reportable Segments   (continued) Property, equipment, land and leasehold improvements, goodwill and total assets for the Company's reportable segments as of June 30 were as follows ($ in thousands) (unaudited):  Property, Equipment, Land and Leasehold Improvements

          

          Goodwill

          

          Total Assets2009(1)

          

          2008

          

          2009(2)

          

          2008

          

          2009

          

          2008Gas production and distribution

          

          $

          143,251

          

          

          $

          139,014

          

          

          $

          120,193

          

          

          $

          120,193

          

          

          $

          336,565

          

          

          $

          324,803District energy

          

          

          146,837

          

          

          

          144,820

          

          

          

          18,646

          

          

          

          18,647

          

          

          

          228,510

          

          

          

          231,070Airport services

          

          

          289,275

          

          

          

          314,033

          

          

          

          377,343

          

          

          

          504,174

          

          

          

          1,505,430

          

          

          

          1,800,772Airport parking

          

          

          74,085

          

          

          

          101,955

          

          

          

          

          

          

          

          133,772

          

          

          

          191,676

          

          

          

          289,853Total

          

          $

          653,448

          

          

          $

          699,822

          

          

          $

          516,182

          

          

          $

          776,786

          

          

          $

          2,262,181

          

          

          $

          2,646,498
  (1)

          Includes non-cash impairment charges of $7.5 million and $6.4 million taken at the airport services business and airport parking business, respectively, during the first half of 2009. (2)

          Includes a non-cash goodwill impairment charge of $71.2 million taken at the airport services business. Reconciliation of reportable segments total assets to consolidated total assets ($ in thousands) (unaudited):  As of June 30,2009

          

          2008Total assets of reportable segments

          

          $

          2,262,181

          

          

          $

          2,646,498Investment in IMTT

          

          

          200,408

          

          

          

          204,159Corporate and other

          

          

          (105,227

          )

          

          

          (3,774

          )Total consolidated assets

          

          $

          2,357,362

          

          

          $

          2,846,883
 Reconciliation of reportable segments goodwill to consolidated goodwill ($ in thousands) (unaudited):  As of June 30,2009

          

          2008Goodwill of reportable segments

          

          $

          516,182

          

          

          $

          776,786Corporate and other

          

          

          

          

          

          

          (1,102

          )Total consolidated goodwill

          

          $

          516,182

          

          

          $

          775,684
 13.  Related Party Transactions Management Services Agreement with Macquarie Infrastructure Management (USA) Inc. (The Manager) As of June 30, 2009, the Manager held 3,173,123 LLC interests of the Company, which were acquired concurrently with the closing of the initial public offering in December 2004 and also by reinvesting performance fees in the Company. In addition, the Macquarie Group held LLC interests acquired in open market purchases. The Company entered into a management services agreement, or Management Agreement, with the Manager pursuant to which the Manager manages the Companys day-to-day operations and oversees the management teams of the Companys operating businesses. In addition, the Manager has the right to appoint the Chairman of the Board of the Company, and an alternate, subject to minimum equity ownership, and to assign, or second, to the Company, on a permanent and wholly-dedicated basis, employees to assume the role of Chief Executive Officer and Chief Financial Officer and second or make other personnel available as required.
 26    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 13.  Related Party Transactions   (continued) In accordance with the Management Agreement, the Manager is entitled to a quarterly base management fee based primarily on the Companys market capitalization, and a performance fee, based on the performance of the Companys stock relative to a U.S. utilities index. For the six months ended June 30, 2009 and June 30, 2008, the Company incurred base management fees of $1.3 million and $9.1 million, respectively. The unpaid portion of the fees at the end of each reporting period is included in due to manager-related party in the consolidated condensed balance sheets. The base management fee for the first quarter of 2009 was paid in cash
during the second quarter of 2009. The base management fee for the second quarter of 2009 will be reinvested in shares of LLC interests during the third quarter of 2009. The Manager is not entitled to any other compensation and all costs incurred by the Manager, including compensation of seconded staff, are paid by the Manager out of its management fee. However, the Company is responsible for other direct costs including, but not limited to, expenses incurred in the administration or management of the Company and its subsidiaries and investments, income taxes, audit and legal fees, acquisitions and dispositions and its compliance with applicable laws and regulations. During the six months ended June 30, 2009 and June 30, 2008, the Manager charged the Company $136,000 and $145,000, respectively, for reimbursement of
out-of-pocket expenses. The unpaid portion of the out-of-pocket expenses at the end of the reporting period is included in due to manager-related party in the consolidated condensed balance sheet. Advisory and Other Services from the Macquarie Group The Macquarie Group, and wholly-owned subsidiaries within the Macquarie Group, including Macquarie Bank Limited, or MBL, and Macquarie Capital (USA) Inc., or MCUSA (formerly Macquarie Securities (USA) Inc.), have provided various advisory and other services and incurred expenses in connection with the Companys equity raising activities, acquisitions and debt structuring for the Company and its businesses. Underwriting fees are recorded in members/stockholders equity as a direct cost of equity offerings. Advisory fees and out-of-pocket expenses relating to acquisitions are capitalized as a cost of the related acquisitions. Debt
arranging fees are deferred and amortized over the term of the credit facility. Amounts relating to these transactions comprise the following ($ in thousands): As of June 30, 2009  Airport parking business restructuring advice

          

          

           advisory services from MCUSA

          

          

          $

          200 reimbursement of out-of-pocket expenses to MCUSA

          

          

          

          3Airport services business debt amendment

          

          

           debt arranging services from MCUSA

          

          

          

          970
 27    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 13.  Related Party Transactions   (continued) Long-Term Debt At June 30, 2009, MIC Inc. has a $97.0 million revolving credit facility with various financial institutions, including MBL. Amounts relating to the portion of this revolving credit facility from MBL comprise the following ($ in thousands): Six Months Ended June 30, 2009  Revolving credit facility commitment provided by Macquarie Group during the period January 1, 2009 through April 13, 2009(1)

          

          $

          66,667Revolving credit facility commitment provided by Macquarie Group during the period April 14, 2009 through June 30, 2009

          

          

          21,556Portion of revolving credit facility commitment from Macquarie Group drawn down, as of June 30, 2009

          

          

          14,755Macquarie Group portion of the principal payments made to the revolving credit facility during the six months ended June 30, 2009

          

          

          578Interest expense on Macquarie Group portion of the drawn down commitment, for the six months ended June 30, 2009

          

          

          366Commitment fees to the Macquarie Group, for the six months ended June 30, 2009

          

          

          81
  (1)

          On April 14, 2009, the Company elected to reduce the available principal on its revolving credit facility from $300.0 million to $97.0 million. This resulted in a decrease in the Macquarie Groups total commitment under the revolving credit facility from $66.7 million to $21.6 million. See Note 8, Long-Term Debt, for further discussion. Derivative Instruments and Hedging Activities The Company has derivative instruments in place to fix the interest rate on certain outstanding variable-rate term loan facilities. MBL has provided interest rate swaps for the airport services business and the gas production and distribution business. At June 30, 2009, the airport services business had $839.4 million of its variable-rate term loans hedged, of which MBL was providing the interest rate swaps for a notional amount of $323.2 million. The remainder of the swaps are from an unrelated third party. During the six months ended June 30, 2009, the airport services business made net payments to MBL of $6.9 million in relation to these swaps. As discussed in Note 8, Long-Term Debt, for the quarter ended June 30, 2009, the airport services business paid $1.5 million in interest rate swap breakage fees, of which $319,000 was paid to MBL. At June 30, 2009, the gas production and distribution business had hedged $160.0 million of its term loans, of which MBL was providing the interest rate swaps for a notional amount of $48.0 million. The remainder of the swaps are from an unrelated third party. During the six months ended June 30, 2009, the gas production and distribution business made net payments to MBL of $834,000 in relation to these swaps. Other Transactions On March 30, 2009, the gas production and distribution business entered into licensing agreements with Utility Service Partners, Inc. and Americas Water Heater Rentals, LLC, both indirect subsidiaries of Macquarie Group Limited, to enable these entities to offer products and services to the gas production and distribution business customer base. No payments were made under these arrangements during the six months ended June 30, 2009. On August 29, 2008, Macquarie Global Opportunities Partners completed the acquisition of the jet membership, retail charter and fuel management business units previously owned by Sentient Jet Holdings, LLC. The new company is called Sentient Flight Group (referred to hereafter as Sentient). Sentient is an
 28    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 13.  Related Party Transactions   (continued) existing customer of the Companys airport services business. For the six months ended June 30, 2009, the airport services business recorded $3.5 million in revenue from Sentient. As of June 30, 2009, the airport services business had a $3,000 receivable from Sentient, which is included in accounts receivable in the consolidated condensed balance sheets. In addition, the Company and various of its subsidiaries have entered into a licensing agreement with the Macquarie Group related to the use of the Macquarie name and trademark. The Macquarie Group does not charge the Company any fees for this license. During the third quarter of 2009, the Company has engaged MGL to provide consulting services to improve the efficiency on the recovery of accounts receivable at the airport services business. As of August 6, 2009 the Company incurred approximately $83,000 in fees and out-of-pocket expenses. 14.  Income Taxes The Company expects to incur a net operating loss for federal consolidated tax return purposes for the year ending December 31, 2009. The Company believes that it will be able to utilize the projected federal and certain state consolidated 2009 and prior year losses. Accordingly, the Company has not provided a valuation allowance against any deferred tax assets generated in 2009, except as noted below. The Company and its subsidiaries file separate and combined state income tax returns. In calculating its consolidated projected effective state tax rate for 2009, the Company has taken into consideration an expected need to provide a valuation allowance for certain state income tax net operating loss carryforwards, the utilization of which is not assured beyond a reasonable doubt. In addition, the Company and its subsidiaries expect to incur certain expenses that will not be deductible in determining state taxable income. Accordingly, these expenses have also been excluded in projecting the Companys effective state tax rate. As discussed in Note 7, Nonfinancial Assets Measured at Fair Value, during the six months ended June 30, 2009, the Company incurred a charge to earnings of approximately $108.4 million for the write down of certain fixed assets and intangibles. For purposes of determining its effective income tax rate for the quarter and six months ended June 30, 2009, the Company does not consider the write down to be part of ordinary income. Of this amount, approximately $53.4 million is attributable to goodwill and represents a permanent book-tax difference. As a result, no tax benefit has been recognized for this charge. Uncertain Tax Positions At December 31, 2008, the Company and its subsidiaries had a reserve of approximately $313,000 for benefits taken during 2008 and prior tax periods attributable to tax positions for which the probability of recognition is not considered to be more likely than not. There was no material change in that reserve as of June 30, 2009. 15.  Legal Proceedings and Contingencies There are no material legal proceedings other than as disclosed in Part I, Item 3 of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the SEC on February 27, 2009. 16.  Subsequent Events In accordance with SFAS No. 165, the Company evaluated and disclosed the following events through August 6, 2009: Airport Parking Business Interest Rate Swap Payments On August 5, 2009 and July 6, 2009, the Company made interest rate swap payments totaling $1.7 million on behalf of the airport parking business. See Note 8, Long-Term Debt for further discussion.
 29    TABLE OF CONTENTS MACQUARIE INFRASTRUCTURE COMPANY LLC NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 16.  Subsequent Events   (continued) Airport Services Business Credit Facility On August 3, 2009, per the revised terms of the term loan agreement, as described in Note 8, Long-Term Debt, the airport services business used $6.6 million of excess cash flow to prepay $6.0 million of the outstanding principal balance of the term loan debt and $563,000 in interest rate swap breakage fees.
 30    TABLE OF CONTENTS Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations General We own, operate and invest in a diversified group of infrastructure businesses that provide basic, everyday services, such as chilled water for building cooling and gas utility services to businesses and individuals primarily in the U.S. The businesses we own and operate are energy-related businesses, consisting of our bulk liquid storage terminal business, or IMTT, gas production and distribution business, or TGC, and our district energy business, and aviation-related businesses, consisting of our airport services business and our airport parking business. These infrastructure businesses generally operate in sectors with limited competition and
barriers to entry resulting from a variety of factors including high initial development and construction costs, the existence of long-term contracts or the requirement to obtain government approvals and lack of immediate cost-efficient alternatives to the services provided. Overall they tend to generate sustainable and growing long-term cash flows. We operate and finance our businesses in a manner that maximizes these cash flows. The Current Economic Environment and Its Effect on Our Businesses and Strategy Our energy-related businesses have proven, to date, largely resistant to the economic downturn, primarily due to the contracted or utility-like nature of their revenues combined with the essential services they provide. We believe these businesses are generally able to sustain cash flows during negative business cycles. This is primarily a result of the contracted nature of the revenue streams of the businesses and the contractual or regulatory ability to pass through most cost increases to customers. The results of our aviation-related businesses have been negatively affected by lower overall economic and aviation activity and perception issues regarding the general aviation sector. In our airport services business, we are aggressively managing operations and reducing debt levels in response to the current economic climate. We implemented a number of measures that have successfully reduced operating expenses beginning in the third quarter of 2008. In the second quarter of 2009, we reduced our ongoing operating costs further primarily through additional rationalization of staffing levels. With the addition of the cost savings achieved in the
second quarter of 2009, overall annualized savings now exceeds $27.0 million. Our airport services business is further rationalizing its cost structure to offset any further declines in general aviation activity levels. The airport parking business does not have sufficient liquidity or capital resources to pay its maturing debt obligations. As a result, we do not expect that the airport parking business will be able to refinance its debt as it matures and management of the business is in active discussions with lenders regarding strategic alternatives. Management Strategy MIC Inc. Revolving Credit Facility At March 31, 2009, we reclassified the MIC Inc. revolving credit facility from long-term debt to current portion of long-term debt on the consolidated condensed balance sheet, due to its maturity on March 31, 2010. We plan to use cash generated from our energy-related businesses combined with existing available cash to prepay amounts under the facility. We believe that we will be able to refinance or extend the facility for the remaining balance on terms that can be supported by the performance of and cash flows from the businesses. We are exploring all options to repay the remaining amounts outstanding under this facility, including continuing
intiatives to increase business level cash generation, asset sales or other potential sources of capital. Airport Parking Business We have notified the lenders under the business credit facilities that we have no intention of contributing any further capital to this business other than potentially obligations that we have guaranteed. The business is in default under its primary credit facility and signed a forbearance agreement with its lenders on June 10, 2009 that expires on August 31, 2009.
 31    TABLE OF CONTENTS Management Strategy  (continued) Creditors of this business do not have recourse to any assets of the Company or any assets of the Companys other businesses, other than approximately $6.2 million in lease and interest rate swap guarantees as of August 6, 2009. There is one remaining interest rate swap payment of approximately $800,000. The interest rate swap expires September 15, 2009. The airport parking business has engaged financial advisors to solicit a sale of the business. A group of prospective purchasers has begun due diligence. The business is working cooperatively with lenders to pursue strategic alternatives, including asset sales, restructuring plans, filing for protection under bankruptcy laws or liquidating the business. Distributions Our Board of Directors has decided to suspend payment of quarterly cash distributions to shareholders in order to reduce both holding company debt and operating company debt at certain businesses where the underlying fundamentals are strong. The suspension is likely to remain in effect until the MIC Inc. revolving credit facility is repaid in full. Results of Operations Consolidated All discussion of our consolidated results and the results for each of our businesses relate to both the quarter and six month periods presented, unless stated otherwise. Key Factors Affecting Operating Results 

