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MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)

		Six Months Ended
		June 30, 2010				June 30, 2009(1)
Operating activities
Net income (loss) before noncontrolling interests		$	76,134			$	(82,856	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations:
Net (income) loss from discontinued operations before noncontrolling interests			(81,199	)			9,583
Non-cash goodwill impairment			—				71,200
Depreciation and amortization of property and equipment			18,195				25,385
Amortization of intangible assets			17,411				42,797
Equity in earnings and amortization charges of investees			(11,367	)			(15,477	)
Equity distributions from investees			5,000				7,000
Amortization of debt financing costs			2,256				2,514
Non-cash derivative loss			31,674				12,173
Base management fees settled in LLC interests			2,189				851
Equipment lease receivable, net			1,451				1,407
Deferred rent			145				87
Deferred taxes			(16,046	)			(38,131	)
Other non-cash expenses (income), net			2,112				(350	)
Changes in other assets and liabilities, net of acquisitions:
Restricted cash			50				—
Accounts receivable			(4,718	)			6,881
Inventories			(2,376	)			1,598
Prepaid expenses and other current assets			1,299				5,394
Due to manager – related party			2,263				(3,493	)
Accounts payable and accrued expenses			(1,281	)			(5,213	)
Income taxes payable			(406	)			40
Other, net			(1,140	)			(1,628	)
Net cash provided by operating activities from continuing operations			41,646				39,762
Investing activities
Purchases of property and equipment			(7,315	)			(11,864	)
Investment in capital leased assets			(2,400	)			—
Other			658				92
Net cash used in investing activities from continuing operations			(9,057	)			(11,772	)

See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS – (continued)
(Unaudited)
($ In Thousands)

		Six Months Ended
		June 30, 2010				June 30, 2009
Financing activities
Net proceeds on line of credit facilities		$	—			$	3,600
Contributions received from noncontrolling interests			300				—
Distributions paid to noncontrolling interests			(1,261	)			(314	)
Payment of long-term debt			(31,736	)			(60,620	)
Change in restricted cash			2,236				(33	)
Payment of notes and capital lease obligations			(164	)			(94	)
Net cash used in financing activities from continuing operations			(30,625	)			(57,461	)
Net change in cash and cash equivalents from continuing operations			1,964				(29,471	)
Cash flows provided by (used in) discontinued operations:
Net cash used in operating activities			(12,703	)			(2,909	)
Net cash provided by (used in) in investing activities			134,356				(312	)
Net cash (used in) provided by financing activities			(124,183	)			2,513
Cash used in discontinued operations(2)			(2,530	)			(708	)
Change in cash of discontinued operations held for sale(2)			2,385				(945	)
Net change in cash and cash equivalents			1,819				(31,124	)
Cash and cash equivalents, beginning of period			27,455				66,054
Cash and cash equivalents, end of period – continuing operations		$	29,274			$	34,930
Supplemental disclosures of cash flow information for continuing operations:
Non-cash investing and financing activities:
Accrued purchases of property and equipment		$	1,092			$	1,238
Issuance of LLC interests to manager for base management fees		$	4,083			$	851
Issuance of LLC interests to independent directors		$	446			$	450
Taxes paid		$	1,508			$	508
Interest paid		$	40,015			$	46,946

See accompanying notes to the consolidated condensed financial statements.

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MACQUARIE INFRASTRUCTURE COMPANY LLC

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Description of Business

Macquarie Infrastructure Company LLC, a Delaware limited liability company, was formed on April 13, 2004. Macquarie Infrastructure Company LLC, both on an individual entity basis and together with its consolidated subsidiaries, is referred to in these financial statements as the “Company” or “MIC”. The Company owns, operates and invests in a diversified group of infrastructure businesses in the United States. Macquarie Infrastructure Management (USA) Inc. is the Company’s manager and is referred to in these financial statements as the Manager. The Manager is a wholly-owned subsidiary within the Macquarie Group of companies, which is comprised of Macquarie Group Limited and its subsidiaries and affiliates worldwide. Macquarie Group Limited is headquartered in Australia and is listed on the Australian Stock Exchange.

The Company is an operating entity with a Board of Directors and other corporate governance responsibilities generally consistent with those of a Delaware corporation.

The Company owns its businesses through its wholly-owned subsidiary, Macquarie Infrastructure Company Inc., or MIC Inc. The Company’s businesses operate predominantly in the United States and consist of the following:

The Energy-Related Businesses:

Atlantic Aviation — an airport services business providing products and services, including fuel and aircraft hangaring/parking, to owners and operators of private jets at 68 airports and one heliport in the U.S.

