CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY CONSOLIDATING INFORMATION  IMTT Holdings Inc. and Subsidiaries Years Ended December 31, 2010 and December 31, 2009      Independent Auditors Report
The Board of Directors
IMTT Holdings Inc.
and Subsidiaries:

We have audited the
accompanying consolidated balance sheets of IMTT Holdings Inc.
and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of income, shareholders equity,
comprehensive income and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.


We conducted our
audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the
consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IMTT Holdings Inc. and subsidiaries as of December 31, 2010 and 2009, and the
results of its operations and its cash flows for the years then ended in
conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP
New Orleans, Louisiana February 21, 2011



IMTT
HOLDINGS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2010 and 2009

20102009ASSETSCurrent assets:Cash
$11,186,000$3,257,000Accounts and accrued interest receivable, net of allowance of $6,809,000
($4,916,000 in 2009)47,076,00028,569,000Inventories (Note 2)8,140,000
6,086,000Prepaid expenses and deposits (Note 12)
24,995,000
19,473,000Total current assets91,397,000
57,385,000Property, Plant and Equipment (Notes 2
and 6):Land
34,565,000
30,366,000Terminal and
other facilities
1,532,516,000
1,427,348,0001,567,081,000
1,457,714,000Less: accumulated depreciation
(525,742,000)
(470,639,000)1,041,339,000
987,075,000Debt issue
costs, net (Notes 2 and 4)11,489,000
3,322,000Tax-exempt bond escrow investment (Note
2)59,741,000Receivable from
affiliates (Note 3)22,000
28,000Investment in NTL venture (Note 2)11,144,00010,587,000Other (Notes 2,
5 and 12)
6,730,0006,452,00089,126,00020,389,000Total assets$1,221,862,000$1,064,849,000LIABILITIES and SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable$33,688,000$15,998,000Accrued liabilities (Note 12)51,693,00036,450,000Current portion of swap fair market value (Notes 2 and 4)18,139,000
17,246,000Current portion of long-term debt (Note 4)
4,866,000
15,829,000Total current liabilities108,386,000
85,523,000Other long-term liabilities (Notes 2,
4, 5, 6 and 12)104,439,00081,099,000Long-term debt,
excluding current maturities (Notes 3, 4 and 8)651,121,000
616,399,000Deferred income taxes (Notes 2 and 7)
179,742,000
141,475,000Total liabilities1,043,688,000
924,496,000Commitments and
Contingencies (Note 6)
Shareholders'
equity (Notes 9 and 10):IMTT Holdings Inc.175,923,000138,586,000Non-controlling interest
2,251,0001,767,000Total shareholders' equity178,174,000140,353,000Total liabilities and shareholders'
equity$1,221,862,000
$1,064,849,000
The accompanying notes are an integral part of these statements.


2
IMTT HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the years ended December 31, 2010 and 2009

20102009REVENUES:Tank storage and terminal charges (Note 11)$367,587,000$326,289,000Other rental income2,421,0002,436,000Railroad operations2,197,0001,655,000Other income (Note 2)1,953,000522,000Environmental response services
184,979,000
15,795,000Total revenues559,137,000346,697,000EXPENSES:Terminals:Labor costs (Note 5)79,813,00075,933,000Repairs and maintenance (Note 6)31,876,00028,227,000Real and personal property taxes10,513,00010,497,000Other operating
46,511,000
41,895,000Total terminal
operating expenses168,713,000156,552,000Environmental response affiliate expenses115,937,00014,792,000General and administrative (Notes 3 and 5)37,126,00027,437,000Interest expense (Notes 2, 3 and 4)34,682,00029,510,000Depreciation and amortization (Note 2)61,277,00055,998,000Mark-to-market loss (gain) of non-hedging derivatives (Notes 2 and 4)
15,652,000
(30,686,000)433,387,000253,603,000Income before
income taxes125,750,00093,094,000(Provision)
credit for income taxes (Notes 2 and 7):Current(12,514,000)(1,593,000)Deferred
(41,007,000)(37,249,000)(53,521,000)(38,842,000)Net income$72,229,000$54,252,000Less: net (income) loss attributable to
non-controlling interest (Note 1)
(165,000)
332,000Net income
attributable to IMTT Holdings Inc.$72,064,000$54,584,000
The accompanying notes are an integral part of these statements.


3
IMTT HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2010 and 2009

20102009Net Income
$72,229,000$54,252,000Less: net (income) loss attributable to non-controlling interest (Note 1)
(165,000)332,000Net income attributable to IMTT
Holdings Inc.72,064,00054,584,000Other comprehensive income (loss):Derivatives (Notes 2 and 4):Change in fair market value of
hedging interest rate swap agreements
3,594,000Amortization of accumulated other
comprehensive loss for swap agreements no longer accounted for as hedges
1,891,0001,605,0001,891,0005,199,000Pension and post-retirement benefit plans (Note 5)(10,953,000)(2,166,000)Foreign currency translation adjustment1,439,0003,671,000Income tax effects of items included in
other comprehensive income
3,215,000(1,644,000)Other
comprehensive (loss) income (Note 10)(4,408,000)
5,060,000Less: other
comprehensive (income) attributable to non-controlling  interest (Note 1)
(319,000)(850,000)Other comprehensive (loss) income
attributable to IMTT Holdings Inc.(4,727,000)4,210,000Comprehensive income67,821,00059,312,000Less: Comprehensive (income)
attributable to non-controlling  interest (Note 1)
(484,000)(518,000)Comprehensive
income attributable to IMTT Holdings Inc.$67,337,000$58,794,000
The accompanying notes are an integral part of these statements.


4
IMTT HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
For the years ended December 31, 2010 and 2009

IMTT Holdings
Inc.
NON-CONTROLLING
INTERESTTotalOther
Shareholders'
EquityAccumulated
Other
Comprehensive
Income (Loss)TotalOther
Shareholders'
EquityAccumulated
Other
Comprehensive
Income (Loss)TotalBalance,
1/1/2009
$81,041,00096,774,000(16,982,000)79,792,000
1,587,000(338,000)$1,249,000Comprehensive income:Net income (loss)54,252,00054,584,00054,584,000(332,000)(332,000)Other comprehensive income (loss), net of
tax5,060,0004,210,0004,210,000
850,000850,00059,312,00054,584,0004,210,00058,794,000(332,000)850,000518,000Distributions, net

Balance,
12/31/2009
140,353,000151,358,000(12,772,000)138,586,000
1,255,000512,0001,767,000Comprehensive income:Net income72,229,00072,064,00072,064,000165,000165,000Other comprehensive income (loss),
net of tax(4,408,000)(4,727,000)(4,727,000)
319,000319,00067,821,00072,064,000(4,727,000)67,337,000165,000319,000484,000Distributions, net
(30,000,000)(30,000,000)(30,000,000)
Balance,
12/31/2010
$178,174,000193,422,000(17,499,000)175,923,000
1,420,000831,000$2,251,000
The accompanying notes are an integral part of these statements.


5
IMTT HOLDINGS INC. AND SUBSIDIARIES
Combined Statements of Cash Flows
For the years ended December 31, 2010 and 2009

20102009CASH FLOWS
FROM OPERATING ACTIVITIESNet income$72,229,000$54,252,000Adjustments to reconcile net cash provided by operating activities:Depreciation and amortization61,277,00055,998,000Debt issue cost amortization2,011,000
543,000Loss on sale/retirement of assets33,00024,000Reclassification of swap loss
from AOCI1,891,000
1,605,000(Increase) decrease in accounts and
accrued interest receivable(18,254,000)14,811,000(Increase) decrease in
inventories(2,053,000)
682,000(Increase) decrease in prepaid expenses
and deposits(4,175,000)1,078,000(Increase) decrease in other
assets(1,285,000)
1,338,000Increase (decrease) in accounts payable14,622,000(3,707,000)Increase in accrued liabilities16,807,000
3,557,000Increase in deferred income taxes41,007,00037,249,000Increase (decrease) in other
long-term liabilities
12,077,000(34,048,000)Net operating cash flows196,187,000133,382,000CASH FLOWS FROM INVESTING ACTIVITIESPurchase of plant assets(107,832,000)
(137,008,000)(Increase) in other assets(637,000)(4,281,000)Proceeds from sale of fixed assets126,000
73,000(Increase) in tax-exempt bond escrow investments
(59,741,000)Net investing
cash flows(168,084,000)
(141,216,000)CASH FLOWS
FROM FINANCING ACTIVITIESNet (payments) borrowings under bank revolving credit facility(153,856,000)6,475,000(Repayments of) proceeds from unsecured term loan(30,000,000)
30,000,000Net borrowings under tax-exempt bond agreements275,000,000Net other debt payments(65,223,000)
(13,201,000)Distributions to shareholders(30,000,000)(14,000,000)Net receipts (payments) of receivables/payables with affiliates6,000
(8,000)Repayments of shareholder debt(3,257,000)(1,955,000)Debt issue cost incurred
(12,919,000)(1,049,000)Net financing cash flows(20,249,000)6,262,000Net increase (decrease) in cash7,854,000(1,572,000)Net increase in cash due to currency
translation75,000227,000Cash at beginning of year
3,257,0004,602,000Cash at end of year$11,186,000$3,257,000SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATIONCash paid during the period for:Interest (net of amount capitalized)$34,116,000$28,954,000Income taxes
13,974,000
346,000
The accompanying notes are an integral part of these statements.