          strong performance in our energy-related businesses; 

          increases in average storage rates and volume of storage under contract at our bulk liquid storage terminal business; 

          effective margin management from the non-utility sector at our gas production and distribution business combined with lower input costs; and 

          additional customers in our district energy business; 

          a decline in volumes of fuel sold partially offset by continued cost reductions in our airport services business; and 

          an increase in interest expense due to payments of interest rate swap breakage fees incurred in connection with debt amendment and pay downs of outstanding term loan debt under the facility at our airport services business.
 32    TABLE OF CONTENTS Results of Operations: Consolidated  (continued) Our consolidated results of operations are as follows ($ in thousands):  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          $

          

          %

          

          2009

          

          2008

          

          $

          

          %RevenueRevenue 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

          

          

          

          1.0Total revenue

          

          

          180,847

          

          

          

          286,543

          

          

          

          (105,696

          )

          

          

          (36.9

          )

          

          

          364,950

          

          

          

          565,246

          

          

          

          (200,296

          )

          

          

          (35.4

          )Costs and expensesCost of product sales

          

          

          50,008

          

          

          

          119,501

          

          

          

          69,493

          

          

          

          58.2

          

          

          

          99,275

          

          

          

          228,018

          

          

          

          128,743

          

          

          

          56.5Cost of product sales   utility

          

          

          15,793

          

          

          

          26,679

          

          

          

          10,886

          

          

          

          40.8

          

          

          

          30,610

          

          

          

          51,014

          

          

          

          20,404

          

          

          

          40.0Cost of services

          

          

          24,682

          

          

          

          32,289

          

          

          

          7,607

          

          

          

          23.6

          

          

          

          56,139

          

          

          

          65,545

          

          

          

          9,406

          

          

          

          14.4Gross 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

          

          

          

          10.2Fees to manager-related party

          

          

          851

          

          

          

          4,509

          

          

          

          3,658

          

          

          

          81.1

          

          

          

          1,313

          

          

          

          9,135

          

          

          

          7,822

          

          

          

          85.6Goodwill impairment

          

          

          53,200

          

          

          

          

          

          

          

          (53,200

          )

          

          

          NM

          

          

          

          71,200

          

          

          

          

          

          

          

          (71,200

          )

          

          

          NMDepreciation

          

          

          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

          )

          

          

          NMOther 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

          

          

          

          136.2Gain (loss) on derivative instruments

          

          

          19,724

          

          

          

          (581

          )

          

          

          20,305

          

          

          

          NM

          

          

          

          (12,501

          )

          

          

          (886

          )

          

          

          (11,615

          )

          

          

          NMOther (expense) income, net

          

          

          (157

          )

          

          

          463

          

          

          

          (620

          )

          

          

          (133.9

          )

          

          

          1,424

          

          

          

          655

          

          

          

          769

          

          

          

          117.4Net (loss) income before income taxes and noncontrolling interests

          

          

          (35,686

          )

          

          

          7,845

          

          

          

          (43,531

          )

          

          

          NM

          

          

          

          (124,204

          )

          

          

          6,940

          

          

          

          (131,144

          )

          

          

          NMBenefit (provision) for income taxes

          

          

          5,689

          

          

          

          364

          

          

          

          5,325

          

          

          

          NM

          

          

          

          41,348

          

          

          

          (1,000

          )

          

          

          42,348

          

          

          

          NMNet (loss) income before noncontrolling interests

          

          

          (29,997

          )

          

          

          8,209

          

          

          

          (38,206

          )

          

          

          NM

          

          

          

          (82,856

          )

          

          

          5,940

          

          

          

          (88,796

          )

          

          

          NMNoncontrolling interests

          

          

          (1,039

          )

          

          

          (129

          )

          

          

          910

          

          

          

          NM

          

          

          

          (872

          )

          

          

          (408

          )

          

          

          464

          

          

          

          113.7Net (loss) income

          

          $

          (28,958

          )

          

          $

          8,338

          

          

          

          (37,296

          )

          

          

          NM

          

          

          $

          (81,984

          )

          

          $

          6,348

          

          

          

          (88,332

          )

          

          

          NM
  NM  Not meaningful
 33    TABLE OF CONTENTS Results of Operations: Consolidated  (continued) Gross Profit The decrease in our consolidated gross profit was primarily due to a decline in the volume of fuel sold at our airport services business. Selling, General and Administrative Expenses The decrease in our selling, general and administrative expenses was primarily a result of substantial cost reduction efforts, particularly at our airport services business. Fees to Manager Base fees to our Manager in the first half of 2009 decreased due to our lower market capitalization. Our Manager elected to reinvest its second quarter 2009 base management fee in additional LLC interests. LLC interests will be issued to our Manager during the third quarter of 2009. Goodwill Impairment In accordance with SFAS No. 142, we performed impairment test for the first and second quarters of 2009. Based on the testing performed, we recognized goodwill impairment charges of $53.2 million and $71.2 million for the quarter and six months ended June 30, 2009, respectively, at our airport services business primarily related to underperformance at a limited number of sites. Depreciation The increase in depreciation was primarily due to non-cash asset impairment charges of $2.2 million and $7.5 million for the quarter and six months ended June 30, 2009, respectively, at our airport services business, related to underperformance at a limited number of sites, and $6.4 million at our airport parking business for the six months ended June 30, 2009. Depreciation expense also increased as a result of capital expenditures by businesses that created higher asset balances. Amortization of Intangibles Amortization expense increased due to non-cash asset impairment charges of $2.9 million and $23.3 million for the quarter and six months ended June 30, 2009, respectively, also related underperformance at a limited number of fixed base operations, or FBOs at our airport services business. Interest Expense and Gain (Loss) on Derivative Instruments Our airport services, gas production and distribution and district energy businesses each entered into LIBOR-based basis swaps during the first quarter of 2009. The basis swaps will lower the effective cash interest rate on these businesses debt through March 2010 and will reduce cash interest expense by approximately $2.2 million on an annualized basis, adjusted for the prepayments of outstanding principal balance on the term loan debt at our airport services business. We recorded a loss of $2.3 million to loss on derivative instruments due to these transactions on our consolidated condensed statement of operations during the first quarter of
2009. Our airport services business paid down $44.6 million of debt during the first quarter, and reduced the notional amount of interest rate swaps used to hedge the interest payments on that debt by a corresponding amount. This resulted in the payment of $5.2 million of breakage fees to the swap counterparties which were recorded as interest expense. In the second quarter of 2009, our airport services business used approximately $17.5 million of excess cash flow to prepay $16.0 million of the outstanding principal balance of the term loan debt and $1.5 million in interest rate swap breakage fees. Following these payments, we reclassified $31.0 million of
accumulated other comprehensive loss from our consolidated condensed balance sheet related to derivatives to loss on derivative instruments to our consolidated condensed statement of operations for the six months ended June 30, 2009. We expect to record interest rate swap breakage fees as our airport services business continues to pay down its term loan debt.
 34    TABLE OF CONTENTS Results of Operations: Consolidated  (continued) Additionally, we discontinued hedge accounting at the airport services business as of February 25, 2009 and incurred $6.3 million of non-cash derivative loss in earnings due to the change in the fair value of these interest rate swaps for the first quarter of 2009 and recognized a gain of $20.2 million for the quarter ended June 30, 2009. We expect to reclassify $55.4 million of net derivative losses included in accumulated other comprehensive loss into loss on derivative instruments on the consolidated condensed statement of operations over the remaining life of the existing interest rate swaps. Effective April 1, 2009, for businesses other than the airport services business, the Company elected to discontinue hedge accounting. As a result, the Company recorded a gain of $8.3 million in the change in fair value of these interest rate swaps directly through earnings during the quarter ended June 30, 2009 and the Company will reclassify into earnings $39.5 million of net derivative losses included in accumulated other comprehensive loss based on expected future cash flows, over the remaining life of the existing interest rate swaps. The increase in interest expense was due solely to the breakage fees paid to the swap counterparties as discussed above, and was partially offset by lower interest paid on the reduced term loan balance. Equity in Earnings and Amortization Charges of Investees Our equity in the earnings of the bulk liquid storage terminal business increased due to improved operating results from that business and our share of the non-cash derivative-related gains of $14.3 million in 2009 compared with gains of $145,000 in 2008. The increase in the non-cash derivative-related gains are attributable to the discontinuance of hedge accounting in accordance with SFAS No. 133 on April 1, 2009. Income Taxes For the 2008 year, we reported a consolidated net loss before income taxes, for which we recorded a deferred tax benefit, net of certain state net operating losses from our airport parking business and a portion of our impairment attributable to non-deductible goodwill. For the year ending December 31, 2009, we expect to have consolidated taxable loss for federal and for certain state income tax purposes. We expect to utilize the projected federal and state tax losses, except as noted below, and any prior year losses. In calculating our consolidated projected effective state tax rate for 2009, we have taken into consideration an expected need to provide a valuation allowance for certain state income tax net operating loss carryforwards, the utilization of which is not assured beyond a reasonable doubt. In addition, we expect to incur certain expenses that will not be deductible in determining state taxable income. Accordingly, these expenses have also been excluded in projecting our effective state tax rate. In determining the effective tax rate for the six months ended June 30, 2009, the Company excluded the write down to fair value of certain assets from ordinary income in determining its effective tax rate. Further, approximately $53.4 million of the write down is attributable to goodwill and is a permanent book-tax difference, for which no tax benefit has been recognized. Earnings Before Interest, Taxes, Depreciation, Amortization (EBITDA) Excluding Non-Cash Items In accordance with GAAP, we have disclosed EBITDA excluding non-cash items for our Company and each of our operating segments in Note 12, Reportable Segments, to our consolidated financial statements as a key performance metric relied on by management in evaluating our performance in accordance with FASB issued Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information, or SFAS No. 131. EBITDA excluding non-cash items is defined as earnings before interest, taxes, depreciation and amortization and non-cash items, principally goodwill impairments and
unrealized gains and losses on derivative instruments. We consider EBITDA excluding non-cash items to be important in the overall assessment of our operating businesses individually and in consolidation. We believe our presentation of EBITDA excluding non-cash items provides additional insight into the performance of our operating companies and their ability to service or reduce debt, to fund growth capital projects and/or support distributions up to our holding company.
 35    TABLE OF CONTENTS Results of Operations: Consolidated  (continued) For the quarter and six months ended June 30, 2008, we used EBITDA. The following tables, reflecting results of operations for the businesses for the quarter and six months ended June 30, 2008, have been conformed to current periods presentation reflecting EBITDA excluding non-cash items. A reconciliation of net (loss) income to EBITDA excluding non-cash items, on a consolidated basis, is provided below ($ in thousands):  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          $