2. Basis of Presentation

The unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of consolidated condensed financial statements in conformity with GAAP requires estimates and assumptions. Management evaluates these estimates and assumptions on an ongoing basis. Actual results may differ from the estimates and assumptions used in the financial statements and notes. Operating results for the quarter and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

2. Basis of Presentation  – (continued)

The consolidated balance sheet at December 31, 2009 has been derived from audited financial statements but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. Certain reclassifications were made to the financial statements for the prior period to conform to current period presentation.

The interim financial information contained herein should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2009 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 25, 2010.

3. New Accounting Pronouncements

In April 2009, the Financial Accounting Standards Board, or FASB, issued ASC 825-10-65Financial Instruments, which is effective for interim reporting periods ending after June 15, 2009. This guidance requires disclosures about the fair value of financial instruments for interim reporting periods in addition to the current requirement to make disclosure in annual financial statements. This guidance also requires disclosure of the methods and significant assumptions used to estimate the fair value of financial instruments and description of changes in the methods and significant assumptions. The Company adopted this guidance during the second quarter of 2009. Since this guidance requires only additional disclosures, the adoption did not have a material impact on the Company’s financial results of operations and financial condition.

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and variable rate senior debt, are carried at cost, which approximates their fair value because of either the short-term maturity, or variable or competitive interest rates assigned to these financial instruments.

4. Income (Loss) Per Share

Following is a reconciliation of the basic and diluted number of shares used in computing income (loss) per share:

		Quarter Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Weighted average number of shares outstanding: basic			45,467,413				44,951,176				45,381,413				44,949,942
Dilutive effect of restricted stock unit grants			136,651				—				132,451				—
Weighted average number of shares outstanding: diluted			45,604,064				44,951,176				45,513,864				44,949,942

The effect of potentially dilutive shares for the quarter and six months ended June 30, 2010 is calculated assuming that the 31,989 restricted stock unit grants provided to the independent directors on June 3, 2010 and the 128,205 restricted stock unit grants provided to the independent directors on June 4, 2009 had been fully converted to shares on those dates. However, the restricted stock unit grants were anti-dilutive for the quarter and six months ended June 30, 2009, due to the Company’s net loss for those periods.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

5. Discontinued Operations

On June 2, 2010, the Company concluded the sale in bankruptcy of an airport parking business (“Parking Company of America Airports” or “PCAA”) resulting in a pre-tax gain of $130.3 million, of which $76.5 million related to the forgiveness of debt, and the elimination of $201.0 million of current debt from liabilities from the Company’s consolidated condensed balance sheet. As a part of the bankruptcy sale process, substantially all of the cash proceeds were used to pay the creditors of this business and were not paid to the Company. The Company received $602,000 from the PCAA bankruptcy estate for expenses paid on behalf of PCAA during its operations.

As a result of the approval of the sale of PCAA's assets in bankruptcy and the expected dissolution of PCAA during 2010, the Company has reduced its valuation allowance on the realization of a portion of the deferred tax assets attributable to its basis in PCAA and its consolidated federal net operating losses. The change in the valuation allowance recorded in discontinued operations was $10.0 million.

The results of operations from this business, for all periods presented, and the gain from the bankruptcy sale are separately reported as a discontinued operations in the Company’s consolidated condensed financial statements. This business is no longer a reportable segment. The assets and liabilities of the business being sold are included in assets of discontinued operations held for sale and liabilities of discontinued operations held for sale on the Company’s consolidated condensed balance sheet at December 31, 2009.

The following is a summary of the assets and liabilities of discontinued operations held for sale related to PCAA at December 31, 2009:

		December 31, 2009
		($ in Thousands)
Assets
Total current assets		$	7,676
Property, equipment, land and leasehold improvements, net			77,524
Other non-current assets			1,495
Total assets		$	86,695
Liabilities
Current portion of long-term debt		$	200,999
Other current liabilities			10,761
Total current liabilities			211,760
Other non-current liabilities			8,789
Total liabilities			220,549
Noncontrolling interests			(1,863	)
Total liabilities and noncontrolling interests		$	218,686

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

5. Discontinued Operations  – (continued)

Summarized financial information for discontinued operations related to PCAA for the quarters and six months ended June 30, 2010 and 2009 are as follows:

		For the Quarter Ended June 30,								For the Six Months Ended June 30,
		2010				2009				2010				2009
		($ in Thousands, Except Share Data)
Service revenue		$	12,319			$	17,439			$	28,826			$	34,046
Gain on sale of assets through bankruptcy (pre-tax)			130,260				—				130,260				—
Net income (loss) from discontinued operations before income taxes		$	135,726			$	(4,026	)		$	132,709			$	(13,544	)
(Provision) benefit for income taxes			(50,514	)			867				(51,510	)			3,961
Net income (loss) from discontinued operations			85,212				(3,159	)			81,199				(9,583	)
Less: net income (loss) attributable to noncontrolling interests			302				(1,213	)			136				(1,213	)
Net income (loss) from discontinued operations attributable to MIC LLC		$	84,910			$	(1,946	)		$	81,063			$	(8,370	)
Basic income (loss) per share from discontinued operations attributable to MIC LLC interest holders		$	1.87			$	(0.04	)		$	1.79			$	(0.18	)
Weighted average number of shares outstanding at the Company level: basic			45,467,413				44,951,176				45,381,413				44,949,942
Diluted income (loss) per share from discontinued operations attributable to MIC LLC interest holders		$	1.86			$	(0.04	)		$	1.78			$	(0.18	)
Weighted average number of shares outstanding at the Company level: diluted			45,604,064				44,951,176				45,513,864				44,949,942

6. Property, Equipment, Land and Leasehold Improvements

Property, equipment, land and leasehold improvements at June 30, 2010 and December 31, 2009 consist of the following ($ in thousands):

		June 30, 2010				December 31, 2009
Land		$	4,618			$	4,618
Easements			5,624				5,624
Buildings			24,796				24,789
Leasehold and land improvements			317,512				312,881
Machinery and equipment			332,064				330,226
Furniture and fixtures			9,441				9,395
Construction in progress			16,394				16,519
Property held for future use			1,561				1,561
			712,010				705,613
Less: accumulated depreciation			(142,817	)			(125,526	)
Property, equipment, land and leasehold improvements, net(1)		$	569,193			$	580,087

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

6. Property, Equipment, Land and Leasehold Improvements  – (continued)

The Company recognized non-cash impairment charges of $2.2 million and $7.5 million during the quarter and six months ended June 30, 2009, respectively, primarily relating to leasehold and land improvements; buildings; machinery and equipment; and furniture and fixtures at Atlantic Aviation. These charges are recorded in depreciation expense in the consolidated condensed statements of operations. There was no impairment charge in the first six months of 2010.

7. Intangible Assets

Intangible assets at June 30, 2010 and December 31, 2009 consist of the following ($ in thousands):

		Weighted Average Life (Years)				June 30, 2010				December 31, 2009
Contractual arrangements			31.1			$	774,309			$	774,309
Non-compete agreements			2.5				9,515				9,515
Customer relationships			10.6				78,596				78,596
Leasehold rights			12.5				3,331				3,331
Trade names			Indefinite				15,401				15,401
Technology			5.0				460				460
							881,612				881,612
Less: accumulated amortization							(147,942	)			(130,531	)
Intangible assets, net						$	733,670			$	751,081

As a result of a decline in the performance of certain asset groups during the quarter and six months ended June 30, 2009, the Company evaluated such asset groups for impairment and determined that the asset groups were impaired. The Company estimated the fair value of each of the impaired asset groups using the discounted cash flow model. Accordingly, the Company recognized non-cash impairment charges of $2.9 million and $23.3 million related to contractual arrangements at Atlantic Aviation during the quarter and six months ended June 30, 2009, respectively. These charges are recorded in amortization of intangibles in the consolidated condensed statement of operations. There was no impairment charge in the first six months of 2010.

The goodwill balance as of June 30, 2010 and December 31, 2009 is comprised of the following ($ in thousands):

Goodwill acquired in business combinations, net of disposals		$	639,382
Less: accumulated impairment charges			(123,200	)
Balance at June 30, 2010 and December 31, 2009		$	516,182

The Company tests for goodwill impairment at the reporting unit level on an annual basis and between annual tests if a triggering event indicates impairment. The decline in the Company’s stock price over the latter part of 2008 and the first half of 2009 caused the book value of the Company to exceed its market capitalization. In addition to its annual goodwill impairment testing conducted routinely on October 1^st of each year, the Company performed goodwill impairment testing during the quarter and six months ended June 30, 2009 due to the triggering event of the Company’s stock price decline. Based on the testing performed, the Company recorded goodwill impairment charges of $53.2 million and $71.2 million at Atlantic Aviation during the quarter and six months ended June 30, 2009, respectively, which is included in the accumulated impairment charges in the above table. There was no goodwill impairment charge in the first six months of 2010.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

