##### Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-K

|   |  |                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934    
|  
|   |  | For the fiscal year ended
    December 31, 2005                                                 
|  
|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: 001-32385


Macquarie Infrastructure Company Trust


(Exact name of registrant as specified in its charter)


|                                                    |  |                                         
|--------------------------------------------------- |  | ----------------------------------------
|Delaware                                            |  | 20-6196808                              
|(Jurisdiction of incorporation
    or organization) |  | (I.R.S. Employer Identification
    No.)




Commission File Number: 001-32384


Macquarie Infrastructure Company LLC


(Exact name of registrant as specified in its charter)


|                                                    |  |                                         
|--------------------------------------------------- |  | ----------------------------------------
|Delaware                                            |  | 43-2052503                              
|(Jurisdiction of incorporation
    or organization) |  | (I.R.S. Employer Identification
    No.)




|                                                            |  |           
|----------------------------------------------------------- |  | ----------
|125 West 55th Street,
    22nd Floor
    New York, New York |  | 10019     
|(Address of principal executive
    offices)                |  | (Zip Code)

(212) 231-1000


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act:


|                                                                                                           |  |                                          
|---------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                                        |  | Name of Each Exchange on Which Registered
|                                                                                                           |  |                                          
|Shares representing beneficial
    interests in Macquarie Infrastructure Company Trust (trust
    stock) |  | New York Stock Exchange                  

Securities registered pursuant to Section 12 (g) of
the Act: None


o þ


o þ


þ o


S-K 10-K 10-K. þ


12b-2


o þ o


12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE












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##### 

TABLE OF CONTENTS

|                                         |  |                                                                                                                      |  |    
|---------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---
|PART I                                  
|Item 1.                                  |  | Business                                                                                                             |  | 3  
|Item 1A.                                 |  | Risk
    Factors                                                                                                     |  | 40 
|Item 1B.                                 |  | Unresolved
    Staff Comments                                                                                        |  | 55 
|Item 2.                                  |  | Properties                                                                                                           |  | 55 
|Item 3.                                  |  | Legal
    Proceedings                                                                                                |  | 57 
|Item 4.                                  |  | Submission of
    Matters to a Vote of Securityholders                                                               |  | 58 
|PART II                                 
|Item 5.                                  |  | Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities |  | 59 
|Item 6.                                  |  | Selected
    Financial Data                                                                                          |  | 61 
|Item 7.                                  |  | Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations                        |  | 64 
|Item 7A.                                 |  | Quantitative
    and Qualitative Disclosures About Market Risk                                                       |  | 109
|Item 8.                                  |  | Financial
    Statements and Supplementary Data                                                                      |  | 113
|Item 9.                                  |  | Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure                         |  | 173
|Item 9A.                                 |  | Controls and
    Procedures                                                                                          |  | 173
|Item 9B.                                 |  | Other
    Information                                                                                                |  | 176
|PART III                                
|Item 10.                                 |  | Directors and
    Executive Officers of the Registrants                                                              |  | 177
|Item 11.                                 |  | Executive
    Compensation                                                                                           |  | 177
|Item 12.                                 |  | Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters               |  | 177
|Item 13.                                 |  | Certain
    Relationships and Related Transactions                                                                   |  | 177
|Item 14.                                 |  | Principal
    Accounting Fees and Services                                                                           |  | 177
|PART IV                                 
|Item 15.                                 |  | Exhibits and
    Financial Statement Schedules                                                                       |  | 178
|EX-10.28: LOAN AGREEMENT                
|EX-10.29: LOAN AGREEMENT                
|EX-10.30: LOAN AGREEMENT                
|EX-21.1: SUBSIDIARIES OF THE REGISTRANTS
|EX-23.1: CONSENT OF KPMG LLP            
|EX-31.1: CERTIFICATION                  
|EX-31.2: CERTIFICATION                  
|EX-32.1: CERTIFICATION                  



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##### Table of Contents

FORWARD-LOOKING STATEMENTS

We have included or incorporated by reference into this report,
and from time to time may make in our public filings, press
releases or other public statements, certain statements that may
constitute forward-looking statements. These include without
limitation those under Risk Factors in Part I,
Item 1A, Legal Proceedings in Part I,
Item 3, Managements Discussion and Analysis of
Financial Condition and Results of Operations in
Part II, Item 7, and Quantitative and
Qualitative Disclosures about Market Risk in Part II,
Item 7A. In addition, our management may make
forward-looking statements to analysts, investors,
representatives of the media and others. These forward-looking
statements are not historical facts and represent only our
beliefs regarding future events, many of which, by their nature,
are inherently uncertain and beyond our control. We may, in some
cases, use words such as project,
believe, anticipate, plan,
expect, estimate, intend,
should, would, could,
potentially, or may or other words that
convey uncertainty of future events or outcomes to identify
these forward-looking statements.

In connection with the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, we are
identifying important factors that, individually or in the
aggregate, could cause actual results to differ materially from
those contained in any forward-looking statements made by us.
Any such forward-looking statements are qualified by reference
to the following cautionary statements.

Forward-looking statements in this report are subject to a
number of risks and uncertainties, some of which are beyond our
control, including, among other things:




    our short operating history;
    our limited ability to remove our Manager for underperformance
    and our Managers right to resign;
    our holding company structure, which may limit our ability to
    meet our dividend policy;
    our ability to service, comply with the terms of and refinance
    at maturity our substantial indebtedness;
    decisions made by persons who control the businesses in which we
    hold less than majority control, including decisions regarding
    dividend policies;
    our ability to make, finance and integrate future acquisitions;
    our ability to implement our operating and internal growth
    strategies;
    the regulatory environment in which our businesses and the
    businesses in which we hold investments operate, rates
    implemented by regulators of our businesses and the businesses
    in which we hold investments, and our relationships and rights
    under concessions and contracts with the governmental agencies
    and authorities;
    changes in patterns of commercial or general aviation air
    travel, or automobile usage, including the effects of changes in
    airplane fuel and gas prices, and seasonal variations in
    customer demand for our businesses;
    changes in electricity or other power costs;
    foreign exchange rate fluctuations;
    changes in general economic or business conditions or economic
    or demographic trends in the United States and other countries
    in which we have a presence, including changes in interest rates
    and inflation;
    environmental risks pertaining to our businesses and the
    businesses in which we hold initial investments;
    our ability to retain or replace qualified employees;
    changes in the current treatment of, and our eligibility for,
    qualified dividend income and long-term capital gains under
    current U.S. federal income tax law; and1



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##### Table of Contents


    extraordinary or force majeure events affecting the facilities
    of our businesses and the businesses in which we hold
    investments.Our actual results, performance, prospects or opportunities
could differ materially from those expressed in or implied by
the forward-looking statements. A description of risks that
could cause our actual results to differ appears under the
caption Risk Factors in Part I, Item 1A
and elsewhere in this report. It is not possible to predict or
identify all risk factors and you should not consider that
description to be a complete discussion of all potential risks
or uncertainties that could cause our actual results to differ.

In light of these risks, uncertainties and assumptions, you
should not place undue reliance on any forward-looking
statements. The forward-looking events discussed in this report
may not occur. These forward-looking statements are made as of
the date of this report. We undertake no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. You
should, however, consult further disclosures we may make in
future filings with the Securities and Exchange Commission.



Exchange Rates

For the purposes of this report, to the extent we have converted
foreign currency amounts into U.S. dollars, we have used
the Federal Reserve Bank noon buying rate at December 30,
2005 for our financial information and the Federal Reserve Bank
noon buying rate at February 6, 2006 for all other
information. At December 30, 2005, the noon buying rate of
the Australian dollar was USD $0.7342 and the noon buying
rate of the Pound Sterling was USD $1.7188. At
February 6, 2006, the noon buying rate of the Australian
dollar was USD $0.7426 and the noon buying rate of the
Pound Sterling was USD $1.7462. The table below sets forth
the high, low and average exchange rates for the Australian
dollar and the Pound Sterling for the years indicated:

|            |  |                               |        |  |                            |  |        |         |  |  |        |  |  |     |        |  |         |  |        |  |  |  |        | 
|----------- |  | ----------------------------- | ------ |  | -------------------------- |  | ------ | ------- |  |  | ------ |  |  | --- | ------ |  | ------- |  | ------ |  |  |  | ------ | 
|            |  | U.S. Dollar/Australian Dollar |        |  | U.S. Dollar/Pound Sterling | 
|            |  |                               |        |  |                            | 
|Time Period |  | High                          |        |  | Low                        |  |        | Average |  |  | High   |  |  | Low |        |  | Average | 
|            |  |                               |        |  |                            |  |        |         |  |  |        |  |  |     |        |  |         | 
|2001        |  |                               | 0.5552 |  |                            |  | 0.5016 |         |  |  | 0.5169 |  |  |     | 1.4773 |  |         |  | 1.4019 |  |  |  | 1.4397 | 
|2002        |  |                               | 0.5682 |  |                            |  | 0.5128 |         |  |  | 0.5437 |  |  |     | 1.5863 |  |         |  | 1.4227 |  |  |  | 1.5024 | 
|2003        |  |                               | 0.7391 |  |                            |  | 0.5829 |         |  |  | 0.6520 |  |  |     | 1.7516 |  |         |  | 1.5738 |  |  |  | 1.6340 | 
|2004        |  |                               | 0.7715 |  |                            |  | 0.7083 |         |  |  | 0.7329 |  |  |     | 1.8950 |  |         |  | 1.7860 |  |  |  | 1.8252 | 
|2005        |  |                               | 0.7974 |  |                            |  | 0.7261 |         |  |  | 0.7627 |  |  |     | 1.9292 |  |         |  | 1.7138 |  |  |  | 1.8198 | 




Australian banking regulations that govern the operations of
Macquarie Bank Limited and all of its subsidiaries, including
our Manager, require the following statements: Investments in
Macquarie Infrastructure Company Trust are not deposits with or
other liabilities of Macquarie Bank Limited or of any Macquarie
Group company and are subject to investment risk, including
possible delays in repayment and loss of income and principal
invested. Neither Macquarie Bank Limited nor any other member
company of the Macquarie Group guarantees the performance of
Macquarie Infrastructure Company Trust or the repayment of
capital from Macquarie Infrastructure Company Trust.


2



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##### Table of Contents

Part I





Item 1.     Business

Macquarie Infrastructure Company Trust, a Delaware statutory
trust that we refer to as the trust, owns its businesses and
investments through Macquarie Infrastructure Company LLC, a
Delaware limited liability company that we refer to as the
company. Except as otherwise specified, Macquarie
Infrastructure Company, we, us,
and our refer to both the trust and the company and
its subsidiaries together. The company owns the businesses
located in the United States through a Delaware corporation,
Macquarie Infrastructure Company Inc., or MIC Inc., and those
located outside of the United States through Delaware limited
liability companies. Macquarie Infrastructure Management
(USA) Inc., the company that we refer to as our Manager, is
part of the Macquarie Group of companies. References to the
Macquarie Group include Macquarie Bank Limited and its
subsidiaries and affiliates worldwide.

GENERAL

The trust and the company were each formed on April 13,
2004. On December 21, 2004, we completed our initial public
offering and concurrent private placement of shares of trust
stock representing beneficial interests in the trust. Each share
of trust stock corresponds to one LLC interest of the company.
We used the majority of the proceeds of the offering and private
placement to acquire our initial businesses and investments and
to pay related expenses.

We own, operate and invest in a diversified group of
infrastructure businesses in the United States and other
developed countries. We offer investors an opportunity to
participate directly in the ownership of infrastructure
businesses, which traditionally have been owned by governments
or private investors, or have formed part of vertically
integrated companies. Our businesses consist of the following:




    an airport services business, conducted through Atlantic;
    an airport parking business, conducted through Macquarie Parking;
    a district energy business, conducted through Thermal Chicago
    and a 75% controlling interest in Northwind Aladdin; and
    a toll road business, through our 50% ownership of the company
    that operates Yorkshire Link, a
    19-mile highway in the
    United Kingdom.Our investments consist of:




    a 17.5% interest in the holding company that owns South East
    Water, or SEW, a regulated water utility in southeastern
    England; and
    approximately 4% of Macquarie Communications Infrastructure
    Group, or MCG, a communications infrastructure fund managed by
    an affiliate of our Manager.Additionally, we have entered into an agreement to acquire 100%
of The Gas Company, a regulated retail gas distribution company
serving Hawaii. We expect to complete this acquisition in the
second or third quarter of 2006.

Our Manager

We have entered into a management services agreement with our
Manager. Our Manager is responsible for our
day-to-day operations
and affairs and oversees the management teams of our operating
businesses. Neither the trust nor the company have or will have
any employees. Our Manager has assigned, or seconded, to the
company, on a permanent and wholly dedicated basis, two of its
employees to assume the offices of chief executive officer and
chief financial officer and makes other personnel available as
required. The services performed for the company are provided at
our Managers expense, including the compensation of our
seconded officers.

3



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##### Table of Contents

We pay our Manager a management fee based primarily on our
market capitalization. In addition, to incentivize our Manager
to maximize shareholder returns, we may pay performance fees.
Our Manager can earn a performance fee equal to 20% of the
outperformance, if any, of quarterly total returns to our
shareholders above a weighted average of two benchmark indices,
a U.S. utilities index and a European utilities index,
weighted in proportion to our U.S. and
non-U.S.equity
investments. To be eligible for the performance fee, our Manager
must deliver total shareholder returns for the quarter that are
positive and in excess of any prior underperformance. Please see
the management services agreement filed as an exhibit to this
Annual Report on
Form 10-K for the
full terms of this agreement.

Our Manager is a member of the Macquarie Group, that, together
with its subsidiaries and affiliates worldwide, provides
specialist investment, advisory, trading and financial services
in select markets around the world. The Macquarie Group is
headquartered in Sydney, Australia and employs over
7,600 people in 23 countries as of the date of this
report. The Macquarie Group is a global leader in advising on
the acquisition, disposition and financing of infrastructure
assets and the management of infrastructure investment vehicles
on behalf of third-party investors.

We believe that the Macquarie Groups demonstrated
expertise and experience in the management, acquisition and
funding of infrastructure businesses will provide us with a
significant advantage in pursuing our strategy. Our Manager is
part of the Macquarie Groups Infrastructure and
Specialized Funds division, or ISF, which as of
December 31, 2005, managed a $23 billion investment
portfolio on behalf of retail and institutional investors
comprising investments in infrastructure and infrastructure-like
businesses. These businesses include toll roads, airports and
airport-related infrastructure, communications, media, electric
and gas distribution networks, water utilities, aged care, rail
and ferry assets. The ISF division has been operating since 1996
and currently has over 340 executives internationally, with
more than 50 executives based in the US and Canada.

We expect that the Macquarie Groups infrastructure
advisory division, with over 340 executives
internationally, including more than 70 executives in North
America, will be an important source of acquisition
opportunities and advice for us. During 2005, the Macquarie
Group globally advised on infrastructure transactions valued at
more than $32 billion. The Macquarie Groups
infrastructure advisory division is separate from the ISF
division. Historically the Macquarie Groups advisory group
has presented the various infrastructure investment vehicles in
ISF with a significant number of high quality infrastructure
acquisition opportunities.

Although it has no contractual obligation to do so, we expect
that Macquaries infrastructure advisory division will
present our Manager with similar opportunities. Under the terms
of the management services agreement, our Manager is obliged to
present to us, on a priority basis, acquisition opportunities in
the United States that are consistent with our strategy, as
discussed below, and the Macquarie Group is our preferred
financial advisor.

We also believe that our relationship with the Macquarie Group
will enable us to take advantage of its expertise and experience
in debt financing for infrastructure assets. As the typically
strong, stable cash flows of infrastructure assets are usually
able to support high levels of debt relative to equity, we
believe that the ability of our Manager and the Macquarie Group
to source and structure low-cost project and other debt
financing provides us with a significant advantage when
acquiring assets. We believe that relatively lower costs will
help us to maximize returns to shareholders from those assets.

Industry

Infrastructure businesses provide basic, everyday services, such
as parking, roads and water. We focus on the ownership and
operation of infrastructure businesses in the following
categories:




    User Pays Assets. These assets are generally
    transportation-related infrastructure that depend on a per use
    system for their main revenue source. Demand for use of these
    assets is relatively unaffected by macroeconomic conditions
    because people use these types of assets on an everyday basis.
    User pays assets, such as airports and toll roads,
    are generally owned by government4



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##### Table of Contents

entities in the United States. Other types of user
    pays assets, such as airport- and rail-related
    infrastructure and off-airport parking, are typically owned by
    the private sector. Where the private sector owner has been
    granted a lease or concession by a government entity to operate
    the business, the business will be subject to any restrictions
    or provisions contained in the lease or concession.
    Contracted Assets. These assets provide services through
    long-term contracts with other businesses or governments. These
    contracts typically can be renewed on comparable terms when they
    expire because there are no or a limited number of providers of
    similar services. Contracted assets, such as communications
    towers, district energy systems and contracted power generation
    plants, are generally owned by the private sector in the United
    States. Where the private sector owner has been granted a lease
    or concession by a government entity to operate the business,
    the business will be subject to any restrictions or provisions
    contained in the lease or concession.
    Regulated Assets. Businesses that own these assets are
    the sole or predominant providers of essential services in their
    service areas and, as a result, are typically regulated by
    government entities with respect to the level of revenue earned
    or charges imposed. Government regulated revenues typically
    enable the service provider to cover operating costs,
    depreciation and taxes and achieve an adequate return on debt
    and equity capital invested. Water utilities, electric
    transmission and gas distribution networks are examples of
    regulated assets. In the United States, regulated assets are
    generally owned by publicly listed utilities, although some are
    owned by government entities.By their nature, businesses in these categories generally have
sustainable and growing long-term cash flows due to consistent
customer demand and the businesses strong competitive
positions. Consistent customer demand is driven by the basic,
everyday nature of the services provided. The strong competitive
position results from high barriers to entry, including:




    high initial development and construction costs, such as the
    cost to build roads;
    difficulty in obtaining suitable land, such as land near or at
    airports for parking facilities or fixed base operations, or
    FBOs;
    required government approvals, which may be difficult or
    time-consuming to obtain, such as approvals for a network of
    communications towers, or approvals to lay pipes under city
    streets; and
    long-term exclusive concessions and customer contracts, such as
    contracts to provide broadcasting services to broadcast
    television companies or cooling services to a building.These barriers to entry have the effect of protecting the cash
flows generated by the infrastructure assets owned by these
businesses. These barriers to entry largely arise because
services provided by infrastructure businesses, such as parking,
roads, and water, can generally only be delivered by relatively
large and costly physical assets in close proximity to
customers. These services cannot be delivered over the internet,
and cannot be outsourced to other countries, and are therefore
not susceptible to the competitive pressures that other
industries, including manufacturing industries, typically face.
We do not expect to acquire infrastructure businesses that face
significant competition, such as merchant electricity generation
facilities.

The prices charged for the use of infrastructure assets can
generally be expected to keep pace with inflation. User
pays assets typically enjoy pricing power in their market
due to consistent demand and limited competition, the
contractual terms of contracted assets typically allow for price
increases, and the regulatory process that determines revenues
for regulated assets typically provides for an inflation
adjustment.

Infrastructure assets, especially newly constructed assets, tend
to be long-lived, require minimal and predictable maintenance
capital expenditures and are generally not subject to major
technological change or physical deterioration. This generally
means that significant cash flow is often available from
infrastructure businesses to service debt, make distributions to
shareholders, expand the business, or all three.

5



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##### Table of Contents

Exceptions exist in relation to much older infrastructure
assets. For example, parts of SEWs water network are more
than 100 years old and require significant maintenance
capital expenditures.

The sustainable and growing long-term cash flows of
infrastructure assets mean their capital structures can
typically support more debt than other businesses. Our ability
to optimize the capital structure of our businesses is a key
component in maximizing returns to investors.

Strategy

We have two primary strategic objectives. First, we intend to
grow our existing businesses. We intend to accomplish this by:




    pursuing revenue growth and gross operating income improvement;
    optimizing the financing structure of our businesses; and
    improving the performance and the competitive position of our
    controlled businesses through complementary acquisitions.Second, we intend to acquire businesses we believe will provide
yield accretive returns in infrastructure sectors other than
those in which our businesses and investments currently operate.
We believe our association with the Macquarie Group is key to
the successful execution of our strategy.



Operational StrategyWe will rely on the Macquarie Groups demonstrated
expertise and experience in the management of infrastructure
businesses to execute our operational strategy. In managing
infrastructure businesses, the Macquarie Group endeavors to
(1) recruit and incentivize talented operational management
teams, (2) instill disciplined financial management
consistently across the businesses, (3) source and execute
acquisitions, and (4) structure and arrange debt financing
for the businesses to maximize returns to shareholders.

We plan to increase the cash generated by our businesses through
initiatives to increase revenues and improve gross operating
income. We have in place seasoned management teams at each of
our businesses who will be supported by the demonstrated
infrastructure management expertise and experience of the
Macquarie Group in the execution of this strategy.




    Improving and expanding our existing marketing programs.
    We expect to enhance the client services and marketing programs
    of our businesses. Sophisticated marketing programs relative to
    those of most other industry participants exist within our
    airport parking and airport services businesses. We intend to
    expand these programs and extend them to any facilities that we
    acquire within those businesses in the future.
    Making selective capital expenditures. We intend to
    expand capacity of our existing locations and improve their
    facilities through selective capital expenditures. Specifically,
    we will make expenditures that we believe will generate
    additional revenues in the short-term. Such opportunities exist,
    notably, in relation to our district energy business. We
    generally strive to manage maintenance capital expenditures to
    keep our assets well- maintained and to avoid any unanticipated
    maintenance costs over the life of the assets.
    Strengthening our competitive position through complementary
    acquisitions. We intend to selectively acquire and integrate
    additional FBO and airport parking businesses or facilities.
    These industry segments are very fragmented and we believe that
    attractive acquisition opportunities exist within them. We also
    believe that complementary acquisitions will improve our overall
    performance by: (1) leveraging our brand and marketing
    programs in our airport services and airport parking businesses;
    (2) taking advantage of the size and diversification of our
    businesses to achieve lower financing costs; and
    (3) allowing us to realize synergies and implement improved
    management practices across a larger number of operations. Our
    acquisition during 2005 of the Las Vegas FBO is an example of
    this strategy.6



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##### Table of Contents

Acquisition StrategyWe expect our acquisition strategy to benefit from the Macquarie
Groups deep knowledge and ability to identify acquisition
opportunities in the infrastructure area. We believe it is often
the case that infrastructure opportunities are not widely
offered, well-understood or properly valued. The Macquarie Group
has significant expertise in the execution of such acquisitions,
which can be time-consuming and complex.

We intend to acquire infrastructure businesses and investments
in sectors other than those sectors in which our businesses
currently operate, provided we believe we can achieve yield
accretive returns. Our pending acquisition of The Gas Company is
an example of this strategy. While our focus is on acquiring
businesses in the United States, we will also consider
opportunities in other developed countries. Generally, we will
seek to acquire controlling interests, but we may acquire
minority positions in attractive sectors where those
acquisitions generate immediate dividends and where our partners
have objectives similar to our own. Our acquisitions of SEW and
MCG are consistent with this philosophy. We believe that the
sectors in which SEW and MCG operate will continue to present
attractive acquisition opportunities and that partnering with
other Macquarie Group-managed vehicles with experience in those
sectors is an appropriate way to pursue opportunities in those
sectors.

Acquisition Opportunities

Infrastructure sectors that may present attractive acquisition
candidates include, in addition to our initial businesses,
electricity transmission and gas distribution networks, water
and sewerage networks, contracted power generation and
communications infrastructure. We expect that acquisition
opportunities will arise from both the private sector and the
public (government) sector.




    Private sector opportunities. Increasingly, private
    sector owners of infrastructure assets are choosing to divest
    these assets for competitive, financial or regulatory reasons.
    For instance, vertically integrated electric, gas and
    telecommunications utilities are increasingly disposing of
    infrastructure assets because a) they wish to concentrate
    on their core business rather than the infrastructure supporting
    it, b) they are over-leveraged and wish to pay down debt,
    c) their capital structure and shareholder expectations do
    not allow them to finance these assets as efficiently as
    possible, or d) regulatory pressures are causing an
    unbundling of vertically integrated product offerings.
    Public (government) sector opportunities.
    Traditionally, governments around the world have financed the
    provision of infrastructure with tax revenue and government
    borrowing. Over the last few decades, many governments have
    pursued an alternate model for the provision of infrastructure
    as a result of budgetary pressures. This trend towards
    increasing private sector participation in the provision of
    infrastructure is well established in Australia, Europe and
    Canada, and it is just beginning in the United States. We
    believe private sector participation in the provision of
    infrastructure in the United States will increase over time, as
    a result of growing budgetary pressures, exacerbated by baby
    boomers reaching retirement age, and the significant
    under-investment (historically) in critical infrastructure
    systems in the United States.7



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##### Table of Contents

U.S. Acquisition Priorities

Under the terms of the management services agreement, the
company has first priority ahead of all current and future
entities managed by our Manager or by members of the Macquarie
Group within the ISF division among the following infrastructure
acquisition opportunities within the United States:

Sector



Airport fixed base operationsDistrict energyAirport parkingUser pays assets, contracted assets and regulated assets (as
    defined below) that represent an investment of greater than AUD
    $40 million (USD $29.7 million), subject to the
    following qualifications:Roads:
    
    The company has second priority after Macquarie Infrastructure
    GroupAirport ownership:
    
    The company has second priority after Macquarie Airports
    (consisting of Macquarie Airports Group and Macquarie Airports)Communications:
    
    The company has second priority after Macquarie Communications
    Infrastructure GroupRegulated Assets (including, but not limited to, electricity and
    gas transmission and distribution and water services):
    
    The company has second priority after Macquarie Essential Assets
    Partnership, or MEAP, until such time as MEAP has invested a
    further CAD $45 million (USD $39.4 million as of
    February 6, 2006) in the United States. Thereafter the
    company will have first priority.The company has first priority ahead of all current and future
entities managed by our Manager or any Manager affiliate in all
investment opportunities originated by a party other than our
Manager or any Manager affiliate where such party offers the
opportunity exclusively to the company and not to any other
entity managed by our Manager or any Manager affiliate within
the ISF division of the Macquarie Group.

Financing

We expect to fund any acquisitions with a combination of new
debt at the company or MIC Inc. level, subsidiary non-recourse
debt and issuance of additional shares of trust stock. We expect
that a significant amount of our cash from operations will be
used to support our dividend policy. We therefore expect that in
order to fund significant acquisitions, in addition to new debt
financing, we will also need to either offer more equity or
offer our shares to the sellers of businesses that we wish to
acquire.

Our businesses and investments have generally been partially
financed with subsidiary level non-recourse debt that is repaid
solely from the businesses revenues. The debt is generally
secured by the physical assets, major contracts and agreements,
and when appropriate, cash accounts. In certain cases, the debt
is secured by our ownership interest in that business. This type
of financing is referred to as project financing. We
have project financing transactions at our airport services and
district energy businesses that generally are structured so that
all revenues of a project or business are deposited directly
with a bank or other financial institution acting as escrow or
security deposit agent. These funds are then payable in a
specified order of priority usually first to pay operating
expenses, senior debt service, taxes and to fund reserve
accounts. Thereafter, subject to the satisfaction of debt
service coverage ratios and

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certain other conditions, available funds may be disbursed as
dividends or payments under shareholder loans or subordinated
debt, where applicable.

These project financing structures are designed to prevent
lenders from looking through the operating businesses to us or
to our other businesses for repayment, that is, they are
non-recourse to us and the other businesses and
investments not involved in the specific project or business,
unless we specifically agree to assume liability for payment.
The debt at our parking business is also non-recourse, although
there is no escrow or security deposit agent. These arrangements
effectively result in each of our businesses being isolated from
the risk of default by any other business we own or in which we
have invested.

We do not currently have any debt at the company level. However,
we have entered into a revolving credit facility at the MIC Inc.
level, currently undrawn, that provides for borrowings up to
$250 million primarily to finance acquisitions and capital
expenditures pending refinancing through equity offerings at an
appropriate time.

OUR BUSINESSES AND INVESTMENTS

Airport Services Business



Business OverviewOur airport services business, or Atlantic, operates fixed-based
operations, or FBOs, at eighteen airports and one heliport
throughout the United States. FBOs primarily provide fuelling
and fuel-related services, aircraft parking and hangarage to
owner/operators of jet aircraft in the general aviation sector
of the air transportation industry. The business also operates
six regional and general aviation airports under management
contracts, although airport management constitutes a small
portion of our airport services business. Previously, the
airport services business consisted of two operating companies,
Atlantic and AvPorts. These businesses have been substantially
integrated and are now managed as one business. The airport
services business had revenue of $201.5 million and
operating income of $28.3 million for our 2005 fiscal year,
and total assets of $553.3 million at December 31,
2005 and $410.3 million at December 31, 2004. Revenues
from our airport services business comprised 66.2% of our total
revenues in the 2005 fiscal year.



Our AcquisitionsOn the day following our initial public offering, we purchased
100% of the ordinary shares in North America Capital Holding
Company, or NACH, the parent company of the Atlantic business,
from Macquarie Investment Holdings Inc., a wholly owned indirect
subsidiary of Macquarie Bank Limited, for a purchase price of
$118.2 million (including transaction costs) plus
$130 million of assumed senior debt pursuant to a stock
purchase agreement. Prior to our acquisition of NACH, it
acquired 100% of the shares of Executive Air Support Inc., or
EAS, the parent company of the Atlantic business, and assumed
$500,000 of debt pursuant to a stock purchase agreement.

On the day following our initial public offering, we also
acquired the AvPorts business from Macquarie Specialised Asset
Management Limited, as Trustee for and on behalf of Macquarie
Global Infrastructure Funds A and C, and Macquarie Specialised
Asset Management 2 Limited, as Trustee for and on behalf of
Macquarie Global Infrastructure Funds B and D, for cash
consideration of $42.4 million (including transaction
costs) and assumption of existing debt.

On January 14, 2005, we acquired all of the membership
interests in General Aviation Holdings, LLC, or GAH, which
operates two FBOs in California for $53.5 million
(including a working capital adjustment, transaction costs, and
funding of the debt service reserve). $32 million of the
purchase price was funded by an increase in the then senior debt
facility of the business with the balance funded by proceeds
from our initial public offering.

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On August 12, 2005, we acquired 100% of the membership
interests in Eagle Aviation Resources, Ltd., or EAR, a Nevada
limited liability company doing business as Las Vegas Executive
Air Terminal, or LVE, from Mr. Gene H. Yamagata. LVE is an
established FBO operating out of McCarran International Airport
in Las Vegas, Nevada under the terms of a 30-year lease granted
in 1996. LVE is one of two FBOs at McCarran Airport.



Industry OverviewFBOs predominantly service the general aviation industry.
General aviation, which includes corporate and leisure flying,
pilot training, helicopter, medivac and certain air freight
operations, is the largest segment of U.S. civil aviation
and represents the largest percentage of the active civil
aircraft fleet. General aviation does not include commercial air
carriers or military operations. In order to attract independent
operators to service general aviation aircraft, local airport
authorities grant FBO operators the right to sell fuel. Fuel
sales provide most of an FBOs revenue.

FBOs generally operate in an environment with limited
competition and high barriers to entry. Airports have limited
physical space for additional FBOs, due in part to safety
restrictions that limit construction in the vicinity of runways.
Airport authorities generally do not have the incentive to add
additional FBOs unless there is a significant demand for
capacity, as profit-making FBOs are more likely to reinvest in
the airport and provide a broad range of services, which
attracts increased airport traffic. The increased traffic
generally generates additional revenue for the airport authority
in the form of landing and fuel flowage fees. Government
approvals and design and construction of a new FBO can also take
significant time.

Demand for FBO services is driven by the number of general
aviation aircraft in operation and average flight hours per
aircraft. Both factors have recently experienced strong growth.
According to the Federal Aviation Administration, or the FAA,
from 1995 to 2005, the fleet of fixed-wing turbine aircraft,
which includes turbojet and turboprop aircraft, increased at an
average rate of 5.4% per year. Fixed-wing turbine aircraft
are the major consumers of FBO services, especially fuel. Over
the same period, the general aviation hours flown by fixed-wing
turbine aircraft have increased at an average rate of
5.4% per year. These factors have contributed to an average
annual growth rate in general aviation jet fuel consumption of
6.1% from 1995 to 2005. This growth is and has been driven by a
number of factors, in addition to general economic growth over
the period, which include the following:




    passage of the General Aviation Revitalization Act in 1994,
    which significantly reduced the product liability facing general
    aviation aircraft manufacturers;
    dissatisfaction with the increased inconvenience of commercial
    airlines and major airports as a result of security-related
    delays;
    growth in programs for the fractional ownership of general
    aviation aircraft (programs for the time share of aircraft),
    including NetJets, FlexJet and Flight Options; and
    a tax package passed by Congress in May 2003, which allows
    companies to depreciate 50% of the value of new business jets in
    the first year of ownership if the jets were purchased and owned
    by the end of 2004.We believe generally that the events of September 11, 2001
have increased the level of general aviation activity. We
believe that safety concerns for corporate staff combined with
increased check-in and security clearance times at many airports
in the United States have increased the demand for private and
corporate jet travel.

As a result of these factors, the FAA is forecasting continued
growth in general aviation jet fuel consumption, on average, of
8.6% per year from 2005 to 2017.

The growth in the general aviation market has driven demand for
the services provided by FBOs, especially fuel sales. The
general aviation market is serviced by FBOs located throughout
the United States at various major and regional airports.
According to Aviation International News, there are
approximately 4,500 FBOs throughout North America, with
generally one to five operators per airport. Most of the FBOs

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are privately owned by operators with only one or two locations.
There are, however, a number of larger industry participants,
including Signature Flight Support, which is owned by BBA plc.



StrategyWe believe that our FBO business will continue to benefit from
the overall growth in the corporate jet market and the demand
for the services that our business offers. However, we believe
that our airport services business is in a position to grow at
rates in excess of the industry as a result of our internal
growth, marketing and acquisition strategies.

Internal Growth. We plan to grow revenues and profits by
continuing to focus on attracting pilots and passengers who
desire full service and quality amenities. We will continue to
develop our staff so as to provide a level of service higher
than that provided by discount fuel suppliers. In addition, we
will make selective capital expenditures that will increase
revenues and reinforce our reputation for service and high
quality facilities, potentially allowing us to increase profits
on fuel sales and other services over time.

Marketing. We plan to improve, expand and capitalize on
our existing marketing programs, including our proprietary point
of sale system and associated customer information database, and
our Atlantic Awards program. Through our marketing
programs, we expect to improve revenues and margins by
generating greater customer loyalty, encouraging
upselling of fuel, cross-selling of services at
additional locations to existing customers, and attracting new
customers.

Acquisitions. We will focus on acquisitions at major
airports and locations where there is likely to be growth in the
general aviation market. We believe we can grow through
acquisitions and derive increasing economies of scale, as well
as marketing, head office and other cost synergies. We believe
the highly fragmented nature of the industry and the desire of
certain owners for liquidity provide attractive acquisition
candidates, including both individual facilities and portfolios
of facilities. In considering potential acquisitions, we will
analyze factors such as capital requirements, the terms and
conditions of the lease for the FBO facility, the condition and
nature of the physical facilities, the location of the FBO, the
size and competitive conditions of the airport and the
forecasted operating results of the FBO.



Business

OperationsWe believe our airport services business has high-quality
facilities and operations and focuses on attracting customers
who desire high-quality service and amenities. Fuel sales
represented approximately 71% of our airport services business
revenue for 2005. Other services provided to these customers
include de-icing, aircraft parking, hangar rental and catering.
Fuel is stored in fuel farms and each FBO operates refueling
vehicles owned or leased by the FBO. The FBO either maintains or
has access to the fuel storage tanks to support its fueling
activities. Services are also provided to commercial carriers
and include refueling from the carriers own fuel supplies
stored in the carriers fuel farm, de-icing and ground and
ramp handling services.

Our cost of fuel is dependent on the wholesale market price. Our
airport services business sells fuel to customers at a
contracted price, or at a price negotiated directly with the
customer. While fuel costs can be volatile, we generally pass
fuel cost changes through to customers.

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LocationsOur FBO facilities operate pursuant to long-term leases from
airport authorities or local government agencies. Our airport
services business and its predecessors have a strong history of
successfully renewing leases, and have held some leases since
the 1940s, 1950s and 1960s. The existing leases have an average
remaining length of approximately 17 years.

|                                                                        |  |            |  |          |      |     |           |  |      | 
|----------------------------------------------------------------------- |  | ---------- |  | -------- | ---- | --- | --------- |  | ---- | 
|                                                                        |  | Other FBOs |  | Operated |      |     | Lease     | 
|Airport                                                                 |  | at Airport |  | Since    |      |     | Expiry(1) | 
|                                                                        |  |            |  |          |      |     |           | 
|Teterboro Airport (Bergen County,
    NJ)                               |  | 4          |  |          | 1946 |     |           |  | 2019 | 
|Chicago Midway Airport (Chicago, IL)                                    |  | 2          |  |          | 1969 |     |           |  | 2020 | 
|Philadelphia International Airport
    (Philadelphia, PA)               |  | None       |  |          | 1955 |     |           |  | 2026 | 
|Republic Airport (Farmingdale, NY)                                      |  | 1          |  |          | 1980 |     |           |  | 2024 | 
|Northeast Philadelphia Airport
    (Philadelphia, PA)                   |  | 1          |  |          | 1960 |     |           |  | 2026 | 
|William P. Hobby Airport (Houston,
    TX)                              |  | 4          |  |          | 1972 |     |           |  | 2013 | 
|Sikorsky Memorial Airport
    (Bridgeport, CT)                          |  | 1          |  |          | 1995 |     |           |  | 2021 | 
|New Orleans Lakefront Airport (New
    Orleans, LA)                     |  | 2          |  |          | 1969 |     |           |  | 2031 | 
|Louis Armstrong New Orleans
    International Airport (New Orleans, LA) |  | 1          |  |          | 1966 |     |           |  | 2015 | 
|Brainard International Airport
    (Hartford, CT)                       |  | None       |  |          | 1988 |     |           |  | 2020 | 
|Louisville International Airport
    (Louisville, KY)                   |  | None       |  |          | 1996 |     |           |  | 2016 | 
|Pittsburgh International Airport
    (Pittsburgh, PA)                   |  | None       |  |          | 1989 |     |           |  | 2028 | 
|Burlington International Airport
    (South Burlington, VT)             |  | None       |  |          | 2001 |     |           |  | 2035 | 
|Metroport East 34th Street
    Heliport (New York, NY)(2)               |  | None       |  |          | 1997 | (3) |           |  | 2017 | 
|Gulfport-Biloxi International
    Airport (Gulfport, MS)                |  | None       |  |          | 2000 |     |           |  | 2010 | 
|New Castle County Airport
    (Wilmington, DE)                          |  | 2          |  |          | 1997 |     |           |  | 2027 | 
|McCarran International Airport (Las
    Vegas, NV)(4)                   |  | 1          |  |          | 1996 |     |           |  | 2025 | 
|John Wayne Orange County Airport
    (Orange County, CA)(5)             |  | 1          |  |          | 1992 |     |           |  | 2014 | 
|Palm Springs Airport (Palm Springs,
    CA)(5)                          |  | 1          |  |          | 1981 |     |           |  | 2031 | 






|    |                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Lease expiries assume Atlantic exercises all its options to
    extend leases.                                                                                                                                                             
|   
|(2) | Formerly the East 60th Street Heliport, operated since
    1968. When the East 60th Street Heliport was closed by the
    local authority, it was relocated and now operates as the
    Metroport East 34th Street Heliport.               
|   
|(3) | Atlantic won the tender to significantly upgrade the Metroport
    East 34th Street Heliport. It is anticipated that the
    upgrade will take place over 2006-2007. In return, Atlantic was
    granted a 10-year
    operating agreement.
|   
|(4) | Acquired on August 12, 2005.                                                                                                                                                                                                               
|   
|(5) | Acquired on January 14, 2005.                                                                                                                                                                                                              



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Airport Management ContractsAtlantic manages and operates six airports on behalf of local
authorities under management contracts. Under these contracts,
Atlantic is responsible for the
day-to-day operation of
the airfield and terminal and is paid a fixed annual fee for
providing these services. The annual fee is paid to Atlantic
irrespective of the number of passengers that pass through the
airport and, therefore, is unaffected by changes in airport
activity. Management contracts accounted for less than 1% of
Atlantics revenue for fiscal 2005.

Atlantic operates six regional or general aviation airports
under management contracts at the following locations:




    Atlantic City International Airport;
    Republic Airport;
    Teterboro Airport;
    Tweed-New Haven Regional Airport;
    Westchester County Airport; and
    Albany International Airport.

MarketingWe believe our airport services business has an experienced
marketing team and marketing programs that are sophisticated
relative to those of other industry participants. Our airport
services business marketing activities support its focus
on high-quality service and amenities and are intended to
generate greater customer loyalty, encourage
upselling of fuel, present cross-selling services at
additional locations to existing customers, and attract new
customers.

Atlantic has established two key marketing programs. Each
utilizes an internally-developed
point-of-sale system
that operates at substantially all locations. This system tracks
all aircraft utilizing the airport and records which FBO the
aircraft uses. To the extent that the aircraft is a customer of
another Atlantic FBO but did not use the Atlantic FBO at the
current location, a member of Atlantics customer service
team will send a letter alerting the pilot or flight department
of Atlantics presence at that site and invite them to
visit next time they are at that location.

The second key program is the Atlantic Awards
program. This program also operates through the
point-of-sale system.
For each 100 gallons of fuel purchased, the pilot is given a
voucher for five Atlantic Awards. The pilot can
begin accumulating points after registering the voucher on
Atlantics website. Once 100 Atlantic Awards have been
accumulated, the pilot is sent a pre-funded American Express
card, branded with Atlantics logo. The card is recharged
each time the pilot registers additional vouchers on
Atlantics website. This program has rapidly gained
acceptance by pilots and is encouraging upselling of
fuel, where pilots purchase a larger portion of their overall
fuel requirement at our locations. These awards are recorded as
a reduction in revenue in our consolidated financial statements.



CompetitionCompetition in the FBO business exists on a local basis at most
of the airports at which our airport services business operates.
Seven of our FBOs (including the heliport) are the only FBO at
that airport, either because of the lack of suitable space at
the airfield, or because the level of demand for FBO services at
the airport does not support more than one FBO. The remaining
twelve FBOs have one or more competitors located at the airport.
FBO operators at a particular airport compete based on a number
of factors, including location of the facility relative to
runways and street access, service, value-added features,
reliability and price. Our airport services business positions
itself at these airports as a provider of superior service to
general aviation pilots and passengers. Staff are provided with
comprehensive training on an ongoing basis to ensure high and
consistent quality of service. Our airport services business
markets to high net worth individuals and corporate flight
departments for whom fuel price is of less importance

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than service and facilities. While each airport is different,
generally there are significant barriers to entry preventing new
FBO competitors from entering the markets in which our airport
services business operates, including limited availability of
suitable land.

There are nine competitors with operations at five or more
U.S. airports, including Signature Flight Support, Landmark
Aviation, Million Air Interlink, Trajen and Mercury Air. These
competitors tend to be privately held or owned by much larger
companies, such as BBA Group plc, The Carlyle Group and Allied
Capital Corporation. Some present and potential competitors have
or may obtain greater financial and marketing resources than we
do, which may negatively impact our ability to compete at each
airport or to compete for acquisitions. We believe that the
airport authorities from which our airport services business
leases space are satisfied with the performance of their FBOs
and are therefore not seeking to solicit additional service
providers.



RegulationThe aviation industry is overseen by a number of regulatory
bodies, the primary one being the FAA. At the FBO level, our
airport services business is largely regulated by the local
airport authorities through lease contracts with those
authorities. Our airport services business must comply with
federal, state and local environmental statutes and regulations
associated in part with numerous underground fuel storage tanks.
These requirements include, among other things, tank and pipe
testing for tightness, soil sampling for evidence of leaking and
remediation of detected leaks and spills. Our airport services
business operations are subject to regular inspection by
federal and local environmental agencies and local fire and
airline quality control departments. With respect to
environmental and compliance requirements, we expect to install
fuel farm containment equipment in 2006 and secondary fuel
containment equipment for our fuel trucks in 2007 to comply with
new fuel farm containment requirements. We do not expect that
compliance and related remediation work will have a material
negative impact on earnings or the competitive position of our
airport services business. To date, our airport services
business has not received notice of any cease and abatement
proceeding by any government agency as a result of failure to
comply with applicable environmental laws and regulations.



ManagementThe day-to-day
operations management of our airport services business is
undertaken by individual site managers. Local managers at each
site are responsible for all aspects of the operations at their
site. Responsibilities include ensuring that customer
requirements are met by the staff employed at their sites and
that revenue from the sites is collected, and expenses incurred,
in accordance with internal guidelines. In order to maximize the
revenue earned at the FBOs, local managers are, within the
specified guidelines, empowered to make decisions as to fuel
pricing and other services. In this way, our airport services
business is able to respond to its customers needs
efficiently and provide them with high quality service.

Atlantics operations are managed and overseen by a group
of senior personnel who, on average, have over 19 years
experience in the aviation industry. Most of the business
management team members have been employed at our airport
services business (or its predecessors) for over 11 years
and have established close and effective working relationships
and understanding with local authorities, customers, service
providers and subcontractors. These teams are responsible for,
among other things, overseeing the FBO operations, setting
strategic direction and ensuring compliance with all contractual
and regulatory obligations.

Atlantics head office is in Plano, Texas. The head office
provides the business with central management and performs
overhead functions, such as accounting, information technology,
human resources, payroll and insurance arrangements. We believe
our facilities are adequate to meet our present and foreseeable
operational needs.

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EmployeesAs of December 31, 2005, our airport services business
employed over 1,080 employees at its various sites.
Approximately 18% of employees are covered by collective
bargaining agreements. We believe that employee relations at our
airport services business are good.

Airport Parking Business



OverviewOur airport parking business is the largest provider of
off-airport parking services in the United States, measured by
number of facilities, with 31 facilities comprising over 40,000
parking spaces and over 360 acres at 20 major airports
across the United States, including six of the ten largest
passenger airports. Our airport parking business, operating
generally under the names PCA, Avistar
or SunPark, provides customers with
24-hour secure parking
close to airport terminals, as well as transportation via
shuttle bus to and from their vehicles and the terminal.
Operations are carried out on either owned or leased land at
locations near airports. Operations on owned land or land on
which our airport parking business has leases longer in term
than 20 years (including extension options) account for a
majority of operating income. The airport parking business had
revenues of $59.9 million and operating income of
$6.5 million for fiscal 2005, and total assets of
$288.8 million at December 31, 2005 and
$205.2 million at December 31, 2004. Revenues from our
airport parking business comprised 19.6% of our total revenues
in fiscal 2005.

In 2002, the Macquarie Global Infrastructure Fund, together with
other investors, acquired the ten off-airport parking facilities
formerly owned and operated by the PCA Group. That transaction
closed in December 2002, and the business commenced operations
as Macquarie Parking. In October 2003, Macquarie Parking
acquired the ten off-airport parking facilities of Airport
Satellite Parking LLC, known as Avistar. Since that acquisition
was completed, the two businesses have been operated as one
merged business. Between October 2003 and December 23,
2004, the business acquired an additional four facilities.



Our AcquisitionOn the second day following our initial public offering, we
acquired 100% of the ordinary shares in Macquarie Americas
Parking Corporation, or MAPC, from the Macquarie Global
Infrastructure Fund for cash consideration of $33.8 million
(including transaction costs). At that time MAPC owned
approximately 83% of the outstanding ordinary membership units
in Parking Company of America Airports Holdings LLC, or PCAA
Holdings. In turn, PCAA Holdings owned approximately 51.9% of
the outstanding membership units in PCAA Parent LLC, or PCAA
Parent. PCAA Parent is the 100% owner of a number of
subsidiaries that collectively own and operate Macquarie Parking.

On the same day, we also acquired all of the minority interests
in PCAA Holdings for $6.7 million and 34.3% of the
outstanding membership units in PCAA Parent for
$23.3 million (in each case, including transaction costs).
As a result of these transactions, we acquired in aggregate 100%
of PCAA Holdings and 87.2% of PCAA Parent, and thereby acquired
Macquarie Parking. The affairs of PCAA Parent are governed by
its LLC agreement. PCAA Parent has a board of directors and PCAA
Holdings has the right to appoint all members to the board of
directors. Pursuant to the LLC agreement, most major decisions
are referred to the board of directors of PCAA Parent, where
decisions are made by majority vote.

On October 3, 2005, our airport parking business acquired
real property, and personal and intangible assets related to six
off-airport parking facilities. These facilities are
collectively referred to as SunPark and are located
at airports in St. Louis, Philadelphia, Houston, Oklahoma
City, Buffalo and Columbus. During 2005, our airport parking
business also acquired a facility in Philadelphia, a leasehold
facility in Cleveland and exercised the option to purchase
previously leased property at existing facilities in Phoenix and
Newark. In conjunction with the property acquisition in Phoenix,
we consolidated our market presence to two facilities by not
renewing the lease on a third facility. We contributed
$17.8 million of the equity

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required to finance these transactions. The minority
shareholders in our airport parking business did not contribute
their full pro rata share of capital related to these
acquisitions. As a result, our ownership interest in the airport
parking business increased from 87.1% to 87.95%.



Industry OverviewAirport parking can be classified as either on-airport
(generally owned by the airport and located on airport land) or
off-airport (generally owned by private operators). The
off-airport parking industry is relatively new, with the first
privately owned parking facilities servicing airports generally
only appearing in the last few decades. Industry participants
include numerous small, privately held companies as well as
on-airport parking owned by airports.

Airports are generally owned by local governments, which often
do not operate or market their parking operations as effectively
as the privately owned operators, as the parking operations do
not form part of the airports core function. In many
cases, on-airport parking facilities are managed by large
parking facility management companies pursuant to cost-plus
contracts that do not create incentives to maximize
profitability. Most airports have historically increased parking
rates rapidly with increases in demand, creating a favorable
pricing environment for off-airport competitors.

Airport parking facilities operate as self-park or
valet parking facilities. Valet parking facilities
often utilize deep-stack parking methods that allow
for a higher number of cars to be parked within the same area
than at a self-parking facility of the same size by minimizing
space between parked cars. In addition, valet parking provides
the customer with superior service, often allowing the parking
rates to be higher than at self-park facilities. However, the
cost of providing valet parking is generally higher, due to
higher labor costs, so self-parking can be more profitable per
car, depending upon land availability at an affordable cost,
labor costs and the premium that can be charged for valet
service.

The substantial increase in use of the internet to purchase air
travel through companies such as Expedia, Orbitz and
Travelocity, as well as through airlines own websites,
provides a strong co-marketing opportunity for larger
off-airport parking operators that provide broad nationwide
coverage at the busiest airports. In addition, we believe the
highly fragmented nature of the industry provides strong
consolidation opportunities for larger off-airport parking
operators that benefit from economies of scale and national
marketing programs, distribution networks and information
systems.



StrategyWe believe that we can grow our airport parking business by
focusing on achieving operating efficiencies and internal
growth, expanding marketing efforts and complementary
acquisitions.

Internal Growth. Our strategy includes:




    increasing the level of services offered to customers, for
    example, by expanding the offering of free car washes,
    complimentary beverages, flight information monitors and
    automated e-ticket
    check-in services;
    making improvements to our facilities, for example by
    constructing covered parking;
    expanding capacity at capacity constrained locations, for
    example, by maximizing capacity at our existing locations
    through more efficient utilization of space, seeking additional
    leases at adjacent or nearby properties to existing locations,
    providing valet parking and utilizing deep-stack
    parking and installation of vertical stackers; and
    ongoing development of pricing strategies designed to maximize
    revenue.Operating Efficiencies. Our business was enlarged with
the acquisition of SunPark in October 2005 and we intend to
pursue additional complementary acquisitions. We believe there
are economies of scale that can be realized due to the increased
size, in areas such as combined marketing programs, vehicles and
equipment purchases and employee benefits.

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Marketing. We intend to expand and improve our existing
marketing strategies. These strategies include the development
of an internet reservation capability, opening new distribution
channels such as promotional agreements with additional airlines
and travel agencies, improving the product offering for
corporate accounts and providing personalized web pages and
activity reports for corporate accounts. We also intend to
integrate our brands and websites.

Acquisitions. We believe we can grow through selective
acquisitions and derive benefits from economies of scale,
including revenue and marketing, head office, insurance, shuttle
buses and other cost synergies. We believe the highly fragmented
nature of the industry and the desire of owners for liquidity
provide attractive acquisition candidates. Acquiring facilities
at major airports where we do not currently have a facility
would allow us to expand our nationwide presence, while
opportunities in markets where we already have a presence should
provide increased operating efficiencies and expanded capacity.
These acquisitions can take the form of entering into new leases
or purchasing land.



Business

OperationsWe believe our size and nationwide coverage and sophisticated
marketing programs provide us with a competitive advantage over
other airport parking operators. We aim to centralize our
marketing activities and the manner in which we sell our
services to customers. Individual location operations can focus
on service delivery as diverse reservation services and customer
and distribution channel relations are managed centrally. Our
size and the diversity of our operations enable us to mitigate
the risk of a downturn or competitive impact in particular
locations or markets. In addition, our size provides us with the
ability to take advantage of incremental growth opportunities in
any of the markets we serve as we generally have more capital
resources to apply toward those opportunities than single
facility operators.

Our nationwide presence also allows us to provide one stop
shopping to internet travel agencies, airlines and major
corporations that seek to deal with as few suppliers as
possible. Our marketing programs and relationships with national
distribution channels are generally more extensive than those of
our industry peers. We market and provide discounts to numerous
affinity groups, tour companies, airlines and online travel
agencies. We believe most air travelers have never tried
off-airport parking facilities, and we use these relationships
to attract these travelers as new customers.

Most of our customers fall into two broad categories: business
travelers and leisure travelers. Business travelers are
typically much less price sensitive and tend to patronize those
locations that emphasize service, particularly prompt,
consistent and quick shuttle service to and from the airport.
Shuttle service is generally provided within a few minutes of
the customers arrival at the parking facility, or the
airport, as the case may be. Leisure travelers often seek the
least expensive parking, and we offer substantial discounts and
coupon programs to attract leisure travelers. In addition to
reserved parking and shuttle services, we provide ancillary
services at some parking facilities to attract customers to the
facility and/or to earn additional revenue at the facility. Such
services include car washes or auto repairs, either at no cost
to the customer or for a fee.

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LocationsWe provide off-airport parking services at the following
airports. Each airport is ranked according to the number of
passenger enplanements (passengers boarding airplanes) sourced
from FAA data for 2004:

|                                               |  |            |    |  |         |  |     |         |  |  |       |  |  |        |       |  |  |  |       | 
|---------------------------------------------- |  | ---------- | -- |  | ------- |  | --- | ------- |  |  | ----- |  |  | ------ | ----- |  |  |  | ----- | 
|                                               |  |            |    |  |         |  |     | Acres   | 
|                                               |  |            |    |  |         |  |     |         | 
|Airport                                        |  | Facilities |    |  | (Valet) |  |     | Ranking |  |  | Owned |  |  | Leased |      
|                                               |  |            |    |  |         |  |     |         |  |  |       |  |  |        |      
|Hartsfield  Jackson
    Atlanta International |  |            | 1  |  |         |  |     |         |  |  | 1     |  |  |        | 12.5  |  |  |  |      | 
|Chicago OHare International                   |  |            | 1  |  |         |  | (1  | )       |  |  | 2     |  |  |        | 5.9   |  |  |  | 1.0   | 
|Dallas/ Fort Worth
    International           |  |            | 1  |  |         |  |     |         |  |  | 4     |  |  |        | 0.0   |  |  |  | 8.0   | 
|Denver International                           |  |            | 1  |  |         |  |     |         |  |  | 5     |  |  |        | 40.3  |  |  |  | 0.0   | 
|Phoenix Sky Harbor International(a)            |  |            | 2  |  |         |  |     |         |  |  | 7     |  |  |        | 17.3  |  |  |  | 0.0   | 
|John F. Kennedy International                  |  |            | 1  |  |         |  | (1  | )       |  |  | 8     |  |  |        | 2.7   |  |  |  | 1.7   | 
|Newark Liberty International                   |  |            | 4  |  |         |  | (2  | )       |  |  | 12    |  |  |        | 18.1  |  |  |  | 14.3  | 
|San Francisco International                    |  |            | 1  |  |         |  |     |         |  |  | 13    |  |  |        | 0.9   |  |  |  | 9.9   | 
|Philadelphia International                     |  |            | 3  |  |         |  | (3  | )       |  |  | 17    |  |  |        | 8.7   |  |  |  | 1.5   | 
|La Guardia International                       |  |            | 1  |  |         |  | (1  | )       |  |  | 20    |  |  |        | 0.0   |  |  |  | 4.9   | 
|Metropolitan Oakland International             |  |            | 3  |  |         |  | (1  | )       |  |  | 31    |  |  |        | 8.2   |  |  |  | 19.2  | 
|Pittsburgh International                       |  |            | 1  |  |         |  |     |         |  |  | 32    |  |  |        | 23.3  |  |  |  | 29.0  | 
|Lambert-St Louis International                 |  |            | 2  |  |         |  |     |         |  |  | 34    |  |  |        | 21.3  |  |  |  | 3.3   | 
|Cleveland, Hopkins International               |  |            | 1  |  |         |  | (1  | )       |  |  | 35    |  |  |        | 0.0   |  |  |  | 3.6   | 
|Memphis International                          |  |            | 1  |  |         |  |     |         |  |  | 36    |  |  |        | 8.3   |  |  |  | 8.0   | 
|Houston, William P. Hobby                      |  |            | 1  |  |         |  |     |         |  |  | 46    |  |  |        | 9.7   |  |  |  | 2.5   | 
|Bradley International                          |  |            | 3  |  |         |  | (2  | )       |  |  | 49    |  |  |        | 0.0   |  |  |  | 39.5  | 
|Port Columbus International                    |  |            | 1  |  |         |  |     |         |  |  | 55    |  |  |        |      |  |  |  | 18.4  | 
|Buffalo Niagara International                  |  |            | 1  |  |         |  |     |         |  |  | 63    |  |  |        | 9.4   |  |  |  | 0.0   | 
|Oklahoma City, Will Rogers World
    Airport   |  |            | 1  |  |         |  |     |         |  |  | 69    |  |  |        | 22.0  |  |  |  | 0.0   | 
|                                               |  |            |    |  |         |  |     |         |  |  |       |  |  |        |      
|Total                                          |  |            | 31 |  |         |  | (12 | )       |  |  |       |  |  |        | 208.6 |  |  |  | 164.8 | 






|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | As part of our consolidation of the Phoenix market, the lease at
    Phoenix Executive was not renewed in 2006 and the business was
    relocated to an existing facility.



| |          
| | ---------
| | Marketing





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CompetitionCompetition exists on a local basis at each of the airports at
which we operate. Generally, airport parking facilities compete
on the basis of location (relative to the airport and major
access roads), quality of facilities (including whether the
facilities are covered), type of service provided (self-park or
valet), security, service (especially relating to shuttle bus
transportation), price and marketing. We face direct competition
from the on-airport parking facilities operated by each airport,
many of which are located closer to passenger terminals than our
locations. Airports generally have significantly more parking
spaces than we do and provide different parking alternatives,
including self-park short-term and long-term, off-airport lots
and valet parking options. However, as the airports are
government-owned, competitive dynamics of service and pricing
are generally different than those experienced with privately
owned competitors. The airports generally do not view parking
operations as their core function, and their pricing strategy is
often driven by the fiscal state of the airport authority, which
often leads to sudden high price increases.

We also face competition from existing off-airport competitors
at each airport. While each airport is different, there
generally are significant barriers to entry preventing new
off-airport competitors from entering the markets in which we
operate, including limited availability of suitable land of
adequate size near the airport and major access roads, and
zoning restrictions. While competition is local in each of the
markets in which we operate, we face strong competition from
several large off-airport competitors, including companies such
as The Parking Spot, ParkNFly, Airport Fast Park and PreFlight
Airport Parking (owned by General Electric) that have operations
at five or more U.S. airports. In each market in which we
operate, we also face competition from smaller, locally owned
independent parking operators, as well as from hotels or rental
car companies that have their own parking facilities. Some
present and potential competitors have or may obtain greater
financial and marketing resources than we do, which may
negatively impact our ability to compete at each airport or to
compete for acquisitions.

Indirectly, we face competition from other modes of
transportation to the airports at which we operate, including
public transportation, airport rail links, taxis, limousines and
drop-offs by friends and family. We face competition from other
large off-airport parking providers in gaining access to
marketing and distribution channels, including internet travel
agencies, airlines and direct mail.



RegulationOur airport parking business is subject to federal, state and
local regulation relating to environmental protection. We own a
parcel of real estate that includes land that the Environmental
Protection Agency, or EPA, has determined to be contaminated. A
third party operating in the vicinity has been identified as a
potentially responsible party by the EPA. We do not believe our
parking business contributed to this contamination and we have
not been named as a potentially responsible party. Nevertheless,
we have purchased an environmental insurance policy for the
property as an added precaution against any future claims. The
policy expires in July 2007 and is renewable.

We transport customers by shuttle bus between the airport
terminals and its parking facilities, and its shuttle operations
are subject to the rules and policies of the local airport. The
airports are able to regulate or control the flow of shuttle
buses. Some airport authorities require permits and/or levy fees
on off-airport parking operators for every shuttle trip to the
terminals. These regulations have not materially affected our
airport parking business to date. If fees were to be
significantly increased, we would seek to pass the increases on
to our customers through higher parking rates, which could
result in a loss of customers.

The FAA and Transportation Safety Administration, or the TSA,
generally have the authority to restrict access to airports as
well as to impose parking and other restrictions near the
airport sites. The TSA generally prohibits parking within
300 feet of airport terminals during times of heightened
alert. While we believe that existing regulations or the present
heightened security at airports may be relaxed in the future,
the existing 300 feet rule may benefit us as it has
prevented some on-airport competitors from using a number of
their existing parking spaces.

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In addition, municipal and state authorities sometimes directly
regulate parking facilities. We also may be affected
periodically by government condemnation of our properties, in
which case we will generally be compensated. We are also
affected periodically by changes in traffic patterns and roadway
systems near our properties and by laws and regulations (such as
zoning ordinances) that are common to any business that deals
with real estate.



ManagementThe day-to-day
operations of our airport parking business are managed by an
operating management team located at head offices in Downey,
California and Newark, New Jersey. Each site is operated by
local managers who are responsible for all aspects of the
operations at their site. Responsibilities include ensuring that
customer requirements are met by the staff employed at their
site and that revenue from the sites is collected and expenses
incurred in accordance with internal guidelines.



EmployeesAs of February 28, 2006, Macquarie Parking employed
approximately 1,000 individuals. Approximately 22% of its
employees are covered by collective bargaining agreements. We
believe that employee relations at Macquarie Parking are good.

District Energy Business



OverviewOur district energy business consists of Thermal Chicago and a
75% interest in Northwind Aladdin. We also own all of the senior
debt of Northwind Aladdin. The remaining 25% equity interest in
Northwind Aladdin is owned by Nevada Electric Investment
Company, or NEICO, an indirect subsidiary of Sierra Pacific
Resources. The district energy business had revenues of
$43.4 million and operating income of $9.4 million for
our 2005 fiscal year, and total assets of $245.4 million at
December 31, 2005 and $254 million at
December 31, 2004. Revenues from our district energy
business comprised 14.2% of our total revenues in the 2005
fiscal year.

Thermal Chicago operates the largest district cooling system in
the United States. The system currently serves 98 customers
under long-term contracts in downtown Chicago and one customer
in Chicago outside the downtown area, and has signed contracts
with two additional customers expected to start service between
2006  2009. Our district energy business provides
chilled water from five modern plants located in downtown
Chicago through a closed loop of underground piping for use in
the air conditioning systems of large commercial, retail and
residential buildings in the central business district. The
first of the plants became operational in 1995, and the most
recent came on line in June 2002. The total capacity of the
downtown system is 83,900 tons of chilled water with deliverable
capacity of approximately 94,400 tons due to the reduced rate
arrangements with interruptible customers who, when called upon,
could meet their own cooling needs during peak times.

The table below provides summary data regarding the capacity of
the downtown Chicago plants:

|      |  |          |        | 
|----- |  | -------- | ------ | 
|      |  | Capacity |       
|Plant |  | (Tons)   |       
|      |  |          |       
|P-1   |  |          | 19,200 | 
|P-2   |  |          | 21,400 | 
|P-3   |  |          | 17,800 | 
|P-4   |  |          | 17,500 | 
|P-5   |  |          | 8,000  | 



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Northwind Aladdin owns and operates a stand-alone facility that
provides cold and hot water (for chilling and heating,
respectively) and
back-up electricity
generation to the Aladdin resort and casino and the adjacent
Desert Passage shopping mall in Las Vegas, Nevada. Services are
provided to both customers under long-term contracts that expire
in 2020 with 90% of cash flows generated from the contract with
the Aladdin resort and casino.

The Northwind Aladdin plant has been in operation since 2000 and
has the capacity to produce 9,270 tons of chilled water,
40 million BTUs of heating per hour and approximately 5
megawatts of electricity.



Our AcquisitionOn the day following our initial public offering, we acquired
100% of the membership interests in Macquarie District Energy
Holdings, LLC, or MDEH, the holding company of our district
energy business, from Macquarie Investment Holdings Inc., a
wholly owned indirect subsidiary of Macquarie Bank Limited, for
$67 million (including transaction costs) and assumed
$120 million of senior debt that was used partially to
finance the acquisition of Thermal Chicago and our interest in
Northwind Aladdin.

Prior to our initial public offering, Macquarie District Energy,
Inc., or MDE, a wholly owned subsidiary of MDEH, acquired 100%
of the shares in Thermal Chicago Corporation, the holding
company for Thermal Chicago, from Exelon Thermal Holdings, Inc.,
a subsidiary of Exelon Corporation, or Exelon, for
$135 million plus a working capital adjustment of
$2.7 million, with no assumption of debt pursuant to a
stock purchase agreement. Prior to our initial public offering,
MDE also acquired all of the shares of ETT Nevada, Inc., which
owns a 75% equity interest in Northwind Aladdin, and separately
all of the senior debt in Northwind Aladdin from a wholly owned
subsidiary of Exelon. The acquisition price for the shares and
senior debt was $26.1 million plus a working capital
adjustment of $2 million. In addition to the purchase
prices under the purchase agreements, MDE incurred fees and
other expenses of approximately $9 million in connection
with the completion of the acquisition of Thermal Chicago and
ETT Nevada, Inc. and required cash for debt service reserves of
approximately $4 million.



Industry OverviewDistrict energy is the provision of chilled water, steam and/or
hot water to customers from a centralized plant through
underground piping for cooling and heating purposes. A typical
district energy customer is the owner/manager of a large office
or residential building or facilities such as hospitals,
universities or municipal buildings. District energy systems
exist in most major North American and European cities and some
have been in operation for over 100 years. District energy
is not, however, an efficient option for suburban areas where
customers are widely dispersed.

To provide district cooling, the system is filled with water
obtained from the municipal system and chilled using electric
chillers. Within the plant, a refrigerant gas is compressed into
a liquid state. This liquid refrigerant is piped into a larger
(less pressurized) chamber, allowing it to expand. The chamber
is surrounded by water pipes. As part of the expansion process,
the refrigerant absorbs heat from the water in the pipes into
the expanding gas, causing the water to be chilled. The chilled
water is then sent down a system of underground pipes to
buildings where the thermal energy (cold) is transferred
into the buildings internal systems. System water does not
mix with in-building water; instead the thermal energy is
transferred via a heat exchanger. Water is then returned to the
plant for re-chilling through the same system. While the process
is relatively simple, operating a district energy system at high
levels of availability and optimum levels of efficiency is
complex. The key operating risks are limited primarily to the
availability of electricity (i.e., blackouts) and general system
breakdowns (in either plant or distribution systems).

District heating is the provision of steam or hot water through
pipes for use as a heating source. The steam is generated
through the burning of fuel to boil water in a boiler. The steam
is distributed through underground piping. After the steam is
used to heat the customers facility, the condensed steam
is returned to the central plant.

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Revenues from providing district energy services under contract
are usually comprised of fixed capacity payments and variable
usage payments. Capacity payments are made regardless of the
actual volume of hot or cold water used. Usage payments are
based on the volume of hot or cold water used.

District energy systems are largely unregulated in the United
States, although each multi-customer system usually has an
agreement with the city in which it operates that provides
permission to lay pipes under the streets (generally in the form
of a use agreement or concession). The plans for laying these
pipes need to be drawn up and provided to the city engineers for
approval. Our district energy business is not subject to
specific government regulation, however, our downtown Chicago
operations are operated subject to the terms of a Use Agreement
with the City of Chicago. See
 Business  Thermal
Chicago  City of Chicago Use Agreement.



StrategyWe believe that we can grow our district energy business
internally via capital expenditure and through acquisitions.

Internal Growth. We plan to grow revenues and profits by
increasing the output capacity of Thermal Chicagos plants
in downtown Chicago and adding new customers to the system. Over
the past two years, minor system modifications have been made
that increased capacity by 3,000 tons. In addition, efficiencies
we have achieved at our plants and throughout our system have
created approximately 9,000 additional tons of saleable
capacity. A portion of this capacity will be used to accommodate
four customers who will convert from interruptible to continuous
service in mid-2006. The balance has been sold to new customers
contracted in 2005 and early 2006.

We anticipate spending up to $8.4 million over two years
starting in 2007 for a system expansion that will increase
saleable capacity by an additional 7,000 tons. This additional
capacity will be available to serve existing and new customers.
We anticipate entering into contracts or letters of intent with
customers prior to committing to the capital expenditure.

Acquisitions. We will seek to grow our district energy
business through acquisitions of other district energy systems
where these acquisitions can be made on favorable economic
terms. The ownership of district energy systems in the United
States is highly fragmented, and we believe the sector has
potential for consolidation. Also, a number of diversified
electric utilities with non-core district energy operations may
seek to sell their systems. We anticipate that these systems,
once acquired, will continue to be operated under the direct
control of local management.



Business  Thermal Chicago

OperationsEach chilling plant is manned when in operation and has a
central control room from which the plant can be operated and
customer site parameters can be monitored and controlled. The
plant operators can monitor, and in some cases control, the
functions of other plants allowing them to cross-monitor
critical functions at the other plants. The control room at
Plant 2 is set up as the primary system control room with
extensive monitoring and control functions and is where the
majority of day-to-day
system operating decisions are made.

Since the commencement of operations, there have been no
unplanned interruptions of service to any customer.
Occasionally, we have experienced plant or equipment outages due
to electricity loss or equipment failure; however, in these
cases we had sufficient idle capacity to maintain customer
loads. When maintenance work performed on the system has
required customer interruption, we have been able to coordinate
our operations for periods of time to meet customer needs. The
effect of major electric outages is generally mitigated since
both customers and the plants are equally affected; the plants
affected by the outages cannot produce cooling and affected
customers are unable to use the cooling service.