          

          %

          

          2009

          

          2008

          

          $

          

          %Net (loss) income

          

          $

          (28,958

          )

          

          $

          8,338

          

          

          

          

          

          

          

          

          

          

          $

          (81,984

          )

          

          $

          6,348Interest expense, net

          

          

          26,585

          

          

          

          25,379

          

          

          

          

          

          

          

          

          

          

          

          57,114

          

          

          

          50,732(Benefit) provision for income taxes

          

          

          (5,689

          )

          

          

          (364

          )

          

          

          

          

          

          

          

          

          

          

          (41,348

          )

          

          

          1,000Depreciation(1)

          

          

          9,270

          

          

          

          6,315

          

          

          

          

          

          

          

          

          

          

          

          22,420

          

          

          

          13,038Depreciation  cost of services(1)

          

          

          2,364

          

          

          

          2,765

          

          

          

          

          

          

          

          

          

          

          

          11,078

          

          

          

          5,511Amortization(2)

          

          

          12,532

          

          

          

          10,904

          

          

          

          

          

          

          

          

          

          

          

          42,797

          

          

          

          21,643Goodwill impairment

          

          

          53,200

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          71,200

          

          

          

          (Gain) loss on derivative instruments

          

          

          (19,724

          )

          

          

          581

          

          

          

          

          

          

          

          

          

          

          

          12,501

          

          

          

          88650% 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. Energy-Related Businesses Bulk Liquid Storage Terminal Business We account for our 50% interest in this business under the equity method. We recognized income of $15.5 million in our consolidated results for the six months ended June 30, 2009. This includes our 50% share of IMTTs net income of $17.8 million for the period, offset by $2.3 million of additional depreciation and amortization expense (net of taxes). For the six months ended June 30, 2008, we recognized income of $6.6 million in our consolidated results. This included our 50% share of IMTTs net income for the period of $8.9 million of net income partially offset by $2.3 million of additional depreciation and amortization expense (net of
taxes). Distributions from IMTT, to the degree classified as taxable dividends and not a return of capital for income tax purposes, qualify for the federal dividends received deduction. Therefore, 80% of any dividend is excluded in calculating our consolidated federal taxable income. Any distributions classified as a return of capital for income tax purposes will reduce our tax basis in IMTT. IMTTs cash from operating activities for the quarters ended March 31, 2009 and June 30, 2009 has been retained to fund IMTTs growth capital expenditures and is expected to contribute significantly to IMTTs gross profit and EBITDA progressively over the
next twelve months. See Liquidity and Capital Resources for further discussion. To enable meaningful analysis of IMTTs performance across periods, IMTTs overall performance is discussed below, rather than IMTTs contribution to our consolidated results.
 36    TABLE OF CONTENTS Energy-Related Business: Bulk Liquid Storage Terminal Business  (continued) Key Factors Affecting Operating Results Terminal revenue and terminal gross profit increased principally due to: 

          increases in average tank rental rates and volume of storage under contract; and 

          increases in revenue from the provision of storage and other services with the commencement of operations at a new storage facility at Geismar, LA.  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          2009

          

          2008$

          

          $

          

          $

          

          %

          

          $

          

          $

          

          $

          

          %($ In Thousands) (Unaudited)RevenueTerminal revenue

          

          

          77,752

          

          

          

          72,899

          

          

          

          4,853

          

          

          

          6.7

          

          

          

          161,562

          

          

          

          147,123

          

          

          

          14,439

          

          

          

          9.8Environmental 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

          

          

          

          7.8Costs and expensesTerminal operating costs

          

          

          38,014

          

          

          

          39,443

          

          

          

          1,429

          

          

          

          3.6

          

          

          

          76,463

          

          

          

          77,985

          

          

          

          1,522

          

          

          

          2.0Environmental 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

          

          

          

          1.7Terminal gross profit

          

          

          39,738

          

          

          

          33,456

          

          

          

          6,282

          

          

          

          18.8

          

          

          

          85,099

          

          

          

          69,138

          

          

          

          15,961

          

          

          

          23.1Environmental 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

          

          

          

          19.3General and administrative expenses

          

          

          6,583

          

          

          

          6,365

          

          

          

          (218

          )

          

          

          (3.4

          )

          

          

          12,567

          

          

          

          13,195

          

          

          

          628

          

          

          

          4.8Depreciation 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

          

          

          

          23.4Interest 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

          

          

          

          NMProvision 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

          

          

          

          15.6Net income

          

          

          22,423

          

          

          

          19,648

          

          

          

          2,775

          

          

          

          14.1

          

          

          

          35,686

          

          

          

          17,836

          

          

          

          17,850

          

          

          

          100.1Reconciliation of net income to EBITDA excluding non-cash items:Net income

          

          

          22,423

          

          

          

          19,648

          

          

          

          

          

          

          

          

          

          

          

          35,686

          

          

          

          17,836Interest expense, net

          

          

          7,551

          

          

          

          5,173

          

          

          

          

          

          

          

          

          

          

          

          14,612

          

          

          

          9,892Provision for income taxes

          

          

          14,959

          

          

          

          12,418

          

          

          

          

          

          

          

          

          

          

          

          23,898

          

          

          

          11,462Depreciation and amortization

          

          

          13,454

          

          

          

          10,323

          

          

          

          

          

          

          

          

          

          

          

          26,278

          

          

          

          20,657Unrealized 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
 37    TABLE OF CONTENTS Energy-Related Business: Bulk Liquid Storage Terminal Business  (continued) Revenue and Gross Profit The increase in terminal revenue primarily reflects growth in storage and other services revenues, partially offset by declines in throughput and heating revenues. Storage revenue grew as the average rental rates increased by 8.1% and 8.3% during the quarter and six months ended, respectively. The increase in storage revenue also reflected an increase in storage capacity as the business completed certain expansion projects at its Bayonne, NJ and Louisiana facilities. The commencement of storage and related logistics services for our principal customer at the Geismar, LA terminal was the primary driver of an overall $5.6 million and $12.5 million
increase in other services revenues during the quarter and six months ended, respectively, at an expected level of gross profit and EBITDA. Throughput and heating revenues declined reflecting lower activity levels at IMTTs facilities and lower heating costs due to the decline in fuel prices passed through to customers. Storage capacity utilization, defined as storage capacity rented divided by total capacity available, remained relatively constant at 93% and 94% during the quarter and six months ended, respectively. The terminal operating costs remained relatively stable. Increases in operating costs primarily related to pension costs and health insurance claims and the commencement of operations at Geismar, LA, offset by a $2.0 million excise tax settlement in 2008 that did not reoccur in 2009. Gross profit from environmental services decreased from 2008 to 2009 primarily due to decreased activity in spill response and other services offset by tank cleaning services provided to IMTT. Revenue from environmental response services is generated from services provided to third parties as well as to IMTT. General and Administrative Expenses Decreased general and administrative costs for the six months ended June 30, 2009 resulted primarily from the recovery of receivables that had been fully provisioned for in prior periods. Depreciation and Amortization Depreciation and amortization expense increased by $3.1 million and $5.6 million for the quarter and six months ended, respectively, as IMTT completed several major expansion projects. Interest Expense, Net Interest costs increased primarily due to higher borrowings incurred to fund growth capital expenditures along with the discontinuation of the capitalization of construction period interest upon the commencement of operations at Geismar, LA. Gas Production and Distribution Business Key Factors Affecting Operating Results 

          increased utility contribution margin for the quarter primarily due to rate increases implemented on June 11, 2009, the timing of fuel adjustment charges and changes in customer mix and increases for the six months ended June 30, 2009 primarily due to a billing adjustment and rate increases implemented on June 11, 2009, partially offset by lower volumes; and 

          increased non-utility contribution margin primarily due to favorable movement in the cost of liquefied petroleum gas, or LPG.
 38    TABLE OF CONTENTS Energy-Related Business: Gas Production and Distribution Business  (continued)  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          2009

          

          2008$

          

          $

          

          $

          

          %

          

          $

          

          $

          

          $

          

          %($ In Thousands) (Unaudited)Contribution marginRevenue  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

          

          

          

          44.7Contribution margin  utility

          

          

          8,369

          

          

          

          7,780

          

          

          

          589

          

          

          

          7.6

          

          

          

          16,251

          

          

          

          15,455

          

          

          

          796

          

          

          

          5.2Revenue  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

          

          

          

          40.8Contribution margin  non-utility

          

          

          10,259

          

          

          

          8,379

          

          

          

          1,880

          

          

          

          22.4

          

          

          

          21,848

          

          

          

          16,914

          

          

          

          4,934

          

          

          

          29.2Total contribution margin

          

          

          18,628

          

          

          

          16,159

          

          

          

          2,469

          

          

          

          15.3

          

          

          

          38,099

          

          

          

          32,369

          

          

          

          5,730

          

          

          

          17.7Production

          

          

          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

          

          

          

          23.7Selling, 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

          

          

          

          35.4Interest expense, net

          

          

          (2,203

          )

          

          

          (2,360

          )

          

          

          157

          

          

          

          6.7

          

          

          

          (4,497

          )

          

          

          (4,671

          )

          

          

          174

          

          

          

          3.7Other (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

          

          

          

          NMProvision 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

          

          

          

          113.1Reconciliation of net income to EBITDA excluding non-cash items:Net income(1)

          

          

          4,518

          

          

          

          1,728

          

          

          

          

          

          

          

          

          

          

          

          7,633

          

          

          

          3,582Interest expense, net

          

          

          2,203

          

          

          

          2,360

          

          

          

          

          

          

          

          

          

          

          

          4,497

          

          

          

          4,671Provision for income taxes

          

          

          2,908

          

          

          

          1,113

          

          

          

          

          

          

          

          

          

          

          

          4,913

          

          

          

          2,305Depreciation and amortization

          

          

          1,732

          

          

          

          1,664

          

          

          

          

          

          

          

          

          

          

          

          3,422

          

          

          

          3,332Unrealized (gains) losses on derivative instruments

          