6
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


(1)
Nature of
operations and organization
IMTT Holdings Inc. (IHI)
formerly Loving Enterprises Inc., owns 100% of various corporations and limited liability companies (International Tank Terminals, L.L.C.
and Affiliates, ITT and Affiliates) who in turn own 100% of various operating entities, primarily partnerships (IMTT
Combined).  The following chart summarizes the relationship of the various ITT and Affiliates and IMTT Combined entities.
Parent Entities (ITT and Affiliates)Subsidiary/Operating Entities (IMTT Combined)99% Ownership1% Ownership *International Tank Terminals, L.L.C.ITT-Storage, Inc.International-Matex Tank TerminalsInternational Tank Bayonne, Inc. (100%)-Bayonne Industries, Inc.International Tank Bayonne, Inc.ITT-Bayonne Storage, Inc.IMTT-BayonneITT-BX, Inc.ITT-BX Storage, Inc.IMTT-BXITT-Pipeline, Inc.ITT-Pipeline Partner, Inc.IMTT-PipelineITT-BC, Inc. (50%)ITT-Interterminal Pipeline, Inc. (50%)IMTT-BCITT-Gretna, L.L.C.ITT-Gretna Storage, Inc.IMTT-GretnaITT-Virginia, Inc.ITT-Virginia Storage, Inc.IMTT-VirginiaITT-Richmond-CA, Inc.ITT-Richmond-CA Storage, Inc.IMTT-Richmond-CAITT-Illinois, Inc.ITT-Illinois Storage, Inc.IMTT-IllinoisITT-Petroleum Management, Inc.ITT-SPR Partner, Inc.IMTT-Petroleum ManagementITT-Geismar, L.L.C.ITT-Geismar Storage, IncIMTT-GeismarInternational Environmental Services, Inc.ITT-IEP Partner, Inc.International Environmental PartnersITT-NTL, Inc. (100%)-IMTT-NTL, Ltd.* - Unless noted otherwise below


7
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



The IMTT Combined
entities primarily provide bulk liquid storage and handling services in North America through terminals located on the East, West and
Gulf Coasts as well as the Great Lakes region of the United States and in Quebec and Newfoundland, Canada, with the predominant terminals
located in New York harbor and on the Mississippi River near the Gulf of Mexico. Petroleum products, vegetable and tropical oils,
renewable fuels, and various chemicals are stored and handled.
International-Matex Tank
Terminals (IMTT) is a partnership formed in 1975 to own and operate bulk liquid storage terminal facilities in St. Rose and
Avondale, Louisiana. Bayonne Industries, Inc. (BII) is a New Jersey corporation which owns terminal facilities in Bayonne,
New Jersey and was purchased in 1983.  IMTT-Bayonne is a partnership formed in 1983 to operate New Jersey terminal assets.  The
IMTT-BX partnership was formed in 1993 to acquire the terminal facility adjacent to BII's tank terminal on April 1, 1993. IMTT-BC is a
partnership organized in 1996 to purchase certain terminal assets in 1997, 2003, and 2004 that are contiguous to the existing Bayonne
terminal.  IMTT-Pipeline is a partnership formed in 1996 to own a pipeline utilized in the transfer of products by IMTT-Bayonne and
other third parties.  IMTT-Bayonne leases and operates tank
terminal and warehouse facilities owned by BII, IMTT-BX and IMTT-BC in Bayonne, New Jersey/ New York Harbor.  IMTT-Gretna is a
partnership formed in 1990 to purchase and operate a bulk liquid storage terminal in Gretna, Louisiana. IMTT-Virginia, formerly
IMTT-Chesapeake and IMTT-Richmond, is a partnership formed in 1991 to purchase and operate bulk liquid storage terminals in Chesapeake
and Richmond, Virginia.  IMTT-Petroleum Management is a partnership formed in 1992 to own an interest in a joint venture operating
the United States Strategic Petroleum Reserve. IMTT-Richmond-CA is a partnership formed in 1995 to purchase and operate a bulk liquid
storage terminal in Richmond, California. IMTT-Illinois (formerly IMTT-Lemont) is a partnership formed in 1997 to purchase and operate
terminal facilities in Lemont and Joliet, Illinois.  IMTT-NTL, Ltd. (IMTT-NTL) is a Canadian corporation formed in 1997
to own an interest in and manage a terminal in Newfoundland, Canada.
 IMTT-Quebec Inc.
(IMTT-Quebec), a 662/3% owned subsidiary of IMTT, operates a bulk liquid storage terminal located in Quebec,
Canada.  IMTT-Geismar is a partnership formed in 2006 to construct and operate a chemical logistics facility in Geismar, Louisiana.
 International Environmental Partners is a partnership formed in 1999 to own an entity that provides environmental response and
other services to the IMTT terminals and third parties.  IMTT-FINCO, LLC (IMTT-FINCO) is a wholly-owned subsidiary of
IMTT, which is a financing conduit to IMTT and other terminal entities.

8
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


(2)
Summary of
significant accounting policies
Combination/consolidation
The accompanying
consolidated financial statements consist of the accounts of IHI, which have been consolidated with those of ITT and Affiliates as well
as those of IMTT Combined after eliminating all intercompany account balances and transactions (IHI Consolidated).  IMTT
Combined consists of the consolidated financial statements of IMTT, IMTT-Quebec and IMTT-FINCO combined with the other entities,
primarily partnerships, described previously.
Revenue
recognition
Contracts for the use of
storage capacity at the various terminals predominantly have non-cancelable terms of one to five years.  These contracts generally
provide for payments for providing storage capacity throughout their term based on a fixed rate per barrel of capacity leased, as
adjusted annually for inflation indices. Contracts are classified and accounted for as operating leases in accordance with generally
accepted accounting principles and revenue is recognized over their term based on the rate specified in the contract. Revenue from the
rendering of ancillary services (e.g. product movement (thruput), heating, mixing, etc.) is recognized as the related services are
performed based on contract rates. Thruput revenues are not recognized until the thruput quantity specified in the contract for the
applicable period is exceeded. Payments received prior to the related services being
performed or as a reimbursement for specific fixed asset additions or improvements related to a customers contract are recorded as
deferred revenue and ratably recognized as storage revenues over the contract term; the non-current portion is included in other
long-term liabilities in the accompanying balance sheet. Environmental response services revenues are recognized as services are
rendered.
Accounts
receivable and allowance for doubtful accounts
Accounts receivable are
stated at the historical carrying amount net of an allowance for doubtful accounts. An allowance for doubtful accounts receivable is
established based on specific customer collection issues that have been identified. Accounts receivable are charged against the allowance
for doubtful accounts when it has been determined the balance will not be collected.