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Corrective maintenance is typically performed by qualified
contract personnel and off-season maintenance is performed by a
combination of plant staff and contract personnel.



Electricity CostsThe largest and most variable direct expense of the operation is
electricity. As a consequence, operating personnel historically
manage this cost in accordance with a strategy that takes into
account system hydraulic requirements and the costs and
efficiencies of each plant. The efficient use of electricity at
each plant will vary based on its design, operation and its
electricity rate plan. In addition, at several plants, ice can
be made overnight to store thermal energy when electricity costs
are generally lower. This ice is then used during the day to
chill water when electricity costs are highest.

Electric utility restructuring legislation was adopted in
Illinois in December 1997 to provide for a transition to a
deregulated generation market scheduled for 2007. The new law
provided Illinois electric utilities the opportunity to
restructure their businesses, mandated a reduction in rates for
residential customers and a rate freeze for customers under
bundled rate plans, and allowed customers the opportunity to
remain on their bundled rate plan or achieve savings by
purchasing electricity supply from alternative retail energy
suppliers. The legislation also included a provision for
electric utilities, in our case ComEd, to collect a customer
transition charge, or CTC, from customers who choose to purchase
electricity from an alternative retail energy supplier or those
who elect ComEds Power Purchase Option, or PPO, during the
transition period as opposed to the bundled rate plans. The CTC
allowed ComEd to recover some of its costs that might otherwise
be unrecoverable under market-based rates. Due to the recent
rise in market-based cost of power, CTCs have fallen.

Three of Thermal Chicagos plants currently participate in
the PPO plan due to the economic advantages of the lower
delivery service costs. In the beginning of each calendar year,
ComEd calculates the rates to be charged under the PPO plan,
including the CTC for each participant, with new rates becoming
effective beginning each May. Under the terms of the PPO plan,
if the CTC of any participant is reduced to zero, that
participant becomes ineligible to purchase electricity under the
PPO plan. With the recent high cost of market-based power,
ComEds calculation of our CTCs at the beginning of 2006 is
zero. As a result, the three plants will no longer be able to
purchase electricity under the PPO plan effective May 2006.

Effective May 1, 2004, ComEd became an integrated member of
the PJM interconnection regional transmission organization
(PJM). As a result, ComEd began to pass on PJM transmission
charges to its customers that procure energy from retail energy
suppliers. PJM transmission charges are passed to Thermal
Chicago at the one plant currently supplied by a retail energy
supply contract. As the PPO contracts with each of our other
three plants expire, we expect that ComEd will pass through
these costs to these three plants.

We have reviewed our options to purchase power for the remainder
of 2006 and have entered into a contract to purchase electricity
with a retail energy supplier. Based on an historically normal
level of electricity usage, we estimate our electricity costs
will increase by $750,000 for the remainder of 2006. We believe
we can mitigate this impact through a combination of operational
and strategic initiatives and offsets from our contract
escalators. Had we remained on the PPO contracts and based
on an historically normal level of electricity usage, we
estimate our electricity costs would have increased by
$1.1 million due to the revised PPO rates determined
by ComEd in early 2006.

The Illinois electricity markets are expected to deregulate
beginning in January 2007 and we will be required to enter into
new electricity purchase arrangements effective at that time.
ComEd has proposed a procurement process referred to as a
reverse-auction. In a reverse-auction, the independent auction
manager sets the opening bid  designed to attract
more supply than needed  and then manages successive
rounds of descending bids until just enough supply is committed
at the lowest possible price to meet customer needs. Under this
process, regulated electric utilities in Illinois will procure
electricity on behalf of certain customers in a reverse-auction
process and pass through the costs of that electricity to its
customers. Large users, including Thermal Chicago Corporation,
are typically excluded from this process. Although the Illinois
Commerce Commission, or ICC, has approved the proposed
reverse-auction process,

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its adoption is still subject to political and legal challenge.
On February 24, 2006, legislation to extend the current
rate freeze in Illinois for an additional three years was
introduced in the Illinois general assembly. However, there is
no assurance that such proposed legislation would become law in
a timely manner or at all.

The market prices of electricity available to us are likely to
reflect prices established in the reverse-auction process.
Market prices of electricity in Illinois are also affected by
changes in natural gas prices, which have been very volatile,
but overall have increased significantly over the past year. We
cannot predict the market prices for electricity that we will
face beginning in 2007 but we anticipate, based on current
market dynamics, that electricity will cost substantially more
in 2007 than in the second half of 2006, as discussed above.

In addition, on August 31, 2005, ComEd filed a rate case
with the ICC, which seeks, among other things, to increase
delivery rates in a manner that we believe disproportionately
impacts larger users of electricity. If the rate case is
approved as currently proposed, our electricity costs would
increase by an additional $2 million annually. We have
joined a consortium of large users to challenge ComEds
rate increase. On December 23, 2005, ICC staffers filed an
objection to ComEds initial request to raise its delivery
charge. Instead, they are calling for a slight decrease on the
basis that the utility is trying to pass on too many
administrative and other costs to customers. In addition, the
Citizens Utility Board and other government agencies have
filed testimony with the ICC refuting ComEds rationale for
an increase in its delivery rates. The results of the rate case
are not expected to be known until at least the third quarter of
2006.



CustomersWe currently serve 98 customers in downtown Chicago and one
outside the downtown area and have signed contracts with two
additional customers expected to begin service between
2006  2009. These customers comprise a diverse
customer base consisting of retail stores, office buildings,
residential buildings, theaters and government facilities.
Customers include a number of landmark Chicago buildings. Office
and commercial buildings comprise approximately 70% of the
customers. No one customer accounts for more than eight percent
of total contracted capacity and only three customers account
for more than five percent of total contracted capacity each.
The top 20% of customers account for approximately 62% of
contracted capacity.

Our downtown district energy system has sold 85,492 tons of
cooling capacity pursuant to contracts under which it is
obligated to provide 72,617 tons of continual service and
12,875 tons of chilling capacity to interruptible
customers. Service to interruptible customers may be
discontinued at any time and in return interruptible customers
pay lower prices for the service. We are able to sell continual
service capacity in excess of the capacity of our system because
customers do not all use their full capacity at the same time.
Because of this diversity in customer usage patterns, we have
not had to discontinue service to interruptible customers since
the initial phases of system construction. Four interruptible
customers will become customers requiring continual service in
mid-2006. The total interruptible capacity contracted to these
four customers is approximately 6,700 tons and we have the
system capacity to accommodate this conversion. The conversion
of these customers will lead to revenue increases of
approximately $1 million per year as these customers will
lose their applicable price discounts.



Customer Contracts  GeneralWe enter into contracts with the owners of the buildings to
which the chilling service is provided. The terms of customer
contracts vary from customer to customer. Approximately half of
our customer contracts expire in the period from 2016 to 2020.
The weighted average life of customer contracts as of
December 31, 2005 is approximately 14 years.

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Customer Contract ExpiryAt expiration, 64% of our customer contracts either
automatically renew unless our district energy business
terminates them or are silent in relation to renewal. This
effectively gives us the ability to re-price these contracts at
expiry unless our customers choose to use an alternative source
for chilled air. The automatic renewal terms range from five to
ten years. The rest of the customer contracts provide the
customer with the option to renew the contract at the existing
contract pricing for similar renewal terms of five to ten years.

Because of a lack of competition from other district energy
systems and district energys advantages over alternative
sources of cooling for customers, we believe that a high
percentage of our existing contracts will be renewed at expiry.
See  Competition.



Contract PricingCustomers pay two charges to receive chilled water services: a
fixed charge, or capacity charge, and a variable charge, or
consumption charge. The capacity charge is a fixed monthly
charge based on the amount of chilled water that we have
contracted to make available to the customer. The consumption
charge is a variable charge based on the volume of chilled water
actually used during a billing period.

Adjustments to the capacity charge and consumption charge occur
periodically, typically annually, either based on changes in
certain economic indices or, under some contracts, at a flat
rate. We make the necessary adjustments and then invoice the
customer appropriately. Capacity charges generally increase at a
fixed rate or are indexed to the Consumer Price Index, or CPI,
which is a broad measure of inflation. Consumption charges are
generally indexed to changes in a number of economic indices.
These economic indices measure changes in the costs of
electricity, labor and chemicals in the region in which we
operate. While the indices used vary from contract to contract,
consumption charges in 90% of our contracts (by capacity) are
indexed to indices weighted at least 50% to increases in the
Midwest producer price index for commercial electric power, with
the balance indexed to costs of labor and chemicals. Hence 45%
or $7.2 million of our 2005 consumption revenue for Thermal
Chicago is linked to the Midwest producer price index. This
weighting is comparable to the composition of Thermal
Chicagos direct expenses, excluding non-cash items, of
approximately 50% which are for electricity. The producer price
index reflects the cost of electricity across a broad geographic
region in the Midwest and, as a result, does not fully reflect
changes in electricity costs that occur locally. Changes in this
index, which are not in our control, combined with recent
significant increases in local power prices, are likely to
result in our electricity costs increasing significantly without
a corresponding increase in contracted revenues to fully offset
the cost. In addition, because our contracts typically adjust
consumption charges annually, there is likely to be a
significant lag before changes in market prices of electricity
are reflected in our contracts overall. We are currently
evaluating the components and calculation of the producer price
index and alternative contractual price adjustment options to
determine whether our contract provisions will allow us to
better offset recent increases in electricity costs described
above.



Other Contract TermsEvents of Default and Contract Termination. Customer
contracts generally permit termination by the customers if,
after an appropriate cure period, we fail to provide the chilled
water service or otherwise fail to comply with the terms of the
contract. We can terminate the contracts if, after an
appropriate cure period, customers fail to make payments to us
or otherwise fail to comply with the terms of the contract.

Make Whole Payments. Except for four contracts that
comprise approximately 3% of capacity sold, if a customer wishes
to terminate a contract early or we terminate the contract for
customer default, then the customer is required to pay a lump
sum. While the formulas vary across contracts, the basic
principle is that the lump sum payment enables us to recover a
portion of the capital that we invested to provide the service
to the customer.

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System Failure Damage. If the chilling system fails for
reasons other than temporary shutdown for maintenance or force
majeure and we default under our contracts, we are generally
liable to some degree for damages to the customer. The most
common forms of system failure damages provided by the terms of
the customer contracts are:




    capacity charges are abated, typically after three to five
    consecutive days of no chilled water service;
    our district energy business becomes responsible for all
    resulting losses and damages; and
    our district energy business becomes responsible for all costs
    of renting and installing temporary chilling equipment.Losses and damages are typically defined in the contracts, and
in these cases are restricted to physical damages to property,
etc. Some contracts are vague in regard to the definitions of
losses and damages and therefore give rise to the risk of suit
for consequential damages. As a result of these potential
damages, we seek to operate with a high level of reliability and
an appropriate level of redundancy.

Change of Ownership Assignment. Generally, the customer
is required to obtain our consent to assign its obligations
under the contract (which may occur if the customer wishes to
sell the property to which we provide service). In some cases,
the contract may be assigned without our consent, provided that
the assignee meets certain credit standards.



SeasonalityApproximately half of our revenues come in the form of capacity
charges and half in the form of consumption charges. Consumption
revenues are higher in the summer months when the demand for
chilled water is at its highest and as a consequence,
approximately 80% of consumption revenue is received in the
second and third quarters of each year. Consumption payments
also fluctuate from year to year depending on weather conditions.



CompetitionThermal Chicago is not subject to substantial competitive
pressures. Pursuant to customer contracts, customers are
generally not allowed to cool their premises by means other than
chilled water service provided by our district energy business.
The exception is when we cannot or choose not to provide
additional capacity. The customer also may be allowed to operate
separate cooling units to be used as
back-up for critical
operations.

In addition, the major alternative cooling system available to
building owners is the installation of a stand-alone water
chilling system (self-cooling). While we consider that
competition from self-cooling exists, we do not consider that it
has a material impact on the likelihood that the current
contracts will be renewed at their scheduled maturity.
Installation of a water chilling system (or refurbishment of
retired systems for customers who once self-cooled) requires
significant building reconfiguration and space and capital
expenditure by our customers, whereas our district energy
business has the advantage of economies of scale in terms of
plant efficiency, staff and power sourcing.

We believe competition from an alternative district energy
system in the Chicago downtown market is unlikely. There are
significant barriers to entry including the considerable capital
investment required, the need to obtain City of Chicago consent
and the difficulty in obtaining sufficient customers given the
number of buildings in downtown Chicago already committed under
long-term contracts to the use of the system owned by us.



City of Chicago Use AgreementWe are not subject to specific government regulation, but our
downtown Chicago operations are operated subject to the terms of
a Use Agreement with the City of Chicago. The Use Agreement
establishes the rights and obligations of our district energy
business and the City of Chicago for the utilization of certain
public ways of the City of Chicago for the operation of our
district cooling system. Under the Use

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Agreement, we have a non-exclusive right to construct, install,
repair, operate and maintain the plants and facilities essential
in providing district cooling chilled water and related air
conditioning service to customers. The principal provisions of
this agreement are summarized below:




    we are required to pay the City of Chicago annually for the
    right to use the public ways the greater of (i) $552,000 or
    (ii) 3% of the total revenue related to the operation,
    lease, exchange or use of our district cooling system, subject
    to the City of Chicagos right to adjust compensation every
    five years. If the compensation rate is adjusted to exceed 4% of
    total revenue, then we have certain rights, including
    arbitration, to dispute the rate increase. We also pay certain
    surcharges for the use of the City of Chicagos tunnels;
    the City of Chicago retains the right to use the public ways for
    a public purpose and may request that we remove, modify, replace
    or relocate our facilities at our expense;
    we are required to post a surety bond or provide a letter of
    credit in the amount of $5 million to ensure our
    performance obligations;
    the City of Chicago has the right to contract with us and our
    affiliates for the provision of a chilled water service under no
    less favorable than the most advantageous terms and conditions
    offered to and accepted by any of our other customers in similar
    or identical transactions;
    any expansion of our plants and facilities requires approval by
    ordinance of the City Council of Chicago; and
    a prior approval of the City Council of Chicago will be required
    in the event of a change in control or any transfer or
    assignment of the Use Agreement.The Use Agreement expires on December 31, 2020. Any
proposed renewal, extension or modification of the Use Agreement
will be subject to the approval by the City Council of Chicago.
Prior to the expiration date, the agreement may be terminated by
the City of Chicago for uncured material breaches of its terms
and conditions by us. If we install any facilities that are not
properly authorized under the Use Agreement or if the district
cooling system does not conform with the standards generally
applied by the City of Chicago, the City of Chicago may impose
upon us liquidated damages in the amount of $6,000 per day
if we fail to remove, modify, replace or relocate our facilities
when requested by the City of Chicago.



ManagementThe day-to-day
operations of our district energy business are managed by an
operating management team located in Chicago, Illinois. Our
management team has a broad range of experience that includes
engineering, construction and project management, business
development, operations and maintenance, project consulting,
energy performance contracting, and retail electricity sales.
The team also has significant financial and accounting
experience.



Business  Northwind Aladdin

CustomersApproximately 90% of Northwind Aladdins cash flows are
generated from a long-term contract with the Aladdin resort and
casino, with the balance generated from a contract with the
Desert Passage shopping mall. The Aladdin resort and casino is
located at the center of Las Vegas Boulevard in Las Vegas and
includes a 2,567-room hotel, a 100,000 square foot casino
and a 75,000 square foot convention and conference
facility. Additional buildings are being constructed on the
Aladdin property and the Northwind Aladdin plant has the
capacity to serve the buildings.

In 2001, the then owner of the Aladdin resort and casino filed
for bankruptcy protection under Chapter 11. Pursuant to a
settlement agreement approved by the bankruptcy court, Opbiz,
LLC, a consortium comprised of Starwood Hotels and Resorts,
Robert Earl, the chairman of Planet Hollywood, and Bay Harbor
Management acquired the Aladdin resort and casino in September
2004 for approximately

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$600 million including the assumption of debt and equity
commitments. Opbiz also assumed the obligations of the Aladdin
resort and casino under the contract with Northwind Aladdin.



ContractsThe existing customer contracts with Aladdin resort and casino
and the Desert Passage shopping mall both expire in February
2020. At expiry of the contracts, the plant will either be
abandoned by us and ownership will pass to the Aladdin resort
and casino for no compensation, or the plant will be removed by
us at the cost of the Aladdin resort and casino.



OperationsThe Northwind Aladdin plant has been in operation since 2000 and
has the capacity to produce 9,270 tons of chilled water,
40 million BTUs of heating per hour and approximately
5 megawatts of electricity. The plant is manned
24 hours a day. The plant supplies district energy services
to its customers via an underground pipe system.



Northwind Aladdin LLC Limited Liability Company AgreementNorthwind Aladdin LLCs limited liability company
agreement, or the operating agreement, dated March 18, 1999
(as amended on March 15, 2002) provides for, among other
things, the ownership rights of its members, NEICO, and ETT
Nevada, Inc., respectively. The operating agreement provides
that the business and affairs of Northwind Aladdin are managed
by or under the direction of a board of managers to which ETT
Nevada, Inc. is entitled to appoint three members and NEICO is
entitled to appoint one member. Provided all members of the
board of managers are present, decisions of the board of
managers require the approval of three of the four directors,
except for certain reserved matters, including approval of the
budget and capital calls, which require unanimous approval. With
respect to amendments to the operating agreement, the approval
of members owning not less than 80% of the interests is required
in addition to unanimous board approval. In the event of a
deadlock, the dispute is referred to the chief executive
officers of the ultimate parent companies of the members and, if
the deadlock remains unresolved, the members can elect to
exercise a buy-out
mechanism.



EmployeesOur district energy business has 44 full-time employees and
one part-time employee. There are 35 plant staff members
employed under the terms of contracts with the International
Union of Operating Engineers. On December 19, 2005,
contracts covering unionized employees were renewed for another
three years effective January 15, 2006. In Las Vegas, the
contract term is currently four years and expires on
March 31, 2009.

Toll Road Business



OverviewConnect M1-A1 Limited
operates the M1-A1 Link
Road, or Yorkshire Link, a highway of approximately
19 miles in length that links the M1 and M62 highways south
of Leeds and the A1 highway south of Wetherby in England.
Connect M1-A1 Limited
is responsible under a concession with the U.K.
governments Transport Secretary for the design, building,
financing and operation of Yorkshire Link, until 2026. Yorkshire
Link is part of the U.K. national highway network and provides a
major road link for both national and regional traffic. It also
serves a local function by providing a bypass around Leeds and
access to the East of Leeds area. Connect
M1-A1 Limited had
revenue of £47.1 million and operating income of
£34.4 million during the year ended March 31,
2005.

In return for building and operating Yorkshire Link, Connect
M1-A1 Limited receives
revenues under a shadow tolling system. Under a shadow tolling
system, road users do not pay tolls; instead, the U.K.
government pays fees or shadow tolls to Yorkshire
Link based on the volume of user traffic on Yorkshire

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Link. Revenue is subject to a predetermined cap, but is
protected from reductions in traffic to the extent that
projected traffic exceeds the capped revenue level. Traffic has
been steadily growing over time.



Our AcquisitionOn December 22, 2004 we acquired 100% of Macquarie
Yorkshire Limited, or Macquarie Yorkshire, from Macquarie
European Infrastructure plc, or MEIP, an entity that is a member
of the Macquarie Infrastructure Group, or MIG, for a total
purchase price of $84.7 million including transaction
costs. MIG is an infrastructure fund managed by the Macquarie
Group that is listed on the Australian Stock Exchange.

Macquarie Yorkshire owns 50% of Connect
M1-A1 Holdings Limited,
or CHL, which owns 100% of Connect
M1-A1 Limited. Connect
M1-A1 Limited is the
holder of the Yorkshire Link concession. The remaining
50% interest in CHL is held by Balfour Beatty, one of the
United Kingdoms leading construction companies, concession
owners, infrastructure service operators and maintenance
providers, for whom the U.K. road sector is a core business.

We set aside a further £1 million (USD
$1.9 million) of the cash acquired through our acquisition
of Macquarie Yorkshire to cash collateralize a letter of credit
of the same amount required by a lender to Connect
M1-A1 Limited as
security for funding breakage costs on their fixed rate loan.
This cash was released in the fourth quarter 2005 when certain
financial tests were met by Connect
M1-A1 Limited.



Industry OverviewToll roads exist in almost every developed country in the world.
Using user pays tolls to finance the development of
essential road infrastructure represents an alternative to
imposing general tax increases. Over the past 25 years,
governments in various countries, including Australia and the
United Kingdom, faced with fiscal pressures and growing needs
for new road infrastructure have sought to have the private
sector develop new toll roads. This privatization offers several
advantages for governments, including allowing a transfer of
development risk, the risk of construction time and cost
overruns, actual traffic usage and future maintenance costs, to
the private sector.

In spite of the trend toward privatization, significant
impediments limit new road construction. These include required
governmental and environmental permits and approvals, scarcity
of available land on which to build and significant time and
upfront construction costs. For example, construction of
Yorkshire Link took approximately three years and cost
approximately £300 million.

Operational toll roads are generally attractive to owners in
that road traffic growth, and therefore revenue growth, has
historically been quite predictable.

The use of shadow toll road programs has an established history
of operations in the United Kingdom. Yorkshire Link is one of
eight shadow toll road programs implemented by the U.K.
government since 1996 and was one of the first road programs
procured under the U.K. governments Private Finance
Initiative. As compared to a toll road, the shadow tolling
system provides a benefit to owners by not requiring the
construction and staffing of tollbooths. Sensors embedded in the
road surface count the number of cars and trucks traveling on
the road. The U.K. government then pays a shadow
toll on the basis of the traffic volume and the only
revenues that need to be accounted for are for payments that are
received monthly from the Transport Secretary. Drivers, in turn,
do not have to contend with the delays caused by tollbooths.



Business

OperationsIn March 1996, Connect
M1-A1 Limited signed a
concession with the Transport Secretary to design, build,
finance and operate Yorkshire Link for a
30-year contract term
in return for shadow tolling revenues. Pursuant to the
concession, Yorkshire Link must be operated and maintained by
Connect M1-A1 Limited
throughout the 30-year
period. The concession expires in 2026, when Connect
M1-A1 Limited will no
longer be entitled to receive revenues and will not be
responsible for the maintenance of Yorkshire Link.

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Construction on Yorkshire Link was completed in 1999, and
vehicles began using the road that same year. Yorkshire Link is
a mature operational phase road with six years of operational
history. Therefore, a base level of traffic has been
established, and there is substantial management experience
within Connect M1-A1
Limited in operating Yorkshire Link.



Concession RevenuePursuant to the concession, shadow toll revenue paid by the
Transport Secretary is based on two factors:




    Traffic Volume. The volume of traffic using Yorkshire
    Link is categorized either as heavy goods vehicles, which are
    vehicles over 17 feet in length, such as trucks, and other
    vehicles, such as cars and motorcycles. Vehicles are counted by
    traffic measuring equipment placed along the length of the road.
    For traffic measurement purposes, the total length of all the
    sections of Yorkshire Link is 26.3 kilometers
    (16.4 miles).
    Fees. A fee per vehicle-kilometers, or vkms, which varies
    annually, is determined based upon the type of vehicle and the
    number of vkms in various (4) bands, pursuant
    to a formula.

Calculation of RevenueThe amount payable to Connect
M1-A1 Limited for each
vkm traveled by heavy goods vehicles and other vehicles is
determined through the use of bands. Each vehicle category has
four traffic volume bands, and different amounts are payable per
vkm in each band.

Historical revenue calculations under each band are as follows:

For the concession year ended March 31, 2005, other
vehicles traffic was 634.8 million vkms, and revenue
calculations were as follows:

|     |  |               |  |                 |      |  |                 |  |       | 
|---- |  | ------------- |  | --------------- | ---- |  | --------------- |  | ----- | 
|Band |  | vkms          |  | Payment         |      |  | Revenue         | 
|     |  |               |  |                 |      |  |                 | 
|     |  | (In millions) |  | (Pence per vkm) |      |  | (£ in millions) | 
|1    |  | 0 - 403.1     |  |                 | 4.76 |  |                 |  | £19.2 | 
|2    |  | 403.1 - 511.1 |  |                 | 3.65 |  |                 |  | 3.9   | 
|3    |  | 511.1 - 653.1 |  |                 | 3.19 |  |                 |  | 3.9   | 
|4    |  | Over 653.1    |  |                 |     |  |                 |  |      | 
|     |  |               |  |                 |      |  |                 | 
|     |  |               |  |                 |      |  |                 |  | £27.0 | 
|     |  |               |  |                 |      |  |                 | 



|     |  |               |  |                 |       |  |                 |  |       | 
|---- |  | ------------- |  | --------------- | ----- |  | --------------- |  | ----- | 
|Band |  | vkms          |  | Payment         |       |  | Revenue         | 
|     |  |               |  |                 |       |  |                 | 
|     |  | (In millions) |  | (Pence per vkm) |       |  | (£ in millions) | 
|1    |  | 0 - 127.2     |  |                 | 13.91 |  |                 |  | £17.6 | 
|2    |  | 127.2 - 147.2 |  |                 | 10.94 |  |                 |  | 2.2   | 
|3    |  | 147.2 - 161.2 |  |                 | 14.84 |  |                 |  | 0.2   | 
|4    |  | Over 161.2    |  |                 |      |  |                 |  |      | 
|     |  |               |  |                 |       |  |                 | 
|     |  |               |  |                 |       |  |                 |  | £20.0 | 
|     |  |               |  |                 |       |  |                 | 

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For the concession year ended March 31, 2004, other
vehicles traffic was 624.8 million vkms, and revenue
calculations were as follows:

|     |  |               |  |                 |      |  |                 |  |       | 
|---- |  | ------------- |  | --------------- | ---- |  | --------------- |  | ----- | 
|Band |  | vkms          |  | Payment         |      |  | Revenue         | 
|     |  |               |  |                 |      |  |                 | 
|     |  | (In millions) |  | (Pence per vkm) |      |  | (£ in millions) | 
|1    |  | 0 - 395.2     |  |                 | 4.79 |  |                 |  | £18.9 | 
|2    |  | 395.2 - 503.2 |  |                 | 3.60 |  |                 |  | 3.9   | 
|3    |  | 503.2 - 645.2 |  |                 | 3.15 |  |                 |  | 3.8   | 
|4    |  | Over 645.2    |  |                 |     |  |                 |  |      | 
|     |  |               |  |                 |      |  |                 | 
|     |  |               |  |                 |      |  |                 |  | £26.6 | 
|     |  |               |  |                 |      |  |                 | 



|     |  |               |  |                 |       |  |                 |  |       | 
|---- |  | ------------- |  | --------------- | ----- |  | --------------- |  | ----- | 
|Band |  | vkms          |  | Payment         |       |  | Revenue         | 
|     |  |               |  |                 |       |  |                 | 
|     |  | (In millions) |  | (Pence per vkm) |       |  | (£ in millions) | 
|1    |  | 0 - 124.1     |  |                 | 14.08 |  |                 |  | £17.5 | 
|2    |  | 124.1 - 144.1 |  |                 | 10.80 |  |                 |  | 2.2   | 
|3    |  | 144.1 - 158.1 |  |                 | 14.64 |  |                 |  | 0.1   | 
|4    |  | Over 158.1    |  |                 |      |  |                 |  |      | 
|     |  |               |  |                 |       |  |                 | 
|     |  |               |  |                 |       |  |                 |  | £19.8 | 
|     |  |               |  |                 |       |  |                 | 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | band 1 increases in size each year by 2% for other vehicles
    and 2.5% for heavy goods vehicles. Bands 2 and 3 are also
    increased to maintain a constant width in vkms, and Band 4
    has no upper limit. In addition, the payment per vkm of traffic
    for Band 1 is reduced by an equivalent proportion. The net
    effect of these changes is that if annual traffic is above
    Band 1, then the revenue generated from Band 1 remains
    constant, ignoring the other two revenue adjustments discussed
    below. The same result applies if annual traffic is above
    Band 2 and Band 3  revenue generated from
    those bands remains constant, ignoring the other two revenue
    adjustments discussed below;                                                                                                                               
|
| |  | the payments per vkm of traffic in each of the bands are
    partially indexed to movement in the U.K. Retail Price
    Index, a measure of inflation in the United Kingdom. Band 1
    payments per vkm are escalated by 38% of the Retail Price
    Index and Bands 2 and 3 by 40% of the Retail
    Price Index each year;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | it should be noted that in the absence of traffic growth or
    inflation, total revenues will decline through time as a
    consequence of these band adjustments; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | a final global factor, which varies from time to time, is
    applied to the payment per vkm of traffic in all bands. This
    global factor remains constant until September 2007, when it
    decreases by 0.2% and then increases in September 2010 by 8.9%.
    In March 2014, this global factor will have the effect of
    reducing revenue per vkm significantly, and less significant
    downward revisions will also occur in 2017 and 2020. These
    global factors were set in 1996 when the concession was signed,
    the purpose of which was to ensure that revenues generally
    followed the underlying cost profile of Connect
    M1-A1 Limited (as
    originally projected) and, in particular, its debt service
    obligations. The current debt repayment schedule recognizes and
    accommodates these revenue reductions in the future.



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Under the concession, the Transport Secretary makes provisional
payments to Connect
M1-A1 Limited each
month, equal to the previous years traffic payment divided
by twelve. In practice, it may take a few months to agree on the
final traffic payment for each concession year, in which case
monthly provisional payments continue at the prevailing rate.
When the payment due to Connect
M1-A1 Limited under the
concession has been finally calculated, there is an annual
reconciliation so that any
under- or over-payment
to date is corrected. The traffic payment for the year ended
March 31, 2005 was £46.162 million. As a result,
in the concession year ending March 31, 2006, Connect
M1-A1 Limited has
provisional payments of approximately £3.93 million
(USD $6.86 million) per month. Year to date vehicle
kilometers is 2.0% under forecast for heavy goods vehicles and
1.0% under forecast for other vehicles.



Factors Likely to Affect Future Traffic FlowsWe believe that there is one new road development, the East
Leeds Link, that will affect future traffic flows on Yorkshire
Link. It is a new road connecting an existing junction near the
midpoint of Yorkshire Link to Leeds city center. We expect that
East Leeds Link will slightly increase traffic on Yorkshire Link
when it opens. It is scheduled to open in 2008.

The West Yorkshire Local Transport Plan, or LTP, which was
published in 2000, sets forth the local context for
transportation in which Yorkshire Link operates, although
Yorkshire Link also carries longer-distance traffic and is less
sensitive to local factors than the surrounding local roads. The
target for traffic growth on all roads in West Yorkshire
established by the LTP is 5% from 1999 to 2011. This compares
with U.K. government forecasts of between 8.5% and 15.2% for the
region over the same period.

The LTP also includes plans for the Leeds Supertram network of
three tram lines, which may have some negative impact on growth
of Yorkshire Link traffic. The lines were programmed to be fully
operational in 2007, but the project has been subject to delays
and it now looks unlikely to proceed in the foreseeable future.



Operations and MaintenanceUnder the terms of the concession, Connect
M1-A1 Limited is
responsible for the operation and maintenance of Yorkshire Link.
Connect M1-A1 Limited
is also responsible for the lighting and associated energy costs
and the communications systems on the road. The police are
responsible for managing traffic flow, although Connect
M1-A1 Limited is
required to provide assistance in the event of accidents.

The operations and maintenance activity and the management of
the concession requirements are managed and coordinated by a
small operations team consisting of a staff of six seconded from
Balfour Beatty. The cost of the management team is recovered
from Connect M1-A1
Limited based on a cost-plus formula. Operations have been
substantially subcontracted under contracts of varying duration.
There are an additional 14 full-time employees of
subcontractor organizations on site. These subcontractor
contracts represented approximately 60% of the routine
maintenance costs for the 2005 concession year.

Connect M1-A1 Limited
has met the operational requirements of the concession over the
six years it has operated and maintained Yorkshire Link. The
operations and maintenance requirements of the concession can be
described in the following categories:




    routine operations and maintenance, including landscape
    management, cleaning work, replacing faulty lighting, repairing
    fencing and crash barriers resulting from traffic accidents,
    maintaining the communications and traffic counting equipment,
    structural inspections, spreading salt and clearing snow and
    periodically verifying the traffic counting data; and
    periodic maintenance, consisting mainly of repair, resurfacing
    and reconstruction work that is required from time to time to
    restore basic qualities, such as skid resistance, to the road
    pavement, and to extend the life of the road by adding extra
    strength to meet increased traffic loadings.There are penalty point and warning notice provisions in the
concession that may be imposed if there are deficiencies in the
way Connect M1-A1
Limited manages its operations and maintenance responsibili-

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ties. Connect M1-A1
Limited has not received any penalty points or warning notices
since Yorkshire Link opened.



Traffic CountingTraffic is counted by traffic measurement equipment, which has
been installed in accordance with the specifications of the U.K.
Highways Agency. Traffic is counted in each direction at nine
sites that lie between each junction of Yorkshire Link. At each
site, each lane, including the hard shoulder, is equipped with a
pair of electromagnetic inductive loops buried in the roadway.
The loops detect passing vehicles and record the passage in a
counter unit. The loops also enable the length of vehicles to be
measured in order to categorize vehicles into heavy goods
vehicles and other vehicles. Software in the roadside equipment
compares the output from adjacent lanes and automatically allows
for the effects of vehicles straddling lanes. Periodic reports
generated from a central computer form the basis of the annual
calculation of vkms on which payment to Connect
A1-M1 Limited is based.
When data is missing or corrupted, a patching procedure to which
the U.K. Highways Agency has agreed is used to estimate the
missed vehicles. In addition, traffic flows are recorded on
video and compared with loop data for consistency.



Warranty for DefectsConnect M1-A1 Limited
subcontracted the design and building of Yorkshire Link to a
construction joint venture consisting of Balfour Beatty CE Ltd.
and Skanska Construction U.K. Ltd. In addition to the
construction of the new route, the initial construction works
included improvements to sections of the existing road.

The construction joint venture is obligated under a twelve-year
warranty for latent defects that expires in 2011. The
construction joint venture also has extended the warranty to
cover defects in the sections of the road that were in existence
when its works began. The construction joint venture has
indemnified Connect
M1-A1 Limited in
respect of any consequential losses, except in relation to the
sections of the existing road, and any lane closure charges that
may be incurred as a result of such defects. The obligations of
the construction joint venture partners are joint and several,
and they are supported by guarantees from Balfour Beatty and
Skanska AB. Cracking defects have been identified on the road
surface on certain sections of Yorkshire Link and these have
required resurfacing repairs to be carried out at the
construction joint ventures expense. Connect
M1-A1 Limited believes
any such further defects would be the responsibility of the
construction joint venture, which is investigating the problem
with the help of its consultants. Connect
M1-A1 Limited is
waiting to receive a proposal from the construction joint
venture as to how the construction joint venture intends to deal
with the problem in the longer term.



EmployeesConnect M1-A1 Limited
has no employees. All operational staff are either employed by
Balfour Beatty and seconded to Connect
M1-A1 Limited or
employed by the various subcontractors.



Shareholders AgreementWe are a party to a shareholders agreement with Balfour
Beatty that governs the relationship of the shareholders in CHL
(formerly Yorkshire Link (Holdings) Limited) and Connect
M1-A1 Limited (formerly
Yorkshire Link Limited). The shareholders agreement
effectively requires the consent of Macquarie Yorkshire and
Balfour Beatty for any decisions relating to these companies.

Based on current shareholdings, Macquarie Yorkshire and Balfour
Beatty are each allowed to appoint three directors to the boards
of CHL and Connect
M1-A1 Limited.
Currently, each has appointed two directors. Voting is pro rata
with the shareholding being represented. All routine matters are
decided by majority vote. Certain matters are reserved and
determined on the basis of approval by not less than 90% of
total shares. Such matters include amending the
shareholders agreement or the constitutional documents of
CHL or Connect M1-A1
Limited, the winding up of CHL or Connect
M1-A1 Limited,
acquisitions and disposals of companies by CHL or Connect
M1-A1 Limited, and
tendering for new work by CHL or

33



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##### Table of Contents

Connect M1-A1 Limited.
In addition, certain other matters relating to CHL and Connect
M1-A1 Limited are
reserved, requiring approval of directors appointed by a
shareholder holding not less than 49% of the total shares. The
shares of CHL and Macquarie Yorkshire are subject to preemption
rights, and, in CHLs case, they also are subject to
tag-along rights by shareholders owning more than 5% of the
total shares.

In addition, the shareholders agreement requires all
post-tax profits to be paid to shareholders as dividends, to the
extent permitted by law and subject to making prudent reserves.

Our Investment in MCG



OverviewMCG is an investment vehicle that has been listed on the
Australian Stock Exchange, or ASX, since August 2002. MCGs
mandate is to acquire investments in communications
infrastructure, such as broadcast transmission towers, wireless
communications towers and satellite infrastructure, around the
world. We have invested in MCG because it seeks to provide
investors with sustainable dividend yields and the potential for
capital growth through investments in communications
infrastructure businesses or assets. Currently, MCG has two
investments. MCG owns a 100% holding in Broadcast Australia, an
Australian television and radio broadcast transmission provider,
and a 54% interest in Arqiva (formerly ntl:Broadcast) that
it acquired on January 31, 2005. Arquiva is a provider of
broadcast transmission and site leasing infrastructure operator
in the United Kingdom and the Republic of Ireland.



Our AcquisitionOn December 22, 2004 we acquired 16.5 million stapled
securities issued by MCG from Macquarie Investments Australia
Pty Limited, for a total purchase price of USD $70 million.
Our investment represents a 4% interest in Macquarie
Communications Infrastructure Group.



Business

OperationsBroadcast Australia is the owner and operator of the most
extensive broadcasting tower network in Australia and provides
transmission services to the Australian Broadcasting
Corporation, or ABC, and Special Broadcasting Service
Corporation, or SBS, plus other services to regional television
and other media, telecommunications and community organizations.
Broadcast Australia operates approximately 600 transmission
tower sites located across metropolitan, regional and rural
Australia. Broadcast Australia owns or operates under leases at
the majority of its sites.

Broadcast Australia derived approximately 87% of its revenue for
the fiscal year ended June 30, 2005 from contracts with ABC
and SBS. Generally, the contracts with ABC and SBS are over the
long term, often 10 to 15 years. ABC and SBS receive most
of their funding from the Australian Commonwealth government
under a triennial funding arrangement. The funding allocated by
the Commonwealth government for the purposes of broadcast
transmission cannot be applied to other uses. Revenue from
Broadcast Australia increased 14.3% for the fiscal year ended
June 30, 2005.

Broadcast Australia is in the process of rolling out digital
transmission services that it is contracted to introduce under
its agreements with ABC and SBS. Under the agreements, as
Broadcast Australia rolls out digital transmission services
across its sites, it will earn additional revenue from the
provision of digital broadcasts. The rollout of digital
transmission will require significant capital expenditure, which
is expected to be funded through an existing AUD
$150 million Broadcast Australia debt facility. This debt
facility has AUD $20 million outstanding at June 30,
2005. It is expected that future drawdowns may be made depending
on Broadcast Australias future capital expenditure
requirements. To the extent that the facility is drawn on its
maturity date on June 26, 2006, it will need to be renewed
or refinanced.

Arqiva is one of the leading national broadcast transmission and
site leasing infrastructure operators in the United Kingdom and
provides coverage to 98.5% of the U.K. population. It is also
the second largest independent wireless site leasing provider.
The business comprises three operating divisions. The Media

34



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##### Table of Contents

Solutions division provides analogue and digital terrestrial
transmission services to TV and radio broadcasters and
end-to-end satellite
transmission and playout services to
direct-to-home and
other customers. The Wireless Solutions division operates the
second largest independent portfolio of wireless towers and
sites available for lease in the United Kingdom, providing
services to all major mobile network operators and other network
owners. The Public Safety division is the largest provider of
managed radio communications services to emergency service
organizations across the United Kingdom and the Republic of
Ireland.



Future InvestmentsIt is expected that MCG will make investments in other
communications infrastructure businesses or assets in the
future, although it will need to raise new equity to fund any
significant acquisitions. It is possible that these investments
will be partly funded through the issue of new
MCG securities. We may have the opportunity to purchase
additional MCG securities in such instances; however, we will
have no obligation to do so.



ManagementMCG is managed by Macquarie Communications Infrastructure
Management Limited, an affiliate of our Manager. MCGs
manager earns a base fee and may earn a performance fee. The
base fee is calculated and paid quarterly based on the net
investment value (market capitalization plus borrowings and
commitments less cash and cash equivalents). The performance fee
is paid semi-annually if MCGs performance exceeds that of
the S&P ASX 200 Industrials Accumulation Index.

Base fees payable by us to our Manager are reduced by the fees
paid by MCG to its manager to the extent that they are
attributable to our interest in MCG. As a result, there is no
duplication of base management fees received by members of the
Macquarie Group with respect to MCG.



Trading HistoryThe securities of MCG were listed on the ASX on August 13,
2002 at an issue price of AUD $2.00. The table below
outlines the quarterly trading history of MCG securities in
Australian dollars from listing through the quarter ended
December 31, 2005. Since its inception, MCG has paid
distributions per stapled security of AUD $0.075 on
February 12, 2003, AUD $0.08 on August 12, 2003, AUD
$0.112 on February 12, 2004, AUD $0.118 on August 12,
2004, AUD $0.144 on February 14, 2005, AUD $0.146 on
August 12, 2005, and AUD $0.195 on February 13, 2006.

|                   |  |                         |      |  |           |  |      |               |  |  |        |  |  |  |           | 
|------------------ |  | ----------------------- | ---- |  | --------- |  | ---- | ------------- |  |  | ------ |  |  |  | --------- | 
|                   |  |                         |      |  |           |  |      | Average Daily | 
|Quarter Ended      |  | High Price              |      |  | Low Price |  |      | Closing Price |  |  | Volume | 
|                   |  |                         |      |  |           |  |      |               |  |  |        | 
|                   |  | (In Australian dollars) |     
|September 30, 2002 |  |                         | 2.02 |  |           |  | 1.60 |               |  |  | 1.96   |  |  |  | 1,159,347 | 
|December 31, 2002  |  |                         | 2.23 |  |           |  | 1.86 |               |  |  | 2.20   |  |  |  | 379,341   | 
|March 31, 2003     |  |                         | 2.61 |  |           |  | 2.10 |               |  |  | 2.43   |  |  |  | 332,041   | 
|June 30, 2003      |  |                         | 3.61 |  |           |  | 2.42 |               |  |  | 2.97   |  |  |  | 343,859   | 
|September 30, 2003 |  |                         | 3.14 |  |           |  | 2.80 |               |  |  | 2.92   |  |  |  | 369,734   | 
|December 31, 2003  |  |                         | 3.26 |  |           |  | 2.83 |               |  |  | 3.03   |  |  |  | 361,148   | 
|March 31, 2004     |  |                         | 3.52 |  |           |  | 3.02 |               |  |  | 3.49   |  |  |  | 204,070   | 
|June 30, 2004      |  |                         | 3.73 |  |           |  | 3.35 |               |  |  | 3.68   |  |  |  | 201,911   | 
|September 30, 2004 |  |                         | 4.71 |  |           |  | 3.60 |               |  |  | 4.71   |  |  |  | 209,211   | 
|December 31, 2004  |  |                         | 5.91 |  |           |  | 4.65 |               |  |  | 5.52   |  |  |  | 812,698   | 
|March 31, 2005     |  |                         | 6.44 |  |           |  | 5.58 |               |  |  | 5.65   |  |  |  | 1,458,232 | 
|June 30, 2005      |  |                         | 6.60 |  |           |  | 5.75 |               |  |  | 6.30   |  |  |  | 1,379,168 | 
|September 30, 2005 |  |                         | 6.74 |  |           |  | 5.79 |               |  |  | 5.93   |  |  |  | 1,221,338 | 
|December 31, 2005  |  |                         | 6.04 |  |           |  | 5.50 |               |  |  | 5.68   |  |  |  | 1,030,775 | 

35



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Our Investment in South East Water



OverviewSouth East Water, or SEW, is a regulated clean water utility
located in southeastern England and is the sole provider of
water to almost 600,000 households and industrial
customers. It is the second largest water-only company in
England, supplying approximately 105 million gallons of
water per day to 1.4 million people across two sub-regions.
Its supply area covers approximately 1,390 square miles of
Kent, Sussex, Surrey, Hampshire and Berkshire.



Our AcquisitionWe own 17.5% of SEW through an equivalent holding in Macquarie
Luxembourg Water SarL, or Macquarie Luxembourg, the indirect
holding company for SEW. We acquired this investment because we
believe that the cash yields and total returns available from
investments in regulated utilities in the United Kingdom are
attractive given the mature and transparent regulatory
environment. A 50.1% controlling interest in SEW is held
through a controlling interest in Macquarie Luxembourg by the
Macquarie European Infrastructure Fund, or MEIF, a vehicle that
is managed by an affiliate of our Manager. MEIF is an unlisted
infrastructure investment fund focused on making medium-term
investments in infrastructure assets in Europe. We believe
MEIFs approach to the ownership and oversight of SEW is
consistent with our approach. Three other institutional
investors, including another investment vehicle managed by the
Macquarie Group holding 7.4%, have minority interests in SEW
through minority interests in Macquarie Luxembourg. Members of
the Macquarie Group are paid fees for providing management
services to SEW. The base fees payable by us to our Manager
under the management services agreement will be reduced by the
portion of such non-performance-based management fees paid by
SEW to the Macquarie Group that are attributable to our interest
in SEW. As a result, there will be no duplication of base
management fees received by members of the Macquarie Group with
respect to SEW.



Industry OverviewThe water sector of the public utilities industry in England and
Wales was privatized by the U.K. government in 1989 and 1990. It
consists of ten water and sewerage companies and thirteen
water-only companies. Water supply activities in England and
Wales are principally regulated by the provisions of the Water
Industry Act of 1991 and the Water Act of 2003, which we
together refer to as the Water Industry Act, and regulations
made under the Water Industry Act. Water-only companies are
granted a license pursuant to that legislation. The provisions
of the Water Industry Act, together with the license, are
administered by the Director General of Water Services, who is
aided by the Office of Water Services, or Ofwat. The
responsibilities of Ofwat include the setting of limits on
allowed water charges and monitoring and enforcing license
obligations. From April 1, 2006, regulatory
responsibilities will be taken over by the new Water Services
Regulation Authority, with an improved board structure. The
current Director General of Ofwat has been appointed Chairman of
the new body. In addition to compliance with Ofwat regulations,
water companies in England and Wales are also required to meet
drinking water quality standards monitored by the U.K. Drinking
Water Inspectorate and general environmental law enforced by the
U.K. Environment Agency.

As water and sewage companies and water-only companies are
natural monopolies, the prices that they are allowed to charge
their customers for water are regulated by Ofwat. Every five
years, Ofwat determines prices for the provision of water
services for the upcoming five years based on an inflation and
efficiency calculation. On December 2, 2004, Ofwat released
its determination with respect to the prices that English and
Welsh water companies, including SEW, are permitted to charge
for the current price review period, which runs from
April 1, 2005 to March 31, 2010. See
 Business  Regulation below.

36



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Business

OperationsApproximately 70% of SEWs water is supplied from boreholes
and aquifers, 20% is supplied from rivers and reservoirs and 10%
is supplied under bulk supply contracts with neighboring water
utilities Three Valleys Water plc and Southern Water Services
Ltd. SEWs security of supply rating from Ofwat, is
currently rated C, but improvement is expected through the
provision of enhanced bulk supply infrastructure.

SEW has a sophisticated telemetry-based system for monitoring
water quality, flows, pressures and reservoir levels. Each water
treatment works has a local monitoring system that checks these
variables and relays data to an outstation unit that regulates
activity levels at the treatment works and feeds data to a
centralized operation center at the Haywards Heath headquarters.
The headquarters is manned constantly.

SEW balances supply and demand in line with industry best
practices and is required to establish a
25-year plan for
sustainable water resources acceptable to the U.K. Environment
Agency and Ofwat. This plan is a combination of resource
development and demand management measures, all of which are
assessed on an economic basis before inclusion.

Following one of the driest winters on record, on July 30,
2005 South East Water implemented its first hosepipe ban since
1995. A long, dry summer and persistently low rainfall this
winter has meant that the ban is still in force, with a
continued minimal impact on the regulatory score. With the
drought showing little sign of abating, further water
conservation options are under consideration.

Leakage detection and control continues to play an important
role in demand management within SEW. SEW had the greatest
percentage reduction of leakage levels in the year ended
March 31, 2002 compared to any other water company in
England and Wales. SEW met its leakage targets for March 2004
and 2005 and is on target to reach Ofwats economic level
of leakage target for March 2006.

In common with other water companies in England and Wales,
SEWs assets vary widely in age (with some over
100 years old), size and type but are generally constructed
using industry-standard materials and technology in use at the
time of their construction. SEW has developed a sophisticated
system for the management and replacement of its assets based
principally on the assessed risk and consequences of failure.
Overall capital investment levels are targeted at maintaining a
constant average level of risk across SEWs area of supply.
Individual programs aim to reduce risk in high risk areas. Water
industry assets tend to be long-lived and SEWs assets are
no exception. Major assets are rarely completely replaced;
short- to medium-life
items (e.g., pumps, electrical switch-gear, instruments) can be
replaced several times during the life of a treatment facility
and a new plant can be fitted into existing buildings. Higher
quality standards are often met by incrementally adding new
treatment processes. Further capacity can be met by adding
additional process streams to existing facilities. SEW is
planning £174 million of investment to improve the
reliability of supply and to fund expansion during the April
2005 to March 2010 regulatory period. SEW expects to finance
this investment through drawings under its existing debt
facilities. As discussed below, pursuant to the approach
utilized by Ofwat to determine SEWs pricing, SEW will be
entitled to earn sufficient revenue from its customers to enable
it to adequately service this increased indebtedness.



RegulationOfwat determines the prices that SEW can charge its customers
using an approach designed to enable SEW to earn sufficient
revenues to recover operating costs, capital infrastructure
renewal and taxes and to generate a return on invested capital,
while creating incentives for SEW to operate efficiently. The
outcome of the regulatory review process is the publication of
k-factors by Ofwat for
each year in the price review period. The
k-factor is the amount
that SEW is allowed to adjust its prices for water services for
each year relative to inflation. For example, a
k-factor of 5% in a
given year would mean that SEW is allowed to increase its prices
by inflation plus 5% in that year.

The use of the k-factor
also is designed to create incentives for water-only companies
and water and sewage companies to generate efficiencies that can
later be passed on to customers. Performance targets

37



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##### Table of Contents

are established by reference to a companys individual
circumstances and its performance relative to other companies in
the sector. Over the course of the current price review period,
SEW has improved in all of its key performance areas, including
customer service, leakage, water quality and operating
efficiency.

In determining the annual
k-factors, Ofwat is
under a statutory duty to consider:




    SEWs ability to properly carry out its functions
    (including legal obligations such as meeting drinking water
    quality standards monitored by the Drinking Water Inspectorate);
    the revenue SEW will need to finance its functions and earn a
    reasonable rate of return on its investment needed to meet its
    legal obligations;
    the promotion of efficiency and economy (through rewards and
    penalties); and
    the facilitation of competition.The following annual
k-factors were set for
SEW in the 1999 price review for the April 1, 2000 to
March 31, 2005 price review period:

|                                                 |  |      |       |    |      |  |      |      |  |  |      |    |  |      |   |   |  |  |   |  
|------------------------------------------------ |  | ---- | ----- | -- | ---- |  | ---- | ---- |  |  | ---- | -- |  | ---- | - | - |  |  | - | -
|Year Ended March 31,                             |  | 2001 |       |    | 2002 |  |      | 2003 |  |  | 2004 |    |  | 2005 |  
|                                                 |  |      |       |    |      |  |      |      |  |  |      |    |  |      |  
|k-factor (additive to the rate of
    inflation) |  |      | (16.1 | )% |      |  | (1.0 | )%   |  |  | (1.5 | )% |  |      | 0 | % |  |  | 0 | %

k-factor k-factor


|                                                 |  |      |      |   |      |  |     |      |  |  |      |   |  |      |     |   |  |  |      |   
|------------------------------------------------ |  | ---- | ---- | - | ---- |  | --- | ---- |  |  | ---- | - |  | ---- | --- | - |  |  | ---- | --
|Year Ended March 31,                             |  | 2006 |      |   | 2007 |  |     | 2008 |  |  | 2009 |   |  | 2010 |    
|                                                 |  |      |      |   |      |  |     |      |  |  |      |   |  |      |    
|k-factor (additive to the rate of
    inflation) |  |      | 15.8 | % |      |  | 2.3 | %    |  |  | 2.2  | % |  |      | 0.5 | % |  |  | (1.6 | )%



| |              
| | -------------
| | Environmental





| |          
| | ---------
| | Employees







38



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On February 3, 2006, the Managing Director resigned. A
search is currently underway for her replacement. The company
does not expect any material impact to operations as a result.



Shareholders AgreementFollowing the acquisition of our interest in SEW, we became a
party to a shareholders agreement relating to Macquarie
Luxembourg. The other parties to the agreement are MEIF, which
holds 50.1% of Macquarie Luxembourg, and three other minority
investors, which hold a combined 32.4% of Macquarie Luxembourg
including another investment vehicle managed by the Macquarie
Group, which holds 7.4%.

We have no influence over the choice of the board of directors
of Macquarie Luxembourg. The board of directors is authorized to
make all decisions necessary to manage the affairs of Macquarie
Luxembourg, except for certain reserved matters that require
approval of 75% of the shareholders and other matters that
require approval of all shareholders.

The shareholders agreement requires all shareholders to
use their powers to cause Macquarie Luxembourgs directly
owned subsidiary to make the maximum possible distribution to
shareholders each year. This provision cannot be changed without
our consent.

The shares of Macquarie Luxembourg are subject to preemption
rights. Our ability to subsequently transfer our interest in
Macquarie Luxembourg is subject to rights of first refusal that
are exercisable by MEIF in priority to the other shareholders
(with whom we have the right to exercise such rights on the same
terms). In the event that MEIF sells all (but not some) of its
interest in Macquarie Luxembourg, all other shareholders are
required to sell their interests to the same buyer on the same
terms. In the event that MEIF sells some but not all of its
interest in Macquarie Luxembourg, all other shareholders may
sell some or all of their interests on the same terms.

Our Employees

We have a total of 2,124 employees in our consolidated
businesses of which 21% in the aggregate are subject to
collective bargaining agreements. The company and the trust do
not have any employees.

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy
any document we file with the SEC at the SECs public
reference room at 100 F Street, NE, Washington, DC 20549. Please
call the SEC at
1-800-SEC-0330 for
information on the operations of the public reference room. The
SEC maintains a website that contains annual, quarterly and
current reports, proxy and information statements and other
information that issuers (including Macquarie Infrastructure
Company) file electronically with the SEC. The SECs
website is www.sec.gov.

Our website is www.macquarie.com/mic. You can access our
Investor Center through this website. We make available free of
charge, on or through our Investor Center, our proxy statements,
annual reports to shareholders, annual report on
Form 10-K,
quarterly reports on
Form 10-Q, current
reports on
Form 8-K and any
amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, or the Exchange Act, as soon as reasonably
practicable after such material is electronically filed with, or
furnished to, the SEC. We also make available through our
Investor Center statements of beneficial ownership of the trust
stock filed by our Manager, our directors and officers, any 10%
or greater shareholders and others under Section 16 of the
Exchange Act.

You can also access our Governance webpage through our Investor
Center. We post the following on our Governance webpage:




    Trust Agreement of Macquarie Infrastructure Company Trust
    Operating Agreement of Macquarie Infrastructure Company LLC
    Management Services Agreement39



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##### Table of Contents


    Corporate Governance Guidelines
    Code of Ethics and Conduct
    Charters for our Audit Committee, Compensation Committee and
    Nominating and Corporate Governance Committee
    Policy for Shareholder Nomination of Candidates to Become
    Directors of Macquarie Infrastructure Company
    Information for Shareholder Communication with our Board of
    Directors, our Audit Committee and our Lead Independent DirectorOur Code of Ethics and Conduct applies to all of our directors,
officers and employees as well as all directors, officers and
employees of our Manager. We will post any amendments to the
Code of Ethics and Business Conduct, and any waivers that are
required to be disclosed by the rules of either the SEC or the
New York Stock Exchange, or NYSE, on our website. The
information on our website is not incorporated by reference into
this report.

You can request a copy of these documents at no cost, excluding
exhibits, by contacting Investor Relations at 125 West
55th Street, 22nd Floor, New York, NY 10019
(212-231-1000).







Item 1A.
    Risk FactorsAn investment in shares of trust stock involves a number of
risks. Any of these risks could result in a significant or
material adverse effect on our results of operations or
financial condition and a corresponding decline in the market
price of the shares.

Risks Related to Our Business



We have only operated as a combined company since December
    2004, during which time we devoted significant resources to
    integrating our businesses, thereby diverting attention from
    strategic initiatives.We completed our initial public offering and the acquisition of
our initial businesses and investments in December 2004 and
completed additional acquisitions in our airport services
business and airport parking business during 2005. Furthermore,
with the exception of our district energy business, prior to our
acquisition all of our businesses were privately owned and not
subject to financial and disclosure requirements and controls
applicable to U.S. public companies. We have expended
significant time and resources throughout our operations to
develop and implement effective systems and procedures,
including accounting and financial reporting systems, in order
to manage our operations on a combined basis as a consolidated
U.S. public company. As a result, these businesses have
been limited, and may continue to be limited, in their ability
to pursue strategic operating initiatives and achieve our
internal growth expectations. In addition, due to our short
operating history as a consolidated U.S. public company,
the performance of our consolidated business during its first
year of operations may not be an accurate indicator of our
prospects for future years.



In the event of the underperformance of our Manager, we
    may be unable to remove our Manager, which could limit our
    ability to improve our performance and could adversely affect
    the market price of our shares.Under the terms of the management services agreement, our
Manager must significantly underperform in order for the
management services agreement to be terminated. The
companys board of directors cannot remove our Manager
unless:




    our shares underperform a weighted average of two benchmark
    indices by more than 30% in relative terms and more than 2.5% in
    absolute terms in 16 out of 20 consecutive quarters prior to and
    including the most recent full quarter, and the holders of a
    minimum of 66.67% of the40



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##### Table of Contents

outstanding trust stock (excluding any shares of trust stock
    owned by our Manager or any affiliate of the Manager) vote to
    remove our Manager;
    our Manager materially breaches the terms of the management
    services agreement and such breach continues unremedied for
    60 days after notice;
    our Manager acts with gross negligence, willful misconduct, bad
    faith or reckless disregard of its duties in carrying out its
    obligations under the management services agreement, or engages
    in fraudulent or dishonest acts; or
    our Manager experiences certain bankruptcy events.Our Managers performance is measured by the market
performance of our shares relative to a weighted average of two
benchmark indices, a U.S. utilities index and a European
utilities index, weighted in proportion to our U.S. and
non-U.S.equity
investments. As a result, even if the absolute market
performance of our shares does not meet expectations, the
companys board of directors cannot remove our Manager
unless the market performance of our shares also significantly
underperforms the weighted average of the benchmark indices. If
we were unable to remove our Manager in circumstances where the
absolute market performance of our shares does not meet
expectations, the market price of our shares could be negatively
affected.



Our Manager can resign on 90 days notice and we
    may not be able to find a suitable replacement within that time,
    resulting in a disruption in our operations which could
    adversely affect our financial results and negatively impact the
    market price of our shares.Our Manager has the right, under the management services
agreement, to resign at any time on 90 days notice,
whether we have found a replacement or not. Australian banking
regulations that govern the operations of Macquarie Bank Limited
and all of its subsidiaries, including our Manager, require that
subsidiaries of Australian banks providing management services
have these resignation rights.

If our Manager resigns, we may not be able to find a new
external manager or hire internal management with similar
expertise within 90 days to provide the same or equivalent
services on acceptable terms, or at all. If we are unable to do
so quickly, our operations are likely to experience a
disruption, our financial results could be adversely affected,
perhaps materially, and the market price of our shares may
decline. In addition, the coordination of our internal
management, acquisition activities and supervision of our
businesses and investments are likely to suffer if we were
unable to identify and reach an agreement with a single
institution or group of executives having the expertise
possessed by our Manager and its affiliates.

Furthermore, if our Manager resigns, the trust, the company and
its subsidiaries will be required to cease using the Macquarie
brand entirely, including changing their names to remove any
reference to Macquarie. This may cause the value of
the company and the market price of our shares to decline.



Our holding company structure may limit our ability to
    make regular distributions to our shareholders because we will
    rely on distributions both from our subsidiaries and the
    companies in which we hold investments.The company is a holding company with no operations. Therefore,
it is dependent upon the ability of our businesses and
investments to generate earnings and cash flows and distribute
them to the company in the form of dividends and upstream debt
payments to enable the company to meet its expenses and to make
distributions to shareholders. The ability of our operating
subsidiaries and the businesses in which we will hold
investments to make distributions to the company is subject to
limitations under the terms of their debt agreements and the
applicable laws of their respective jurisdictions. If, as a
consequence of these various limitations and restrictions, we
are unable to generate sufficient distributions from our
businesses and investments, the company may not be able to
declare or may have to delay or cancel payment of distributions
on its shares.

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Our businesses and the businesses in which we have
    invested have substantial indebtedness, which could inhibit
    their operating flexibility.As of December 31, 2005, on a consolidated basis, we had
total long-term debt outstanding of $611 million, excluding
affiliated debt relating to our toll road business, all of which
is currently at the operating company level. All of this debt
has recourse only to the relevant business. The companies in
which we have investments also have debt. The terms of this debt
generally require our operating businesses and the companies in
which we have investments to comply with significant operating
and financial covenants. The ability of each of our businesses
and investments to meet their respective debt service
obligations and to repay their outstanding indebtedness will
depend primarily upon cash produced by that business.

This indebtedness could have important consequences, including:




    limiting the payment of dividends and distributions to us;
    increasing the risk that our subsidiaries and the companies in
    which we hold investments might not generate sufficient cash to
    service their indebtedness;
    limiting our ability to use operating cash flow in other areas
    of our businesses because our subsidiaries or the companies in
    which we hold investments must dedicate a substantial portion of
    their operating cash flow to service their debt;
    limiting our and our subsidiaries ability to borrow
    additional amounts for working capital, capital expenditures,
    debt services requirements, execution of our internal growth
    strategy, acquisitions or other purposes; and
    limiting our ability to capitalize on business opportunities and
    to react to competitive pressures or adverse changes in
    government regulation.If we are unable to comply with the terms of any of our various
debt agreements, we may be required to refinance a portion or
all of the related debt or obtain additional financing. We may
be unable to refinance or obtain additional financing because of
our high levels of debt and debt incurrence restrictions under
our debt agreements. We also may be forced to default on any of
our various debt obligations if cash flow from the relevant
operating business is insufficient and refinancing or additional
financing is unavailable, and, as a result, the relevant debt
holders may accelerate the maturity of their obligations.



The audited financial statements of the company do not
    include meaningful comparisons to prior years.The audited financial statements of the company at and for the
year ended December 31, 2004 include consolidated results
of operations and cash flows only for the period from the date
of acquisition to year end. Only our audited financial
statements for our 2005 fiscal year contain full-year
consolidated results of operations and cash flows. As a result,
we cannot provide meaningful
year-to-year
comparisons until after the end of our 2006 fiscal year and
cannot provide investors with a year over year comparative
analysis of our business on a consolidated basis. The
comparative analysis of our operating segments that we do
present may not reflect all matters that a consolidated
comparative analysis would.



We own minority interests in our investments and may
    acquire similar minority interests in future investments, and
    consequently cannot exercise significant influence over their
    business or the level of their distributions to us, which could
    adversely affect our results of operations and our ability to
    generate cash and make distributions.We own minority positions in the investments in MCG and SEW and
have limited legal rights to influence the management of those
businesses or any other businesses in which we make minority
investments. MCG is managed by an affiliate of our Manager and
SEW is majority owned by an entity that is managed by an
affiliate of our Manager. These entities may develop different
objectives than we have and may not make distributions to us at
levels that we anticipate. Our inability to exercise significant

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influence over the operations, strategies and policies of the
businesses in which we have, or may acquire, a minority interest
means that decisions could be made that could adversely affect
our results and our ability to generate cash and pay
distributions on our shares.



Our ability to successfully implement our growth strategy
    and to sustain and grow our distributions depends on our ability
    to successfully implement our acquisition strategy and manage
    the growth of our business.A major component of our strategy is to acquire additional
infrastructure businesses both within the sectors in which we
currently operate and in sectors where we currently have no
presence. Acquisitions involve a number of special risks,
including failure to successfully integrate acquired businesses
in a timely manner, failure of the acquired business to
implement strategic initiatives we set for it and/or achieve
expected results, failure to identify material risks or
liabilities associated with the acquired business prior to its
acquisition, diversion of managements attention and
internal resources away from the management of existing
businesses and operations, and the failure to retain key
personnel of the acquired business. We expect to face
competition for acquisition opportunities, and some of our
competitors may have greater financial resources or access to
financing on more favorable terms than we will. This competition
may limit our acquisition opportunities, may lead to higher
acquisition prices or both. While we expect that our
relationship with the Macquarie Group will help us in making
acquisitions, we cannot assure you that the benefits we
anticipate will be realized. The successful implementation of
our acquisition strategy may result in the rapid growth of our
business which may place significant demands on management,
administrative, operational and financial resources.
Furthermore, other than our Chief Executive Officer and Chief
Financial Officer, the personnel of ISF performing services for
us under the management services agreement are not wholly
dedicated to us, which may result in a further diversion of
management time and resources. Our ability to manage our growth
will depend on our maintaining and allocating an appropriate
level of internal resources, information systems and controls
throughout our business. Our inability to successfully implement
our growth strategy or successfully manage growth could have a
material adverse effect on our business, cash flow and ability
to pay distributions on our shares.



We may not be able to successfully fund future
    acquisitions of new infrastructure businesses due to the
    unavailability of debt or equity financing on acceptable terms,
    which could impede the implementation of our acquisition
    strategy and negatively impact our business.In order to make acquisitions, we will generally require funding
from external sources. Since the timing and size of acquisitions
cannot be readily predicted, we may need to be able to obtain
funding on short notice to benefit fully from attractive
opportunities. Debt to fund an acquisition may not be available
on short notice or may not be available on terms acceptable to
us. Although we have a revolving credit facility at the MIC Inc.
level primarily to fund acquisitions and capital expenditures,
we may require more funding than is available under this
facility and the level of our subsidiary indebtedness may limit
our ability to expand this facility if needed or incur
additional borrowings at the holding company level. This
facility matures in 2008 and we may be unable to refinance any
borrowing under this facility or enter into a new facility,
which could impede our ability to pursue our acquisition
strategy.

In addition to debt financing, we will likely fund or refinance
a portion of the consideration for future acquisitions through
the issuance of additional shares. If our shares do not maintain
a sufficient market value, issuance of new shares may result in
dilution of our then-existing shareholders. In addition,
issuances of new shares, either privately or publicly, may occur
at a discount to our stock price at the time. Our equity
financing activities may cause the market price of our stock to
decline. Alternatively, we may not be able to complete the
issuance of the required amount of shares on short notice or at
all due to a lack of investor demand for the shares at prices
that we find acceptable. As a result, we may not be able to
pursue our acquisition strategy successfully.

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Our businesses and investments are dependent on our
    relationships, on a contractual and regulatory level, with
    government entities that may have significant leverage over us.
    Government entities may be influenced by political
    considerations to take actions adverse to us.Our businesses and investments generally are, and our future
businesses and investments may be, subject to substantial
regulation by governmental agencies. In addition, their
operations do and may rely on government permits, licenses,
concessions, leases or contracts. Government entities, due to
the wide-ranging scope of their authority, have significant
leverage over us in their contractual and regulatory
relationships with us that they may exercise in a manner that
causes us delays in the operation of our business or pursuit of
our strategy, or increased administrative expense. Furthermore,
government permits, licenses, concessions, leases and contracts
are generally very complex, which may result in periods of
non-compliance, or disputes over interpretation or
enforceability. If we fail to comply with these regulations or
contractual obligations, we could be subject to monetary
penalties or we may lose our rights to operate the affected
business, or both. Where our ability to operate an
infrastructure business is subject to a concession or lease from
the government, the concession or lease may restrict our ability
to operate the business in a way that maximizes cash flows and
profitability. Further, our ability to grow our current and
future businesses will often require consent of numerous
government regulators. Increased regulation restricting the
ownership or management of U.S. assets, particularly
infrastructure assets, by
non-U.S.persons,
given the
non-U.S.ultimate
ownership of our Manager, may limit our ability to pursue
acquisitions. Any such regulation may also limit our
Managers ability to continue to manage our operations,
which could cause disruption to our business and a decline in
our performance. In addition, any required government consents
may be costly to seek and we may not be able to obtain them.
Failure to obtain any required consents could limit our ability
to achieve our growth strategy.

Our contracts with government entities may also contain clauses
more favorable to the government counterparty than a typical
commercial contract. For instance, a lease, concession or
general service contract may enable the government to terminate
the agreement without requiring them to pay adequate
compensation. In addition, government counterparties also may
have the discretion to change or increase regulation of our
operations, or implement laws or regulations affecting our
operations, separate from any contractual rights they may have.
Governments have considerable discretion in implementing
regulations that could impact these businesses. Because our
businesses provide basic, everyday services, and face limited
competition, governments may be influenced by political
considerations to take actions that may hinder the efficient and
profitable operation of our businesses and investments.



Governmental agencies may determine the prices we charge
    and may be able to restrict our ability to operate our business
    to maximize profitability.Where our businesses or investments are sole or predominant
service providers in their respective service areas and provide
services that are essential to the community, they are likely to
be subject to rate regulation by governmental agencies that will
determine the prices they may charge. We may be subject to
unfavorable price determinations that may be final with no right
of appeal or that, despite a right of appeal, could result in
our profits being negatively affected. In addition, we may have
very little negotiating leverage in establishing contracts with
government entities, which may decrease the prices that we
otherwise might be able to charge or the terms upon which we
provide products or services. Businesses and investments we
acquire in the future may also be subject to rate regulation or
similar negotiating limitations.



Our results are subject to quarterly and seasonal
    fluctuations.Our businesses can be subject to seasonal variations. Our
district energy business generally experiences greater revenues
and profitability in the summer months. Accordingly, our
operating results for any particular quarter may not be
indicative of the results that can be expected for any other
quarter or for the entire year.

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The ownership of businesses and investments located
    outside of the United States exposes us to currency exchange
    risks that may result in a decrease in the carrying value of our
    investments and a decrease in the amount of distributions we
    receive from our businesses and investments, which could
    negatively impact our results of operations.Our interests in CHL, MCG and SEW are subject to risk from
fluctuations in currency exchange rates, as the reporting
currencies of CHL and SEW are Pounds Sterling, and the reporting
currency of MCG is Australian dollars. We receive distributions
from CHL, MCG and SEW denominated in these currencies.
Fluctuations in the currency exchange rates for Pounds Sterling
and Australian dollars against the U.S. dollar resulting in
losses from any such fluctuations will be reflected in our
results. A strengthening of the U.S. dollar against these
currencies would reduce the U.S. dollar amount of the
distributions we receive from these foreign operations.