          

          (3,452

          )

          

          

          129

          

          

          

          

          

          

          

          

          

          

          

          (2,802

          )

          

          

          150EBITDA 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.
 39    TABLE OF CONTENTS Energy-Related Business: Gas Production and Distribution Business  (continued) Although the presentation and analysis of contribution margin is a non-GAAP performance measure, management believes that it is meaningful to understanding TGCs performance under both a utility regulated rate structure and a non-utility competitive pricing structure. Under a regulated environment, feedstock costs are automatically passed through to utility customers, while non-utility pricing may be adjusted, subject to the competitive environment, to recover changes in feedstock costs. Contribution margin should not be considered an alternative to revenue, operating income, or net income, which are determined in accordance with U.S. GAAP. We calculate contribution margin as revenue less direct costs of revenue other than production and transmission and distribution costs. Other companies may calculate contribution margin differently or may use different metrics and, therefore, the contribution margin presented for TGC is not necessarily comparable with metrics of other companies. Contribution Margin and Operating Income Utility contribution margin for the second quarter was higher primarily due to implementation of a rate increase on June 11, 2009, described further below, the timing of the pass through of fuel adjustment charges, and a shift in the mix of customers in favor of those with higher margins. Utility contribution margin through six months was higher primarily due to a billing adjustment affecting a single customer, the implementation of the rate case and a shift in the mix of customers in favor of those with higher margins, partially offset by a lower volume of gas sold. As noted in previous filings, TGC filed a general rate increase application on August 4, 2008. On June 4, 2009, the Hawaii Public Utilities Commission, or HPUC, issued an Interim Decision and Order, which provided for a revenue increase of approximately $9.5 million including applicable taxes per year. Interim rates took effect on June 11, 2009; thus, second quarter results only show a partial impact of the rate increase. The full effect of the rate increase will be seen through June 2010. Non-utility contribution margin increased due to favorable movement in the cost of LPG. The volume of gas products sold in 2009 was comparable to 2008. Selling, general and administrative costs increased due to higher incentive compensation, medical and pension expenses and professional services costs, primarily related to new marketing initiatives. Full year 2009 pension expense is expected to increase by approximately $1.1 million compared with 2008. District Energy Business Customers of our district energy business pay two charges to receive chilled water services: a fixed charge based on contracted capacity, and a variable charge based on the consumption of chilled water. Capacity charges are typically adjusted annually at a fixed rate or are indexed to the Consumer Price Index (CPI). The terms of our customer contracts provide for the pass through of increases or decreases in our electricity costs, the largest component of our direct expenses. Key Factors Affecting Operating Results 

          a decrease in gross profit, driven by: 

          cooler average temperatures in 2009 compared with 2008, resulting in decreased cooling consumption revenue and decreased electricity costs due to lower ton-hour sales, partially offset by 

          a net increase in contracted capacity as six new customers began service and annual inflation-linked increases in contract capacity rates. 

          decreased selling, general and administrative costs due to a reduction in legal expenses, a change in the method of accruing audit fees, and a customer reimbursement in 2009 for project development costs.
 40    TABLE OF CONTENTS Energy-Related Business: District Energy Business  (continued)  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          2009

          

          2008$

          

          $

          

          $

          

          %

          

          $

          

          $

          

          $

          

          %($ In Thousands) (Unaudited)Cooling capacity revenue

          

          

          5,110

          

          

          

          4,828

          

          

          

          282

          

          

          

          5.8

          

          

          

          10,007

          

          

          

          9,634

          

          

          

          373

          

          

          

          3.9Cooling 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

          

          

          

          3.5Finance lease revenue

          

          

          1,205

          

          

          

          1,179

          

          

          

          26

          

          

          

          2.2

          

          

          

          2,397

          

          

          

          2,373

          

          

          

          24

          

          

          

          1.0Total revenue

          

          

          12,560

          

          

          

          12,797

          

          

          

          (237

          )

          

          

          (1.9

          )

          

          

          21,633

          

          

          

          21,297

          

          

          

          336

          

          

          

          1.6Direct 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

          

          

          

          23.0Amortization of intangibles

          

          

          341

          

          

          

          341

          

          

          

          

          

          

          

          

          

          

          

          678

          

          

          

          682

          

          

          

          4

          

          

          

          0.6Operating income

          

          

          3,211

          

          

          

          3,614

          

          

          

          (403

          )

          

          

          (11.2

          )

          

          

          4,941

          

          

          

          4,902

          

          

          

          39

          

          

          

          0.8Interest expense, net

          

          

          (2,471

          )

          

          

          (2,608

          )

          

          

          137

          

          

          

          5.3

          

          

          

          (5,035

          )

          

          

          (5,152

          )

          

          

          117

          

          

          

          2.3Other 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

          

          

          

          NMIncome tax (provision) benefit

          

          

          (2,296

          )

          

          

          (247

          )

          

          

          (2,049

          )

          

          

          NM

          

          

          

          (1,221

          )

          

          

          107

          

          

          

          (1,328

          )

          

          

          NMNoncontrolling 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

          

          

          

          NMReconciliation 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

          

          

          

          5,152Income tax provision (benefit)

          

          

          2,296

          

          

          

          247

          

          

          

          

          

          

          

          

          

          

          

          1,221

          

          

          

          (107

          )Depreciation

          

          

          1,502

          

          

          

          1,476

          

          

          

          

          

          

          

          

          

          

          

          2,965

          

          

          

          2,952Amortization of intangibles

          

          

          341

          

          

          

          341

          

          

          

          

          

          

          

          

          

          

          

          678

          

          

          

          682Unrealized 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.
 41    TABLE OF CONTENTS Energy-Related Business: District Energy Business  (continued) Gross Profit Gross profit decreased primarily due to reduced cooling consumption revenue related to lower ton-hour sales resulting from cooler average temperatures in 2009 compared with 2008 and an adjustment for electricity costs passed through in 2008. Cooler weather conditions in the Chicago area, compared with 2008, have contributed to a significant decrease in chilled water demand. Cooling capacity revenue increased due to a net increase in contract capacity as six new customers began service and annual inflation-related increases of contract capacity rates in accordance with customer contract terms. Electricity expense increased due to higher market rates
in 2009, partially offset by lower consumption. Other direct expenses increased compared to 2008 due to the timing of the completion of maintenance projects. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased, primarily due to a reduction in legal expenses, resulting from lower activity combined with active expense management. In addition, the decrease also reflects a change in the method of accruing audit fees and a customer reimbursement in 2009. Aviation-Related Businesses Airport Services Business The soft overall economic conditions have caused a lower utilization of business jets by both companies and individuals. However, the level of U.S. business jet flight activity (as measured by take-offs and landings) has been stabilizing since March 2009 according to the flight data reported by the Federal Aviation Administration, or FAA. Fuel gross profit, the leading indicator of our FBOs operating performance, has remained essentially flat in the second quarter of 2009 as compared to the first quarter of 2009. We also have rationalized our cost structure to help offset any further decline in activity levels. We believe that, based on the businesss current performance and further anticipated reductions in expenses, cash generation from the business will be sufficient to meet debt service obligations and the business will remain in compliance with financial covenants through the maturity of the debt without any further equity contribution from the Company. According to the FAA, the active turbine powered fleet in the U.S. expanded by approximately 5.5% in 2008. The business jet component of the fleet grew by approximately 9.8%. We expect the net active business jet fleet to continue to expand. We believe that increased flight activity and growth in fleet size will drive increased demand for FBO services in the U.S. when the economy stabilizes and begins to recover. The following section summarizes the historical consolidated financial performance of our airport services business for the quarter and six months ended June 30, 2009 and 2008. Key Factors Affecting Operating Results 

          lower general aviation fuel volumes; 

          higher interest expense primarily driven by interest rate swap breakage fees associated with prepayment of debt during the first six months of 2009; and 

          lower compensation expense resulting from staff rationalization and decreased credit card fees stemming from lower jet fuel prices and lower activity levels.
 42    TABLE OF CONTENTS Aviation-Related Business: Airport Services Business  (continued)  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          2009

          

          2008$

          

          $

          

          $

          

          %

          

          $

          

          $

          

          $

          

          %($ In Thousands) (Unaudited)RevenueFuel 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 revenueCost of revenue-fuel

          

          

          39,468

          

          

          

          101,914

          

          

          

          62,446

          

          

          

          61.3

          

          

          

          76,935

          

          

          

          193,796

          

          

          

          116,861

          

          

          

          60.3Cost of revenue-non-fuel

          

          

          2,777

          

          

          

          8,868

          

          

          

          6,091

          

          

          

          68.7

          

          

          

          7,480

          

          

          

          20,668

          

          

          

          13,188

          

          

          

          63.8Total cost of revenue

          

          

          42,245

          

          

          

          110,782

          

          

          

          68,537

          

          

          

          61.9

          

          

          

          84,415

          

          

          

          214,464

          

          

          

          130,049

          

          

          

          60.6Fuel 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

          

          

          

          13.5Goodwill impairment

          

          

          53,200

          

          

          

          

          

          

          

          (53,200

          )

          

          

          NM

          

          

          

          71,200

          

          

          

          

          

          

          

          (71,200

          )

          

          

          NMDepreciation 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

          )

          

          

          NMInterest 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

          )

          

          

          NMBenefit (provision) for income taxes

          

          

          20,844

          

          

          

          (2,295

          )

          

          

          23,139

          

          

          

          NM

          

          

          

          54,798

          

          

          

          (6,306

          )

          

          

          61,104

          

          

          

          NMNet (loss) income(2)

          

          

          (30,876

          )

          

          

          3,400

          

          

          

          (34,276

          )

          

          

          NM

          

          

          

          (81,176

          )

          

          

          9,342

          

          

          

          (90,518

          )

          

          

          NMReconciliation of net (loss) income to EBITDA excluding non-cash items:Net (loss) income(2)

          

          

          (30,876

          )

          

          

          3,400

          

          

          

          

          

          

          

          

          

          

          

          (81,176

          )

          

          

          9,342Interest expense, net

          

          

          16,456

          

          

          

          15,443

          

          

          

          

          

          

          

          

          

          

          

          36,687

          

          

          

          31,281(Benefit) provision for income taxes

          

          

          (20,844

          )

          

          

          2,295

          

          

          

          

          

          

          

          

          

          

          

          (54,798

          )

          

          

          6,306Depreciation and amortization

          

          

          19,729

          

          

          

          14,487

          

          

          

          

          

          

          

          

          

          

          

          61,117

          

          

          

          29,124Goodwill impairment

          

          

          53,200

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          71,200

          

          

          

          Unrealized (gains) losses on derivative instruments

          

          

          (11,520

          )

          

          

          356

          

          

          

          

          

          

          

          

          

          

          

          18,084

          

          

          