9
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Inventories
Inventories which consist
primarily of back-up fuel supplies, chemicals and supplies used in packaging anti-freeze for customers, spare parts used in maintenance
activities, and spill response materials are carried at cost which is equal to or less than their fair market value.
Property, plant
and equipment
Property, plant and
equipment is carried at cost including applicable construction period interest. Construction period interest (including related letter of
credit fees) of $782,000 and $1,842,000 was capitalized in 2010 and 2009, respectively. Depreciation is provided using the straight-line
method over lives which range from 15 to 30 years for the terminal facility and 3 to 8 years for furniture, fixtures and equipment. Costs
which are associated with capital additions and improvements or that extend the useful lives or increase service capacity of assets are
capitalized; costs of maintenance and repairs are expensed.  Terminal fixed assets with a net book value of $1,035,000,000 at
December 31, 2010 are utilized to provide storage capacity and related services to customers/lessees.  The balance of assets not
placed in service and recorded in construction in progress was $56,856,000
and $39,934,000 at December 31, 2010 and 2009, respectively.
Debt issue costs
Costs incurred related to
issuing and reissuing and extending the term of tax-exempt bonds and entering into extended and expanded bank lines of credit and the
unsecured term loan (See Note 4) are capitalized as debt issue costs in the accompanying balance sheet and amortized over the term of the
related debt as additional interest expense.
Tax-exempt bond
escrow investment
Proceeds from the
tax-exempt bond issues are held by the trustee and invested in a highly liquid bank deposit pending reimbursement of IMTT Combined for
expenditure of qualified project costs.

10
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Other assets
Costs incurred to deepen
vessel draft at the docks as well as those incurred periodically to maintain draft depths for more than one year are capitalized and
amortized over their estimated useful lives (3 to 20 years) as a planned major maintenance activity.  $637,000 and $4,281,000 of
such costs were capitalized in 2010 and 2009, respectively.  Amortization of such costs was $1,703,000 and $1,817,000 in 2010 and
2009, respectively.
Investment in
NTL venture
On July 21, 1997 IMTT-NTL
acquired a 20% interest in Newfoundland Transshipment Limited (NTL), a Canadian corporation which owns and operates a storage
and transshipment terminal located in Newfoundland. The investment is shown in the accompanying balance sheet at cost of $11,144,000 at
December 31, 2010. NTL guarantees its shareholders a minimum 12% return on investment. This return on investment was $1,621,000 and
$1,471,000 for 2010 and 2009, respectively, and is recorded as other income in the accompanying statements of income as its ultimate
realization is reasonably assured based on the nature of its operations and the involvement of major oil companies as customers and
shareholders.
Income taxes
Income taxes are
accounted for in accordance with the asset and liability method.  Income tax expense includes federal and state taxes currently
payable as well as deferred taxes arising from temporary differences between income for financial reporting and income tax reporting
purposes.  Operating loss and tax credit carryforwards are recognized as reductions to net deferred income tax liabilities if it is
likely that their benefit will be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 IHI Consolidated recognizes the effect income tax positions only if those
positions are more likely than not of being sustained.  Recognized income tax positions are measured at the largest amount that is
greater than 50% likely of being realized.  Changes in recognition or measurement are reflected in the period in which the change in
judgment occurs.


11
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Fair value
measurements
IHI Consolidated has
adopted the provisions of ASC 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and
financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the
financial statements on a recurring basis.  ASC 820 defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date and also establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
Derivatives
IHI Consolidated has
entered into interest rate-related derivative instruments to manage its interest rate exposure on certain debt instruments.  See
Note 4.  IHI Consolidated does not enter into derivative instruments for any purpose other than economic interest rate hedging.
 That is, IHI Consolidated does not speculate using derivative instruments.
By using derivative
financial instruments to hedge exposures to changing interest rates, IHI Consolidated exposes itself to credit risk and market risk.
 Credit risk is the failure of the counterparty to perform under the terms of the derivative contract.  When the fair value of
a derivative contract is positive, the counterparty owes IHI Consolidated, which creates credit risk for IHI Consolidated.  When the
fair value of a derivative contract is negative, IHI Consolidated owes the counterparty and, therefore, it does not possess credit risk,
as was the case at December 31, 2010 and 2009.  IHI Consolidated minimizes the credit risk in the derivative instruments by entering
into transactions with high quality counterparties.  Market risk is the adverse effect on the value of a financial instrument that
results from a change in interest rates.
IHI Consolidated has in
place variable-rate debt.  These debt obligations expose IHI Consolidated to variability in interest payments due to changes in
interest rates.  IHI Consolidated believes that it is prudent to limit the variability of a large portion of its interest payments.
 To meet this objective, IHI Consolidated enters into interest rate swap agreements to manage fluctuations in cash flows resulting
from interest rate risk on a majority of its variable-rate debt.  These swaps change the variable-rate cash flow exposure on the
debt obligations to fixed cash flows.  Under the terms of the interest rate swaps, IHI Consolidated receives variable interest rate
payments and makes fixed interest rate payments, thereby creating the equivalent of fixed-rate debt for the portion of the debt that is
swapped.


12
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



In accordance with ASC
815-10-05-4, IHI Consolidated had concluded that all of its interest rate swaps qualified as cash flow hedges and IHI Consolidated
applied hedge accounting for these instruments until March 31, 2009.  Changes in the fair value of interest rate derivatives
designated as hedging instruments that effectively offset the variability of cash flows associated with variable-rate debt obligations up
to that time were reported in other comprehensive income or loss.  Any ineffective portion of the change in valuation of derivatives
was recorded through earnings, and reported in the mark-to-market loss (gain) of non-hedging derivatives line in the consolidated
statements of income.  Effective April 1, 2009, IHI Consolidated elected to discontinue the application of hedge accounting to its
interest rate swap agreements.  The amount recorded in accumulated other
comprehensive income at that time ($6,984,000 loss) will be amortized to mark-to-market loss (gain) in the statement of income over the
remaining term of the swap agreements.  $1,891,000 and $1,605,000 was amortized to mark-to-market loss (gain) in the statements of
income for the years ended December 31, 2010 and 2009, respectively.  Subsequent to March 31, 2009, all changes in the fair value of
interest rate swap agreements are recorded through earnings.  The long-term portion of these fair market values is recorded in other
long-term liabilities in the accompanying balance sheet.  The term over which IHI Consolidated is currently partially hedging
exposures relating to debt is through June 2017.  (See Note 4)
At December 31, 2010, IHI
Consolidated had $655,987,000 of outstanding debt, $438,300,000 of which was hedged with interest rate swaps.  At December 31, 2009,
IHI Consolidated had $632,228,000 of outstanding debt, $431,300,000 of which was hedged with interest rate swaps.


13
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



For the years ended
December 31, 2010 and 2009, IHI Consolidated recorded the following changes in the current and non-current portions of the value of its
derivative instruments:

20102009Opening balance (liability)$(47,651,000)$(83,536,000)Unrealized gain on derivative instruments in other
comprehensive income for the year3,594,000Ineffective portion of the changes in the
valuation of the derivatives instruments, representing unrealized gains included in gains (loss) on derivative instruments for the year3,306,000Change in fair value of derivative instruments after March
31, 2009 included in gain (loss) on derivative instruments in the accompanying statement of income(32,407,000)11,518,000Reclassification of realized losses on
derivative instruments into interest expense for the year18,646,00017,467,000Closing balance (liability)$(61,412,000)$(47,651,000)
IHI Consolidated will
amortize losses of approximately $1,602,000 (pretax) from accumulated other comprehensive (loss) into mark-to-market loss (gain) in the
statement of income over the next twelve months.
In accordance with ASC
815-10-10-1, IHI Consolidated derivative instruments are recorded on the balance sheet at fair value.  IHI Consolidated measures
derivative instruments at fair value using the income approach which converts future amounts (being the future net cash settlements
expected under the derivative contracts) to a discounted present value.  These valuations primarily utilize observable (level
2) inputs including contractual terms, interest rates and yield curves observable at commonly quoted intervals.


14
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


IHI Consolidateds
fair value measurements of its derivative instruments at December 31, 2010 and 2009 were as follows:
Fair Value Measurements at Reporting Date UsingDescription2010
Total
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)Derivative Instruments:Current liabilities$(18,139,000)$
                   $(18,139,000)$
                  Non-current liabilities(43,273,000)

(43,273,000)
Total$(61,412,000)$
                   $(61,412,000)$
                  
Fair Value Measurements at Reporting Date UsingDescription2009
Total
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable
Inputs
(Level 3)Derivative Instruments:Current liabilities$(17,246,000)$
                   $(17,246,000)$
                  Non-current liabilities(30,405,000)

(30,405,000)
Total$(47,651,000)$
                   $(47,651,000)$
                  
There have been no
transfers of assets or liabilities between levels for the years ended December 31, 2010 and 2009.