Certain provisions of the management services agreement,
    the operating agreement of the company and the trust agreement
    make it difficult for third parties to acquire control of the
    trust and the company and could deprive you of the opportunity
    to obtain a takeover premium for your shares.In addition to the limited circumstances in which our Manager
can be terminated under the terms of the management services
agreement, the management services agreement provides that in
circumstances where the trust stock ceases to be listed on a
recognized U.S. exchange or on the Nasdaq National Market
as a result of the acquisition of trust stock by third parties
in an amount that results in the trust stock ceasing to meet the
distribution and trading criteria on such exchange or market,
the Manager has the option to either propose an alternate fee
structure and remain our Manager or resign, terminate the
management services agreement upon 30 days written
notice and be paid a substantial termination fee. The
termination fee payable on the Managers exercise of its
right to resign as our Manager subsequent to a delisting of our
shares could delay or prevent a change in control that may favor
our shareholders. Furthermore, in the event of such a delisting,
any proceeds from the sale, lease or exchange of a significant
amount of assets must be reinvested in new assets of our
company. We are also prohibited from incurring any new
indebtedness or engaging in any transactions with the
shareholders of the company or its affiliates without the prior
written approval of the Manager. These provisions could deprive
the shareholders of the trust of opportunities to realize a
premium on the shares of trust stock owned by them.

The operating agreement of the company, which we refer to as the
LLC agreement, and the trust agreement contain a number of
provisions that could have the effect of making it more
difficult for a third party to acquire, or discouraging a third
party from acquiring, control of the trust and the company.
These provisions include:




    restrictions on the companys ability to enter into certain
    transactions with our major shareholders, with the exception of
    our Manager, modeled on the limitation contained in
    Section 203 of the Delaware General Corporation Law;
    allowing only the companys board of directors to fill
    vacancies, including newly created directorships and requiring
    that directors may be removed only for cause and by a
    shareholder vote of
    662/3%;
    requiring that only the companys chairman or board of
    directors may call a special meeting of our shareholders;
    prohibiting shareholders from taking any action by written
    consent;
    establishing advance notice requirements for nominations of
    candidates for election to the companys board of directors
    or for proposing matters that can be acted upon by our
    shareholders at a shareholders meeting;
    having a substantial number of additional shares of authorized
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
    providing the companys board of directors with broad
    authority to amend the LLC agreement and the trust
    agreement; and
    requiring that any person who is the beneficial owner of ten
    percent or more of our shares make a number of representations
    to the City of Chicago in its standard form of Economic
    Disclosure Statement, or EDS, the current form of which is
    included in our LLC agreement, which is incorporated by
    reference as an exhibit to this report.

Our airport parking business has a substantial amount of
    senior debt due to mature in 2006. The inability to extend,
    refinance or repay this debt when due would have a material
    adverse effect on the business. In addition, if interest rates
    or margins increase, the cost of servicing any refinancing debt
    will increase, reducing our profitability and ability to pay
    dividends.Our airport parking business has $126 million of senior
debt due in 2006. This loan will have to be extended or
refinanced on the maturity date or repaid. While our airport
parking business has the option to extend the senior debt for up
to two additional one-year periods, we cannot assure you that we
will meet the criteria necessary to exercise these extensions at
that time or that replacement loans will be available. If
available, replacement loans may only be available at
substantially higher interest rates or margins or with
substantially more restrictive covenants. Either event may limit
the operational flexibility of the business and its ability to
upstream dividends and distributions. We also cannot assure you
that we or the other owners of Macquarie Parking will be able to
make capital contributions to repay some or all of the debt if
required. If our airport parking business were unable to repay
its debts when due, this business would become insolvent. If
interest rates or margins increase, our businesses will pay
higher rates of interest on any debts that they raise to
refinance existing debt, thereby reducing their profitability
and, consequently, having an adverse impact on their ability to
pay dividends to us and our ability to pay dividends to
shareholders.

In addition, we do not currently have any interest rate hedges
in place to cover any borrowings under our MIC Inc. revolving
credit facility. If we draw down on our MIC Inc. revolving
credit facility, an increase in interest rates would directly
reduce our profitability and cash available for distribution to
shareholders. Our MIC Inc. revolving credit facility matures in
2008 and we expect to repay or refinance any borrowing
outstanding at that time and enter into a similar facility. An
increase in interests rates or margins at that time may
significantly increase the cost of any repayment or the terms
associated with any refinancing.



Our businesses and investments have environmental risks
    that may impact our future profitability.The operations of our businesses and investments are, and
businesses we acquire or investments we make in the future may
be, subject to numerous statutes, rules and regulations relating
to environmental protection. In particular, our airport services
business is subject to environmental protection requirements
relating to the storage, transport, pumping and transfer of
fuel, and our district energy business is subject to
requirements relating mainly to its handling of significant
amounts of hazardous materials. Certain statutes, rules and
regulations might also require that our businesses, or
businesses we acquire in the future, address possible prior or
future environmental contamination, including soil and
groundwater contamination, that results from the spillage of
fuel, hazardous materials or other pollutants.

Under various federal, state, local and foreign environmental
statutes, rules and regulations, a current or previous owner or
operator of real property may be liable for noncompliance with
applicable environmental and health and safety requirements and
for the costs of investigation, monitoring, removal or
remediation of hazardous materials. These laws often impose
liability, whether or not the owner or operator knew of, or was
responsible for, the presence of hazardous materials. The
presence of these hazardous materials on a property could also
result in personal injury or property damage or similar claims
by private parties.

Persons who arrange for the disposal or treatment of hazardous
materials may also be liable for the costs of removal or
remediation of those materials at the disposal or treatment
facility, whether or not that facility is or ever was owned or
operated by that person.

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Any liability resulting from noncompliance or other claims
relating to environmental matters could have a material adverse
effect on our results of operations, financial condition,
liquidity and prospects.



We are dependent on certain key personnel, and the loss of
    key personnel, or the inability to retain or replace qualified
    employees, could have an adverse effect on our business,
    financial condition and results of operations.We operate our businesses on a stand-alone basis, relying on
existing management teams for
day-to-day operations.
Consequently, our operational success, as well as the success of
our internal growth strategy, will be dependent on the continued
efforts of the management teams of our businesses, who have
extensive experience in the
day-to-day operations
of these businesses. Furthermore, we will likely be dependent on
the operating management teams of businesses that we may acquire
in the future. The loss of key personnel, or the inability to
retain or replace qualified employees, could have an adverse
effect on our business, financial condition and results of
operations.



Any adverse development in the general aviation industry
    that results in less air traffic at airports we service would
    have a material adverse impact on our airport services
    business.A large part of the revenues at our airport services business is
generated from fuel sales and other services provided to general
aviation customers. Air travel and air traffic volume of general
aviation customers can be affected by airport-specific
occurrences as well as events that have nationwide and
industry-wide implications. The events of September 11,
2001 had a significant adverse impact on the aviation industry,
particularly in terms of traffic volume due to forced closures.
Immediately following September 11, 2001, thousands of
general aviation aircraft were grounded for weeks due to the
FAAs no-fly zone restrictions imposed on the
operation of aircraft. Airport specific circumstances include
situations in which our major customers relocate their home base
or preferred fueling stop to alternative locations.
Additionally, the general economic conditions of the area where
the airport is located will impact the ability of our FBOs to
attract general aviation customers or generate fuel sales, or
both. Significant increases in fuel prices may also decrease the
demand for our services, including refueling services, or result
in lower fuel sales margins, or both, leading to lower operating
income.

Changes in the general aviation market as a whole may adversely
affect our airport services business. General aviation travel is
more expensive than alternative modes of travel. Consequently,
during periods of economic downturn, FBO customers may choose to
travel by less expensive means, which could impact the earnings
of our airport services business. In addition, changes to
regulations governing the tax treatment relating to general
aviation travel, either for businesses or individuals, may cause
a reduction in general aviation travel. Travel by commercial
airlines may also become more attractive for general aviation
travelers if the cost of commercial airline travel decreases or
if service levels improve. Under these circumstances, our FBOs
may lose customers to the commercial air travel market, which
may decrease our earnings.



Our airport services business is subject to a variety of
    competitive pressures, and the actions of competitors may have a
    material adverse effect on the revenues of our airport services
    business.FBO operators at a particular airport compete based on a number
of factors, including location of the facility relative to
runways and street access, service, value added features,
reliability and price. Many of our FBOs compete with one or more
FBOs at their respective airports, and, to a lesser extent, with
FBOs at nearby airports. We cannot predict the actions of
competitors who may seek to increase market share. Some present
and potential competitors have or may obtain greater financial
and marketing resources than we do, which may negatively impact
our ability to compete at each airport.

Our sole provider FBOs (including the heliport) do not have the
right to be the sole provider of FBO services at any of our FBO
locations. The authority responsible for each airport has the
ability to grant other FBO leases at the airport and new
competitors could be established at those FBO locations. The
addition

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of new competitors is particularly likely if we are seen to be
earning significant profits from these FBO operations. Any such
actions, if successful, may reduce, or impair our ability to
increase, the revenues of the FBO business.



The termination for cause or convenience of one or more of
    the FBO leases would damage our airport services business
    significantly.Our airport services revenues are derived from long-term FBO
leases at airports and one heliport. If we default on the terms
and conditions of our leases, the relevant authority may
terminate the lease without compensation, and we would then lose
the income from that location, and would be in default under the
loan agreements of our airport services business and be obliged
to repay our lenders a portion or all of our outstanding loan
amount. Our leases at Chicago Midway, Philadelphia, North East
Philadelphia, New Orleans International and Orange County, and
the Metroport 34th Street Heliport in New York City allow
the relevant authority to terminate the lease at their
convenience. If the relevant authority were to terminate any of
those leases, we would then lose the income from that location
and be obliged to repay our lenders a portion or all of the then
outstanding loan amount.



Occupancy of our airport parking business facilities
    is dependent on the level of passenger traffic at the airports
    at which we operate and reductions in passenger traffic could
    negatively impact our results of operations.Our airport parking business parking facilities are
dependent upon parking traffic primarily generated by commercial
airline passengers and are therefore susceptible to competition
from other airports and to disruptions in passenger traffic at
the airports at which we operate. For example, the events of
September 11, 2001 had a significant impact on the aviation
industry and, as a result, negatively impacted occupancy levels
at parking facilities. In the first few days following
September 11, 2001, revenue from our parking facilities was
negligible and did not fully recover until some months after the
event. Other events such as wars, outbreaks of disease, such as
SARS, and terrorist activities in the United States or overseas
may reduce airport traffic and therefore occupancy rates. In
addition, traffic at an airport at which we have facilities may
be reduced if airlines reduce the number of flights at that
airport.



Our airport parking business is exposed to competition
    from both on-airport and off-airport parking, which could slow
    our growth or harm our business.At each of the locations at which our airport parking business
operates, it competes with both on-airport parking facilities,
many of which are located closer to passenger terminals, and
other off-airport parking facilities. If an airport expands its
parking facilities or if new off-airport parking facilities are
opened or existing facilities expanded, customers may be drawn
away from our sites or we may have to reduce our parking rates,
or both.

Parking rates charged by us at each of our locations are set
with reference to a number of factors, including prices charged
by competitors and quality of service by on-airport and
off-airport competitors, the location and quality of the
facility and the level of service provided. Additional sources
of competition to our parking operations may come from new or
improved transportation to the airports where our parking
facilities are located. Improved rail, bus or other services may
encourage our customers not to drive to the airport and
therefore negatively impact revenue.



Changes in regulation by airport authorities or other
    governmental bodies governing the transportation of customers to
    and from the airports at which our airport parking business
    operates may negatively affect our operating results.Our airport parking business shuttle operations transport
customers between the airport terminals and its parking
facilities and are regulated by, and are subject to, the rules
and policies of the relevant local airport authority, which may
be changed at their discretion. Some airport authorities levy
fees on off-airport parking operators for the right to transport
customers to the terminals. There is a risk that airport
authorities

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may deny or restrict our access to terminals, impede our ability
to manage our shuttle operations efficiently, impose new fees or
increase the fees currently levied.

Further, the FAA and the Transportation Security Administration,
or TSA, regulate the operations of all the airports at which our
airport parking business has locations. The TSA has the
authority to restrict access to airports as well as to impose
parking and other restrictions around the airports. The TSA
could impose more stringent restrictions in the future that
would inhibit the ability of customers to use our parking
facilities.



Pursuant to the terms of a use agreement with the City of
    Chicago, the City of Chicago has rights that, if exercised,
    could have a significant negative impact on our district energy
    business.In order to operate our district cooling system in downtown
Chicago, we have obtained the right to use certain public ways
of the City of Chicago under a use agreement, which we refer to
as the Use Agreement. Under the terms of the Use Agreement, the
City of Chicago retains the right to use the public ways for a
public purpose and has the right in the interest of public
safety or convenience to cause us to remove, modify, replace or
relocate our facilities at our own expense. If the City of
Chicago exercises these rights, we could incur significant costs
and our ability to provide service to our customers could be
disrupted, which would have an adverse effect on our business,
financial condition and results of operations. In addition, the
Use Agreement is non-exclusive, and the City of Chicago is
entitled to enter into use agreements with our potential
competitors.

The Use Agreement expires on December 31, 2020 and may be
terminated by the City of Chicago for any uncured material
breach of its terms and conditions. The City of Chicago also may
require us to pay liquidated damages of $6,000 a day if we fail
to remove, modify, replace or relocate our facilities when
required to do so, if we install any facilities that are not
properly authorized under the Use Agreement or if our district
cooling system does not conform to the City of Chicagos
standards. Each of these noncompliance penalties could result in
substantial financial loss or effectively shut down our district
cooling system in downtown Chicago.

Any proposed renewal, extension or modification of the Use
Agreement requires approval by the City Council of Chicago.
Extensions and modifications subject to the City of
Chicagos approval include those to enable the expansion of
chilling capacity and the connection of new customers to the
district cooling system. The City of Chicagos approval is
contingent upon the timely filing of an Economic Disclosure
Statement, or EDS, by us and certain of the beneficial owners of
our stock. If any of these investors fails to file a completed
EDS form within 30 days of the City of Chicagos
request or files an incomplete or inaccurate EDS, the City of
Chicago has the right to refuse to provide the necessary
approval for any extension or modification of the Use Agreement
or to rescind the Use Agreement altogether. If the City of
Chicago declines to approve extensions or modifications to the
Use Agreement, we may not be able to increase the capacity of
our district cooling system and pursue our growth strategy for
our district energy business. Furthermore, if the City of
Chicago rescinds or voids the Use Agreement, our district
cooling system in downtown Chicago would be effectively shut
down and our business, financial condition and results of
operations would be materially and adversely affected as a
result.



Certain of our investors may be required to comply with
    certain disclosure requirements of the City of Chicago and
    noncompliance may result in the City of Chicagos
    rescission or voidance of the Use Agreement and any other
    arrangements our district energy business may have with the City
    of Chicago at the time of the noncompliance.In order to secure any amendment to the Use Agreement with the
City of Chicago to pursue expansion plans or otherwise, or to
enter into other contracts with the City of Chicago, the City of
Chicago may require any person who owns or acquires seven and
one half percent or more of our shares to make a number of
representations to the City of Chicago by filing a completed
EDS. Our LLC agreement and our trust agreement require that in
the event that we need to obtain approval from the City of
Chicago in the

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future for any specific matter, including to expand the district
cooling system or to amend the Use Agreement, we and each of our
then ten percent investors would need to submit an EDS to the
City of Chicago within 30 days of the City of
Chicagos request. In addition, our LLC agreement and our
trust agreement require each ten percent investor to provide any
supplemental information needed to update any EDS filed with the
City of Chicago as required by the City of Chicago and as
requested by us from time to time. However, in 2005, the City of
Chicago passed an ordinance lowering the ownership percentage
for which an EDS is required from ten percent to seven and one
half percent.

We are currently in discussions with the City of Chicago that
would allow us to satisfy this requirement through an
alternative solution. If we fail to reach agreement with the
City of Chicago in a timely manner, we may need to extend the
requirements in our LLC and trust agreements to seven and one
half percent owners.

Any EDS filed by an investor may become publicly available. By
completing and signing an EDS, an investor will have waived and
released any possible rights or claims which it may have against
the City of Chicago in connection with the public release of
information contained in the EDS and also will have authorized
the City of Chicago to verify the accuracy of information
submitted in the EDS. The requirements and consequences of
filing an EDS with the City of Chicago will make compliance with
the EDS requirements difficult for our investors. If an investor
fails to provide us and the City of Chicago with the information
required by an EDS, our LLC and trust agreements provide us with
the right to seek specific performance by such investor.
However, we currently do not have this right with respect to
investors that own less than ten percent of our shares. In
addition, any action for specific performance we bring may not
be successful in securing timely compliance of every investor
with the EDS requirements.

If any investor fails to comply with the EDS requirements on
time or the City of Chicago determines that any information
provided in any EDS is false, incomplete or inaccurate, the City
of Chicago may rescind or void the Use Agreement or any other
arrangements Thermal Chicago has with the City of Chicago, and
pursue any other remedies available to them. If the City of
Chicago rescinds or voids the Use Agreement, our district
cooling system in downtown Chicago would be effectively shut
down and our business, financial condition and results of
operations would be adversely affected as a result.



Our district energy business may not be able to fully pass
    increases in electricity costs through to its customers, thereby
    resulting in lowered operating income. This risk may be
    increased by the deregulation of electricity markets in Illinois
    scheduled for January 2007, which may result in higher and more
    volatile electricity prices.The Illinois electricity markets are expected to deregulate
beginning in January 2007 and we will be required to enter into
new electricity purchase arrangements effective at that time as
discussed under Our Businesses and Investments 
District Energy Business  Business 
Thermal Chicago  Electricity Costs in
Item 1. Business. ComEd has proposed a procurement process
referred to as a reverse-auction. The market prices of
electricity available to us are likely to reflect prices
established in the reverse-auction process. Market prices of
electricity in Illinois are also affected by changes in natural
gas prices, which have been very volatile, but overall have
increased significantly over the past year. We cannot predict
the market prices for electricity that we will face beginning in
2007 but we anticipate, based on current market dynamics, that
our electricity will increase substantially in 2007. If these
market dynamics change in a way that is adverse to us, our costs
could be higher than we currently anticipate. In addition, on
August 31, 2005, ComEd filed a rate case with the ICC,
which seeks, among other things, to increase delivery rates in a
manner that we believe disproportionately impacts larger users
of electricity. If the rate case is approved as currently
proposed, our electricity costs would increase by an additional
$2 million annually.

The index adjustment in our contracts is unlikely to fully
offset these costs. In addition, because our contracts typically
adjust consumption charges annually, there is likely to be a
significant lag before changes in market prices of electricity
are reflected in our contracts overall. As a result of these
increased electricity costs, the performance of our district
energy business is likely to decline, which could have a

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material adverse effect on distributions from our district
energy business to us and our ability to maintain our
distributions to shareholders with funds from operations.



If certain events within or beyond the control of our
    district energy business occur, our district energy business may
    be unable to perform its contractual obligations to provide
    chilling and heating services to its customers. If, as a result,
    its customers elect to terminate their contracts, our district
    energy business may suffer loss of revenues. In addition, our
    district energy business may be required to make payments to
    such customers for damages.In the event of a shutdown of one or more of our district energy
business plants due to operational breakdown, strikes, the
inability to retain or replace key technical personnel or events
outside its control, such as an electricity blackout, or
unprecedented weather conditions in Chicago, our district energy
business may be unable to continue to provide chilling and
heating services to all of its customers. As a result, our
district energy business may be in breach of the terms of some
or all of its customer contracts. In the event that such
customers elect to terminate their contracts with our district
energy business as a consequence of their loss of service, its
revenues may be materially adversely affected. In addition,
under a number of contracts, our district energy business may be
required to pay damages to a customer in the event that a
cessation of service results in loss to that customer.



Northwind Aladdin currently derives approximately 90% of
    its cash flows from a contract with a single customer, the
    Aladdin resort and casino, which recently emerged from
    bankruptcy. If this customer were to enter into bankruptcy
    again, our contract may be amended or terminated and we may
    receive no compensation, which could result in the loss of our
    investment in Northwind Aladdin.Northwind Aladdin derives approximately 90% of its cash flows
from a contract with the Aladdin resort and casino in Las Vegas
to supply cold and hot water and
back-up electricity.
The Aladdin resort and casino emerged from bankruptcy
immediately prior to MDEs acquisition of Northwind Aladdin
in September 2004, and, during the course of those proceedings,
the contract with Northwind Aladdin was amended to reduce the
payment obligations of the Aladdin resort and casino. If the
Aladdin resort and casino were to enter into bankruptcy again
and a cheaper source of the services that Northwind Aladdin
provides can be found, our contract may be terminated or
amended. This could result in a total loss or significant
reduction in our income from Northwind Aladdin, for which we may
receive no compensation.



Our toll road business revenues may be adversely
    affected if traffic volumes remain stable or decline.Since the shadow toll revenues payable by the U.K.
governments Secretary of State for Transport, or the
Transport Secretary, are linked to the volume of traffic using
the Yorkshire Link, our toll road business revenues will
be adversely affected if traffic volumes decline. A decline in
traffic volume could result from a number of factors, including
recession, increases in fuel prices, attractive alternative
transport routes or improvements in public transportation.

In addition, pursuant to the formulas provided by the terms of
the concession, shadow toll revenues will decrease through time
if there is no growth in traffic volume or inflation. The
magnitude of the decrease varies depending on the total volume
of traffic; however, in the year ended March 31, 2005, in
the absence of traffic volume growth or inflation, revenues of
Yorkshire Link would have declined by approximately
£0.6 million or 1.3% compared to revenues for the year
ended March 31, 2004.

Also, the concession provides for a significant reduction in the
shadow toll revenues payable by the Transport Secretary from
2014.

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The Transport Secretary may terminate the concession
    without compensation to our toll road business or with
    insufficient compensation, which would reduce the value of our
    investment and negatively affect our operating results.If our toll road business defaults on its obligations set out in
the concession, the Transport Secretary may terminate the
concession without compensation to our toll road business. Even
if our toll road business does not default on its obligations
under the concession, the Transport Secretary may terminate the
concession in the event that:




    the performance of the concession becomes impossible without the
    exercise of a statutory power by the Transport Secretary;
    the Transport Secretary chooses not to exercise that power
    following a request from our toll road business; and
    our toll road business and the Transport Secretary fail to agree
    on an alternative means of performance within a period of
    90 days.We are unable to predict if or when such circumstances might
occur. The concession also may be terminated by the Transport
Secretary in certain other circumstances, including an event of
force majeure. The compensation required to be paid in such
circumstances may be insufficient for us to recover our full
investment in our toll road business. Failure to compensate our
toll road business in the event of termination may result in the
value of our investment in our toll road business being reduced
to nothing since our toll road business would likely default on
its debt obligations in these circumstances.



We share control of our toll road business equally with
    our partner Balfour Beatty and, as a result, are not in a
    position to control operations, strategies or financial
    decisions without the concurrence of Balfour Beatty.We hold a 50% interest in our toll road business and the
remaining 50% is held by Balfour Beatty. We are not in a
position to control operations, strategies or financial
decisions without the agreement of Balfour Beatty. Conflicts may
arise in the future between our business objectives and those of
Balfour Beatty. If this were to occur, decisions to take action
necessary, in our view, for the proper management of the
business might not be made.



MCGs investments in Broadcast Australia and Arqiva
    rely upon key customers. If contracts with these customers were
    terminated and Broadcast Australia or Arqiva were not adequately
    compensated, or if the contracts were not renewed, MCGs
    revenues would be significantly reduced.MCGs only investments at present are 100% ownership of
Broadcast Australia and a 54% stake in Arqiva. Broadcast
Australias two key customers are the government-owned
national broadcasters, the Australian Broadcasting Corporation,
or the ABC, and Special Broadcasting Service, or SBS, which
together accounted for approximately 87% of Broadcast
Australias total revenue in its fiscal year ended
June 30, 2005. ABC and SBS both currently receive
Australian government funding to provide transmission services,
but that funding could be reduced or withdrawn. Broadcast
Australia has entered into a series of long-term contracts with
ABC and SBS, with terms generally ending between 2008 and 2024.
The majority of Arqivas revenue is earned under long-term
contracts with a small number of customers, with terms generally
ending between 2007 and 2015. If these contracts are terminated
and Broadcast Australia or Arqiva are not adequately
compensated, or the contracts are not renewed at their
expiration, Broadcast Australias or Arqivas
operations would be materially adversely affected.



A change in the ownership of the ABC or SBS may cause
    Broadcast Australia to be in default under its loan agreements,
    which would adversely affect dividends paid by MCG to us.An event of default occurs under Broadcast Australias loan
agreements if the Australian government ceases to own more than
50% of the issued shares of the ABC and if Broadcast
Australias medium-term

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notes have not been repaid within 270 days, or if the
Australian government ceases to own or control more than 50% of
the issued shares of the ABC or SBS and this has a material
adverse effect on Broadcast Australias ability to perform
its obligations under the loan agreements. If such an event of
default occurs, it will adversely affect the amount of dividends
paid by MCG to us.



SEWs revenues are subject to regulation and SEW may
    receive unfavorable treatment from U.K. regulatory authorities,
    which could negatively impact its revenue in the future.As the sole water-only supplier in its service areas, the prices
that SEW charges for its services are subject to review and
approval every five years by Ofwat, the water regulator for
England and Wales. Ofwat has the power to deny recovery of
certain operating expenses and/or capital expenditures. These
are significant for SEW, in common with other water companies in
England and Wales, due to the age of some parts of their water
network. Similarly, Ofwat could determine that a reduced return
on invested capital should be allowed. Taking these views and
reducing the prices that SEW charges for its services would
cause a negative impact on the future revenues of the company.



SEW is dependent on the availability of water supplies
    and, if such supply is not sufficient, could incur substantial
    costs, which, despite the existence of interim pricing review
    mechanisms, may not be adequately compensated.SEW requires sufficient water to supply its customer base. The
availability of water is subject to, among other things, SEW
continuing to benefit from water abstraction licenses,
contractual arrangements for the supply of water from
neighboring water companies, investment in increasing water
resources to match customer growth and short-term issues
affecting water supply, such as drought. Ofwat has placed SEW,
along with other southern water companies, in the lowest
quartile in terms of security of water supply. As a result of
the current water shortage and continuing housepipe ban, SEW has
been exposed to additional costs and reputational damage. There
are significant uncertainties beyond SEWs control
affecting the amount of water resources, including climate
change, the amount of annual rainfall, the rate of house
building and industrial development in SEWs service areas
and other factors. SEW could incur substantial costs to secure a
sufficient water supply which, despite the existence of interim
pricing review mechanisms, may not be adequately compensated.



SEW is required to comply with government regulations with
    respect to water quality. If SEW failed to comply, SEW could be
    fined, become subject to other punitive regulatory action and/or
    become liable for any injury caused to its customers by
    inadequate water quality, any of which could have a significant
    negative impact on SEWs profitability.SEWs water quality is required to meet standards set by
the U.K. governments Drinking Water Inspectorate. In
addition, SEW is required to meet other U.K. government
guidelines in relation to the security of its facilities. If SEW
failed to comply with these guidelines, SEW could be fined,
become subject to other punitive regulatory action and/or become
liable for any injury caused to its customers by inadequate
water quality, any of which could have a significant negative
impact on SEWs profitability.



We may face a greater exposure to terrorism than other
    companies because of the nature of our businesses and
    investments.We believe that infrastructure businesses face a greater risk of
terrorist attack than other businesses, particularly those
businesses that have operations within the immediate vicinity of
metropolitan and suburban areas. Any terrorist attacks that
occur at or near our business locations would likely cause
significant harm to our employees and assets. As a result of the
terrorist attacks in New York on September 11, 2001,
insurers significantly reduced the amount of insurance coverage
available for liability to persons other than employees or
passengers for claims resulting from acts of terrorism, war or
similar events. A terrorist attack that makes use of our
property, or property under our control, may result in liability
far in excess of available insurance coverage. In addition, any
further terrorist attack, regardless of location, could cause a
disruption

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to our business and a decline in earnings. Furthermore, it is
likely to result in an increase in insurance premiums and a
reduction in coverage, which could cause our profitability to
suffer.



The market price and marketability of our shares may from
    time to time be significantly affected by numerous factors
    beyond our control, which may adversely affect our ability to
    raise capital through future equity financings.The market price of our shares may fluctuate significantly. Many
factors that are beyond our control may significantly affect the
market price and marketability of our shares and may adversely
affect our ability to raise capital through equity financings.
These factors include the following:




    price and volume fluctuations in the stock markets generally;
    significant volatility in the market price and trading volume of
    securities of registered investment companies, business
    development companies or companies in our sectors, which may not
    be related to the operating performance of these companies;
    changes in our earnings or variations in operating results;
    any shortfall in revenue or net income or any increase in losses
    from levels expected by securities analysts;
    changes in regulatory policies or tax law;
    operating performance of companies comparable to us; and
    loss of a major funding source.

A significant and sustained increase in the price of oil
    could have a negative impact on the revenues of a number of our
    businesses.A significant and sustained increase in the price of oil could
have a negative impact on the revenues of a number of our
business. Higher prices for jet fuel could result in less use of
aircraft by general aviation customers which would have a
negative impact on the revenues of our airport services
business. Higher prices for jet fuel will increase the cost of
traveling by commercial aviation which could result in lower
enplanements at the airports where our airport parking business
operates and therefore less patronage of our parking facilities
and lower revenues. Higher fuel prices could also result in less
traffic using Yorkshire Link and therefore lower shadow toll
payments and would increase the cost of power to our district
energy business which it may not be able to fully pass on to
customers pursuant to the terms of our contracts with them.

Risks Related to Taxation



Shareholders may be subject to taxation on their share of
    our taxable income, whether or not they receive cash
    distributions from us.Shareholders may be subject to U.S. federal income taxation
and, in some cases, state, local, and foreign income taxation on
their share of our taxable income, whether or not they receive
cash distributions from us. Shareholders may not receive cash
distributions equal to their share of our taxable income or even
the tax liability that results from that income. In addition, if
we invest in the stock of a controlled foreign corporation (or
if one of the corporations in which we invest becomes a
controlled foreign corporation, an event which we cannot
control), we may recognize taxable income, which shareholders
will be required to take into account in determining their
taxable income, without a corresponding receipt of cash to
distribute to them.

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If the company fails to satisfy the qualifying
    income exception, all of its income, including income
    derived from its
    non-U.S. assets,
    will be subject to an entity-level tax in the United States,
    which could result in a material reduction in our
    shareholders cash flow and after-tax return and thus could
    result in a substantial reduction in the value of the
    shares.A publicly traded partnership will not be characterized as a
corporation for U.S. federal income tax purposes so long as
90% or more of its gross income for each taxable year
constitutes qualifying income within the meaning of
Section 7704(d) of the Code. We refer to this exception as
the qualifying income exception. The company has concluded that
it is classified as a partnership for U.S. federal income
tax purposes. This conclusion is based upon the fact that:
(a) the company has not elected and will not elect to be
treated as a corporation for U.S. federal income tax
purposes; and (b) for each taxable year, the company
expects that more than 90% of its gross income is and will be
income that constitutes qualifying income within the meaning of
Section 7704(d) of the Code. Qualifying income includes
dividends, interest and capital gains from the sale or other
disposition of stocks and bonds. If the company fails to satisfy
the qualifying income exception described above,
items of income and deduction would not pass through to
shareholders and shareholders would be treated for
U.S. federal (and certain state and local) income tax
purposes as shareholders in a corporation. In such case, the
company would be required to pay income tax at regular corporate
rates on all of its income, including income derived from its
non-U.S.assets.
In addition, the company would likely be liable for state and
local income and/or franchise taxes on all of such income.
Distributions to shareholders would constitute ordinary dividend
income taxable to such shareholders to the extent of the
companys earnings and profits, and the payment of these
dividends would not be deductible by the company. Taxation of
the company as a corporation could result in a material
reduction in our shareholders cash flow and after-tax
return and thus could result in a substantial reduction of the
value of the shares.



The current treatment of qualified dividend income and
    long-term capital gains under current U.S. federal income
    tax law may be adversely affected, changed or repealed in the
    future. Further, should the dividends we receive from CHL, MCG
    and SEW no longer be treated as qualified dividend income, your
    distributive share of any dividends we receive from such
    companies will be taxed at the tax rates generally applicable to
    ordinary income, which could negatively impact your after-tax
    return.Under current law, qualified dividend income and long-term
capital gains are taxed to non-corporate investors at a maximum
U.S. federal income tax rate of 15%. This tax treatment may
be adversely affected, changed or repealed by future changes in
tax laws at any time and is currently scheduled to expire for
tax years beginning after December 31, 2008. We anticipate
that we will report each shareholders distributive share
of dividends we receive from SEW as qualified dividend income,
but it is possible that the Internal Revenue Service, or the
IRS, may take a contrary view under existing law or that
regulations or other administrative guidance interpreting the
qualified dividend income provisions will prevent dividends
received by the company from SEW from constituting qualified
dividend income. Further, because the ownership and activities
of CHL, MCG and SEW are not within our control, each of such
entities could experience a change of ownership or activities
that could result in dividends we receive from such corporations
no longer being considered qualified dividend income, and we
will be unable to stop such a change from occurring.







Item 1B.
    Unresolved Staff CommentsNone.







Item 2.
    PropertiesAirport Services Business

Our airport services business does not own any real property.
Its operations are carried out under various leases. Our airport
services business leases office space for its head office in
Plano, Texas, and satellite offices in Baltimore, Maryland and
at Teterboro Airport. For more information regarding our FBO

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locations see Business  Our Businesses and
Investments  Airport Services  Business
Locations in Part I, Item 1. The lease in Plano
expires in 2008 and the lease in Baltimore expires in 2006. We
believe that these facilities are adequate to meet current and
foreseeable future needs.

At its FBO sites, our airport services business owns or leases a
number of vehicles, including fuel trucks, as well as other
equipment needed to service customers. Some phased replacement
and routine maintenance is performed on this equipment. We
believe that the equipment is generally well maintained and
adequate for present operations.

Airport Parking Business

Our airport parking business has 31 off-airport parking
facilities located at 20 airports throughout the United
States. The land on which the facilities are located is either
owned or leased by us. The material leases are generally
long-term in nature. Please see the description under
Business  Our Businesses and
Investments  Airport Parking Business 
Locations in Part I, Item 1 for a fuller
description of the nature of the properties where these
facilities are located.

Our airport parking business leases office space for its head
office in Downey, California. The lease expires in 2010. We
believe that the leased facility is adequate to meet current and
foreseeable needs.

Our airport parking business operates a fleet of shuttle buses
to transport customers to and from the airports at which it
operates. The buses are either owned or leased. The total size
of the fleet is approximately 205 shuttle buses. Some routine
maintenance is performed by its own mechanics, while we
outsource more significant maintenance. We believe that these
vehicles are generally well maintained and adequate for present
operations. Our airport parking business replaces the shuttle
fleet approximately every three to five years.

District Energy Business

Thermal Chicago owns or leases six plants as follows:

|             |     |  |                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------ | --- |  | ------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plant Number |     |  | Ownership or Lease Information
|             |     |  |                               
|             | P-1 |  |                                | Thermal Chicago has a long-term
    ground lease until 2043 with an option to renew for
    49 years. The plant is owned by Thermal Chicago.                                                                                                                                                                                                                                                                                                                                                          
|             | P-2 |  |                                | Property and plant are owned by
    Thermal Chicago.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|             | P-3 |  |                                | Thermal Chicago has a ground lease
    that expires in 2017 with a right to renew for ten years. The
    plant is owned by Thermal Chicago but the landlord has a
    purchase option over one-third of the plant.                                                                                                                                                                                                                                                                                    
|             | P-4 |  |                                | Thermal Chicago has a ground lease
    that expires in 2016 and we may renew the lease for another
    ten years for the P-4B plant unilaterally, and for P-4A,
    with the consent of the landlord. Thermal Chicago acquired the
    existing P-4A plant and completed the building of the P-4B plant
    in 2000. The landlord can terminate the service agreement and
    the plant A premises lease upon transfer of the property, on
    which the A and B plants are located, to a third party.
|             | P-5 |  |                                | Thermal Chicago has an exclusive
    perpetual easement for the use of the basement where the plant
    is located.                                                                                                                                                                                                                                                                                                                                                                                   
|             | P-6 |  |                                | Thermal Chicago has a contractual
    right to use the property pursuant to a service agreement.
    Thermal Chicago will own the plant until the earliest of 2025
    when the plant reverts to the customer or until the customer
    exercises an early purchase option. Early in 2005, the customer
    indicated its intent to exercise the early purchase option but
    has not pursued the matter to date.                                                                                    



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Northwind Aladdins plant is housed in its own building on
a parcel of leased land within the perimeter of the Aladdin
resort and casino. The lease is co-terminus with the supply
contract with the Aladdin resort and casino. The plant is owned
by Northwind Aladdin and upon termination of the lease the plant
is required to either be abandoned or removed at the
landlords expense. The plant has sufficient capacity to
serve its customers and has room for expansion if needed.

Toll Road Business

Connect M1-A1 Limited
does not own any real estate. It has a license to occupy the
land on which Yorkshire Link has been constructed, and it has a
lease over the site used as the maintenance compound for the
duration of the concession.

SEW

SEW owns four reservoirs, 171 storage towers and 64 treatment
plants. As of December 31, 2005, the unaudited book value
of SEWs tangible assets was £415.9 million (USD
$715 million). Its main network extends some
6,000 miles. A review by SEW of the condition of its
assets, which was accepted by Ofwat, indicated that 87% of
SEWs assets are in average or better-than-average
condition with the majority of the balance nearing the end of
their useful life and thus requiring replacement over the next
ten years and a small percentage that require replacement
in the short term.







Item 3.
    Legal ProceedingsAirport Services Business

On or about May 15, 2002, the families of two pilots killed
in a plane crash in 2000 filed complaints in the Supreme Court
of New York against a number of parties, including EAS, a
subsidiary within our airport services business, and a formerly
owned subsidiary, Million Air Interlink, Inc., or Million Air
Interlink, asserting claims for punitive damages, wrongful death
and pain and suffering and seeking $100 million in punitive
damages, $100 million for wrongful death and
$5 million for pain and suffering. The plaintiffs
claim arose out of a plane crash allegedly caused by one of the
aircrafts engines losing power, which caused the plane to
crash, killing all on board. The engine lost power as a result
of fuel starvation. The plaintiffs alleged this was caused by
insufficient fuel or design fault. The plane had last been
refueled prior to the accident at the Farmingdale FBO operated
by Flightways of Long Island, Inc., or Flightways, on the day of
the accident.

EAS and Million Air Interlink moved to dismiss the complaints
for lack of jurisdiction because Flightways, rather than EAS or
Million Air Interlink, was the entity that operated the
Farmingdale FBO, and that employed the person who refueled the
plane in question. The court denied the motion, permitting
discovery to go forward on the jurisdictional issues, and with
leave for the defendants to refile the motion if discovery
warranted doing so.

Flightways was subsequently added as a defendant. USAIG, the
insurer of Flightways under the primary insurance policy,
assumed the defense on behalf of the three Atlantic defendants.
On June 23, 2005, the defendants entered into a settlement
agreement with the plaintiffs under which the three Atlantic
defendants are liable for $325,000 of the total settlement
amount, all of which is expected to be covered by insurance. The
settlement is pending surrogate court approval.

On February 28, 2005, Rohan Foster and Margaret Foster
filed a complaint in the Supreme Court of New Jersey, Passaic
County, naming several defendants, including various parties
within our airport services business, based on injuries they
allegedly suffered when a
Challenger CL-600
aircraft failed to ascend during take off from the Teterboro
Airport and ran off of the runway, the airport grounds, onto and
across a public highway. The complaint alleges, among other
things, negligence in the maintenance and control of the
aircraft and maintenance, operation, management and control of
the airport, and seeks an unspecified amount of compensatory and
special damages. The plaintiffs have agreed to voluntarily
dismiss the claim without prejudice against the AvPorts
defendant. We are seeking a similar dismissal for

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the Atlantic defendants. On April 14, 2005, James and
Catherine Dinnall filed a complaint in the Superior Court of New
Jersey, Essex County, naming several defendants, including
various parties within our airport services business, based on
injuries allegedly suffered in the same incident at the
Teterboro Airport. The complaint alleged, among other things,
negligence in the inspection, service and maintenance of the
aircraft and in permitting an allegedly unfit aircraft to be
used on the runway, seeking an unspecified amount of
compensatory and punitive damages and costs of suit. The claim
against the AvPorts defendant has been dismissed without
prejudice and we are seeking a similar dismissal for the
Atlantic defendants.

Toll Road Business

Neither Macquarie Yorkshire, CHL nor Connect M1-A1 Limited is
currently a party to any material legal proceedings.

On March 20, 2004, a fatal road accident occurred on
Yorkshire Link. The accident is currently the focus of an
ongoing investigation by local police authorities. As part of
their investigation, the police have interviewed several
employees and, pursuant to a search warrant, have collected
certain documentation from Connect
M1-A1 Limiteds
offices. Connect M1-A1
Limited has fully cooperated with the police investigation and,
to date, has received no further information with respect to the
outcome of the police investigation. Connect
M1-A1 Limited has
conducted an internal investigation and believes that its
maintenance of the section of Yorkshire Link where the accident
occurred was in compliance with its obligations under the
concession. The seller to us of our interest in Yorkshire Link
has indemnified us for our proportional share of any loss of
revenue, penalties awarded by a court in potential civil or
criminal proceedings or imposed by the Transport Secretary under
the concession and legal expenses and other costs associated
with any claim arising from this accident up to a maximum of
£2.75 million.

SEW

In 2003 and 2004, V.A.S. Maddison Ltd., a previous contractor of
SEW, contacted SEW, claiming approximately
£1.4 million with respect to the alleged incorrect
allocation of two contracts during the period from 1997 to 2001,
and £5.1 million in lost profits and bid costs with
respect to alleged breaches of procurement rules in relation to
the award of a contract in 2001. In addition, V.A.S. Madison
claims that SEW owes an additional £2.6 million
relating to work performed. SEW does not believe any additional
amounts are owed. To date, no formal claim has been made.

Saur International had been engaged by SEW, then owned by Saur
UK and part of the Bouygues Group, to develop and implement a
new billing system for SEW, for completion by the end of 2004.
Following extended delays and technical problems with the
software, SEW notified Saur International of its intention to
terminate the project in December 2004. By the end of January,
the parties were unable to reach agreement or agree to mediate
the dispute. In March 2005, SEW initiated a claim against Saur
International through arbitration with the International Chamber
of Commerce in France for £13.2 million to recover
amounts paid to Saur International for the purchase of the
customer billing system and costs incurred as a result of having
to terminate the project. On April 4, 2005, SEW was
notified that Saur International had responded with a
counterclaim of £4.6 million allegedly representing
unpaid invoices, damages suffered and costs incurred. In
December 2005, Saur International amended its counterclaim to
£12.2 million, alleging loss of revenue opportunities
and damage to brand image.







Item 4.
    Submission of Matters to a Vote of SecurityholdersNone.

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##### Table of Contents

Part II







Item 5.
    Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    SecuritiesMarket Information

Our common stock is traded on the NYSE under the symbol
MIC. Our common stock began trading on the NYSE on
December 16, 2004. The following table sets forth, for the
fiscal periods indicated, the high and low sale prices per share
of our common stock on the NYSE:

|                                                                 |  |      |       |  |     |   |       | 
|---------------------------------------------------------------- |  | ---- | ----- |  | --- | - | ----- | 
|                                                                 |  | High |       |  | Low |  
|                                                                 |  |      |       |  |     |  
|Fiscal 2004                                                      |  |      |       |  |     |   |       | 
|                                                                 |  |      |       |  |     |  
|Fourth Quarter (December 16,
    2004 through December 31, 2004) |  | $    | 29.35 |  |     | $ | 25.00 | 
|                                                                
|Fiscal 2005                                                      |  |      |       |  |     |   |       | 
|                                                                 |  |      |       |  |     |  
|First Quarter                                                    |  | $    | 30.08 |  |     | $ | 27.91 | 
|Second Quarter                                                   |  |      | 29.82 |  |     |   | 27.21 | 
|Third Quarter                                                    |  |      | 28.80 |  |     |   | 27.92 | 
|Fourth Quarter                                                   |  |      | 31.00 |  |     |   | 28.44 | 
|                                                                
|Fiscal 2006                                                      |  |      |       |  |     |   |       | 
|                                                                 |  |      |       |  |     |  
|First Quarter (through
    February 16, 2006)                    |  | $    | 34.30 |  |     | $ | 30.79 | 



Disclosure of NYSE-Required Certifications


10-K,


Distribution Policy






|                 |  |                |                             |  |             |   |        |             |  |  |                   |  |  |  |                   | 
|---------------- |  | -------------- | --------------------------- |  | ----------- | - | ------ | ----------- |  |  | ----------------- |  |  |  | ----------------- | 
|Declared         |  | Period Covered |                             |  | $ Per Share |   |        | Record Date |  |  | Payable Date      | 
|                 |  |                |                             |  |             |   |        |             |  |  |                   | 
|May 14, 2005     |  |                | Dec 15 - Dec 31, 2004       |  |             | $ | 0.0877 |             |  |  | June 2, 2005      |  |  |  | June 7, 2005      | 
|May 14, 2005     |  |                | Qtr. End March 31, 2005     |  |             |   | $0.50  |             |  |  | June 2, 2005      |  |  |  | June 7, 2005      | 
|August 8, 2005   |  |                | Qtr. End June 30, 2005      |  |             |   | $0.50  |             |  |  | September 6, 2005 |  |  |  | September 9, 2005 | 
|November 7, 2005 |  |                | Qtr. End September 30, 2005 |  |             |   | $0.50  |             |  |  | December 6, 2005  |  |  |  | December 9, 2005  | 

59



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The declaration and payment of any future distribution will be
subject to a decision of the companys board of directors,
which includes a majority of independent directors. The
companys board of directors will take into account such
matters as general business conditions, our financial condition,
results of operations, capital requirements and any contractual,
legal and regulatory restrictions on the payment of
distributions by us to our shareholders or by our subsidiaries
to us, and any other factors that the board of directors deems
relevant. In particular, each of our businesses and investments
have substantial debt commitments, which must be satisfied
before any of them can distribute dividends or make
distributions to us. These factors could affect our ability to
continue to make distributions. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources in
Part II, Item 7.

Securities Authorized for Issuance Under Equity Compensation
Plans

The table below sets forth information with respect to shares of
trust stock authorized for issuance as of December 31, 2005:

|                                                              |  |                      |        |  |                   |                      |                     |                       |  |  |    |  
|------------------------------------------------------------- |  | -------------------- | ------ |  | ----------------- | -------------------- | ------------------- | --------------------- |  |  | -- | -
|                                                              |  |                      |        |  |                   | Number of Securities |                    
|                                                              |  | Number of            |        |  |                   |                      | Remaining Available |                      
|                                                              |  | Securities to be     |        |  | Weighted-Average  |                      |                     | for Future Issuance   | 
|                                                              |  | Issued Upon Exercise |        |  | Exercise Price of |                      |                     | under Equity          | 
|                                                              |  | of Outstanding       |        |  | Outstanding       |                      |                     | Compensation Plans    | 
|                                                              |  | Options, Warrants    |        |  | Options, Warrants |                      |                     | (Excluding Securities | 
|Plan Category                                                 |  | and Rights           |        |  | and Rights        |                      |                     | Under Column (a))     | 
|                                                              |  |                      |        |  |                   |                      |                     |                       | 
|                                                              |  | (a)                  |        |  | (b)               |                      |                     | (c)                   | 
|Equity compensation plans approved
    by securityholders(1)  |  |                      | 15,873 |  |                   | $                    | 0.00                |                       |  |  | (1 | )
|Equity compensation plans not
    approved by securityholders |  |                      |       |  |                   |                      |                    |                       |  |  |   |  
|                                                              |  |                      |        |  |                   |                      |                     |                       | 
|Total                                                         |  |                      | 15,873 |  |                   | $                    | 0.00                |                       |  |  | (1 | )






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Information represents number of shares of trust stock issuable
    upon the vesting of director stock units pursuant to our
    independent directors equity plan, which was approved and
    became effective in December 2004. Under the plan, each
    independent director elected at our annual meeting of
    shareholders is entitled to receive a number of director stock
    units equal to $150,000 divided by the average closing sale
    price of the trust stock during the
    10-day period
    immediately preceding our annual meeting. The units vest on the
    day prior to the following years annual meeting. We
    granted 5,921 director stock units to each of our independent
    directors elected at our 2005 annual shareholders meeting
    based on the
    average 10-day
    closing price of $28.35. Currently, we have 60,000 shares
    of trust stock reserved for future issuance under the plan.

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##### Table of Contents

Item 6.
    Selected Financial DataThe selected financial data includes the results of operations,
cash flow and balance sheet data of North America Capital
Holding Company, or NACH, which was deemed to be our
predecessor. We have included the results of operations and cash
flow data of NACH for the years ended December 31, 2002 and
December 31, 2003, for the period from January 1, 2004
through July 29, 2004 and for the period July 30, 2004
through December 22, 2004. The period from
December 23, 2004 through December 31, 2004 includes
the results of operations and cash flow data for our businesses
and investments from December 23 through December 31, 2004
and the results of the company from April 13, 2004 through
December 31, 2004. The year ended December 31, 2005
includes the full year of results for our consolidated group,
with the results of businesses acquired during 2005 being
included from the date of acquisition. We have included the
balance sheet data of NACH at December 31, 2003, and our
consolidated balance sheet data at December 31, 2004 and
December 31, 2005.

|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |   |         |   |  |   |         |  
|------------------------------------------------------------------ |  | ---------------------------------------------- | ------- | --------- | ------- | - | ----------- | ------- |  | ----------- | --------- | - |  | ------------ | ------- | - | ---- | - | ------- | - |  | - | ------- | -
|                                                                   |  |                                                |         | Successor |         |   | Predecessor |         |  | Predecessor |           |   | 
|                                                                   |  | Successor                                      |         |           | Dec 23  |   |             | July 30 |  |             | January 1 |   |  | Predecessor  |        
|                                                                   |  | Year Ended                                     |         |           | through |   |             | through |  |             | through   |   |  | Year Ended   |        
|                                                                   |  | Dec 31,                                        |         |           | Dec 31, |   |             | Dec 22, |  |             | July 29,  |   |  | December 31, |        
|                                                                   |  | 2005                                           |         |           | 2004    |   |             | 2004    |  |             | 2004      |   |  | 2003         |         |   | 2002 |  
|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |  
|                                                                   |  | ($ in thousands, except per share information) |        
|Statement of Operations Data:                                      |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |   |         |   |  |   |         |  
|Revenue:                                                           |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |   |         |   |  |   |         |  
|Revenue from fuel sales                                            |  | $                                              | 143,273 |           |         | $ | 1,681       |         |  | $           | 29,465    |   |  | $            | 41,146  |   |      | $ | 57,129  |   |  | $ | 49,893  |  
|Service revenue                                                    |  |                                                | 156,167 |           |         |   | 3,257       |         |  |             | 9,839     |   |  |              | 14,616  |   |      |   | 20,720  |   |  |   | 18,698  |  
|Lease income                                                       |  |                                                | 5,303   |           |         |   | 126         |         |  |             |          |   |  |              |        |   |      |   |        |   |  |   |        |  
|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |  
|Total revenue                                                      |  |                                                | 304,743 |           |         |   | 5,064       |         |  |             | 39,304    |   |  |              | 55,762  |   |      |   | 77,849  |   |  |   | 68,591  |  
|Cost of revenue:                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |   |         |   |  |   |         |  
|Cost of revenue  fuel                                             |  |                                                | (84,806 | )         |         |   | (912        | )       |  |             | (16,599   | ) |  |              | (21,068 | ) |      |   | (27,003 | ) |  |   | (22,186 | )
|Cost of revenue 
    service(1)                                   |  |                                                | (81,834 | )         |         |   | (1,633      | )       |  |             | (849      | ) |  |              | (1,428  | ) |      |   | (1,961  | ) |  |   | (1,907  | )
|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |  
|Gross profit                                                       |  |                                                | 138,103 |           |         |   | 2,519       |         |  |             | 21,856    |   |  |              | 33,266  |   |      |   | 48,885  |   |  |   | 44,498  |  
|Selling, general and administrative
    expenses(2)                |  |                                                | (82,636 | )         |         |   | (7,953      | )       |  |             | (13,942   | ) |  |              | (22,378 | ) |      |   | (29,159 | ) |  |   | (27,795 | )
|Fees to manager                                                    |  |                                                | (9,294  | )         |         |   | (12,360     | )       |  |             |          |   |  |              |        |   |      |   |        |   |  |   |        |  
|Depreciation expense                                               |  |                                                | (6,007  | )         |         |   | (175        | )       |  |             | (1,287    | ) |  |              | (1,377  | ) |      |   | (2,126  | ) |  |   | (1,852  | )
|Amortization of intangibles                                        |  |                                                | (14,815 | )         |         |   | (281        | )       |  |             | (2,329    | ) |  |              | (849    | ) |      |   | (1,395  | ) |  |   | (1,471  | )
|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |  
|Operating income                                                   |  |                                                | 25,351  |           |         |   | (18,250     | )       |  |             | 4,298     |   |  |              | 8,662   |   |      |   | 16,205  |   |  |   | 13,380  |  
|Interest income                                                    |  |                                                | 4,064   |           |         |   | 69          |         |  |             | 28        |   |  |              | 17      |   |      |   | 71      |   |  |   | 63      |  
|Dividend income                                                    |  |                                                | 12,361  |           |         |   | 1,704       |         |  |             |          |   |  |              |        |   |      |   |        |   |  |   |        |  
|Finance fees                                                       |  |                                                |        |           |         |   |            |         |  |             | (6,650    | ) |  |              |        |   |      |   |        |   |  |   |        |  
|Interest expense                                                   |  |                                                | (33,800 | )         |         |   | (756        | )       |  |             | (2,907    | ) |  |              | (4,655  | ) |      |   | (4,820  | ) |  |   | (5,351  | )
|Equity in earnings (loss) and
    amortization charges of investee |  |                                                | 3,685   |           |         |   | (389        | )       |  |             |          |   |  |              |        |   |      |   |        |   |  |   |        |  
|Other income (expense)                                             |  |                                                | 123     |           |         |   | 50          |         |  |             | (39       | ) |  |              | (5,135  | ) |      |   | (1,219  | ) |  |   |        |  
|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |  
|Income (loss) from continuing
    operations before income tax     |  |                                                | 11,784  |           |         |   | (17,572     | )       |  |             | (5,270    | ) |  |              | (1,111  | ) |      |   | 10,237  |   |  |   | 8,092   |  
|Income tax benefit (expense)                                       |  |                                                | 3,615   |           |         |   |            |         |  |             | (286      | ) |  |              | 597     |   |      |   | (4,192  | ) |  |   | (3,150  | )
|Minority interests                                                 |  |                                                | (203    | )         |         |   | (16         | )       |  |             |          |   |  |              |        |   |      |   |        |   |  |   |        |  
|                                                                   |  |                                                |         |           |         |   |             |         |  |             |           |   |  |              |         |   |      |  

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|                                                                                                   |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |   |        |   |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | -------- | --------- | ------- | - | ----------- | ------- |  | ----------- | --------- | - |  | ------------ | ------ | - | ---- | - | ------ | - |  | - | ------- | -
|                                                                                                   |  |                                                |          | Successor |         |   | Predecessor |         |  | Predecessor |           |   | 
|                                                                                                   |  | Successor                                      |          |           | Dec 23  |   |             | July 30 |  |             | January 1 |   |  | Predecessor  |       
|                                                                                                   |  | Year Ended                                     |          |           | through |   |             | through |  |             | through   |   |  | Year Ended   |       
|                                                                                                   |  | Dec 31,                                        |          |           | Dec 31, |   |             | Dec 22, |  |             | July 29,  |   |  | December 31, |       
|                                                                                                   |  | 2005                                           |          |           | 2004    |   |             | 2004    |  |             | 2004      |   |  | 2003         |        |   | 2002 |  
|                                                                                                   |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |  
|                                                                                                   |  | ($ in thousands, except per share information) |         
|Income (loss) from continuing
    operations                                                       |  |                                                | 15,196   |           |         |   | (17,588     | )       |  |             | (5,556    | ) |  |              | (514   | ) |      |   | 6,045  |   |  |   | 4,942   |  
|Discontinued operations:                                                                           |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |   |        |   |  |   |         |  
|Income from operations of
    discontinued operations                                              |  |                                                |         |           |         |   |            |         |  |             | 116       |   |  |              | 159    |   |      |   | 121    |   |  |   | 197     |  
|Loss on disposal of discontinued
    operations                                                    |  |                                                |         |           |         |   |            |         |  |             |          |   |  |              |       |   |      |   | (435   | ) |  |   | (11,620 | )
|                                                                                                   |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |  
|Income (loss) on disposal of
    discontinued operations (net of applicable income tax provisions) |  |                                                |         |           |         |   |            |         |  |             | 116       |   |  |              | 159    |   |      |   | (314   | ) |  |   | (11,423 | )
|Net income (loss)                                                                                  |  |                                                | 15,196   |           |         |   | (17,588     | )       |  |             | (5,440    | ) |  |              | (355   | ) |      |   | 5,731  |   |  |   | (6,481  | )
|Basic and diluted earnings (loss)
    per share(3)                                                 |  |                                                | 0.56     |           |         |   | (17.38      | )       |  |             |          |   |  |              |       |   |      |   |       |   |  |   |        |  
|                                                                                                   |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |  
|Cash Flow Data:                                                                                    |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |   |        |   |  |   |         |  
|Cash provided by (used in)
    operating activities                                                |  |                                                | 43,547   |           |         |   | (4,045      | )       |  |             | (577      | ) |  |              | 7,757  |   |      |   | 9,811  |   |  |   | 9,608   |  
|Cash (used in) provided by
    investing activities                                                |  |                                                | (201,950 | )         |         |   | (467,477    | )       |  |             | (228,145  | ) |  |              | 3,011  |   |      |   | (4,648 | ) |  |   | (2,787  | )
|Cash provided by (used in)
    financing activities                                                |  |                                                | 133,847  |           |         |   | 611,765     |         |  |             | 231,843   |   |  |              | (5,741 | ) |      |   | (5,956 | ) |  |   | (5,012  | )
|Effect of exchange rate                                                                            |  |                                                | (331     | )         |         |   | (193        | )       |  |             |          |   |  |              |       |   |      |   |       |   |  |   |        |  
|                                                                                                   |  |                                                |          |           |         |   |             |         |  |             |           |   |  |              |        |   |      |  
|Net (decrease) increase in cash                                                                    |  | $                                              | (24,887  | )         |         | $ | 140,050     |         |  | $           | 3,121     |   |  | $            | 5,027  |   |      | $ | (793   | ) |  | $ | 1,809   |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes depreciation expense of $8.1 million for the year
    ended December 31, 2005, relating to our airport parking
    and district energy businesses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(2) | The company incurred $6 million of non-recurring
    acquisition and formation costs that have been included in the
    December 23, 2004 to December 31, 2004 consolidated
    results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) | Basic and diluted earnings (loss) per share was computed on a
    weighted average basis for the year ended December 31, 2005
    and for the period April 13, 2004 (inception) through
    December 31, 2004. The basic weighted average computation
    of 26,919,608 shares of trust stock outstanding for 2005
    was computed based on 26,610,100 shares outstanding from
    January 1, 2005 through April 18, 2005,
    27,043,101 shares outstanding from April 19, 2005
    through May 24, 2005 and 27,050,745 shares outstanding
    from May 25, 2005 through December 31, 2005. The
    diluted weighted average computation of 26,929,219 shares
    of trust stock outstanding for 2005 was computed by assuming
    that all of the stock grants provided to the independent
    directors on May 25, 2005 had been converted to shares on
    that date. The basic weighted average computation of
    1,011,887 shares of trust stock outstanding for 2004 was
    computed based on 100 shares outstanding from
    April 13, 2004 through December 21, 2004 and
    26,610,100 shares outstanding from December 22, 2004
    through December 31, 2004. The stock grants provided to the
    independent directors on December 21, 2004 were
    anti-dilutive in 2004 due to our net loss for that period.

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|                                                                    |  |                  |           |  |              |   |           |              |  |   |         |  
|------------------------------------------------------------------- |  | ---------------- | --------- |  | ------------ | - | --------- | ------------ |  | - | ------- | -
|                                                                    |  | Successor        |           |  | Successor    |   |           | Predecessor  | 
|                                                                    |  | at               |           |  | at           |   |           | at           | 
|                                                                    |  | December 31,     |           |  | December 31, |   |           | December 31, | 
|                                                                    |  | 2005             |           |  | 2004         |   |           | 2003         | 
|                                                                    |  |                  |           |  |              |   |           |              | 
|                                                                    |  | ($ in thousands) |          
|Balance Sheet Data:                                                 |  |                  |           |  |              |   |           |              |  |   |         |  
|Total current assets                                                |  | $                | 156,676   |  |              | $ | 167,769   |              |  | $ | 10,108  |  
|Property, equipment, land and
    leasehold improvements, net       |  |                  | 335,119   |  |              |   | 284,744   |              |  |   | 36,963  |  
|Contract rights and other
    intangibles, net                      |  |                  | 299,487   |  |              |   | 254,530   |              |  |   | 52,524  |  
|Goodwill                                                            |  |                  | 281,776   |  |              |   | 217,576   |              |  |   | 33,222  |  
|Total assets                                                        |  |                  | 1,363,298 |  |              |   | 1,208,487 |              |  |   | 135,210 |  
|Current liabilities                                                 |  |                  | 34,598    |  |              |   | 39,525    |              |  |   | 15,271  |  
|Deferred tax liabilities                                            |  |                  | 113,794   |  |              |   | 123,429   |              |  |   | 22,866  |  
|Long-term debt, including related
    party, net of current portion |  |                  | 629,095   |  |              |   | 434,352   |              |  |   | 32,777  |  
|Total liabilities                                                   |  |                  | 786,693   |  |              |   | 603,676   |              |  |   | 75,369  |  
|Redeemable convertible preferred
    stock                          |  |                  |          |  |              |   |          |              |  |   | 64,099  |  
|Stockholders equity (deficit)                                      |  |                  | 567,665   |  |              |   | 596,296   |              |  |   | (4,258  | )

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Item 7.
    Managements Discussion and Analysis of Financial
    Condition and Results of OperationsThe following discussion of the financial condition and results
of operations of the company should be read in conjunction with
the consolidated 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 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. Unless required by law, we 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.

GENERAL

The trust is a Delaware statutory trust that was formed on
April 13, 2004. The company is a Delaware limited liability
company that was also formed on April 13, 2004. The trust
is the sole holder of 100% of the LLC interests of the company.
Prior to December 21, 2004, the trust was a wholly-owned
subsidiary of MIMUSA.

We own, operate and invest in a diversified group of
infrastructure businesses, that are providing basic, everyday
services, such as parking, roads and water, through long-life
physical assets. These infrastructure businesses generally
operate in sectors with limited competition and high barriers to
entry. As a result, they have sustainable and growing long-term
cash flows. We operate and finance our businesses in a manner
that maximizes these cash flows.

The company is dependent upon cash distributions from its
businesses and investments to meet its corporate overhead and to
pay management fee expenses and to pay dividends. The company
expects to receive dividends from its airport services business,
airport parking business and district energy business through
its directly owned holding company Macquarie Infrastructure
Company Inc., or MIC Inc. The company will receive interest and
principal on our subordinated loans to, and dividends from, its
toll road business and dividends from its investments in
Macquarie Communications Infrastructure Group, or MCG, and South
East Water, or SEW, through directly owned holding companies
that it has formed to hold its interest in each business and
investment.

Distributions received from our businesses and investments net
of taxes, are available first to meet management fees and
corporate overhead expenses then to fund dividend payments by
the company to the trust for payment to holders of trust stock.
Base management and performance fees payable to our Manager are
allocated between the company and the directly owned
subsidiaries based on the companys internal allocation
policy.

On May 14, 2005 our Board of Directors declared a dividend
of $0.50 per share for the quarter ended March 31,
2005, and an additional dividend of $0.0877 per share for
the period ended December 31, 2004. The dividend payments
were made on June 7, 2005 to holders of record on
June 2, 2005. On August 8, 2005, our Board of
Directors declared a dividend of $0.50 per share for the
quarter ended June 30, 2005. The dividend payments were
made on September 9, 2005 to holders of record on
September 6, 2005. Additionally, on November 7, 2005,
our Board of Directors declared a dividend of $0.50 per
share for the quarter ended September 30, 2005. This
dividend was paid on December 9, 2005 to holders of record
on December 6, 2005. On March 14, 2006, our Board of
directors declared a dividend of $0.50 per share payable on
April 10, 2006 to holders of record on April 5, 2006.

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Tax Treatment of Distributions

At the time of our initial public offering, or IPO, we
anticipated that substantially all of the portion of our regular
distributions that are treated as dividends for US federal
income tax purposes should qualify for taxation at the lower US
federal income tax rate currently applicable to qualified
dividend income (currently a maximum of 15%). In 2005,
substantially all of the distributions from MIC Inc. to the
company, the trust and ultimately the holders of our trust stock
were treated as return of capital for US federal income tax
purposes rather than as qualified dividend income. Distributions
to holders of our trust stock that are treated as return of
capital for US federal income tax purposes are generally not
taxable in the hands of holders to the extent that the total
amount of such distributions received does not exceed the
holders tax basis in the trust stock. Instead such distributions
that are not in excess of the holders tax basis in the trust
stock will reduce such holders tax basis in the trust stock
resulting in more capital gain or less capital loss upon
ultimate disposal of the trust stock. Distributions from MIC
Inc. were $25.1 million in 2005, representing 51.1% of the
total distributions received by the company from our businesses
and investments in calendar year 2005. In addition, we received
distributions from SEW in 2005 amounting to $8.5 million,
or 17.6% of these total distributions, that did not qualify for
the reduced tax rates applicable to qualified dividend income.
As a consequence, the portion of our distributions for 2005 that
are treated as dividends for US federal income tax purposes was
lower than expected, and the portion of our distributions that
were treated as return of capital for US federal income tax
purposes were higher than expected. Further, the portion of our
distributions that were treated as dividends for US federal
income tax purposes and characterized as qualified dividend
income was lower than expected (while still comprising a
majority of the portion of our distributions treated as
dividends for US federal income tax purposes).

Beyond 2005, the portion of our distributions that will be
treated as dividends or return of capital for US federal income
tax purposes is subject to a number of uncertainties. We
currently anticipate that substantially all of the portion of
our regular distributions that are treated as dividends for US
federal income tax purposes should be characterized as qualified
dividend income. We expect that future distributions from SEW
will qualify for required rates applicable to qualified dividend
income.

The IPO and Completed Acquisitions

On December 21, 2004, we completed our IPO and concurrent
private placement, issuing a total of 26,610,000 shares of
trust stock at a price of $25.00 per share. Total gross
proceeds were $665.3 million before offering costs and
underwriting fees of $51.6 million. MIMUSA purchased two
million shares ($50 million) of the total shares
outstanding, through a private placement. The majority of the
proceeds were used to acquire our initial infrastructure
businesses and investment.

We acquired our airport services, district energy and toll road
businesses and made our investments in SEW and MCG on
December 22, 2004 and acquired our airport parking business
on December 23, 2004. These acquisitions were effected by
purchasing the shares of North America Capital Holding Company,
or NACH, Macquarie Airports North America, Inc., or MANA,
Macquarie District Energy Holdings, LLC, or MDEH, Macquarie
Americas Parking Corporation, or MAPC, Macquarie Yorkshire
Limited, or MYL, stapled securities in MCG and ordinary shares
and Preferred Equity Certificates, or PECs, in Macquarie
Luxembourg. On January 14, 2005 we acquired General
Aviation Holdings, LLC, or GAH, which became a subsidiary of
NACH. Consequently, the results of GAH from the date of its
acquisition are reflected in our airport services business
results of operations for the year ended December 31, 2005.
On August 12, 2005, our airport services business acquired
all of the membership interests in Eagle Aviation Resources,
Ltd., or EAR, a Nevada limited liability company doing business
as Las Vegas Executive Air Terminal. Consequently, the results
of EAR from the date of its acquisition are reflected in the
airport services business results of operations for the
year ended December 31, 2005. On October 3, 2005, our
airport parking business completed the acquisition of real
property and personal and intangible assets related to the
SunPark facilities and, on October 26, 2005, acquired an
additional property in Maricopa, Arizona. Consequently, the
results of these facilities from the date of acquisition are
reflected in the airport parking business results of
operations for the year ended December 31, 2005.

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The purchases of our airport services, airport parking and
district energy businesses following our IPO were recorded by us
using the purchase method of accounting, due to our ability to
control each business. MCG is accounted for as an available for
sale investment and SEW is recorded under the cost method of
accounting. Macquarie Yorkshire, through its 50% ownership of
Connect M1-A1 Holdings Limited, or CHL, effectively owns 50% of
Connect M1-A1 Limited.
Our investment in CHL is accounted for under the equity method
of accounting.

The purchases of GAH, LVE and SunPark were recorded using the
purchase method of accounting. The $50.3 million purchase
price of GAH (including transaction costs and working capital
adjustments) was funded through additional long-term debt
borrowings of $32 million with the remainder funded by
proceeds from our initial public offering. The
$59.8 million purchase price of LVE (including a
preliminary working capital adjustment of $244,000 and related
transaction costs of $1.6 million) was funded with cash
raised in our initial public offering. The $69.8 million
purchase price of SunPark (including $4 million of
transaction costs, pre-funded reserves and pre-funded capital
expenditures) was funded with a combination of
$21.2 million of cash, the majority of which was raised in
our initial public offering, and $48.7 million of
non-recourse debt under a new debt facility.

Pending Acquisitions

On August 17, 2005, we entered into a joinder agreement
with k1 Ventures Limited,
K-1 HGC Investment,
L.L.C. (together with k1 Ventures, the
K1 Parties), and Macquarie Investment Holdings
Inc. , or MIHI, and a related assignment agreement with MIHI.
Under these agreements, we assumed all of MIHIs rights and
obligations as a Buyer under a purchase agreement between MIHI
and the K1 Parties for no additional consideration other
than providing MIHI with an indemnification for the liabilities,
cost and expenses it has incurred as Buyer under the
purchase agreement. The purchase agreement provides for the
acquisition by the Buyer of, at the option of k1 Ventures,
either 100% of the interests in HGC Investment or 100% of the
membership interests of HGC Holdings, L.L.C.

HGC Investment owns a 99.9% non-managing membership interest in
HGC Holdings, a Hawaii limited liability company, and has the
right to acquire the remaining membership interest in HGC
Holdings. HGC Holdings is the sole member of The Gas Company,
L.L.C., a Hawaii limited liability company which owns and
operates the sole regulated gas distribution business in Hawaii
as well as a propane sales and distribution business in Hawaii.