8. Nonfinancial Assets Measured at Fair Value

The following major categories of nonfinancial assets at the impaired asset groups were written down to fair value during the quarter and six months ended June 30, 2009 at Atlantic Aviation ($ in thousands):

						Total Losses
		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)(1)				Quarter Ended June 30, 2009				Six Months Ended June 30, 2009
Property, equipment, land and leasehold improvements, net		$	5,122			$	2,200			$	7,521
Intangible assets			14,430				2,962				23,326
Goodwill			377,343				53,200				71,200
Total		$	396,895			$	58,362			$	102,047

The Company estimated the fair value of each of the impaired asset groups using discounted cash flows. Property, equipment, land and leasehold improvements for Atlantic Aviation with a carrying value of $12.6 million were written down to fair value of $5.1 million during the six months ended June 30, 2009. The non-cash impairment charge of $7.5 million was recorded in depreciation expense in the consolidated condensed statement of operations for the six months ended June 30, 2009. There was no impairment charge in the first six months of 2010.

Additionally, intangible assets at Atlantic Aviation with a carrying value of $37.7 million were written down to their fair value of $14.4 million during the six months ended June 30, 2009. The non-cash impairment charge of $23.3 million was recorded in amortization of intangibles expense in the consolidated condensed statement of operations. There was no impairment charge in the first six months of 2010.

As discussed in Note 7, “Intangible Assets”, the Company performed goodwill impairment analyses during the quarter and six months ended June 30, 2009. As a result of these analyses, goodwill at Atlantic Aviation with a carrying value of $448.5 million was written down to its implied fair value of $377.3 million resulting in a non-cash impairment charge of $71.2 million. This non-cash impairment charge was included in goodwill impairment in the consolidated condensed statement of operations. There was no goodwill impairment charge in the first six months of 2010.

The significant unobservable inputs (“level 3”) used for all fair value measurements in the above table included forecasted cash flows of Atlantic Aviation and its asset groups, the discount rate and, in the case of goodwill, the terminal value. The forecasted cash flows for this business were developed using actual cash flows from 2009, forecasted jet fuel volumes from the Federal Aviation Administration, forecasted consumer price indices and forecasted LIBOR rates based on proprietary models using various published sources. The discount rate was developed using a capital asset pricing model.

Model inputs included:

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

8. Nonfinancial Assets Measured at Fair Value  – (continued)

The terminal value was based on observed earnings before interest, taxes, depreciation and amortization, or EBITDA, and multiples historically paid in transactions for comparable businesses.

9. Long-Term Debt

At June 30, 2010 and December 31, 2009, the Company’s consolidated long-term debt consisted of the following ($ in thousands):

		June 30, 2010				December 31, 2009
The Gas Company		$	179,000			$	179,000
District Energy			170,000				170,000
Atlantic Aviation			831,544				863,279
Total			1,180,544				1,212,279
Less: current portion			(53,153	)			(45,900	)
Long-term portion		$	1,127,391			$	1,166,379

Until March 31, 2010, MIC Inc. had a revolving credit facility with various financial institutions. The facility was repaid in full in December 2009 and no amounts were outstanding under the revolving credit facility as of December 31, 2009 or at the facility’s maturity on March 31, 2010.

On February 25, 2009, Atlantic Aviation amended its credit facility to provide the business additional financial flexibility over the near and medium term. Under the amended terms, the business will apply all excess cash flow from the business to prepay additional debt whenever the leverage ratio (debt to adjusted EBITDA) is equal to or greater than 6.0x to 1.0 for the trailing twelve months and will use 50% of excess cash flow to prepay debt whenever the leverage ratio is equal to or greater than 5.5x to 1.0 and below 6.0x to 1.0. For the quarter and six months ended June 30, 2010, Atlantic Aviation used $7.7 million and $34.9 million, respectively, of excess cash flow to prepay $7.0 million and $31.7 million, respectively, of the outstanding principal balance of the term loan debt under the facility and $695,000 and $3.2 million, respectively, in interest rate swap breakage fees. The Company has classified $53.2 million relating to Atlantic Aviation’s debt in current portion of long-term debt in the consolidated condensed balance sheet at June 30, 2010, as it expects to repay this amount within one year.

In August 2010, Atlantic Aviation used $9.9 million of excess cash flow to prepay $9.0 million of the outstanding principal balance of the term loan debt under this facility and incurred $935,000 in interest rate swap breakage fees.