          555EBITDA 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.
 43    TABLE OF CONTENTS Aviation-Related Business: Airport Services Business  (continued) Results for 2008 include SevenBar FBO from March 4, 2008 (acquisition date) to June 30, 2009. 2009 results include SevenBar FBOs for the three and six months ended June 30, 2009. Results for the two months ended February 29, 2009 have not been presented separately as they are immaterial. Revenue and Gross Profit The majority of the revenue and gross profit in our airport services business is generated through fueling general aviation aircraft at our 72 FBOs around the United States. This revenue is categorized according to who owns the fuel we use to service these aircrafts. If we own the fuel, we record our cost to purchase that fuel as cost of revenue-fuel. Our corresponding fuel revenue is our cost to purchase that fuel plus a margin. We generally pursue a strategy of maintaining, and where appropriate increasing, dollar-based margins, thereby passing any increase in fuel prices to the customer. We also have into-plane arrangements whereby we fuel
aircraft with fuel owned by another party. We collect a fee for this service that is recorded as non-fuel revenue. Other non-fuel revenue includes various services such as hangar rentals and de-icing. Our revenue and gross profit are driven by fuel volume and dollar-based margin per gallon. This applies to both fuel and into-plane revenue. Our customers will occasionally move from one category to the other. Therefore, we believe discussing our fuel and non-fuel revenue and gross profit and the related key metrics on a combined basis provides a more meaningful analysis of our airport services business. Gross profit decreased compared to the six months ended June 30, 2008, mainly due to lower general aviation volume and lower general aviation fuel margins. General aviation fuel volumes declined 22.0% as compared to the first six months of 2008. Total weighted average margins, including into-plane sales, decreased by 3.0%. Excluding the results from the Charter operations and Management Contracts business, which were sold in the second half of 2008, gross profit from other services (including hangar rentals, de-icing and miscellaneous services) decreased by 8.0% for the year, primarily due to lower de-icing revenue and hangar rent. The decline in
hangar rent is due to lower transient traffic. The slowing economy has contributed to a general decrease in corporate activity, resulting in a sharper reduction in business-related general aviation flight movements at our FBOs than recreation-related general aviation flight movements. The 8.3% decline in gross profit compared to the first quarter of 2009 is primarily due to typically lower seasonal activity at our FBOs with a strong recreational focus, as well as lack of de-icing activity during the second quarter. Selling, General and Administrative Expenses The decrease in selling, general and administrative expenses is due primarily to integration synergies and the implementation of cost reduction initiatives. These cost savings were partially offset by a $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. Our airport services business is further rationalizing its cost structure to offset any further declines in general aviation activity levels. Goodwill Impairment In accordance with SFAS No. 142, we performed an impairment test at the reporting unit level during the first six months of 2009. Goodwill is considered impaired when the carrying amount of a reporting units goodwill exceeds its implied fair value, as determined under a two step approach. Based on the testing performed, we recognized goodwill impairment charges of $53.2 million and $71.2 million for the quarter and six months ended June 30, 2009, principally related to underperformance at a limited number of sites. Depreciation and Amortization The increase in depreciation and amortization expense was due to non-cash asset impairment charges of $5.1 million and $30.8 million for the quarter and six months ended June 30, 2009, respectively, due to underperformance at a limited number of sites. Interest Expense, Net Interest expense increased despite a reduction of $44.6 million and $16.0 million of debt in the first and second quarter, respectively, due to the payment of $5.2 million and $1.6 million of swap breakage fees during the periods, respectively.
 44    TABLE OF CONTENTS Aviation-Related Business: Airport Parking Business Airport Parking Business Key Factors Affecting Operating Results 

          lower revenue due to reduced traffic volumes resulting from the continued economic downturn and airline enplanement declines, offset, in part, by $1.3 million of revenue from a location acquired in the third quarter of 2008; 

          lower direct expenses from fuel cost savings and from cost reduction programs initiated by the business, excluding the $6.4 million of non-cash impairment charge to property, equipment, land and leasehold improvements in the first quarter of 2009; and 

          higher selling, general and administrative costs during the quarter primarily due to higher professional fees associated with credit facility defaults and restructuring activities and higher expenses related to corporate office relocation, partially offset by a state tax accrual in the second quarter of 2008.  Quarter Ended June 30,

          

          Change Favorable/(Unfavorable)

          

          Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008

          

          2009

          

          2008$

          

          $

          

          $

          

          %

          

          $

          

          $

          

          $

          

          %($ 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

          

          

          

          6.2Amortization of intangibles

          

          

          

          

          

          

          727

          

          

          

          727

          

          

          

          NM

          

          

          

          

          

          

          

          1,543

          

          

          

          1,543

          

          

          

          NMOperating income (loss)

          

          

          794

          

          

          

          437

          

          

          

          357

          

          

          

          81.7

          

          

          

          (5,209

          )

          

          

          245

          

          

          

          (5,454

          )

          

          

          NMInterest 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

          

          

          

          NMUnrealized (losses) gains on derivative instruments

          

          

          (327

          )

          

          

          81

          

          

          

          (408

          )

          

          

          NM

          

          

          

          (327

          )

          

          

          158

          

          

          

          (485

          )

          

          

          NMBenefit for income taxes

          

          

          1,204

          

          

          

          1,270

          

          

          

          (66

          )

          

          

          (5.2

          )

          

          

          5,277

          

          

          

          2,771

          

          

          

          2,506

          

          

          

          90.4Noncontrolling interest

          

          

          1,213

          

          

          

          273

          

          

          

          940

          

          

          

          NM

          

          

          

          1,213

          

          

          

          697

          

          

          

          516

          

          

          

          74.0Net 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

          

          

          

          7,636Benefit for income taxes

          

          

          (1,204

          )

          

          

          (1,270

          )

          

          

          

          

          

          

          

          

          

          

          (5,277

          )

          

          

          (2,771

          )Depreciation(1)

          

          

          862

          

          

          

          1,289

          

          

          

          

          

          

          

          

          

          

          

          8,113

          

          

          

          2,559Amortization of intangibles

          

          

          

          

          

          

          727

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          

          1,543Unrealized 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 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.
 45    TABLE OF CONTENTS Aviation-Related Business: Airport Parking Business  (continued)  Quarter Ended June 30,

          

          Change

          

          Six Months Ended June 30,

          

          Change2009

          

          2008

          

          

          

          %

          

          2009

          

          2008

          

          

          

          %Operating Data:Cars Out(1)

          

          

          468,497

          

          

          

          512,213

          

          

          

          (43,716

          )

          

          

          (8.5

          )

          

          

          865,898

          

          

          

          1,010,201

          

          

          

          (144,303

          )

          

          

          (14.3

          )Average Revenue Per Car Out:

          

          $

          36.41

          

          

          $

          36.37

          

          

          $

          0.04

          

          

          

          0.1

          

          

          $

          39.11

          

          

          $

          36.31

          

          

          $

          2.80

          

          

          

          7.7Average Overnight Occupancy(2)

          

          

          17,674

          

          

          

          23,270

          

          

          

          (5,596

          )

          

          

          (24.0

          )

          

          

          16,773

          

          

          

          22,552

          

          

          

          (5,779

          )

          

          

          (25.6

          )
  (1)

          Cars Out refers to the total number of customers exiting during the period. (2)

          Average Overnight Occupancy refers to aggregate average daily occupancy measured for all locations at the lowest point of the day and does not reflect turnover and intra-day activity. Liquidity and Capital Resources General Our primary cash requirements include normal operating expenses, debt service, maintenance capital expenditures and debt principal payments. Our primary means of meeting these requirements is from cash generated by operating activities, although we could borrow against existing credit facilities or issue additional LLC interests. In the past, we have distributed substantially all of our excess cash to shareholders, other than cash retained for prudent reserves in either our operating companies or our holding company. However, the current business downturn and the dislocation in the capital markets has caused us to suspend our quarterly cash distributions and retain cash that historically we would have distributed to shareholders. The additional cash is expected to buffer the Company against continued deterioration in the credit markets in particular and may be used to pay down holding company debt or outstanding debt of existing businesses. As previously discussed, there is substantial doubt about our parking business ability to continue as a going concern and we have no intention of contributing any additional capital to this business. Creditors of this business do not have recourse to any assets of the Company or any assets of the Companys other businesses, other than approximately $6.2 million in lease and interest rate swap guarantees as of August 6, 2009. There is one remaining interest rate swap payment of approximately $800,000. The interest rate swap expires September 15, 2009. With the exception of our airport parking business, we believe that our businesses and holding company will have sufficient liquidity and capital resources with which to meet our future requirements, including our holding company and subsidiary debt obligations. We base our assessment of the sufficiency of our liquidity and capital resources on the following assumptions: 

          our businesses and investments overall generate, and will continue to generate, significant operating cash flow; 

          the ongoing maintenance capital expenditures associated with our businesses are modest and readily funded from their respective operating cash flow or available financing; 

          all significant short-term growth capital expenditures will be funded with cash on hand or from committed undrawn credit facilities; and 

          we will be able to refinance, extend and/or repay the principal amount of maturing debt on terms that can be supported by the cash flows from our businesses. The section below discusses the sources and uses of cash on a consolidated basis and for each of our businesses and investments. All inter-company activities such as corporate allocation, capital contributions to our businesses and distributions from our businesses have been excluded from the tables below as these transactions are eliminated on consolidation. Prior period comparatives also have been updated to remove these inter-company activities.
 46    TABLE OF CONTENTS Liquidity and Capital Resources: General  (continued) Our sources of cash to meet these obligations are as follows: 

          cash generated from our operations (see Operating Activities below); 

          refinancing our current credit facilities on or before maturity (see Financing Activities below); and 

          cash available from our undrawn credit facilities (see Financing Activities below). Analysis of Consolidated Historical Cash Flows  Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008($ In Thousands)

          

          $

          

          $

          

          $

          

          %Cash provided by operating activities

          

          

          36,853

          

          

          

          48,590

          

          

          

          (11,737

          )

          

          

          (24.2

          )Cash used in investing activities

          

          

          (12,084

          )

          

          

          (74,213

          )

          

          

          62,129

          

          

          

          83.7Cash (used in) provided by financing activities

          

          

          (54,948

          )

          

          

          14,610

          

          

          

          (69,558

          )

          

          

          NM
  NM  Not meaningful Consolidated Operating Activities Consolidated cash provided by operating activities mainly comprises the cash from operations of the businesses we own, as described in each of the business discussions below. The cash flow from our consolidated business operations is partially offset by expenses paid at the corporate level, such as base management fees paid in cash, professional fees and interest on any amounts drawn on our revolving credit facility. The decrease in consolidated cash provided by operating activities was due primarily to: 

          lower operating performance at our airport services and airport parking businesses; 

          increase in interest rate expense attributable to the interest rate swap breakage fees from the prepayment of the outstanding principal balance on the term loan debt from our airport services businesses; partially offset by 

          a reduction in working capital in 2009 compared to an increase in 2008. As a prerequisite to obtaining financing for the airport parking business, in 2006 the Company guaranteed interest rate swap payments to be made monthly to a financial institution. As part of a forbearance agreement that the airport parking business has entered into with its lenders, the business ceased making its monthly swap payments effective June 2009 at which point the Company began to make payments under the guarantee. The Company made a swap payment of $810,000 in the second quarter of 2009, $1.7 million in payments in the third quarter to date and expects to make the final payment of approximately $800,000 in the third quarter of 2009. Investing Activities The decrease in consolidated cash used in investing activities was primarily due to: 

          the absence of acquisition activity in 2009; and 

          lower capital expenditures at our airport services business; partially offset by 

          no return in our investment in IMTT beyond the equity earnings reported in cash from operating activities.
 47    TABLE OF CONTENTS Liquidity and Capital Resources: Consolidated  (continued) Distributions from IMTT are reflected in our consolidated cash provided by operating activities only up to our 50% share of IMTTs positive earnings. Amounts in excess of this, and any distributions when IMTT records a net loss, are reflected in our consolidated cash from investing activities. For the six months of 2009, $15.5 million of the equity income and $7.0 million in equity distributions were included in cash from operations. In the six months of 2008, $6.6 million of the $14.0 million dividends received were included in cash from operating activities and $7.4 million were included in investing activities. Financing Activities The decrease in consolidated cash (used in) provided by financing activities was primarily due to: 

          debt draw downs in the first quarter of 2008, primarily against the MIC Inc. revolving credit facility, to fund an acquisition; 

          debt repayment during 2009 at our airport services business; partially offset by 

          the suspension of distributions to shareholders in 2009. MIC Inc. Revolving Credit Facility The financial covenant requirements under our MIC Inc. revolving credit facility, and the calculation of these measures at June 30, 2009, were as follows: 

          Ratio of Debt to Consolidated Adjusted Cash from Operations < 5.6x (at June 30, 2009: 1.5x) 

          Ratio of Consolidated Adjusted Cash from Operations to Interest Expense > 2.0x (at June 30, 2009: 12.9x) 