15
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Pension and
other postretirement plans
IHI Consolidated records
annual amounts relating to its pension and postretirement plans based on calculations that incorporate various actuarial and other
assumptions, including discount rates, mortality, assumed rates of return, compensation increases, turnover rates and healthcare cost
trend rates.  IHI Consolidated reviews its assumptions on an annual basis and makes modifications to the assumptions based on
current rates and trends when it is appropriate to do so.  The effect of modifications to those assumptions is recorded in other
comprehensive income and amortized to net periodic cost over future periods using the corridor method.  IHI Consolidated believes
that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience and market conditions.
 Net periodic costs are recognized as employees render the services necessary
to earn the postretirement benefits.
Estimates
The preparation of
financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect reported amounts and disclosures.  Some of the more important estimates and assumptions concern depreciation methods and
lives, future environmental remediation costs and pension plan discount rates and rates of return on plan assets.  Actual results
may differ from those estimates and assumptions.
Impairment of
long-lived assets
Long-lived assets, such
as property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable.  Recoverability of assets is assessed by a comparison of the carrying amount of an asset
to estimated undiscounted future cash flows expected to be generated by the asset.  If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair
value of the asset.  Certain nursery assets involved in plant growing operations (greenhouses and related equipment) as well as a
small amount of equipment used in packaging liquids are no longer in use due to unfavorable prospects for future profitable operations.
 The estimated remaining useful life of these assets was adjusted
in 2009 to reduce their net book value to zero (estimated fair value).  Additional depreciation expense of $1,458,000 was recorded
in the accompanying 2009 statement of income as a result of this change in the remaining useful life.


16
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Foreign currency
translation
The assets and
liabilities of IMTT-NTL and IMTT-Quebec are translated from their foreign currency (Canadian dollars) to U.S. dollars at exchange rates
in effect at the end of the year and statement of income accounts are translated at average exchange rates for the year. Translation
gains or losses as a result of changes in the exchange rate are recorded as a component of other comprehensive income.
Commitments and
contingencies
Liabilities for loss
contingencies arising from claims, assessments, litigation, fines, penalties and other sources, are recorded when it is probable that a
liability has been incurred and the amount can be reasonably estimated.  Legal costs incurred in connection with loss contingencies
are expensed as incurred.
(3)
Related party
transactions
During 2010 and 2009, IHI
Consolidated paid or accrued $2,247,000 and $2,300,000, respectively, to entities related to a group of shareholders for legal services
and office rent which are recorded as general and administrative expense in the accompanying statements of income.  Receivables from
affiliates of $22,000 and $28,000 at December 31, 2010 and 2009, respectively, consist of receivables from entities affiliated with a
group of shareholders.  In accordance with the terms of the shareholders agreement, IHI has loans outstanding to a group of
shareholders at December 31, 2010 and 2009 of $31,282,000 and $34,540,000, respectively.  Principal payments of $2,607,000 are due
annually through December 2022.  Interest accrued on these loans for 2010 and 2009 was $1,834,000 and $1,980,000, respectively
.


17
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



(4)
Long-term debt and
related derivatives
Long-term debt consists
of the following:
20102009Tax-exempt
N.J.E.D.A. bonds, .75% at December 31, 2010 (.29% at December 31, 2009)$30,000,000$30,000,000Tax-exempt N.J.E.D.A. bonds of
terminated El Dorado joint venture, .75% at December 31, 2010 (.29% at December 31, 2009)6,300,0006,300,000Tax-exempt
Ascension Parish bonds, .32% at December 31, 2010 (.26% at December 31, 2009)165,000,000165,000,000Tax-exempt L.P.F.A. bonds, .32% at
December 31, 2010 (.26% at December 31, 2009)50,000,00050,000,000Tax-exempt
L.P.F.A. bonds, .32% at December 31, 201085,000,000Bank-owned tax-exempt L.P.F.A.
bonds, 1.64% at December 31, 2010100,000,000Bank-owned
tax-exempt L.P.F.A. bonds, 1.64% at December 31, 201090,000,000Unsecured notes payable under U.S.
revolving bank credit facility averaging 1.40% at December 31, 2010  (1.30% at December 31, 2009)75,000,000230,100,000Notes payable
under revolving credit facility with a Canadian bank, averaging 3.24% at December 31, 2010 (1.40% at December 31, 2009)23,167,00020,827,000Unsecured term loan payable to a
bank (4.24% at December 31, 2009)30,000,000Capitalized
land sublease due in monthly installments through October, 2011 with interest at 7%202,000425,000Loans from shareholders, 5.50%,
due in quarterly installments over a 15 year period beginning March 31, 200831,282,00034,540,000Notes payable
to a bank, 1.231% at December 31, 200965,000,000Other36,000
36,000$655,987,000$632,228,000Less  Current maturities(4,866,000)
(15,829,000)$651,121,000
$616,399,000

18
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009




In 1993, BII and
IMTT-Bayonne received the proceeds of and became obligated for $30,000,000 of tax-exempt New Jersey Economic Development Authority
(N.J.E.D.A.) Dock Facility Revenue Refunding Bonds (the Bonds) to refinance and retire previously issued
tax-exempt industrial development revenue bonds.
In accordance with the
terms of the Bond indenture, BII and IMTT-Bayonne select from four interest rate-setting frequency modes; daily, weekly, commercial paper
(CP) (from 30 to 269 days) and adjustable rate mode (at least six months). The interest rates for these various alternatives
are determined by the remarketing agent as the lowest rate that will allow the Bonds to be sold at par based on the current market
conditions. For all of 2010 and 2009, the Bond interest rate was set under the daily rate mode.
The Bonds are secured by
$30,473,000 of irrevocable letters of credit, which expire June, 2014 (if not extended), issued by the banks under the credit facility
discussed below.
The Bonds mature on
December 1, 2027, but are subject to optional and mandatory tender, as well as various redemption provisions, at 100% of principal and
accrued interest (plus applicable premium if the Bonds are in the adjustable rate mode). When in the daily or weekly rate mode, bond
owners may, at their option, tender the Bonds to the remarketing agent for payment of principal and accrued interest.
The Bonds are also
subject to mandatory tender provisions in the following cases: 1) each time the interest rate mode is converted, 2) if the related
letters of credit are released or allowed to terminate or expire without replacement or extension, 3) substitution of an alternate credit
facility for an existing letter of credit, if certain conditions are not met and 4) on each CP rate reset date. After tender, if
sufficient funds are not available from remarketing the Bonds, the bond owners could be paid from the proceeds of a draw on the related
letters of credit, or, should sufficient funds not be available from letters of credit, the Bonds could be purchased by BII and
IMTT-Bayonne. The Bonds may be redeemed at various times at the direction of BII and IMTT-Bayonne while in any rate mode and are also
subject to mandatory redemption if the Bonds are determined to be taxable.
IMTT-BC is responsible
for the payment of principal (due December 1, 2021) and related interest of a $6,300,000 N.J.E.D.A. tax-exempt bond issue of a terminated
joint venture.  Interest terms on these bonds are similar to those issued by BII and IMTT-Bayonne discussed previously. These bonds
are secured by a $6,404,000 irrevocable letter of credit issued by the banks under the credit facility discussed below.