The purchase agreement provides for the payment in cash of a
base purchase price of $238 million (subject to working
capital and capital expenditure adjustments) with no assumed
interest-bearing debt. We currently expect working capital and
capital expenditure adjustments to add approximately
$12 million to the total purchase price. In addition to the
purchase price, it is anticipated that approximately a further
$9 million will be paid to cover transaction costs. We
expect to finance the acquisition, including an initial up-front
deposit of $12.2 million, with $160 million of future
subsidiary level debt and the remainder from proceeds from the
refinancing of our airport services segment discussed below or
other sources of available cash. Absent an intervening use for
the proceeds from this refinancing, we do not intend to issue
equity in the public markets to complete the acquisition of The
Gas Company.

On March 3, 2006, the Hawaii Division of Consumer Advocacy
(Consumer Advocate) filed its position statement recommending
approval of our application to the Hawaii Public Utilities
Commission, or HPUC, to transfer ownership of The Gas Company to
us. The Consumer Advocates recommendation was conditioned
upon the HPUC accepting the regulatory conditions set forth in
the Consumer Advocates position statement. We have
discussed these conditions with the Consumer Advocate and find
them acceptable as presented to the HPUC. We are in the process
of preparing a response statement to the HPUC formally accepting
the recommended regulatory conditions. In that response, we will
be requesting a decision and order from the HPUC that would
allow us to close the transaction, if approved, by early June
2006.

The Gas Company has filed an Annual Report of its financial
condition for the year ended December 31, 2004 with the
HPUC which included the following unaudited financial
information. We are including

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this publicly available information because we believe it
provides a general understanding of the historical results of
The Gas Company. However, we have not independently verified
this information. Furthermore, according to the filing this
information was produced in conformity with accounting standards
for regulated utilities, which may not be consistent with
U.S. Generally Accepted Accounting Principles applicable to
non-utility businesses.

According to the filing with the HPUC, the regulated gas utility
business of The Gas Company produced pre-tax, pre-interest net
income of $11.3 million and EBITDA of $15 million for
the year ended December 31, 2004. The non-utility gas
distribution business produced pre-tax, pre-interest net income
of $9.5 million for the same period. EBITDA for the
non-utility gas distribution business is not presented in the
HPUC filing. EBITDA for the gas utility business should not be
viewed as an indication of the performance of the non-utility
business. Net asset value of the non-regulated gas distribution
business was $27.7 million at December 31, 2004,
compared to net asset value of the gas utility business of
$99.5 million at that date. The above historical financial
information should not be taken as an indication of future
performance. In particular, we would expect interest expense to
increase significantly following our acquisition.

The purchase agreement contains various provisions customary for
transactions of this size and type, including representations,
warranties and covenants with respect to the business that are
subject to customary limitations. Completion of the acquisition
depends on a number of conditions being satisfied by
October 31, 2006, including approval by HPUC of the
transaction and the subsidiary level debt financing, numerous
contractual consents and the expiration or early termination of
any waiting period under the Hart-Scott-Rodino Antitrust Act of
1976, as amended, as well as other customary closing conditions.
Failure to obtain financing would not permit us to terminate the
purchase agreement. Therefore, if we do not obtain sufficient
funding for the transaction, we would be required to pay
liquidated damages to the seller as described below.

The purchase agreement provides for the payment of liquidated
damages equal to 5% of the base purchase price if the
transaction is terminated for breach prior to receipt of
regulatory approvals and 10% of the base purchase price if
terminated for breach thereafter. In addition, we would be
obligated to pay a liquidated damages amount equal to 5% of the
base purchase price if approval from HPCU were not obtained due
in whole or substantial part to HPUCs findings regarding
our financial, legal or operational qualifications.

The maximum amount of indemnification payable by either party
under the purchase agreement is 75% of the base purchase price,
with some exceptions.

MSUSA is acting as financial advisor to us on the transaction,
including in connection with the debt financing arrangements.
MIHI and MSUSA are both subsidiaries of Macquarie Bank Limited,
the parent company of the our Manager.

IMPACT OF ACQUISITIONS ON OUR RESULTS OF OPERATIONS

The acquisitions of our consolidated businesses and our equity
investment in Macquarie Yorkshire resulted in significant
increases in the recorded value of our property, plant and
equipment and our intangible assets, including our airport
contract rights, customer relationships and technology. Our 2004
consolidated results of operations reflect only nine days of the
resulting additional depreciation and amortization expense. Our
2005 annual depreciation and amortization expense increased as
this additional expense was fully reflected in our results.

These acquisitions also resulted in a significant amount of
goodwill.

In the last half of 2004, prior to our acquisition of parts of
our airport services and district energy businesses, they were
recapitalized with significant levels of non-recourse debt. Our
consolidated interest expense increased in 2005 to reflect the
full year impact of our additional indebtedness.

Simultaneous with our acquisition of our parking business
holding company, the holding company increased its economic
ownership in the underlying Macquarie Parking business from
43.1% to 87.1%.

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Minority shareholders did not contribute their full pro-rata
share of capital raised for acquisitions in 2005. As a result,
the holding company increased it ownership in the underlying
Macquarie Parking business from 87.1% to 87.9%. The historical
results of the parking business discussed in this section
include a larger allocation of net losses to the minority
investors. Going forward, we expect to recognize a greater share
of the financial performance of our parking business in our
consolidated results of operations, reflecting the holding
companys increased ownership in Macquarie Parking.

OPERATING SEGMENTS AND BUSINESSES



Airport Services BusinessOur airport services business depends upon the level of general
aviation activity, and jet fuel consumption, for the largest
portion of its revenue. General aviation activity is in turn a
function of economic and demographic growth in the regions
serviced by a particular airport and the general rate of
economic growth in the United States. According to estimates
from the FAA, in 2004 and 2005, the number of general aviation
turbojet aircraft in the United States, which are the major
consumers of the services of our airport services business,
increased by 3.5% and 4.2%, respectively. General aviation jet
fuel consumption increased in 2002 by 3.3% and declined in 2003
by 4.5%. The FAA estimates that general aviation jet fuel
consumption grew by 2.8% in 2004, by 4.5% in 2005 and is
projected to grow 6.2% in 2006. A number of our airports are
located near key business centers, for example, New
York  Teterboro, Chicago  Midway and
Philadelphia. We believe that as a result the growth in fuel
consumption and general aviation activity is higher at our
airports than the industry average nationwide.

Fuel revenue is a function of the volume sold at each location
and the average per gallon sale price. The average per gallon
sale price is a function of our cost of fuel plus, where
applicable, fees and taxes paid to airports or other local
authorities for each gallon sold (Cost of revenue 
fuel), plus our margin. Our fuel gross profit (Fuel revenue less
Cost of revenue  fuel) depends on the volume of fuel
sold and the average dollar-based margin earned per gallon. The
dollar-based margin charged to customers varies based on
business considerations. Dollar-based margins per gallon are
generally insensitive to the wholesale price of fuel with both
increases and decreases in the wholesale price of fuel generally
passed through to customers, subject to the level of price
competition that exists at the various FBOs.

Our airport services business also earns revenues from
activities other than fuel sales (Non-fuel revenue). For
example, our airport services business earns revenues from
refueling some general aviation customers and some commercial
airlines on a pass-through basis, where we act as a
fueling agent for fuel suppliers and for commercial airlines,
receiving a fee, generally on a per gallon basis. In addition,
our airport services business earns revenue from aircraft
landing and parking fees and by providing general aviation
customers with other services, such as de-icing and hangar
rental. At some facilities we also provide de-icing services to
commercial airlines. Our airport services business also earns
management fees for its operation of six regional airports under
management contracts.

In generating non-fuel revenue, our airport services business
incurs supply expenses (Cost of revenue  non-fuel),
such as de-icing fluid costs and payments to airport
authorities, which vary from site to site. Cost of
revenue  non-fuel are directly related to the volume
of services provided and therefore generally increase in line
with non-fuel revenue.

Our airport services business incurs expenses in operating and
maintaining each FBO, such as rent and insurance, which are
generally fixed in nature. Other expenses incurred in operating
each FBO, such as salaries, generally increase with the level of
activity. In addition, our airport services business incurs
general and administrative expenses at the head office that
include senior management expenses as well as accounting,
information technology, human resources, environmental
compliance and other corporate costs.

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Airport Parking BusinessThe revenues of our airport parking business include both
parking and non-parking components. Parking revenues, which
comprise the substantial majority of total revenues, are driven
by the volume of passengers using the airports at which the
business operates, its market share at each location and its
parking rates. We aim to grow our parking revenue by increasing
our market share at each location and optimizing parking rates
taking into consideration local demand and competition. We
compete for market share against other parking facilities (on-
and off-airport) and to a lesser extent against alternative
modes of transport to the airport, such as trains, taxis,
private transport or rental cars. Among other factors, market
share is driven by the capacity of the parking facility, the
proximity of the parking facility to the airport, the quality of
service provided and the parking rates. Our airport parking
business seeks to increase market share through marketing
initiatives to attract both returning customers and air
travelers who have not previously used off-airport parking and
through improved services. Our ability to successfully execute
marketing, pricing and service initiatives is key to maintaining
and growing revenues. Non-parking revenue includes primarily
transportation services.

Turnover and intra-day activity are captured in the cars
out or total number of customers exiting during the
period. This measure, in combination with average parking
revenue per car out and available overnight occupancy, are
primary indicators of our customer mix and dictate our ongoing
revenue management efforts. Average parking revenue is a
function of the fee for parking, the discount applied, if any,
and the number of days the customer is parked at the facility.
For example, an increase in average parking revenue over time
can be a result of increased pricing, reduced discounting or a
shift in the average length of stay.

Our parking business customers pay a fee for parking at
its locations. The parking fees collected constitute revenue
earned. The prices charged are a function of demand, quality of
service and competition. Parking rate increases are often led by
on-airport parking lots and changes in the competitive
environment. Most airports have historically increased parking
rates rapidly with increases in demand, creating a favorable
pricing environment for off-airport competitors. However, in
certain markets, the airport may not raise rates in line with
general economic trends. Further, our airport parking business
seeks to increase parking rates through the value-added services
such as valet parking, car washes and covered parking.

In the discussion of our airport parking business results
of operations, we disclose the average overnight occupancy for
each period. Our airport parking business measures occupancy by
counting the number of cars at the lowest point of the
day between 12 a.m. and 2 a.m. every night. At
this time, customer activity is low, and thus an accurate
measure of the car count may be taken at each location. This
method means that turnover and intra-day activity are not taken
into account and therefore occupancy during the day is likely to
be much higher than when the counts are undertaken.

In providing parking services, our airport parking business
incurs expenses, such as personnel costs, real estate related
costs and the costs of leasing, operating and maintaining its
shuttle buses. These costs are incurred in providing customers
with service at each parking lot as well as in transporting them
to and from the airport terminal. Generally, as the level of
occupancy, or usage, at each of the business locations
increases, labor and the other costs related to the operation of
each facility increase. We also incur costs related to damaged
cars either as a result of the actions of our employees or
criminal activity. The business is continually reviewing
security and safety measures to minimize these costs.

Other costs incurred by Macquarie Parking relate to the
provision of the head office function that the business requires
to operate. These costs include marketing and advertising, rents
and other general and administrative expenses associated with
the head office function.



District Energy BusinessOur district energy business is comprised of Thermal Chicago and
Northwind Aladdin, which are 100% and 75% indirectly owned,
respectively, by MDEH, which is a wholly owned subsidiary.
Thermal

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Chicago sells chilled water to 98 customers in the Chicago
downtown area and one customer outside of the downtown area
under long-term contracts. Pursuant to these contracts, Thermal
Chicago receives both capacity and consumption payments.
Capacity payments (cooling capacity revenue) are received
irrespective of the volume of chilled water used by a customer
and these payments generally increase in line with inflation.
Capacity payments constituted approximately 46% of Thermal
Chicagos total revenue in 2005.

Consumption payments (cooling consumption revenue) are a per
unit charge for the volume of chilled water used. Such payments
are higher in the summer months when the demand for chilled
water is at its highest and, as a consequence, approximately 80%
of consumption revenue is received in the second and third
quarters of each year. Consumption payments also fluctuate
moderately from year to year depending on weather conditions. By
contract, consumption payments generally increase in line with a
number of economic indices that reflect the cost of electricity,
labor and other input costs relevant to the operations of
Thermal Chicago. The weighting of the individual economic
indices broadly reflects the composition of Thermal
Chicagos direct expenses.

Thermal Chicagos principal direct expenses in 2005 were
electricity 40%, labor 13%, operations and maintenance 16%,
depreciation and accretion 23% and other 8%. Electricity usage
fluctuates in line with the volume of chilled water produced.
Thermal Chicago particularly focuses on minimizing the amount of
electricity consumed per unit of chilled water produced,
including by storing thermal energy by producing ice at night
when electricity costs are generally lower. The ice is then used
during the day to chill water when electricity costs and
consumption are highest. Other direct expenses, including labor,
operations and maintenance, depreciation, and general and
administrative are largely fixed irrespective of the volumes of
chilled water produced.

Electric utility restructuring legislation was adopted in
Illinois in December 1997 to provide for a transition to a
deregulated generation market scheduled for 2007 as discussed
under Our Businesses and Investments  District
Energy Business  Business  Thermal
Chicago  Electricity Costs in Item 1.
Business. The legislation included a provision for electric
utilities, in our case ComEd, to collect a customer transition
charge (CTC) from customers who choose to purchase
electricity from an alternative retail energy supplier or those
who elect ComEds Power Purchase Option (PPO) during
the transition period. Under the terms of the PPO plan, if the
CTC of any participant is reduced to zero, that participant
becomes ineligible to purchase electricity under the PPO plan.
With the recent high cost of market-based power, ComEds
calculation of our CTCs at the beginning of 2006 are zero. As a
result, we will no longer be able to purchase electricity under
the PPO plan effective May 2006. Furthermore, ComEd began to
charge transmission charges to its customers that procure energy
from retail energy suppliers. These transmission charges had
been charged to one of our plants which is currently under a
retail energy supply contract. Beginning in May, these charges
will also apply to our plants that are no longer eligible for
the PPO plan. We have reviewed our options to purchase power for
the remainder of 2006 and have entered into a contract to
purchase electricity with a retail energy supplier. Based on an
historically normal level of electricity usage, we estimate our
electricity costs will increase by $750,000 for the remainder of
2006. We believe we can mitigate this impact through a
combination of operational and strategic initiatives and offsets
from our contract escalators. Had we remained on the PPO
contracts and based on an historically normal level of
electricity usage, we estimate our electricity costs would have
increased by $1.1 million due to the revised PPO rates
determined by ComEd in early 2006.

The Illinois electricity markets are expected to deregulate
beginning in January 2007 and we will be required to enter into
new electricity purchase arrangements effective at that time.
ComEd has proposed a procurement process referred to as a
reverse-auction. The market prices of electricity available to
us are likely to reflect prices established in the
reverse-auction process. Market prices of electricity in
Illinois are also affected by changes in natural gas prices,
which have been very volatile, but overall have increased
significantly over the past year. We cannot predict the market
prices for electricity that we will face beginning in 2007 but
we anticipate, based on current market dynamics, that
electricity will cost substantially more in 2007 than in the
second half of 2006, as discussed above. If these market
dynamics change in a way that is adverse to us, our costs could
be substantially higher than we currently anticipate. In

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addition, on August 31, 2005, ComEd filed a rate case with
the ICC, which seeks, among other things, to increase delivery
rates in a manner that we believe disproportionately impacts
larger users of electricity. If the rate case is approved as
currently proposed, our electricity costs would increase by an
additional $2 million annually.

45% or $7.2 million of our 2005 consumption revenue for
Thermal Chicago is linked to the Midwest producer price index.
The producer price index reflects the cost of electricity across
a broad geographic region in the Midwest and, as a result, does
not fully reflect changes in electricity costs that occur
locally. Changes in this index, which are not in our control,
combined with recent significant increases in electricity costs
discussed above, are likely to result in our electricity costs
increasing significantly without a corresponding increase in
contracted revenues to fully offset the cost. In addition,
because our contracts typically adjust consumption charges
annually, there is likely to be a significant lag before changes
in the market prices of electricity are reflected in our
contracts overall. We are currently evaluating the components
and calculation of the producer price index and alternative
contractual price adjustment options to determine whether our
contract provisions will allow us to better offset recent
increases in electricity costs described above.

Northwind Aladdin provides cold and hot water and
back-up electricity
under two long-term contracts that expire in February 2020.
Pursuant to these contracts, Northwind Aladdin receives monthly
fixed payments of approximately $5.4 million per annum
through March 2016 and monthly fixed payments of approximately
$2 million per year thereafter through February 2020. In
addition, Northwind Aladdin receives consumption and other
variable payments from its customers that allow it to recover
substantially all of its operating costs. Approximately 90% of
total contract payments are received from the Aladdin resort and
casino and the balance from the Desert Passage shopping mall.

In addition to its 75% interest in Northwind Aladdin, MDEH also
owns all of Northwind Aladdins senior debt. This debt pays
interest quarterly at a rate of 12.14% per year and is
scheduled to fully amortize by the end of 2012. This debt is
eliminated in consolidation.



Toll Road BusinessWe own our toll road business through our 50% interest in CHL
and share control with our joint venture partner Balfour Beatty
plc. The sole source of revenue of our toll road business is
shadow tolls received from the U.K. government. This
revenue is a function of traffic volume and shadow toll rates.
In general, traffic volume is driven by general economic and
demographic growth in the region served. Yorkshire Link has been
in operation for over six years and traffic volumes have grown
continuously over this period. It is typical for a toll road to
show strong traffic growth early in its life as drivers switch
from congested alternative routes to the new road and then, as
the road matures, for growth to trend toward levels that are
reflective of overall economic and demographic growth in the
region serviced by the road. As Yorkshire Link is a mature toll
road, we expect that future traffic growth during the remainder
of the concession will be consistent with economic and
demographic growth rates.

Based on a formula contained in the concession, revenues
increase with increases in the volume of traffic using Yorkshire
Link and the rate of inflation in the United Kingdom. If traffic
volumes do not increase and there is no inflation, toll rates
will decline moderately through time due to the operation of the
rate structure under the concession. Also, periodically, a
global factor in the formula serves to decrease or increase
shadow toll rates. The payment calculations are discussed
further under Business  Our Businesses and
Investments  Toll Road Business 
Business in Part I, Item I. The operations of
Yorkshire Link are relatively straightforward and therefore cash
operating expenses are limited. This is partially a reflection
of the fact that the road is relatively new. For example,
operating expenses, excluding depreciation, comprised only 6.9%
of revenues for the year ended March 31, 2005. The majority
of revenues after expenses will be used to service Connect
M1-A1 Limiteds
debt and the remainder will be used to pay distributions to us
and our joint venture partner.

Operating expenses comprise two components: a recurring
component that reflects the
day-to-day cost of
operating Yorkshire Link; and periodic maintenance that is
necessary to maintain the condition of

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the road at the standard required by the concession.
Day-to-day operating
costs can generally be expected to grow at a rate moderately
above the rate of inflation. As operating costs are low relative
to revenues, significant percentage fluctuations in operating
costs do not have a correspondingly significant impact on
operating income.

We account for our toll road business under the equity method of
accounting and record profits and losses from our 50% indirect
ownership in CHL, net of intangible amortization expense, in the
equity in earnings (loss) and amortization charges of investee
line of our statement of operations. In addition, we record
interest income from our subordinated loans to Connect
M1-A1 Limited in the
interest income line of our statement of operations and interest
expense on the loan from Connect
M1-A1 Limited in the
interest expense line.



Investments

MCGWe hold a minority interest in MCG and do not have any influence
over its operations. Therefore, our interest in MCG is accounted
for as an available for sale investment and dividends received
are included in our statement of operations. Unrealized gains
and losses in the share price of MCG are reflected in Other
Comprehensive Income section of Stockholders Equity. The
revenues of MCG are derived mainly from the long-term contracts
that its businesses, Broadcast Australia and, since January
2005, Arqiva, have entered into to provide broadcast
infrastructure in Australia and the United Kingdom. As a result,
the revenues of MCG are relatively insensitive to fluctuations
in macroeconomic conditions in Australia and the United Kingdom.



SEWWe hold a minority interest in SEW and do not have significant
influence over its operations. Therefore, our interest in SEW is
accounted for as a cost investment and dividends received will
be included in our statement of operations. The U.K. water
industry regulator determines the prices that SEW can charge its
customers. These determinations are undertaken every five years
using an approach designed to enable SEW to earn sufficient
revenues to recover operating costs, capital expenditure and
taxes and to generate a return on invested capital, while
creating incentives for SEW to operate efficiently. As a result
of this price determination mechanism and the fact that demand
for water is relatively insensitive to economic conditions,
SEWs earnings are stable.

RESULTS OF OPERATIONS

We acquired our initial businesses and investments on December
22 and December 23, 2004 using the majority of the proceeds
of our initial public offering. As a consequence, our
consolidated operating results for the year ended
December 31, 2004 only reflect the results of operations of
our businesses and investments for a nine day period between
December 22, 2004 and December 31, 2004. Any
comparisons to our consolidated results of operations to prior
periods would not be meaningful. We have therefore included a
comparison of the historical results of operations for each of
our consolidated businesses, which we believe is a more
appropriate approach to explaining the historical financial
performance of the company. The results of our businesses
acquired during the year ended December 31, 2005 are
included in our consolidated operating results from the date of
acquisition.

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##### Table of Contents

Our consolidated results of operations are summarized below (in
thousands):

|                                                                   |  |              |         |                |                |   |         |  
|------------------------------------------------------------------ |  | ------------ | ------- | -------------- | -------------- | - | ------- | -
|                                                                   |  |              |         | April 13, 2004 |               
|                                                                   |  | Year Ended   |         |                | (inception) to |  
|                                                                   |  | December 31, |         |                | December 31,   |  
|                                                                   |  | 2005         |         |                | 2004           |  
|                                                                   |  |              |         |                |                |  
|Revenues                                                           |  |              |         |                |                |   |         |  
|Revenue from fuel sales                                            |  | $            | 143,273 |                |                | $ | 1,681   |  
|Service revenue                                                    |  |              | 156,167 |                |                |   | 3,257   |  
|Financing and equipment lease income                               |  |              | 5,303   |                |                |   | 126     |  
|                                                                   |  |              |         |                |                |  
|Total revenue                                                      |  |              | 304,743 |                |                |   | 5,064   |  
|                                                                   |  |              |         |                |                |  
|Costs and expenses                                                 |  |              |         |                |                |   |         |  
|Cost of fuel sales                                                 |  |              | 84,806  |                |                |   | 912     |  
|Cost of services                                                   |  |              | 81,834  |                |                |   | 1,633   |  
|Selling, general and administrative
    expenses                   |  |              | 82,636  |                |                |   | 7,953   |  
|Fees to manager                                                    |  |              | 9,294   |                |                |   | 12,360  |  
|Depreciation expense                                               |  |              | 6,007   |                |                |   | 175     |  
|Amortization of intangibles                                        |  |              | 14,815  |                |                |   | 281     |  
|                                                                   |  |              |         |                |                |  
|Total operating expenses                                           |  |              | 279,392 |                |                |   | 23,314  |  
|                                                                   |  |              |         |                |                |  
|Operating income
    (loss)                                        |  |              | 25,351  |                |                |   | (18,250 | )
|Other income (expense)                                             |  |              |         |                |                |   |         |  
|Dividend income                                                    |  |              | 12,361  |                |                |   | 1,704   |  
|Interest income                                                    |  |              | 4,064   |                |                |   | 69      |  
|Interest expense                                                   |  |              | (33,800 | )              |                |   | (756    | )
|Equity in earnings (loss) and
    amortization charges of investee |  |              | 3,685   |                |                |   | (389    | )
|Other (expense) income, net                                        |  |              | 123     |                |                |   | 50      |  
|                                                                   |  |              |         |                |                |  
|Net income (loss) before income
    taxes and minority interests   |  |              | 11,784  |                |                |   | (17,572 | )
|Income tax benefit                                                 |  |              | 3,615   |                |                |   |        |  
|                                                                   |  |              |         |                |                |  
|Net income (loss) before minority
    interests                    |  |              | 15,399  |                |                |   | (17,572 | )
|Minority interests                                                 |  |              | 203     |                |                |   | 16      |  
|                                                                   |  |              |         |                |                |  
|Net income (loss)                                                  |  | $            | 15,196  |                |                | $ | (17,588 | )
|                                                                   |  |              |         |                |                |  





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Companies acquired in 2004 by MIC, Inc. completed their 2004 tax
returns during 2005 for the period prior to their acquisition.
An analysis of the net operating losses and other tax attributes
that will carryforward to the US federal consolidated tax return
of MIC, Inc. and its subsidiaries from those returns, and an
analysis of the need for a valuation allowance on the
realizability of the companys deferred tax assets,
resulted in a decrease in the consolidated valuation allowance
of approximately $5.9 million, $4.4 million of which
is included in net income.

We have included earnings before interest, taxes, depreciation
and amortization, or EBITDA, a non-GAAP financial measure, on
both a consolidated basis as well as for each segment. We use
EBITDA to measure our ability to generate operating cash flow
and to meet our distribution policy. We generated
$70.2 million in EBITDA for the year ended
December 31, 2005.

A reconciliation of EBITDA is provided below (in thousands):

|                      |  |              |        |                |                |   |         |  
|--------------------- |  | ------------ | ------ | -------------- | -------------- | - | ------- | -
|                      |  |              |        | April 13, 2004 |               
|                      |  | Year Ended   |        |                | (inception) to |  
|                      |  | December 31, |        |                | December 31,   |  
|                      |  | 2005         |        |                | 2004           |  
|                      |  |              |        |                |                |  
|Net income (loss)     |  | $            | 15,196 |                |                | $ | (17,588 | )
|Interest expense, net |  |              | 29,736 |                |                |   | 687     |  
|Income tax benefit    |  |              | (3,615 | )              |                |   |        |  
|Depreciation(1)       |  |              | 14,098 |                |                |   | 370     |  
|Amortization(2)       |  |              | 14,815 |                |                |   | 281     |  
|                      |  |              |        |                |                |  
|EBITDA                |  | $            | 70,230 |                |                | $ | (16,250 | )
|                      |  |              |        |                |                |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes depreciation expense of $2.4 million and $55,000
    for the airport parking business for the year ended
    December 31, 2005 and the period December 23, 2004
    (our acquisition date) through December 31, 2004,
    respectively. Also includes depreciation expense of
    $5.7 million and $140,000 for the district energy business
    for the year ended December 31, 2005 and the period
    December 22, 2004 (our acquisition date) through
    December 31, 2004, respectively. The airport parking
    business and district energy business include depreciation
    expense within cost of services in our consolidated statement of
    operations.
|   
|(2) | Does not include amortization expense related to intangible
    assets in connection with our investment in the toll road
    business, of $3.8 million and $95,000 for the year ended
    December 31, 2005 and the period December 22, 2004
    (our acquisition date) through December 31, 2004,
    respectively.                                                                                                                                                                                                                                                                                                                                                          

Airport Services Business










| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | Executive Air Support, Inc., or EAS, from January 1, 2004
    through July 29, 2004, on which date EAS was acquired by
    NACH;
|
| |  | NACH from January 1, 2004 through December 22, 2004,
    when it was part of the Macquarie Group;                               

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
    NACH during the period of our ownership from December 22,
    2004 to December 31, 2004;
    MANA for the period January 1, 2004 through
    December 22, 2004, prior to our acquisition; and
    MANA during the period of our ownership from December 22,
    2004 to December 31, 2004.The financial performance for the year ended December 31,
2003 represents the combined results of operations of EAS (the
predecessor of NACH) and MANA. The 2003 and 2004 results do not
include the historical performance of GAH or EAR.



Year Ended December 31, 2005 Compared to Year Ended
    December 31, 2004Key Factors Affecting Operating Results




    contribution of positive operating results from two new FBOs in
    California (GAH) acquired in January 2005 and one FBO in
    Las Vegas (EAR) acquired in August 2005;
    higher average dollar per gallon fuel margins at existing
    locations;
    continued increases in fuel prices;
    higher rental income from new hangars and increased tenant
    occupancy;
    no significant effect on our results from recent
    hurricanes; and
    higher 2005 first quarter de-icing revenues at our northeast
    locations.

|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |         |         |  |  |        |        |  |  |         |      | 
|------------------------------------------------------------------------------------------------------------ | --------------------- | -------------------------------- | ------- | --------- | ------------ |  | ------- | ------- |  |  | ------ | ------ |  | ---- | ------- | ---- | ---- |  | ------ | ------ |  |  | ------- | ------- |  | - | ------- | ------- |  |  | ------ | ------ |  |  | ------- | ---- | 
|                                                                                                             |                       |                                  |         | GAH & EAR |              |  |        
|                                                                                                             |                       | Existing Locations (NACH & MANA) |         |           | Acquisitions |  |         | Total   | 
|                                                                                                             |                       |                                  |         |           |              |  |         |         | 
|                                                                                                             |                       |                                  |         | Change    |              |  |         |         |  |  | Change |       
|                                                                                                             |                       | 2005                             |         |           | 2004         |  |         |         |  |  | 2005   |        |  | 2005 |         |      | 2004 |  |        |        | 
|                                                                                                             |                       | $                                |         |           | $            |  |         | $       |  |  | %      |        |  | $    |         |      | $    |  |        | $      |  |  | $       |         |  | % |        
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|                                                                                                             |                       | ($ in thousands)                 |        
|Fuel revenue                                                                                                 |                       |                                  | 115,758 |           |              |  | 100,363 |         |  |  | 15,395 |        |  |      | 15.3    |      |      |  | 27,515 |        |  |  | 143,273 |         |  |   | 100,363 |         |  |  | 42,910 |        |  |  | 42.8    |     
|Non-fuel revenue                                                                                             |                       |                                  | 48,677  |           |              |  | 41,714  |         |  |  | 6,963  |        |  |      | 16.7    |      |      |  | 9,536  |        |  |  | 58,213  |         |  |   | 41,714  |         |  |  | 16,499 |        |  |  | 39.6    |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|                                                                                                             | Total revenue         |                                  |         | 164,435   |              |  |         | 142,077 |  |  |        | 22,358 |  |      |         | 15.7 |      |  |        | 37,051 |  |  |         | 201,486 |  |   |         | 142,077 |  |  |        | 59,409 |  |  |         | 41.8 | 
|Cost of revenue-fuel                                                                                         |                       |                                  | 68,240  |           |              |  | 53,572  |         |  |  | 14,668 |        |  |      | 27.4    |      |      |  | 16,566 |        |  |  | 84,806  |         |  |   | 53,572  |         |  |  | 31,234 |        |  |  | 58.3    |     
|Cost of revenue-non-fuel                                                                                     |                       |                                  | 6,718   |           |              |  | 6,036   |         |  |  | 682    |        |  |      | 11.3    |      |      |  | 862    |        |  |  | 7,580   |         |  |   | 6,036   |         |  |  | 1,544  |        |  |  | 25.6    |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|                                                                                                             | Total cost of revenue |                                  |         | 74,958    |              |  |         | 59,608  |  |  |        | 15,350 |  |      |         | 25.8 |      |  |        | 17,428 |  |  |         | 92,386  |  |   |         | 59,608  |  |  |        | 32,778 |  |  |         | 55.0 | 
|Fuel gross profit                                                                                            |                       |                                  | 47,518  |           |              |  | 46,791  |         |  |  | 727    |        |  |      | 1.6     |      |      |  | 10,949 |        |  |  | 58,467  |         |  |   | 46,791  |         |  |  | 11,676 |        |  |  | 25.0    |     
|Non-fuel gross profit                                                                                        |                       |                                  | 41,959  |           |              |  | 35,678  |         |  |  | 6,281  |        |  |      | 17.6    |      |      |  | 8,674  |        |  |  | 50,633  |         |  |   | 35,678  |         |  |  | 14,955 |        |  |  | 41.9    |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|                                                                                                             | Gross profit          |                                  |         | 89,477    |              |  |         | 82,469  |  |  |        | 7,008  |  |      |         | 8.5  |      |  |        | 19,623 |  |  |         | 109,100 |  |   |         | 82,469  |  |  |        | 26,631 |  |  |         | 32.3 | 
|Selling, general and administrative
    expenses                                                             |                       |                                  | 54,472  |           |              |  | 55,041  |         |  |  | (569   | )      |  |      | (1.0    | )    |      |  | 10,668 |        |  |  | 65,140  |         |  |   | 55,041  |         |  |  | 10,099 |        |  |  | 18.3    |     
|Depreciation and amortization                                                                                |                       |                                  | 12,187  |           |              |  | 12,142  |         |  |  | 45     |        |  |      | 0.4     |      |      |  | 3,465  |        |  |  | 15,652  |         |  |   | 12,142  |         |  |  | 3,510  |        |  |  | 28.9    |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|Operating income                                                                                             |                       |                                  | 22,818  |           |              |  | 15,286  |         |  |  | 7,532  |        |  |      | 49.3    |      |      |  | 5,490  |        |  |  | 28,308  |         |  |   | 15,286  |         |  |  | 13,022 |        |  |  | 85.2    |     
|Other expense                                                                                                |                       |                                  | (122    | )         |              |  | (11,814 | )       |  |  | 11,692 |        |  |      | 99.0    |      |      |  | (913   | )      |  |  | (1,035  | )       |  |   | (11,814 | )       |  |  | 10,779 |        |  |  | 91.2    |     
|Interest expense, net                                                                                        |                       |                                  | (10,548 | )         |              |  | (11,423 | )       |  |  | 875    |        |  |      | 7.7     |      |      |  | (3,599 | )(1)   |  |  | (14,147 | )       |  |   | (11,423 | )       |  |  | (2,724 | )      |  |  | 23.8    |     
|Provision (benefit) for income taxes                                                                         |                       |                                  | 5,481   |           |              |  | (326    | )       |  |  | 5,807  |        |  |      | 1,781.3 |      |      |  | 543    |        |  |  | 6,024   |         |  |   | (326    | )       |  |  | 6,350  |        |  |  | 1,947.9 |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|Net income (loss) from continuing
    operations                                                             |                       |                                  | 6,667   |           |              |  | (7,625  | )       |  |  | 14,292 |        |  |      | 187.4   |      |      |  | 435    |        |  |  | 7,102   |         |  |   | (7,625  | )       |  |  | 14,727 |        |  |  | 193.1   |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|Reconciliation of net income
    (loss) from continuing operations to EBITDA from continuing
    operations:
|Net income (loss) from continuing
    operations                                                             |                       |                                  | 6,667   |           |              |  | (7,625  | )       |  |  | 14,292 |        |  |      | 187.4   |      |      |  | 435    |        |  |  | 7,102   |         |  |   | (7,625  | )       |  |  | 14,727 |        |  |  | 193.1   |     
|Interest expense, net                                                                                        |                       |                                  | 10,548  |           |              |  | 11,423  |         |  |  | (875   | )      |  |      | 7.7     |      |      |  | 3,599  |        |  |  | 14,147  |         |  |   | 11,423  |         |  |  | 2,724  |        |  |  | 23.8    |     
|Provision (benefit) for income taxes                                                                         |                       |                                  | 5,481   |           |              |  | (326    | )       |  |  | 5,807  |        |  |      | 1,781.3 |      |      |  | 543    |        |  |  | 6,024   |         |  |   | (326    | )       |  |  | 6,350  |        |  |  | 1,947.9 |     
|Depreciation and amortization                                                                                |                       |                                  | 12,187  |           |              |  | 12,142  |         |  |  | 45     |        |  |      | 0.4     |      |      |  | 3,465  |        |  |  | 15,652  |         |  |   | 12,142  |         |  |  | 3,510  |        |  |  | 28.9    |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        
|EBITDA from continuing operations                                                                            |                       |                                  | 34,883  |           |              |  | 15,614  |         |  |  | 19,269 |        |  |      | 123.4   |      |      |  | 8,042  |        |  |  | 42,925  |         |  |   | 15,614  |         |  |  | 27,311 |        |  |  | 174.9   |     
|                                                                                                             |                       |                                  |         |           |              |  |         |         |  |  |        |        |  |      |         |      |      |  |        |        |  |  |         |         |  |   |        

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(1)
    We have allocated a portion of NACH interest expense to GAH and
    EAR on the basis of amortization expense of intangible assets,
    mainly airport contract rights, of GAH and EAR as a proportion
    of total NACH intangible assets amortization expenses.
    Therefore, we recognize interest expense on EAR even though we
    did not incur any additional senior debt at the time of our
    acquisition of EAR.

Revenue and Gross ProfitMost of our revenue and gross profit is generated through
fueling general aviation aircraft at our 19 fixed base
operations around the United States. This revenue is categorized
according to who owns the fuel we use to service these aircraft.
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 dollar-based margin. We generally
pursue a strategy of maintaining, and where appropriate
increasing, our margins, thereby passing any increase or
decrease 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, de-icing and terminal services.
Cost of revenue-non-fuel includes our cost, if any, of providing
these services.

The key factors generating our revenue and gross profit are 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 the most
meaningful analysis of our airport services business.

Our total revenue and gross profit growth was due to several
factors:




    inclusion of the results of GAH and EAR from the respective
    dates of their acquisitions;
    rising cost of fuel, which we pass on to customers; to date we
    have not seen any material negative impact on demand for fuel
    due to the increases in fuel costs;
    an increase in dollar per gallon fuel margins at our existing
    locations, resulting largely from a higher proportion of higher
    margin customers;
    higher rental income due to new hangars that opened in 2004 and
    2005 at our Chicago and Burlington locations respectively and
    higher occupancy of our existing locations; and
    increase in de-icing revenue in the northeastern locations
    during first quarter of 2005 due to colder weather conditions.Our facilities at New Orleans, LA and Gulfport, MS
(approximately $2.3 million EBITDA in 2004) were impacted
by Hurricane Katrina. Some of our hangar and terminal facilities
were damaged. However, our results for the year were not
significantly affected by this or any other recent hurricane. We
believe that we have an appropriate level of insurance coverage
to repair or rebuild our facilities and to cover us for any
business interruption we experience in the near term. We
anticipate that combined traffic at these facilities in 2006 may
be lower than in 2005 as travel to New Orleans and Gulfport has
slowed. However, we believe that this will not have a
significant effect on our overall results in 2006 or thereafter.



Operating ExpensesThe decrease in operating expenses at existing locations is due
to non-recurring transaction costs incurred by EAS associated
with the sale of the company in July 2004. This decrease was
partially offset by increased professional fees and the
implementation of a stock appreciation rights plan for certain
employees at the former AvPorts business. The increase in
depreciation and amortization was due to the recording of
NACHs and MANAs net assets to fair value upon their
acquisitions, partially offset by the expiration in November
2004 of a two-year non-compete agreement.

On February 14, 2006, the board of NACH approved the
implementation and issuance of a stock appreciation rights
program, or SARs, to reward certain employees of the airport
services business and to

76



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##### Table of Contents

incentivize those employees to increase the long term value of
that business. The SARs will vest over a five-year period, with
the majority of the vesting to occur by July 2009. The SARs will
be valued based upon the estimated fair market value of the
airport services business as calculated by us. The estimated
value of the SARs is $2 million based on the
December 31, 2005 valuation, assuming 100% vesting at that
date.



Other ExpenseThe decrease in other expense in 2005 is primarily due to the
recognition of expense attributable to outstanding warrants
valued at approximately $5.2 million that were subsequently
cancelled in connection with the acquisition of Atlantic by NACH
in July 2004, prior to our acquisition of NACH. Also included in
2004 results are $981,000 of costs associated with debt
financing required to partially fund NACHs acquisition of
Atlantic and $5.6 million of bridge costs associated with
our acquisition of NACH. In 2005, NACH incurred underwriting
fees of $913,000 in relation to the acquisition of GAH that were
funded with proceeds from our IPO.



Interest Expense, NetInterest expense increased by $2.7 million in 2005 over
2004 largely as a result of an increase in the level of debt,
which was incurred at the time of our acquisition of GAH, and as
a result of the refinancing described below. Interest expense in
2005 includes the following items:




    $5.7 million of amortization of deferred financing costs,
    including $4.9 million of deferred financing costs relating
    to the previously refinanced debt that was written off at the
    time of the 2005 refinancing;
    $4.2 million gain on the recognition of the market value of
    interest rate swaps at the time of the 2005 refinancing; we have
    kept the swaps in place following the refinancing as outlined
    below; and
    $579,000 interest expense on subordinated debt, which we owned,
    that was converted to equity in June 2005.In December 2005, we refinanced two existing debt facilities at
our airport services business with a single debt facility. This
new debt facility provides an aggregate term loan borrowing of
$300 million and a $5 million working capital
facility. The facility has a term of five years. Amounts
borrowed under the facility bear interest at a margin of 1.75%
over LIBOR for the first three years and a margin of 2.00% over
LIBOR thereafter. We have interest rate swap arrangements in
place for 100% of the aggregate term loan. See Liquidity
and Capital Resources  Commitments and
Contingencies for more details on this refinancing.

Since we have hedged 100% of our interest rate exposure, our
effective interest rate through 2010 is 6.52% on the
$300 million loan facility.



EBITDAThe substantial increase in EBITDA from existing locations is
due to increased dollar fuel margins combined with a reduction
in other expenses associated with the sale and financing of the
acquisition of Atlantic by NACH of approximately
$13.4 million in July 2004. Excluding these expenses EBITDA
at existing locations would have increased 20.2%.



Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003The following section summarizes the historical consolidated
financial performance of our airport services business for the
years ended December 31, 2004 and 2003.



Key Factors Affecting Operating Results


    contribution of positive operating results from two FBOs in New
    Orleans acquired in December 2003;77



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##### Table of Contents


    increased general aviation activity at most locations leading to
    higher fuel volumes sold and higher non-fuel revenues;
    continued increases in fuel prices; and
    non-operating expenses related to the acquisition and subsequent
    recapitalization of Atlantic.

|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |        |  |  |        |      | 
|------------------------------------------------------------------------------------------------------------ | --------------------- | ---------------- | ------- | ------- | ---- | ------ | ------ | ------- |  |  | ------- | ------ |  |  | ------ | ---- | 
|                                                                                                             |                       |                  |         |         |      | Change |       
|                                                                                                             |                       | 2004             |         |         | 2003 |        |        |         | 
|                                                                                                             |                       | $                |         |         | $    |        |        | $       |  |  | %       |       
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|                                                                                                             |                       | ($ in thousands) |        
|Fuel revenue                                                                                                 |                       |                  | 100,363 |         |      |        | 78,883 |         |  |  | 21,480  |        |  |  | 27.2   |     
|Non-fuel revenue                                                                                             |                       |                  | 41,714  |         |      |        | 35,981 |         |  |  | 5,733   |        |  |  | 15.9   |     
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|                                                                                                             | Total revenue         |                  |         | 142,077 |      |        |        | 114,864 |  |  |         | 27,213 |  |  |        | 23.7 | 
|Cost of revenue  fuel                                                                                       |                       |                  | 53,572  |         |      |        | 37,507 |         |  |  | 16,065  |        |  |  | 42.8   |     
|Cost of revenue  non-fuel                                                                                   |                       |                  | 6,036   |         |      |        | 5,473  |         |  |  | 563     |        |  |  | 10.3   |     
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|                                                                                                             | Total cost of revenue |                  |         | 59,608  |      |        |        | 42,980  |  |  |         | 16,628 |  |  |        | 38.7 | 
|Fuel gross profit                                                                                            |                       |                  | 46,791  |         |      |        | 41,376 |         |  |  | 5,415   |        |  |  | 13.1   |     
|Non-fuel gross profit                                                                                        |                       |                  | 35,678  |         |      |        | 30,508 |         |  |  | 5,170   |        |  |  | 16.9   |     
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|                                                                                                             | Gross profit          |                  |         | 82,469  |      |        |        | 71,884  |  |  |         | 10,585 |  |  |        | 14.7 | 
|Selling, general and administrative
    expenses                                                             |                       |                  | 55,041  |         |      |        | 45,260 |         |  |  | 9,781   |        |  |  | 21.6   |     
|Depreciation and amortization                                                                                |                       |                  | 12,142  |         |      |        | 9,853  |         |  |  | 2,289   |        |  |  | 23.2   |     
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|Operating income                                                                                             |                       |                  | 15,286  |         |      |        | 16,771 |         |  |  | (1,485  | )      |  |  | (8.9   | )   
|Other expense                                                                                                |                       |                  | (11,814 | )       |      |        | (1,203 | )       |  |  | (10,611 | )      |  |  | 882.0  |     
|Interest expense, net                                                                                        |                       |                  | (11,423 | )       |      |        | (8,508 | )       |  |  | (2,915  | )      |  |  | 34.3   |     
|(Benefit) provision for income taxes                                                                         |                       |                  | (326    | )       |      |        | 3,521  |         |  |  | (3,847  | )      |  |  | (109.3 | )   
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|Net (loss) income from continuing
    operations(1)                                                          |                       |                  | (7,625  | )       |      |        | 3,539  |         |  |  | (11,164 | )      |  |  | (315.5 | )   
|Income (loss) from discontinued
    operations (net of applicable income tax provision)                      |                       |                  | 275     |         |      |        | (314   | )       |  |  | 589     |        |  |  | (187.6 | )   
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|Net (loss) income                                                                                            |                       |                  | (7,350  | )       |      |        | 3,225  |         |  |  | (10,575 | )      |  |  | (327.9 | )   
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|Reconciliation of net (loss)
    income from continuing operations to EBITDA from continuing
    operations:
|Net (loss) income from continuing
    operations(1)                                                          |                       |                  | (7,625  | )       |      |        | 3,539  |         |  |  | (11,164 | )      |  |  | (315.5 | )   
|Interest expense, net                                                                                        |                       |                  | 11,423  |         |      |        | 8,508  |         |  |  | 2,915   |        |  |  | 34.3   |     
|Benefit (provision) for income
    taxes                                                                     |                       |                  | (326    | )       |      |        | 3,521  |         |  |  | (3,847  | )      |  |  | (109.3 | )   
|Depreciation and amortization                                                                                |                       |                  | 12,142  |         |      |        | 9,853  |         |  |  | 2,289   |        |  |  | 23.2   |     
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       
|EBITDA from continuing operations                                                                            |                       |                  | 15,614  |         |      |        | 25,421 |         |  |  | (9,807  | )      |  |  | (38.6  | )   
|                                                                                                             |                       |                  |         |         |      |        |        |         |  |  |         |       






|    |                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------
|(1) | Discontinued operations consist of income (loss) from
    Atlantics charter flight business which was sold in 2003.



| |                         
| | ------------------------
| | Revenue and Gross Profit







| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | increase due to acquisition in 2004 of two FBOs in New Orleans
    (contributing $9.3 million in revenue and $5.3 million
    in gross profit);

78



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##### Table of Contents


    rising cost of fuel, which we pass on to customers
    ($9.4 million of revenue increase); and
    an increase in the volume of fuel sold (up 8.3% on a same stores
    basis) due to increased general aviation activity at most
    locations, increased volumes due to customer loyalty programs
    and increased military activity at Louisville with aircraft
    returning from Iraq and at Gulfport with more military training.

Operating ExpensesSelling, general and administrative costs increased due to the
addition of the two New Orleans locations, including acquisition
costs incurred by Executive Air Support associated with the sale
of the company in July 2004 and increased costs associated with
the overall growth of the business. The costs related to the
sale of the company totaled approximately $1.6 million in
2004.

Depreciation and amortization expense increased by
$2.3 million, reflecting the impact of purchase accounting
on Atlantics asset valuations upon acquisition of Atlantic
by NACH, offset by a slight reduction in AvPorts depreciation
and amortization expense due to the expiration in November 2004
of non-compete agreements.



Other ExpenseOther expense in 2004 consisted of the recognition of
$5.2 million in expense attributable to then outstanding
warrants that were subsequently cancelled in connection with the
acquisition of Atlantic by NACH and the costs associated with
the bridge financing required to fund NACHs acquisition of
Atlantic of $6.6 million.



Interest Expense, NetNet interest expense increased by $2.9 million due to an
increase in the level of debt incurred after NACHs
acquisition of Atlantic. Interest expense also includes
$1.2 million of interest payable on the subordinated debt
of MANA, which we own, and is eliminated upon consolidation.



EBITDAThe substantial decrease in EBITDA is due to costs in 2004
associated with acquisitions (approximately $13.4 million).
Excluding these non-operating items, EBITDA increased by approx
$3.4 million or 14%, of which approximately $1 million
was due to the addition of the two New Orleans FBOs.

Airport Parking Business

In the following discussion, results of operations for 2004 and
2003 include results of MAPC prior to our acquisition of the
airport parking business on December 23, 2004. New
locations refer to locations in operation during the year ended
December 31, 2005 but not in operation throughout the
corresponding 2004 period. Comparable locations refer to
locations in operation throughout the years 2004 and 2005. For
the year ended December 31, 2005, the new locations were
Buffalo, Cleveland, Columbus, Houston, Oklahoma City,
Philadelphia (2) and St. Louis (1), acquired in the
fourth quarter of 2005, as well as, St. Louis (1),
Newark  Haynes Avenue and Oakland Pardee, which were
not in operation for the full year ended December 31, 2004.

In addition, we relocated one facility in Phoenix to a newly
acquired property during the quarter ended December 31,
2005. This facility has been included in comparable locations
totals for the year ended December 31, 2005.

79



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##### Table of Contents

Year Ended December 31, 2005 Compared to Year Ended
    December 31, 2004Key Factors Affecting Operating Results

Key factors influencing operating results were as follows:




    an increase in cars out at comparable locations and the revenue
    contributed by the new locations resulted in a 16.2% increase in
    revenue during the year ended December 31, 2005;
    reduced discounting and yield management of, for example, daily
    airport employee customers contributed to the slight increase in
    average parking revenue per car out for comparable locations
    during the year. The impact of these initiatives was stronger in
    the second half of 2005; and
    higher operating costs at comparable locations lowered operating
    margins while margins at new locations reflected less impact
    from start up costs than experienced in the prior year period
    and the positive contribution from the SunPark facilities
    acquired in the fourth quarter of 2005.

|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |        |        |   |       |       |       | 
|---------------------------------------------------------- | ----------------------------------------- | --------------------------- | ------- | ------ | ------ | ------ | ------ | ------ | ----- | - | ------ | ------ | ------ | - | ----- | ----- | ----- | 
|                                                           |                                           |                             |         |        |        | Change |       
|                                                           |                                           | 2005                        |         |        | 2004   |        |        |        |      
|                                                           |                                           | $                           |         |        | $      |        |        | $      |       |   | %      |       
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       
|                                                           |                                           | ($ in thousands)            |        
|Revenue                                                    |                                           |                             | 59,856  |        |        |        | 51,444 |        |       |   | 8,412  |        |        |   | 16.4  |      
|Direct expenses(1)                                         |                                           |                             | 45,076  |        |        |        | 36,872 |        |       |   | 8,204  |        |        |   | 22.2  |      
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       
|                                                           | Gross profit                              |                             |         | 14,780 |        |        |        | 14,572 |       |   |        | 208    |        |   |       | 1.4   |      
|Selling, general and administrative                        |                                           |                             | 4,509   |        |        |        | 4,670  |        |       |   | (161   | )      |        |   | (3.4  | )    
|Amortization of intangibles                                |                                           |                             | 3,802   |        |        |        | 2,850  |        |       |   | 952    |        |        |   | 33.4  |      
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       
|                                                           | Operating income                          |                             |         | 6,469  |        |        |        | 7,052  |       |   |        | (583   | )      |   |       | (8.3  | )    
|Interest expense, net                                      |                                           |                             | (10,320 | )      |        |        | (8,392 | )      |       |   | (1,928 | )      |        |   | 23.0  |      
|Other expense                                              |                                           |                             | (14     | )      |        |        | (47    | )      |       |   | 33     |        |        |   | (70.2 | )    
|Minority interest in loss of
    consolidated subsidiaries |                                           |                             | 517     |        |        |        | 629    |        |       |   | (112   | )      |        |   | (17.8 | )    
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       
|                                                           | Net loss                                  |                             |         | (3,348 | )      |        |        | (758   | )     |   |        | (2,590 | )      |   |       | 341.7 |      
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       
|                                                           | Reconciliation of net loss to
    EBITDA: |                             |         |        |        |        |        |        |       |   |        |        |        |   |       |       |      
|                                                           |                                           | Net loss                    |         |        | (3,348 | )      |        |        | (758  | ) |        |        | (2,590 | ) |       |       | 341.7 | 
|                                                           |                                           | Interest expense, net       |         |        | 10,320 |        |        |        | 8,392 |   |        |        | 1,928  |   |       |       | 23.0  | 
|                                                           |                                           | Depreciation                |         |        | 2,397  |        |        |        | 2,164 |   |        |        | 233    |   |       |       | 10.8  | 
|                                                           |                                           | Amortization of intangibles |         |        | 3,802  |        |        |        | 2,850 |   |        |        | 952    |   |       |       | 33.4  | 
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       
|                                                           | EBITDA                                    |                             |         | 13,171 |        |        |        | 12,648 |       |   |        | 523    |        |   |       | 4.1   |      
|                                                           |                                           |                             |         |        |        |        |        |        |       |   |        |       






|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes depreciation expense of $2.4 million and
    $2.2 million for the years ended December 31, 2005 and
    2004, respectively.

80



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##### Table of Contents



|                                         |  |                         |           |   |      |   |           |   
|---------------------------------------- |  | ----------------------- | --------- | - | ---- | - | --------- | --
|                                         |  | Year Ended December 31, |          
|                                         |  |                         |          
|Operating Data:                          |  | 2005                    |           |   | 2004 |  
|                                         |  |                         |           |   |      |  
|Total Revenues
    (thousands)(1):       |  |                         |           |   |      |   |           |   
|New locations                            |  | $                       | 8,031     |   |      | $ | 1,006     |   
|Comparable locations                     |  | $                       | 51,825    |   |      | $ | 50,438    |   
|Comparable locations increase            |  |                         | 2.8       | % |      |   |           |   
|Gross Profit
    Percentage:             |  |                         |           |   |      |   |           |   
|New locations                            |  |                         | 0.75      | % |      |   | (241.21   | )%
|Comparable locations                     |  |                         | 28.54     | % |      |   | 32.88     | % 
|Parking Revenues
    (thousands)(2):     |  |                         |           |   |      |   |           |   
|New locations                            |  | $                       | 7,594     |   |      | $ | 823       |   
|Comparable locations                     |  | $                       | 50,221    |   |      | $ | 48,368    |   
|Comparable locations increase            |  |                         | 3.8       | % |      |   |           |   
|Cars Out(3):                             |  |                         |           |   |      |   |           |   
|New locations                            |  |                         | 276,414   |   |      |   | 27,481    |   
|Comparable locations                     |  |                         | 1,390,947 |   |      |   | 1,344,198 |   
|Comparable locations increase            |  |                         | 3.5       | % |      |   |           |   
|Average Parking Revenue per Car
    Out: |  |                         |           |   |      |   |           |   
|New locations                            |  | $                       | 27.48     |   |      | $ | 29.96     |   
|Comparable locations                     |  | $                       | 36.11     |   |      | $ | 35.98     |   
|Comparable locations increase            |  |                         | 0.3       | % |      |   |           |   
|Average Overnight
    Occupancy(4):      |  |                         |           |   |      |   |           |   
|New locations                            |  |                         | 6,372     |   |      |   | 1,252     |   
|Comparable locations                     |  |                         | 14,321    |   |      |   | 14,177    |   
|Comparable locations increase            |  |                         | 1.0       | % |      |   |           |   
|Locations:                               |  |                         |           |   |      |   |           |   
|New locations                            |  |                         | 11        |   |      |   |           |   
|Comparable locations                     |  |                         | 20        |   |      |   |           |   






|    |                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Total Revenues include revenues from all sources, including but
    not limited to Parking Revenues.                                                                                              
|   
|(2) | Parking Revenues include all receipts from parking related
    revenue streams, which includes monthly, membership and receipts
    from third parties such as Expedia and Orbitz.                
|   
|(3) | Cars out refers to the total number of customers exiting during
    the period.                                                                                                                   
|   
|(4) | Average overnight occupancy refers to aggregate average daily
    occupancy measured for all locations at the lowest point of the
    day, which does not reflect turnover and intra-day activity.



| |        
| | -------
| | Revenue





81



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##### Table of Contents

Certain discounting and pricing strategies that had resulted in
lower parking revenue per car out during the first half of the
year were adjusted during the second half of 2005. These lower
levels of discounting and higher prices in certain markets
resulted in improved revenue per car out during the second half
of 2005 and resulted in revenue per car out for 2005 being
slightly higher than the 2004 period. The business has
experienced increased competition in several locations which may
put short term pressure on pricing. In 2006, promotional and
service efforts will be focused on these markets to address this
increased competition.

Seven of the 11 new locations were acquired in the fourth
quarter and contributed to the overall increase in revenue. We
are continuing to integrate these facilities including upgrade
of the bus fleet and certain infrastructure scheduled for
completion in the first and second quarters of 2006. In
combination with staff training, improved customer service and
integrated marketing, we expect the incremental benefits of
integration will continue to be seen throughout 2006.

Although the number of cars using our facilities in 2005
increased over 2004 at the majority of our locations, our
airport parking business as a whole has sufficient capacity to
accommodate further growth. At locations where we are operating
at peak capacity intra day, we continue to evaluate our
available options to expand capacity of these locations,
including the use of additional overflow facilities and car
lifts. For example, in November, capacity was increased by
approximately 10% at one of our facilities with the installation
of cars lifts. At facilities where we are not capacity
constrained we also aim to grow revenues through increased
pricing or reduced discounting.



Operating ExpensesDirect expenses for the year ended December 31, 2005
increased mainly by the additional costs associated with
operating 11 new locations. The increase totaled $8 million.

Direct expenses include non-cash rent in excess of lease in the
amount of $2 million and $901,000 for the years 2005 and
2004, respectively. In accordance with U.S. generally
accepted accounting principles, we recognize the total rent
expense to be paid over the life of a lease on a straight-line
basis. This generally results in rent expense higher than actual
cash paid early in the lease and rent expense lower than actual
cash paid later in the lease. Other factors affecting direct
expenses at comparable locations are:




    higher shuttle operating costs in the second half of 2005 due to
    the increased cost of fuel;
    higher rents related to new long term lease agreements that were
    secured in the fourth quarter 2004 and rental payments resulting
    from use of overflow lots in locations with capacity constraints;
    higher damaged car claims and, in response, higher security
    costs;
    higher advertising expenses reflecting a radio campaign during
    the fourth quarter; and
    lower selling, general and administrative expenses resulting
    from lower severance costs and performance bonuses, offset in
    part by higher professional fees and strategic planning
    initiatives.On February 27, 2006, the board of MAPC approved the
implementation and issuance of a stock appreciation rights
program, or SARs, to reward certain key employees of the airport
parking business and to incentivize those employees to increase
the long term value of that business. The SARs will vest over a
five-year period, with the majority of the vesting to occur by
July 2009. The SARs will be valued based upon the estimated fair
market value of the airport services business as calculated by
us. The estimated value of the SARs is $488,000 based on the
December 31, 2005 valuation, assuming 100% vesting at that
date.



Amortization of IntangiblesAmortization increased largely as a result of the increase in
the fair value of the assets acquired when MAPC was purchased by
us on December 23, 2004 and the fair value of assets
acquired in the fourth quarter of 2005, partially offset by the
accelerated amortization of customer contracts that expired in
2004.

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Interest Expense, NetInterest expense in 2005 increased due to higher LIBOR rates,
partially offset by the elimination of deferred finance cost
amortization resulting from our initial acquisition, and
increases in our overall level of debt as a result of the
acquisition the SunPark facilities and a facility in
Philadelphia.

We have an interest rate cap agreement at a base rate of LIBOR
equal to 4.5% for a notional amount of $126 million for the
term of the loan and a second interest rate cap agreement at a
base rate of LIBOR equal to 4.48% for a notional amount of
$58.7 million. Both interest rate caps were reached in the
first quarter of 2006.



EBITDAExcluding the aforementioned non-cash deferred rent and the
contract settlement in 2004, EBITDA would have increased by 18%
in the year ended December 31, 2005 compared to the prior
year period.

New locations generated a gross profit margin of 0.75% for the
year ended December 31, 2005 compared to (26.7)% for the
nine months to September 30, 2005. This reflects the
positive impact of the SunPark acquisition in the fourth quarter.



Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003Key Factors Affecting Operating Results




    acquisition of Avistar in October 2003 which contributed
    $21.6 million in revenue in 2004;
    continued enplanement growth at all major airports; and
    conversion to public parking of previously contracted employee
    parking which contributed $1.6 million in revenue.

|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |       |       |   |        |       |       |  
|---------------------------------------------------------- | ----------------------------------------- | --------------------------- | ------ | ------ | ----- | ------ | ------ | ------ | ------ | - | ------ | ----- | ----- | - | ------ | ----- | ----- | -
|                                                           |                                           |                             |        |        |       | Change |       
|                                                           |                                           | 2004                        |        |        | 2003  |        |        |        |       
|                                                           |                                           | $                           |        |        | $     |        |        | $      |        |   | %      |      
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      
|                                                           |                                           | ($ in thousands)            |       
|Revenue                                                    |                                           |                             | 51,444 |        |       |        | 26,291 |        |        |   | 25,153 |       |       |   | 95.7   |      
|Direct expenses(1)                                         |                                           |                             | 36,872 |        |       |        | 19,236 |        |        |   | 17,636 |       |       |   | 91.7   |      
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      
|                                                           | Gross profit                              |                             |        | 14,572 |       |        |        | 7,055  |        |   |        | 7,517 |       |   |        | 106.5 |      
|Selling, general and administrative                        |                                           |                             | 4,670  |        |       |        | 1,749  |        |        |   | 2,921  |       |       |   | 167.0  |      
|Amortization of intangibles                                |                                           |                             | 2,850  |        |       |        | 3,576  |        |        |   | (726   | )     |       |   | (20.3  | )    
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      
|                                                           | Operating income                          |                             |        | 7,052  |       |        |        | 1,730  |        |   |        | 5,322 |       |   |        | 307.6 |      
|Interest expense, net                                      |                                           |                             | (8,392 | )      |       |        | (8,260 | )      |        |   | (132   | )     |       |   | 1.6    |      
|Other (expense) income                                     |                                           |                             | (47    | )      |       |        | 10     |        |        |   | (57    | )     |       |   | (570.0 | )    
|Minority interest in loss of
    consolidated subsidiaries |                                           |                             | 629    |        |       |        | 1,520  |        |        |   | (891   | )     |       |   | (58.6  | )    
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      
|                                                           | Net loss                                  |                             |        | (758   | )     |        |        | (5,000 | )      |   |        | 4,242 |       |   |        | (84.8 | )    
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      
|                                                           | Reconciliation of net loss to
    EBITDA: |                             |        |        |       |        |        |        |        |   |        |       |       |   |        |       |      
|                                                           |                                           | Net loss                    |        |        | (758  | )      |        |        | (5,000 | ) |        |       | 4,242 |   |        |       | (84.8 | )
|                                                           |                                           | Interest expense, net       |        |        | 8,392 |        |        |        | 8,260  |   |        |       | 132   |   |        |       | 1.6   |  
|                                                           |                                           | Depreciation                |        |        | 2,164 |        |        |        | 1,343  |   |        |       | 821   |   |        |       | 61.1  |  
|                                                           |                                           | Amortization of intangibles |        |        | 2,850 |        |        |        | 3,576  |   |        |       | (726  | ) |        |       | (20.3 | )
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      
|                                                           | EBITDA                                    |                             |        | 12,648 |       |        |        | 8,179  |        |   |        | 4,469 |       |   |        | 54.6  |      
|                                                           |                                           |                             |        |        |       |        |        |        |        |   |        |      






|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes depreciation expense of $2.2 million and
    $1.3 million for the years ended December 31, 2004 and
    2003, respectively.

83



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RevenueRevenue in the year ended December 31, 2004 was higher than
in the year ended December 31, 2003 mainly due to the
acquisition of the assets of the Avistar parking business on
October 1, 2003. Avistar contributed $21.6 million of
the total revenue increase in 2004 of $25.2 million.
Revenue from the comparable sites increased by 13% and was
primarily due to new marketing initiatives, an overall increase
in air passenger traffic at airports at which the business
operates, the conversion to public parking of one of our
facilities in June 2003 that was previously contracted to a
company for employee parking, and additional capacity from
temporary overflow locations. Average daily
overnight occupancy increased from approximately
6,000 vehicles in 2003 to approximately 14,500 vehicles in 2004,
mainly due to the acquisition of Avistar (7,000 vehicles) and
growth at comparable locations of 25%.



Operating ExpensesDirect expenses increased by $17.6 million mainly due to
the acquisition of the Avistar parking business, which
contributed $13 million to the increase. The other factors
affecting direct expenses include:




    start up costs of $3.3 million for the four new locations
    opened during 2004;
    additional operating expenses resulting from the conversion of
    the parking lot described above; and increase in staffing and
    shuttle bus expense to support higher occupancy levels; and
    higher selling, general and administrative expenses due to the
    payment of a termination fee upon cancellation of the management
    contract with the previous owner and severance costs of $322,000.

Amortization of IntangiblesAmortization decreased largely as a result of an impairment loss
in the amount of $1 million related to certain contract
rights which was recorded in 2003, but offset by an increase in
amortization of the assets purchased in the Avistar transaction
which were recorded for the full year in 2004.



Interest ExpenseInterest expense in 2004 included $1.4 million of deferred
finance cost amortization, which decreased from
$3.7 million in 2003. This is due to $2.9 million in
debt issuance costs which were written off on October 1,
2003 in conjunction with the debt refinancing and with the new
debt raised to finance the acquisition of the Avistar assets.



EBITDAEBITDA increased 54.6% in the 12 months ended
December 31, 2004 compared to the prior year period, mostly
due to the full year effect of the Avistar acquisition.

District Energy Business

The following table compares the historical consolidated
financial performance of Macquarie District Energy Holdings,
LLC, or MDEH, for the year ended December 31, 2005 to the
year ended December 31, 2004.

We have combined the following results of operations:




    the predecessor Thermal Chicago Corporation from January 1,
    2004 through June 30, 2004, prior to its acquisition by
    MDEH;
    MDEH from January 1, 2004 through December 22, 2004,
    when it was part of the Macquarie Group;84



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##### Table of Contents


    MDEH from December 23, 2004 through December 31, 2004,
    the period of our ownership; and
    ETT Nevada, Inc., or ETT Nevada, the holding company for our 75%
    interest in Northwind Aladdin, from September 29, 2004
    through December 22, 2004, when it was owned indirectly by
    MDEH and was therefore part of the Macquarie Group.At the time at which MDEH indirectly acquired a 75% interest in
Northwind Aladdin, MDEH also indirectly acquired all of the
senior debt of Northwind Aladdin. As a consequence, interest
expense included in the statement of operations below from
September 29, 2004 through December 31, 2004 on such
senior debt was eliminated in our consolidated financial
statements for 2004 and all subsequent periods.