          Minimum EBITDA (as defined in the facility) of > $100.0 million (at June 30, 2009: $180.2 million) For a description of the material terms of the MIC Inc. revolving credit facility, see Liquidity and Capital Resources in Part II, Item 7 of our Annual Report of Form 10-K for the fiscal year ended December 31, 2008. As of March 31, 2009, the Company reclassified its revolving credit facility from long-term debt to current portion of long-term debt on the consolidated condensed balance sheet, due to its maturity on March 31, 2010. We plan to use cash generated from our energy-related businesses combined with existing available cash to prepay amounts under the facility. We believe that we will be able to refinance or extend the facility
for the remaining balance on terms that can be supported by the performance of and cash flows from the businesses. As previously stated, we are exploring all options to repay the remaining amounts outstanding under this facility, including continuing initiatives to increase business level cash generation, asset sales or other potential sources of capital. Energy-Related Businesses Bulk Liquid Storage Terminal Business The following analysis represents 100% of the cash flows of IMTT, which we believe is the most appropriate and meaningful approach to discussing the historical cash flow trends of IMTT, rather than just the composition of cash flows that are included in our consolidated cash flows. We account for our 50% ownership of this business using the equity method. When IMTT records a net loss, or pays distributions in excess of our share of its earnings, distributions we receive in excess of IMTTs earnings are reflected in the consolidated cash flow used in investing activities. Through December 2008, we received a quarterly dividend of $7.0 million
since completing our investment in May 2006. Cash from operating activities with respect to the quarters ended March 31, 2009 and June 30, 2009 has been retained to fund IMTTs growth capital expenditures and is expected to contribute significantly to IMTTs gross profit and EBITDA progressively over the next twelve months.
 48    TABLE OF CONTENTS Energy-Related Business: Bulk Liquid Storage Terminal Business  (continued)  Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008($ In Thousands)

          

          $

          

          $

          

          $

          

          %Cash provided by operating activities

          

          

          66,836

          

          

          

          41,624

          

          

          

          25,212

          

          

          

          60.6Cash used in investing activities

          

          

          (83,119

          )

          

          

          (58,024

          )

          

          

          (25,095

          )

          

          

          (43.2

          )Cash provided by financing activities

          

          

          29,960

          

          

          

          18,186

          

          

          

          11,774

          

          

          

          64.7
 Operating Activities Cash provided by operating activities at IMTT is generated primarily from storage rentals and ancillary services that are billed monthly and paid on various terms. Cash used in operating activities is mainly for payroll costs, maintenance and repair of fixed assets, utilities and professional services, interest payments and payments to tax jurisdictions. Cash provided by operating activities increased primarily due to improved operating results and partially due to an improvement in working capital in excess of 2008 improvements and timing differences in cash contributions to the IMTT pension plan. Investing Activities Cash used in investing activities relates primarily to capital expenditures discussed below. Capital expenditures decreased from $113.2 million in 2008 to $81.4 million in 2009 reflecting a reduction in growth capital expenditure as projects have been completed and a decrease in maintenance capital expenditures. However, cash used in investing activities in 2008 was decreased by $55.0 million of proceeds received from the sale of Gulf Opportunity Zone (GO Zone) bond investments that were held in escrow during 2008 which did not reoccur in 2009. Maintenance Capital Expenditure IMTT incurs maintenance capital expenditures to maintain the existing revenue-producing assets in good working order and prolong the useful lives or increase the service capacity of those revenue producing assets. Maintenance capital expenditures include the refurbishment of storage tanks, piping, and dock facilities, and environmental capital expenditure, principally in relation to improvements in containment measures and remediation. During the six months ended June 30, 2009, IMTT spent $16.7 million on maintenance capital expenditures, including $14.5 million principally in relation to tank refurbishments and repairs to docks and other infrastructure and $2.2 million on environmental capital expenditures, principally in relation to improvements in containment measures and remediation. In 2009, IMTT expects to spend a total of approximately $55.0 million on maintenance capital expenditures. IMTT anticipates that maintenance capital expenditures will increase in 2010 and remain at elevated levels at least through 2012 before moderating. Growth Capital Expenditure During the six months ended June 30, 2009, IMTT spent $49.3 million on growth projects, including $6.9 million in relation to the final elements of construction of the new bulk liquid chemical storage facility at Geismar, LA, $21.9 million principally for the on-going construction of new storage tanks at its other three sites in Louisiana and $16.2 million for on-going tank construction and refurbishment as well as improved infrastructure at its Bayonne, NJ facility. The balance of the expenditure was spent on specific expansion projects related to a number of smaller projects to improve the capabilities of IMTTs facilities.
 49    TABLE OF CONTENTS Energy-Related Business: Bulk Liquid Storage Terminal Business  (continued) Since our investment in IMTT, the business has undertaken or committed to a total of $519.0 million in expansion projects and acquired the Joliet, IL facility for $18.5 million as shown in the following table.  IncrementalCapacity (Barrels Thousands)

          

          RefurbishedCapacity (Barrels Thousands)

          

          Expenditure Cost ($ in Millions)

          

          EBITDA ($ in Millions)(1)Geismar

          

          

          860

          

          

          

          

          

          

          

          236.3

          

          

          

          21.5St. Rose/Gretna/Avondale

          

          

          3,859

          

          

          

          288

          

          

          

          188.1

          

          

          

          26.7Bayonne

          

          

          242

          

          

          

          1,429

          

          

          

          69.1

          

          

          

          8.9Quebec

          

          

          704

          

          

          

          

          

          

          

          30.3

          

          

          

          5.1All Other Projects

          

          

          

          

          

          

          

          

          

          

          3.2

          

          

          

          1.0Joliet Acquisition

          

          

          752

          

          

          

          

          

          

          

          18.5

          

          

          

          2.0Adjustment for Capital ExpenditurePrior to MIC Investment(2)

          

          

          

          

          

          

          

          

          

          

          (8.0

          )

          

          

          Total

          

          

          6,417

          

          

          

          1,717

          

          

          

          537.5

          

          

          

          65.2
  (1)

          Represents projected increases in annualized EBITDA in the first year following completion of the project. (2)

          Represents capital expenditure costs prior to the Companys investment in IMTT. Capital projects completed across the terminals, including the acquisition of the Joliet, IL facility, through June 30, 2009 added and/or refurbished approximately 5.6 million barrels of storage capacity and contribute $45.3 million to gross profit and EBITDA on an annualized basis. IMTT currently has ongoing growth projects for the construction of 1.8 million barrels of new storage capacity and associated infrastructure at St. Rose, LA, which are expected to be put into service in late 2009 through 2010, and the conversion of 0.8 million barrels of capacity and associated infrastructure at Bayonne, NJ, which are expected to be put into service by the end of 2009. Other smaller growth projects are also being pursued. On a combined basis, the projects under construction are expected to have a total cost of $133.8 million and are expected to contribute approximately $19.9 million to gross profit and EBITDA on an annualized basis.
Of the total cost of IMTTs current growth projects, $80.1 million remained to be spent as at June 30, 2009. Contracts with a term of between 4 and 10 years have been signed with customers for substantially all of the tanks being constructed/converted in LA and NJ. IMTT continues to review numerous additional attractive growth opportunities. IMTT anticipates funding existing and new growth capital expenditures with a combination of its cash flow from operating activities, existing credit facilities and additional debt. On June 25, 2009, IMTT received a commitment letter to provide an additional $30.0 million of debt financing in the form of a floating rate term loan. The commitment is subject to final documentation, completion of due diligence and customary closing conditions. The new facility is expected to have the potential to be increased to $200.0 million depending on syndication and the needs of the business. Initial funding of the $30.0 million is expected during August 2009. The
proceeds will be used to finance a portion of the projects noted above. Terms of the additional facility would include an interest rate of LIBOR plus an average margin of 4.0% and a tenor of three years. The business is evaluating opportunities to hedge the floating rate element through interest rates swaps or caps. The availability of the term loan reduces the demand on cash from operating activities to fund growth capital expenditures. As a result, we are in discussions with our co-shareholder about the use of the unallocated cash flows and may conclude that IMTT has the capacity to undertake additional projects, to make distributions (starting in 2010), or both.
 50    TABLE OF CONTENTS Energy-Related Business: Bulk Liquid Storage Terminal Business  (continued) Financing Activities Cash flows from financing activities increased primarily due to lower dividend payments in 2009 and increases in debt draw downs used to fund growth capital expenditure, offset by repayment of shareholder loans. The financial covenant requirements under IMTTs credit facilities, and the calculation of these measures at quarter end, were as follows:  USD Revolving Credit Facility

          

          CAD Revolving Credit FacilityDebt to EBITDA Ratio: Max 4.75x

          

          Debt to EBITDA Ratio: Max 4.75x(at June 30, 2009: 3.69x)

          

          (at June 30, 2009: 3.69x)EBITDA to Interest Ratio: Min 3.00x

          

          EBITDA to Interest Ratio: Min 3.00x(at June 30, 2009: 7.46x)

          

          (at June 30, 2009: 7.46x)
 For a description of the material terms of IMTTs credit facilities, see Liquidity and Capital Resources in Part II, Item 7 of our Annual Report of Form 10-K for the fiscal year ended December 31, 2008. We have not had any material changes to these credit facilities since February 27, 2009, our 10-K filing date. Gas Production and Distribution Business  Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008($ In Thousands)

          

          $

          

          $

          

          $

          

          %Cash provided by operating activities

          

          

          11,831

          

          

          

          8,011

          

          

          

          3,820

          

          

          

          47.7Cash used in investing activities

          

          

          (3,497

          )

          

          

          (4,200

          )

          

          

          703

          

          

          

          16.7Cash provided by financing activities

          

          

          

          

          

          

          3,250

          

          

          

          (3,250

          )

          

          

          NM
  NM  Not meaningful Operating Activities The main drivers for cash provided by operating activities are customer receipts offset by timing of payments for fuel, materials, pipeline repairs, vendor services and supplies, payroll and benefit costs, revenue-based taxes and payment of administrative costs. Our customers are generally billed monthly and make payments on account. Our vendors and suppliers generally bill us when services are rendered or when products are shipped. The increase from 2008 to 2009 was primarily due to improved operating results. Investing Activities Cash used in investing activities primarily comprises capital expenditures. Capital expenditures for the non-utility business are funded by cash from operating activities and capital expenditures for the utility business are funded by drawing on credit facilities as well as cash from operating activities. Maintenance Capital Expenditure Maintenance capital expenditures include replacement of pipeline sections, improvements to our transmission system and synthetic natural gas, or SNG, plant, improvements to buildings and other property and the purchases of vehicles and equipment. Growth Capital Expenditure Growth capital expenditures include the purchases of meters, regulators and propane tanks for new customers, the cost of installing pipelines for new residential and commercial construction and the costs of new commercial energy projects.
 51    TABLE OF CONTENTS Energy-Related Business: Gas Production and Distribution Business  (continued) The following table sets forth information about capital expenditures in our gas production and distribution business:  Maintenance

          

          GrowthSix months ended June 30, 2008

          

          $

          2.4 million

          

          

          $

          2.0 millionSix months ended June 30, 2009

          

          $

          1.3 million

          

          

          $

          2.3 million2009 full year projected

          

          $

          3.7 million

          

          

          $

          4.3 millionCommitments at June 30, 2009

          

          $

          51,000

          

          

          $

          185,000
 We expect to fund approximately 60% of our total 2009 capital expenditures with available credit facilities that relate to the utility operations. 2009 capital expenditures are expected to be lower than previous years due to deferral of several large projects until the economic outlook improves. Financing Activities The main drivers for cash from financing activities are debt financings for capital expenditures and the repayment of outstanding credit facilities. The change from 2008 to 2009 was due primarily to the timing of borrowings to fund capital expenditures. The financial covenants under the business credit facility are as follows: 