19
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



In July, 2007,
IMTT-Geismar received the proceeds of and became obligated for $165,000,000 of tax-exempt Industrial Development Board of the Parish of
Ascension, Louisiana, Inc. revenue bonds to finance construction of a chemical liquid logistics facility in Geismar, Louisiana.  At
the same time, IMTT received the proceeds of and became obligated for $50,000,000 of tax-exempt Louisiana Public Facilities Authority
(L.P.F.A.) revenue bonds to finance the expansion of liquid terminal facilities at its St. Rose, Louisiana terminal.
 Both of these tax-exempt financings mature on June 1, 2043 and are secured by irrevocable letters of credit expiring May, 2014
($167,170,000 and $50,658,000, respectively) issued by the banks under the credit facility discussed below as well as confirming
irrevocable letters of credit ($167,333,000 and $50,707,000, respectively) issued by the Federal
Home Loan Bank (FHLB) of Atlanta which expire August, 2013.  These two tax-exempt financings have interest rate setting
modes, optional and mandatory tender and redemption provisions similar to the NJEDA tax-exempt bonds.  For all of 2010 and 2009 the
rate on these bonds was set under the weekly rate mode.
In August, 2010,
IMTT-FINCO received the proceeds of and became obligated for $85,000,000 of tax-exempt L.P.F.A. revenue bonds to finance expansion and
improvements at the St. Rose facility in Louisiana.  This tax-exempt financing matures on August 1, 2046 and is secured by an
irrevocable letter of credit ($86,118,000) expiring May, 2014 issued by the banks under the credit facility discussed below as well as a
confirming irrevocable letter of credit ($86,202,000) issued by the FHLB of Atlanta, which expires August, 2013.  This tax-exempt
financing has interest rate setting modes, optional and mandatory tender and redemption provisions similar to the NJEDA tax-exempt bonds.
 For 2010, the rate on these bonds was set under the weekly rate mode.  Costs of $871,000 associated with the issuance of these
bonds are being deferred and amortized to interest expense ratably over the
term of the bonds.
In November and December
2010, IMTT-FINCO received the proceeds of and became obligated for an additional $100,000,000 and $90,000,000, respectively, of
tax-exempt L.P.F.A. revenue bonds to finance expansion and improvements at the St. Rose, Geismar and Gretna facilities in Louisiana.
 Concurrent with the issuance of these bonds, IMTT-FINCO entered into agreements with a syndicate of banks to purchase the bonds,
some of which also participate in the revolving credit facility discussed below.  These bonds do not require a letter of credit as
security and provide for monthly principal payments beginning in July, 2011, as follows, with final maturity in December, 2040, subject
to mandatory tender for purchase in December, 2015 at 100% of the outstanding principal balance plus accrued interest.  The bonds
can be resold at that time and are subject to annual tender thereafter.

20
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



YearTotal
Principal Payments2011$2,057,00020124,322,00020134,455,00020144,577,00020154,701,000IMTT-FINCOs
obligations under these agreements are guaranteed by the remainder of the entities comprising IMTT Combined, excluding the Canadian
entities.  These agreements also contain covenants and restrictions similar to the revolving credit facility as described below.
 The interest rate on these bonds is determined monthly based on 68% of one-month LIBOR plus 65% of the LIBOR margin under the
revolving credit facility as described below.
Costs of $2,761,000
associated with the issuance of these bonds is being deferred and amortized to interest expense ratably over the period to mandatory
tender.
On June 18, 2010 IMTT
Combined amended and restated its revolving credit facility.  The unsecured revolving credit facility is with a twenty-two bank
syndicate with commitments totaling $1,100,000,000.  This amended and restated credit facility consists of seventeen banks with
commitments totaling $995,000,000 through June 7, 2014, one Canadian bank with a commitment of $30,000,000 through June 7, 2014 and four
banks with commitments totaling $75,000,000 through June 7, 2012.  The proceeds from the amended and restated revolving credit
facility were used to pay off the existing revolving credit facilities, an existing $30,000,000 term loan and, through distributions, the
remaining $65,000,000 on an ITT and Affiliates term loan.
IMTT and IMTT-Bayonne are
the borrowers under this agreement, which is guaranteed by all the remaining entities comprising IMTT Combined, except IMTT-NTL and
IMTT-Quebec; however, a majority of the equity interest in IMTT-NTL and IMTT-Quebec is pledged in repayment of the debt.  IMTT-NTL
and IMTT-Quebec are the borrowers under the Canadian portion of the facility.
Except for a $65,000,000
portion of the facility through December 31, 2012, as described below, IMTT and IMTT-Bayonne can borrow, at their option, for various
periods under the agreement at LIBOR plus 1.50% to 2.75% or at the banks base rate, as defined, plus .50% to 1.75%, dependent upon
the leverage ratio, as defined. The Canadian borrowers can borrow from the Canadian lender at the bankers acceptance rates plus
1.50% to 2.75%, or the Canadian prime rate plus .50% to 1.75%, dependent upon the leverage ratio, as defined. Borrowings provided by the
four banks not extending their commitments through June 2014 are at LIBOR plus .55% to 1.50% or the banks base rate, as defined,
dependent upon the leverage ratio, as defined.


21
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



The bank that previously
held the ITT and Affiliates $65,000,000 term loan is part of the bank syndication and now holds the $65,000,000 under the amended and
restated revolving credit facility.  The rate on this portion of the outstanding debt is LIBOR plus 1.00% and matures on December
31, 2012, at which time this portion of the facility is paid from and converts to extended commitments through June, 2014 with pricing
the same as other commitments.
Costs of $9,275,000
associated with the amendment, extension and increase of the revolving credit facility are being deferred and amortized to interest
expense ratably over the remaining extended loan term.
The U.S. portion of the
revolving credit facility includes the availability for the issuance of letters of credit. Letters of credit outstanding under this
facility at December 31, 2010 of $350,835,000 primarily secure obligations under certain tax-exempt bonds referred to previously. Loans
of $75,000,000 were outstanding under the U.S. portion of this facility and $23,167,000 of loans were outstanding with the Canadian bank
at December 31, 2010, thus leaving $650,998,000 total available under of this credit facility at December 31, 2010.
IMTT Combined is subject
to various covenants under this credit facility. The primary covenants require the maintenance of certain ratios, as defined, of combined
1) debt to earnings before interest, income taxes and depreciation and amortization, and 2) earnings before interest, income taxes and
depreciation and amortization to interest expense.  The loan agreement also restricts liens on assets, additional investments and
loans, sales or dispositions of assets and change of control, as defined, among other requirements.
The interest rate on the
borrowings under the tax-exempt bonds and the revolving bank credit facility discussed previously adjusts periodically depending on their
individual terms as previously described. In an effort to achieve a more stable interest cost and reduce the risk of rising interest
rates and expense, four interest rate swap agreements with three large banks were entered into whereby floating rates were swapped for
fixed rates. The primary terms and the accounting treatment of these financial instruments are described below.

22
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009




Swap 1Swap 2Swap 3Swap 4TotalRelated debt
N.J.E.D.A. Bonds
Tax-Exempt Bonds
Bank Line
Bank Line/Note PayableNotional amount
$36,300,000
$215,000,000
$135,000,000 *
$52,000,000 ***Term
10/07-10/12
7/07-6/17
10/07-3/17
5/06-12/12Fixed rate paid
3.410%
3.662%
5.507%
6.290%Floating rate received
67% of monthly Libor
67% of monthly Libor
Quarterly Libor
Monthly Libor2010
2009
2010
2009
2010
2009
201020092010
2009Floating rate at year end
0.175%
0.156%
0.175%
0.156%
0.303%
0.251%
0.261%0.231%Net interest expense for year
$1,171,000
$1,156,000
$7,485,000
$7,390,000
$6,026,000
$4,224,000
$3,964,000$4,697,000$18,646,000
$17,467,000Fair market value at year end
(liability)**
$(1,970,000)
$(2,153,000)
$(24,712,000)
$(18,563,000)
$(28,858,000)
$(19,474,000)
$(5,872,000)$(7,461,000)$(61,412,000)
$(47,651,000)Change in fair market value for
year gain (loss)
$183,000
$797,000
$(6,149,000)
$15,433,000
$(9,384,000)
$16,005,000
$1,589,000$3,650,000$(13,761,000)
$35,885,000Change in fmv value recorded in







$Other comprehensive income
(loss)$$(130,000)$$$$3,157,000
$$567,000$
$3,594,000Net income (loss)
$183,000
$927,000
$(6,149,000)
$15,433,000
$(9,384,000)
$12,848,000
$1,589,000$3,083,000$(13,761,000)
$32,291,000Total gain (loss)
$183,000
$797,000
$(6,149,000)
$15,433,000
$(9,384,000)
$16,005,000
$1,589,000$3,650,000$(13,761,000)
$35,885,000* Increases annually to $200 million at
12/31/12. At 1/1/10 was $115 million.** Included in current and other long-term
liabilities in the accompanying balance sheets.*** Was $65,000,000, changed to $52,000,000 on
12/31/10
(5)
Employee benefits
Except for a plan
covering certain employees covered by a collective bargaining agreement at the Lemont and Joliet, Illinois terminals, substantially all
employees of IMTT Combined are eligible to participate in a defined benefit pension plan (the Plan). Benefits under the Plan
are based on years of service and the employees' highest average compensation for a consecutive five year period. Coincident with the
acquisition of terminal facilities in 1997 and 2007 by IMTT-Illinois, it became the sponsor of a defined benefit plan covering union
employees at these terminals (Union Plan). Monthly benefits under this plan are computed based on a benefit rate in effect at
the date of the participant's termination ($50.50 at November 1, 2010) multiplied by the number of years of service. IMTT Combineds
contributions to both plans are based on the recommendations of its
consulting actuary.
The following table sets
forth the obligations and assets (as well as changes therein) of both plans, the resulting funded status and amounts recognized in the
accompanying financial statements.