Key Factors Affecting Operating ResultsKey factors affecting the year ended December 31, 2005
compared to the year ended December 31, 2004 were as
follows:




    full year of results for ETT Nevada in 2005;
    capacity revenue generally increased in-line with inflation;
    consumption ton-hours sold were higher primarily due to above
    average temperature in Chicago from June to September; and
    EBITDA was higher due to the incremental margin from additional
    consumption ton-hours sold and the inclusion of ETT Nevada.85



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##### Table of Contents

Year Ended December 31, 2005 Compared to Year Ended
    December 31, 2004

|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        |  |         |        |         |   |        |       |         |   |       |      |        |  
|-------------------------------------------------- | ------------- | --------------------------- | ------ | ------ | ---------- | - | ------- | ------------ | ------- | - | ------ | ----- | ------- | ---- | ----- | ---- | ----- | - | ------ | ----- | ----- |  | ----- | ----- | ----- | - | ------ | ------ | ------ |  | ------- | ------ | ------- | - | ------ | ----- | ------- | - | ----- | ---- | ------ | -
|                                                   |               | MDEH Excluding ETT Nevada   |        |        | ETT Nevada |   |         | Consolidated |        
|                                                   |               |                             |        |        |            |   |         |              |        
|                                                   |               |                             |        | Change |            |   |         |              |         |   | Change |      
|                                                   |               | 2005                        |        |        | 2004       |   |         |              |         |   | 2005   |       |         | 2004 |       |      | 2005  |   |        | 2004  |       |  |       |      
|                                                   |               | $                           |        |        | $          |   |         | $            |         |   | %      |       |         | $    |       |      | $     |   |        | $     |       |  | $     |       |       | $ |        |        | %      | 
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|                                                   |               | ($ in thousands)            |       
|Cooling capacity revenue                           |               |                             | 16,524 |        |            |   | 16,224  |              |         |   | 300    |       |         |      | 1.8   |      |       |   |       |       |       |  |      |       |       |   | 16,524 |        |        |  | 16,224  |        |         |   | 300    |       |         |   | 1.8   |     
|Cooling consumption revenue                        |               |                             | 16,894 |        |            |   | 14,359  |              |         |   | 2,535  |       |         |      | 17.7  |      |       |   | 1,825  |       |       |  | 289   |       |       |   | 18,719 |        |        |  | 14,648  |        |         |   | 4,071  |       |         |   | 27.8  |     
|Other revenue                                      |               |                             | 1,090  |        |            |   | 1,285   |              |         |   | (195   | )     |         |      | (15.2 | )    |       |   | 1,765  |       |       |  | 436   |       |       |   | 2,855  |        |        |  | 1,721   |        |         |   | 1,134  |       |         |   | 65.9  |     
|Finance lease revenue                              |               |                             | 1,287  |        |            |   | 1,387   |              |         |   | (100   | )     |         |      | (7.2  | )    |       |   | 4,016  |       |       |  | 1,036 |       |       |   | 5,303  |        |        |  | 2,423   |        |         |   | 2,880  |       |         |   | 118.9 |     
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|                                                   | Total revenue |                             |        | 35,795 |            |   |         | 33,255       |         |   |        | 2,540 |         |      |       | 7.6  |       |   |        | 7,606 |       |  |       | 1,761 |       |   |        | 43,401 |        |  |         | 35,016 |         |   |        | 8,385 |         |   |       | 23.9 |       
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|Direct expenses 
    Electricity                  |               |                             | 10,270 |        |            |   | 8,767   |              |         |   | 1,503  |       |         |      | 17.1  |      |       |   | 1,810  |       |       |  | 231   |       |       |   | 12,080 |        |        |  | 8,998   |        |         |   | 3,082  |       |         |   | 34.3  |     
|Direct expenses  other(1)                         |               |                             | 15,590 |        |            |   | 13,410  |              |         |   | 2,180  |       |         |      | 16.3  |      |       |   | 1,508  |       |       |  | 369   |       |       |   | 17,098 |        |        |  | 13,779  |        |         |   | 3,319  |       |         |   | 24.1  |     
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|                                                   |               | Direct expenses  total     |        |        | 25,860     |   |         |              | 22,177  |   |        |       | 3,683   |      |       |      | 16.6  |   |        |       | 3,318 |  |       |       | 600   |   |        |        | 29,178 |  |         |        | 22,777  |   |        |       | 6,401   |   |       |      | 28.1   |  
|                                                   |               | Gross profit                |        |        | 9,935      |   |         |              | 11,078  |   |        |       | (1,143  | )    |       |      | (10.3 | ) |        |       | 4,288 |  |       |       | 1,161 |   |        |        | 14,223 |  |         |        | 12,239  |   |        |       | 1,984   |   |       |      | 16.2   |  
|Selling, general and administrative
    expenses   |               |                             | 3,161  |        |            |   | 3,555   |              |         |   | (394   | )     |         |      | (11.1 | )    |       |   | 319    |       |       |  | 74    |       |       |   | 3,480  |        |        |  | 3,629   |        |         |   | (149   | )     |         |   | (4.1  | )   
|Amortization of intangibles                        |               |                             | 1,321  |        |            |   | 704     |              |         |   | 617    |       |         |      | 87.6  |      |       |   | 47     |       |       |  | 12    |       |       |   | 1,368  |        |        |  | 716     |        |         |   | 652    |       |         |   | 91.1  |     
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|                                                   |               | Operating income            |        |        | 5,453      |   |         |              | 6,819   |   |        |       | (1,366  | )    |       |      | (20.0 | ) |        |       | 3,922 |  |       |       | 1,075 |   |        |        | 9,375  |  |         |        | 7,894   |   |        |       | 1,481   |   |       |      | 18.8   |  
|Interest expense, net                              |               |                             | (6,255 | )      |            |   | (20,736 | )            |         |   | 14,481 |       |         |      | (69.8 | )    |       |   | (2,016 | )     |       |  | (585  | )     |       |   | (8,271 | )      |        |  | (21,321 | )      |         |   | 13,050 |       |         |   | (61.2 | )   
|Other income                                       |               |                             | 138    |        |            |   | 1,529   |              |         |   | (1,391 | )     |         |      | (91.0 | )    |       |   | 231    |       |       |  |      |       |       |   | 369    |        |        |  | 1,529   |        |         |   | (1,160 | )     |         |   | (75.9 | )   
|Provision for income taxes                         |               |                             | (302   | )      |            |   | (1,103  | )            |         |   | 801    |       |         |      | (72.6 | )    |       |   |       |       |       |  | (116  | )     |       |   | (302   | )      |        |  | (1,219  | )      |         |   | 917    |       |         |   | (75.2 | )   
|Minority interest                                  |               |                             |       |        |            |   |        |              |         |   |       |       |         |      |       |      |       |   | (719   | )     |       |  | (118  | )     |       |   | (719   | )      |        |  | (118    | )      |         |   | (601   | )     |         |   | 509.3 |     
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|                                                   |               | Net (loss) income           |        |        | (966       | ) |         |              | (13,491 | ) |        |       | 12,525  |      |       |      | (92.8 | ) |        |       | 1,418 |  |       |       | 256   |   |        |        | 452    |  |         |        | (13,235 | ) |        |       | 13,687  |   |       |      | (103.4 | )
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|Reconciliation of net (loss)
    income to EBITDA: |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |      
|                                                   |               | Net (loss) income           |        |        | (966       | ) |         |              | (13,491 | ) |        |       | 12,525  |      |       |      | 92.8  |   |        |       | 1,418 |  |       |       | 256   |   |        |        | 452    |  |         |        | (13,235 | ) |        |       | 13,687  |   |       |      | (103.4 | )
|                                                   |               | Interest expense, net       |        |        | 6,255      |   |         |              | 20,736  |   |        |       | (14,481 | )    |       |      | (69.8 | ) |        |       | 2,016 |  |       |       | 585   |   |        |        | 8,271  |  |         |        | 21,321  |   |        |       | (13,050 | ) |       |      | (61.2  | )
|                                                   |               | Provision for income taxes  |        |        | 302        |   |         |              | 1,103   |   |        |       | (801    | )    |       |      | (72.6 | ) |        |       |      |  |       |       | 116   |   |        |        | 302    |  |         |        | 1,219   |   |        |       | (917    | ) |       |      | (75.2  | )
|                                                   |               | Depreciation                |        |        | 5,694      |   |         |              | 4,202   |   |        |       | 1,492   |      |       |      | 35.5  |   |        |       |      |  |       |       |      |   |        |        | 5,694  |  |         |        | 4,202   |   |        |       | 1,492   |   |       |      | 35.5   |  
|                                                   |               | Amortization of Intangibles |        |        | 1,321      |   |         |              | 704     |   |        |       | 617     |      |       |      | 87.6  |   |        |       | 47    |  |       |       | 12    |   |        |        | 1,368  |  |         |        | 716     |   |        |       | 652     |   |       |      | 91.1   |  
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 
|                                                   | EBITDA        |                             |        | 12,606 |            |   |         | 13,254       |         |   |        | (648  | )       |      |       | (4.9 | )     |   |        | 3,481 |       |  |       | 969   |       |   |        | 16,087 |        |  |         | 14,223 |         |   |        | 1,864 |         |   |       | 13.1 |       
|                                                   |               |                             |        |        |            |   |         |              |         |   |        |       |         |      |       |      |       |   |        |       |       |  |       |       |       |   |        |        |        | 






|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes depreciation expense of $5.7 million and
    $4.2 million for the years ended December 31, 2005 and
    2004, respectively.





| |             
| | ------------
| | Gross Profit



86



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##### Table of Contents

the impact of higher electricity costs. Higher direct labor
costs from scheduled increases in wages and benefits for union
workers and scheduled increases in maintenance contracts also
contributed to the decrease in gross margin.



Selling, General and Administrative ExpensesSelling, general and administrative expenses at Thermal Chicago
decreased from the year ended December 31, 2004 primarily
due to the absence of expenses and local taxes related to the
sale of Thermal Chicago by Exelon in 2004.



Interest Expense, NetThe substantial decrease in net interest expense was due to a
make-whole payment of $10.3 million to redeem outstanding
bonds prior to the acquisition of Thermal Chicago by MDEH on
June 30, 2004 and other payments related to financing the
acquisition. The other payments included $2.2 million
related to the termination of an interest rate swap used to
hedge MDEHs long term interest rate risk pending issuance
of notes in the private placement, and $3.4 million related
to a bridge loan financing. MDEH currently has $120 million
in long term debt, consisting of $100 million and
$20 million at fixed annual rates of 6.82% and 6.40%,
respectively.



EBITDAEBITDA excluding ETT Nevada decreased $600,000 due to a
$1.3 million financial restructuring gain in 2004.
Exclusive of the gain, EBITDA would have been $600,000 or 5.5%
higher than the year ended December 31, 2004 primarily due
to the incremental consumption revenue from additional ton-hours
sold.



Key Factors Affecting Operating ResultsKey factors affecting the year ended December 31, 2004
compared to the year ended December 31, 2003 were as
follows:




    capacity revenue generally increased in-line with inflation;
    consumption ton-hours sold were higher primarily due to warmer
    average weather in 2004 compared to 2003; and
    EBITDA was higher due to the incremental margin from additional
    consumption ton-hours sold.87



---



##### Table of Contents

The following table compares the historical consolidated
financial performance of MDEH for the year ended
December 31, 2004 to the year ended December 31, 2003.



Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003

|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |        |        |        |       |         |       |         |         |       |      |        |        |  
|------------------------------------------------------------------- | ------------- | ------------------------- | --------------------------- | ------ | ---------- | ------- | ------ | ------------ | ------ | ----- | ------- | ----- | ------- | ------- | ------ | --- | ------ | ------ | ----- | ----- | ----- | --- | ------- | ------ | ------- | ------- | ------ | ------ | ------ | ----- | ------- | ----- | ------- | ------- | ----- | ---- | ------ | ------ | -
|                                                                    |               | MDEH Excluding ETT Nevada |                             |        | ETT Nevada |         |        | Consolidated |       
|                                                                    |               |                           |                             |        |            |         |        |              |       
|                                                                    |               |                           |                             | Change |            |         |        |              |        |       | Change  |      
|                                                                    |               | 2004                      |                             |        | 2003       |         |        |              |        |       | 2004    |       |         | 2004    |        |     | 2003   |        |       |       |      
|                                                                    |               | $                         |                             |        | $          |         |        | $            |        |       | %       |       |         | $       |        |     | $      |        |       | $     |       |     | $       |        |         | %       |       
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|                                                                    |               | ($ in thousands)          |                            
|Cooling capacity revenue                                            |               |                           | 16,224                      |        |            |         | 15,737 |              |        |       | 487     |       |         |         | 3.1    |     |        |        |      |       |       |     | 16,224  |        |         |         | 15,737 |        |        |       | 487     |       |         |         | 3.1   |     
|Cooling consumption revenue                                         |               |                           | 14,359                      |        |            |         | 13,378 |              |        |       | 981     |       |         |         | 7.3    |     |        |        | 289   |       |       |     | 14,648  |        |         |         | 13,378 |        |        |       | 1,270   |       |         |         | 9.5   |     
|Other revenue                                                       |               |                           | 1,285                       |        |            |         | 849    |              |        |       | 436     |       |         |         | 51.4   |     |        |        | 436   |       |       |     | 1,721   |        |         |         | 849    |        |        |       | 872     |       |         |         | 102.7 |     
|Finance lease revenue                                               |               |                           | 1,387                       |        |            |         | 1,369  |              |        |       | 18      |       |         |         | 1.3    |     |        |        | 1,036 |       |       |     | 2,423   |        |         |         | 1,369  |        |        |       | 1,054   |       |         |         | 77.0  |     
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|                                                                    | Total revenue |                           |                             | 33,255 |            |         |        | 31,333       |        |       |         | 1,922 |         |         |        | 6.1 |        |        |       | 1,761 |       |     |         | 35,016 |         |         |        | 31,333 |        |       |         | 3,683 |         |         |       | 11.8 |       
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|Direct expenses 
    electricity                                   |               |                           | 8,767                       |        |            |         | 8,061  |              |        |       | 706     |       |         |         | 8.8    |     |        |        | 231   |       |       |     | 8,998   |        |         |         | 8,061  |        |        |       | 937     |       |         |         | 11.6  |     
|Direct expenses  other(1)                                          |               |                           | 13,410                      |        |            |         | 11,317 |              |        |       | 2,093   |       |         |         | 18.5   |     |        |        | 369   |       |       |     | 13,779  |        |         |         | 11,317 |        |        |       | 2,462   |       |         |         | 21.8  |     
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|                                                                    |               | Direct expenses  total   |                             |        | 22,177     |         |        |              | 19,378 |       |         |       | 2,799   |         |        |     | 14.4   |        |       |       | 600   |     |         |        | 22,777  |         |        |        | 19,378 |       |         |       | 3,399   |         |       |      | 17.5   |       
|                                                                    |               | Gross profit              |                             |        | 11,078     |         |        |              | 11,955 |       |         |       | (877    | )       |        |     | (7.3   | )      |       |       | 1,161 |     |         |        | 12,239  |         |        |        | 11,955 |       |         |       | 284     |         |       |      | 2.4    |       
|Selling, general and administrative
    expenses                    |               |                           | 3,555                       |        |            |         | 2,922  |              |        |       | 633     |       |         |         | 21.7   |     |        |        | 74    |       |       |     | 3,629   |        |         |         | 2,922  |        |        |       | 707     |       |         |         | 24.2  |     
|Amortization of intangibles                                         |               |                           | 704                         |        |            |         | 99     |              |        |       | 605     |       |         |         | 611.1  |     |        |        | 12    |       |       |     | 716     |        |         |         | 99     |        |        |       | 617     |       |         |         | 623.2 |     
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|                                                                    |               | Operating income          |                             |        | 6,819      |         |        |              | 8,934  |       |         |       | (2,115  | )       |        |     | (23.7  | )      |       |       | 1,075 |     |         |        | 7,894   |         |        |        | 8,934  |       |         |       | (1,040  | )       |       |      | (11.6  | )     
|Interest expense, net                                               |               |                           | (20,736                     | )      |            |         | (4,772 | )            |        |       | (15,964 | )     |         |         | 334.5  |     |        |        | (585  | )     |       |     | (21,321 | )      |         |         | (4,772 | )      |        |       | (16,549 | )     |         |         | 346.8 |     
|Other income                                                        |               |                           | 1,529                       |        |            |         | 1,087  |              |        |       | 442     |       |         |         | 40.7   |     |        |        |      |       |       |     | 1,529   |        |         |         | 1,087  |        |        |       | 442     |       |         |         | 40.7  |     
|Provision for income taxes                                          |               |                           | (1,103                      | )      |            |         | (2,144 | )            |        |       | 1,041   |       |         |         | (48.6  | )   |        |        | (116  | )     |       |     | (1,219  | )      |         |         | (2,144 | )      |        |       | 925     |       |         |         | (43.1 | )   
|Minority interest                                                   |               |                           |                            |        |            |         |       |              |        |       |        |       |         |         |       |     |        |        | (118  | )     |       |     | (118    | )      |         |         |       |        |        |       | (118    | )     |         |         |      |     
|Cumulative effect of change in
    accounting principle, net of tax |               |                           |                            |        |            |         | (299   | )            |        |       | 299     |       |         |         | (100.0 | )   |        |        |      |       |       |     |        |        |         |         | (299   | )      |        |       | 299     |       |         |         | (100  | )   
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|                                                                    |               | Net (loss) income         |                             |        | (13,491    | )       |        |              | 2,806  |       |         |       | (16,297 | )       |        |     | (580.8 | )      |       |       | 256   |     |         |        | (13,235 | )       |        |        | 2,806  |       |         |       | (16,041 | )       |       |      | (571.7 | )     
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|Reconciliation of net (loss)
    income to EBITDA:                  |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |      
|                                                                    |               |                           | Net (loss) income           |        |            | (13,491 | )      |              |        | 2,806 |         |       |         | (16,297 | )      |     |        | (580.8 | )     |       |       | 256 |         |        |         | (13,235 | )      |        |        | 2,806 |         |       |         | (16,041 | )     |      |        | (571.7 | )
|                                                                    |               |                           | Interest expense, net       |        |            | 20,736  |        |              |        | 4,772 |         |       |         | 15,964  |        |     |        | 334.5  |       |       |       | 585 |         |        |         | 21,321  |        |        |        | 4,772 |         |       |         | 16,549  |       |      |        | 346.8  |  
|                                                                    |               |                           | Provision for income taxes  |        |            | 1,103   |        |              |        | 2,144 |         |       |         | (1,041  | )      |     |        | (48.6  | )     |       |       | 116 |         |        |         | 1,219   |        |        |        | 2,144 |         |       |         | (925    | )     |      |        | (43.1  | )
|                                                                    |               |                           | Depreciation                |        |            | 4,202   |        |              |        | 2,806 |         |       |         | 1,396   |        |     |        | 49.8   |       |       |       |    |         |        |         | 4,202   |        |        |        | 2,806 |         |       |         | 1,396   |       |      |        | 49.8   |  
|                                                                    |               |                           | Amortization of intangibles |        |            | 704     |        |              |        | 99    |         |       |         | 605     |        |     |        | 611.1  |       |       |       | 12  |         |        |         | 716     |        |        |        | 99    |         |       |         | 617     |       |      |        | 623.2  |  
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       
|                                                                    |               | EBITDA                    |                             |        | 13,254     |         |        |              | 12,627 |       |         |       | 627     |         |        |     | 5.0    |        |       |       | 969   |     |         |        | 14,223  |         |        |        | 12,627 |       |         |       | 1,596   |         |       |      | 12.6   |       
|                                                                    |               |                           |                             |        |            |         |        |              |        |       |         |       |         |         |        |     |        |        |       |       |       |     |         |        |         |         |       






|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes depreciation expense of $4.2 million and
    $2.8 million for the years ended December 31, 2004 and
    2003, respectively.

88



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##### Table of Contents

Gross ProfitGross profit decreased at Thermal Chicago primarily due to
increased acquisition-related depreciation expense of
$1 million. The increase offset the 5% increase in
consumption ton-hours sold resulting from warmer average weather
in 2004 compared to 2003. Annual inflation-related increases in
contract capacity rates and scheduled increases in contract
consumption rates in accordance with the terms of existing
customer contracts accounted for the remaining increase in
revenue.

Higher direct labor costs from scheduled increases in wages and
benefits for union workers, scheduled increases in maintenance
contracts and increases in insurance costs also contributed to
the decrease in gross margin. Including ETT Nevada, gross profit
increased from the year ended December 31, 2003 primarily
due to the acquisition of ETT Nevada on September 29, 2004.



Selling, General and Administrative ExpensesSelling, general and administrative expenses increased by
approximately $707,000 in 2004. This increase was largely due to
an increase in costs associated with Exelons sale of the
business to MDE Inc. in June 2004 of $200,000, an increase in
bad debt expense of $175,000 related to a customers
Chapter 11 bankruptcy and a one-time increase in local
taxes of $175,000 caused by Exelons recapitalization of
the business to prepare it for sale.



Interest Expense, NetInterest expense in 2004 was higher due primarily to acquisition
related costs, including a $10.3 million make-whole payment
associated with the redemption of outstanding bonds prior to the
acquisition of Thermal Chicago by MDEH, a loss of
$2.2 million from the termination of an interest rate swap
that was used to hedge MDEHs long term interest rate risk
pending issuance of notes in a private placement, and
$3.4 million of costs associated with the bridge loan
utilized to finance MDEHs acquisition of Thermal Chicago.



EBITDAEBITDA increased in 2004 primarily due to the acquisition of ETT
Nevada and the additional gross profit from additional ton-hours
sold.



Toll Road BusinessThe following section discusses the historical consolidated
financial performance for CHL. The historical statements of
operations are denominated in Pounds Sterling and compiled in
accordance with U.S. GAAP. We own a 50% interest in CHL
through an indirectly wholly owned subsidiary Macquarie
Yorkshire Limited. CHL has a March 31 fiscal year end.

89



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##### Table of Contents

The table below summarizes the consolidated statement of
operations for CHL for the years ended March 31, 2005,
March 31, 2004 and March 31, 2003.

|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |         |           |   |  |        |       | 
|------------------------------------------ | ----------------- | ---------------- | ------- | ------ | ---------- |  | ------- | ------- |  | ---------- | ------ | ----- | - | ------ | ------- | --------- | - |  | ------ | ----- | 
|                                           |                   | Year Ended       |         |        | Year Ended |  |         |         |  | Year Ended |        |       |  
|                                           |                   | March 31,        |         |        | March 31,  |  |         |         |  | March 31,  |        |       |  
|                                           |                   | 2005             |         |        | 2004       |  |         | Change  |  |            | 2003   |       |   | Change |        
|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |        
|                                           |                   | £                |         |        | £          |  |         |         |  | £          |        |       |  
|                                           |                   |                  |         | %      |           
|                                           |                   | (£ in thousands) |         |        |           
|Revenue                                    |                   |                  | £47,474 |        |            |  | £46,284 |         |  |            | 2.6    |       |   |        | £45,267 |           |   |  | 2.2    |      
|Cost of revenue(1)                         |                   |                  | (12,861 | )      |            |  | (12,702 | )       |  |            | 1.25   |       |   |        | (11,404 | )         |   |  | 11.4   |      
|General and administrative expense         |                   |                  | (261    | )      |            |  | (1,157  | )       |  |            | (77.4  | )     |   |        | (1,245  | )         |   |  | (7.1   | )    
|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |        
|Operating income                           |                   |                  | 34,352  |        |            |  | 32,425  |         |  |            | 5.9    |       |   |        | 32,618  |           |   |  | (0.6   | )    
|Interest expense, net                      |                   |                  | (19,922 | )      |            |  | (18,711 | )       |  |            | 6.5    |       |   |        | (20,396 | )         |   |  | (8.3   | )    
|(Loss) income from interest rate
    swaps |                   |                  | (2,831  | )      |            |  | 1,597   |         |  |            | (277.3 | )     |   |        | (15,260 | )         |   |  | (110.5 | )    
|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |        
|Income (loss) before income                |                   |                  | 11,599  |        |            |  | 15,311  |         |  |            | (24.2  | )     |   |        | (3,038  | )         |   |  | 604.0  |      
|Income tax expense (benefit)               |                   |                  | 3,556   |        |            |  | 4,229   |         |  |            | (15.9  | )     |   |        | (925    | )         |   |  | 557.2  |      
|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |        
|                                           | Net income (loss) |                  |         | £8,043 |            |  |         | £11,082 |  |            |        | (27.4 | ) |        |         | £ ( 2,113 | ) |  |        | 624.5 | 
|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |        
|(1) Includes depreciation expense of       |                   |                  | £9,869  |        |            |  | £9,790  |         |  |            | 0.8    |       |   |        | £9,508  |           |   |  | 3.0    |      
|                                           |                   |                  |         |        |            |  |         |         |  |            |        |       |   |        |        



| |                                                                       
| | ----------------------------------------------------------------------
| | Year Ended March 31, 2005 as Compared to Year Ended
    March 31, 2004



| |        
| | -------
| | Revenue





| |                                                                             
| | ----------------------------------------------------------------------------
| | Cost of Revenue, General and Administrative Expense and
    Operating Income





| |                  
| | -----------------
| | Net Income (Loss)





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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

We do not intend to retain significant cash balances in excess
of what are prudent reserves. We believe that we will have
sufficient liquidity and capital resources to meet our future
liquidity requirements, including in relation to our acquisition
strategy and our dividend policy. We base our assessment on the
following assumptions:




    that all of our businesses and investments generate, and will
    continue to generate, significant operating cash flow;
    that the ongoing maintenance capital expenditures associated
    with our businesses are modest and readily funded from their
    respective operating cash flow;
    that all significant short-term growth capital expenditure will
    be funded with cash on hand or from committed undrawn debt
    facilities;
    that CHLs amortizing debt can be paid from operating cash
    flow;
    that we can refinance or extend the Macquarie Parking debt
    facility at its initial maturity in 2006;
    that payments on Thermal Chicago/ Northwind Aladdins debt
    that will begin to amortize in 2007 can be paid from operating
    cash flow;
    that our wholly owned subsidiary, MIC Inc., has a
    $250 million credit facility (maturing in 2008) with which
    to finance acquisitions and capital expenditures, including
    $30 million available for general corporate purposes as
    described below.On November 11, 2005, MIC Inc., the holding company for our
U.S. businesses, entered into a $250 million revolving
credit facility with Citicorp North America Inc (as lender and
administrative agent), Citibank NA, Merrill Lynch Capital
Corporation, Credit Suisse, Cayman Islands Branch and Macquarie
Bank Limited. We intend to use the revolving facility to fund
acquisitions, capital expenditures and to a limited extent
working capital, pending refinancing through equity offerings at
an appropriate time.

MIC Inc.s obligations under the revolving facility are
guaranteed by the company and secured by a pledge of the equity
of all current and future direct subsidiaries of MIC Inc. and
the company. The terms and conditions for the revolving facility
include events of default and representations and warranties
that are generally customary for a facility of this type. In
addition, the revolving facility includes an event of default
should the Manager or another affiliate of Macquarie Bank
Limited ceases to act as manager.

Details of the revolving facility are as follows:

|                                   |  |                                                                                                                                                                      
|---------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Facility size:                     |  | $250 million for loans and/or
    letters of credit                                                                                                                  
|Term:                              |  | March 31, 2008                                                                                                                                                       
|Interest and principal repayments: |  | Interest only during the term of
    the loan
    Repayment of principal at maturity, upon voluntary prepayment,
    or upon an event requiring mandatory prepayment.
|Eurodollar rate:                   |  | LIBOR plus 1.25% per annum                                                                                                                                           
|Base rate:                         |  | Base rate plus 0.25% per annum                                                                                                                                       
|Commitment fees:                   |  | 0.25% per annum on undrawn
    portion                                                                                                                               
|Financial Covenants:               |  |   Ratio
    of MIC Inc. plus MIC LLC Debt to Consolidated Adjusted Cash from
    Operations< 5.6:1                                                                  
|                                   |  |   Ratio
    of MIC Inc. plus MIC LLC Interest Expense to Consolidated
    Adjusted Cash from Operations> 2:1                                                        



91



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##### Table of Contents

commitment for $100 million of the revolving facility on
the same terms as the non-affiliated participants. Each of
Citicorp North America Inc, Merrill Lynch Capital Corporation
and Credit Suisse, Cayman Islands Branch provided commitments of
$50 million.

The section below discusses the sources and uses of cash of our
businesses and investments.

Our Consolidated Cash Flow

The following information details our consolidated cash flows
from operating, financing and investing activities for the
periods ended December 31, 2003, December 31, 2004 and
December 31, 2005. We acquired our initial businesses and
investments on December 22 and December 23, 2004 using
proceeds from our initial public offering and concurrent private
placement. Consequently, our consolidated cash flows from
operating, financing and investing activities in 2004 reflect
the nine-day period between December 22, 2004 and
December 31, 2004. Any comparisons of our consolidated cash
flows from operating, investing and financing activities for
this short period in 2004 to any prior or future periods would
not be meaningful. Therefore we have included a comparison of
the cash flows from operating, financing and investing
activities for each of our consolidated businesses for each of
the full years 2003, 2004 and 2005. We believe this is a more
appropriate approach to explaining our historical financial
performance. Cash flows in 2005 reflect the acquisition of new
operations by each of our airport services and airport parking
businesses. We also discuss the historical cash flows from
operating, investing and financing activities for our toll road
business and our investments in MCG and SEW.

On a consolidated basis, cash flow provided by operating
activities totaled $43.5 million for the year ended
December 31, 2005. Cash flow used in investing activities
totaled $201.9 million, which includes the costs associated
with acquisitions concluded during the year. Cash flow provided
by financing activities totaled $133.8 million, including
proceeds of debt incurred at each of our airport services and
airport parking businesses. As of December 31, 2005, our
consolidated cash and cash equivalent balances totaled
$115.2 million. This includes cash balances in excess of
restricted reserve requirements that we acquired when we
purchased our consolidated businesses and Yorkshire Link.



Cash Flow from Operations from Our Consolidated
    BusinessesOur consolidated statement of cash flows includes the cash flow
from operations for our airport services business (Atlantic
(NACH), AvPorts (MANA)), our airport parking business (MAPC) and
our district energy business (Thermal Chicago and Northwind
Aladdin (together as MDEH)). The cash flow provided by
operations for these businesses for the years ended
December 31, 2005, December 31, 2004 and
December 31, 2003 is summarized in the table below:

|                             |  |                  |        |  |              |   |       |              |  |   |        | 
|---------------------------- |  | ---------------- | ------ |  | ------------ | - | ----- | ------------ |  | - | ------ | 
|                             |  | Year Ended       |        |  | Year Ended   |   |       | Year Ended   | 
|                             |  | December 31,     |        |  | December 31, |   |       | December 31, | 
|                             |  | 2005             |        |  | 2004         |   |       | 2003         | 
|                             |  |                  |        |  |              |   |       |              | 
|                             |  | ($ in thousands) |       
|Airport services business(1) |  | $                | 21,783 |  |              | $ | 9,803 |              |  | $ | 13,166 | 
|Airport parking business     |  | $                | 4,893  |  |              | $ | 7,294 |              |  | $ | 765    | 
|District energy business(2)  |  | $                | 12,106 |  |              | $ | 2,302 |              |  | $ | 13,134 | 






|    |                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes EAS for the period from January 1, 2004 to
    July 29, 2004, NACH for the period from July 30, 2004
    to December 31, 2004 and MANA for the year ended
    December 31, 2004.                                            
|   
|(2) | Includes Thermal Chicago Corporation for the six months ended
    June 30, 2004 and MDEH for the six months ended
    December 31, 2004 and includes ETT Nevada Inc. for the
    period from September 29, 2004 to December 31, 2004.

92



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##### Table of Contents

Airport Services BusinessOur airport services business generated $21.8 million in
cash flow from operations in 2005, an increase of
$12 million from 2004. Key factors included:




    the acquisition of GAH and EAR in
    January 2005 and August 2005, respectively;
    improved performance at our
    existing locations, reflecting improved operating performance
    and the non-recurrence of acquisition related costs incurred in
    2004;
    the increase in interest expense
    of $2.7 million, reflecting higher debt levels; and
    increase in working capital usage
    of $6.8 million, primarily due to accounts receivable
    related to system conversions.Cash flow from operations from our airport services business for
the year ended December 31, 2004 declined by
$3.4 million compared to 2003. Key factors included:




    non-recurring bridge financing
    fees and costs related to the acquisition of Atlantic; and
    interest expense of
    $1.2 million related to the subordinated notes, which were
    acquired by us.

Airport Parking BusinessOur airport parking business generated $4.9 million in cash
flow from operations in 2005, a reduction of $2.4 million
from 2004. The key factor influencing cash flow from operations
was:




    an increase in interest expense of
    $1.9 million, due to higher interest rates and higher
    overall debt levels.For the year ended December 31, 2004 cash flow from
operations from our airport parking business improved by
$6.5 million compared to 2003. Key factors influencing this
increase included:




    improved operating
    performance; and
    a $2.2 million increase in
    accrued expenses in 2004 of which $1 million relates to
    year-end salary and bonus accruals.

District Energy BusinessOur district energy business generated $12.5 million in
cash flow from operations in 2005, an increase of
$10.2 million from 2004. Key factors influencing the
increase in cash flow from operations included:




    a full year of results for ETT
    Nevada;
    $1.7 million of principal
    receipts under equipment leases;
    positive working capital movements
    of $1.9 million, reflecting better collections on
    receivables and an increase in accrued expenses; and
    non-recurrence of acquisition
    related costs that were incurred in 2004.The decrease in cash flow from operations for the year ended
December 31, 2004 compared to December 31, 2003 was
significantly affected by the following factors:




    a $10.3 million make whole
    payment to retire the existing debt of Thermal Chicago in
    connection with the sale of Thermal Chicago to MDEH; and
    $5.9 million of bridge
    financing and swap breakage fees, plus $800,000 of costs
    incurred by Thermal Chicagos former owner in connection
    with its sale.93



---



##### Table of Contents

Cash Flow Used in Investing Activities by Our Consolidated
    BusinessesOur consolidated statement of cash flows include the cash flows
used in the investing activities of our consolidated businesses.
The cash flows used in investing activities for these businesses
for the years ended December 31, 2005, December 31,
2004 and December 31, 2003 are summarized in the table
below:

|                             |  |                  |          |   |              |   |          |              |  |   |         |  
|---------------------------- |  | ---------------- | -------- | - | ------------ | - | -------- | ------------ |  | - | ------- | -
|                             |  | Year Ended       |          |   | Year Ended   |   |          | Year Ended   | 
|                             |  | December 31,     |          |   | December 31, |   |          | December 31, | 
|                             |  | 2005             |          |   | 2004         |   |          | 2003         | 
|                             |  |                  |          |   |              |   |          |              | 
|                             |  | ($ in thousands) |         
|Airport services business(1) |  | $                | (112,466 | ) |              | $ | (229,839 | )            |  | $ | (7,211  | )
|Airport parking business     |  | $                | (75,688  | ) |              | $ | (32,737  | )            |  | $ | (73,956 | )
|District energy business(2)  |  | $                | (332     | ) |              | $ | (169,579 | )            |  | $ | (3,522  | )






|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes EAS for the period from January 1, 2004 to
    July 29, 2004, and NACH for the period from July 30,
    2004 to December 31, 2004.                                                                                     
|   
|(2) | Includes Thermal Chicago Corporation for the six months ended
    June 30, 2004 and MDEH for the six months ended
    December 31, 2004 and includes ETT Nevada Inc. for the
    period September 29, 2004 to December 31, 2004.



| |                          
| | -------------------------
| | Airport Services Business





| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | the acquisition of GAH in January
    2005 for $50 million, less cash acquired;                                      
|
| |  | the acquisition of EAR in August,
    2005 for $58.8 million, less cash acquired; and                                
|
| |  | capital expenditures of
    $4 million, of which $3.3 million was for maintenance
    and $733,000 was for expansion.





| |   |                                                                                 
| | - | --------------------------------------------------------------------------------
| |  | NACHs acquisition of
    Atlantic for $223 million;                            
|
| |  | $4 million for the completion
    of construction of a hangar at Chicago-Midway;
|
| |  | construction of new hangars at
    Burlington for approximately $2 million; and 
|
| |  | acquisition of hangars at
    Louisville for $1 million;                        





| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $3.3 million for the
    acquisition of the New Orleans facilities in December 2003,
    partially offset by cash proceeds of $2 million related to
    the sale of discontinued operations;
|
| |  | other internal capital
    expenditures at Atlantic of $3.2 million, primarily related
    to the ongoing construction at Chicago-Midway; and                                               
|
| |  | $1.6 million related to
    reimbursement by AvPorts of transaction costs incurred by
    AvPorts owners at the time of the acquisition of AvPorts by MANA.                                 



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Airport Parking BusinessThe airport parking business used $75.7 million in
investing activities in 2005. Key expenditures were:




    the acquisitions of the SunPark,
    Cleveland, Priority and Phoenix properties for a combined
    $74 million; and
    $1.7 million in maintenance
    capital expenditures.Cash flow used in investing activities in our airport parking
business in 2004 was $32.7 million. Key expenditures were:




    $30 million related to
    MAPCs increase in its economic and voting interest in the
    airport parking business to 87.1%; and
    approximately $1 million on
    improvements to existing sites and the purchase of additional
    equipment.Cash flow used in investing activities in our airport parking
business in 2003 was $74 million. Key expenditures were:




    $67.3 million for the
    acquisition of the Avistar business in October 2003 and costs
    associated with that acquisition;
    the purchase of the property at
    the Chicago facility for $6.1 million, which had previously
    been leased; and
    the purchase of shuttle buses and
    other equipment used in operations.

District Energy BusinessThe district energy business used $332,000 in investing
activities in 2005. Key expenditures were:




    maintenance capital expenditures
    of $600,000 and growth capital expenditures of approximately
    $400,000 to connect a customer, which will be funded by
    available debt facilities; and
    a receipt of $694,000,
    representing our share of the bankruptcy settlement proceeds
    received from the Aladdin bankruptcy trustee.Cash flow used in investing activities in our district energy
business in 2004 was $169.6 million. Key expenditures were:




    $164.3 million to acquire
    Thermal Chicago and Northwind Aladdin;
    $4 million to establish the
    debt service reserve relating to the debt raised to finance
    these acquisitions; and
    $1.1 million for ongoing
    capital expenditures.In 2003, the primary use of cash in investing activities was
capital expenditures, mostly related to the costs of connecting
additional customers and to a lesser extent ongoing capital
expenditure.

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Cash Flows Provided from (Used in) Financing Activities by
    Our Consolidated BusinessesOur consolidated statement of cash flows includes the cash flows
provided by or used in the financing activities of our
consolidated businesses. The cash flows relating to financing
activities for these businesses for the years ended
December 31, 2005, 2004, and 2003 are summarized in the
table below:

|                             |  |                  |         |   |              |   |         |              |  |   |         |  
|---------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------- | -
|                             |  | Year Ended       |         |   | Year Ended   |   |         | Year Ended   | 
|                             |  | December 31,     |         |   | December 31, |   |         | December 31, | 
|                             |  | 2005             |         |   | 2004         |   |         | 2003         | 
|                             |  |                  |         |   |              |   |         |              | 
|                             |  | ($ in thousands) |        
|Airport services business(1) |  | $                | 93,121  |   |              | $ | 228,357 |              |  | $ | (6,675  | )
|Airport parking business     |  | $                | 76,720  |   |              | $ | 24,959  |              |  | $ | 65,686  |  
|District energy business(2)  |  | $                | (15,235 | ) |              | $ | 168,163 |              |  | $ | (11,239 | )






|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes EAS for the period from January 1, 2004 to
    July 29, 2004, for the period from July 30, 2004 to
    December 31, 2004.                                                                                              
|   
|(2) | Includes Thermal Chicago Corporation for the six months ended
    June 30, 2004 and MDEH for the six months ended
    December 31, 2004 and includes ETT Nevada Inc. for the
    period September 29, 2004 to December 31, 2004.



| |                          
| | -------------------------
| | Airport Services Business





| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | $332 million in proceeds for
    the GAH acquisition and the debt refinancing in December 2005;
|
| |  | repayment of $196.5 million
    in conjunction with the debt refinancing; and                  
|
| |  | distributions to shareholders of
    $111 million.                                             





| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the debt and equity raised by NACH
    to fund the initial acquisition of Atlantic, offset by a
    $1.5 million repayment of debt at the end of 2004; and
|
| |  | $3.9 million for the
    establishment of a debt service reserve relating to the debt
    raised to finance the acquisition of Atlantic.                  







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NACH as well as the equity interests of NACH and its
    subsidiaries. The terms and conditions for the facilities
    includes events of default and representations and warranties
    that are customary for facilities of this type.This term loan facility, together with the revolving credit
facility discussed below, are secured by all of the assets and
stock of NACH and its subsidiaries and is non-recourse to the
company and its other subsidiaries. Details of the term loan
facility are as follows:



Amount outstanding as of December 31, 2005
    
    $300 million term loan 
     $5 million revolver with established letters of credit in
    place for $2 millionTerm
    
    5 years (matures December 12, 2010)Amortization
    
    Payable at maturityInterest rate type
    
    FloatingInterest rate base
    
    LIBORInterest rate margin
    
    1.75% until 2008 
     2.00% until 2010Interest rate hedging
    
    We have novated MANA and NACHs existing swaps and entered
    into new interest rate swaps (fixed vs. LIBOR), fixing 100% of
    the term loan at the following average rates (not including
    interest margin):

| |  |              |  |              |  |           
| |  | ------------ |  | ------------ |  | ----------
| |  | Start Date   |  | End Date     |  | Fixed Rate
| |  | Dec 14, 2005 |  | Sep 28, 2007 |  | 4.27%     
| |  | Sep 28, 2007 |  | Nov 7, 2007  |  | 4.73%     
| |  | Nov 7, 2007  |  | Oct 21, 2009 |  | 4.85%     
| |  | Oct 21, 2009 |  | Dec 14, 2010 |  | 4.98%     



|                            |  |                                                                           
|--------------------------- |  | --------------------------------------------------------------------------
|Debt service reserve        |  | Six months of debt service                                                
|                           
|Distributions Lock-Up Tests |  | 12 month forward and 12 month backward debt service
    cover ratio < 1.5x
|                           
|                            |  | Minimum adjusted EBITDA:                                                  

| |  |      |  |                        
| |  | ---- |  | -----------------------
| |  | Year |  | Minimum adjusted EBITDA
| |  | 2005 |  | $40.1 million          
| |  | 2006 |  | $40.1 million          
| |  | 2007 |  | $43.5 million          
| |  | 2008 |  | $47.0 million          



| |  |                                                    
| |  | ---------------------------------------------------
| |  | Maximum debt/ adjusted EBITDA calculated quarterly:

| |  |                   |  |                    |  |                                  
| |  | ----------------- |  | ------------------ |  | ---------------------------------
| |  | Starting          |  | Ending             |  | Maximum debt/
    adjusted EBITDA
| |  | December 31, 2008 |  | September 30, 2009 |  | 5.5x                             
| |  | December 31, 2009 |  | March 31, 2010     |  | 5.0x                             
| |  | June 30, 2010     |  | September 30, 2010 |  | 4.5x                             



|                                     |  |                                                                                  
|------------------------------------ |  | ---------------------------------------------------------------------------------
|Mandatory Prepayments                |  | If any distribution
    lock-up test is not met
    for two consecutive quarters.
|                                    
|Events of Default Financial Triggers |  | If backward debt service cover ratio < 1.2x                                      

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12 month backward debt service cover ratio as at
    December 31, 2005
    
    2.19x12 month forward debt service cover ratio as at
    December 31, 2005
    
    2.63xWe do not intend to be in a position to repay the amount
outstanding under this facility at maturity as a result of our
dividend policy to distribute to shareholders available cash net
of prudent reserves. Therefore, we will need to refinance this
facility at or prior to its maturity. We have no reason to
believe at this time that we will not be able to refinance the
debt when due.

In addition to the term loan facility, NACH has entered into a
$5 million, five-year revolving credit facility with Mizuho
Corporate Bank Ltd. that may be used to fund working capital
requirements or to provide letters of credit. This facility
ranks equally with the term loan. As of March 10, 2005,
$2 million of this facility has been utilized to provide
letters of credit pursuant to certain FBO leases.



Airport Parking BusinessOur airport parking business generated $76.7 million of
cash flow provided by financing activities in 2005. Key
components were:




    $58.7 million in additional
    debt used to fund the acquisition of the SunPark properties in
    October, 2005; and
    $20.8 million that we
    provided to the business in the form of equity contributions to
    fund acquisitions.Cash flow provided by financing activities from our airport
parking business in 2004 included:




    $30 million invested by us to
    enable MAPC to increase its economic and voting interest in the
    underlying business to 87.1%;
    a $2.3 million deposit into
    the reserve account associated with the senior debt
    facility; and
    a dividend distribution by the
    business of $1.8 million prior to our acquisition, which
    would have been $1.5 million had we owned 87.1% of the
    business at that time.The debt service reserve account is now fully funded and
Macquarie Parking does not expect to make further significant
deposits into this account.

On October 1, 2003, Macquarie Parking entered into a loan
for $126 million, which was used to refinance debt and to
partly fund the acquisition of the Avistar business. This loan
is secured by the majority of real estate and other assets of
the airport parking business and is recourse only to Macquarie
Parking and its subsidiaries. On December 22, 2003,
Macquarie Parking entered into another loan agreement with the
same lender for $4.8 million. Macquarie Parking used the
proceeds of this loan to partly fund the acquisition of land
that it formerly leased for operating its Chicago facility. This
loan is secured by the land at the Chicago site.

Our parking business established a non-recourse debt facility on
October 3, 2005 under a new credit agreement with GMAC
Commercial Mortgage Corporation to fund the SunPark acquisition
and additional airport parking facilities. The SunPark debt
facility is secured by all of the real property and other assets
of SunPark, our LaGuardia facility and the Maricopa facility. In
addition, in the third quarter of 2005, we assumed a debt
facility in connection with our acquisition of an additional
facility in Philadelphia reflected as Loan 4 below.

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The following table outlines the key terms of the senior debt
facilities of our airport parking business:

|                                               |  |                                                                                    |  |                                                                                                             |  |                                                                                      |  |                                                                                                               
|---------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------
|Loan                                           |  | Loan 1                                                                             |  | Loan 2                                                                                                      |  | Loan 3                                                                               |  | Loan 4                                                                                                        
|                                               |  |                                                                                    |  |                                                                                                             |  |                                                                                      |  |                                                                                                               
|Amount outstanding as of
    December 31, 2005 |  | $126 million                                                                       |  | $4.7 million                                                                                                |  | $58.7 million                                                                        |  | $2.2 million                                                                                                  
|Term                                           |  | 3 years (September 2006)                                                           |  | 5 years
    (January 2009)                                                                                  |  | 3 years
    (October 2008)                                                           |  | 5 years
    (January 2009)                                                                                    
|Extension options                              |  | Two one-year extensions subject to
    meeting certain covenants                   |  | None                                                                                                        |  | Two one-year extensions subject to
    meeting certain covenants                     |  | None                                                                                                          
|Interest and principal repayments              |  | Interest only during term of the
    loan. Repayment of principal at maturity.     |  | Monthly payment of interest and
    principal of $28,675. Repayment of remaining principal at
    maturity. |  | Interest only during term of the
    loan. Repayment of principal at maturity.       |  | Monthly payment of interest and
    principal of $14,069.12. Repayment of remaining principal at
    maturity.
|Interest rate type                             |  | Floating                                                                           |  | Fixed                                                                                                       |  | Floating                                                                             |  | Fixed                                                                                                         
|Interest rate base                             |  | 1 month LIBOR                                                                      |  | N/A                                                                                                         |  | 1 month LIBOR                                                                        |  | N/A                                                                                                           
|Interest rate margin                           |  | 1-3 years: 3.44%                                                                   |  | 5.3%                                                                                                        |  | 1-3 years: 2.75%                                                                     |  | 5.46%                                                                                                         
|                                               |  | 4th year: 3.54%                                                                    |  |                                                                                                             |  | 4th year: 2.95%                                                                      |  |                                                                                                               
|                                               |  | 5th year: 3.69%                                                                    |  |                                                                                                             |  | 5th year: 3.15%                                                                      |  |                                                                                                               
|Interest rate hedging                          |  | 1 month LIBOR cap of 4.5% out
    to 3 years for a notional amount of $126 million |  | N/A                                                                                                         |  | 1 month LIBOR cap of 4.48% out
    to 3 years for a notional amount of $58.7 million |  | N/A                                                                                                           
|Debt reserves                                  |  | Various reserves totaling
    $5.7 million, currently fully funded                 |  | None                                                                                                        |  | Various reserves totaling $522,000,
    currently fully funded                       |  | None                                                                                                          
|Lock-up/cash sweeps                            |  | None                                                                               |  | None                                                                                                        |  | Operating income transferred to
    Lock Box account weekly                          |  | None                                                                                                          





| |                         
| | ------------------------
| | District Energy Business





| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | dividend distributions of
    $15.5 million; and                      
|
| |  | additional borrowings of $850,000
    to finance capital expenditures.



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The indirect acquisition of Thermal Chicago by MDEH was
initially partially financed with a $76 million bridge loan
facility provided by the Macquarie Group. This bridge loan
facility was refinanced in September 2004 with part of the
proceeds from the issuance of $120 million of fixed rate
secured notes due 2023 in a private placement. The notes,
together with the revolving credit facility discussed below, are
secured by the assets of MDEHs direct subsidiary MDE and
its subsidiaries, excluding the assets of Northwind Aladdin, and
MDEs stock and are recourse only to MDE and its
subsidiaries.

The details of the senior secured notes are as follows:



Amount outstanding as of December 31, 2005
    
    $120 millionTerm
    
    Matures December 31, 2023Amortization
    
    Variable quarterly amortization commencing December 31, 2007Interest rate type
    
    FixedInterest rate
    
    6.82% on $100 million and 6.4% on $20 millionDebt service reserve
    
    Six-month debt service reserveDividend payment restriction
    
    No distributions to be made to shareholders of MDE if debt
    service coverage ratio is less than 1.25 times for previous and
    next 12 months, tested quarterly.Make whole payment
    
    Difference between the outstanding principal balance and the
    value of the senior secured notes discounting remaining payments
    at a discount rate of 50 basis points over the
    U.S. treasury security with a maturity closest to the
    weighted average maturity of the senior secured notes.Debt Service Coverage Ratio at December 31, 2005
    
    2.16:1In addition to the senior secured notes, MDE has also entered
into a $20 million, three-year revolving credit facility
with La Salle Bank National Association that may be used to
fund capital expenditures or working capital or to provide
letters of credit. This facility ranks equally with the senior
secured notes. As of December 31, 2005, $7.1 million
of this facility has been utilized to provide letters of credit
to the City of Chicago pursuant to the Use Agreement and in
relation to a single customer contract and another $850,000
drawn to fund maintenance capital expenditures.



Toll Road BusinessConnect M1-A1 Limited uses its cash flow after funding its
operations to make interest and principal payments on its senior
debt, to make interest and principal payments on its
subordinated debt to Macquarie Yorkshire and Balfour Beatty and
then to make dividend payments to CHL. CHL then distributes
these dividends to Macquarie Yorkshire (50%) and Balfour Beatty
(50%). The subordinated debt interest payments received by
Macquarie Yorkshire are included in our consolidated cash flow
from operations and subordinated debt principal payments and
dividends are included in our consolidated cash flow from
investing activities.



Subordinated LoansCash flow is generated from our toll road business in the form
of interest and principal repayments received from Connect M1-A1
Limited on Macquarie Yorkshires subordinated loans to
Connect M1-A1 Limited. The terms of these subordinated loans are
summarized below. The outstanding amounts and

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repayment schedule set out below reflect our 50% interest in the
subordinated loans, the balance of which is held by our partner,
Balfour Beatty.

|                                             |  |                          |                                         |  |                          |  |                       | 
|-------------------------------------------- |  | ------------------------ | --------------------------------------- |  | ------------------------ |  | --------------------- | 
|                                             |  | Senior Subordinated Loan |                                         |  | Junior Subordinated Loan | 
|                                             |  |                          |                                         |  |                          | 
|Outstanding balance as of
    March 31, 2005 |  |                          | £4.9 million                            |  |                          |  | £2.85 million         | 
|Interest rate                                |  |                          | U.K. LIBOR +4% per year payable         |  |                          |  | 15% per year payable  | 
|                                             |  |                          | semi-annually (minimum 6% per year)     |  |                          |  | semi-annually         | 
|                                             |  |                          | 65% of principal repayments             |  |                          |  |                       | 
|Maturity                                     |  |                          | September 30, 2016                      |  |                          |  | March 26, 2020        | 
|Repayment schedule                           |  |                          | Semi-annually from March 31, 2005       |  |                          |  | Repayment at maturity | 
|                                             |  |                          | Payable during year ended December  31, |  |                          |  |                       | 
|                                             |  |                          | 2005-2006  £200,000                     |  |                          |  |                       | 
|                                             |  |                          | 2007-2011  £300,000                     |  |                          |  |                       | 
|                                             |  |                          | 2012-2015  £600,000                     |  |                          |  |                       | 
|                                             |  |                          | 2016-  £700,000                         |  |                          |  |                       | 



|                   |  |  |                | 
|------------------ |  |  | -------------- | 
|Interest           |  |  | £1.01  million | 
|Redemption premium |  |  | Nil            | 
|Principal          |  |  | £0.2 million   | 
|Total              |  |  | £1.21  million | 



| |          
| | ---------
| | Dividends



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Connect M1-A1 Limiteds Senior DebtDistribution of dividends by Connect M1-A1 Limited to CHL and
payments of principal and interest on Connect M1-A1
Limiteds subordinated loans from Macquarie Yorkshire are
subject to the timely payment of interest and principal and
compliance by Connect M1-A1 Limited with covenants contained in
the terms of its senior debt described below.

Connect M1-A1 Limited has two non-recourse senior debt
facilities both of which are secured by the assets and pledged
stock of Connect M1-A1 Limited which are summarized below:

|                                             |  |                                                                                                                                                                                                                                                              |  |                                                                     
|-------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------
|                                             |  | Commercial Senior Debt Facility                                                                                                                                                                                                                              |  | European Investment Bank Facility                                   
|                                             |  |                                                                                                                                                                                                                                                              |  |                                                                     
|Outstanding balance as of
    March 31, 2005 |  | £194.2 million                                                                                                                                                                                                                                               |  | £79.2 million                                                       
|Interest rate                                |  | U.K. LIBOR plus 0.75% per year
    increasing to plus 0.80% from September 30, 2006 and plus
    0.90% from September 30, 2020 payable semi-annually.
    Interest rate swaps have been entered into in respect of 70% of
    the notional principal amount. |  | 9.23% for guaranteed portion and
    9.53% for unguaranteed portion.
|Maturity                                     |  | March 31, 2024                                                                                                                                                                                                                                               |  | March 25, 2020                                                      
|Amortization                                 |  | Semi-annual unequal amortization                                                                                                                                                                                                                             |  | Semi-annual unequal amortization                                    







| |                           
| | --------------------------
| | Investments in MCG and SEW



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##### Table of Contents

to be paid by SEW during the year, we expect to receive total
dividends from our investment in SEW of approximately
£3.2 million (USD $5.9 million).

Capital Expenditures

On a consolidated basis, we expect to incur $8.4 million of
maintenance capital expenditure in 2006 and $26.5 million
of specific capital expenditure in through 2008. The specific
capital expenditure will be funded from available debt
facilities, with the proceeds from our recent debt refinancing
and with restricted cash from acquisitions. All of the
maintenance and specific capital expenditure will be incurred at
the operating company level.

We have detailed our capital expenditures on a
segment-by-segment basis, which we believe is a more appropriate
approach to explaining our capital expenditure requirements on a
consolidated basis.



Airport Services Business

Maintenance Capital ExpenditureWe expect to spend approximately $3.8 million, or
$200,000 per FBO, per year on maintenance capital
expenditure. This amount is spent on items such as repainting,
replacing equipment as necessary and any ongoing environmental
or required regulatory expenditure, such as installing safety
equipment. This expenditure is funded from cash flow from
operations.



Specific Capital ExpenditureWe intend to incur a total of approximately $12.4 million
of specific capital expenditure in 2006 and 2007 which we intend
to fund from the proceeds of our recent debt refinancing.

|                                        |  |                                                                                                                              |  |                                |  |                       |             | 
|--------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ |  | --------------------- | ----------- | 
|                                        |  |                                                                                                                              |  |                                |  | Estimated Cost/Amount |            
|                                        |  |                                                                                                                              |  |                                |  | Remaining (from       |            
|Location                                |  | Item                                                                                                                         |  | Expected Timing                |  | December 31, 2005)    |            
|                                        |  |                                                                                                                              |  |                                |  |                       |            
|Teterboro Airport                       |  | Ramp construction                                                                                                            |  | Commencing second quarter 2006 |  | $                     | 4.5 million | 
|Metroport East 34th Street
    Heliport |  | Upgrade of heliport in exchange for
    ten-year operating agreement                                                         |  | Commencing third quarter 2006  |  | $                     | 2.8 million | 
|Pittsburgh International Airport        |  | Original lease requires further
    capital expenditure. This will be fulfilled through the
    development of a new hangar. |  | Commencing by June 2006        |  | $                     | 5.1 million | 



| |                         
| | ------------------------
| | Airport Parking Business



| |                                
| | -------------------------------
| | Maintenance Capital Expenditure



103



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##### Table of Contents

Specific Capital ExpenditureOur airport parking business committed to specific capital
projects in 2005 totaling $2.1 million, of which $360,000
represents specific capital expenditures that were paid in cash.
The remainder was financed with capital leases and otherwise.
These revenue enhancing projects included a vehicle lift system
to manage additional demand at one location and covered parking
solutions at three locations. In 2006, our airport parking
business expects to commit to $447,000 of specific capital
projects, of which $300,000 represents specific capital
expenditures and the remainder of which we expect to finance.

In addition, we intend to spend an additional $1.6 million
on capital expenditures related to our SunPark facilities, all
of which we pre-funded at the time of our acquisition.



District Energy Business

Maintenance Capital ExpenditureThermal Chicago expects to spend approximately $1 million
per year on capital expenditures relating to the replacement of
parts and minor system modifications. Over the past two years,
minor system modifications have been made that increased
capacity by 3,000 tons. Maintenance capital expenditures will be
funded for the next two years from available debt facilities and
thereafter are expected to be funded from cash flow from
operations.



Specific Capital ExpenditureWe anticipate that Thermal Chicago will spend up to
approximately $8.4 million for system expansion over two
years starting in 2007. The estimated cost of system expansion
has increased by $1.4 million over prior estimates due to
increases in equipment and material costs. This expansion, in
conjunction with efficiencies we have achieved at our plants and
throughout our system, will add approximately 16,000 tons of
saleable capacity to the Thermal Chicago downtown cooling
system. A portion of this increased capacity, approximately
6,700 tons, will be used to accommodate four customers who will
convert from interruptible to continuous service in mid-2006,
with the balance sold to new or existing customers. We
anticipate that the expanded capacity sold to new or existing
customers will be under contract or subject to letters of intent
prior to Thermal Chicago committing to the capital expenditure.
As of March 1, 2006, we have signed contracts with two
customers representing 30% of the additional saleable capacity,
including their options to extend. These customers will begin
receiving service between 2006 and 2009.

Associated with expanding the system and creating additional
capacity, we estimate that we will incur additional capital
expenditure of $3.8 million over the next three years to
connect new customers to the system. Typically, new customers
will reimburse Thermal Chicago for most, if not all, of these
expenditures. Approval from the City of Chicago may be required
if expansion of underground piping is necessary.

Based on recent contract experience, each new ton of capacity
sold will add approximately $425 to annual revenues in the first
year of service. Approximately 50% of this increased revenue is
in the form of cooling capacity revenue and the balance as
cooling consumption revenue.

Thermal Chicago expects to fund the capital expenditure for
system expansion and interconnection by drawing on available
debt facilities.



Toll Road Business

Maintenance Capital ExpenditureMaintenance capital expenditure is required to maintain the
condition of Yorkshire Link at the standard required under the
concession on an ongoing basis and to meet the return condition
requirements at the end of the concession when the road is
transferred to the U.K. government.
Connect M1-A1
Limited anticipates spending approximately
£30.6 million, at 2003 prices, on periodic maintenance
over the remaining life of the concession, with most of this
expenditure occurring after 2020. This expenditure

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generally relates to resurfacing and the maintenance of
structures over which Yorkshire Link runs and is in addition to
the general day-to-day
operating costs of Yorkshire Link.

COMMITMENTS AND CONTINGENCIES

The following tables summarize the future obligations of the MIC
Inc., the U.S. holding company for our consolidated
businesses, due by period, as of December 31, 2005, under
their various contractual obligations, off-balance sheet
arrangements and commitments.

|                                          |  |                        |           |           |          |   |         |           |           |   |           |  |  |         |         |  |  |   |         | 
|----------------------------------------- |  | ---------------------- | --------- | --------- | -------- | - | ------- | --------- | --------- | - | --------- |  |  | ------- | ------- |  |  | - | ------- | 
|                                          |  | Payments Due by Period |          
|                                          |  |                        |          
|                                          |  |                        |           | Less than |          |   |         |           | More than |  
|                                          |  | Total                  |           |           | one Year |   |         | 1-3 Years |           |   | 3-5 Years |  |  | 5 Years |        
|                                          |  |                        |           |           |          |   |         |           |           |   |           |  |  |         |        
|                                          |  | ($ in thousands)       |          
|Long-term debt(1)                         |  | $                      | 610,994   |           |          | $ | 146     |           |           | $ | 194,104   |  |  | $       | 315,644 |  |  | $ | 101,100 | 
|Capital lease obligations(2)              |  |                        | 4,237     |           |          |   | 1,756   |           |           |   | 2,002     |  |  |         | 479     |  |  |   |        | 
|Notes payable                             |  |                        | 1,274     |           |          |   | 891     |           |           |   | 308       |  |  |         | 60      |  |  |   | 15      | 
|Operating lease obligations(3)            |  |                        | 395,218   |           |          |   | 20,467  |           |           |   | 41,042    |  |  |         | 39,781  |  |  |   | 293,928 | 
|Purchase obligations(4)                   |  |                        | 86,800    |           |          |   | 86,800  |           |           |   |          |  |  |         |        |  |  |   |        | 
|                                          |  |                        |           |           |          |   |         |           |           |   |           |  |  |         |        
|Total contractual cash
    obligations(5) |  | $                      | 1,098,523 |           |          | $ | 110,060 |           |           | $ | 237,456   |  |  | $       | 355,964 |  |  | $ | 395,043 | 
|                                          |  |                        |           |           |          |   |         |           |           |   |           |  |  |         |        






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The long-term debt represents the consolidated principal
    obligations to various lenders. The debt facilities, which are
    obligations of the operating businesses and have maturities
    between 2006 and 2020, are subject to certain covenants, the
    violation of which could result in acceleration. We believe the
    likelihood of a debt covenant violation to be remote. Refer to
    the Liquidity and Capital Resources section for
    details on interest rates and interest rate hedges on our
    long-term debt.                                 
|   
|(2) | Capital lease obligations are for the lease of certain
    transportation equipment. Such equipment could be subject to
    repossession upon violation of the terms of the lease
    agreements. We believe the likelihood of such violation to be
    remote.                                                                                                                                                                                                                                                                                                             
|   
|(3) | The company is obligated under non-cancelable operating leases
    for various parking facilities at MAPC and for real estate
    leases at MDEH. This represents the minimum annual rentals
    required to be paid under such non-cancelable operating leases
    with terms in excess of one year.                                                                                                                                                                                                                                                                       
|   
|(4) | Purchase obligations include the commitment of the company
    (through a wholly-owned subsidiary) to acquire 100% of the
    membership interests in The Gas Company for $238 million
    (plus expected transaction costs and reserves of
    $21 million), net of expected debt of $160 million.
    The transaction is expected to close late in the second quarter
    or third quarter of 2006. With an up front deposit of
    $12.2 million already paid, and with the expected debt of
    $160 million, this reduces the purchase obligation to
    $86.8 million.
|   
|(5) | This table does not reflect certain long-term obligations, such
    as deferred taxes, where we are unable to estimate the period in
    which the obligation will be incurred.                                                                                                                                                                                                                                                                                                                                                                                             



| |          
| | ---------
| | Toll Road

|                                   |  |                  |        |  |           |  |   |           |  |   |        | 
|---------------------------------- |  | ---------------- | ------ |  | --------- |  | - | --------- |  | - | ------ | 
|                                   |  | Payments Due by  |        |  | Less Than |  |   | More Than | 
|                                   |  | Period Total     |        |  | 1-3 Years |  |   | 3-5 Years | 
|                                   |  |                  |        |  |           |  |   |           | 
|                                   |  | (£ in thousands) |       
|Loans from Connect M1-A1 Limited   |  | £                | 25,384 |  |           |  |  |           |  | £ | 25,384 | 
|                                   |  |                  |        |  |           |  |   |           | 
|Total contractual cash obligations |  | £                | 25,384 |  |           |  |  |           |  | £ | 25,384 | 
|                                   |  |                  |        |  |           |  |   |           | 



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concession period. Not included in this table is
managements estimate of the cost of this obligation, which
is approximately £30.6 million over the life of the
concession as measured at 2003 prices.



The Gas CompanyOn November 21, 2005, we entered into two loan agreements
dated as of November 17, 2005, each providing for
$80 million of term loan borrowing, $160 million in
the aggregate, and a $20 million revolving credit facility.
We intend to use the $160 million in term loans to
partially fund the acquisition of The Gas Company, LLC, or TGC.
The acquisition is subject to regulatory and other approvals.
The agreements contemplate borrowings of the term loans by HGC
Holdings, LLC, or HGC, the parent company of TGC, and by TGC,
concurrently with our acquisition of those entities. The
counterparties to each agreement are Dresdner Bank AG, London
Branch, as administrative agent, Dresdner Kleinwort Wasserstein
Limited, as lead arranger, and the other lenders party thereto.
We intend to utilize the $20 million revolving credit
facility to finance TGCs working capital and to finance or
refinance TGCs capital expenditures for regulated assets.
Upon borrowing, the term loans and revolver will be obligations
of our operating subsidiaries containing the business of TGC and
will be non-recourse to us and our other businesses. The
obligations under the credit agreements will be secured by
security interests in the assets of TGC as well as the equity
interests of TGC and HGC. The terms and conditions for the
facilities includes events of default and representations and
warranties that are generally customary for facilities of this
type. Select details of the term and revolving credit facilities
are presented below:

|                                   |  |                                                                                                                                                                      |  |                                                                                  |  |                                                         
|---------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | --------------------------------------------------------
|                                   |  | Holding Company Debt                                                                                                                                                 |  | Operating Company Debt                                                          
|                                   |  |                                                                                                                                                                      |  |                                                                                 
|Borrowers:                         |  | HGC Holdings, LLC                                                                                                                                                    |  | The Gas Company, LLC                                                            
|                                  
|Borrowings:                        |  | $80 million Term Loan                                                                                                                                                |  | $80 million Term Loan                                                            |  | $20 million Revolver                                    
|                                  
|Security:                          |  | First priority security interest on
    HGC assets and equity interests                                                                                              |  | First priority security interest on
    TGC assets and equity interests         
|                                  
|Term:                              |  | 7 years from date of first
    drawdown                                                                                                                              |  | 7 years from date of first
    drawdown                                          |  | 7 years from date of first
    drawdown on TGC term loan
|                                  
|Amortization:                      |  | Payable at maturity                                                                                                                                                  |  | Payable at maturity                                                              |  | Payable at maturity                                     
|                                  
|Rate Years 1-5:                    |  | LIBOR plus 0.60%                                                                                                                                                     |  | LIBOR plus 0.40%                                                                 |  | LIBOR plus 0.40%                                        
|Years 6-7:                         |  | LIBOR plus 0.70%                                                                                                                                                     |  | LIBOR plus 0.50%                                                                 |  | LIBOR plus 0.50%                                        
|                                  
|Hedging:                           |  | We have entered into forward
    starting interest rate swaps (fixed v. LIBOR) fixing
    funding costs at 4.84% for 7 years on a notional value of
    $160 million |  |                                                                                
|                                  
|Covenants prior to First Drawdown: |  | Maximum Debt to EBITDA of 6.6x at
    closing                                                                                                                        |  |                                                                                
|                                  
|Distributions Lock-Up Test:        |  |                                                                                                                                                                     |  | 12 mo. look-forward and 12 mo.
    look-backward adjusted EBITDA/interest<  3.5x |  |                                                        

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|                                     |  |                      |  |                                                                                                                  |  |                                      
|------------------------------------ |  | -------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | -------------------------------------
|                                     |  | Holding Company Debt |  | Operating Company Debt                                                                                          
|                                     |  |                      |  |                                                                                                                 
|                                    
|Mandatory Prepayments                |  |                     |  | 12 mo. look-forward and 12 mo.
    look-backward adjusted EBITDA /interest<  3.5x for
    3 consecutive quarters |  |                                     
|                                    
|Events of Default Financial Triggers |  |                      |  | Adjusted EBITDA/
    interest<  2.50x                                                                            |  | Adjusted EBITDA/
    interest<  2.50x

CRITICAL ACCOUNTING POLICIES






| |                      
| | ---------------------
| | Business Combinations





| |                                                                  
| | -----------------------------------------------------------------
| | Goodwill, intangible assets and property, plant and
    equipment







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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 are 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
services 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.

The carrying value of our equity method investment includes an
additional intangible asset to reflect the difference between
the purchase price for our 50% investment in the toll road
business and the underlying equity in the net assets of the
business. This intangible asset value, which represents the
concession agreement with the Secretary of State for Transport
in the United Kingdom (the Concession Agreement) has
been recorded at fair value determined by management, taking
into consideration information supplied by the management of
acquired entities and other relevant information including
valuations supplied by independent appraisal experts. The
Concession Agreement is amortized based on a percentage of usage
of the toll road in the period relative to the total estimated
usage over the life of the agreement. In addition, any loss in
value that is other than temporary is recognized as an
impairment charge.

We test goodwill for impairment as of October 1 each year.
There was no goodwill impairment as of October 1, 2005. We
test our long-lived assets when there is an indicator of
impairment. There were no impairments of long-lived assets
during 2005.



Securities available for saleOur acquisition of MCG was initially recorded at cost and
classified as a Security available for sale on our
consolidated balance sheet. Our intention is to hold MCG for an
indeterminate period of time. Since

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MCG has a readily determinable market value, we record this
investment at cost with unrealized gains and losses reported in
other comprehensive income (loss). Declines in value other than
temporary are included in investment income. Management consider
MCGs financial position, results of operations, stock
price performance, analyst research reports and other relevant
information in determining whether a decline is other than
temporary. We revaluate our hold position on an annual basis.



Investments at costOur initial investment in SEW was recorded at cost. As SEW does
not have a readily determinable market value, we continue to
record the investment at cost. We perform periodic review of the
investment, using information supplied by the management of SEW.
We further evaluate SEW based on the future cash flow
projections, discounted to present value. We use outside
valuation experts when we consider it appropriate to do so.



Revenue recognitionFuel revenue from our airport services business is recorded when
fuel is provided or when services are rendered. Our airport
services business also records hangar rental fees, which are
recognized during the month for which service is provided.

Our airport parking business records parking lot revenue, as
services are performed, net of allowances and local taxes.
Revenues for services performed, but not collected as of a
reporting date, are recorded based upon the estimated value of
uncollected parking revenues for customer vehicles at each
location. Our airport parking business also offers various
membership programs for which customers pay an annual membership
fee. Such revenue is recognized ratably over the one-year life
of the membership. Revenue from prepaid parking vouchers that
can be redeemed in the future is recognized when such vouchers
are redeemed.

Our district energy business recognizes revenue from cooling
capacity and consumption at the time of performance of service.
Cash received from customers for services to be provided in the
future are recorded as unearned revenue and recognized over the
expected services period on a straight-line basis.



HedgingWith respect to our debt facilities and the expected cash flows
from our non-US investments, we have entered into a series of
derivatives and forward contracts to hedge our interest rate and
foreign exchange exposure. We have classified each hedge as a
cash flow hedge at the time the hedge was put in place. Changes
in the value of the hedges, to the extent effective, are
recorded in other comprehensive income (loss). Changes in the
value that represent the ineffective portion of the hedge is
recorded as other income (loss) on the consolidated income
statement.



Income TaxesWe account for income taxes using the asset and liability method
of accounting. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax basis and for operating loss and tax credit carry
forwards. 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.







Item 7A.
    Quantitative and Qualitative Disclosures About Market
    Risk

Currency RiskWe are exposed to currency risk on cash flows we receive from
our businesses and investments located outside of the United
States and on the translation of earnings. Our current policy is
not to hedge over the long term the currency risk associated
with foreign currency denominated income and cash flows,

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due to the uncertain size and timing of the distributions we
expect to receive. However, we may from time to time seek to
hedge our currency risk for short to medium periods, up to two
years at a time. We have hedged our currency exposures through
2007 through various forward contracts, which are described
below.



Toll Road BusinessOur cash flows are exposed to the impact of fluctuations in the
Pound Sterling/ U.S. dollar exchange rate on the interest
income and dividends from
Connect M1-A1
Limited and CHL, respectively. Based on the interest and
dividends expected to be received in 2006 by Macquarie
Yorkshire, a hypothetical 1% appreciation in the
U.S. dollar against the Pound Sterling would reduce our
interest income from Connect
M1-A1 Limited by
$19,000 per year and our dividends from CHL by
$67,000 per year.

The principal payments we will receive on the subordinated loans
are also denominated in Pounds Sterling and fluctuations in the
Pound Sterling/ U.S. dollar exchange rate will cause
fluctuations in the actual cash we receive in U.S. dollars.

We have entered into various forward exchange contracts to hedge
our exposure to the impact of Pound Sterling/ U.S. dollar
fluctuations on our expected 2006 and 2007 interest, principal
and dividends for Macquarie Yorkshire. The forward exchange
contract rates range from £0.5325 to £0.5674 per
$1.00.



Investments in SEW and MCGIn relation to our investment in SEW, we are exposed to the
impact of the Pound Sterling/ U.S. dollar exchange rate on
our dividend income. Based on our expected dividend income from
SEW in 2006, a hypothetical 1% appreciation of the
U.S. dollar against the Pound Sterling would reduce our
dividend income and cash flows by $55,000 per year.

We have entered into various forward exchange contracts to hedge
our exposure to the impact of Pound Sterling/ U.S. dollar
fluctuations on our expected 2006 and 2007 dividends from SEW.
The forward exchange contract rates range from £0.5303 to
£0.5674 per $1.00.

In relation to our investment in MCG, we are exposed to the
impact of the Australian dollar/ U.S. dollar exchange rate
on our dividend income. Based on our expected dividend income
from MCG in 2006, a hypothetical 1% appreciation of the
U.S. dollar against the Australian dollar would reduce our
dividend income and cash flows prior to any withholding taxes by
$47,000 per year.

We have entered into various forward exchange contracts to hedge
our exposure to the impact of Australian dollar/
U.S. dollar fluctuations on our expected 2006 and 2007
dividends from MCG. The forward exchange contract rates range
from AUD $1.3286 to AUD $1.3541 per $1.00.



Interest Rate RiskWe are exposed to interest rate risk in relation to the
borrowings of our businesses. Our current policy is to enter
into derivative financial instruments to fix variable rate
interest payments covering at least half of the interest rate
risk associated with the borrowings of our businesses, subject
to the requirements of our lenders. As of February 13,
2006, we have total debt outstanding at our consolidated
businesses of $611.5 million. Of this total debt
outstanding, $126.8 million is fixed rate and
$484.8 million is floating. Of the $484.8 million of
floating rate debt, $300 million is hedged with interest
rate swaps, and $184.7 million is hedged with an interest
rate cap.