          12 mo. look-forward and 12 mo. look-backward EBITDA/interest > 3.5x (distribution lock-up) and > 2.5x (debt default threshold). The ratio at June 30, 2009 was 8.83x. The terms and conditions for the credit facilities include events of default, covenants and representations and warranties that are generally customary for facilities of this type. The facility also requires mandatory repayment if we or another entity managed by the Macquarie Group fails to either own 75% of the respective borrowers or control the management and policies of the respective borrowers. The HPUC, in approving our acquisition of the gas production and distribution business, required that consolidated debt to total capital for HGC Holdings not exceed 65%. The ratio was 60% at June 30, 2009. TGC also has an uncommitted unsecured short-term borrowing facility of $7.5 million that was renewed during the second quarter of 2009. This credit line is being used for working capital needs; no amounts were outstanding as of June 30, 2009. For a description of the material terms of the gas production and distribution business credit facilities, see Liquidity and Capital Resources in Part II, Item 7 of our Annual Report of Form 10-K for the fiscal year ended December 31, 2008. We have not had any material changes to these credit facilities since February 27, 2009, our 10-K filing date. District Energy Business  Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008($ In Thousands)

          

          $

          

          $

          

          $

          

          %Cash provided by operating activities

          

          

          4,841

          

          

          

          5,932

          

          

          

          (1,091

          )

          

          

          (18.4

          )Cash used in investing activities

          

          

          (3,403

          )

          

          

          (1,967

          )

          

          

          (1,436

          )

          

          

          (73.0

          )Cash provided by (used in) financing activities

          

          

          2,686

          

          

          

          (321

          )

          

          

          3,007

          

          

          

          NM
  NM  Not meaningful
 52    TABLE OF CONTENTS Energy-Related Business: District Energy Business  (continued) Operating Activities Cash provided by operating activities is primarily driven by customer receipts for services provided and for leased equipment, the timing of payments for electricity and vendor services or supplies and the payment of payroll and benefit costs. The decline in cash provided by operating activities was primarily due to higher new customer reimbursements for costs to connect to our system in 2008 compared to 2009 and the timing of payments to vendors. The cash contribution from operating results was relatively flat period over period. Investing Activities Cash used in investing activities mainly comprises capital expenditures, which are generally funded by drawing on available credit facilities. Cash used in investing activities in 2008 and 2009 funded growth capital expenditures for new customer connections and plant expansion. Maintenance Capital Expenditure We expect to spend up to $1.0 million per year on capital expenditures relating to the replacement of parts, system reliability, customer service improvements and minor system modifications. Maintenance capital expenditures will be funded from available credit facilities and cash from operating activities. Growth Capital Expenditure The following table summarizes growth capital expenditures committed by our district energy business as well as the gross profit and EBITDA expected to be generated by those expenditures. Of the $28.0 million total, approximately $17.2 million, or 61%, has been spent as of June 30, 2009.  Capital Expenditure Cost ($ Millions)

          

          Gross Profit/EBITDA ($ Millions)(1)

          

          Expected DateChicago Plant and Distribution System Expansion

          

          

          7.7New Chicago Customer Connections and Minor System Modifications

          

          

          6.614.3

          

          

          

          4.9

          

          

          

          2007  2011Chicago Plant Renovation and Expansion

          

          

          11.0

          

          

          

          1.3

          

          

          

          2010  2011Las Vegas System Expansion

          

          

          2.7

          

          

          

          0.3

          

          

          

          2010Total

          

          

          28.0

          

          

          

          6.5
  (1)

          Represents projected increases in annualized EBITDA in the first year following completion of the project. New customers will typically reimburse us for a substantial portion of expenditures related to connecting them to our system, thereby reducing the impact of this element of capital expenditure. In addition, new customers generally have up to two years after their initial service date to increase capacity up to their final contracted tons which may defer a small portion of the expected gross profit and EBITDA. We anticipate that the expanded capacity sold to new or existing customers will be under contract or subject to letters of intent prior to us committing to the capital expenditure. Since our acquisition of the district energy business, we have
signed contracts with eleven new customers representing approximately 80% of expected additional gross profit and EBITDA relating to the Chicago projects in the table above. We expect to fund the capital expenditures for system expansion and interconnection by drawing on available credit facilities.
 53    TABLE OF CONTENTS Energy-Related Business: District Energy Business  (continued) The following table sets forth information about capital expenditures in our district energy business:  Maintenance

          

          GrowthSix months ended June 30, 2008

          

          

          $364,000

          

          

          

          $1.6 millionSix months ended June 30, 2009

          

          

          $175,000

          

          

          

          $3.2 million2009 full year projected

          

          

          $1.0 million

          

          

          

          $14.0 millionCommitments at June 30, 2009

          

          

          $298,000

          

          

          

          $838,000
 Financing Activities The increase in cash provided by (used in) financing activities is primarily due to $3.0 million of borrowings on our credit facility in 2009 to finance growth capital expenditures. The financial covenants under the business credit facility are as follows: 

          Backward Interest Coverage Ratio > 1.5x (distribution lock-up) and > 1.2x (debt default threshold). The ratio at June 30, 2009 was 2.2x. 

          Leverage Ratio (funds from operations less interest expense to net debt) for the previous 12 months equal to or greater than 5.5% (distribution lock-up) and 4.0% (debt default threshold) in years 1 and 2 and thereafter equal to or greater than 6.0% (distribution lock-up). The ratio at June 30, 2009 was 10.9%. For a description of the material terms of district energy business credit facilities, see Liquidity and Capital Resources in Part II, Item 7 of our Annual Report of Form 10-K for the fiscal year ended December 31, 2008. We have not had any material changes to these credit facilities since February 27, 2009, our 10-K filing date. Aviation-Related Businesses Airport Services Business  Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008($ In Thousands)

          

          $

          

          $

          

          $

          

          %Cash provided by operating activities

          

          

          25,576

          

          

          

          43,868

          

          

          

          (18,292

          )

          

          

          (41.7

          )Cash used in investing activities

          

          

          (4,872

          )

          

          

          (60,760

          )

          

          

          55,888

          

          

          

          92.0Cash (used in) provided by financing activities(1)

          

          

          (57,548

          )

          

          

          15,464

          

          

          

          (73,012

          )

          

          

          NM
  NM  Not meaningful (1)

          During the first quarter of 2009, we provided our airport services business with a capital contribution of $50.0 million to pay down $44.6 million of debt and used the remainder of the capital contribution to pay interest rate swap breakage fees and expenses. In the first quarter of 2008, we provided out airport services business with $41.9 million of funding, which was used to pay for the acquisition of SevenBar FBOs (reflected above in cash used in investing activities) and to pre-fund integration costs. In response to the slowing of the overall economy and the recent decline in general aviation activity, we have undertaken to reduce the indebtedness of our airport services business. In cooperation with our lenders, we amended the terms of the loan agreement of our airport services business. The amendment was executed on February 25, 2009. The revised terms are outlined in Liquidity and Capital Resources, Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 27, 2009.
 54    TABLE OF CONTENTS Aviation-Related Business: Airport Services Business  (continued) Operating Activities Operating cash at our airport services business is generated from sales transactions primarily paid by credit cards. Some customers are extended payment terms and billed accordingly. Cash is used in operating activities mainly for payments to vendors of fuel, aircraft services and professional services, as well as payroll costs and payments to tax jurisdictions. Cash provided by operating activities decreased mainly due to: 

          a decline in gross profit resulting from lower general aviation activity; and 

          increased interest expense primarily due to interest rate swap breakage fees associated with the prepayment of the term loan debt; partially offset by 

          reduced levels of working capital, reflecting decreased general aviation activities. Investing Activities Cash used in investing activities relates primarily to our acquisitions and capital expenditures. Decrease in cash used in investing activity is primarily due to the SevenBar acquisition in March of 2008 and lower capital expenditures in the first half of 2009. Maintenance expenditures are generally funded by cash from operating activities and growth capital expenditures are generally funded with draw downs on capital expenditure facilities. Maintenance Capital Expenditure Maintenance capital expenditures encompass repainting, replacing equipment as necessary and any ongoing environmental or required regulatory expenditure, such as installing safety equipment. These expenditures are funded from cash flow from operating activities. Growth Capital Expenditure Growth capital expenditures are incurred primarily in connection with lease extensions and only where we expect to receive an appropriate return relative to our cost of capital. Historically these expenditures have included development of hangars, terminal buildings and ramp upgrades. We have funded these projects through our growth capital expenditure facility. The following table sets forth information about capital expenditures in our airport services business:  Maintenance

          

          GrowthSix months ended June 30, 2008

          

          

          $5.2 million

          

          

          

          $14.8 millionSix months ended June 30, 2009

          

          

          $1.5 million

          

          

          

          $3.4 million2009 full year projected

          

          

          $3.5 million

          

          

          

          $6.4 millionCommitments at June 30, 2009

          

          

          $305,000

          

          

          

          $206,000
 The decreased growth capital expenditures in 2009 primarily relates to the construction of a new hangar at the San Jose FBO and a ramp repair and extension at our Teterboro location that were completed in 2008. We expect growth capital expenditures to be $6.4 million in 2009 and $1.0 million in 2010. The decreases in maintenance capital expenditures are primarily due to the elimination of non-essential maintenance capital expenditures in response to the overall soft economic conditions. Financing Activities During the first quarter of 2009, the Company provided the business with a capital contribution of $50.0 million. The business paid down $44.6 million of debt and used the remainder of the capital contribution to pay interest rate swap breakage fees. In the second quarter of 2009, per the revised terms of the loan agreement, we used approximately $17.5 million of excess cash flow from our airport services business to prepay $16.0 million of the outstanding principal balance of the term loan debt and $1.5 million in interest rate swap breakage fees.
 55    TABLE OF CONTENTS Aviation-Related Business: Airport Services Business  (continued) On August 3, 2009, our airport services business used $6.6 million of free cash flow from the second quarter of 2009 to prepay $6.0 million of the outstanding principal balance of the term loan debt and $563,000 million of interest rate swap breakage fees. We expect to apply all excess cash flow from the business to prepay additional debt principal for the foreseeable future. We believe that, based on the businesss current performance and further anticipated reductions in expenses, cash generation from the business will be sufficient to meet debt service obligations and the business will remain in compliance with financial covenants through the maturity of the debt without any further equity contribution from the Company. The financial covenant requirements under the airport services business credit facility, and the calculation of these measures at quarter end, were as follows: 

          Debt Service Coverage Ratio > 1.2x (default threshold). The ratio at June 30, 2009 was 1.84x. 

          Leverage Ratio debt to adjusted EBITDA for the trailing twelve months < 8.25x (default threshold). The ratio at June 30, 2009 was 7.73x For a description of the material terms of the airport services business credit facility, see Liquidity and Capital resources in Part II, Item 7 of our Annual Report of Form 10-K for the fiscal year ended December 31, 2008. We have not had any material changes to these credit facility since February 27, 2009, our 10-K filing date. Airport Parking Business  Six Months Ended June 30,

          

          Change Favorable/(Unfavorable)2009

          

          2008($ In Thousands)

          

          $

          

          $

          

          $

          

          %Cash used in operating activities

          

          

          (2,909

          )

          

          

          (38

          )

          

          

          (2,871

          )

          

          

          NMCash used in investing activities

          

          

          (312

          )

          

          

          (13,998

          )

          

          

          13,686

          

          

          

          97.8Cash provided by (used in) financing activities

          

          

          2,513

          

          

          

          (421

          )

          

          

          2,934

          

          

          