10. Derivative Instruments and Hedging Activities

The Company and its businesses have in place variable-rate debt. Management believes that it is prudent to limit the variability of a portion of the business’ interest payments. To meet this objective, the Company enters into interest rate swap agreements to manage fluctuations in cash flows resulting from interest rate risk on a majority of its debt with a variable-rate component.

At June 30, 2010, the Company had $1.2 billion of current and long-term debt, $1.1 billion of which was economically hedged with interest rate swaps and $83.9 million of which was unhedged.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

10. Derivative Instruments and Hedging Activities  – (continued)

As discussed in Note 9, “Long-Term Debt”, Atlantic Aviation applies its excess cash flow to prepay debt. As a result, $4.9 million and $11.1 million of accumulated other comprehensive loss in the consolidated condensed balance sheet related to Atlantic Aviation’s derivative instruments were reclassified to interest expense in the consolidated condensed statement of operations for the quarter and six months ended June 30, 2010, respectively. Atlantic Aviation expects to record further reclassifications from accumulated other comprehensive loss to interest expense as the business continues to pay down its debt.

In March 2009, Atlantic Aviation, The Gas Company and District Energy entered into interest rate basis swap contracts that expired on March 31, 2010. These contracts effectively changed the interest rate index on each business’ existing swap contracts from the 90-day LIBOR rate to the 30-day LIBOR rate plus a margin of 19.50 basis points for Atlantic Aviation and 24.75 basis points for The Gas Company and District Energy. This transaction, adjusted for the prepayments of outstanding principal on the term loan debt at Atlantic Aviation, resulted in $580,000 and $1.8 million lower interest expense for these businesses for the quarter ended March 31, 2010 and the year ended December 31, 2009, respectively.

Effective February 25, 2009 for Atlantic Aviation and effective April 1, 2009 for the Company’s other businesses, the Company elected to discontinue hedge accounting. In prior periods, when the Company applied hedge accounting, changes in the fair value of derivatives that effectively offset the variability of cash flows on the Company’s debt interest obligations were recorded in other comprehensive income or loss. From the dates that hedge accounting was discontinued, all movements in the fair value of the interest rate swaps are recorded directly through earnings. As interest payments are made, a portion of the other comprehensive loss recorded under hedge accounting is also reclassified into earnings. The Company will reclassify into earnings $56.9 million of net derivative losses, included in accumulated other comprehensive loss as of June 30, 2010 over the remaining life of the existing interest rate swaps, of which approximately $24.1 million will be reclassified over the next 12 months.

The Company measures derivative instruments at fair value using the income approach which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations utilize primarily observable (“level 2”) inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals.

The Company’s fair value measurements of its derivative instruments and the related location of the liabilities associated with the hedging instruments within the consolidated condensed balance sheets at June 30, 2010 and December 31, 2009 were as follows:

		Liabilities at Fair Value(1)
		Interest Rate Swap Contracts Not Designated as Hedging Instruments
Balance Sheet Location		June 30, 2010				December 31, 2009
		($ In Thousands)
Fair value of derivative instruments – current liabilities		$	(45,792	)		$	(49,573	)
Fair value of derivative instruments – non-current liabilities			(72,268	)			(54,794	)
Total interest rate derivative contracts		$	(118,060	)		$	(104,367	)

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

10. Derivative Instruments and Hedging Activities  – (continued)

The Company’s hedging activities for the quarter and six months ended June 30, 2010 and 2009 and the related location within the consolidated condensed financial statements were as follows:

		Derivatives Not Designated as Hedging Instruments(1)
		Amount of (Loss) Gain Recognized in Interest Expense for the Quarter Ended June 30,
Financial Statement Account		2010(2)				2009(3)
		($ In Thousands)
Interest expense		$	(36,008	)		$	5,395
Total		$	(36,008	)		$	5,395

		Derivatives Designated as Hedging Instruments(1)																								Derivatives Not Designated as Hedging Instruments(1)
		Amount of Gain Recognized in OCI on Derivatives (Effective Portion) for the Six Months Ended June 30,								Amount of Loss Reclassified from OCI into Income (Effective Portion) for the Six Months Ended June 30,								Amount of Loss Recognized in Loss on Derivative Instruments (Ineffective Portion) for the Six Months Ended June 30,								Amount of Loss Recognized in Interest Expense for the Six Months Ended June 30,
Financial Statement Account		2010				2009				2010				2009(2)				2010				2009				2010(3)				2009(4)
		($ In Thousands)
Interest expense		$	—			$	—			$	—			$	(15,691	)		$	—			$	—			$	(63,142	)		$	(1,592	)
Loss on derivative instruments			—				—				—				(25,154	)			—				(84	)			—				—
Accumulated other comprehensive loss			—				2,848				—				—				—				—				—				—
Total		$	—			$	2,848			$	—			$	(40,845	)		$	—			$	(84	)		$	(63,142	)		$	(1,592	)

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

10. Derivative Instruments and Hedging Activities  – (continued)

All of the Company’s derivative instruments are collateralized by all of the assets of the respective businesses.