Airport Services BusinessThe senior debt for our airport services business comprises a
non-amortizing $300 million floating rate facility maturing
in 2010.

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A 1% increase in the interest rate on the airport services
business debt would result in a $3 million increase in the
interest cost per year. A corresponding 1% decrease would result
in a $3 million decrease in interest cost per year.

Our airport services business exposure to interest rate
changes has been 100% hedged until December 14, 2010
through the use of interest rate swaps. These hedging
arrangements will offset any additional interest rate expense
incurred as a result of increases in interest rates during that
period. However, if interest rates decrease, the value of our
hedge instruments will also decrease. A 10% relative decrease in
interest rates would result in a decrease in the fair market
value of the hedge instruments of $6.6 million. A
corresponding 10% relative increase would result in a
$6.5 million increase in the fair market value.



Airport Parking BusinessOur airport parking business has four senior debt facilities: a
$126 million non-amortizing floating rate facility maturing
in 2006 if the options to extend are not exercised, a
$58.7 million non-amortizing floating rate facility
maturing in 2008, a partially amortizing $4.6 million fixed
rate facility maturing in 2009 and a partially amortizing
$2.2 million fixed rated facility maturing in 2009. The
airport parking business intends to exercise the option to
extend the $126 million facility and management expects the
airport parking business will be able to fulfill the required
conditions. Conditions include providing specified notice to the
lender before maturity of the original facility, entering
appropriate interest rate cap agreements and maintenance of debt
service coverage constant ratios and debt service coverage
ratios. Due to a requirement imposed by our lender we were
unable to enter into any interest rate swap agreements in
relation to either the $126 million facility or the
$58.7 million facility. Instead, we purchased an interest
rate cap agreement at a base rate of LIBOR equal to 4.5% for a
notional amount of $126 million for the term of the loan
and a second interest rate cap agreement at a base rate of LIBOR
equal to 4.48% for a notional amount of $58.7 million.

A 1% increase in the interest rate on the $126 million
facility will increase the interest cost by $1.3 million
per year. A 1% decrease in interest rates will result in a
$1.3 million decrease in interest cost per year. A 1%
increase in the interest rate on the $58.7 million facility
will increase the interest cost by $587,000 per year. A 1%
decrease in interest rates will result in a $587,000 decrease in
interest costs per year.

Our airport parking business has a fixed rate exposure on the
$4.6 million debt facility and the $2.2 million debt
facility. A 10% relative increase in interest rates will
decrease the fair market value of the $4.6 million facility
by $62,000. A 10% relative decrease in interest rates will
result in a $63,000 increase in the fair market value. A 10%
relative increase in interest rates will decrease the fair
market value of the $2.2 million facility by $35,000. A 10%
relative decrease in interest rates will result in a $36,000
increase in the fair market value.

In relation to the interest rate cap instruments, the
30-day LIBOR rate as at
December 31, 2005 was 4.39%, compared to our interest rate
cap of a LIBOR rate of 4.5% and 4.48%. We reached the interest
rate caps in the first quarter of 2006.



Thermal Chicago/ Northwind AladdinMDE, a subsidiary of MDEH and the direct holding company for
Thermal Chicago and our interest in Northwind Aladdin, has
issued $120 million of aggregate principal amount of fixed
rate senior secured notes maturing December 31, 2023, with
variable quarterly amortization commencing June 30, 2007.
MDE has a fixed rate exposure on these notes and therefore a 10%
relative increase in interest rates will result in a
$5.8 million decrease in the fair market value of the
notes. A 10% relative decrease in interest rates will result in
a $6.3 million increase in the fair market value of the
notes.

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Connect M1-A1
    LimitedWe receive floating rate interest payments on
Connect M1-A1
Limiteds senior subordinated loan. A 1% increase in the
interest rate on this loan results in a £49,000 increase in
the interest received per year. A 1% decrease in the interest
rate results in a £49,000 decrease in the interest received
per year.

We have an exposure to changes in interest rates through
Connect M1-A1
Limiteds junior subordinated loan provided at a fixed rate
by Macquarie Yorkshire. For a 10% increase in interest rates,
the fair market value of this loan will decrease by
£219,000. For a 10% decrease in interest rates, the fair
market value will increase by £254,000.

Connect M1-A1
Limited has floating interest rate exposure on its commercial
senior debt facility. For a 1% increase in the interest rate the
interest cost will increase by £2 million per year. A
1% decrease will result in a decrease in the interest cost of
£2 million per year.

The interest rate exposure on the commercial senior debt
facility of
Connect M1-A1
Limited has been partially hedged through a combination of five
interest rate swaps. These interest swaps will partially offset
any additional expense incurred as a result of an increase in
interest rates. However, if interest rates decrease, the value
of Connect M1-A1
Limiteds hedging instruments will also decrease. The fair
market value of these interest rate swaps will decrease by
£7.4 million in the event of a 10% decrease in
interest rates. A 10% increase in interest rates will result in
a £7 million increase in the fair market value.

Connect M1-A1
Limited has a fixed rate exposure on its European Investment
Bank debt facility. A 10% increase in interest rates will result
in a £3.8 million decrease in the fair market value of
the facility. A 10% decrease in interest rates will result in a
£4.1 million increase in the fair market value of the
facility.



Commodity RiskOur district energy business is exposed to the risk of
fluctuating electricity prices which is not fully offset by
escalation provisions in our contracts with customers. In light
of the current uncertainty surrounding electricity pricing,
particularly given the upcoming deregulation of the Illinois
electricity markets and pending rate cases, and the resulting
potential changes in our contract pricing provisions, we are
unable at this time to reasonably perform a sensitivity analysis
regarding changes in electricity prices. Please see Our
Businesses and Investments  District Energy
Business  Business-Thermal Chicago 
Electricity Costs and  Contract
Pricing in Item 1. Business for a further discussion
of these matters.

112



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##### 

Item 8.     Financial
Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS

MACQUARIE INFRASTRUCTURE COMPANY TRUST

|                                                                                                                                                                                                                                              |  |        |     | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | --- | 
|                                                                                                                                                                                                                                              |  | Page   |    
|                                                                                                                                                                                                                                              |  | Number |    
|                                                                                                                                                                                                                                              |  |        |    
|CONSOLIDATED
    BALANCE SHEETS as of December 31, 2005 and
    December 31, 2004                                                                                                                                                             |  |        | 115 | 
|CONSOLIDATED
    STATEMENTS OF OPERATIONS for the Year Ended December 31,
    2005 and the Period April 13, 2004 (inception) to
    December 31, 2004                                                                                         |  |        | 116 | 
|CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
    for the Year Ended December 31, 2005 and the Period
    April 13, 2004 (inception) to December 31, 2005                                                      |  |        | 117 | 
|CONSOLIDATED
    STATEMENTS OF CASH FLOWS for the Year Ended December 31,
    2005 and the Period April 13, 2004 (inception) to
    December 31, 2004                                                                                         |  |        | 118 | 
|NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                                                                                |  |        | 120 | 
|                                                                                                                                                                                                                                             
|NORTH AMERICA CAPITAL HOLDING
    COMPANY                                                                                                                                                                                                    
|(Predecessor to Macquarie
    Infrastructure Company Trust)                                                                                                                                                                                  
|CONSOLIDATED
    STATEMENTS OF OPERATIONS for the Period July 30, 2004 to
    December 22, 2004, the Period January 1, 2004 to
    July 29, 2004 and the Year Ended December 31, 2003                                                         |  |        | 161 | 
|CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) AND
    COMPREHENSIVE INCOME (LOSS) for the Period July 30, 2004 to
    December 22, 2004, the Period January 1, 2004 to
    July 29, 2004 and the Year Ended December 31, 2003 |  |        | 162 | 
|CONSOLIDATED
    STATEMENTS OF CASH FLOWS for the Period July 30, 2004 to
    December 22, 2004, the Period January 1, 2004 to
    July 29, 2004 and the Year Ended December 31, 2003                                                         |  |        | 163 | 
|NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                                                                                |  |        | 164 | 
|SCHEDULE II
    VALUATION AND QUALIFYING ACCOUNTS                                                                                                                                                                                             |  |        | 173 | 



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Report of Independent Registered Public Accounting Firm

The Stockholders of Macquarie Infrastructure Company Trust:

The Board of Directors of Macquarie Infrastructure Company LLC:

We have audited the accompanying consolidated balance sheets of
Macquarie Infrastructure Company Trust (the Trust)
as of December 31, 2005 and December 31, 2004, and the
related consolidated statements of operations,
stockholders equity and comprehensive income, and cash
flows for the year ended December 31, 2005 and the period
April 13, 2004 (inception) to December 31, 2004.
In connection with the audits of the consolidated financial
statements, we have audited the related financial statement
schedule. These consolidated financial statements and financial
statement schedule are the responsibility of the Trusts
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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 examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes 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 Macquarie Infrastructure Company Trust as of
December 31, 2005 and December 31, 2004, and the
consolidated results of their operations and their cash flows
for the year ended December 31, 2005 and the period
April 13, 2004 (inception) to December 31, 2004,
in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth
therein.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of Macquarie Infrastructure Company Trusts
internal control over financial reporting as of
December 31, 2005, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), and
our report dated March 10, 2006 expressed an unqualified
opinion on managements assessment of, and the effective
operation of, internal control over financial reporting.



/s/ KPMG LLPDallas, Texas

March 10, 2006

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CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                            |  |                         |           |   |              |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | - | ------------ | - | --------- | -
|                                                                                                                                                                                            |  | December 31,            |           |   | December 31, |  
|                                                                                                                                                                                            |  | 2005                    |           |   | 2004         |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|                                                                                                                                                                                            |  | ($ in thousands, except |          
|                                                                                                                                                                                            |  | per share amounts)      |          
|Assets                                                                                                                                                                                     
|Current assets:                                                                                                                                                                             |  |                         |           |   |              |   |           |  
|Cash and cash equivalents                                                                                                                                                                   |  | $                       | 115,163   |   |              | $ | 140,050   |  
|Restricted cash                                                                                                                                                                             |  |                         | 1,332     |   |              |   | 1,155     |  
|Accounts receivable, less allowance
    for doubtful accounts of $839 and $1,359, respectively                                                                                              |  |                         | 21,150    |   |              |   | 12,312    |  
|Dividend receivable                                                                                                                                                                         |  |                         | 2,365     |   |              |   | 1,743     |  
|Inventories                                                                                                                                                                                 |  |                         | 1,981     |   |              |   | 1,563     |  
|Prepaid expenses                                                                                                                                                                            |  |                         | 4,701     |   |              |   | 4,186     |  
|Deferred income taxes                                                                                                                                                                       |  |                         | 2,101     |   |              |   | 1,452     |  
|Income tax receivable                                                                                                                                                                       |  |                         | 3,489     |   |              |   | 1,761     |  
|Other                                                                                                                                                                                       |  |                         | 4,394     |   |              |   | 3,547     |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Total current assets                                                                                                                                                                        |  |                         | 156,676   |   |              |   | 167,769   |  
|Property, equipment, land and
    leasehold improvements, net                                                                                                                               |  |                         | 335,119   |   |              |   | 284,744   |  
|Restricted cash                                                                                                                                                                             |  |                         | 19,437    |   |              |   | 16,790    |  
|Equipment lease receivables                                                                                                                                                                 |  |                         | 43,546    |   |              |   | 45,395    |  
|Investment in unconsolidated
    business                                                                                                                                                   |  |                         | 69,358    |   |              |   | 79,065    |  
|Investment, cost                                                                                                                                                                            |  |                         | 35,295    |   |              |   | 39,369    |  
|Securities, available for sale                                                                                                                                                              |  |                         | 68,882    |   |              |   | 71,263    |  
|Related party subordinated loan                                                                                                                                                             |  |                         | 19,866    |   |              |   | 21,748    |  
|Goodwill                                                                                                                                                                                    |  |                         | 281,776   |   |              |   | 217,576   |  
|Intangible assets, net                                                                                                                                                                      |  |                         | 299,487   |   |              |   | 254,530   |  
|Deposits and deferred costs on
    acquisitions                                                                                                                                             |  |                         | 14,746    |   |              |   |          |  
|Deferred financing costs, net of
    accumulated amortization                                                                                                                               |  |                         | 12,830    |   |              |   | 7,757     |  
|Fair value of derivative instruments                                                                                                                                                        |  |                         | 4,660     |   |              |   | 724       |  
|Other                                                                                                                                                                                       |  |                         | 1,620     |   |              |   | 1,757     |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Total assets                                                                                                                                                                                |  | $                       | 1,363,298 |   |              | $ | 1,208,487 |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|                                                                                                                                                                                           
|Liabilities and
    stockholders equity                                                                                                                                                   
|Current liabilities:                                                                                                                                                                        |  |                         |           |   |              |   |           |  
|Due to manager                                                                                                                                                                              |  | $                       | 2,637     |   |              | $ | 12,306    |  
|Accounts payable                                                                                                                                                                            |  |                         | 11,535    |   |              |   | 10,912    |  
|Accrued expenses                                                                                                                                                                            |  |                         | 13,994    |   |              |   | 11,980    |  
|Current portion of notes payable
    and capital leases                                                                                                                                     |  |                         | 2,647     |   |              |   | 1,242     |  
|Current portion of long-term debt                                                                                                                                                           |  |                         | 146       |   |              |   | 94        |  
|Other                                                                                                                                                                                       |  |                         | 3,639     |   |              |   | 2,991     |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Total current liabilities                                                                                                                                                                   |  |                         | 34,598    |   |              |   | 39,525    |  
|Capital leases and notes payable,
    net of current portion                                                                                                                                |  |                         | 2,864     |   |              |   | 1,755     |  
|Long-term debt, net of current
    portion                                                                                                                                                  |  |                         | 610,848   |   |              |   | 415,074   |  
|Related party long-term debt                                                                                                                                                                |  |                         | 18,247    |   |              |   | 19,278    |  
|Deferred income taxes                                                                                                                                                                       |  |                         | 113,794   |   |              |   | 123,429   |  
|Fair value of derivative instruments                                                                                                                                                        |  |                         |          |   |              |   | 286       |  
|Other                                                                                                                                                                                       |  |                         | 6,342     |   |              |   | 4,329     |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Total liabilities                                                                                                                                                                           |  |                         | 786,693   |   |              |   | 603,676   |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Minority interests                                                                                                                                                                          |  |                         | 8,940     |   |              |   | 8,515     |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Stockholders equity:                                                                                                                                                                       |  |                         |           |   |              |   |           |  
|Trust stock, no par value;
    500,000,000 authorized; 27,050,745 shares issued and
    outstanding at December 31, 2005; 26,610,100 shares
    issued and outstanding at December 31, 2004 |  |                         | 583,023   |   |              |   | 613,265   |  
|Accumulated other comprehensive
    (loss) income                                                                                                                                           |  |                         | (12,966   | ) |              |   | 619       |  
|Accumulated deficit                                                                                                                                                                         |  |                         | (2,392    | ) |              |   | (17,588   | )
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Total stockholders equity                                                                                                                                                                  |  |                         | 567,665   |   |              |   | 596,296   |  
|                                                                                                                                                                                            |  |                         |           |   |              |  
|Total liabilities and
    stockholders equity                                                                                                                                              |  | $                       | 1,363,298 |   |              | $ | 1,208,487 |  
|                                                                                                                                                                                            |  |                         |           |   |              |  



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CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                          |  |                                   |            |                |                |   |           |  
|------------------------------------------------------------------------- |  | --------------------------------- | ---------- | -------------- | -------------- | - | --------- | -
|                                                                          |  |                                   |            | April 13, 2004 |               
|                                                                          |  | Year Ended                        |            |                | (inception) to |  
|                                                                          |  | December 31,                      |            |                | December 31,   |  
|                                                                          |  | 2005                              |            |                | 2004           |  
|                                                                          |  |                                   |            |                |                |  
|                                                                          |  | ($ in thousands, except per share |           
|                                                                          |  | and shares outstanding)           |           
|Revenues                                                                  |  |                                   |            |                |                |   |           |  
|Revenue from fuel sales                                                   |  | $                                 | 143,273    |                |                | $ | 1,681     |  
|Service revenue                                                           |  |                                   | 156,167    |                |                |   | 3,257     |  
|Financing and equipment lease income                                      |  |                                   | 5,303      |                |                |   | 126       |  
|                                                                          |  |                                   |            |                |                |  
|Total revenue                                                             |  |                                   | 304,743    |                |                |   | 5,064     |  
|                                                                          |  |                                   |            |                |                |  
|Costs and expenses                                                        |  |                                   |            |                |                |   |           |  
|Cost of fuel sales                                                        |  |                                   | 84,806     |                |                |   | 912       |  
|Cost of services                                                          |  |                                   | 81,834     |                |                |   | 1,633     |  
|Selling, general and administrative
    expenses                          |  |                                   | 82,636     |                |                |   | 7,953     |  
|Fees to manager                                                           |  |                                   | 9,294      |                |                |   | 12,360    |  
|Depreciation expense                                                      |  |                                   | 6,007      |                |                |   | 175       |  
|Amortization of intangibles                                               |  |                                   | 14,815     |                |                |   | 281       |  
|                                                                          |  |                                   |            |                |                |  
|Total operating expenses                                                  |  |                                   | 279,392    |                |                |   | 23,314    |  
|                                                                          |  |                                   |            |                |                |  
|Operating income
    (loss)                                               |  |                                   | 25,351     |                |                |   | (18,250   | )
|Other income (expense)                                                    |  |                                   |            |                |                |   |           |  
|Dividend income                                                           |  |                                   | 12,361     |                |                |   | 1,704     |  
|Interest income                                                           |  |                                   | 4,064      |                |                |   | 69        |  
|Interest expense                                                          |  |                                   | (33,800    | )              |                |   | (756      | )
|Equity in earnings (loss) and
    amortization charges of investee        |  |                                   | 3,685      |                |                |   | (389      | )
|Other income                                                              |  |                                   | 123        |                |                |   | 50        |  
|                                                                          |  |                                   |            |                |                |  
|Net income (loss) before income
    taxes and minority interests          |  |                                   | 11,784     |                |                |   | (17,572   | )
|Income tax benefit                                                        |  |                                   | 3,615      |                |                |   |          |  
|                                                                          |  |                                   |            |                |                |  
|Net income (loss) before minority
    interests                           |  |                                   | 15,399     |                |                |   | (17,572   | )
|Minority interests                                                        |  |                                   | 203        |                |                |   | 16        |  
|                                                                          |  |                                   |            |                |                |  
|Net income (loss)                                                         |  | $                                 | 15,196     |                |                | $ | (17,588   | )
|                                                                          |  |                                   |            |                |                |  
|Basic earnings (loss) per share:                                          |  | $                                 | 0.56       |                |                | $ | (17.38    | )
|                                                                          |  |                                   |            |                |                |  
|Weighted average number of shares
    of trust stock outstanding: basic   |  |                                   | 26,919,608 |                |                |   | 1,011,887 |  
|Diluted earnings (loss) per share:                                        |  | $                                 | 0.56       |                |                | $ | (17.38    | )
|                                                                          |  |                                   |            |                |                |  
|Weighted average number of shares
    of trust stock outstanding: diluted |  |                                   | 26,929,219 |                |                |   | 1,011,887 |  
|Cash dividends declared per share                                         |  | $                                 | 1.5877     |                |                | $ |          |  
|                                                                          |  |                                   |            |                |                |  



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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME

|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | ---------- | - | ------ | - | ----------- | ------- |  | ------------- | ------------- | ------- | ------------- | ------ | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                     |                                                                                                 | Trust Stock                                                     |            |   |        |   | Accumulated |         |  |              
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   | Other       |         |  | Total         |              
|                                                                                                     |                                                                                                 | Number of                                                       |            |   |        |   | Accumulated |         |  | Comprehensive |               |         | Stockholders |       
|                                                                                                     |                                                                                                 | Shares                                                          |            |   | Amount |   |             | Deficit |  |               | Income (Loss) |         |               | Equity |        
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |        
|                                                                                                     |                                                                                                 | ($ in thousands, except number of shares and per share amounts) |           
|Issuance of trust stock, net of
    offering costs                                                   |                                                                                                 |                                                                 | 26,610,100 |   |        | $ | 613,265     |         |  | $             |              |         |               | $      |        |         |   | $ | 613,265 |        
|Other comprehensive income (loss):                                                                   |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |         |         |   |   |         |        
|                                                                                                     | Net loss for the period ended
    December 31, 2004                                             |                                                                 |            |  |        |   |             |        |  |               |               | (17,588 | )             |        |         |        |   |   |         | (17,588 | )
|                                                                                                     | Translation adjustment                                                                          |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | 855     |   |   |         | 855     |  
|                                                                                                     | Change in fair value of derivatives                                                             |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | 1       |   |   |         | 1       |  
|                                                                                                     | Unrealized loss on marketable
    securities                                                    |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | (237    | ) |   |         | (237    | )
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |        
|Total comprehensive loss for the
    period ended December 31, 2004                                  |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |         |         |   |   | (16,969 | )      
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |        
|Balance at December 31, 2004                                                                         |                                                                                                 |                                                                 | 26,610,100 |   |        | $ | 613,265     |         |  | $             | (17,588       | )       |               | $      | 619     |         |   | $ | 596,296 |        
|Issuance of trust stock to manager                                                                   |                                                                                                 |                                                                 | 433,001    |   |        |   | 12,088      |         |  |               |              |         |               |        |        |         |   |   | 12,088  |        
|Issuance of trust stock to
    independent directors                                                 |                                                                                                 |                                                                 | 7,644      |   |        |   | 191         |         |  |               |              |         |               |        |        |         |   |   | 191     |        
|Adjustment to offering costs                                                                         |                                                                                                 |                                                                 |           |   |        |   | 427         |         |  |               |              |         |               |        |        |         |   |   | 427     |        
|Distributions to trust stockholders
    (comprising $1.5877 per share paid on
    27,050,745 shares) |                                                                                                 |                                                                 |           |   |        |   | (42,948     | )       |  |               |              |         |               |        |        |         |   |   | (42,948 | )      
|Other comprehensive income (loss):                                                                   |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |         |         |   |   |         |        
|                                                                                                     | Net income for the year ended
    December 31, 2005                                             |                                                                 |            |  |        |   |             |        |  |               |               | 15,196  |               |        |         |        |   |   |         | 15,196  |  
|                                                                                                     | Translation adjustment                                                                          |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | (16,160 | ) |   |         | (16,160 | )
|                                                                                                     | Change in fair value of
    derivatives, net of taxes of $441                                   |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | 2,928   |   |   |         | 2,928   |  
|                                                                                                     | Reclassification adjustment for
    realized gain on interest rate swap, net of taxes of $1,707 |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | (2,459  | ) |   |         | (2,459  | )
|                                                                                                     | Unrealized gain on marketable
    securities                                                    |                                                                 |            |  |        |   |             |        |  |               |               |        |               |        |         | 2,106   |   |   |         | 2,106   |  
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |        
|Total comprehensive income for the
    year ended December 31, 2005                                  |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |         |         |   |   | 1,611   |        
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |        
|Balance at December 31, 2005                                                                         |                                                                                                 |                                                                 | 27,050,745 |   |        | $ | 583,023     |         |  | $             | (2,392        | )       |               | $      | (12,966 | )       |   | $ | 567,665 |        
|                                                                                                     |                                                                                                 |                                                                 |            |   |        |   |             |         |  |               |               |         |               |        |        



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CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                       |                                                                    |                                               |          |        |                   |   |          |     |        |  
|------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------ | --------------------------------------------- | -------- | ------ | ----------------- | - | -------- | --- | ------ | -
|                                                                                                       |                                                                    | Year Ended                                    |          |        | April 13, 2004    |  
|                                                                                                       |                                                                    | December 31,                                  |          |        | (inception) to    |  
|                                                                                                       |                                                                    | 2005                                          |          |        | December 31, 2004 |  
|                                                                                                       |                                                                    |                                               |          |        |                   |  
|                                                                                                       |                                                                    | ($ in thousands)                              |         
|Operating activities                                                                                   |                                                                    |                                               |          |        |                   |   |          |    
|Net income (loss)                                                                                      |                                                                    | $                                             | 15,196   |        |                   | $ | (17,588  | )  
|Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activities: |                                                                    |                                               |          |        |                   |   |          |    
|                                                                                                       | Depreciation and amortization of
    property and equipment        |                                               |          | 14,098 |                   |   |          | 370 |       
|                                                                                                       | Amortization of intangible assets                                  |                                               |          | 14,815 |                   |   |          | 281 |       
|                                                                                                       | Loss on disposal of equipment                                      |                                               |          | 674    |                   |   |          |    |       
|                                                                                                       | Equity in earnings (loss) and
    amortization charges of investee |                                               |          | 1,803  |                   |   |          | 389 |       
|                                                                                                       | Amortization of finance charges                                    |                                               |          | 6,290  |                   |   |          |    |       
|                                                                                                       | Noncash derivative gain, net of
    noncash interest expense       |                                               |          | (4,166 | )                 |   |          |    |       
|                                                                                                       | Accretion of asset retirement
    obligation                       |                                               |          | 222    |                   |   |          |    |       
|                                                                                                       | Deferred rent                                                      |                                               |          | 2,308  |                   |   |          | 80  |       
|                                                                                                       | Deferred revenue                                                   |                                               |          | (130   | )                 |   |          | (62 | )     
|                                                                                                       | Deferred taxes                                                     |                                               |          | (5,695 | )                 |   |          |    |       
|                                                                                                       | Minority interests                                                 |                                               |          | 203    |                   |   |          | 16  |       
|                                                                                                       | Noncash compensation                                               |                                               |          | 209    |                   |   |          |    |       
|                                                                                                       | Post retirement obligations                                        |                                               |          | (116   | )                 |   |          |    |       
|                                                                                                       | Accrued interest expense on
    subordinated debt  related party  |                                               |          | 1,003  |                   |   |          | 26  |       
|                                                                                                       | Accrued interest income on
    subordinated debt  related party   |                                               |          | (399   | )                 |   |          | (50 | )     
|                                                                                                       | Changes in operating assets and
    liabilities:                   |                                               |          |        |                   |   |          |     |       
|                                                                                                       |                                                                    | Restricted cash                               |          |        | (462              | ) |          |     |       |  
|                                                                                                       |                                                                    | Accounts receivable                           |          |        | (7,683            | ) |          |     | (420   | )
|                                                                                                       |                                                                    | Equipment lease receivable, net               |          |        | 1,677             |   |          |     | (121   | )
|                                                                                                       |                                                                    | Dividend receivable                           |          |        | (651              | ) |          |     | (1,704 | )
|                                                                                                       |                                                                    | Inventories                                   |          |        | (178              | ) |          |     | 686    |  
|                                                                                                       |                                                                    | Prepaid expenses and other current
    assets |          |        | (39               | ) |          |     | (439   | )
|                                                                                                       |                                                                    | Due to subsidiaries                           |          |        |                  |   |          |     | 1,398  |  
|                                                                                                       |                                                                    | Accounts payable and accrued
    expenses     |          |        | 1,882             |   |          |     | 798    |  
|                                                                                                       |                                                                    | Due to manager                                |          |        | 2,419             |   |          |     | 12,306 |  
|                                                                                                       |                                                                    | Other                                         |          |        | 267               |   |          |     | (11    | )
|                                                                                                       |                                                                    |                                               |          |        |                   |  
|Net cash provided by (used in)
    operating activities                                                |                                                                    |                                               | 43,547   |        |                   |   | (4,045   | )  
|Investing activities                                                                                   |                                                                    |                                               |          |        |                   |   |          |    
|Acquisition of businesses and
    investments, net of cash acquired                                    |                                                                    |                                               | (182,367 | )      |                   |   | (467,413 | )  
|Additional costs of acquisitions                                                                       |                                                                    |                                               | (60      | )      |                   |   |         |    
|Deposits and deferred costs on
    future acquisitions                                                 |                                                                    |                                               | (14,746  | )      |                   |   |         |    
|Goodwill adjustment 
    cash received                                                                |                                                                    |                                               | 694      |        |                   |   |         |    
|Collection on notes receivable                                                                         |                                                                    |                                               | 358      |        |                   |   |         |    
|Purchases of property and equipment                                                                    |                                                                    |                                               | (6,743   | )      |                   |   | (81      | )  
|Proceeds received on subordinated
    loan                                                             |                                                                    |                                               | 914      |        |                   |   |         |    
|Other                                                                                                  |                                                                    |                                               |         |        |                   |   | 17       |    
|                                                                                                       |                                                                    |                                               |          |        |                   |  
|Net cash used in investing
    activities                                                              |                                                                    |                                               | (201,950 | )      |                   |   | (467,477 | )  

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CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)

|                                                       |                                                                            |                  |          |        |                   |   |         |       | 
|------------------------------------------------------ | -------------------------------------------------------------------------- | ---------------- | -------- | ------ | ----------------- | - | ------- | ----- | 
|                                                       |                                                                            | Year Ended       |          |        | April 13, 2004    |  
|                                                       |                                                                            | December 31,     |          |        | (inception) to    |  
|                                                       |                                                                            | 2005             |          |        | December 31, 2004 |  
|                                                       |                                                                            |                  |          |        |                   |  
|                                                       |                                                                            | ($ in thousands) |         
|Financing activities                                   |                                                                            |                  |          |        |                   |   |         |      
|Proceeds from issuance of shares of
    trust stock    |                                                                            |                  |         |        |                   |   | 665,250 |      
|Proceeds from long-term debt                           |                                                                            |                  | 390,742  |        |                   |   | (1,500  | )    
|Proceeds from line-credit facility                     |                                                                            |                  | 850      |        |                   |   |        |      
|Contributions received from
    minority shareholders  |                                                                            |                  | 1,442    |        |                   |   |        |      
|Distributions paid to trust
    shareholders           |                                                                            |                  | (42,948  | )      |                   |   |        |      
|Debt financing costs                                   |                                                                            |                  | (11,350  | )      |                   |   |        |      
|Distributions paid to minority
    shareholders        |                                                                            |                  | (1,219   | )      |                   |   |        |      
|Payment of long-term debt                              |                                                                            |                  | (197,170 | )      |                   |   |        |      
|Offering costs                                         |                                                                            |                  | (1,844   | )      |                   |   | (51,985 | )    
|Restricted cash                                        |                                                                            |                  | (2,362   | )      |                   |   |        |      
|Payment of notes and capital lease
    obligations     |                                                                            |                  | (1,605   | )      |                   |   |        |      
|Acquisition of swap contract                           |                                                                            |                  | (689     | )      |                   |   |        |      
|                                                       |                                                                            |                  |          |        |                   |  
|Net cash provided by financing
    activities          |                                                                            |                  | 133,847  |        |                   |   | 611,765 |      
|Effect of exchange rate changes on
    cash            |                                                                            |                  | (331     | )      |                   |   | (193    | )    
|                                                       |                                                                            |                  |          |        |                   |  
|Net change in cash and cash
    equivalents            |                                                                            |                  | (24,887  | )      |                   |   | 140,050 |      
|Cash and cash equivalents at
    beginning of year     |                                                                            |                  | 140,050  |        |                   |   |        |      
|                                                       |                                                                            |                  |          |        |                   |  
|Cash and cash equivalents at end of
    year           |                                                                            | $                | 115,163  |        |                   | $ | 140,050 |      
|                                                       |                                                                            |                  |          |        |                   |  
|Supplemental disclosures of cash
    flow information: |                                                                            |                  |          |        |                   |   |         |      
|Noncash investing and financing
    activity:          |                                                                            |                  |          |        |                   |   |         |      
|                                                       | Accrued offering costs                                                     |                  | $        |       |                   |   | $       | 2,270 | 
|                                                       |                                                                            |                  |          |        |                   |  
|                                                       | Accrued purchases of property and
    equipment                            |                  | $        | 384    |                   |   | $       | 810   | 
|                                                       |                                                                            |                  |          |        |                   |  
|                                                       | Acquisition of property through
    capital leases                         |                  | $        | 3,270  |                   |   | $       |      | 
|                                                       |                                                                            |                  |          |        |                   |  
|                                                       | Issuance of trust stock to manager
    for payment of 2004 performance fee |                  | $        | 12,088 |                   |   | $       |      | 
|                                                       |                                                                            |                  |          |        |                   |  
|                                                       | Issuance of trust stock to
    independent directors                       |                  | $        | 191    |                   |   | $       |      | 
|                                                       |                                                                            |                  |          |        |                   |  
|Taxes paid                                             |                                                                            | $                | 2,610    |        |                   | $ |        |      
|                                                       |                                                                            |                  |          |        |                   |  
|Interest paid                                          |                                                                            | $                | 30,902   |        |                   | $ | 2,056   |      
|                                                       |                                                                            |                  |          |        |                   |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS







1.
    Organization and Description of BusinessMacquarie Infrastructure Company Trust, or the Trust, a Delaware
statutory trust, was formed on April 13, 2004. Macquarie
Infrastructure Company LLC, or the Company, a Delaware limited
liability company, was also formed on April 13, 2004. Prior
to December 16, 2004, the Trust was a wholly owned
subsidiary of Macquarie Infrastructure Management
(USA) Inc., or MIMUSA. MIMUSA is a subsidiary of the
Macquarie Group of companies, which is comprised of Macquarie
Bank Limited and its subsidiaries and affiliates worldwide.
Macquarie Bank Limited is headquartered in Australia and is
listed on the Australian Stock Exchange.

The Trust and the Company were formed to own, operate and invest
in a diversified group of infrastructure businesses in the
United States and other developed countries. In accordance with
the Trust Agreement, the Trust is the sole holder of 100%
of the LLC interests of the Company and, pursuant to the LLC
Agreement, the Company will have outstanding the identical
number of LLC interests as the number of outstanding shares of
trust stock. The Company is the operating entity with a Board of
Directors and other corporate governance responsibilities
generally consistent with that of a Delaware corporation.

On December 21, 2004, the Trust and the Company completed
an initial public offering, or IPO, and concurrent private
placement, issuing a total of 26,610,000 shares of trust
stock at a price of $25.00 per share. Total gross proceeds
were $665.3 million, before offering costs and underwriting
fees of $51.6 million. MIMUSA purchased two million shares
($50 million) of the total shares issued, through the
private placement offering. The majority of the proceeds were
used to acquire the Companys initial businesses and
investments.

In December 2004, subsequent to the IPO, the Company purchased
the following companies:



(i) North America Capital Holding Company, or
    NACH  an airport service business that is an operator
    of 13 fixed-based operations, or FBOs, (including additional
    FBOs acquired during 2005) which provide fuel, de-icing,
    aircraft parking, hangar and other services. The FBOs are
    located in various locations in the United States and the
    corporate headquarters are in Plano, Texas.(ii) Macquarie Airports North America, Inc., or
    MANA  an airport service business that is an operator
    of five FBOs and one heliport which provides fuel, de-icing,
    aircraft parking and hangar services, airport management, and
    other aviation services. The FBOs are located in the northeast
    and southern regions in the United States and the corporate
    headquarters were formerly in Baltimore, Maryland. During 2005,
    MANAs operations and management were integrated into NACH.(iii) Macquarie Americas Parking Corporation, or
    MAPC  an airport parking business that provides
    off-airport parking services as well as ground transportation to
    and from the parking facilities to the airport terminals. MAPC
    operates 31 off-airport parking facilities located at 20
    airports (including facilities at airports from acquisitions
    during 2005) throughout the United States and maintains its
    headquarters in Downey, California.(iv) Macquarie District Energy Holdings, LLC, or
    MDEH  a business that provides district cooling to 98
    customers in Chicago, Illinois and provides district heating and
    cooling to a single customer outside of downtown Chicago and to
    the Aladdin Resort & Casino and Desert Passage shopping
    mall located in Las Vegas, Nevada. MDEH maintains its
    headquarters in Chicago, Illinois.(v) Macquarie Yorkshire Limited, or MYL  an
    entity that owns a 50% interest in a shadow toll road located in
    the United Kingdom, pursuant to a concession agreement with the
    U.K. government.In December 2004, the Company also purchased an interest in
Macquarie Communications Infrastructure Group, or MCG, an
investment vehicle managed by a member of the Macquarie Group
that operates an Australian broadcast transmission provider and
a provider of broadcast transmission and site

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

leasing infrastructure in the United Kingdom and the Republic of
Ireland. The Company also purchased an indirect interest in
South East Water, or SEW, a utility company that provides water
to households and industrial customers in southeastern England.

During the year ended December 31, 2005, the Companys
major acquisitions were as follows:



(i) On January 14, 2005, NACH acquired all of the
    membership interests in General Aviation Holdings, LLC, or GAH,
    an entity that operates two FBOs in California.(ii) On August 12, 2005, Macquarie FBO Holdings LLC, a
    wholly owned subsidiary of Macquarie Infrastructure Company
    Inc., or MIC Inc., acquired all of the membership interests in
    Eagle Aviation Resources, Ltd., or EAR, an FBO company doing
    business as Las Vegas Executive Air Terminal.(iii) On October 3, 2005, MAPC completed the
    acquisition of real property and personal and intangible assets
    related to six off-airport parking facilities (collectively
    referred to as SunPark).The airport services, airport parking and district energy
businesses are owned by the Companys wholly-owned
subsidiary, MIC Inc. The investments in MCG, SEW and the
business that operates a toll road are owned by the Company
through separate Delaware limited liability companies.



2.
    Summary of Significant Accounting Policies

Principles of ConsolidationThe consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation. Except as otherwise specified, we refer to
Macquarie Infrastructure Company LLC and its subsidiaries
collectively as the Company. The Company
consolidates investments where it has a controlling financial
interest. The usual condition for a controlling financial
interest is ownership of a majority of the voting interest and,
therefore, as a general rule, ownership, directly or indirectly,
of over 50% percent of the outstanding voting shares is a
condition for consolidation. For investments in variable
interest entities, as defined by Financial Accounting Standards
Board (FASB) Interpretation No. 46, Consolidation
of Variable Interest Entities, the Company consolidates when
it is determined to be the primary beneficiary of the variable
interest entity. As of December 31, 2005, the Company was
not the primary beneficiary of any variable interest entity in
which it did not own a majority of the outstanding voting stock.



Use of EstimatesThe preparation of our consolidated financial statements in
conformity with GAAP requires us to make estimates and
assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenues and expenses
during the reporting period. We evaluate these estimates and
judgments on an ongoing basis and base our estimates on
experience, current and expected future conditions, third-party
evaluations and various other assumptions that we believe are
reasonable under the circumstances. Significant items subject to
such estimates and assumptions include the carrying amount of
property, equipment and leasehold improvements, intangibles,
asset retirement obligations and goodwill; valuation allowances
for receivables, inventories and deferred income tax assets;
environmental liabilities; and valuation of derivative
instruments. The results of these estimates form the basis for
making judgments about the carrying values of assets and
liabilities as well as identifying and assessing the accounting
treatment with respect to commitments and contingencies. Actual
results may differ from the estimates and assumptions used in
the financial statements and related notes.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



Cash EquivalentsThe Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents. Included in cash and cash equivalents at
December 31, 2005 and December 31, 2004 is
$87 million of commercial paper and $76.3 million of
U.S. Treasury bills, respectively.



Restricted CashThe Company classifies all cash pledged as collateral on the
outstanding senior debt as restricted in the consolidated
balance sheets. At December 31, 2005 and December 31,
2004, the Company has recorded $19.4 million and
$16.8 million, respectively, of cash pledged as collateral
in the accompanying consolidated balance sheets. In addition, at
December 31, 2005 the Company has classified
$1.3 million as restricted cash in current assets relating
to our airport services business and to a credit facility
requirement of MAPC. At December 31, 2004, the Company
classified $1.2 million as restricted cash in current
assets relating to the debt of our 75% indirectly owned
subsidiary, Northwind Aladdin, and to a credit facility
requirement of MAPC.



Allowance for Doubtful AccountsThe Company uses estimates to determine the amount of the
allowance for doubtful accounts necessary to reduce billed and
unbilled accounts receivable to their net realizable value. The
Company estimates the amount of the required allowance by
reviewing the status of past-due receivables and analyzing
historical bad debt trends. Actual collection experience has not
varied significantly from estimates due primarily to credit
policies and a lack of concentration of accounts receivable. The
Company writes off receivables deemed to be uncollectible to the
allowance for doubtful accounts. Accounts receivable balances
are not collateralized.



InventoryInventory consists principally of jet fuel purchased from
various third-party vendors. Inventory is stated at the lower of
the first-in, first-out
cost or market cost.



Property, Equipment, Land and Leasehold
    ImprovementsProperty, equipment, land and leasehold improvements are
recorded at cost less accumulated depreciation. Major renewals
and improvements are capitalized while maintenance and repair
expenditures are expensed when incurred. We depreciate our
property, equipment and leasehold improvements over their
estimated useful lives. The estimated economic useful lives
range according to the table below:

|                                |  |              
|------------------------------- |  | -------------
|Buildings                       |  | 9 to 40 years
|Leasehold and land improvements |  | 3 to 40 years
|Machinery and equipment         |  | 1 to 40 years
|Furniture and fixtures          |  | 3 to 10 years



| |                               
| | ------------------------------
| | Goodwill and Intangible Assets



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



Impairment of Long-lived Assets, Excluding GoodwillLong-lived assets, including amortizable intangible assets, are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset or
group of assets may not be fully recoverable. These events or
changes in circumstances may include a significant deterioration
of operating results, changes in business plans, or changes in
anticipated future cash flows. If an impairment indicator is
present, the Company evaluates recoverability by a comparison of
the carrying amount of the assets to future undiscounted net
cash flows expected to be generated by the assets. If the assets
are impaired, the impairment recognized is measured by the
amount by which the carrying amount exceeds the fair value of
the assets. Fair value is generally determined by estimates of
discounted cash flows. The discount rate used in any estimate of
discounted cash flows would be the rate required for a similar
investment of like risk.



Impairment of GoodwillGoodwill 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. The first step is to
determine the estimated fair value of each reporting unit with
goodwill. The reporting units of the Company, for purposes of
the impairment test, are those components of operating segments
for which discrete financial information is available and
segment management regularly reviews the operating results of
that component. Components are combined when determining
reporting units if they have similar economic characteristics.

The Company estimates the fair value of each reporting unit by
estimating the present value of the reporting units future
cash flows. If the recorded net assets of the reporting unit are
less than the reporting units estimated fair value, then
no impairment is indicated. Alternatively, if the recorded net
assets of the reporting unit exceed its estimated fair value,
then goodwill is assumed to be impaired and a second step is
performed. In the second step, the implied fair value of
goodwill is determined by deducting the estimated fair value of
all tangible and identifiable intangible net assets of the
reporting unit from the estimated fair value of the reporting
unit. If the recorded amount of goodwill exceeds this implied
fair value, an impairment charge is recorded for the excess.



Debt Issuance CostsThe Company capitalizes all direct costs incurred in connection
with the issuance of debt as debt issuance costs. These costs
are amortized over the contractual term of the debt instrument,
which ranges from 3 to 19 years.



Derivative InstrumentsThe Company accounts for derivatives and hedging activities in
accordance with FASB Statement No. 133, Accounting for
Derivative Instruments and Certain Hedging Activities, as
amended, which requires that all derivative instruments be
recorded on the balance sheet at their respective fair values.

On the date a derivative contract is entered into, the Company
designates the derivative as either a hedge of the fair value of
a recognized asset or liability or of an unrecognized firm
commitment (fair value hedge), a hedge of a forecasted
transaction or the variability of cash flows to be received or
paid related to a recognized asset or liability (cash flow
hedge), a foreign-currency fair-value or cash-flow hedge
(foreign currency hedge). For all hedging relationships the
Company formally documents the hedging relationship and its
risk-management objective and strategy for undertaking the
hedge, the hedging instrument, the item, the nature of the risk
being hedged, how the hedging instruments effectiveness in
offsetting the hedged risk will be assessed, and a description
of the method of measuring ineffectiveness. This process
includes linking all derivatives that are designated as
fair-value, cash-flow, or foreign-currency hedges to

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STATEMENTS  (Continued)

specific assets and liabilities on the balance sheet or to
specific firm commitments or forecasted transactions. The
Company also formally assesses, both at the hedges
inception and on an ongoing basis, whether the derivatives that
are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.
Changes in the fair value of a derivative that is highly
effective and that is designated and qualifies as a fair-value
hedge, along with the loss or gain on the hedged asset or
liability or unrecognized firm commitment of the hedged item
that is attributable to the hedged risk, are recorded in
earnings. Changes in the fair value of a derivative that is
highly effective and that is designated and qualifies as a
cash-flow hedge are recorded in other comprehensive income to
the extent that the derivative is effective as a hedge, until
earnings are affected by the variability in cash flows of the
designated hedged item. Changes in the fair value of derivatives
that are highly effective as hedges and that are designated and
qualify as foreign-currency hedges are recorded in either
earnings or other comprehensive income, depending on whether the
hedge transaction is a fair-value hedge or a cash-flow hedge.
The ineffective portion of the change in fair value of a
derivative instrument that qualifies as either a fair-value
hedge or a cash-flow hedge is reported in earnings.

The Company discontinues hedge accounting prospectively when it
is determined that the derivative is no longer effective in
offsetting changes in the fair value or cash flows of the hedged
item, the derivative expires or is sold, terminated, or
exercised, the derivative is no longer designated as a hedging
instrument, because it is unlikely that a forecasted transaction
will occur, a hedged firm commitment no longer meets the
definition of a firm commitment, or management determines that
designation of the derivative as a hedging instrument is no
longer appropriate.

In all situations in which hedge accounting is discontinued, the
Company continues to carry the derivative at its fair value on
the balance sheet and recognizes any subsequent changes in its
fair value in earnings. When hedge accounting is discontinued
because it is determined that the derivative no longer qualifies
as an effective fair-value hedge, the Company no longer adjusts
the hedged asset or liability for changes in fair value. The
adjustment of the carrying amount of the hedged asset or
liability is accounted for in the same manner as other
components of the carrying amount of that asset or liability.
When hedge accounting is discontinued because the hedged item no
longer meets the definition of a firm commitment, the Company
removes any asset or liability that was recorded pursuant to
recognition of the firm commitment from the balance sheet, and
recognizes any gain or loss in earnings. When hedge accounting
is discontinued because it is probable that a forecasted
transaction will not occur, the Company recognizes immediately
in earnings gains and losses that were accumulated in other
comprehensive income.



Financial InstrumentsThe Companys financial instruments, including cash and
cash equivalents, accounts receivable, accounts payable,
subordinated debt 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.



Concentrations of Credit RiskFinancial instruments that potentially expose the Company to
concentrations of credit risk consist primarily of cash and cash
equivalents and accounts receivable. The Company places its cash
and cash equivalents with financial institutions and its
balances may exceed federally insured limits. The Companys
accounts receivable are mainly derived from fuel sales and
services rendered under contract terms with commercial and
private customers located primarily in the United States. At
December 31, 2005 and December 31, 2004, there were no
outstanding accounts receivable due from a single customer,
which accounted for more than 10% of the total accounts
receivable.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Additionally, no single customer accounted for more than 10% of
the Companys revenues during the year ended
December 31, 2005, and for the period April 13, 2004
through December 31, 2004.



Foreign Currency TranslationThe Companys foreign investments and unconsolidated
businesses have been translated into U.S. dollars in
accordance with FASB Statement No. 52, Foreign Currency
Translation. All assets and liabilities have been translated
using the exchange rate in effect at the balance sheet date.
Statement of operations amounts have been translated using the
average exchange rate for the period. Adjustments from such
translation have been reported separately as a component of
other comprehensive income in stockholders equity.



Earnings (Loss) Per ShareThe Company calculates earnings (loss) per share in accordance
with FASB Statement No. 128, Earnings Per Share.
Accordingly, basic earnings (loss) per share is computed using
the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Common
equivalent shares consist of shares issuable upon the exercise
of stock options (using the treasury stock method); common
equivalent shares are excluded from the calculation if their
effect is anti-dilutive.

Basic and diluted earnings (loss) per share was computed on a
weighted average basis for the year ended December 31, 2005
and for the period April 13, 2004 (inception) through
December 31, 2004. The basic weighted average computation
of 26,919,608 shares of trust stock outstanding for 2005
was computed based on 26,610,100 shares outstanding from
January 1, 2005 through April 18, 2005,
27,043,101 shares outstanding from April 19, 2005
through May 24, 2005 and 27,050,745 shares outstanding
from May 25, 2005 through December 31, 2005. The
diluted weighted average computation of 26,929,219 shares
of trust stock outstanding for 2005 was computed by assuming
that all of the stock grants provided to the independent
directors on May 25, 2005 had been converted to shares on
that date. The basic weighted average computation of
1,011,887 shares of trust stock outstanding for 2004 was
computed based on 100 shares outstanding from
April 13, 2004 through December 21, 2004 and
26,610,100 shares outstanding from December 22, 2004
through December 31, 2004. The stock grants provided to the
independent directors on December 21, 2004 were
anti-dilutive in 2004 due to the Companys net loss for
that period.



Comprehensive Income (Loss)The Company follows the requirements of FASB Statement
No. 130, Reporting Comprehensive Income, for the
reporting and presentation of comprehensive income (loss) and
its components. FASB Statement No. 130 requires unrealized
gains or losses on the Companys available for sale
securities, foreign currency translation adjustments and change
in fair value of derivatives to be included in other
comprehensive income (loss).



AdvertisingAdvertising costs are expensed as incurred. Costs associated
with direct response advertising programs may be prepaid and
will be expensed once the printed materials are distributed to
the public.



Revenue RecognitionIn accordance with Staff Accounting Bulletin 104,
Revenue Recognition, the Company recognizes revenues when
persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the sellers price
to the buyer is fixed and determinable, and collectibility is
probable.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



Airport Services BusinessRevenue on fuel sales is recognized when the fuel has been
delivered to the customer, collection of the resulting
receivable is probable, persuasive evidence of an arrangement
exists, and the fee is fixed or determinable. Fuel sales are
recorded net of volume discounts and rebates.

Service revenues include certain fueling fees. The Company
receives a fueling fee for fueling certain carriers with fuel
owned by such carriers. In accordance with Emerging Issues Task
Force, or EITF, Issue 99-19, Reporting Revenue Gross as a
Principal versus Net as an Agent, revenue from these
transactions is recorded based on the service fee earned and
does not include the cost of the carriers fuel.

Other FBO revenues consist principally of de-icing services,
landing and fuel distribution fees as well as rental income for
hangar and terminal use. Other FBO revenues are recognized as
the services are rendered to the customer.

The Company also enters into management contracts to operate
regional airports or aviation-related facilities. Management
fees are recognized pro rata over the service period based on
negotiated contractual terms. All costs incurred to perform
under contracts are reimbursed entirely by the customer and are
generally invoiced with the related management fee. As the
Company is acting as an agent in these contracts, the amount
invoiced is recorded as revenue net of the reimbursable costs.



Airport Parking BusinessParking lot revenue is recorded as services are performed, net
of appropriate allowances and local taxes. For customer vehicles
remaining at our facilities at year end, revenues for services
performed are recorded in other current assets in the
accompanying consolidated balance sheet based upon the value of
unpaid parking revenues for customer vehicles.

The Company offers various membership programs for which
customers pay an annual membership fee. The Company accounts for
membership fee revenue on a deferral basis whereby
membership fee revenue is recognized ratably over the one-year
life of the membership. In addition, the Company also sells
prepaid parking vouchers which can be redeemed for future
parking services. These sales of prepaid vouchers are recorded
as deferred revenue and recognized as parking
revenue when redeemed. Unearned membership revenue and prepaid
vouchers are included in deferred revenue (other current
liability) in the accompanying consolidated balance sheet.



District Energy BusinessRevenues from cooling capacity and consumption are recognized at
the time of performance of service. Cash received from customers
for services to be provided in the future are recorded as
unearned revenue and recognized over the expected service period
on a straight-line basis.



Income TaxesMIC Inc., which is the holding company of the wholly owned
U.S. businesses, files a consolidated U.S. federal
income tax return. As a consequence, all of its direct and
indirect U.S. subsidiaries will pay no U.S. federal
income taxes, and all tax obligations will be incurred by MIC
Inc. based on the consolidated U.S. federal income tax
position of the U.S. businesses after taking into account
deductions for management fees and corporate overhead expenses
allocated to MIC Inc.

The Company uses the liability method in accounting for income
taxes. Under this method, deferred income tax assets and
liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and
are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

We do not expect that the U.S. holding companies of our
interests in the toll road business, MCG or SEW will pay any
U.S. federal income taxes, as each of these entities has
elected to be disregarded as an entity separate from the Company
for U.S. federal income tax purposes.



ReclassificationsCertain reclassifications were made to the financial statements
for the prior period to conform to current year presentation.



Recently Issued Accounting StandardsIn May 2005, the FASB issued SFAS No. 154,
Accounting Changes and Error Corrections, which replaces
APB Opinion No. 20, Accounting Changes, and
SFAS No. 3, Reporting Accounting Changes in Interim
Financial Statements, and provides guidance on the
accounting for and reporting of accounting changes and error
corrections. SFAS No. 154 applies to all voluntary
changes in accounting principle and requires retrospective
application(a term defined by the statement) to prior
periods financial statements, unless it is impracticable
to determine the effect of a change. It also applies to changes
required by an accounting pronouncement that does not include
specific transition provisions. In addition,
SFAS No. 154 redefines restatementas the
revising of previously issued financial statements to reflect
the correction of an error. The statement is effective for
accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The Company will
adopt SFAS No. 154 beginning January 1, 2006.

In March 2005, the FASB issued Interpretation
(FIN) No. 47, Accounting for Conditional Asset
Retirement Obligations, an interpretation of SFAS 143,
or the Interpretation. FIN 47 clarifies the manner in which
uncertainties concerning the timing and the method of settlement
of an asset retirement obligation should be accounted for. In
addition, the Interpretation clarifies the circumstances under
which fair value of an asset retirement obligation is considered
subject to reasonable estimation. The Interpretation is
effective no later than the end of fiscal years ending after
December 15, 2005. The Company adopted this statement
during the year. The Company evaluated the impact of applying
FIN 47 and concluded that there is no impact on the
financial statements.

In December 2004, the FASB issued Statement No. 123
(revised 2004), Share-Based Payment, which addresses the
accounting for transactions in which an entity exchanges its
equity instruments for goods or services, with a primary focus
on transactions in which an entity obtains employee services in
share-based payment transactions. This Statement is a revision
to Statement 123 and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and its related
implementation guidance. Incremental compensation costs arising
from subsequent modifications of awards after the grant date
must be recognized. The Company adopted this Statement as of
April 1, 2005.

In December 2004, the FASB issued Statement No. 151,
Inventory Costs, which clarifies the accounting for
abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Under this Statement,
such items will be recognized as current-period charges. In
addition, the Statement requires that allocation of fixed
production overheads to the costs of conversion be based on the
normal capacity of the production facilities. This Statement
will be effective for the Company for inventory costs incurred
on or after January 1, 2006.

In December 2004, the FASB issued Statement No. 153,
Exchanges of Non-Monetary Assets, which eliminates an
exception in APB 29 for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial
substance. This Statement will be effective for the Company for
nonmonetary asset exchanges occurring on or after
January 1, 2006.

127



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



3.
    Earnings Per ShareFollowing is a reconciliation of the basic and diluted number of
shares used in computing earnings (loss) per share:

|                                                                          |  |              |            |             |                   |  |           | 
|------------------------------------------------------------------------- |  | ------------ | ---------- | ----------- | ----------------- |  | --------- | 
|                                                                          |  |              |            | Period from |                  
|                                                                          |  | Year Ended   |            |             | April 13, 2004    | 
|                                                                          |  | December 31, |            |             | (inception) to    | 
|                                                                          |  | 2005         |            |             | December 31, 2004 | 
|                                                                          |  |              |            |             |                   | 
|Weighted average number of shares
    of trust stock outstanding: basic   |  |              | 26,919,608 |             |                   |  | 1,011,887 | 
|Dilutive effect of restricted stock
    unit grants                       |  |              | 9,611      |             |                   |  |          | 
|                                                                          |  |              |            |             |                   | 
|Weighted average number of shares
    of trust stock outstanding: diluted |  |              | 26,929,219 |             |                   |  | 1,011,887 | 
|                                                                          |  |              |            |             |                   | 





|   |                                       
|-- | --------------------------------------
|4. | Acquisition of Consolidated Businesses







| |                    
| | -------------------
| | Acquisition of NACH







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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

ber 22, 2004. The acquisition of NACH resulted in the
company assuming the existing income tax bases of the
predecessor. In accordance with FASB Statement No. 141,
Business Combinations, a deferred tax liability was
recorded to reflect the increase in the financial accounting
bases of the assets acquired over the carryover income tax basis.

The initial allocation of the purchase price, including
transaction costs, was as follows (in thousands):

|                                                         |                         |   |         |         | 
|-------------------------------------------------------- | ----------------------- | - | ------- | ------- | 
|Current assets                                           |                         | $ | 11,877  |        
|Property, equipment, land and
    leasehold improvements |                         |   | 44,987  |        
|Intangible assets:                                       |                         |   |         |        
|                                                         | Customer relationships  |   |         | 3,596   | 
|                                                         | Airport contract rights |   |         | 130,833 | 
|                                                         | Trade name              |   |         | 6,801   | 
|                                                         | Technology              |   |         | 460     | 
|                                                         | Non-compete agreements  |   |         | 3,735   | 
|Goodwill                                                 |                         |   | 108,740 |        
|Other                                                    |                         |   | 9,025   |        
|                                                         |                         |   |        
|Total assets acquired                                    |                         |   | 320,054 |        
|Current liabilities                                      |                         |   | 10,592  |        
|Long-term liabilities assumed                            |                         |   | 131,426 |        
|Deferred income taxes                                    |                         |   | 59,826  |        
|                                                         |                         |   |        
|Net assets acquired                                      |                         | $ | 118,210 |        
|                                                         |                         |   |        



02-17, Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination






| |                    
| | -------------------
| | Acquisition of MANA

,


129



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

bank debt of $36 million was also assumed in the
transaction. In addition, MIC Inc. acquired the subordinated
debt and accrued interest of MANA, at par from GIF, for
$12.2 million. This amount was eliminated in the
consolidated balance sheet at December 31, 2004, and
replaced with a capital contribution during 2005.

The MANA and the NACH acquisitions enabled the Company to enter
the aviation services market as an established competitor with
an existing customer base and corporate infrastructure. The
acquisition has been accounted for under the purchase method of
accounting. The results of operations of MANA are included in
the accompanying consolidated financial statements since
December 22, 2004. The acquisition of MANA resulted in the
Company assuming the existing income tax basis of the
predecessor. In accordance with FASB Statement No. 141, a
deferred tax liability was recorded to reflect the increase in
the financial accounting bases of the assets acquired over the
carryover income tax basis.

The initial allocation of the purchase price, including
transaction costs, was as follows (in thousands):

|                                                         |  |   |        | 
|-------------------------------------------------------- |  | - | ------ | 
|Current assets                                           |  | $ | 10,138 | 
|Property, equipment, land and
    leasehold improvements |  |   | 20,412 | 
|Intangible assets:                                       |  |   |        | 
|Airport contract rights                                  |  |   | 49,654 | 
|Goodwill                                                 |  |   | 10,200 | 
|Other                                                    |  |   | 1,377  | 
|                                                         |  |   |       
|Total assets acquired                                    |  |   | 91,781 | 
|Current liabilities                                      |  |   | 16,450 | 
|Long-term liabilities assumed                            |  |   | 36,871 | 
|Deferred income taxes                                    |  |   | 8,046  | 
|                                                         |  |   |       
|Net assets acquired                                      |  | $ | 30,414 | 
|                                                         |  |   |       







| |                    
| | -------------------
| | Acquisition of MAPC



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

of approximately $1 million to Macquarie Securities
(USA) Inc, or MSUSA, a wholly owned indirect subsidiary of
Macquarie Bank Limited, to acquire 1.4% of PCAA Parent, LLC. The
acquisition has been accounted for under the purchase method of
accounting. The results of operations of MAPC are included in
the accompanying consolidated financial statements since
December 23, 2004. The acquisition of MAPC resulted in the
Company assuming the existing income tax basis of the
predecessor. In accordance with FASB Statement No. 141, a
deferred tax liability was recorded to reflect the increase in
the financial accounting bases of the assets acquired over the
carryover income tax basis.

The initial allocation of the purchase price, including
transaction costs, was as follows (in thousands):

|                                                         |                        |   |         |        | 
|-------------------------------------------------------- | ---------------------- | - | ------- | ------ | 
|Current assets                                           |                        | $ | 4,351   |       
|Property, equipment, land and
    leasehold improvements |                        |   | 67,073  |       
|Intangible assets:                                       |                        |   |         |       
|                                                         | Customer relationships |   |         | 6,404  | 
|                                                         | Trade name             |   |         | 21,758 | 
|                                                         | Leasehold rights       |   |         | 3,528  | 
|                                                         | Non-compete agreements |   |         | 2,331  | 
|                                                         | Domain names           |   |         | 7,987  | 
|Goodwill                                                 |                        |   | 83,573  |       
|Other                                                    |                        |   | 7,528   |       
|                                                         |                        |   |        
|Total assets acquired                                    |                        |   | 204,533 |       
|Current liabilities                                      |                        |   | 35,745  |       
|Long-term liabilities assumed                            |                        |   | 131,949 |       
|Minority interests                                       |                        |   | 3,006   |       
|                                                         |                        |   |        
|Net assets acquired                                      |                        | $ | 33,833  |       
|                                                         |                        |   |        



02-17, Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination.






| |                    
| | -------------------
| | Acquisition of MDEH



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

required return on equity by the Macquarie Group for the period
from June 30, 2004 through the acquisition date.

Prior to our acquisition, on June 30, 2004, Macquarie
District Energy Inc., or MDE, a wholly owned subsidiary of MDEH,
acquired 100% of the shares in Thermal Chicago Corporation, the
holding company for the Thermal Chicago business, from Exelon
Thermal Holdings, Inc., a subsidiary of Exelon Corporation, for
$135 million plus working capital adjustments of
$2.7 million, with no assumption of debt. In addition, on
September 29, 2004, MDE acquired 100% of the shares in ETT
Nevada, Inc., the owner of a 75% interest in Northwind Aladdin
and all of Northwind Aladdins senior debt (which had an
outstanding principal balance of $19.3 million as at
June 30, 2004) from Exelon Thermal Holdings, Inc. for
$26.1 million plus working capital adjustments of
$2 million. MDE paid fees of approximately
$6.6 million to the Macquarie Group for advisory and debt
arranging services and equity underwriting facilities provided
in connection with the acquisitions. MDE also paid interest and
letter of credit fees of $887,000 to the Macquarie Group in
relation to a bridge loan facility utilized to fund a portion of
the acquisition of Thermal Chicago until permanent debt
financing was established. On September 29, 2004, MDE
borrowed $120 million through the issuance of senior
secured notes in a private placement.

Prior to MDEs issuance of senior secured notes in a
private placement, MDEH entered into an interest rate swap
transaction with the Macquarie Group with a notional principal
amount of $47.5 million to hedge against increases in
long-term interest rates. This hedge was terminated in September
2004 upon issuance of the notes. Both the execution and
termination of the swap occurred at market rates. Due to
downward movements in market interest rates, MDEH was required
to pay the Macquarie Group $2.2 million to terminate the
swap.

The acquisition has been accounted for under the purchase method
of accounting. The results of operations of MDEH are included in
the accompanying consolidated financial statements since
December 22, 2004. The acquisition of MDEH resulted in the
Company assuming the existing income tax basis of the
predecessor. In accordance with FASB Statement No. 141, a
deferred tax liability was recorded to reflect the increase in
the financial accounting bases of the assets acquired over the
carryover income tax basis.

The initial allocation of the purchase price, including
transaction costs, was as follows (in thousands):

|                                                         |                        |   |         |        | 
|-------------------------------------------------------- | ---------------------- | - | ------- | ------ | 
|Current assets                                           |                        | $ | 17,543  |       
|Property, equipment, land and
    leasehold improvements |                        |   | 151,750 |       
|Intangible assets:                                       |                        |   |         |       
|                                                         | Customer relationships |   |         | 14,490 | 
|                                                         | Leasehold rights       |   |         | 3,230  | 
|Goodwill                                                 |                        |   | 16,094  |       
|Other                                                    |                        |   | 52,966  |       
|                                                         |                        |   |        
|Total assets acquired                                    |                        |   | 256,073 |       
|Current liabilities                                      |                        |   | 4,842   |       
|Long-term liabilities assumed                            |                        |   | 122,693 |       
|Deferred income taxes                                    |                        |   | 56,029  |       
|Minority interest                                        |                        |   | 5,493   |       
|                                                         |                        |   |        
|Net assets acquired                                      |                        | $ | 67,016  |       
|                                                         |                        |   |        



132



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

assets had to be acquired or developed separately. The value of
the acquired intangible assets was determined by taking into
account risks related to the characteristics and applications of
the assets, existing and future markets and analyses of expected
future cash flows to be generated by the business. The Company
expects that goodwill recorded will not be deductible for income
tax purposes.

The Company allocated $14.5 million of the purchase price
to customer relationships in accordance with
EITF 02-17,
Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination. The Company will
amortize the amount allocated to customer relationships over a
weighted average
12.8-year period.

During 2005, the Company recorded adjustments to the initial
purchase price allocation due to changes in preliminary
estimates of the fair value of assets acquired and liabilities
assumed, consisting of a $694,000 increase in current assets, a
$46,000 decrease in property, equipment, land and leasehold
improvements, a $43,000 decrease in long-term liabilities and a
$3.2 million increase in deferred income taxes. The
adjustments were recorded as an increase of goodwill of
$2.5 million.



Acquisition of GAHOn January 14, 2005, NACH acquired all of the membership
interests in GAH, which, through its subsidiaries, operates two
FBOs in California, for $50.3 million (including
transaction costs and working capital adjustments). This
acquisition strengthened the Companys presence in the
airport services market. The acquisition was paid for in cash
through additional long-term debt borrowings of $32 million
under NACHs then existing debt facility (prior to the
refinancing discussed in Note 12), with the remainder
funded by proceeds from the IPO.

NACH paid fees to the Macquarie Group for advisory services of
$1.1 million, debt arranging services of $160,000, equity
and debt underwriting services of $913,000 provided in
connection with the acquisition and reimbursed the Macquarie
Group for nominal expenses. The advisory fees have been
capitalized and are included as part of the purchase price of
the acquisition. The debt arranging fees were deferred and
amortized over the life of the relevant debt facility, and were
expensed during 2005 due to the refinancing. The equity and debt
underwriting fees have been expensed.

The acquisition has been accounted for under the purchase method
of accounting. The results of operations of GAH are included in
the accompanying consolidated statement of operations since
January 15, 2005.

The allocation of the purchase price, including transaction
costs, was as follows (in thousands):

|                                                    |                         |   |        |        | 
|--------------------------------------------------- | ----------------------- | - | ------ | ------ | 
|Current assets                                      |                         | $ | 1,820  |       
|Property, equipment, and leasehold
    improvements |                         |   | 12,680 |       
|Intangible assets:                                  |                         |   |        |       
|                                                    | Customer relationships  |   |        | 1,100  | 
|                                                    | Airport contract rights |   |        | 18,800 | 
|                                                    | Non-compete agreements  |   |        | 1,100  | 
|Goodwill                                            |                         |   | 15,686 |       
|                                                    |                         |   |       
|Total assets acquired                               |                         |   | 51,186 |       
|Current liabilities                                 |                         |   | 882    |       
|                                                    |                         |   |       
|Net assets acquired                                 |                         | $ | 50,304 |       
|                                                    |                         |   |       

133



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Company paid more than the fair value of the underlying net
assets as a result of the expectation of its ability to earn a
higher rate of return from the acquired business than would be
expected if those net assets had to be acquired or developed
separately. The value of the acquired intangible assets was
determined by taking into account risks related to the
characteristics and applications of the assets, existing and
future markets and analyses of expected future cash flows to be
generated by the business. The airport contract rights are being
amortized on a straight-line basis over their estimated useful
lives ranging from 20 to 30 years. The Company expects that
goodwill will be deductible for income tax purposes.

The Company allocated $1.1 million of the purchase price to
customer relationships in accordance with
EITF 02-17,
Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination. The Company will
amortize the amount allocated to customer relationships over a
nine-year period.



Acquisition of EAROn August 12, 2005, Macquarie FBO Holdings LLC, a wholly
owned subsidiary of MIC Inc., acquired all of the membership
interests in EAR, a Nevada limited liability company doing
business as Las Vegas Executive Air Terminal, for
$59.8 million (including transaction costs and working
capital adjustments). This acquisition strengthened the
Companys presence in the airport services market. The
acquisition was paid for in cash, funded by proceeds from the
IPO.

Macquarie FBO Holdings LLC paid fees to the Macquarie Group for
advisory services of $1 million, plus nominal expenses, in
connection with the acquisition. The advisory fees have been
capitalized and are included as part of the purchase price of
the acquisition.

The acquisition has been accounted for under the purchase method
of accounting. The results of operations of EAR are included in
the accompanying consolidated statement of operations since
August 13, 2005.

The allocation of the purchase price, including transaction
costs, was as follows (in thousands):

|                                                    |                         |   |        |        | 
|--------------------------------------------------- | ----------------------- | - | ------ | ------ | 
|Current assets                                      |                         | $ | 2,264  |       
|Property, equipment, and leasehold
    improvements |                         |   | 17,259 |       
|Intangible assets:                                  |                         |   |        |       
|                                                    | Airport contract rights |   |        | 38,286 | 
|Goodwill                                            |                         |   | 3,905  |       
|                                                    |                         |   |       
|Total assets acquired                               |                         |   | 61,714 |       
|Current liabilities                                 |                         |   | 1,934  |       
|                                                    |                         |   |       
|Net assets acquired                                 |                         | $ | 59,780 |       
|                                                    |                         |   |       





| |                                                    
| | ---------------------------------------------------
| | Acquisition of SunPark and Other Parking Facilities



134



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##### Table of Contents

MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The total cash purchase price for SunPark was $66.9 million
(including transaction costs and working capital adjustments).

The acquisition has been accounted for under the purchase method
of accounting. The results of operations of SunPark are included
in the accompanying consolidated statement of operations since
October 4, 2005.

The allocation of the purchase price, including transaction
costs, was as follows (in thousands):

|                                                    |                        |   |        |       | 
|--------------------------------------------------- | ---------------------- | - | ------ | ----- | 
|Current assets                                      |                        | $ | 93     |      
|Property, equipment, and leasehold
    improvements |                        |   | 18,859 |      
|Intangible assets:                                  |                        |   |        |      
|                                                    | Customer relationships |   |        | 1,020 | 
|                                                    | Trade name             |   |        | 500   | 
|                                                    | Leasehold rights       |   |        | 1,750 | 
|                                                    | Domain names           |   |        | 320   | 
|Goodwill                                            |                        |   | 44,396 |      
|                                                    |                        |   |       
|Total assets acquired                               |                        |   | 66,938 |      
|Current liabilities                                 |                        |   | 60     |      
|                                                    |                        |   |       
|Net assets acquired                                 |                        | $ | 66,878 |      
|                                                    |                        |   |       













135



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

disclosed pro forma results for the period ended
December 31, 2004 since the results are not meaningful as
we had only nine days of operations for our consolidated group.