23
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



20102009The PlanUnion PlanThe PlanUnion PlanChanges in benefit obligation:Benefit obligation at beginning of year$63,043,000$4,052,000$53,261,000$3,333,000Service cost4,066,000200,0003,314,000174,000Interest cost3,728,000235,0003,414,000221,000Actuarial loss7,326,000273,0005,337,000396,000Benefits paid(1,276,000)(99,000)(2,283,000)(72,000)Benefit
obligation at end of year$76,887,000$4,661,000$63,043,000$4,052,000Changes in plan assets:Fair value of plan assets at  beginning
of year$39,274,000$3,492,000$32,049,000$2,848,000Actual return on plan assets3,936,000338,0005,676,000498,000Employer contribution4,447,000131,0003,832,000218,000Benefits paid(1,276,000)(99,000)(2,283,000)(72,000)Fair value of
plan assets at end of year$46,381,000$3,862,000$39,274,000$3,492,000Funded status  Pension (liability) recognized in
balance sheet in other long-term liabilities$(30,506,000)$(799,000)$(23,769,000)$(560,000)Amounts
recognized in accumulated other comprehensive income consist of:Net actuarial loss$18,382,000$1,264,000$12,214,000$1,081,000Prior service cost745,000284,000915,000316,000Total$19,127,000$1,548,000$13,129,000$1,397,000Accumulated benefit obligation at
December 31:$54,499,000$4,661,000$46,346,000$4,052,000
24
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



20102009The PlanUnion PlanThe PlanUnion PlanComponents of net periodic benefit
cost:Service cost$4,066,000$200,000$3,314,000$174,000Interest cost3,728,000235,0003,414,000221,000Expected return on plan assets(3,431,000)(298,000)(2,696,000)(244,000)Amortization of prior service cost170,00033,000170,00033,000Recognized net actuarial loss653,00050,000583,00058,000Net periodic
benefit cost recognized in statement of income$5,186,000$220,000$4,785,000$242,000Other changes in plan assets and benefit obligation
recognized in other comprehensive income:Net actuarial loss$6,821,000$233,000$2,357,000$142,000Amortization of prior service (cost)(170,000)(33,000)(170,000)(33,000)Amortization of actuarial
(loss)(653,000)(50,000)(583,000)(58,000)Total recognized in
other comprehensive income$5,998,000$150,000$1,604,000$51,000Total recognized in net periodic benefit cost and other comprehensive income$11,184,000$370,000$6,389,000$293,000Weighted average assumptions used to determine benefit
obligations as of December 31:Discount rate5.60%5.55%6.00%6.00%Expected return on plan assets8.50%8.50%8.50%8.50%Rate of compensation
increase5.47%5.47%Weighted average assumptions used to determine net benefit
cost:Discount rate6.00%6.00%6.50%6.50%Expected return on plan assets8.50%8.50%8.50%8.50%Rate of compensation
increase5.47%5.47%

25
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


As of December 31, 2010,
the discount rate assumption used in the computation of benefit obligations for the Plan and the Union Plan was changed to 5.60% and
5.55%, respectively, to better approximate returns available on high quality fixed income investments.  The long-term rate of return
of pension assets is based on historical results adjusted as necessary for future expectations.
The allocation of pension
plan assets as of December 31, 2010 and 2009 is shown below based on quoted prices in active markets for identical assets (Level 1 fair
value measurements).
20102009The PlanUnion PlanThe PlanUnion PlanWeighted average
asset allocation:Domestic equity funds25.6%25.3%12.3%12.2%International
equity fund15.4%15.1%7.4%7.4%Domestic fixed income fund56.1%55.0%78.1%76.3%Other2.9%4.6%2.2%4.1%Total100.0%100.0%100.0%100.0%
Pension asset investment
decisions are made with assistance of an outside paid advisor to achieve the multiple goals of high rate of return, diversification and
safety.
Beginning in late 2008,
the concentration of plan assets was shifted to a preponderance in one domestic fixed income fund, as opposed to a more traditional 60%
equity and 40% fixed income allocation, in light of adverse economic conditions and declining equity valuations. This strategy was
revised in 2010 back toward greater equity asset concentration and continued subsequent to December 31, 2010 to a 60% equity and 40%
fixed income allocation based on economic recovery and a more favorable stock market outlook.


26
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Expected benefit payments
as of December 31, 2010 are as follows:

The PlanUnion PlanYear 2011$3,124,000$135,000Year 20122,992,000150,000Year 20133,218,000164,000Year 20143,602,000180,000Year 20154,155,000199,000Years 2016-202026,361,0001,553,000Anticipated
contributions for 2011
$4,000,000
$347,000
IMTT Combined provides post-retirement life insurance (coverage equal to 25% of final year compensation not to exceed
$25,000) and health benefits (coverage for early retirees at least 62 years old on early retirement to age 65,
reimbursement of Medicare premiums for the Bayonne terminal employees and some smaller health benefits no longer
offered) to retired employees.  IMTT Combined adopted the accounting treatment for post-retirement benefits
other than pensions as prescribed by ASC 715-60-05 in 2006.  As allowed by that accounting standard, IMTT Combined elected to defer
and amortize the January 1, 2006 transition obligation over ten years.
The following table sets
forth the obligation and assets (as well as changes therein) of these plans, the resulting funded status and amounts recognized in the
accompanying financial statements.


27
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



20102009Changes in benefit obligation:Benefit obligation at beginning of year$4,346,000$3,501,000Service cost297,000104,000Interest cost346,000216,000Actuarial loss5,318,000863,000Benefits paid
(428,000)(338,000)Benefit obligation at end of year
$9,879,000$4,346,000Changes in plan assets:Fair value of plan assets at beginning of
year$
               $
                Employer contribution428,000338,000Benefits paid
(428,000)(338,000)Fair value of plan assets at end of year
$
                $
                Funded status  plan (liability)
$(9,879,000)$(4,346,000)Amounts recognized in combined balance sheets consist of:Current (liabilities)$(669,000)$(320,000)Other long-term (liabilities)
(9,210,000)(4,026,000)Total (liabilities)
$(9,879,000)$(4,346,000)Amounts recognized in accumulated other comprehensive
income consist of:Transition obligation$1,756,000$2,108,000Net actuarial loss
6,200,0001,044,000Total
$7,956,000$3,152,000Components of net periodic benefit cost:Service cost$297,000$104,000Interest cost346,000216,000Amortization of transition obligation351,000351,000Amortization of actuarial loss
162,000Net periodic benefit cost of the plan
$1,156,000$671,000
28
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



20102009Other changes in plan assets and
benefit obligation recognized in other comprehensive income:Net actuarial loss$5,318,000$862,000Amortization of transition obligation(351,000)(351,000)Amortization of actuarial (loss)
(162,000)Total recognized in other comprehensive
income
$4,805,000$511,000Total recognized in net periodic benefit cost and other
comprehensive income
$5,961,000$1,182,000Weighted average assumptions used to
determine benefit obligations as of December 31:Discount rate5.50%6.00%Rate of compensation increase5.47%3.00%Weighted average assumptions used to determine net benefit
cost:Discount rate6.00%6.50%Rate of compensation increase3.00%3.00%Health Care Trend Rates -
Pre-65 (Post-65)Healthcare trend rate7.69% (7.60%)8.00%Ultimate trend5.50%5.00%Year ultimate trend reached20172014Health Care Trend Rates
 Medicare Part BHealthcare trend rate-1.39%8.00%Ultimate trend5.50%5.00%Year ultimate trend reached20192014

29
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Expected benefit payments
and contributions as of December 31, 2010 are as follows:
Year 2011$669,000Year 2012541,000Year 2013507,000Year 2014548,000Year 2015582,000Years 2016  20204,418,000Anticipated
contributions for 2011$669,000
Assumptions concerning
health care cost trend rates can have a significant impact on plan costs and liabilities, as shown below as of year-end and for the year
2010:

Using StatedOne percentage pointassumptionsDecreaseIncreaseEnd of year benefit obligation$9,879,000$8,836,000$11,153,000Service and interest cost643,000578,000723,000
Accumulated other
comprehensive income at December 31, 2010 contains $1,330,000 of net actuarial losses, $203,000 of prior service cost and $351,000 of net
transition obligation for the foregoing defined benefit pension and post-retirement health/life plans expected to be recognized as
components of net periodic benefit cost in 2011.
IMTT Combined has
established a supplementary, non-qualified benefit plan for certain management employees whose compensation exceeds the maximum eligible
for inclusion in the qualified defined benefit plan.  Under this plan, IMTT Combined funds additional compensation to the affected
employees on a pre-tax basis that will allow them to make a contribution to a separate investment account which the employees own that
will provide the actuarial equivalent of the benefits available as if all of the employees compensation had been included in the
qualified defined benefit plan.  Expense related to this plan is recorded as additional compensation and primarily included in
general and administrative expense in the accompanying financial statements ($862,000 in 2010 and $687,000 in 2009).
IMTT Combined has
established defined contribution Section 401(k) employee benefit plans. Under the primary plan, employees who are eighteen years old and
have six months of service are eligible to participate. Employees may contribute up to the maximum allowable for Federal income tax purposes
and IMTT Combineds matching contribution is determined each year by management. In both 2010 and 2009, IMTT Combined elected to match
5% of employee contributions. Total expense for the 401 (k) plans recognized for 2010 and 2009 was $282,000 and $188,000, respectively.


30
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



IMTT Combined purchases
life insurance for certain management employees and provides for the repayment of premiums paid through deferred compensation
arrangements.  Under this program, various amounts of life insurance are purchased and paid for by IMTT Combined and receivables are
recorded from each management employee, along with accrued interest.  At retirement or termination of service, funds are provided to
the plan participants under deferred compensation agreements to provide for the repayment of premiums paid and ownership of the policies
is transferred at that time.  Expense related to the deferred compensation arrangements is recorded annually as employee service is
rendered.  Expense associated with providing this benefit of $68,000 and $62,000 for 2010 and 2009, respectively, is recorded in
general and administrative expense in the accompanying financial
statements.
(6)
Commitments and
contingencies
IHI Consolidated is
involved in various lawsuits, claims and inquiries (including environmental matters) which are routine to the nature of its business.
 Management believes that resolution of these matters will not result in any material adverse effect on the financial statements.
Many of the entities
comprising IMTT Combined are subject to compliance with federal and state environmental regulations, some of which require environmental
remediation and ongoing monitoring activities. Depending upon the nature and circumstances of such activities, certain of the
expenditures related thereto have been recorded as operating expenses in the accompanying statements of income and others are capitalized
as such expenditures are incurred.
A summary of these
environmental remediation matters follows.
The Lemont terminal
entered into a consent order with the state of Illinois to remediate a contamination problem which existed at the time of the purchase of
this facility from its former owners. Remediation is also required as a result of the renewal of a lease with a government agency for a
portion of the terminal. This remediation effort, consisting of among other things, the implementation of extraction and monitoring wells
and soil treatment, is estimated to span a period of ten to twenty years or more at a cost of $9,900,000 to $15,000,000.

31
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009




The Bayonne, New Jersey
terminal which has been acquired and aggregated over a 27 year period contains pervasive remediation requirements that were assumed at
the time of purchase from the various former owners. One former owner retained environmental remediation responsibilities for a purchased
site as well as sharing other remediation costs. These remediation requirements are documented in two memoranda of agreement and an
administrative consent order with the state of New Jersey. Remediation efforts entail removal of free product, soil treatment,
repair/replacement of sewer systems, and the implementation of containment and monitoring systems. These remediation activities are
estimated to span a period of ten to twenty or more years at a cost ranging from $38,450,000 to $61,100,000.
The remediation
activities described previously at the two terminals are estimated based on currently available information, in undiscounted U.S. dollars
and are inherently subject to relatively large fluctuation. Management believes that the cost of the foregoing remediation activities
($48,350,000 to $76,100,000 in total) is capitalizable in accordance with generally accepted accounting principles (ASC 410-30-25-18) as
such costs are recoverable and improve the property as compared with its condition when acquired and either 1) extend the life, increase
the capacity or improve the safety and/or efficiency of the property or 2) mitigate or prevent environmental contamination that has yet
to occur that may result from future operations or activities. During 2010 and 2009 approximately $6,450,000 and $3,890,000,
respectively, of such expenditures were incurred and capitalized within property, plant
and equipment. For the years ended December 31, 2010 and 2009 approximately $2,171,000 and $2,040,000, respectively, of environmental
related cost that did not meet the capitalization criteria were charged to operations.
The New Jersey Department
of Environmental Protection (DEP) promulgated a pending new regulation that will require vapor control (collection and
destruction) on some tanks during roof landings and tank cleanings when degassing is required. These new requirements will apply to
refineries and independent terminals. Emissions during these times are currently permitted by IMTT-Bayonne with some restrictions on
frequency and timing but no required collection and destruction of the emissions. The potential cost to IMTT-Bayonne of complying with
this new regulation is estimated at $3,500,000 to $5,000,000 over the next several years. In accordance with the terms of their
contracts, these costs could be recouped through additional charges to customers. IMTT-Bayonne will continue working to mitigate impacts
on New Jersey operations with customers and the DEP, as well as designing the most cost
effective means of control as the new regulation takes effect.
The IHI
shareholders agreement contains various provisions concerning shareholder distributions.  Currently, the shareholders of IHI
disagree as to the interpretation of those provisions which could potentially result in significant increases in the level of distributions.
If the shareholders are unable to resolve this issue, arbitration or litigation may be required.


32
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009




IMTT Combined is in the
process of expanding storage capacity and other customer service capabilities at various terminals to satisfy new customer contract
requirements.  Approximately $21,970,000 of additional capital expenditures will be necessary in 2011 to complete these projects.
IMTT-Quebec Inc. has
operating lease commitments primarily for the land on which the terminal is located and related terminal assets.  Minimum lease
payments required in the future are as follows at December 31, 2010.
Year
Amounts2011$812,0002012821,0002013833,0002014850,0002015871,000Thereafter2,210,000
In connection with the
leases described above, IMTT-Quebec has the responsibility to remove any contaminants from the leased premises at the end of their term.
 The total amount of undiscounted estimated future cash flows through December 31, 2028 lease termination required to satisfy this
obligation is $3,845,000.  These cash flows were discounted using a credit-adjusted risk free interest rate of 7.5% and capitalized
in property, plant and equipment and are being depreciated over the term of the leases.  The changes to the asset retirement
obligation recorded are as follows for 2010 and 2009.

20102009Balance, January 1,$994,000$924,000Accretion (interest) expense76,00070,000Exchange rate effect on
obligation55,000Balance, December 31,$1,125,000$994,000
This obligation is
recorded in other long-term liabilities in the accompanying balance sheets.


33
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


(7)
Income taxes

IHI Consolidated provides
for income taxes in accordance with the asset and liability method as prescribed by ASC 740-10-25-2.  The components of the income
tax expense shown in the accompanying statements are as follows:
20102009CurrentDeferredTotalCurrentDeferredTotalU.S. federal$5,504,000$36,205,000$41,709,000$210,000$30,541,000$30,751,000State and local7,037,0004,591,00011,628,0001,383,0006,725,0008,108,000Foreign(27,000)211,000184,000(17,000)(17,000)Total income tax expense$12,514,000$41,007,000$53,521,000$1,593,000$37,249,000$38,842,000
Income tax expense
differs from income tax computed at the U.S. federal statutory rate of 35% of income before income taxes as shown in the accompanying
financial statements, as follows:
20102009Income tax expense based on
U.S. federal statutory rate$44,013,000$32,583,000State income tax provisions, net of federal
income tax benefit7,558,0005,270,000Non-deductible expenses592,000134,000Foreign income tax differences(54,000)(2,000)Others, net1,412,000857,000Total income tax expense recorded in accompanying financial statements$53,521,000$38,842,000