11. Comprehensive Income (Loss)

Other comprehensive income (loss) includes primarily the change in fair value of derivative instruments which qualified for hedge accounting until the dates that hedge accounting was discontinued, as discussed in Note 10, “Derivative Instruments and Hedging Activities”.

The difference between net income (loss) and comprehensive income (loss) for the quarter and six months ended June 30, 2010 and 2009 was as follows ($ in thousands):

		Quarter Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Net income (loss) attributable to MIC LLC		$	85,850			$	(28,958	)		$	77,485			$	(81,984	)
Unrealized gain in fair value of derivatives, net of taxes			—				—				—				1,498
Reclassification of realized losses into earnings, net of taxes			4,390				8,673				9,738				34,663
Comprehensive income (loss)		$	90,240			$	(20,285	)		$	87,223			$	(45,823	)

For further discussion on derivative instruments and hedging activities, see Note 10, “Derivative Instruments and Hedging Activities”.

12. Members’ Equity

The Company is authorized to issue 500,000,000 LLC interests. Each outstanding LLC interest of the Company is entitled to one vote on any matter with respect to which holders of LLC interests are entitled to vote.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13. Reportable Segments

The Company’s operations are broadly classified into the energy-related businesses and Atlantic Aviation. The energy-related businesses consist of two reportable segments: The Gas Company and District Energy. The energy-related businesses also include a 50% investment in IMTT, which is accounted for under the equity method. Financial information for IMTT’s business as a whole is presented below ($ in thousands) (unaudited):

		Quarter Ended, and as of, June 30,								Six Months Ended, and as of, June 30,
		2010				2009				2010				2009
Revenue		$	158,235			$	81,974			$	265,273			$	168,777
Net income		$	14,222			$	22,423			$	27,465			$	35,686
Interest expense (income), net			25,774				(17,671	)			37,899				(10,610	)
Provision for income taxes			10,750				14,959				20,356				23,898
Depreciation and amortization expense			14,916				13,454				29,534				26,278
Unrealized gains on derivative instruments			—				—				—				(3,306	)
Other non-cash expense (income)			12				157				245				(669	)
EBITDA excluding non-cash items (1)		$	65,674			$	33,322			$	115,499			$	71,277
Capital expenditures paid		$	17,741			$	41,482			$	37,171			$	81,424
Property, equipment, land and leasehold improvements, net			993,427				953,907				993,427				953,907
Total assets balance			1,127,169				1,041,219				1,127,169				1,041,219

All of the business segments are managed separately and management has chosen to organize the Company around the distinct products and services offered.

Energy-Related Businesses

IMTT provides bulk liquid storage and handling services in North America through ten terminals located on the East, West and Gulf Coasts, the Great Lakes region of the United States and partially owned terminals in Quebec and Newfoundland, Canada. IMTT derives the majority of its revenue from storage and handling of petroleum products, various chemicals, renewable fuels, and vegetable and animal oils. Based on storage capacity, IMTT operates one of the largest third-party bulk liquid storage terminal businesses in the United States.

The revenue from The Gas Company segment is included in revenue from product sales. Revenue is generated from the distribution and sales of synthetic natural gas, or SNG, and liquefied petroleum gas, or LPG. Revenue is primarily a function of the volume of SNG and LPG consumed by customers and the price per thermal unit or gallon charged to customers. Because both SNG and LPG are derived from petroleum, revenue levels, without organic growth, will generally track global oil prices. The utility revenue of The Gas Company reflects fuel adjustment charges, or FACs, through which changes in fuel costs are passed through to customers.

The revenue from the District Energy segment is included in service revenue and financing and equipment lease income. Included in service revenue is capacity revenue, which relates to monthly fixed contract charges, and consumption revenue, which relates to contractual rates applied to actual usage. Financing and equipment lease income relates to direct financing lease transactions and equipment leases to the business’ various customers. District Energy provides its services to buildings primarily in the downtown Chicago, Illinois area and to a casino and a shopping mall located in Las Vegas, Nevada.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13. Reportable Segments  – (continued)

Atlantic Aviation

The Atlantic Aviation segment derives the majority of its revenues from fuel sales and from other airport services, including de-icing, aircraft hangarage and other aviation services. All of the revenue of Atlantic Aviation is generated in the United States at 68 airports and one heliport.