5.
    Equity Investment in Toll Road BusinessOn December 22, 2004, our wholly owned subsidiary,
Macquarie Yorkshire LLC, or MY LLC, acquired 100% of Macquarie
Yorkshire Limited, or MYL, for $84.7 million (including
transaction costs) from Macquarie European Infrastructure plc,
an entity that is a member of the Macquarie Infrastructure
Group. MYL owns 50% of Connect
M1-A1 Holdings Ltd., or
CHL, which, in turn, owns 100% of Connect
M1-A1 Limited. Connect
M1-A1 Limited is the
holder of the Yorkshire Link concession, a highway of
approximately 19 miles located south of Wetherby, England.

The investment in CHL has been accounted for under the equity
method of accounting. In addition to the equity investment in
CHL, MYL recorded a loan from Connect
M1-A1 Limited with an
estimated fair value of $19.4 million at December 22,
2004, loans to Connect
M1-A1 Limited with an
estimated fair value of $21.8 million at December 22,
2004, cash of $300,000, and restricted cash of $1.9 million
at December 22, 2004. These balances were recorded to the
accompanying consolidated balance sheet in 2004. The loan from
Connect M1-A1 Limited,
loans to Connect M1-A1
Limited, cash and restricted cash balances at December 31,
2005 were $18.2 million, $19.9 million, $113,000 and
$Nil, respectively.

For the year ended December 31, 2005, MY LLC has recorded
an equity gain in investee of $3.7 million (net of
$3.8 million amortization expense), net interest income of
$758,000 and other income of $429,000. In addition, during the
year ended December 31, 2005, MY LLC recorded an unrealized
loss in foreign currency translation of $7.4 million. This
unrealized loss has been recorded as an adjustment to other
comprehensive income (loss). Our equity investment balance was
reduced by $5.5 million in cash distributions received
during the year ended December 31, 2005.



6.
    Investment in MCGOn December 22, 2004, our wholly owned subsidiary,
Communications Infrastructure LLC, or CI LLC, acquired
16,517,413 shares (representing approximately 4%) of the
stapled securities issued by Macquarie Infrastructure
Communications Group, or MCG, for an aggregate purchase price of
$70 million, in an
at-the-market
transaction, from Macquarie Investments Australia Pty Limited, a
member of the Macquarie Group.

MCG is a public investment vehicle managed by an affiliate of
the Macquarie Group. MCGs sole investment at
December 31, 2004 was its 100% ownership of Broadcast
Australia Pty Limited, which operates approximately 600
transmission tower sites in Australia. In January 2005, MCG
completed its purchase of a 54% interest in Arqiva, which
operates approximately 3,000 transmission towers in the United
Kingdom.

CI LLCs investment in MCG has been recorded as securities
available for sale in the accompanying consolidated balance
sheet. The fair value of the MCG investment was
$68.9 million and $71.3 million at December 31,
2005 and December 31, 2004, respectively. During the year
ended December 31, 2005, CI LLC recorded an unrealized
loss in foreign currency translation of $4.5 million,
offset in part by an unrealized gain in the investment of
$2.1 million. This net loss has been recorded as an
adjustment to other comprehensive income (loss) in 2005. During
the period December 22, 2004 (our acquisition date) through
December 31, 2004, CI LLC recorded an unrealized gain in
foreign currency translation of $1.5 million, offset in
part by an unrealized loss in the investment of $237,000. This
net gain was recorded as an adjustment to other comprehensive
income (loss) in 2004.

136



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

For the year ended December 31, 2005 and the period
December 22, 2004 (our acquisition date) through
December 31, 2004, CI LLC recognized AUD $5.6 million
(USD $4.2 million) and AUD $2.2 million (USD
$1.7 million), respectively, in dividend income from its
investment in MCG.



7.
    Investment in SEWOn December 22, 2004, our wholly owned subsidiary, South
East Water LLC, or SEW LLC, subscribed for 17.5% of the ordinary
shares and preferred equity certificates, or PECs, of Macquarie
Luxembourg Water SarL, or Macquarie Luxembourg, for
approximately $39.6 million from Macquarie Luxembourg.
Macquarie Luxembourg used the proceeds of the subscription to
acquire 9,712,500 shares in Macquarie Water (U.K.) Limited,
or Macquarie Water. Macquarie Water is the indirect holding
company for South East Water, or SEW.

SEW is a regulated utility located in southeastern England that
is the sole provider of water to approximately 600,000
households and industrial customers. This investment has been
recorded as a noncurrent investment to the accompanying
consolidated balance sheet and is accounted for under the cost
method of accounting. During the year ended December 31,
2005, and the period December 22, 2004 (our acquisition
date) through December 31, 2004, SEW LLC recorded an
unrealized loss in foreign currency translation of
$4.1 million and $215,000, respectively, on this investment
which was recorded as an adjustment to other comprehensive
income (loss).

For the year ended December 31, 2005, SEW LLC recognized
£4.6 million (USD $8.2 million) of dividend
income from its investment in SEW. SEW LLC also recognized
$390,000 in other income during the year ended December 31,
2005. No dividends were recognized by SEW LLC in 2004.



8.
    Direct Financing Lease TransactionsThe Company has entered into energy service agreements
containing provisions to lease equipment to customers. Under
these agreements, title to the leased equipment will transfer to
the customer at the end of the lease terms, which range from 5
to 25 years. The lease agreements are accounted for as
direct financing leases. The components of the Companys
consolidated net investments in direct financing leases at
December 31, 2005 and December 31, 2004 are as follows
(in thousands):

|                                              |  |              |         |   |              |   |         |  
|--------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | -
|                                              |  | December 31, |         |   | December 31, |  
|                                              |  | 2005         |         |   | 2004         |  
|                                              |  |              |         |   |              |  
|Minimum lease payments receivable             |  | $            | 90,879  |   |              | $ | 98,039  |  
|Less: Unearned financing lease
    income     |  |              | (44,851 | ) |              |   | (50,333 | )
|                                              |  |              |         |   |              |  
|Net investment in direct financing
    leases |  | $            | 46,028  |   |              | $ | 47,706  |  
|Equipment leases:                             |  |              |         |   |              |   |         |  
|Current portion                               |  | $            | 2,482   |   |              | $ | 2,311   |  
|Long-term portion                             |  |              | 43,546  |   |              |   | 45,395  |  
|                                              |  |              |         |   |              |  
|                                              |  | $            | 46,028  |   |              | $ | 47,706  |  
|                                              |  |              |         |   |              |  

137



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Unearned financing lease income is recognized over the terms of
the leases. Minimum lease payments to be received by the Company
total approximately $90.9 million as follows (in thousands):

|           |  |   |        | 
|---------- |  | - | ------ | 
|2006       |  | $ | 6,933  | 
|2007       |  |   | 6,904  | 
|2008       |  |   | 6,887  | 
|2009       |  |   | 6,881  | 
|2010       |  |   | 6,874  | 
|Thereafter |  |   | 56,400 | 
|           |  |   |       
|Total      |  | $ | 90,879 | 
|           |  |   |       



|   |                                                     
|-- | ----------------------------------------------------
|9. | Property, Equipment, Land and Leasehold Improvements



|                                                              |  |              |         |   |              |   |         |  
|------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | -
|                                                              |  | December 31, |         |   | December 31, |  
|                                                              |  | 2005         |         |   | 2004         |  
|                                                              |  |              |         |   |              |  
|Land                                                          |  | $            | 62,520  |   |              | $ | 47,017  |  
|Easements                                                     |  |              | 5,624   |   |              |   | 5,624   |  
|Buildings                                                     |  |              | 32,866  |   |              |   | 30,337  |  
|Leasehold and land improvements                               |  |              | 108,726 |   |              |   | 61,187  |  
|Machinery and equipment                                       |  |              | 132,196 |   |              |   | 125,679 |  
|Furniture and fixtures                                        |  |              | 1,920   |   |              |   | 1,247   |  
|Construction in progress                                      |  |              | 3,486   |   |              |   | 12,178  |  
|Property held for future use                                  |  |              | 1,196   |   |              |   | 1,317   |  
|Other                                                         |  |              | 764     |   |              |   | 528     |  
|                                                              |  |              |         |   |              |  
|                                                              |  |              | 349,298 |   |              |   | 285,114 |  
|Less: Accumulated depreciation                                |  |              | (14,179 | ) |              |   | (370    | )
|                                                              |  |              |         |   |              |  
|Property, equipment, land and
    leasehold improvements, net |  | $            | 335,119 |   |              | $ | 284,744 |  
|                                                              |  |              |         |   |              |  



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



10.
    Intangible AssetsIntangible assets at December 31, 2005 and
December 31, 2004 consist of the following (in thousands):

|                               |  |                  |            |     |              |   |         |              |  |   |         |  
|------------------------------ |  | ---------------- | ---------- | --- | ------------ | - | ------- | ------------ |  | - | ------- | -
|                               |  | Weighted Average |            |     | December 31, |   |         | December 31, | 
|                               |  | Life (Years)     |            |     | 2005         |   |         | 2004         | 
|                               |  |                  |            |     |              |   |         |              | 
|Contractual arrangements       |  |                  | 32.0       |     |              | $ | 237,572 |              |  | $ | 180,491 |  
|Non-compete agreements         |  |                  | 2.8        |     |              |   | 4,835   |              |  |   | 6,066   |  
|Customer relationships         |  |                  | 9.8        |     |              |   | 26,640  |              |  |   | 24,490  |  
|Leasehold rights               |  |                  | 13.3       |     |              |   | 8,259   |              |  |   | 6,758   |  
|Trade names                    |  |                  | Indefinite | (1) |              |   | 26,175  |              |  |   | 28,559  |  
|Domain names                   |  |                  | Indefinite | (1) |              |   | 8,307   |              |  |   | 7,987   |  
|Technology                     |  |                  | 5.0        |     |              |   | 460     |              |  |   | 460     |  
|                               |  |                  |            |     |              |   |         |              | 
|                               |  |                  |            |     |              |   | 312,248 |              |  |   | 254,811 |  
|Less: Accumulated amortization |  |                  |            |     |              |   | (12,761 | )            |  |   | (281    | )
|                               |  |                  |            |     |              |   |         |              | 
|Intangible assets, net         |  |                  |            |     |              | $ | 299,487 |              |  | $ | 254,530 |  
|                               |  |                  |            |     |              |   |         |              | 






|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(1) | Trade names of $500,000 and domain names of $320,000 are being
    amortized over a period of 1.5 years and 4 years,
    respectively.







|    |                 
|--- | ----------------
|11. | Accrued Expenses



|                                |  |              |        |  |              |   |        | 
|------------------------------- |  | ------------ | ------ |  | ------------ | - | ------ | 
|                                |  | December 31, |        |  | December 31, |  
|                                |  | 2005         |        |  | 2004         |  
|                                |  |              |        |  |              |  
|Payroll and related liabilities |  | $            | 3,794  |  |              | $ | 3,638  | 
|Interest                        |  |              | 1,082  |  |              |   | 1,159  | 
|Insurance                       |  |              | 1,909  |  |              |   | 1,171  | 
|Real estate taxes               |  |              | 2,484  |  |              |   | 2,215  | 
|Other                           |  |              | 4,725  |  |              |   | 3,797  | 
|                                |  |              |        |  |              |  
|                                |  | $            | 13,994 |  |              | $ | 11,980 | 
|                                |  |              |        |  |              |  



|    |               
|--- | --------------
|12. | Long-term Debt



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

At December 31, 2005 and December 31, 2004, our
consolidated long-term debt consists of the following (in
thousands):

|                      |  |              |         |  |              |   |         |    
|--------------------- |  | ------------ | ------- |  | ------------ | - | ------- | ---
|                      |  | December 31, |         |  | December 31, |  
|                      |  | 2005         |         |  | 2004         |  
|                      |  |              |         |  |              |  
|MDE senior notes      |  | $            | 120,000 |  |              | $ | 120,000 | (a)
|NACH class A notes    |  |              |        |  |              |   | 23,500  | (b)
|NACH class B notes    |  |              |        |  |              |   | 105,000 | (b)
|MANA senior debt      |  |              |        |  |              |   | 36,000  | (b)
|Airport services debt |  |              | 300,000 |  |              |   |        | (b)
|MAPC loan payable     |  |              | 125,448 |  |              |   | 126,000 | (c)
|MAPC loan payable     |  |              | 4,574   |  |              |   | 4,668   | (c)
|PCAA SP loan payable  |  |              | 58,740  |  |              |   |        | (c)
|Priority loan payable |  |              | 2,232   |  |              |   |        | (c)
|                      |  |              |         |  |              |  
|                      |  |              | 610,994 |  |              |   | 415,168 |    
|Less current portion  |  |              | 146     |  |              |   | 94      |    
|                      |  |              |         |  |              |  
|Long-term portion     |  | $            | 610,848 |  |              | $ | 415,074 |    
|                      |  |              |         |  |              |  



|           |  |   |         | 
|---------- |  | - | ------- | 
|2006       |  | $ | 146     | 
|2007(1)    |  |   | 129,202 | 
|2008       |  |   | 64,902  | 
|2009       |  |   | 10,844  | 
|2010       |  |   | 304,800 | 
|Thereafter |  |   | 101,100 | 
|           |  |   |        
|           |  | $ | 610,994 | 
|           |  |   |        






|    |                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes $126 million of MAPC loan facility which is due to
    be repaid in October 2006. MAPC intends to exercise a one-year
    renewal option under the loan. The conditions which must be met
    in order for MAPC to exercise this renewal option are discussed
    below in paragraph (c).



| |         
| | --------
| | (a) MDEH







| |                                               
| | ----------------------------------------------
| | 1) $100 million, with fixed interest at 6.82%.
|
| | 2) $20 million, with fixed interest at 6.40%. 



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

2023, with principal repayments of the MDE Senior Notes starting
in the quarter ending December 31, 2007.

In addition, MDE entered into a $20 million three-year
revolving credit facility with a financial institution that may
be used to fund capital expenditures, working capital or to
provide letters of credit. As of December 31, 2005, MDE has
issued three separate letters of credit totaling
$7.2 million against this facility in the favor of the City
of Chicago, and has drawn $850,000 for ongoing working capital.

Debt arranging fees of $600,000 were paid to MSUSA, a related
party, by MDE prior to our acquisition of MDEH, and are included
in deferred financing costs on the accompanying consolidated
balance sheet. These costs are amortized over the life of the
long-term debt.



(b) Airport Services

NACHThe acquisition of EAS by NACH on July 29, 2004 was
partially financed with a $130 million bridge loan facility
provided by the Macquarie Group. On October 21, 2004, NACH
refinanced its bridge loan facility by borrowing
$130 million under a new credit facility, or Term Facility,
originally set to mature on October 21, 2011.

The Term Facility originally consisted of two tranches:



1) Tranche A  $25 million at LIBOR
    plus 2.25%.2) Tranche B  $105 million at LIBOR
    plus 3.00%.Principal repayments with respect to Tranche A were to
commence in 2007. However, an early repayment of
$1.5 million was made on December 31, 2004.
Tranche B was payable at maturity. A syndicate of three
banks, including Macquarie Bank Limited, granted the Term
Facility. Under the terms of the Term Facility, 100% of
available cash flows of NACH and its subsidiaries had to be
applied to the repayment of the Term Facility during the last
two years of the debt. The Term Facility was secured by all of
the assets and stock of NACH and its subsidiaries and was
non-recourse to the Company and its other subsidiaries. NACH
also provided a six-month debt service reserve of
$3.9 million as security. This reserve was included in
restricted cash on our accompanying consolidated balance sheet
at December 31, 2004.

In addition to the Term Facility, NACH had entered into a
$3 million, two-year revolving credit facility with a bank
that could be used to fund working capital requirements or to
provide letters of credit. This facility ranked equally with the
Term Facility. Prior to the refinancing discussed below,
$700,000 of this facility had been utilized to provide letters
of credit pursuant to certain FBO leases.

Macquarie Bank Limited provided $52 million of the original
Term Facility, of which $600,000 was repaid early on
December 31, 2004. Financing costs of $520,000 were paid by
NACH in October 2004 to Macquarie Bank Limited. In addition,
debt arranging fees of $650,000 were paid to MSUSA, a member of
the Macquarie Group, prior to our acquisition of NACH. These
financing costs and debt arranging fees are included in deferred
financing costs on the accompanying consolidated balance sheet
at December 31, 2004. The deferred financing costs were
being amortized over the life of the long-term debt. Due to the
refinancing in December 2005, the unamortized balance of these
fees paid to related parties of $998,000 was expensed within
interest expense in the accompanying consolidated statement of
operations.

On January 14, 2005, NACH borrowed an additional
$32 million from its original Term Facility to partly fund
its acquisition of GAH. Financing costs of $244,000 were paid by
NACH in January 2005 to Macquarie Bank Limited in relation to
these additional borrowings. Debt arranging fees of $160,000
were also paid in January 2005 to MSUSA. These costs were
included in deferred financing costs prior to the refinancing,
and were being amortized over the life of the long-term debt.
Due to the refinancing in

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

December 2005, the unamortized balance of these fees paid to
related parties of $352,000 was expensed within interest expense
in the accompanying consolidated statement of operations.

On June 30, 2005, Macquarie Bank Limited sold down
$26 million of their loan to NACH to other banks and, as a
result, Macquarie Bank Limiteds term loan to NACH
(immediately prior to the refinancing) was $25.4 million.

Interest paid by NACH on Macquarie Bank Limiteds portion
of the term loan for the period January 1, 2005 through to
December 13, 2005 (prior to the refinancing) was
$2.2 million and has been included in interest expense in
the accompanying consolidated statement of operations for the
year ended December 31, 2005.



MANAThe acquisition of MANA by the Company included the assumption
of a $36 million senior debt facility that was issued to a
European bank. The debt accrued interest at either the
Eurodollar rate or at the Companys option, the 30, 60
or 180-day LIBOR plus a
margin of 1.875%, increasing to a margin of 2.25% in November
2005. Interest-only payments were to be made quarterly with the
principal balance due in full in November 2007. Borrowings under
the debt facility were secured by all assets as well as pledged
stock of MANA and its subsidiaries. A debt service reserve of
$1.3 million was included in restricted cash on our
accompanying consolidated balance sheet at December 31,
2004. This debt was repaid on December 12, 2005 as part of
the airport services refinancing.



Airport Services RefinancingOn December 12, 2005, NACH entered into a loan agreement
providing for $300 million of term loan borrowing and a
$5 million revolving credit facility. On December 14,
2005, NACH drew down $300 million in term loans and repaid
the existing NACH and MANA term loans of $198.6 million
(including accrued interest and fees), increased the new debt
service reserve by $3.4 million to $9.3 million and
paid $6.4 million in fees in expenses. The remaining amount
of the draw down was distributed to MIC Inc. NACH also utilized
$2 million of the revolving credit facility to issue
letters of credit.

The obligations under the credit agreements are secured by the
assets of NACH, as well as the equity interests of NACH and its
subsidiaries. The term of the loan is 5 years, and the
interest rate is LIBOR plus 1.75% for years 1 through 3 and
LIBOR plus 2% for years 4 and 5.

To hedge the interest commitments under the new term loan,
NACHs existing interest rate swaps were novated and, in
addition, new swaps were entered into, fixing 100% of the term
loan at the following average rates (not including interest
margins of 1.75% and 2% as discussed above):

|                   |  |          |                    |         |      |  |       | 
|------------------ |  | -------- | ------------------ | ------- | ---- |  | ----- | 
|                   |  |          |                    | Average |     
|Start Date         |  | End Date |                    |         | Rate | 
|                   |  |          |                    |         |      | 
|December 14, 2005  |  |          | September 28, 2007 |         |      |  | 4.27% | 
|September 28, 2007 |  |          | November 7, 2007   |         |      |  | 4.73% | 
|November 7, 2007   |  |          | October 21, 2009   |         |      |  | 4.85% | 
|October 21, 2009   |  |          | December 14, 2010  |         |      |  | 4.98% | 



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

December 14, 2005 through December 31, 2005, which has
been included in interest expense in the accompanying
consolidated statement of operations.

MSUSA acted as financial advisor in connection with this
transaction for which it received $2 million in advisory
fees plus reimbursement for nominal expenses. These fees are
included in deferred financing costs in the accompanying
consolidated balance sheet at December 31, 2005, and are
being amortized over the life of the long-term debt.

Interest paid by NACH on Macquarie Bank Limiteds portion
of the new term loan for the period December 14, 2005
through to December 31, 2005 was $162,000 and has been
included in interest expense in the accompanying consolidated
statement of operations for the year ended December 31,
2005.



(c)     MAPCOn October 1, 2003, MAPC, through its controlled
subsidiaries, or PCA Group, entered into a $126 million
credit facility (the Facility) with GMAC Commercial
Mortgage Corporation. The proceeds of the Facility were used to
repay previously outstanding long-term debt and fund the Avistar
acquisition. The Facility is secured by all the assets of the
PCA Group. In addition, guarantees of $1 million have been
made by two members of MAPC. The Facility matures on
October 1, 2006, but may be extended at the option of the
Company for up to two additional one-year periods. MAPC intends
to exercise this renewal option. To extend the Facility, the
following conditions must be fulfilled:




    written notice to be provided to the lender not more than
    90 days and not less than 30 days before maturity, of
    the intent to extend;
    achievement and maintenance of a debt service coverage constant
    ratio of 1.10:1.00 and 1.15:1.00 prior to the commencement of
    the first and second extension periods, respectively;
    interest rate to be applied of not less than 4.66% in the first
    extension period and 4.81% in the second extension period;
    interest rate cap to be in place such that the minimum debt
    service coverage ratio of 1.30:1.00 is maintained; and
    MAPC to reimburse lender for all
    out-of-pocket expenses.Management expects that the conditions for extension of the
Facility are likely to be met.

MAPC is required to maintain reserves in relation to the
Facility equal to $5.7 million at December 31, 2005,
which is included in restricted cash in the accompanying
consolidated balance sheet. The Facility bears interest at the
floating base rate (defined as the one-month LIBOR) plus 3.44%
and is payable monthly in arrears. The margin steps up to 3.54%
and 3.69% on October 1, 2006 and 2007, respectively, if the
facility is extended.

The company entered into an interest rate cap agreement which
effectively caps the LIBOR portion on the Facility at 4.5% for
any amounts borrowed under the Facility.

In addition, MAPC entered into a separate $4.8 million
credit facility (the OHare Facility) with GMAC
Commercial Mortgage Corporation for the purchase of certain
property in Chicago, Illinois. The OHare Facility is
secured by all the assets of PCAA Chicago, LLC. The OHare
Facility matures on January 1, 2009, bears interest at 5.3%
and requires a monthly payment of principal and interest in the
amount of $29,000.

The Companys off-airport parking business acquired a
facility in Philadelphia on July 1, 2005 and assumed the
pre-existing debt facility. The $2.2 million credit
facility, or the Priority Facility, with GMAC

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Commercial Mortgage Corporation is secured by all the assets of
RCL Properties, LLC. Maturing on May 1, 2009, the Priority
Facility bears interest at 5.46% and requires a monthly payment
of principal and interest in the amount of $14,000.

The Companys off-airport parking business established a
non-recourse debt facility on October 3, 2005 under a
credit agreement between GMAC Commercial Mortgage Corporation
and a subsidiary within the Companys off-airport parking
business to fund the acquisition of SunPark and previously
leased land in Maricopa (the SunPark debt facility).
The SunPark debt facility provided funding in the form of a term
loan with a three-year term and two additional one-year
extensions at the borrowers option subject to meeting
certain covenants. Amounts outstanding under the facility bear
interest at the rate of 2.75% over LIBOR per annum during the
first three years, increasing by 0.20% per annum in
connection with each one-year extension. The first tranche of
$48.8 million was drawn to fund the SunPark acquisition on
October 3, 2005. A second tranche of $2.8 million was
drawn on October 26, 2005 to fund the acquisition of the
previously leased property at the Maricopa facility. The final
tranche of $7.2 million was drawn down in December 2005
subsequent to execution of a long term lease contract for the
property at LaGuardia Airport. The $7.2 million was used to
reduce the capital contribution required to fund the SunPark
acquisition. The SunPark debt facility is secured by all of the
real property and other assets of SunPark, the Maricopa facility
and the LaGuardia facility.

The Company entered into an interest rate cap agreement which
effectively caps the LIBOR portion of the interest rate on the
SunPark debt facility at 4.48% for any amounts borrowed under
the facility.

The credit facility contains various provisions customary for
credit facilities of this size and type, including
representations, warranties and covenants with respect to the
business. In particular, the borrower is required to maintain a
net worth of $20 million and liquidity of $1 million.
In addition, the borrower is required to maintain various
reserves totaling $522,000, which were fully funded at closing.
The agreement provides for a cash
lock-up in an event of
default.

MSUSA acted as financial advisor to the Company in connection
with the SunPark acquisition and debt financing for which it
received a fee of $1 million plus nominal expenses.



(d) MIC Inc. Revolving Credit FacilityOn November 11, 2005, MIC Inc. entered into a
$250 million revolving credit facility with four financial
institutions, including Macquarie Bank Limited. MIC Inc.s
obligations under the revolving facility are guaranteed by the
Company and secured by a pledge of the equity of all current and
future direct subsidiaries of MIC Inc. and the Company. No
amounts have been borrowed under this facility to date. The
terms and conditions for the revolving facility include events
of default and representations and warranties that are generally
customary for a facility of this type. In addition, the
revolving facility includes an event of default should the
Manager or another affiliate of Macquarie Bank Limited cease to
act as manager. The Company intends to use the revolving
facility to fund acquisitions, capital expenditures and, to a
limited extent, working capital.

The scheduled termination date of the revolving facility is
March 31, 2008. The interest rate applicable on amounts
drawn under the base rate revolving facility will be the base
rate plus 0.25%, the base rate comprising the higher of the
Citibank New York base rate as publicly announced or 0.5% plus
the Federal Funds Rate, or FFR. The FFR is the weighted average
of the rates on the overnight Federal funds transactions with
members of the Federal Reserve System as published by the
Federal Reserve Bank of New York. If no such rate is published
for any business day, the rate for that day is determined by the
average of the quotations for such day on such transactions
received by the revolving facility administrative agent from
three Federal funds brokers of recognized standing. The interest
rate applicable on amounts drawn under the Eurodollar revolving
facility will be LIBOR plus 1.25%.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Commitment fees of 0.25% of the undrawn portion of the facility
are payable quarterly in arrears.

MSUSA provided advisory services in relation to the
establishment of the revolving facility and received fees of
$625,000. Macquarie Bank Limited has provided $100 million
of the revolving facility on the same terms as the
non-affiliated participants, for which it received $250,000 in
establishment fees. The advisory fees and establishment fees
have been included in deferred financing costs in the
accompanying consolidated balance sheet at December 31,
2005, and are being amortized over the life of the facility.
Each of the remaining three financial institutions provided
$50 million of the facility.



(e) MIC Inc. Term Loan FacilityOn November 21, 2005, MIC Inc. entered into two loan
agreements dated as of November 17, 2005, each providing
for $80 million of term loan borrowing, $160 million
in aggregate, and a $20 million revolving credit facility.
MIC Inc. intends to use the $160 million in term loans to
partially fund the acquisition of The Gas Company, LLC, or TGC.
The agreements contemplate borrowings of the term loans by HGC
Holdings, LLC, or HGC, the parent company of TGC, of
$60 million and by TGC of $60 million and any amounts
under the revolver facility, concurrently with MIC Inc.s
acquisition of those entities. MIC Inc. intends to utilize the
$20 million revolving credit facility to finance TGCs
working capital and to finance or refinance TGCs capital
expenditures for regulated assets.

Upon borrowing, the term loans and revolver will be obligations
of the operating subsidiaries containing the business of TGC and
will be non-recourse to the Company and its other businesses.
The obligations under the credit agreements will be secured by
security interests in the assets of TGC, as well as the equity
interests of TGC and HGC. The terms and conditions for the
facilities includes events of default and representations and
warranties that are generally customary for facilities of this
type.

The maturity of the $60 million HGC term loan is
7 years from the date of the first drawdown on that loan.
The maturity of the $60 million TGC term loan and the
$20 million revolver facility is 7 years from the date
of the first drawdown on the TGC term loan. Interest will be
payable on the HGC term loan at LIBOR plus 0.6% for years 1
through 5 and LIBOR plus 0.7% for years 6 through 7. Interest
will be payable on the TGC term loan and amounts drawn under the
revolver facility at LIBOR plus 0.4% for years 1 through 5 and
LIBOR plus 0.5% for years 6 through 7.

Commitment fees of 35% of the relevant interest margin
(consisting of 0.6%, 0.7%, 0.4% and 0.5%, as discussed above)
are payable on the undrawn term loan commitments under the
facilities, commencing on the date of the first drawdown of the
term loans and quarterly in arrears thereafter for the undrawn
portion of the revolving facility.

On August 18, 2005, MIC Inc. entered into two interest rate
swaps with Macquarie Bank Limited and two interest rates swaps
with another bank, to manage its future interest rate exposure
on intended drawdowns under the MIC Inc. term loan facility for
a notional value of $160 million. The effective date of the
swaps is August 31, 2006 and no payments or receipts have
arisen in relation to these swaps during the year ended
December 31, 2005.

All of the term debt described in paragraphs (a) to
(e) above contain customary financial covenants, including
maintaining or exceeding certain financial ratios, and
limitations on capital expenditures and additional debt.



13.
    Derivative Instruments and Hedging ActivitiesThe Company has interest-rate related and foreign-exchange
related derivative instruments to manage its interest rate
exposure on its debt instruments, and to manage its exchange
rate exposure on its future cash flows from its non-U.S.
investments. In addition, the Company used foreign exchange
option con-

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

tracts to acquire its stake in MYL and its investment in SEW.
The Company does not enter into derivative instruments for any
purpose other than interest rate hedging or cash-flow hedging
purposes. That is, the Company does not speculate using
derivative instruments.

By using derivative financial instruments to hedge exposures to
changes in interest rates and foreign exchange rates, the
Company 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 the
Company, which creates credit risk for the Company. When the
fair value of a derivative contract is negative, the Company
owes the counterparty and, therefore, it does not possess credit
risk. The Company minimizes the credit risk in 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 or
currency exchange rates. The market risk associated with
interest rate is managed by establishing and monitoring
parameters that limit the types and degree of market risk that
may be undertaken.



Anticipated future cash flowsThe Company entered into foreign exchange forward contracts for
its anticipated cash flows in order to hedge the market risk
associated with fluctuations in foreign exchange rates. The
forward contracts limit the unfavorable effect that foreign
exchange rate changes will have on cash flows. All of the
Companys forward contracts relating to anticipated future
cash flows have been designated as cash flow hedges. The maximum
term over which the Company is currently hedging exposures to
the variability of foreign exchange rates is 24 months.

Changes in the fair value of forward contracts designated as
cash flow hedges that effectively offset the variability of cash
flows associated with anticipated distributions are reported in
other comprehensive income. These amounts subsequently are
reclassified into other income or expense when the contract is
expired or executed. During the year ended December 31,
2005, the Company recognized a comprehensive gain of
$1.8 million, relating to foreign exchange forward
contracts for anticipated cash flows. These amounts have not
been recorded net of income taxes since the underlying income of
the investments are not subject to tax. During the year ended
December 31, 2005, the Company recorded approximately
$979,000 in recognized gains on foreign exchange. This amount is
included in the accompanying consolidated statement of
operations.



Debt ObligationsThe Company has in place variable-rate debt. The debt
obligations expose the Company to variability in interest
payments due to changes in interest rates. Management believes
that it is prudent to limit the variability of a portion of its
interest payments. To meet this objective, management enters
into interest rate swap agreements to manage fluctuations in
cash flows resulting from interest rate risk. 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,
the Company 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.

Changes in the fair value of interest rate swaps designated as
hedging instruments that effectively offset the variability of
cash flows associated with variable-rate, long-term debt
obligations are reported in other comprehensive income. These
amounts subsequently are reclassified into interest expense as a
yield adjustment of the hedged interest payments in the same
period in which the related interest affects earnings. In
accordance with FASB Statement No. 133, the Company
concluded that all of its interest rate swaps qualify as cash
flow hedges. The Company anticipates the hedges to be effective
on an ongoing

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

basis. During the year ended December 31, 2005, the Company
recognized comprehensive income, net of income taxes, of
$1.1 million relating to the fair value of interest rate
swaps of future interest debt payments. During 2005, the Company
terminated certain swap contracts upon the refinancing of NACH
debt and reclassified $2.5 million, net of taxes, from
accumulated other comprehensive income to interest expense
(reduction). The term over which the Company is currently
hedging exposures relating to debt is through August 2013.



14.
    Notes Payable and Capital LeasesThe Company has existing notes payable with various finance
companies for the purchase of equipment. The notes are secured
by the equipment and require monthly payments of principal and
interest. The Company also leases certain equipment under
capital leases. The following is a summary of the maturities of
the notes payable and the future minimum lease payments under
capital leases, together with the present value of the minimum
lease payments, as of December 31, 2005 (in thousands):

|                                    |  |         |       |   |         |   |        |  
|----------------------------------- |  | ------- | ----- | - | ------- | - | ------ | -
|                                    |  | Notes   |       |   | Capital |  
|                                    |  | Payable |       |   | Leases  |  
|                                    |  |         |       |   |         |  
|2006                                |  | $       | 891   |   |         | $ | 2,030  |  
|2007                                |  |         | 278   |   |         |   | 1,457  |  
|2008                                |  |         | 30    |   |         |   | 748    |  
|2009                                |  |         | 30    |   |         |   | 296    |  
|2010                                |  |         | 30    |   |         |   | 217    |  
|Thereafter                          |  |         | 15    |   |         |   |       |  
|                                    |  |         |       |   |         |  
|Total minimum payments              |  | $       | 1,274 |   |         | $ | 4,748  |  
|Less: Amounts representing interest |  |         |      |   |         |   | (511   | )
|                                    |  |         |       |   |         |  
|Present value of minimum payments   |  |         | 1,274 |   |         |   | 4,237  |  
|Less: Current portion               |  |         | (891  | ) |         |   | (1,756 | )
|                                    |  |         |       |   |         |  
|Long-term portion                   |  | $       | 383   |   |         | $ | 2,481  |  
|                                    |  |         |       |   |         |  





|    |                     
|--- | --------------------
|15. | Stockholders Equity





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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

On the date of each annual meeting, each director will receive a
grant of stock units equal to $150,000 divided by the fair
market value of one share of trust stock as of the date of each
annual meeting of the trusts stockholders. The stock units
vest, assuming continued service by the director, on the date
immediately preceding the next annual meeting of the
Companys stockholders.

Upon the completion of our offering on December 21, 2004,
each independent director was granted 2,548 stock units, for a
total of 7,644 stock units. These stock units, which equal
$150,000 per director divided by the initial public
offering price of $25.00 per share and on a pro rata basis
relating to the period from the closing of the offering through
the anticipated date of our first annual meeting of
stockholders, vests on the day immediately preceding our annual
meeting of the Companys stockholders. The compensation
expense related to this grant for 2004 (in accordance with
Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employers, as interpreted) did not have
a significant effect on operations.

On May 24, 2005, the 7,644 outstanding restricted stock
units became fully vested and were issued as trust stock to the
independent directors. On the same date, each independent
director was granted 5,291 stock units, for a total of 15,873
stock units. These stock units, which equal $150,000 per
director divided by the average price for the ten business days
preceding vesting of the 7,644 stock, being $28.35 per
share, vests on the day immediately preceding our 2006 annual
meeting of the Companys stockholders.



16.
    Reportable SegmentsThe Companys operations are classified into three
reportable business segments: airport services business, airport
parking business, and district energy business. All of the
business segments are managed separately. Prior to the September
2005 quarter, the airport services business consisted of two
reportable segments, Atlantic and AvPorts. These businesses are
currently being integrated and managed together. Therefore, they
are now combined into a single reportable segment. Results for
prior periods have been restated to reflect the new combined
segment.

The airport services business reportable segment principally
derives income from fuel sales and from airport services.
Airport services revenue includes fuel, de-icing, aircraft
parking, airport management and other aviation services. All of
the revenue of the airport services business is derived in the
United States. The airport services business operated 18 FBOs
and one heliport and managed six airports under management
contracts as of December 31, 2005.

The revenue from the airport parking business reportable segment
is included in service revenue and primarily consists of
off-airport parking and ground transportation to and from the
parking facilities and the airport terminals. At
December 31, 2005, the airport parking business operated 31
off-airport parking facilities located in California, Arizona,
Colorado, Texas, Georgia, Tennessee, Missouri, Pennsylvania,
Connecticut, New York, New Jersey, Ohio, Oklahoma and Illinois.

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
Companys various customers. The Company provides such
services to buildings throughout the greater Chicago area and to
the Aladdin Resort and Casino and shopping mall located in Las
Vegas, Nevada.

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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Selected information by reportable segment is presented in the
following tables (in thousands):

Revenue from external customers for the Companys segments
for the year ended December 31, 2005 are as follows:

|                               |  |          |         |  |         |   |        |          |  |   |        |  |  |   |         | 
|------------------------------ |  | -------- | ------- |  | ------- | - | ------ | -------- |  | - | ------ |  |  | - | ------- | 
|                               |  | Airport  |         |  | Airport |   |        | District |  |   |       
|                               |  | Services |         |  | Parking |   |        | Energy   |  |   | Total  | 
|                               |  |          |         |  |         |   |        |          |  |   |        | 
|Revenue from Product
    Sales |  |          |         |  |         |   |        |          |  |   |        |  |  |   |         | 
|Fuel sales                     |  | $        | 143,273 |  |         | $ |       |          |  | $ |       |  |  | $ | 143,273 | 
|                               |  |          |         |  |         |   |        |          |  |   |        | 
|                               |  |          | 143,273 |  |         |   |       |          |  |   |       |  |  |   | 143,273 | 
|Service Revenue                |  |          |         |  |         |   |        |          |  |   |        |  |  |   |         | 
|Other services                 |  |          | 58,213  |  |         |   |       |          |  |   | 2,855  |  |  |   | 61,068  | 
|Capacity revenue               |  |          |        |  |         |   |       |          |  |   | 16,524 |  |  |   | 16,524  | 
|Consumption revenue            |  |          |        |  |         |   |       |          |  |   | 18,719 |  |  |   | 18,719  | 
|Parking services               |  |          |        |  |         |   | 59,856 |          |  |   |       |  |  |   | 59,856  | 
|                               |  |          |         |  |         |   |        |          |  |   |        | 
|                               |  |          | 58,213  |  |         |   | 59,856 |          |  |   | 38,098 |  |  |   | 156,167 | 
|Financing and Lease
    Income |  |          |         |  |         |   |        |          |  |   |        |  |  |   |         | 
|Financing and equipment lease  |  |          |        |  |         |   |       |          |  |   | 5,303  |  |  |   | 5,303   | 
|                               |  |          |         |  |         |   |        |          |  |   |        | 
|                               |  |          |        |  |         |   |       |          |  |   | 5,303  |  |  |   | 5,303   | 
|Total Revenue                  |  | $        | 201,486 |  |         | $ | 59,856 |          |  | $ | 43,401 |  |  | $ | 304,743 | 
|                               |  |          |         |  |         |   |        |          |  |   |        | 



|                 |  |                    |         |                      |                   |   |        |                 |  |   |                    |  |  |              |         |         |              |   |           |  |  |   |       | 
|---------------- |  | ------------------ | ------- | -------------------- | ----------------- | - | ------ | --------------- |  | - | ------------------ |  |  | ------------ | ------- | ------- | ------------ | - | --------- |  |  | - | ----- | 
|                 |  | For the Year Ended |         |                      |                  
|                 |  | December 31, 2005  |         |                      | December 31, 2005 |  
|                 |  |                    |         |                      |                   |  
|                 |  |                    |         | Property, Equipment, |                   |   |       
|                 |  | Segment            |         |                      | Interest          |   |        | Depreciation/   |  |   | Land and Leasehold |  |  |              |         | Capital |             
|                 |  | Profit(1)          |         |                      | Expense           |   |        | Amortization(2) |  |   | Improvements       |  |  | Total Assets |         |         | Expenditures |  
|                 |  |                    |         |                      |                   |   |        |                 |  |   |                    |  |  |              |         |         |              |  
|Airport services |  | $                  | 109,100 |                      |                   | $ | 14,484 |                 |  | $ | 15,652             |  |  | $            | 92,906  |         |              | $ | 553,285   |  |  | $ | 4,038 | 
|Airport parking  |  |                    | 14,780  |                      |                   |   | 10,350 |                 |  |   | 6,199              |  |  |              | 94,859  |         |              |   | 288,846   |  |  |   | 1,679 | 
|District energy  |  |                    | 14,223  |                      |                   |   | 8,543  |                 |  |   | 7,062              |  |  |              | 147,354 |         |              |   | 245,405   |  |  |   | 1,026 | 
|                 |  |                    |         |                      |                   |   |        |                 |  |   |                    |  |  |              |         |         |              |  
|Total            |  | $                  | 138,103 |                      |                   | $ | 33,377 |                 |  | $ | 28,913             |  |  | $            | 335,119 |         |              | $ | 1,087,536 |  |  | $ | 6,743 | 
|                 |  |                    |         |                      |                   |   |        |                 |  |   |                    |  |  |              |         |         |              |  





| |                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Segment profit includes revenues less cost of sales.
    For the airport parking and district energy businesses,
    depreciation of $2.4 million and $5.7 million,
    respectively, are included in cost of sales.
|
| | (2) Includes depreciation of property, plant and equipment
    and amortization of intangibles. Amounts also include
    depreciation charges for the airport parking and district energy
    businesses.               

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Reconciliation of total reportable segment assets to
consolidated total assets at December 31, 2005 (in
thousands):

|                                                                                                   |                                             |   |           |        | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------- | - | --------- | ------ | 
|Total reportable segments                                                                          |                                             | $ | 1,087,536 |       
|Equity and cost investments:                                                                       |                                             |   |           |       
|                                                                                                   | Equity investment in toll road
    business |   |           | 69,358 | 
|                                                                                                   | Investment in SEW                           |   |           | 35,295 | 
|                                                                                                   | Investment in MCG                           |   |           | 68,882 | 
|Corporate  Macquarie
    Infrastructure Company LLC and Macquarie Infrastructure Company
    Inc. |                                             |   | 359,403   |       
|Less: Consolidation entries                                                                        |                                             |   | (257,176  | )     
|                                                                                                   |                                             |   |          
|Total consolidated assets                                                                          |                                             | $ | 1,363,298 |       
|                                                                                                   |                                             |   |          



|                                                                         |  |   |         |  
|------------------------------------------------------------------------ |  | - | ------- | -
|Total reportable segments                                                |  | $ | 138,103 |  
|Selling, general and administrative                                      |  |   | (82,636 | )
|Fees to manager                                                          |  |   | (9,294  | )
|Depreciation and amortization                                            |  |   | (20,822 | )
|                                                                         |  |   |        
|                                                                         |  |   | 25,351  |  
|Other expense, net                                                       |  |   | (13,567 | )
|                                                                         |  |   |        
|Total consolidated income before
    income taxes and minority interests |  | $ | 11,784  |  
|                                                                         |  |   |        



|                               |                               |          |       |       |         |   |       |          |  |   |       |     |  |   |       |       | 
|------------------------------ | ----------------------------- | -------- | ----- | ----- | ------- | - | ----- | -------- |  | - | ----- | --- |  | - | ----- | ----- | 
|                               |                               | Airport  |       |       | Airport |   |       | District |  |   |      
|                               |                               | Services |       |       | Parking |   |       | Energy   |  |   | Total |    
|                               |                               |          |       |       |         |   |       |          |  |   |       |    
|Revenue from Product
    Sales |                               |          |       |       |         |   |       |          |  |   |       |     |  |   |       |      
|                               | Fuel sales                    |          | $     | 1,681 |         |   | $     |         |  |   | $     |    |  |   | $     | 1,681 | 
|                               |                               |          |       |       |         |   |       |          |  |   |       |    
|                               |                               |          | 1,681 |       |         |   |      |          |  |   |      |     |  |   | 1,681 |      
|Service Revenue                |                               |          |       |       |         |   |       |          |  |   |       |     |  |   |       |      
|                               | Other services                |          |       | 956   |         |   |       |         |  |   |       | 11  |  |   |       | 967   | 
|                               | Capacity revenue              |          |       |      |         |   |       |         |  |   |       | 399 |  |   |       | 399   | 
|                               | Consumption revenue           |          |       |      |         |   |       |         |  |   |       | 190 |  |   |       | 190   | 
|                               | Parking service               |          |       |      |         |   |       | 1,701    |  |   |       |    |  |   |       | 1,701 | 
|                               |                               |          |       |       |         |   |       |          |  |   |       |    
|                               |                               |          | 956   |       |         |   | 1,701 |          |  |   | 600   |     |  |   | 3,257 |      
|Financing and Lease
    Income |                               |          |       |       |         |   |       |          |  |   |       |     |  |   |       |      
|                               | Financing and equipment lease |          |       |      |         |   |       |         |  |   |       | 126 |  |   |       | 126   | 
|                               |                               |          |       |       |         |   |       |          |  |   |       |    
|                               |                               |          |      |       |         |   |      |          |  |   | 126   |     |  |   | 126   |      
|Total Revenue                  |                               | $        | 2,637 |       |         | $ | 1,701 |          |  | $ | 726   |     |  | $ | 5,064 |      
|                               |                               |          |       |       |         |   |       |          |  |   |       |    

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Financial data by reportable business segments are as follows
(in thousands):

|                 |  |                                 |       |                      |                   |   |     |                 |  |   |                    |  |  |        |         |  |              |   |         |  |  |   |     | 
|---------------- |  | ------------------------------- | ----- | -------------------- | ----------------- | - | --- | --------------- |  | - | ------------------ |  |  | ------ | ------- |  | ------------ | - | ------- |  |  | - | --- | 
|                 |  | From the date of acquisition to |       |                      |                  
|                 |  | December 31, 2004               |       |                      | December 31, 2004 |  
|                 |  |                                 |       |                      |                   |  
|                 |  |                                 |       | Property, Equipment, |                   |   |    
|                 |  | Segment                         |       |                      | Interest          |   |     | Depreciation/   |  |   | Land and Leasehold |  |  | Total  |         |  | Capital      |  
|                 |  | Profit(1)                       |       |                      | Expense           |   |     | Amortization(2) |  |   | Improvements       |  |  | Assets |         |  | Expenditures |  
|                 |  |                                 |       |                      |                   |   |     |                 |  |   |                    |  |  |        |         |  |              |  
|Airport services |  | $                               | 1,621 |                      |                   | $ | 254 |                 |  | $ | 363                |  |  | $      | 66,042  |  |              | $ | 410,304 |  |  | $ | 818 | 
|Airport parking  |  |                                 | 697   |                      |                   |   | 206 |                 |  |   | 55                 |  |  |        | 67,018  |  |              |   | 205,185 |  |  |   |    | 
|District energy  |  |                                 | 201   |                      |                   |   | 207 |                 |  |   | 38                 |  |  |        | 151,684 |  |              |   | 254,013 |  |  |   | 74  | 
|                 |  |                                 |       |                      |                   |   |     |                 |  |   |                    |  |  |        |         |  |              |  
|Total            |  | $                               | 2,519 |                      |                   | $ | 667 |                 |  | $ | 456                |  |  | $      | 284,744 |  |              | $ | 869,502 |  |  | $ | 892 | 
|                 |  |                                 |       |                      |                   |   |     |                 |  |   |                    |  |  |        |         |  |              |  









|                                                                                                   |                                             |   |           |         | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------- | - | --------- | ------- | 
|Total reportable segments                                                                          |                                             | $ | 869,502   |        
|Equity and cost investments:                                                                       |                                             |   |           |        
|                                                                                                   | Equity investment in toll road
    business |   |           | 103,076 | 
|                                                                                                   | Investment in SEW                           |   |           | 39,369  | 
|                                                                                                   | Investment in MCG                           |   |           | 73,006  | 
|Corporate  Macquarie
    Infrastructure Company LLC and Macquarie Infrastructure Company
    Inc. |                                             |   | 372,006   |        
|Less: Consolidation entries                                                                        |                                             |   | (248,472  | )      
|                                                                                                   |                                             |   |          
|Total consolidated assets                                                                          |                                             | $ | 1,208,487 |        
|                                                                                                   |                                             |   |          



|                                                                       |  |   |         |  
|---------------------------------------------------------------------- |  | - | ------- | -
|Total reportable segments                                              |  | $ | 2,519   |  
|Selling, general and administrative                                    |  |   | (7,953  | )
|Fees to manager                                                        |  |   | (12,360 | )
|Depreciation and amortization                                          |  |   | (456    | )
|                                                                       |  |   |        
|                                                                       |  |   | (18,250 | )
|Other income, net                                                      |  |   | 678     |  
|                                                                       |  |   |        
|Total consolidated loss before
    income taxes and minority interests |  | $ | (17,572 | )
|                                                                       |  |   |        



|    |                           
|--- | --------------------------
|17. | Related Party Transactions



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Management Services Agreement with Macquarie
    Infrastructure Management (USA) Inc., or MIMUSA



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NOTES TO CONSOLIDATED FINANCIAL
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share equal to the initial public offering price of $25.
Pursuant to the terms of the Management Agreement (discussed
below), MIMUSA may sell up to 30% of these shares at any time.
At any time from and after December 21, 2005 (being the
first anniversary of the IPO closing), MIMUSA may sell up to a
further 35% of these shares and may sell the balance at any time
from and after December 21, 2007 (being the third
anniversary of the IPO closing).

The Company entered into a management services agreement, or
Management Agreement, with MIMUSA dated December 21, 2004
pursuant to which MIMUSA manages the Companys
day-to-day operations
and oversees the management teams of the Companys
operating businesses. In addition, MIMUSA has seconded a Chief
Executive Officer and a Chief Financial Officer to the Company
and makes other personnel available as required.

In accordance with the Management Agreement, MIMUSA is entitled
to a quarterly base management fee based primarily on the
Trusts market capitalization and a performance fee, as
defined, based on the performance of the trust stock relative to
a weighted average of two benchmark indices, a
U.S. utilities index and a European utilities index,
weighted in proportion to the Companys equity investments.
For the year ended December 31, 2005, base management fees
of $9.3 million were payable to MIMUSA. Of this amount,
$2.5 million is included as due to manager in the
accompanying consolidated balance sheet at December 31,
2005. There was no performance fee payable to MIMUSA for the
year ended December 31, 2005. For the fiscal quarter ended
December 31, 2004, a base management fee of $271,000 and a
performance fee of $12.1 million were payable to MIMUSA.
These amounts are included as due to manager in the accompanying
consolidated balance sheet at December 31, 2004.

On April 19, 2005, the Company issued 433,001 shares
of trust stock to MIMUSA as consideration for the
$12.1 million performance fee due for the fiscal quarter
ended December 31, 2004.

MIMUSA is not entitled to any other compensation and all costs
incurred by MIMUSA including compensation of seconded staff, are
paid 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, and acquisitions and dispositions and its
compliance with applicable laws and regulations. During the year
ended December 31, 2005, MIMUSA charged the Company
$402,000 for reimbursement of
out-of-pocket expenses.

In addition, for services rendered in preparing the Trust and
Company for the IPO, MIMUSA was paid a structuring fee in
December 2004 of $8 million. This amount has been recorded
as a reduction to trust stock to the accompanying consolidated
balance sheet at December 31, 2004 and December 31,
2005. Furthermore, MIMUSA was reimbursed for certain direct
pre-IPO costs totaling $4.3 million in December 2004. These
amounts were recorded as expenses or capitalized and included as
acquisition costs to our business acquisitions during the year
ended December 31, 2004.



Advisory and Other Services from the Macquarie
    GroupThe Macquarie Group, through its wholly owned group company,
MSUSA, has provided various advisory services and has incurred
expenses in connection with the Companys acquisitions and
underlying debt associated with the businesses. In addition,
during the year ended December 31, 2004, the Company
incurred capital charges in relation to the
businesses and investments acquired from the Macquarie Group or
investment vehicles managed but not controlled by the Macquarie
Group, defined as the required return on equity by the Macquarie
Group in anticipation of the IPO offering. The advisory fees and
the capital charges relating to the acquisitions have been
capitalized and are included as part of the purchase price of
the acquisitions. Further details on these amounts are contained
in Note 4. The debt

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

arranging fees have been deferred and are amortized over the
life of the relevant debt facilities. Further details on these
amounts are contained in Note 12.

The Company and its airport services and airport parking
businesses pay fees for employee consulting services to the
Detroit and Canada Tunnel Corporation, which is owned by an
entity managed by the Macquarie Group. Fees paid for the year
ended December 31, 2005 were $173,000.



Derivative Instruments and Hedging ActivitiesThe Company, through its limited liability subsidiaries, has
entered into foreign-exchange related derivative instruments
with Macquarie Bank Limited to manage its exchange rate exposure
on its future cash flows from its
non-U.S.investments.

During the year ended December 31, 2005, SEW LLC paid
£2.6 million to Macquarie Bank Limited and received
$4.9 million which closed out two foreign currency forward
contracts between the parties. As part of the settlement of
these foreign currency forward contracts, Macquarie Bank Limited
paid SEW LLC $192,000, which has been included in the
accompanying consolidated statement of operations. As of
December 31, 2005, SEW LLC has two other foreign currency
forward contracts with Macquarie Bank Limited which are due to
be settled in the year ending December 31, 2006.

During the same period, MY LLC paid £5.5 million to
Macquarie Bank Limited and received $10.4 million which
closed out three foreign currency forward contracts between the
parties. No additional payments or receipts arose from
settlement of these foreign currency forward contracts. As of
December 31, 2005, MY LLC has two other foreign currency
forward contracts with Macquarie Bank Limited which are due to
be settled in the year ending December 31, 2006.

In August 2005, MIC Inc. entered into interest rate swaps with
Macquarie Bank Limited. Further details are provided in
Note 12.

In December 2005, NACH entered into interest rate swaps with
Macquarie Bank Limited. Further details are provided in
Note 12.



Other Related Party Transactionsa. Macquarie Bank Limited has extended a loan to a
subsidiary within our group. Details on this loan, and the
related fees paid to the Macquarie Group, are disclosed in
Note 12.

b. Macquarie Bank Limited has provided a portion of the
commitment under the revolver facility to MIC Inc. Further
details on the commitment, and the related fees paid to the
Macquarie Group, are disclosed in Note 12.

c. Macquarie Holdings (USA) Inc., or MHUSA, is an
indirect wholly owned subsidiary of Macquarie Bank Limited. We
paid $219,000 to MHUSA as reimbursement for
out-of-pocket expenses
in relation to NACH and MDEH, during the year ended
December 31, 2004.

d. MSUSA acted as one of the underwriters for our IPO in
2004 and was paid a fee of $3.2 million from the lead
underwriter.



18.
    Income TaxesMacquarie Infrastructure Company Trust is classified as a
grantor trust for U.S. federal income tax purposes and,
therefore, is not subject to income taxes. Accordingly, the
Trust stockholders should include their pro rata portion of the
Trusts income or loss in their respective federal and
state income tax returns. In addition, Macquarie Infrastructure
Company LLC will be treated as a partnership for
U.S. federal income tax purposes and is not subject to
income taxes.

153



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##### Table of Contents

MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

MIC Inc. and its wholly owned subsidiaries are subject to
federal and state income taxes.

Components of MIC Inc.s income tax expense (benefit) are
as follows (in thousands):

|                            |  |                   |        |                |                   |   |        |  
|--------------------------- |  | ----------------- | ------ | -------------- | ----------------- | - | ------ | -
|                            |  |                   |        | April 13, 2004 |                  
|                            |  | Year Ended        |        |                | (Inception) to    |  
|                            |  | December 31, 2005 |        |                | December 31, 2004 |  
|                            |  |                   |        |                |                   |  
|Current taxes:              |  |                   |        |                |                   |   |        |  
|Federal                     |  | $                 |       |                |                   | $ |       |  
|State                       |  |                   | 2,080  |                |                   |   | 15     |  
|                            |  |                   |        |                |                   |  
|Total current taxes         |  |                   | 2,080  |                |                   |   | 15     |  
|Deferred tax benefit:       |  |                   |        |                |                   |   |        |  
|Federal                     |  |                   | (463   | )              |                   |   | (4,268 | )
|State                       |  |                   | (862   | )              |                   |   | (32    | )
|Valuation allowance         |  |                   | (4,370 | )              |                   |   | 4,285  |  
|                            |  |                   |        |                |                   |  
|Total tax expense (benefit) |  | $                 | (3,615 | )              |                   | $ |       |  
|                            |  |                   |        |                |                   |  



|                                                      |  |                   |          |   |                   |   |          |  
|----------------------------------------------------- |  | ----------------- | -------- | - | ----------------- | - | -------- | -
|                                                      |  | December 31, 2005 |          |   | December 31, 2004 |  
|                                                      |  |                   |          |   |                   |  
|Deferred tax assets:                                  |  |                   |          |   |                   |   |          |  
|Net operating loss carryforwards                      |  | $                 | 15,115   |   |                   | $ | 10,056   |  
|Capital loss carryforwards                            |  |                   | 4,885    |   |                   |   | 4,885    |  
|Lease transaction costs                               |  |                   | 2,131    |   |                   |   |         |  
|Amortization of intangible assets                     |  |                   | 4,398    |   |                   |   | 3,909    |  
|Deferred revenue                                      |  |                   | 515      |   |                   |   | 920      |  
|Accrued compensation                                  |  |                   | 717      |   |                   |   | 638      |  
|Accrued expenses                                      |  |                   | 1,225    |   |                   |   | 1,080    |  
|FAS 143 retirement obligations                        |  |                   | 1,135    |   |                   |   | 1,131    |  
|Other                                                 |  |                   | 1,569    |   |                   |   | 2,114    |  
|                                                      |  |                   |          |   |                   |  
|Total gross deferred tax assets                       |  |                   | 31,690   |   |                   |   | 24,733   |  
|Less: Valuation allowance                             |  |                   | (5,451   | ) |                   |   | (11,310  | )
|                                                      |  |                   |          |   |                   |  
|Net deferred tax assets after
    valuation allowance |  |                   | 26,239   |   |                   |   | 13,423   |  
|Deferred tax liabilities:                             |  |                   |          |   |                   |   |          |  
|Intangible assets                                     |  |                   | (70,259  | ) |                   |   | (74,115  | )
|Property and equipment                                |  |                   | (59,133  | ) |                   |   | (58,416  | )
|Partnership basis differences                         |  |                   | (6,373   | ) |                   |   |         |  
|Prepaid expenses                                      |  |                   | (693     | ) |                   |   | (1,312   | )
|Other                                                 |  |                   | (1,474   | ) |                   |   | (1,557   | )
|                                                      |  |                   |          |   |                   |  
|Total deferred tax liabilities                        |  |                   | (137,932 | ) |                   |   | (135,400 | )
|                                                      |  |                   |          |   |                   |  
|Net deferred tax liability                            |  |                   | (111,693 | ) |                   |   | (121,977 | )
|Less: current deferred tax asset                      |  |                   | 2,101    |   |                   |   | 1,452    |  
|                                                      |  |                   |          |   |                   |  
|Noncurrent deferred tax liability                     |  | $                 | (113,794 | ) |                   | $ | (123,429 | )
|                                                      |  |                   |          |   |                   |  

154



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

At December 31, 2005, MIC Inc. had net operating loss
carryforwards for federal income tax purposes of approximately
$37 million which is available to offset future taxable
income, if any, through 2025. Approximately $9 million of
these net operating losses will be limited, on an annual basis,
due to the change of control of the respective subsidiaries in
which such losses were incurred.

In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during
the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, and
tax planning strategies in making this assessment. Due to
statutory limitations on the utilization of certain deferred tax
assets, the Company has applied a valuation reserve on a portion
of the deferred tax assets.

The Company has approximately $112 million in net deferred
tax liabilities. A significant portion of the Companys
deferred tax liabilities relates to tax basis temporary
differences of both intangible assets and property and
equipment. For financial accounting purposes, we recorded the
acquisitions of our consolidated businesses under the purchase
method of accounting and accordingly recognized a significant
increase to the value of the intangible assets and to property
and equipment. For tax purposes, we assumed the existing tax
basis of the acquired businesses. To reflect the increase in the
financial accounting basis of the assets acquired over the
carryover income tax basis, a deferred tax liability was
recorded. The liability will reduce in future periods as these
temporary differences reverse.

A reconciliation of the reported income tax expense to the
amount that would result by applying the U.S. federal tax
rate to the reported net income (loss) is as follows (in
thousands):

|                                                 |  |                   |        |                |                   |   |        |  
|------------------------------------------------ |  | ----------------- | ------ | -------------- | ----------------- | - | ------ | -
|                                                 |  |                   |        | April 13, 2004 |                  
|                                                 |  | Year Ended        |        |                | (Inception) to    |  
|                                                 |  | December 31, 2005 |        |                | December 31, 2004 |  
|                                                 |  |                   |        |                |                   |  
|Tax expense (benefit) at
    U.S. statutory rate |  | $                 | 4,124  |                |                   | $ | (6,150 | )
|Effect of permanent differences                  |  |                   | 168    |                |                   |   | 4      |  
|State income taxes, net of federal
    benefit   |  |                   | 1,125  |                |                   |   | (11    | )
|Tax effect of flow-through
    entities, other   |  |                   | (4,662 | )              |                   |   | 1,872  |  
|Change in valuation allowance                    |  |                   | (4,370 | )              |                   |   | 4,285  |  
|                                                 |  |                   |        |                |                   |  
|Total                                            |  | $                 | (3,615 | )              |                   | $ |       |  
|                                                 |  |                   |        |                |                   |  



|    |       
|--- | ------
|19. | Leases





|           |  |   |         | 
|---------- |  | - | ------- | 
|2006       |  | $ | 20,467  | 
|2007       |  |   | 20,567  | 
|2008       |  |   | 20,475  | 
|2009       |  |   | 20,294  | 
|2010       |  |   | 19,487  | 
|Thereafter |  |   | 293,928 | 
|           |  |   |        
|           |  | $ | 395,218 | 
|           |  |   |        

155



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Rent expense under all operating leases for the year ended
December 31, 2005 and the period ended December 31,
2004 was $22.5 million and $417,000, respectively.



20.
    Employee Benefit PlansThe subsidiaries of MIC Inc. maintain defined contribution plans
allowing eligible employees to contribute a percentage of their
annual compensation up to an annual amount as set by the
Internal Revenue Service. The employer contribution to these
plans ranges from 0% to 6% of eligible compensation. For the
year ended December 31, 2005 and the period
December 23 through December 31, 2004, contributions
were approximately $156,000 and $4,000, respectively.

The NACH subsidiary also sponsors a retiree medical and life
insurance plan available to certain employees for Atlantic
Aviation. Currently, the plan is funded as required to pay
benefits, and at December 31, 2005, the plan had no assets.
The Company accounts for postretirement healthcare and life
insurance benefits in accordance with FASB Statement
No. 106, Employers Accounting for Postretirement
Benefits Other Than Pensions. This Statement requires the
accrual of the cost of providing postretirement benefits during
the active service period of the employee. The accumulated
benefit obligation at December 31, 2005, using an assumed
discount rate of 5.5%, was approximately $607,000. There have
been no changes in plan provisions during 2005. Estimated
contributions by Atlantic Aviation in 2006 should approximate
$136,000.



21.
    Legal Proceedings and ContingenciesThe subsidiaries of MIC Inc. are subject to legal proceedings
arising in the ordinary course of business. In managements
opinion, the company has adequate legal defenses and/or
insurance coverage with respect to the eventuality of such
actions, and does not believe the outcome of any pending legal
proceedings will be material to the companys financial
position or results of operations.



Airport Services BusinessOn or about May 15, 2002, the families of two pilots killed
in a plane crash in 2000 filed complaints in the Supreme Court
of New York against a number of parties including Executive Air
Support Inc., or EAS, a subsidiary within our airport services
business, and a formerly owned subsidiary, Million Air
Interlink, Inc., or Million Air Interlink, asserting claims for
punitive damages, wrongful death and pain and suffering and
seeking $100 million in punitive damages, $100 million
for wrongful death and $5 million for pain and suffering.
The plaintiffs claim arose out of the facts surrounding a
plane crash allegedly caused by one of the aircrafts
engines losing power, which caused the plane to crash, killing
all on board. The engine lost power as a result of fuel
starvation. The plaintiffs alleged this was caused by
insufficient fuel or design fault. The plane had last been
refueled prior to the accident at the Farmingdale FBO operated
by Flightways of Long Island, Inc., or Flightways, on the day of
the accident.

EAS and Million Air Interlink moved to dismiss the complaints
for lack of jurisdiction because Flightways, rather than EAS or
Million Air Interlink, was the entity that operated the
Farmingdale FBO, and that employed the person who refueled the
plane in question. The court denied the motion, permitting
discovery to go forward on the jurisdictional issues, and with
leave for the defendants to refile the motion if discovery
warranted doing so.

Flightways was subsequently added as a defendant. USAIG, the
insurer of Flightways under the primary insurance policy,
assumed the defense on behalf of the three Atlantic defendants.
On June 23, 2005, the defendants entered into a settlement
agreement with the plaintiffs under which the three Atlantic
defendants are liable for $325,000 of the total settlement
amount, all of which is expected to be covered by insurance. The
settlement is pending surrogate court approval.

156



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

On February 28, 2005, Rohan Foster and Margaret Foster
filed a complaint in the Supreme Court of New Jersey, Passaic
County, naming several defendants, including various parties
within our airport services business, based on injuries they
allegedly suffered when a Challenger CL-600 aircraft failed to
ascend during take off from the Teterboro Airport and ran off of
the runway, the airport grounds, onto and across a public
highway. The complaint alleges, among other things, negligence
in the maintenance and control of the aircraft and maintenance,
operation, management and control of the airport, and seeks an
unspecified amount of compensatory and special damages. The
plaintiffs have agreed to voluntarily dismiss the claim without
prejudice against the AvPorts defendant. We are seeking a
similar dismissal for the Atlantic defendants. On April 14,
2005, James and Catherine Dinnall filed a complaint in the
Superior Court of New Jersey, Essex County, naming several
defendants, including various parties within our airport
services business, based on injuries allegedly suffered in the
same incident at the Teterboro Airport. The complaint alleged,
among other things, negligence in the inspection, service and
maintenance of the aircraft and in permitting an allegedly unfit
aircraft to be used on the runway, seeking an unspecified amount
of compensatory and punitive damages and costs of suit. The
claim against the AvPorts defendant has been dismissed without
prejudice and we are seeking a similar dismissal for the
Atlantic defendants.



Toll Road BusinessNeither MYL, CHL nor Connect M1-A1 Limited is currently a party
to any material legal proceedings.

On March 20, 2004, a fatal road accident occurred on
Yorkshire Link. The accident is currently the focus of an
ongoing investigation by local police authorities. As part of
their investigation, the police have interviewed several
employees and, pursuant to a search warrant, have collected
certain documentation from Connect M1-A1 Limiteds offices.
Connect M1-A1 Limited has fully cooperated with the police
investigation and, to date, has received no further information
with respect to the outcome of the police investigation. Connect
M1-A1 Limited has conducted an internal investigation and
believes that its maintenance of the section of Yorkshire Link
where the accident occurred was in compliance with its
obligations under the concession. The seller to us of our
interest in Yorkshire Link has indemnified us for our
proportional share of any loss of revenue, penalties awarded by
a court in potential civil or criminal proceedings or imposed by
the Transport Secretary under the concession and legal expenses
and other costs associated with any claim arising from this
accident up to a maximum of £2.75 million.



District Energy BusinessMDEH has been in discussions with the City of Chicago of their
intent to exercise its early buyout option with respect to
Plant 6, which supplies heating and cooling services to a
facility in Illinois. MDEH would receive approximately
$11 million from the buyout all of which would be used to
pay down debt. MDEH may be obliged to continue operating the
facility on behalf of the City of Chicago. MDEH is reviewing its
obligations under the early buyout option to determine what
impact the buyout would have on its ongoing operations.

Laws and regulations relating to environmental matters may
affect the operations of the Company. The Company believes that
its policies and procedures with regard to environmental matters
are adequate to prevent unreasonable risk of environmental
damage and related financial liability. Some risk of
environmental and other damage is, however, inherent in
particular operations of the Company. The Company maintains
adequate levels of insurance coverage with respect to
environmental matters. As of December 31, 2005, management
does not believe that environmental matters will have a
significant effect on the Companys operations.

157



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



The Gas CompanyOn August 17, 2005, the Company, through a wholly-owned
subsidiary, entered into a joinder agreement with k1 Ventures
Limited, K-1 HGC Investment, L.L.C. (together with k1 Ventures,
the K1 Parties), and MIHI, and a related assignment
agreement with MIHI. Under these agreements, the Companys
wholly owned subsidiary assumed all of MIHIs rights and
obligations as a Buyer under a purchase agreement between MIHI
and the K1 Parties for no additional consideration other than
providing MIHI with an indemnification for the liabilities, cost
and expenses it has incurred as Buyer under the
purchase agreement. The purchase agreement provides for the
acquisition by the Buyer of, at the option of k1 Ventures,
either 100% of the interests in HGC Investment or 100% of the
membership interests of HGC Holdings, L.L.C.

HGC Investment owns a 99.9% non-managing membership interest in
HGC Holdings, a Hawaii limited liability company, and has the
right to acquire the remaining membership interest in HGC
Holdings. HGC Holdings is the sole member of The Gas Company,
L.L.C., a Hawaii limited liability company which owns and
operates the sole regulated gas distribution business in Hawaii,
as well as a propane sales and distribution business in Hawaii.

The purchase agreement provides for the payment in cash of a
base purchase price of $238 million (subject to working
capital and capital expenditure adjustments) with no assumed
interest-bearing debt. The Company currently expects working
capital and capital expenditure adjustments to add approximately
$12 million to the total purchase price. In addition to the
purchase price, it is anticipated that approximately a further
$9 million will be paid to cover transaction costs. The
Company expects to finance the acquisition, including an initial
up-front deposit of $12.2 million, with $160 million
of future subsidiary level debt and the remainder from proceeds
from a refinancing of the airport services segment currently
underway or other sources of available cash. Absent an
intervening use for the proceeds from the refinancing of the
Companys airport services segment, the Company does not
intend to issue equity in the public markets to complete the
acquisition of The Gas Company.

Due to the regulatory and other approvals required to complete
the transaction, the Company does not expect to be able to close
the transaction prior to late in the second quarter or early in
the third quarter of 2006.

MSUSA is acting as financial advisor to the Company on the
transaction, including in connection with the debt financing
arrangements. MIHI and MSUSA are both subsidiaries of Macquarie
Bank Limited, the parent company of the Companys Manager.