34
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


Deferred income taxes
have been recorded in the accompanying balance sheets for the tax effects of temporary differences that impact the financial statements
and income tax returns in different periods, offset partially by carryforwards for federal and state income tax purposes of unused net
operating losses and tax credits.   These temporary differences consist primarily of fixed asset basis differences as well as
various expenses which affect the financial statements and tax returns in different periods.  Differences in the basis of the fixed
assets for accounting and income tax reporting purposes exist primarily as a result of different depreciation methods and lives used for
financial and income tax reporting purposes, involuntary conversion treatment, for income tax purposes, of proceeds received from asset
expropriations and settlement of insurance coverage for property
damage. The primary components of deferred income tax liabilities (assets) are as follows:
20102009Deferred tax
liabilities:Fixed asset basis
differences$216,340,000$192,852,000Currency translation gain1,431,000848,000Foreign terminal
earnings and investment basis differences4,544,000Others, net2,395,000Total deferred tax liabilities$222,315,000$196,095,000Deferred tax assets:Interest rate swap agreement
differences$(24,875,000)$(19,335,000)Net
operating loss and tax credit carryforwards(8,107,000)(29,224,000)Expense accruals(9,217,000)(7,043,000)Deferred revenue items(5,003,000)(5,878,000)Pension expense in excess of
contributions(10,918,000)(7,944,000)Others, net(217,000)Total
deferred tax assets prior to valuation allowance(58,337,000)(69,424,000)Valuation allowance2,624,0002,104,000Net
deferred tax assets(55,713,000)(67,320,000)Net deferred taxes as shown in accompanying
balance sheets$166,602,000$128,775,000

35
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



Management believes that
it is more likely than not that the net deferred tax assets will be realized through future operations and the reversal of other
temporary differences.  The valuation allowance at December 31, 2010 and 2009 was primarily related to state net operating loss
carryforwards that, in the judgment of management, are not more likely than not to be realized.  The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become
deductible and prior to the expiration of the net operating loss carryforwards.
Deferred income taxes are
classified as follows in the accompanying balance sheets.
20102009Current deferred tax (asset)$ (13,140,000)$(12,700,000)Noncurrent deferred tax liability179,742,000
141,475,000Net deferred tax liability$166,602,000$128,775,000
Net operating loss
(N.O.L.) and tax credit carryforwards outstanding as of December 31, 2010 expire as follows:
Year of
ExpirationFederal N.O.L.State N.O.L.s
Foreign
N.O.L.s2011$
                 $4,118,000$
             20128,126,00020135,496,00020143,188,000431,00020151,895,000742,00020163,850,0002017908,00020181,066,0002019843,00020201,535,00020212,646,00020226,642,000202319,705,000202427,416,000202514,251,00020267,000942,0002027191,000108,000570,00020286,0004,738,00020294,0002,800,0002030
3,307,000$       191,000$101,810,000
$13,530,000

36
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



Federal alternative
minimum tax credits of $428,000 have unlimited carryforward periods.
IHI Consolidated adopted
the provisions of ASC 740 relating to uncertain tax positions on January 1, 2009.  IHI Consolidated has not recorded any increase in
income tax liabilities attributable to unrecognized income tax benefits in its consolidated statement of income for the year 2010.
 Accordingly, no related expense or liability for interest or penalties has been accrued at December 31, 2010.  As of December
31, 2010, tax authorities have proposed no material adjustments to IHI Consolidateds income tax positions.  There are no
income tax positions for which it is reasonably possible that the amounts of unrecognized tax benefits will materially increase or
decrease in the next 12 months.
IHI Consolidated and its
subsidiaries file U.S. federal and state income tax returns.  Two subsidiaries file Canadian federal and provincial income tax
returns.  There are no on-going examinations of income tax returns filed by IHI Consolidated or any of its subsidiaries that are
expected to result in material adjustment.  U.S. federal income tax returns for tax years ending after 2006 (after 2002 to the
extent of federal net operating loss carryforward deductions) are subject to examination by the Internal Revenue Service.  State
income tax returns for tax years ending after 2005 (after 1997 to the extent of state net operating loss carryforward deductions) are
subject to examination by state tax authorities.  Canadian tax returns for tax years after 2005 are subject to examination by
Revenue Canada and provincial tax authorities.
(8)
Fair value of
financial instruments
The fair value of
financial instruments (as defined by ASC 825-10-50) contained in the accompanying balance sheets, including cash, accounts receivable,
accounts payable and long-term debt, approximates the carrying amount due to either the short-term maturity or variable or competitive
interest rates assigned to these financial instruments.
(9)
Changes in ownership
In January 2000,
International Tank Terminals, L.L.C. and its affiliates (ITT) acquired the 50% interest of their former partner in each of
the entities comprising IMTT Combined. The consideration for the purchase was in the form of $130,000,000 of notes payable to the former
partner.  These notes were refinanced by ITT with a bank in December, 2005 and in June 2010 the remaining $65,000,000 was repaid by
ITT with proceeds of a distribution from IMTT Combined from the amended and restated revolving credit facility as described more fully in
note 4.  At that time, the related interest rate swap agreement was transferred to IMTT Combined at its recorded balance ($7,302,000
liability) and treated as a partnership distribution ($5,061,000 charged to partners capital and $2,241,000 charged to accumulated
other comprehensive income).


37
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009

On May 1, 2006, Loving
Enterprises, Inc. (Loving) which was the 100% owner of ITT (owners of 100% of IMTT Combined), transferred a 50% interest to
Macquarie Infrastructure Company Trust for $250,000,000 and Loving changed its name to IMTT Holdings Inc.
(10)
Accumulated other
comprehensive income
Shareholders equity
includes accumulated other comprehensive income.  Changes in the components of accumulated other comprehensive income for 2010 and
2009 are as follows:
DerivativesForeign Currency TranslationPension and Post-Retirement PlansAccumulated Other Comprehensive Income (Loss)Balance, January 1, 2009$(6,596,000)$(919,000)$(9,805,000)$(17,320,000)Other comprehensive income (loss) for the
year, net of tax3,396,0002,369,000(705,000)5,060,000*Balance, December 31, 2009(3,200,000)1,450,000(10,510,000)(12,260,000)Other comprehensive income (loss) for the
year, net of tax1,094,000832,000(6,334,000)(4,408,000)*Balance, December 31, 2010$(2,106,000)$2,282,000$(16,844,000)($16,668,000)
*
Net of deferred income tax benefit (expense) of $3,215,000 in 2010 and $(1,644,000) in 2009.


(11)
Future minimum
rental revenues
Future minimum rental
revenues for terminal storage capacity for the remaining unexpired term of lease agreements in existence at December 31, 2010 are as follows.

YearAmounts2011$287,813,0002012242,918,0002013159,997,0002014114,669,000201580,160,0002016 and thereafter90,724,000Total
$976,281,000


38
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009


(12) Additional balance sheet detail
Additional detail of the components of
certain balance sheet captions follows.
20102009Prepaid expenses and
deposits:Deferred income tax
asset$13,140,000$12,700,000Prepaid insurance4,189,0003,868,000Prepaid income taxes3,479,0001,787,000Other4,187,0001,118,000Total prepaid expenses and deposits$24,995,000$19,473,000
20102009Other assets:Deferred dredging costs$3,073,000$4,139,000Deposits2,524,0001,346,000Other1,133,000967,000Total other assets$6,730,000$6,452,000


20102009Accrued liabilities:Accrued payables$23,976,000$11,660,000Accrued bonuses6,196,000Damage claim settlement/
fine accruals5,314,0006,235,000Deferred revenue  current portion2,873,0002,676,000Vacation pay2,165,0002,244,000Utilities1,667,0001,478,000Health claims1,165,0001,052,000Interest1,161,0002,059,000Workmens
compensation claims1,031,0001,648,000Other6,145,0007,398,000Total accrued liabilities$51,693,000$36,450,000

39
IMTT HOLDINGS INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2010 and 2009



20102009Other long-term liabilities:Swap mark-to-market
liabilities$43,273,000$30,405,000Pension benefits31,305,00024,329,000Deferred revenue18,684,00020,805,000Retiree health/life benefits9,210,0004,026,000Deferred compensation656,000588,000Other1,311,000946,000Total other long-term liabilities$104,439,000$81,099,000
(13) Accounting pronouncements
IHI Consolidated is not
aware of any issued accounting standards whose implementation date is subsequent to December 31, 2010, that would have a material impact
on the reporting of its future results of operations or financial position.
(14) Subsequent events
Subsequent to December
31, 2010, IMTT Combined contributed $4,347,000 to the IMTT and Lemont union pension plans.  Subsequent events were evaluated through
February 21, 2011 for their impact on the accompanying financial statements, which is the date the statements were available to be
issued.


40