          NM
  NM  Not meaningful The results of operations and financial condition of our airport parking business have suffered in the wake of continuing declines in commercial enplanements and reduced consumer spending. Our airport parking business has $201.2 million of total debt due on or before September 2009, secured by the assets and other collateral of this business. It is in default on its debt and does not have sufficient liquidity or capital resources to repay or refinance this debt. The business signed a forbearance agreement with the lenders under its primary credit facility on June 10, 2009 that expires on August 31, 2009. Material terms of the forbearance agreement are that during the forbearance period: 

          lenders forbear from exercising rights and remedies for certain designated defaults including any breaches of certain financial covenants and the non-payment of interest; 

          interest will accrue at the current interest rate (LIBOR plus 190 basis points) and will be deferred and capitalized; 

          payments on the swap rate agreement will not be made by the airport parking business; 

          the business cannot sell, lease or dispose of assets or properties or incur debt, in each case, other than in the ordinary course of business; and 

          certain limitations on capital expenditures and other payments, including to the Company.
 56    TABLE OF CONTENTS Aviation-Related Business: Airport Parking Business  (continued) The forbearance agreement will expire or be terminated at the earliest of August 31, 2009 or the date that the business is in default under the agreement, an event of default occurs under the underlying credit facility (other than as a result of a default covered by the forbearance agreement) or creditors exercise rights or remedies with respect to debt of the business in excess of $500,000 or such debt is accelerated. There is substantial doubt regarding the business ability to continue as a going concern. The business has engaged financial advisors to actively solicit a sale of the business. A group of prospective purchasers has begun due diligence. The business is working cooperatively with its lenders to pursue strategic alternatives, including asset sales, restructuring plans or filing for protection under bankruptcy laws. Operating Activities Cash used in operating activities is primarily driven by customer receipts, timing of payments for rent, repairs and maintenance, fuel for shuttle buses, and payroll and benefits. Through the six months ended June 30, 2009 the airport parking business used $2.9 million of cash on hand to fund operating activities. At June 30, 2009 the business had $3.3 million in cash on its balance sheet. Investing Activities Cash used in investing activities is primarily driven by maintenance capital expenditures which include fleet replacements, site repairs and IT equipment. For the quarter and six months ended June 30, 2009, the airport parking business spent $109,000 and $312,000, respectively, on maintenance capital expenditures reflecting ongoing deferral of non-essential items and elimination of growth capital expenditures. The following table sets forth information about capital expenditures in our airport parking business:  MaintenanceSix months ended June 30, 2008

          

          $

          994,000Six months ended June 30, 2009

          

          $

          312,0002009 full year projected

          

          $

          750,000Commitments at June 30, 2009

          

          

          
 Financing Activities Cash provided by financing activities is comprised primarily of the release of $3.3 million of previously restricted cash during the first six months of 2009 offset by payments on smaller debt facilities and capital lease obligations. The cash had been restricted by the lenders in support of the liquidity covenant under the business primary credit facility but, in consultation with the lenders, the business released the cash to be used to fund operations. For a description of the material terms of the airport parking business primary credit facility, see Liquidity and Capital Resources in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Commitments and Contingencies At June 30, 2009 there were no material changes in our future commitments and contingencies from December 31, 2008, except for the reclassification of the MIC Inc. revolving credit facility and the mandatory prepayment we expect to make under the cash sweep terms of the airport services business credit facility from long-term debt to current portion of long-term debt in our consolidated condensed balance sheet. The current portion of long-term debt at June 30, 2009 is comprised of $201.2 million for the airport parking business, $66.4 million for MIC Inc. and $44.9 million for the airport services business.
 57    TABLE OF CONTENTS On February 25, 2009, we amended our airport services business credit facility to provide for additional financial flexibility over the near and medium term. Under the amended terms, we will apply all excess cash flow from the business to the prepayment of debt principal for the foreseeable future. Actual prepayment amounts in the periods beginning June 30, 2010 through the maturity of the facility will depend on the performance of the business and therefore the business is not able to accurately estimate future prepayments at this time. In the second quarter of 2009, per the revised terms of the loan agreement, we used approximately $17.5
million of excess cash flow from our airport services business to prepay $16.0 million of the outstanding principal balance of the term loan debt and $1.5 million in interest rate swap breakage fees. On August 3, 2009, the airport services business used $6.6 million of excess cash flow from the second quarter of 2009 to prepay $6.0 million of the outstanding principal balance of the term loan debt and $563,000 in interest rate swap breakage fees. See Note 8, Long-Term Debt, to our consolidated condensed financial statements in Part I, Item of this Form 10-Q for further discussion. At June 30, 2009, we did not have any outstanding material purchase obligations. For a discussion of our other future obligations, due by period, under the various contractual obligations, off-balance sheet arrangements and commitments, please see Liquidity and Capital Resources  Commitments and Contingencies in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the SEC on February 27, 2009. We have not had any material changes to our commitments except as discussed above. In addition, at June 30, 2009, we did not have any material reserves for contingencies. We have other contingencies, including pending threatened legal and administrative proceedings that are not reflected at this time as they are not ascertainable. Our sources of cash to meet these obligations are as follows: 

          cash generated from our operations (see Operating Activities in the Liquidity and Capital Resources); 

          refinancing our current credit facilities on or before maturity (see Financing Activities in the Liquidity and Capital Resources); and 

          cash available from our undrawn credit facilities (see Financing Activities in the Liquidity and Capital Resources). Critical Accounting Estimates For critical accounting estimates, see Critical Accounting Estimates in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Our critical accounting estimates have not changed materially from the description contained in that Annual Report. Goodwill, Intangible Assets and Property, Plant and Equipment Significant assets acquired in connection with our acquisition of the airport services business, gas production and distribution business, district energy business and airport parking business include contract rights, customer relationships, non-compete agreements, trademarks, domain names, property and equipment and goodwill. Trademarks and domain names are generally considered to be indefinite life intangibles. Trademarks, domain names and goodwill are not amortized in most circumstances. It may be appropriate to amortize some trademarks and domain names. However, for unamortized intangible assets, we are required to perform annual impairment reviews 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 reporting unit based on a discounted cash flow model using revenue and profit forecasts and comparing those estimated fair values with the carrying values, which included 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
 58    TABLE OF CONTENTS impairment by determining an implied fair value of goodwill. The determination of a reporting units implied fair value of goodwill requires the allocation of the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit. Any unallocated fair value represents the implied fair value of goodwill, which is compared to its corresponding carrying value. The airport services business, gas production and distribution business, district energy business and airport parking business are separate reporting units for purposes of this analysis. The impairment test for trademarks and
domain names which are not amortized 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 is 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 limited to, strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on our customer base, or material negative change in relationship with significant customers. Property and equipment is initially stated at cost. Depreciation on property and equipment is 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 remains in service assuming normal routine maintenance. We review the estimated useful lives assigned to property and equipment when our business experience suggests that they do not properly reflect the consumption of economic benefits embodied in the property and equipment nor result in the appropriate
matching of cost against revenue. 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. Significant intangibles, 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 perform impairment reviews of property and equipment and intangibles subject to amortization, when events or circumstances indicate that assets are less than their carrying amount and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. In this circumstance, the impairment charge is determined based upon the amount of the net book value of the assets exceeds their fair market value. Any impairment is measured by comparing the fair value of the asset to its carrying value. The implied fair value of reporting units and fair value of property and equipment and intangible assets is determined by our management and is generally based upon future cash flow projections for the acquired assets, discounted to present value. We use outside valuation experts when management considers that it is appropriate to do so. We test for goodwill and indefinite-lived intangible assets when there is an indicator of impairment. Impairments of goodwill, property, equipment, land and leasehold improvements and intangible assets during 2009 and 2008 relating to our airport services business and airport parking business, respectively, are discussed in Managements Discussion and Analysis of Financial Condition and Results of Operations    Results of Operations in Part I, Item 2 of this quarterly report on Form 10-Q. New Accounting Pronouncements See Note 3, New Accounting Pronouncements, to our consolidated condensed financial statements in Part I, Item I of this Form 10-Q for details on new accounting pronouncements which is incorporated herein by reference. Other Matters The discussion of the financial condition and results of operations of the Company should be read in conjunction with the consolidated condensed financial statements and the notes to those statements included elsewhere herein. This discussion contains forward-looking statements that involve risks and uncertainties and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words
 59    TABLE OF CONTENTS such as anticipates, expects, intends, plans, believes, seeks, estimates, and similar expressions identify such forward-looking statements. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Unless required by law, we can undertake no obligation to update forward-looking statements.
Readers should also carefully review the risk factors set forth in other reports and documents filed from time to time with the SEC. Except as otherwise specified, Macquarie Infrastructure Company, we, us, and our refer to the Company and its subsidiaries together from June 25, 2007 and, prior to that date, to the Trust, the Company and its subsidiaries. Macquarie Infrastructure Management (USA) Inc., which we refer to as our Manager, is part of the Macquarie Group, comprised of Macquarie Group Limited and its subsidiaries and affiliates worldwide. Item 3. Quantitative and Qualitative Disclosure About Market Risk For quantitative and qualitative disclosures about market risk, see Item 7A Quantitative and Qualitative Disclosures about Market Risk in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Our exposure to market risk has not changed materially since February 27, 2009, our 10-K filing date. Item 4. Controls and Procedures Under the direction and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures (as such term is defined under Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2009. There has been no change in our internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the six months ended June 30, 2009 that has materially
affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 60    TABLE OF CONTENTS PART II OTHER INFORMATION Item 1. Legal Proceedings None, other than as previously disclosed in Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31 2008, filed with the SEC on February 27, 2009. Item 1A. Risk Factors See Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31 2008, filed with the SEC on February 27, 2009. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities As previously disclosed, a $195.0 million credit facility in our airport parking business matures on September 9, 2009 and it is highly unlikely that we will be able to refinance or repay this indebtedness at or prior to its maturity. The business is currently in default under certain financial and other covenants and has entered into a forbearance agreement with its lenders as described under Item 2. Managements Discussion of Financial Condition and Results of Operations  Liquidity and Capital Resources  Airport Parking Business above. Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of holders of LLC interests of the Company, or stockholders, was held on June 4, 2009. The stockholders voted on proposals to elect three directors to the board of directors of the company, to ratify the appointment of KPMG LLP as independent auditors and to approve an amendment to the Companys management services agreement. The stockholders vote ratified the appointment of the independent auditors. All nominees for election to the board of directors were elected to the terms of office set forth in the Proxy Statement dated April 21, 2009. In addition, John Roberts continues to serve as chairman of the board of directors and Stephen Mentzines continues to serve as alternate chairman, both having been appointed by our
Manager under the terms of the management services agreement between our Manager, the Company and the Companys direct subsidiaries. Stockholders did not vote in sufficient numbers to approve the amendment to the management services agreement. The number of votes cast for, against or withheld, and the number of abstentions with respect to each proposal, is set forth below. The Companys independent inspectors of election reported the vote of the stockholders as follows:  For

          

          Against/Withheld

          

          Abstain

          

          BrokerNon-VoteElection of Directors:Nominee:Norman H. Brown, Jr.

          

          

          35,848,288

          

          

          

          1,753,911

          

          

          

          *

          

          

          

          *George W. Carmany, III

          

          

          35,823,904

          

          

          

          1,778,295

          

          

          

          *

          

          

          

          *William H. Webb

          

          

          35,858,356

          

          

          

          1,743,843

          

          

          

          *

          

          

          

          *Ratification of Independent Auditors:

          

          

          37,129,651

          

          

          

          359,916

          

          

          

          112,632

          

          

          

          *Amendment to the Management Services Agreement

          

          

          14,866,041

          

          

          

          465,826

          

          

          

          400,008

          

          

          

          21,870,324
  *

          Not applicable. Item 5. Other Information None. Item 6. Exhibits An exhibit index has been filed as part of this Report on page E-1.
 61    TABLE OF CONTENTS SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  MACQUARIE INFRASTRUCTURE COMPANY LLCDated: August 6, 2009

          

          By:/s/ James HookeName: James Hooke Title: Chief Executive OfficerDated: August 6, 2009

          

          By:/s/ Todd WeintraubName: Todd Weintraub Title: Chief Financial Officer
     TABLE OF CONTENTS EXHIBIT INDEX  Exhibit Number

          

          Description10.1*

          

          Forbearance Agreement, dated as of June 10, 2009, among Parking Company of America Airports, LLC, Parking Company of America Airports Phoenix, LLC, PCAA SP, LLC, PCA Airports, Ltd., PCAA Parent, LLC, Dekabank Deutsche Girozentrale, Deutsche Hypothekenbank AG, ING Real Estate Finance (USA) LLC, Capmark Finance, Inc. and Capmark Structured Real Estate, Ltd., with respect to the Loan Agreement dated as of September 1, 2006, as amended.31.1*

          

          Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer31.2*

          

          Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer32.1*

          

          Section 1350 Certification of Chief Executive Officer32.2*

          

          Section 1350 Certification of Chief Financial Officer
  *

          Filed herewith.
 E-1