22.
    DividendsOn May 14, 2005, our Board of Directors declared a dividend
of $0.50 per share for the quarter ended March 31,
2005 and an additional dividend of $0.0877 per share for
the period ended December 31, 2004. The dividend payments
were made on June 7, 2005 to holders of record on
June 2, 2005. On August 8, 2005, our Board of
Directors declared a dividend of $0.50 per share for the
quarter ended June 30, 2005. The dividend payment was made
on September 9, 2005 to holders of record on
September 6, 2005. On November 7, 2005, our Board of
Directors declared a dividend of $0.50 per share for the
quarter ended September 30, 2005. The dividend payment was
made on December 9, 2005 to holders of record on
December 6, 2005.



23.
    Subsequent EventsOn March 14, 2006, our Board of Directors declared a
dividend of $0.50 per share for the quarter ended
December 31, 2005, payable on April 10, 2006 to
holders of record on April 5, 2006.

158



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MACQUARIE INFRASTRUCTURE COMPANY TRUST

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



24.
    Quarterly Data (Unaudited)The data shown below includes all adjustments which the Company
considers necessary for a fair presentation of such amounts. The
2005 column consists of the operations of the Company for the
year ended December 31, 2005. Although the Companys
inception was April 13, 2004, the operations from this date
through December 31, 2004 have been presented in the
December 31 category for 2004. The Company acquired its
initial businesses and investments on December 22 and 23,
2004 and since the Company had no significant operations prior
to this, presentation by quarter for 2004 would not be
meaningful.

|               |  |                  |        |  |                  |   |       |                   |  |   |       |  |  |      |         |   |      |   |       |   |  |   |         |  
|-------------- |  | ---------------- | ------ |  | ---------------- | - | ----- | ----------------- |  | - | ----- |  |  | ---- | ------- | - | ---- | - | ----- | - |  | - | ------- | -
|               |  | Operating        |        |  | Operating Income |   |       |                  
|               |  | Revenues         |        |  | (Loss)           |   |       | Net (Loss) Income | 
|               |  |                  |        |  |                  |   |       |                   | 
|               |  | 2005             |        |  | 2004             |   |       | 2005              |  |   | 2004  |  |  | 2005 |         |   | 2004 |  
|               |  |                  |        |  |                  |   |       |                   |  |   |       |  |  |      |         |   |      |  
|               |  | ($ in thousands) |       
|Quarter ended: |  |                  |        |  |                  |   |       |                   |  |   |       |  |  |      |         |   |      |   |       |   |  |   |         |  
|March 31       |  | $                | 65,735 |  |                  | $ |      |                   |  | $ | 5,867 |  |  | $    |        |   |      | $ | (83   | ) |  | $ |        |  
|June 30        |  |                  | 72,519 |  |                  |   |      |                   |  |   | 7,485 |  |  |      |        |   |      |   | 5,636 |   |  |   |        |  
|September 30   |  |                  | 79,935 |  |                  |   |      |                   |  |   | 6,451 |  |  |      |        |   |      |   | 1,306 |   |  |   |        |  
|December 31    |  |                  | 86,554 |  |                  |   | 5,064 |                   |  |   | 5,548 |  |  |      | (18,250 | ) |      |   | 8,337 |   |  |   | (17,588 | )

159



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

North America Capital Holding Company:

We have audited the accompanying consolidated statements of
operations, stockholders equity (deficit) and
comprehensive income (loss), and cash flows of North America
Capital Holding Company (the Company), (Successor to Executive
Air Support, Inc., or EAS), a Delaware corporation, and
subsidiaries for the periods January 1, 2004 through
July 29, 2004, July 30, 2004 through December 22,
2004, and for the year ended December 31, 2003. 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 generally accepted
auditing standards as established by the Auditing Standards
Board (United States) and in accordance with the auditing
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. Our
audit included consideration of internal controls 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 controls over financial reporting. Accordingly, we
express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes 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
consolidated results of operations and cash flows of North
America Capital Holding Company and subsidiaries for the periods
January 1, 2004 through July 29, 2004, July 30,
2004 through December 22, 2004, and for the year ended
December 31, 2003, in conformity with U.S. generally
accepted accounting principles.



/s/ KPMG LLPDallas, Texas

March 22, 2005

160



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)





Consolidated Statements of Operations

|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |       |        |        |        |       |        |  
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | ---------------------------------------------------------------- | ------ | --------------------------- | ------ | ------ | ------------ | ----- | ------ | ------ | ------ | ----- | ------ | -
|                                                         |                                                                                                                                                | North America                  |                                                                  |        |                             |        |       
|                                                         |                                                                                                                                                | Capital Holding                |                                                                  |        |                            
|                                                         |                                                                                                                                                | Company                        |                                                                  |        | Executive Air Support, Inc. |       
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |       
|                                                         |                                                                                                                                                | July 30,                       |                                                                  |        | January 1,                  |        |        |             
|                                                         |                                                                                                                                                | 2004 to                        |                                                                  |        | 2004 to                     |        |        | Year Ended   |      
|                                                         |                                                                                                                                                | December 22,                   |                                                                  |        | July 29,                    |        |        | December 31, |      
|                                                         |                                                                                                                                                | 2004                           |                                                                  |        | 2004                        |        |        | 2003         |      
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                | ($ in thousands)               |                                                                 
|Fuel revenue                                             |                                                                                                                                                | $                              | 29,465                                                           |        |                             | $      | 41,146 |              |       | $      | 57,129 |       
|Service revenue                                          |                                                                                                                                                |                                | 9,839                                                            |        |                             |        | 14,616 |              |       |        | 20,720 |       
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | Total revenue                                                    |        |                             | 39,304 |        |              |       | 55,762 |        |        |       | 77,849 |  
|Cost of revenue  fuel                                   |                                                                                                                                                |                                | 16,599                                                           |        |                             |        | 21,068 |              |       |        | 27,003 |       
|Cost of revenue  service                                |                                                                                                                                                |                                | 849                                                              |        |                             |        | 1,428  |              |       |        | 1,961  |       
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | Gross profit                                                     |        |                             | 21,856 |        |              |       | 33,266 |        |        |       | 48,885 |  
|Selling, general, and
    administrative expenses        |                                                                                                                                                |                                | 13,942                                                           |        |                             |        | 22,378 |              |       |        | 29,159 |       
|Depreciation                                             |                                                                                                                                                |                                | 1,287                                                            |        |                             |        | 1,377  |              |       |        | 2,126  |       
|Amortization                                             |                                                                                                                                                |                                | 2,329                                                            |        |                             |        | 849    |              |       |        | 1,395  |       
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | Operating profit                                                 |        |                             | 4,298  |        |              |       | 8,662  |        |        |       | 16,205 |  
|Other income (expense):                                  |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |       |        |        |       
|                                                         | Other expense                                                                                                                                  |                                |                                                                  | (39    | )                           |        |        | (5,135       | )     |        |        | (1,219 | )    
|                                                         | Finance fees                                                                                                                                   |                                |                                                                  | (6,650 | )                           |        |        |             |       |        |        |       |      
|                                                         | Interest expense                                                                                                                               |                                |                                                                  | (2,907 | )                           |        |        | (4,655       | )     |        |        | (4,820 | )    
|                                                         | Interest income                                                                                                                                |                                |                                                                  | 28     |                             |        |        | 17           |       |        |        | 71     |      
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | (Loss) income from continuing
    operations before income taxes |        |                             | (5,270 | )      |              |       | (1,111 | )      |        |       | 10,237 |  
|Income taxes                                             |                                                                                                                                                |                                | 286                                                              |        |                             |        | (597   | )            |       |        | 4,192  |       
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | (Loss) income from continuing
    operations                     |        |                             | (5,556 | )      |              |       | (514   | )      |        |       | 6,045  |  
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|Discontinued operations:                                 |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |       |        |        |       
|                                                         | Net income from operations of
    discontinued operations (net of applicable tax provision
    (benefit) of $80, ($194) and $81, respectively) |                                |                                                                  | 116    |                             |        |        | 159          |       |        |        | 121    |      
|                                                         | Loss on disposal of discontinued
    operations (net of applicable income tax provision (benefit) of
    $Nil, $Nil, and ($289), respectively) |                                |                                                                  |       |                             |        |        |             |       |        |        | (435   | )    
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | Net income (loss) from discontinued
    operations               |        |                             | 116    |        |              |       | 159    |        |        |       | (314   | )
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | Net (loss) income                                                |        | $                           | (5,440 | )      |              | $     | (355   | )      |        | $     | 5,731  |  
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|Net (loss) income applicable to
    common stockholders: |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |       |        |        |       
|                                                         | Net (loss) income                                                                                                                              |                                | $                                                                | (5,440 | )                           |        |        | (355         | )     |        |        | 5,731  |      
|                                                         |                                                                                                                                                | Less preferred stock dividends |                                                                  |        |                            |        |        |              | 3,102 |        |        |        | 5,360 |       
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      
|                                                         |                                                                                                                                                |                                | Net (loss) income applicable to
    common stockholders          |        | $                           | (5,440 | )      |              | $     | (3,457 | )      |        | $     | 371    |  
|                                                         |                                                                                                                                                |                                |                                                                  |        |                             |        |        |              |      



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)





Consolidated Statements of Stockholders Equity
(Deficit) and Comprehensive Income (Loss)

|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  |  |   |      |   |  |   |         |        |  
|----------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- |  | ---------- | --------- | ------- | - | ------- | ----------- | ----------- | ------- | ------------- | ----- | ------------- | ------------- | ------ | ---------------- |  | - | ---- | - |  | - | ------- | ------ | -
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             | Accumulated |         |               |      
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             | Other       |         |               | Total |              
|                                          |                                                                                                                                                         |                      |  |            |           | Paid in |   |         | Accumulated |             |         | Comprehensive |       |               | Stockholders |       
|                                          |                                                                                                                                                         | Shares               |  |            | Par Value |         |   | Capital |             |             | Deficit |               |       | Income (Loss) |               |        | Equity (Deficit) | 
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          |                                                                                                                                                         | ($ in thousands)     | 
|Executive Air Support, Inc.               |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  |  |   |      |   |  |   |        
|                                          | Balance, December 31, 2002                                                                                                                              |                      |  | 1,895,684  |           |         |   | 19      |             |             |         | 195           |       |               |               | (9,518 | )                |  |   | (927 | ) |  |   | (10,231 | )     
|                                          | Net income                                                                                                                                              |                      |  |           |           |         |   |        |             |             |         |              |       |               |               | 5,731  |                  |  |   |     |   |  |   | 5,731   |       
|                                          | Interest rate swap agreement net of
    tax provision of $162                                                                                           |                      |  |           |           |         |   |        |             |             |         |              |       |               |               |       |                  |  |   | 242  |   |  |   | 242     |       
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          |                                                                                                                                                         | Comprehensive income |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  |  |   |      |   |  |   |         | 5,973  |  
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          | Balance, December 31, 2003                                                                                                                              |                      |  | 1,895,684  |           |         |   | 19      |             |             |         | 195           |       |               |               | (3,787 | )                |  |   | (685 | ) |  |   | (4,258  | )     
|                                          | Net loss, period January 1,
    2004, through July 29, 2004                                                                                             |                      |  |           |           |         |   |        |             |             |         |              |       |               |               | (355   | )                |  |   |     |   |  |   | (355    | )     
|                                          | Interest rate swap agreement, net
    of tax provision of $189                                                                                          |                      |  |           |           |         |   |        |             |             |         |              |       |               |               |       |                  |  |   | 283  |   |  |   | 283     |       
|                                          | Reclassification adjustment for
    realized loss on interest rate swap included in net loss, net of
    tax benefit of $268                            |                      |  |           |           |         |   |        |             |             |         |              |       |               |               |       |                  |  |   | 402  |   |  |   | 402     |       
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          |                                                                                                                                                         | Comprehensive income |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  |  |   |      |   |  |   |         | 330    |  
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          | Tax benefit from exercise of stock
    options                                                                                                          |                      |  |           |           |         |   |        |             |             |         | 1,781         |       |               |               |       |                  |  |   |     |   |  |   | 1,781   |       
|                                          | Elimination of stockholders
    equity (deficit) balances upon acquisition of Executive Air
    Support, Inc. by North America Capital Holding Company |                      |  | (1,895,684 | )         |         |   | (19     | )           |             |         | (1,976        | )     |               |               | 4,142  |                  |  |   |     |   |  |   | 2,147   |       
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          | Adjusted balance, July 29, 2004                                                                                                                         |                      |  |           |           |         | $ |        |             |             | $       |              |       |               | $             |       |                  |  | $ |     |   |  | $ |        |       
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|North America Capital Holding
    Company |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  |  |   |      |   |  |   |        
|                                          | Issuance of common stock                                                                                                                                |                      |  | 544,273    |           |         | $ | 5       |             |             | $       | 108,830       |       |               | $             |       |                  |  | $ |     |   |  | $ | 108,835 |       
|                                          | Net loss, period July 30, 2004
    through December 22, 2004                                                                                            |                      |  |           |           |         |   |        |             |             |         |              |       |               |               | (5,440 | )                |  |   |     |   |  |   | (5,440  | )     
|                                          | Interest rate swap agreement, net
    of tax provision of $28                                                                                           |                      |  |           |           |         |   |        |             |             |         |              |       |               |               |       |                  |  |   | 41   |   |  |   | 41      |       
|                                          |                                                                                                                                                         | Comprehensive loss   |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  |  |   |      |   |  |   |         | (5,399 | )
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 
|                                          | Balance, December 22, 2004                                                                                                                              |                      |  | 544,273    |           |         | $ | 5       |             |             | $       | 108,830       |       |               | $             | (5,440 | )                |  | $ | 41   |   |  | $ | 103,436 |       
|                                          |                                                                                                                                                         |                      |  |            |           |         |   |         |             |             |         |               |       |               |               |        |                  | 



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)





Consolidated Statements of Cash Flows

|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |        |       |        |        |  
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------- | --------------------------- | ----- | -------- | ------------ | ----- | ------ | ------ | ------ | ----- | ------ | ------ | -
|                                                      |                                                                                                        | North America                                               |                                                                        |                                                         |                             |       |         
|                                                      |                                                                                                        | Capital Holding                                             |                                                                        |                                                         |                            
|                                                      |                                                                                                        | Company                                                     |                                                                        |                                                         | Executive Air Support, Inc. |      
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |      
|                                                      |                                                                                                        | July 30,                                                    |                                                                        |                                                         | January 1,                  |       |          |             
|                                                      |                                                                                                        | 2004 to                                                     |                                                                        |                                                         | 2004 to                     |       |          | Year Ended   |      
|                                                      |                                                                                                        | December 22,                                                |                                                                        |                                                         | July 29,                    |       |          | December 31, |      
|                                                      |                                                                                                        | 2004                                                        |                                                                        |                                                         | 2004                        |       |          | 2003         |      
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|                                                      |                                                                                                        | ($ in thousands)                                            |                                                                       
|Cash flows from operating
    activities:             |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |       
|                                                      | Net (loss) income                                                                                      |                                                             | $                                                                      | (5,440                                                  | )                           |       |          | (355         | )     |        |        | 5,731  |      
|                                                      | Adjustments to reconcile net (loss)
    income to net cash (used in) provided by operating activities: |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |        |      
|                                                      |                                                                                                        | Fair value adjustment for
    outstanding warrant liability |                                                                        |                                                         |                            |       |          |              | 5,280 |        |        |        | 1,219 |       
|                                                      |                                                                                                        | Depreciation and amortization                               |                                                                        |                                                         | 3,616                       |       |          |              | 2,226 |        |        |        | 3,521 |       
|                                                      |                                                                                                        | Noncash interest expense and other                          |                                                                        |                                                         | (240                        | )     |          |              | 2,760 |        |        |        | 1,032 |       
|                                                      |                                                                                                        | Deferred income taxes                                       |                                                                        |                                                         | (954                        | )     |          |              | (953  | )      |        |        | 568   |       
|                                                      |                                                                                                        | Changes in assets and liabilities,
    net of acquisition:  |                                                                        |                                                         |                             |       |          |              |       |        |        |        |       |       
|                                                      |                                                                                                        |                                                             | Accounts receivable                                                    |                                                         |                             | (304  | )        |              |       | (127   | )      |        |       | (822   | )     
|                                                      |                                                                                                        |                                                             | Inventories                                                            |                                                         |                             | (447  | )        |              |       | 3      |        |        |       | (122   | )     
|                                                      |                                                                                                        |                                                             | Prepaid expenses and other                                             |                                                         |                             | (659  | )        |              |       | 1,049  |        |        |       | 1,146  |       
|                                                      |                                                                                                        |                                                             | Liabilities from discontinued
    operations                           |                                                         |                             | (177  | )        |              |       | (131   | )      |        |       |       |       
|                                                      |                                                                                                        |                                                             | Accounts payable                                                       |                                                         |                             | 1,575 |          |              |       | 572    |        |        |       | 2,382  |       
|                                                      |                                                                                                        |                                                             | Accrued payroll, payroll related,
    environmental, interest, & other |                                                         |                             | 1,007 |          |              |       | 191    |        |        |       | (4,685 | )     
|                                                      |                                                                                                        |                                                             | Customer deposits and deferred
    hangar rent                         |                                                         |                             | 20    |          |              |       | 24     |        |        |       | 1      |       
|                                                      |                                                                                                        |                                                             | Receivable from related party                                          |                                                         |                             | 301   |          |              |       | (734   | )      |        |       |       |       
|                                                      |                                                                                                        |                                                             | Income taxes                                                           |                                                         |                             | 1,125 |          |              |       | (2,048 | )      |        |       | (160   | )     
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|                                                      |                                                                                                        |                                                             |                                                                        | Net cash (used in) provided by
    operating activities |                             |       | (577     | )            |       |        | 7,757  |        |       |        | 9,811  |  
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|Cash flows from investing
    activities:             |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |       
|                                                      | Purchase of Executive Air Support,
    net of cash acquired                                            |                                                             |                                                                        | (218,544                                                | )                           |       |          |             |       |        |        |       |      
|                                                      | Funds received on July 29,
    2004 for option and warrant payments made on July 30, 2004              |                                                             |                                                                        | (6,015                                                  | )                           |       |          | 6,015        |       |        |        |       |      
|                                                      | Purchase of General Aviation, net
    of cash acquired                                                 |                                                             |                                                                        |                                                        |                             |       |          |             |       |        |        | (3,341 | )    
|                                                      | Proceeds from sale of Flight
    Services and Interlink                                                |                                                             |                                                                        |                                                        |                             |       |          |             |       |        |        | 2,000  |      
|                                                      | Capital expenditures                                                                                   |                                                             |                                                                        | (3,198                                                  | )                           |       |          | (3,049       | )     |        |        | (3,245 | )    
|                                                      | Collections on note receivable from
    sale of division                                               |                                                             |                                                                        | 47                                                      |                             |       |          | 45           |       |        |        | 22     |      
|                                                      | Other                                                                                                  |                                                             |                                                                        | (435                                                    | )                           |       |          |             |       |        |        | (84    | )    
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|                                                      |                                                                                                        |                                                             |                                                                        | Net cash (used in) provided by
    investing activities |                             |       | (228,145 | )            |       |        | 3,011  |        |       |        | (4,648 | )
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|Cash flows from financing
    activities:             |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |       
|                                                      | Proceeds from issuance of common
    stock                                                             |                                                             |                                                                        | 108,835                                                 |                             |       |          |             |       |        |        |       |      
|                                                      | Proceeds from issuance of
    redeemable preferred stock                                               |                                                             |                                                                        | 1,023                                                   |                             |       |          |             |       |        |        |       |      
|                                                      | Proceeds from debt                                                                                     |                                                             |                                                                        | 130,000                                                 |                             |       |          |             |       |        |        |       |      
|                                                      | Deferred financing costs                                                                               |                                                             |                                                                        | (4,014                                                  | )                           |       |          |             |       |        |        |       |      
|                                                      | Restricted cash                                                                                        |                                                             |                                                                        | (3,856                                                  | )                           |       |          |             |       |        |        |       |      
|                                                      | Repayment of short-term note                                                                           |                                                             |                                                                        |                                                        |                             |       |          | (2,354       | )     |        |        |       |      
|                                                      | Payments on capital lease
    obligations                                                              |                                                             |                                                                        | (145                                                    | )                           |       |          | (325         | )     |        |        | (220   | )    
|                                                      | Borrowings under revolving credit
    agreement                                                        |                                                             |                                                                        |                                                        |                             |       |          |             |       |        |        | 1,000  |      
|                                                      | Payments under revolving credit
    agreement                                                          |                                                             |                                                                        |                                                        |                             |       |          | (1,000       | )     |        |        |       |      
|                                                      | Repayment on subordinated debt                                                                         |                                                             |                                                                        |                                                        |                             |       |          | (17,850      | )     |        |        |       |      
|                                                      | Repayments of borrowings under bank
    term loans                                                     |                                                             |                                                                        |                                                        |                             |       |          | (17,753      | )     |        |        | (6,736 | )    
|                                                      | Purchase of common stock warrants                                                                      |                                                             |                                                                        |                                                        |                             |       |          | (7,525       | )     |        |        |       |      
|                                                      | Termination of interest rate swap                                                                      |                                                             |                                                                        |                                                        |                             |       |          | (670         | )     |        |        |       |      
|                                                      | Deemed capital contribution from
    parent company for debt and warrant payments                      |                                                             |                                                                        |                                                        |                             |       |          | 41,736       |       |        |        |       |      
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|                                                      |                                                                                                        |                                                             |                                                                        | Net cash provided by (used in)
    financing activities |                             |       | 231,843  |              |       |        | (5,741 | )      |       |        | (5,956 | )
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|                                                      |                                                                                                        |                                                             |                                                                        | Net change in cash and cash
    equivalents             |                             |       | 3,121    |              |       |        | 5,027  |        |       |        | (793   | )
|                                                      |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |      
|Cash and cash equivalents at
    beginning of period  |                                                                                                        |                                                             |                                                                       |                                                         |                             |       | 2,438    |              |       |        | 3,231  |       
|Cash and cash equivalents at end of
    period        |                                                                                                        | $                                                           | 3,121                                                                  |                                                         |                             |       | 7,465    |              |       |        | 2,438  |       
|Non-cash investing and financing
    transactions:    |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |       
|                                                      | Note receivable from sale of
    subsidiary                                                            |                                                             | $                                                                      |                                                        |                             |       | $        |             |       |        | $      | 500    |      
|                                                      | Issuance of note payable in
    connection with acquisition                                            |                                                             |                                                                        |                                                        |                             |       |          |             |       |        |        | 2,400  |      
|Supplemental disclosure of cash
    flow information: |                                                                                                        |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |       
|                                                      | Cash paid during the period for:                                                                       |                                                             |                                                                        |                                                         |                             |       |          |              |       |        |        |        |      
|                                                      |                                                                                                        | Interest                                                    |                                                                        | $                                                       | 1,447                       |       |          | $            | 2,550 |        |        | $      | 4,234 |       
|                                                      |                                                                                                        | Income taxes                                                |                                                                        |                                                         | 134                         |       |          |              | 2,601 |        |        |        | 3,740 |       



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)





Notes to Consolidated Financial Statements

December 22, 2004 and December 31, 2003



(1)
    Basis of PresentationThe consolidated financial statements of North America Capital
Holding Company, or the Company or NACH, for the period from
January 1, 2004 to July 29, 2004 and for the year
ended December 31, 2003 represent the results of operations
of Executive Air Support, Inc., or EAS, as the predecessor
company. The consolidated financial statements for the period
from July 30, 2004 through December 22, 2004 reflect
the acquisition of EAS and subsequent acquisition of the Company
by Macquarie Infrastructure Company Inc., or MIC, as described
in Note 4. The acquisition has been accounted for using the
purchase method of accounting as prescribed in
SFAS No. 141, Business Combinations,or
SFAS No. 141. In accordance with
SFAS No. 141, the purchase price has been allocated to
the assets acquired and liabilities assumed based on estimates
of their respective fair values at the date of acquisition. Fair
values were determined principally by independent third-party
appraisals and supported by internal studies. See Note 4
for details of the purchase price allocation.



(2)
    The Company and Corporate RestructuringThe Company, a Delaware corporation, was formed on June 2,
2004 for the purpose of acquiring the aircraft service and
support operations of EAS, a Delaware corporation, and
subsidiaries. Effective with the closing of the acquisition of
EAS on July 29, 2004, the Company and its subsidiaries are
engaged primarily in the aircraft service and support business.
The Company currently operates ten fixed base operation, or FBO,
sites at airports throughout the United States and its
activities consist of fueling, hangar leasing, and related
services. Prior to July 30, 2004, the Company itself had no
significant operations.

Upon the closing of the July 29, 2004 transaction, the
Company succeeded EAS, and the historical financial information
contained herein reflects EAS status as the predecessor.

On October 12, 2004, MIC, a wholly owned indirect
subsidiary of Macquarie Infrastructure Company Trust, entered
into a second amended and restated stock purchase agreement with
Macquarie Investment Holdings Inc., a wholly owned indirect
subsidiary of Macquarie Bank Limited, to acquire 100% of the
ordinary shares in NACH. The closing date for the acquisition
was December 22, 2004 and resulted in a purchase price of
$118.2 million. Senior debt of $130 million, with
recourse only to the Company and its subsidiaries, that the
Company incurred to partially finance the acquisition of EAS
remained in place after the acquisition of the Company.

Pursuant to a stock purchase agreement, entered into by
Macquarie Investment Holdings Inc. on April 28, 2004, and
subsequently assigned to the Company, the Company acquired 100%
of the shares of EAS for $223.1 million, which includes
capital expenditure and working capital adjustments of
$4.6 million, estimated acquisition costs of
$2 million, and $500,000 of assumed debt. Cash acquired at
acquisition was $7.5 million. Additional costs of
acquisition totaling $3 million were capitalized subsequent
to the acquisition date. The Company incurred fees and other
expenses of approximately $10.3 million paid to the
Macquarie Group in connection with the completion of the
acquisition and debt arranging services on the bridge debt put
in place to fund the acquisition. Of these fees, $3 million
was capitalized to the cost of the investment in EAS (in
December 2004), $650,000 was deferred as financing costs and
will be amortized over the life of the debt facility and
$6.7 million was included as an expense in the
Companys statement of operations.

The stock purchase agreement relating to EAS includes an
indemnity from the selling shareholders for breaches of
representations and warranties that is limited to
$20 million, except for breaches of representations and
warranties regarding title, capitalization, taxes and any claims
based on fraud, willful misconduct

164



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

or intentional misrepresentation, for which the maximum amount
payable in respect thereof is an amount equal to the purchase
price.



(3)
    Summary of Significant Accounting Policies

(a) Basis of ConsolidationThe consolidated financial statements include the accounts of
the Company and its subsidiaries. All intercompany transactions
are eliminated in consolidation.



(b) Revenue RecognitionIn accordance with Staff Accounting Bulletin 104,
Revenue Recognition, the Company recognizes fuel and
service revenue when: persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered,
the sellers price to the buyer is fixed and determinable,
and collectibility is reasonably assured. In addition, all sales
incentives received by customers on fuel purchases under the
Companys Atlantic Awards program are recognized as a
reduction of revenue during the period incurred.

Service revenues include certain fueling fees. The Company
receives a fueling fee for fueling certain carriers with fuel
owned by such carriers. In accordance with Emerging Issues Task
Force, or EITF,
Issue 99-19,
Reporting Revenue Gross as a Principal versus Net as an
Agent, revenue from these transactions is recorded based on
the service fee earned and does not include the cost of the
carriers fuel.



(c) Accounting EstimatesThe preparation of financial statements, in conformity with
accounting principles generally accepted in the United States of
America, requires management to make estimates and assumptions
that affect the reported amounts of revenues and expenses.
Actual results could differ from these estimates.



(d) Cash and Cash EquivalentsCash and cash equivalents includes cash and highly liquid
investments with original maturity dates of 90 days or less.



(e) Depreciation of Property and EquipmentDepreciation of machinery and equipment is computed on the
straight-line method over the estimated service lives of the
respective property, which vary from 5 to 10 years. The
cost of leasehold improvements is amortized, on a straight-line
basis, over the shorter of the estimated service life of the
improvement or the respective term of the lease, generally
20 years. Expenditures for renewals and betterments are
capitalized, and expenditures for maintenance and repairs are
charged to expense as incurred.



(f) Accounting for Stock-Based Employee Compensation
    ArrangementsThe Company applies the intrinsic value-based method of
accounting for stock-based employee compensation arrangements.
No stock option-based employee compensation costs are reflected
in the Companys net income (loss), as all options granted
had an exercise price greater than the market value of the
Companys underlying common stock at the date of grant. Had
the Company elected to recognize compensation cost based on the
fair value of the stock options at the date of grant under
SFAS No. 123, such compensation expense would have
been insignificant. These options were exercised and redeemed
upon acquisition of EAS by the Company on July 29, 2004.

165



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003



(g) Derivative Financial InstrumentsThe Company adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, at the
beginning of its fiscal year 2001. The standard requires the
Company to recognize all derivatives on the balance sheet at
fair value. Derivatives that are not hedges must be adjusted to
fair value through the statement of operations. If the
derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings, or recognized
in other comprehensive income (loss) until the hedged item is
recognized in earnings. The ineffective portion of a
derivatives changes in fair value will be immediately
recognized in earnings.



(h) New Accounting PronouncementsIn January 2003, the Financial Accounting Standards Board (FASB)
issued Interpretation No. 46, Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51,
which addresses the consolidation by business enterprises of
variable interest entities. This provision had no impact on the
consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities, which amends and clarifies financial
accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts and
for hedging activities under SFAS No. 133. This
provision had no impact on the Companys consolidated
financial statements.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, which
establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both
liabilities and equity. This provision had no impact on the
Companys consolidated financial statements.

In December 2003, FASB issued SFAS No. 132 (revised),
Employers Disclosures about Pensions and Other
Postretirement Benefits. Statement No. 132 (revised)
prescribes employers disclosures about pension plans and
other post-retirement benefit plans; it does not change the
measurement or recognition of those plans. The statement retains
and revises the disclosure requirements contained in the
original Statement No. 132. It also requires additional
disclosures about the assets, obligations, cash flows and net
periodic benefit cost of defined benefit pension plans and other
postretirement benefit plans. See note 8 for revised
requirements applicable to the Company for the period from
January 1, 2004 through December 22, 2004 and year
ended December 31, 2003.

In December 2004, the FASB issued Statement No. 123
(revised 2004), Share-Based Payment, which addresses the
accounting for transactions in which an entity exchanges its
equity instruments for goods or services, with a primary focus
on transactions in which an entity obtains employee services in
share-based payment transactions. This Statement is a revision
to Statement 123 and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and its related
implementation guidance. For nonpublic companies, this Statement
will require measurement of the cost of employee services
received in exchange for stock compensation based on the
grant-date fair value of the employee stock options. Incremental
compensation costs arising from subsequent modifications of
awards after the grant date must be recognized. This Statement
will be effective for the Company as of July 1, 2005.

In December 2004, the FASB issued Statement No. 151,
Inventory Costs, which clarifies the accounting for
abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). Under this Statement,
such items will be recognized as current-period charges. In
addition, the Statement requires that allocation of fixed
production overheads to the costs of conversion be based on the
normal

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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

capacity of the production facilities. This Statement will be
effective for the Company for inventory costs incurred on or
after January 1, 2006.

In December 2004, the FASB issued Statement No. 153,
Exchanges of Non-Monetary Assets, which eliminates an
exception in APB 29 for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for
exchanges of nonmonetary assets that do not have commercial
substance. This Statement will be effective for the Company for
nonmonetary asset exchanges occurring on or after
January 1, 2006.



(i) ReclassificationsCertain amounts reported in the 2003 consolidated financial
statements have been reclassified to conform to the 2004
presentation.



(4)
    Business CombinationOn July 29, 2004, the Company acquired the capital stock of
EAS for $223.1 million. The acquisition of EAS enabled the
Company to enter the aviation services market as an established
competitor with an existing customer base and corporate
infrastructure. The acquisition has been accounted for under the
purchase method of accounting. As a result of the business
combination, the Company succeeded EAS, and the historical
financial information presented reflects the results of
operations and cash flows of EAS as the predecessor company. The
basis for the allocation of the purchase price is described in
Note 1.

The acquisition of EAS resulted in the Company assuming the
existing income tax bases of the predecessor. In accordance with
SFAS No. 141, a deferred tax liability was recorded to
reflect the increase in the financial accounting bases of the
assets acquired over the carryover income tax bases.

The allocation of the purchase price on July 29, 2004,
including transaction costs, was as follows (in thousands):

|                              |  |   |         |  
|----------------------------- |  | - | ------- | -
|Net working capital           |  | $ | 1,988   |  
|Airport contract rights       |  |   | 132,120 |  
|Plant and equipment           |  |   | 42,700  |  
|Customer relationships        |  |   | 3,900   |  
|Tradename                     |  |   | 6,800   |  
|Technology (intangible asset) |  |   | 500     |  
|Noncompete agreements         |  |   | 4,310   |  
|Other                         |  |   | 404     |  
|Goodwill                      |  |   | 93,205  |  
|                              |  |   |        
|Total assets acquired         |  |   | 285,927 |  
|Long-term liabilities assumed |  |   | (1,757  | )
|Deferred income taxes         |  |   | (61,051 | )
|                              |  |   |        
|Net assets acquired           |  | $ | 223,119 |  
|                              |  |   |        



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

The Company paid more than the fair value of the underlying net
assets as a result of the expectation of its ability to earn a
higher rate of return from the acquired business than would be
expected if those net assets had to be acquired or developed
separately. The value of the acquired intangible assets was
determined by taking into account risks related to the
characteristics and applications of the assets, existing and
future markets and analyses of expected future cash flows to be
generated by the business. The airport contract rights are being
amortized on a straight-line basis over their useful lives
ranging from 20 to 40 years. The weighted average
amortization period of the contractual agreements is
approximately 34 years. The Company expects that goodwill
recorded will not be deductible for income tax purposes.

The Company allocated $3.9 million of the purchase price,
respectively, to customer relationships in accordance with
EITF 02-17,
Recognition of Customer Relationship Intangible Assets
Acquired in a Business Combination. The Company will
amortize the amount allocated to customer relationships over a
five-year period.



(5)
    Income TaxesThe income tax provision (benefit) consisted of the following
for the period from January 1, 2004 through July 29,
2004, the period from July 30, 2004 through
December 22, 2004 (including stub periods), and fiscal
December 31, 2003 (in thousands):

|                                               |  |                 |      |   |                             |   |      |              |  |   |       |  
|---------------------------------------------- |  | --------------- | ---- | - | --------------------------- | - | ---- | ------------ |  | - | ----- | -
|                                               |  | North America   |      |   |                             |   |     
|                                               |  | Capital Holding |      |   |                             |   |     
|                                               |  | Company         |      |   |                            
|                                               |  |                 |      |   | Executive Air Support, Inc. |  
|                                               |  | July 30,        |      |   |                             |  
|                                               |  | 2004 to         |      |   | January 1,                  |   |      | Year Ended   | 
|                                               |  | December 22,    |      |   | 2004 to                     |   |      | December 31, | 
|                                               |  | 2004            |      |   | July 29, 2004               |   |      | 2003         | 
|                                               |  |                 |      |   |                             |   |      |              | 
|Continuing operations:                         |  |                 |      |   |                             |   |      |              |  |   |       |  
|Federal  current                              |  | $               | 966  |   |                             | $ | (10  | )            |  | $ | 2,596 |  
|Federal  deferred                             |  |                 | (672 | ) |                             |   | (281 | )            |  |   | 586   |  
|State  current                                |  |                 | 274  |   |                             |   | 366  |              |  |   | 1,028 |  
|State  deferred                               |  |                 | (282 | ) |                             |   | (672 | )            |  |   | (18   | )
|                                               |  |                 |      |   |                             |   |      |              | 
|                                               |  |                 | 286  |   |                             |   | (597 | )            |  |   | 4,192 |  
|Discontinued operations                        |  |                 | 80   |   |                             |   | (194 | )            |  |   | (208  | )
|                                               |  |                 |      |   |                             |   |      |              | 
|Total provision (benefit) for
    income taxes |  | $               | 366  |   |                             | $ | (791 | )            |  | $ | 3,984 |  
|                                               |  |                 |      |   |                             |   |      |              | 

168



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

The difference between the actual provision (benefit) for income
taxes from continuing operations and the expected
provision for income taxes computed by applying the
U.S. federal corporate tax rate to income from continuing
operations before taxes is attributable to the following (in
thousands):

|                                                                   |  |                 |        |   |  |                             |   |       |              |  |   |       | 
|------------------------------------------------------------------ |  | --------------- | ------ | - |  | --------------------------- | - | ----- | ------------ |  | - | ----- | 
|                                                                   |  | North America   |        |   |  |                             |   |      
|                                                                   |  | Capital Holding |        |   |  |                            
|                                                                   |  | Company         |        |   |  | Executive Air Support, Inc. |  
|                                                                   |  |                 |        |   |  |                             |  
|                                                                   |  | July 30,        |        |   |  | January 1,                  |   |       |             
|                                                                   |  | 2004 to         |        |   |  | 2004 to                     |   |       | Year Ended   | 
|                                                                   |  | December 22,    |        |   |  | July 29,                    |   |       | December 31, | 
|                                                                   |  | 2004            |        |   |  | 2004                        |   |       | 2003         | 
|                                                                   |  |                 |        |   |  |                             |   |       |              | 
|Provision (benefit) for federal
    income taxes at statutory rate |  | $               | (1,844 | ) |  |                             | $ | (378  | )            |  | $ | 3,480 | 
|State income taxes, net of federal
    tax benefit                 |  |                 | (6     | ) |  |                             |   | (675  | )            |  |   | 614   | 
|Nondeductible transaction costs                                    |  |                 | 1,805  |   |  |                             |   | 87    |              |  |   |      | 
|Nondeductible warrant liability                                    |  |                 |       |   |  |                             |   | 1,795 |              |  |   |      | 
|Resolution of tax contingency                                      |  |                 |       |   |  |                             |   | (915  | )            |  |   |      | 
|Other                                                              |  |                 | 331    |   |  |                             |   | (511  | )            |  |   | 98    | 
|                                                                   |  |                 |        |   |  |                             |   |       |              | 
|Provision (benefit) for income
    taxes for continuing operations |  | $               | 286    |   |  |                             | $ | (597  | )            |  | $ | 4,192 | 
|                                                                   |  |                 |        |   |  |                             |   |       |              | 



|    |                       
|--- | ----------------------
|(6) | Employee Benefit Plans



Employers Accounting for
Postretirement Benefits Other Than Pensions




169



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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

tions, up to a maximum of 6% of eligible employee compensation.
Employees may elect to contribute to the Plan an additional 1%
to 9% of gross pay that is not subject to match by the Company.
Company matching contributions totaled approximately $74,000,
$52,000 and $120,000 during the periods January 1, 2004
through July 29, 2004, July 30, 2004 through
December 22, 2004 and fiscal 2003, respectively. The
Company may make discretionary contributions to the Plan;
however, there were no discretionary contributions made during
the periods January 1, 2004 through July 29, 2004,
July 30, 2004 through December 22, 2004 and fiscal
2003.



(7)
    Commitments and Contingencies

(a) Operating LeasesThe Company leases hangar and other facilities at several
airport locations under operating leases expiring between 2005
and 2020, which are generally renewable, at the Companys
option, for substantial periods at increased rentals. These
leases generally restrict their assignability and the use of the
premises to activities associated with general aviation. The
leases provide for supplemental rentals based on certain sales
and other circumstances.

At December 22, 2004, the Company was obligated under the
lease agreements to construct certain facilities. The total
remaining cost of these projects is estimated to be
$0.3 million.

Rent expense charged to operations for the periods
January 1, 2004 through July 29, 2004, July 30,
2004 through December 22, 2004 and fiscal 2003 was
approximately $3.5 million, $2.5 million and
$5.2 million, respectively.

The Company has entered into employment agreements with certain
executives. The terms of the agreements provide for compensation
levels and termination provisions.



(b) Environmental MattersLaws and regulations relating to environmental matters may
affect the operations of the Company. The Company believes that
its policies and procedures with regard to environmental matters
are adequate to prevent unreasonable risk of environmental
damage and related financial liability. Some risk of
environmental and other damage is, however, inherent in
particular operations of the Company. The Company maintains
adequate levels of insurance coverage with respect to
environmental matters. As of December 22, 2004 and
December 31, 2003, management does not believe that
environmental matters will have a significant effect on the
Companys operations.



(c) Legal ProceedingsThe Company is involved in various claims and lawsuits
incidental to its business. In the opinion of management, these
claims and suits in the aggregate will not have a material
adverse effect on the Companys business, financial
condition, or results of operations.

(8)     Related-Party
Transactions

On July 29, 2004, the Company drew down $130 million
on a Combined Bridge Acquisition and Letter of Credit Facility
Agreement with Macquarie Bank Limited, an affiliated company
(the Bridge Facility). The Bridge Facility was repaid
concurrently with the long-term notes being issued on
October 21, 2004. The Company incurred interest expense of
$1.6 million and fees of $1.3 million on this Bridge
Facility, which are included as expenses in the Companys
results of operations.

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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

The Company paid fees to Macquarie Securities (USA) Inc.,
or MSUSA, a wholly owned subsidiary within the Macquarie Bank
Group of companies, of $3 million for advisory services
provided in connection with the acquisition of EAS. The Company
also reimbursed MSUSA $1.4 million and another Macquarie
Group company, Macquarie Holdings (USA) Inc. $0.2 million,
for direct acquisition costs. These fees and expenses have been
capitalized and included as part of the purchase price of the
EAS acquisition. The Company also paid fees to MSUSA of
$0.7 million for debt arranging services in relation to the
long-term debt issued in October 2004. These fees have been
deferred and are amortized over the life of the debt facility.
Fees paid to MSUSA of $3.8 million and $0.7 million
for equity underwriting facilities and bridge debt facilities,
respectively, which have now matured or ceased have been
included as expenses in the Companys results of operations.

Macquarie Bank Limited loaned $52 million of the long-term
debt of the Company on October 21, 2004. The Company paid
Macquarie Bank Limited an upfront lending fee of $520,000 which
has been deferred and amortized over the life of the debt
facility. Interest expense on this related party portion of the
long-term debt was $434,000 for the period October 21, 2004
to December 22, 2004.

EAS issued 699,500 warrants during fiscal 2000 to a shareholder.
The warrants had an exercise price of $3.62 per share and
were exercisable upon the earlier of August 31, 2010 or the
sale of EAS. These warrants were purchased and subsequently
cancelled by the Company for $1.56 million upon the
acquisition of EAS by the Company.

On December 21, 2000, EAS issued 1,104,354 warrants to a
shareholder (the Warrant Holder) in conjunction with the
issuance of subordinated debt. The warrants had an exercise
price of $0.01 per share and were exercisable at any time
through December 21, 2010. Beginning in the first quarter
of 2007, EAS could buy the warrants from the Warrant Holder at
the then fair value of the warrants, as defined. Beginning in
the first quarter of 2006, the Warrant Holder could sell the
warrants to EAS at the then fair value of the warrants, as
defined. Due to the warrant holders ability to sell the
warrants to EAS for cash, EAS recorded the fair value of the
warrants as a liability in accordance with
EITF 00-19,
Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Companys Own Stock. The
warrants were reflected at fair value and subsequent changes in
fair value were reflected in EASs operating results. EAS
recorded an increase in the fair value of the warrants of
approximately $5.2 million in other expense on the
accompanying consolidated statement of operations for the period
from January 1, 2004 through July 29, 2004. The
warrants were purchased and canceled by the Company for
$7.5 million upon the acquisition of EAS by the Company on
July 29, 2004.

(9)     Stock Options

In 2000, EAS adopted a stock option plan whereby EAS would grant
incentive stock options or nonqualified stock options to
employees to purchase EAS common stock, hereinafter referred to
as the Plan. The incentive stock options or
nonqualified options were to be granted at no less than the fair
market value of the shares at the date of grant. Under the Plan,
stock options would expire ten years after issuance and
generally would vest ratably over five years. The stock options
were fully vested and were

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##### Table of Contents

NORTH AMERICA CAPITAL HOLDING COMPANY

(Successor to Executive Air Support, Inc.)

Notes to Consolidated Financial
Statements  (Continued)

December 22, 2004 and December 31, 2003

sold by the option holders upon the acquisition of EAS by the
Company on July 29, 2004. Activity under the Plan for the
period ended December 22, 2004 and fiscal 2003 is as
follows:

|                               |  |           |           |          |                |   |      | 
|------------------------------ |  | --------- | --------- | -------- | -------------- | - | ---- | 
|                               |  |           |           | Weighted |               
|                               |  | Number of |           |          | Average        |  
|                               |  | Shares    |           |          | Exercise Price |  
|                               |  |           |           |          |                |  
|Outstanding, December 31, 2003 |  |           | 1,398,848 |          |                | $ | 3.62 | 
|Granted at fair value          |  |           |          |          |                |   |     | 
|Forfeited                      |  |           |          |          |                |   |     | 
|Exercised                      |  |           | 1,398,848 |          |                |   | 3.62 | 
|                               |  |           |           |          |                |  
|Outstanding, July 29, 2004     |  |           |          |          |                |   |     | 
|Granted at fair value          |  |           |          |          |                |   |     | 
|Forfeited                      |  |           |          |          |                |   |     | 
|Exercised                      |  |           |          |          |                |   |     | 
|                               |  |           |           |          |                |  
|Outstanding, December 22, 2004 |  |           |          |          |                | $ |     | 
|                               |  |           |           |          |                |  





|     |                  
|---- | -----------------
|(10) | Sale of Interlink



(11)     Sale of Flight Services




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##### Table of Contents

SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS

|                                                                    |  |                |       |  |            |   |    |       |  |   |            |            |  |           |      |   |  |   |       | 
|------------------------------------------------------------------- |  | -------------- | ----- |  | ---------- | - | -- | ----- |  | - | ---------- | ---------- |  | --------- | ---- | - |  | - | ----- | 
|                                                                    |  | Balance at     |       |  | Charged to |   |    |       |  |   |            | Balance at | 
|                                                                    |  | Beginning of   |       |  | Costs and  |   |    |       |  |   |            | End        | 
|                                                                    |  | Period         |       |  | Expenses   |   |    | Other |  |   | Deductions |            |  | of Period |     
|                                                                    |  |                |       |  |            |   |    |       |  |   |            |            |  |           |     
|                                                                    |  | (In thousands) |      
|Allowance for Doubtful Accounts                                     |  |                |       |  |            |   |    |       |  |   |            |            |  |           |      |   |  |   |       | 
|For the Period April 13, 2004
    (inception) to December 31, 2004: |  | $              |      |  |            | $ | 26 |       |  | $ | 1,333      |            |  | $         |     |   |  | $ | 1,359 | 
|                                                                    |  |                |       |  |            |   |    |       |  |   |            |            |  |           |     
|For the Year Ended
    December 31, 2005:                           |  | $              | 1,359 |  |            | $ | 4  |       |  | $ |           |            |  | $         | (524 | ) |  | $ | 839   | 
|                                                                    |  |                |       |  |            |   |    |       |  |   |            |            |  |           |     






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure

S-1 333-116244) 8-K







|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



| |                                                                          
| | -------------------------------------------------------------------------
| | (a)     Managements
    evaluation of disclosure controls and procedures

13(a)-15(e) 13a-15(f)




| |                                                                             
| | ----------------------------------------------------------------------------
| | (b)     Managements report
    on internal control over financial reporting

13a-15(f) 15d-15(f)






173



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##### Table of Contents

procedures may deteriorate. Accordingly, even those systems
determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.

Management used the framework set forth in the report entitled
Internal Control-Integrated Framework published by
the Committee of Sponsoring Organizations of the Treadway
Commission (referred to as COSO) to evaluate the
effectiveness of the Companys internal control over
financial reporting as of December 31, 2005. As permitted
under the guidance of the SEC released October 16, 2004, in
Question 3 of its Frequently Asked Questions
regarding Securities Exchange Act Release
No. 34-47986,
Managements Report on Internal Control Over Financial
Reporting and Certification of Disclosure in Exchange Act
Periodic Reports, the scope of managements evaluation
excluded assets acquired through the purchase of Eagle Aviation
Resources, Ltd. (EAR), acquisition date August 12, 2005,
and the assets of SunPark, acquisition date October 3, 2005.

Accordingly, managements assertion of the Companys
internal control over financial reporting does not include
internal control over financial reporting of the EAR assets and
the SunPark assets.

The EAR assets represent 4.6% of the Companys total assets
at December 31, 2005 and generated 4.1% of the
Companys total revenues during the year ended
December 31, 2005. The SunPark assets represent 5.5% of the
Companys total assets at December 31, 2005 and
generated 1% of the Companys total revenue during the year
ended December 31, 2005.

As a result of its evaluation, management has concluded that the
Companys internal control over financial reporting was
effective as of December 31, 2005.

KPMG LLP, an independent registered public accounting firm that
audited the financial statements included in this report has
issued an attestation report on managements assessment of
our internal control over financial reporting.

174



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Macquarie Infrastructure Company Trust.:

We have audited managements assessment, included in
Item 9A.(b) titled Managements report on internal
control over financial reporting, that Macquarie Infrastructure
Company Trust maintained effective internal control over
financial reporting as of December 31, 2005, based on
criteria established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). Macquarie Infrastructure Company
Trusts management is responsible for maintaining effective
internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on
managements assessment and an opinion on the effectiveness
of the Companys internal control over financial reporting
based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, evaluating
managements assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing
such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable
basis for our opinion.

A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

Macquarie Infrastructure Company Trust, through wholly owned
subsidiaries, acquired Eagle Aviation Resources, Ltd. (EAR), the
assets of which the Company acquired on August 12, 2005,
and through a majority-owned subsidiary, acquired certain assets
and assumed certain liabilities related to six off-airport
parking facilities, collectively referred to as SunPark on
October 3, 2005. Management excluded from its assessment of
the effectiveness of Macquarie Infrastructure Company
Trusts internal control over financial reporting as of
December 31, 2005, both EARs and SunParks
internal control over financial reporting. The EAR assets
represent 4.6% of the Companys total assets at
December 31, 2005, and generated 4.1% of the Companys
total revenues during the year ended December 31, 2005. The
SunPark assets represent 5.5% of the Companys total assets
at December 31, 2005 and generated 1% of the Companys
total revenues during the year ended December 31, 2005. Our
audit of internal control over financial reporting of

175



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##### Table of Contents

Macquarie Infrastructure Company Trust also excluded an
evaluation of the internal control over financial reporting of
both EAR and SunPark.

In our opinion, managements assessment that Macquarie
Infrastructure Company Trust maintained effective internal
control over financial reporting as of December 31, 2005,
is fairly stated, in all material respects, based on criteria
established in Internal Control  Integrated Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Also, in our opinion, Macquarie
Infrastructure Company Trust maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2005, based on criteria established in
Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Macquarie Infrastructure Company
Trust and subsidiaries as of December 31, 2005 and 2004,
and the related consolidated statements of operations,
stockholders equity and comprehensive income, and cash
flows and the related financial statement schedule for the year
ended December 31, 2005 and the period from April 13,
2004 (inception) to December 31, 2004, and our report dated
March 10, 2006 expressed an unqualified opinion on those
consolidated financial statements.



(d)     Changes in Internal
    Controls.No change in our internal control over financial reporting (as
such term is defined in Exchange Act
Rule 13a-15(f))
was identified in connection with the evaluation described in
(b) above during the fiscal quarter ended December 31,
2005 that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.





Item 9B.     Other
Information

None.

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##### Table of Contents

Part III







Item 10.
    Directors and Executive Officers of the RegistrantsThe company will furnish to the Securities and Exchange
Commission a definitive proxy statement not later than
120 days after the end of the fiscal year ended
December 31, 2005. The information required by this item is
incorporated herein by reference to the proxy statement.







Item 11.
    Executive CompensationThe information required by this item is incorporated herein by
reference to the proxy statement.







Item 12.
    Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder MattersThe information required by this item is incorporated herein by
reference to the proxy statement.







Item 13.
    Certain Relationships and Related TransactionsThe information required by this item is incorporated herein by
reference to the proxy statement.







Item 14.
    Principal Accounting Fees and ServicesThe information required by this item is incorporated herein by
reference to the proxy statement.

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##### Table of Contents

Part IV







Item 15.
    Exhibits, Financial Statement SchedulesFinancial Statements and Schedules

The consolidated financial statements in Part II,
Item 8, and schedule listed in the accompanying exhibit
index are filed as part of this report.

Exhibits

The exhibits listed on the accompanying exhibit index are filed
as a part of this report.

178



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##### Table of Contents

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, each Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 14, 2006.



MACQUARIE INFRASTRUCTURE COMPANYTRUST (REGISTRANT)

By:
    /s/ Peter StokesPeter StokesRegular TrusteeMACQUARIE INFRASTRUCTURE COMPANY LLC (REGISTRANT)

By:
    /s/ Peter StokesPeter StokesChief Executive Officer179



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##### Table of Contents

Power of Attorney

We, the undersigned directors and executive officers of
Macquarie Infrastructure Company LLC, hereby severally
constitute Peter Stokes and David Mitchell, and each of them
singly, our true and lawful attorneys with full power to them
and each of them to sign for us, and in our names in the
capacities indicated below, any and all amendments to the Annual
Report on
Form 10-K filed
with the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by our said
attorneys to any and all amendments to said Annual Report on
Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of Macquarie Infrastructure Company LLC and in the
capacities indicated on the 14th day of March, 2006.

|                                               |  |                                                                                           
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------
|Signature                                      |  | Title                                                                                     
|                                               |  |                                                                                           
|                                              
|/s/ Peter StokesPeter Stokes                   |  | Chief Executive Officer
    (Principal Executive Officer)                                 
|                                              
|/s/ David MitchellDavid Mitchell               |  | Chief Financial Officer
    (Principal Financial Officer and Principal Accounting Officer)
|                                              
|/s/ John RobertsJohn Roberts                   |  | Chairman of the Board of Directors                                                        
|                                              
|/s/ Norman H. Brown, Jr.Norman H. Brown, Jr.   |  | Director                                                                                  
|                                              
|/s/ George W. Carmany IIIGeorge W. Carmany III |  | Director                                                                                  
|                                              
|/s/ William H. WebbWilliam H. Webb             |  | Director                                                                                  

180



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##### Table of Contents

Exhibit Index

|        |   |             |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | - | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |            
|Number  |   | Description
|        |   |            
|        | 2 | .1          |  | Stock Purchase Agreement dated as
    of June 7, 2004, as amended as of August 9, 2004 and
    November 25, 2004 relating to the acquisition of Macquarie
    Americas Parking Corporation (incorporated by reference to
    Exhibit 2.1 of Amendment No. 4 to the
    Registrants Registration Statement on Form S-1
    (Registration No. 333-116244) (Amendment
    No. 4))                 
|        | 2 | .2          |  | Second Amended and Restated Stock
    Purchase Agreement dated as of October 12, 2004 as amended
    as of November 24, 2004 relating to the acquisition of
    North America Capital Holding Company (incorporated by reference
    to Exhibit 2.2 of Amendment No. 4)                                                                                                                           
|        | 2 | .3          |  | Share Purchase Agreement dated
    June 7, 2004 and related Side Letters dated
    October 14, 2004 and November 1, 2004 relating to the
    acquisition of Macquarie Yorkshire Limited (incorporated by
    reference to Exhibit 2.3 of Amendment No. 4)                                                                                                                                         
|        | 2 | .4          |  | Amended and Restated Limited
    Liability Company Purchase Agreement dated October 12, 2004
    relating to the acquisition of Macquarie District Energy
    Holdings LLC (incorporated by reference to Exhibit 2.4 of
    Amendment No. 3 to the Registrants Registration
    Statement on Form S-1 (Registration No. 333-116244)
    (Amendment No. 3))                                     
|        | 2 | .5          |  | Contribution and Subscription
    Agreement dated as of June 7, 2004, related Side Letter
    dated October 15, 2004 and Novation Agreement dated
    November 15, 2004 relating to the investment in the
    ordinary shares and preferred equity certificates of Macquarie
    Luxembourg Water S.a.r.L. (incorporated by reference to
    Exhibit 2.5 of Amendment No. 4)                      
|        | 2 | .6          |  | Stapled Security Purchase Agreement
    dated as of June 7, 2004, as amended as of
    November 18, 2004, and related assignment agreements
    relating to the investment in stapled securities of Macquarie
    Communications Infrastructure Group (incorporated by reference
    to Exhibit 2.6 of Amendment No. 4)                                                                           
|        | 2 | .7          |  | Unit Purchase Agreement dated as of
    August 17, 2004 relating to the acquisition of units of
    PCAA Parent LLC from the PCA Group (as defined therein)
    (incorporated by reference to Exhibit 2.7 of Amendment
    No. 2 to the Registrants Registration Statement on
    Form S-1 (Registration No. 333-116244)
    (Amendment No. 2))                                                
|        | 2 | .8          |  | Stock Purchase Agreement, dated as
    of October 8, 2004 relating to the acquisition of 100% of
    the common stock of Seacoast Holdings (PCAAH), Inc.
    (incorporated by reference to Exhibit 2.8 of Amendment
    No. 2)                                                                                                                                                                    
|        | 2 | .9          |  | Unit Purchase Agreement dated as of
    October 8, 2004 relating to the acquisition of units of
    PCAA Parent LLC from Macquarie Securities (USA), Inc.
    (incorporated by reference to Exhibit 2.9 of Amendment
    No. 2)                                                                                                                                                                   
|        | 2 | .10         |  | Stock Purchase Agreement, dated as
    of October 8, 2004 as amended as of November 25, 2004
    relating to the acquisition of Macquarie Airports North America
    Inc. (incorporated by reference to Exhibit 2.10 of
    Amendment No. 4)                                                                                                                                                      
|        | 2 | .11         |  | Membership Interest Purchase
    Agreement dated May 26, 2005 between Gene H. Yamagata and
    Macquarie FBO Holdings LLC, relating to the acquisition of Las
    Vegas Executive Air Terminal (incorporated by reference to the
    Registrants Current Report on Form 8-K filed with the
    SEC on May 31, 2005)                                                                              
|        | 2 | .12         |  | Purchase Agreement dated
    August 2, 2005, as amended August 17, 2005, among k1
    Ventures Limited, K-1 HGC Investment, L.L.C. and Macquarie
    Investment Holdings Inc, and related joinder agreement and
    assignment agreement (incorporated by reference to
    Exhibits 2.1, 2.2 and 2.3 to the Registrants Current
    Report on Form 8-K filed with the SEC on August 19,
    2005)
|        | 2 | .13         |  | Second Amendment to Purchase
    Agreement dated October 21, 2005 among k1 Ventures Limited,
    K-1 HGC Investment, L.L.C. and Macquarie Gas Holdings LLC
    (incorporated by reference to Exhibit 2.2 of the
    Registrants Quarterly Report on Form 10-Q for the
    quarter ended September 30, 2005 (the September
    Quarterly Report))                                               
|        | 2 | .14         |  | Joinder Agreement dated
    September 16, 2005 between Macquarie Infrastructure Company
    Inc., k1 Ventures Limited, K-1 HGC Investment, L.L.C. and
    Macquarie Gas Holdings LLC (incorporated by reference to
    Exhibit 2.3 of the Registrants September Quarterly
    Report)                                                                                                            



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##### Table of Contents



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                 
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 2  | .15         |  | Assignment Agreement dated
    September 16, 2005 between Macquarie Infrastructure Company
    Inc. and Macquarie Gas Holdings LLC (incorporated by reference
    to Exhibit 2.4 of the Registrants September Quarterly
    Report)                                                                                                                                                                            
|        | 3  | .1          |  | Second Amended and Restated
    Trust Agreement dated as of September 1, 2005 of
    Macquarie Infrastructure Company Trust (incorporated by
    reference to Exhibit 3.1 of the Registrants Current
    Report on Form 8-K, filed with the SEC on September 7,
    2005 (the September Current Report))                                                                                                     
|        | 3  | .2          |  | Second Amended and Restated
    Operating Agreement dated as of September 1, 2005 of
    Macquarie Infrastructure Company LLC (incorporated by reference
    to Exhibit 3.2 of the September Current Report)                                                                                                                                                                                                    
|        | 3  | .3          |  | Amended and Restated Certificate of
    Trust of Macquarie Infrastructure Assets Trust (incorporated by
    reference to Exhibit 3.7 of Amendment No. 2)                                                                                                                                                                                                                                                        
|        | 3  | .4          |  | Amended and Restated Certificate of
    Formation of Macquarie Infrastructure Assets LLC (incorporated
    by reference to Exhibit 3.8 of Amendment No. 2)                                                                                                                                                                                                                                                      
|        | 4  | .1          |  | Specimen certificate evidencing
    share of trust stock of Macquarie Infrastructure Company Trust
    (incorporated by reference to Exhibit 4.1 of the
    Registrants Annual Report on Form 10-K for the year
    ended December 31, 2004 (the 2004 Annual
    Report))                                                                                                                                    
|        | 4  | .2          |  | Specimen certificate evidencing LLC
    interest of Macquarie Infrastructure Company LLC (incorporated
    by reference to Exhibit 4.2 of the 2004 Annual Report)                                                                                                                                                                                                                                               
|        | 10 | .1          |  | Management Services Agreement among
    Macquarie Infrastructure Company LLC, certain of its
    subsidiaries named therein and Macquarie Infrastructure
    Management (USA) Inc. dated as of December 21, 2004
    (incorporated by reference to the Current Report)                                                                                                                                          
|        | 10 | .2          |  | Registration Rights Agreement among
    Macquarie Infrastructure Company Trust, Macquarie Infrastructure
    Company LLC and Macquarie Infrastructure Management
    (USA) Inc. dated as of December 21, 2004 (incorporated
    by reference to the Registrants Current Report on
    Form 8-K filed with the SEC on December 27, 2004)                                                                        
|        | 10 | .3          |  | Terms and Conditions of
    Class A Preferred Equity Certificates (incorporated by
    reference to Exhibit 10.3 of Amendment No. 2)                                                                                                                                                                                                                                                                            
|        | 10 | .4          |  | Terms and Conditions of
    Class B Preferred Equity Certificates (incorporated by
    reference to Exhibit 10.4 of Amendment No. 2)                                                                                                                                                                                                                                                                            
|        | 10 | .5         |  | Shareholders Agreement dated
    April 30, 2004 relating to the Registrants interest
    in Macquarie Luxembourg Water S.a.r.L. (incorporated by
    reference to Exhibit 10.5 of Amendment No. 3)                                                                                                                                                                                                            
|        | 10 | .6         |  | Deed of Adherence to the
    Shareholders Agreement relating to the Registrants
    interest in Macquarie Luxembourg Water S.a.r.L. (incorporated by
    reference to Exhibit 10.6 of the 2004 Annual Report)                                                                                                                                                                                                 
|        | 10 | .7          |  | Shareholders Agreement dated
    March 26, 1996 and amended and restated on April 30,
    2003 relating to the Registrants interest in
    Connect M1-A1 Holdings Limited (formerly Yorkshire Link
    (Holdings) Limited) (incorporated by reference to
    Exhibit 10.7 of the Registrants Registration
    Statement on Form S-1 (Registration No. 333-116244)
    (the Form S-1))                      
|        | 10 | .8          |  | Deed of Novation to the
    Shareholders Agreement relating to the Registrants
    interest in Connect M1-A1 Holdings Limited (incorporated by
    reference to Exhibit 10.8 of the 2004 Annual Report)                                                                                                                                                                                                       
|        | 10 | .9          |  | Loan Agreement dated
    October 1, 2003, among Parking Company of America Airports,
    LLC, PCA Airports, Ltd., Parking Company of America Airports
    Phoenix, LLC and GMAC Commercial Mortgage Corporation
    (incorporated by reference to Exhibit 10.11 of the
    Form S-1)                                                                                                                            
|        | 10 | .10         |  | Stock Purchase Agreement dated as
    of April 28, 2004, among Macquarie Investment Holdings,
    Inc., Executive Air Support, Inc. and its shareholders named
    therein, as amended by the Closing Letter Agreement dated as of
    July 29, 2004, relating to the acquisition of Executive Air
    Support, Inc. (incorporated by reference to Exhibit 10.12
    of Amendment No. 4)                        
|        | 10 | .11         |  | Membership Interest Purchase
    Agreement dated as of August 18, 2004 among North America
    Capital Holding Company, and the Sellers named therein relating
    to the acquisition of General Aviation Holdings, LLC
    (incorporated by reference to Exhibit 10.13 of Amendment
    No. 1 to the Registrants Registration Statement on
    Form S-1 (Registration No. 333-116244)
    (Amendment No. 1))



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##### Table of Contents



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .12         |  | Share Purchase Agreement dated
    April 30, 2004 relating to the acquisition by Macquarie
    Luxembourg Water S.a.r.L. of the ordinary shares of Macquarie
    Water (UK) Limited (incorporated by reference to
    Exhibit 10.17 of Amendment No. 4)                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .13         |  | Amended and Restated Secondment
    Agreement dated March 26, 1996 and amended and restated on
    April 30, 2003, among Connect M1-A1 Limited (formerly
    Yorkshire Link Limited) Macquarie Infrastructure
    (UK) Limited and Balfour Beatty plc (incorporated by
    reference to Exhibit 10.18 of Amendment No. 4)                                                                                                                                                                                                                                                                                           
|        | 10 | .14         |  | Deed of Novation related to the
    Secondment Agreement (incorporated by reference to
    Exhibit 10.17 of the 2004 Annual Report)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .15         |  | DBFO contract dated March 26,
    1996, by and between the U.K. Secretary of State for Transport
    and Connect M1-A1 Limited (formerly Yorkshire Link Limited)
    (incorporated by reference to Exhibit 10.20 of Amendment
    No. 4)                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .16         |  | Amended and Restated Facility
    Agreement dated March 26, 1996 and amended and restated on
    October 20, 1997 and September 4, 2001, among Connect
    M1-A1 Limited (formerly Yorkshire Link Limited), ABN AMRO Bank
    N.V. and certain financial institutions listed in
    Schedule 1 thereto (incorporated by reference to
    Exhibit 10.21 of Amendment No. 4)                                                                                                                                                                                                                                          
|        | 10 | .17         |  | EIB Facility Agreement dated
    March 26, 1996 and amended and restated on
    September 4, 2001, between European Investment Bank and
    Connect M1-A1 Limited (formerly Yorkshire Link Limited)
    (incorporated by reference to Exhibit 10.22 of Amendment
    No. 4)                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .18         |  | Amended and Restated Commercial
    Subordinated Loan Agreement dated March 26, 1996 and
    amended and restated on October 20, 1997 and
    September 4, 2001, among Connect M1-A1 Limited (formerly
    Yorkshire Link Limited), Macquarie Infrastructure
    (UK) Limited and Balfour Beatty plc (incorporated by
    reference to Exhibit 10.23 of Amendment No. 4)                                                                                                                                                                                                                                            
|        | 10 | .19         |  | Stock Purchase Agreement dated as
    of December 12, 2003 among Macquarie District Energy, Inc.,
    Macquarie District Energy Holdings, LLC, Macquarie Bank Limited,
    Exelon Corporation and Exelon Thermal Holdings, Inc., as amended
    as of June 30, 2004 (incorporated by reference to
    Exhibit 10.25 of Amendment No. 1)                                                                                                                                                                                                                                                                             
|        | 10 | .20         |  | District Cooling System Use
    Agreement dated as of October 1, 1994 between the City of
    Chicago, Illinois and MDE Thermal Technologies, Inc., as amended
    on June 1, 1995, July 15, 1995, February 1, 1996,
    April 1, 1996, October 1, 1996, November 7, 1996,
    January 15, 1997, May 1, 1997, August 1, 1997,
    October 1, 1997, March 12, 1998, June 1, 1998,
    October 8, 1998, April 21, 1999, March 1, 2000,
    March 15, 2000, June 1, 2000, August 1, 2001,
    November 1, 2001, June 1, 2002, and June 30, 2004
    (incorporated by reference to Exhibit 10.25 of Amendment
    No. 2)
|        | 10 | .21         |  | Note Purchase Agreement dated
    as of September 27, 2004 relating to the financing of the
    acquisition of Thermal Chicago Corporation by Macquarie District
    Energy, Inc. (incorporated by reference to Exhibit 10.26 of
    Amendment No. 2)                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .22         |  | Macquarie Infrastructure Company
    LLC  Independent Directors Equity Plan (incorporated
    by reference to Exhibit 10.25 of the 2004 Annual Report)                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .23         |  | Parent Company Guarantee between
    Macquarie Infrastructure Company LLC and Balfour Beatty plc
    (incorporated by reference to Exhibit 10.27 of the 2004
    Annual Report)                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10 | .24         |  | Limited Liability Company Agreement
    dated as of March 18, 1999 of Northwind Aladdin, LLC
    (incorporated by reference to Exhibit 10.31 of Amendment
    No. 3)                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .25         |  | Letter Agreement dated
    November 3, 2004 relating to the reimbursement of pre-IPO
    costs of Macquarie Infrastructure Management (USA) Inc.
    (incorporated by reference to Exhibit 10.32 of Amendment
    No. 3)                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .26         |  | Loan Agreement between PCAA SP,
    LLC, as Borrower, and GMAC Commercial Mortgage Bank, as Lender,
    dated as of October 3, 2005 (incorporated by reference to
    Exhibit 10.2 of the September Quarterly Report)                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .27         |  | Credit Agreement dated as of
    November 11, 2005 among Macquarie Infrastructure Company
    Inc. (d/b/a Macquarie Infrastructure Company (US)) as Borrower,
    Macquarie Infrastructure Company LLC, the Lenders and Issuers
    party thereto and Citicorp North America, Inc., as
    Administrative Agent (incorporated by reference to
    Exhibit 10.3 of the September Quarterly Report)                                                                                                                                                                                                                   



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##### Table of Contents



|        |    |             |  |                                                                                                                                                                                          
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|Number  |    | Description
|        |    |            
|        | 10 | .28         |  | Loan Agreement dated as of
    December 12, 2005 among North America Capital Holding
    Company, the Lenders named therein and Mizuho Corporate Bank,
    Ltd.                          
|        | 10 | .29         |  | Loan Agreement dated as of
    November 17, 2005 among HGC Holdings, LLC (unsigned),
    Macquarie Gas Holdings, LLC, the Lenders named therein and
    Dresdner Bank AG London Branch   
|        | 10 | .30         |  | Loan Agreement dated as of
    November 17, 2005 among The Gas Company, LLC (unsigned),
    Macquarie Gas Holdings, LLC, the Lenders named therein and
    Dresdner Bank AG London Branch
|        | 21 | .1          |  | Subsidiaries of the Registrants                                                                                                                                                          
|        | 23 | .1          |  | Consent of KPMG LLP                                                                                                                                                                      
|        | 24 | .1          |  | Powers of Attorney (included in
    signature pages)                                                                                                                                     
|        | 31 | .1          |  | Rule 13a-14(a)/15d-14(a)
    Certification of the Chief Executive Officer                                                                                                                
|        | 31 | .2          |  | Rule 13a-14(a)/15d-14(a)
    Certification of the Chief Financial Officer                                                                                                                
|        | 32 |             |  | Section 1350 Certifications                                                                                                                                                              






|  |                                                                                                     
|- | ----------------------------------------------------------------------------------------------------
| | Confidential treatment granted as to certain portions, which
    were separately filed with the SEC.