Selected information by segment is presented in the following tables. The tables do not include financial data for the Company’s equity investment in IMTT.

Revenue from external customers for the Company’s consolidated reportable segments was as follows
($ in thousands) (unaudited):

		Quarter Ended June 30, 2010
		Energy-related Businesses
		The Gas Company				District Energy				Atlantic Aviation				Total
Revenue from Product Sales
Product sales		$	24,236			$	—			$	100,941			$	125,177
Product sales – utility			28,450				—				—				28,450
			52,686				—				100,941				153,627
Service Revenue
Other services			—				803				36,552				37,355
Cooling capacity revenue			—				5,295				—				5,295
Cooling consumption revenue			—				7,144				—				7,144
			—				13,242				36,552				49,794
Financing and Lease Income
Financing and equipment lease			—				1,271				—				1,271
			—				1,271				—				1,271
Total Revenue		$	52,686			$	14,513			$	137,493			$	204,692

		Quarter Ended June 30, 2009
		Energy-related Businesses
		The Gas Company				District Energy				Atlantic Aviation				Total
Revenue from Product Sales
Product sales		$	18,390			$	—			$	71,040			$	89,430
Product sales – utility			21,414				—				—				21,414
			39,804				—				71,040				110,844
Service Revenue
Other services			—				743				40,004				40,747
Cooling capacity revenue			—				5,110				—				5,110
Cooling consumption revenue			—				5,502				—				5,502
			—				11,355				40,004				51,359
Financing and Lease Income
Financing and equipment lease			—				1,205				—				1,205
			—				1,205				—				1,205
Total Revenue		$	39,804			$	12,560			$	111,044			$	163,408

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13. Reportable Segments  – (continued)

		Six Months Ended June 30, 2010
		Energy-related Businesses
		The Gas Company				District Energy				Atlantic Aviation				Total
Revenue from Product Sales
Product sales		$	49,546			$	—			$	195,649			$	245,195
Product sales – utility			55,285				—				—				55,285
			104,831				—				195,649				300,480
Service Revenue
Other services			—				1,667				81,893				83,560
Cooling capacity revenue			—				10,533				—				10,533
Cooling consumption revenue			—				8,907				—				8,907
			—				21,107				81,893				103,000
Financing and Lease Income
Financing and equipment lease			—				2,516				—				2,516
			—				2,516				—				2,516
Total Revenue		$	104,831			$	23,623			$	277,542			$	405,996

		Six Months Ended June 30, 2009
		Energy-related Businesses
		The Gas Company				District Energy				Atlantic Aviation				Total
Revenue from Product Sales
Product sales		$	39,465			$	—			$	139,157			$	178,622
Product sales – utility			41,581				—				—				41,581
			81,046				—				139,157				220,203
Service Revenue
Other services			—				1,499				89,068				90,567
Cooling capacity revenue			—				10,007				—				10,007
Cooling consumption revenue			—				7,730				—				7,730
			—				19,236				89,068				108,304
Financing and Lease Income
Financing and equipment lease			—				2,397				—				2,397
			—				2,397				—				2,397
Total Revenue		$	81,046			$	21,633			$	228,225			$	330,904

In accordance with FASB ASC 280Segment Reporting, the Company has disclosed earnings before interest, taxes, depreciation and amortization (EBITDA) excluding non-cash items as a key performance metric relied on by management in the evaluation of the Company’s performance. Non-cash items include impairments, derivative gains and losses and adjustments for other non-cash items reflected in the statements of operations. The Company believes EBITDA excluding non-cash items provides additional insight into the performance of the operating businesses relative to each other and similar businesses without regard to their capital structure, and their ability to service or reduce debt, fund capital expenditures and/or support distributions to the holding company. EBITDA excluding non-cash items is reconciled to net income or loss.

During the quarter and six months ended June 30, 2009, the Company disclosed EBITDA excluding only non-cash gains (losses) on derivative instruments. The following tables, reflecting results of operations for the consolidated group and for each of the businesses for the quarter and six months ended June 30, 2009, have been conformed to current periods’ presentation reflecting EBITDA excluding all non-cash items.

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13. Reportable Segments  – (continued)

EBITDA excluding non-cash items for the Company’s consolidated reportable segments is shown in the tables below ($ in thousands) (unaudited). Allocation of corporate expense and the federal tax effect have been excluded as they are eliminated on consolidation.

		Quarter Ended June 30, 2010
		Energy-related Businesses								Atlantic Aviation				Total Reportable Segments
		The Gas Company				District Energy
Net income (loss)		$	1,212			$	(2,705	)		$	(8,538	)		$	(10,031	)
Interest expense, net			5,926				7,976				26,688				40,590
Benefit (provision) for income taxes			780				(1,767	)			(5,764	)			(6,751	)
Depreciation			1,511				1,636				5,691				8,838
Amortization of intangibles			205				341				8,194				8,740
Other non-cash expense			531				232				558				1,321
EBITDA excluding non-cash items		$	10,165			$	5,713			$	26,829			$	42,707

		Quarter Ended June 30, 2009
		Energy-related Businesses								Atlantic Aviation(1)				Total Reportable Segments
		The Gas Company				District Energy
Net income (loss)		$	4,518			$	3,514			$	(30,876	)		$	(22,844	)
Interest (income) expense, net			(1,249	)			(2,728	)			4,936				959
Benefit (provision) for income taxes			2,908				2,296				(20,844	)			(15,640	)
Depreciation			1,520				1,502				7,750				10,772
Amortization of intangibles			212				341				11,979				12,532
Goodwill impairment			—				—				53,200				53,200
Other non-cash expense (income)			564				172				(430	)			306
EBITDA excluding non-cash items		$	8,473			$	5,097			$	25,715			$	39,285

		Six Months Ended June 30, 2010
		Energy-related Businesses								Atlantic Aviation				Total Reportable Segments
		The Gas Company				District Energy
Net income (loss)		$	3,466			$	(5,336	)		$	(11,927	)		$	(13,797	)
Interest expense, net			10,733				14,004				48,674				73,411
Benefit (provision) for income taxes			2,231				(3,487	)			(8,051	)			(9,307	)
Depreciation			3,023				3,271				11,901				18,195
Amortization of intangibles			411				678				16,322				17,411
Other non-cash expense			1,065				387				605				2,057
EBITDA excluding non-cash items		$	20,929			$	9,517			$	57,524			$	87,970

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13. Reportable Segments  – (continued)

		Six Months Ended June 30, 2009
		Energy-related Businesses								Atlantic Aviation(1)				Total Reportable Segments
		The Gas Company				District Energy
Net income (loss)		$	7,633			$	1,868			$	(80,482	)		$	(70,981	)
Interest expense, net			1,368				227				31,440				33,035
Benefit (provision) for income taxes			4,913				1,221				(54,330	)			(48,196	)
Depreciation			2,996				2,965				19,424				25,385
Amortization of intangibles			426				678				41,693				42,797
Goodwill impairment			—				—				71,200				71,200
Loss on derivative instruments			327				1,378				23,331				25,036
Other non-cash expense (income)			1,015				276				(367	)			924
EBITDA excluding non-cash items		$	18,678			$	8,613			$	51,909			$	79,200

Reconciliations of consolidated reportable segments’ EBITDA excluding non-cash items to consolidated net loss from continuing operations before income taxes are as follows ($ in thousands) (unaudited):

		Quarter Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
Total reportable segments EBITDA excluding non-cash items		$	42,707			$	39,285			$	87,970			$	79,200
Interest income			4				34				20				101
Interest expense			(38,974	)			(2,103	)			(73,661	)			(35,669	)
Depreciation(1)			(8,838	)			(10,772	)			(18,195	)			(25,385	)
Amortization of intangibles(2)			(8,740	)			(12,532	)			(17,411	)			(42,797	)
Selling, general and administrative –  corporate			(1,628	)			(1,417	)			(3,608	)			(4,348	)
Fees to manager			(2,268	)			(851	)			(4,457	)			(1,313	)
Equity in earnings and amortization charges of investees			5,774				10,028				11,367				15,477
Goodwill impairment			—				(53,200	)			—				(71,200	)
Loss on derivative instruments			—				—				—				(25,238	)
Other (expense) income, net			(1,125	)			(132	)			(1,667	)			512
Total consolidated net loss from continuing operations before income taxes		$	(13,088	)		$	(31,660	)		$	(19,642	)		$	(110,660	)

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13. Reportable Segments  – (continued)

Capital expenditures for the Company’s reportable segments were as follows ($ in thousands) (unaudited):

		Quarter Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
The Gas Company		$	1,555			$	1,716			$	3,886			$	3,581
District Energy			500				1,784				846				3,403
Atlantic Aviation			1,247				1,635				2,583				4,880
Total		$	3,302			$	5,135			$	7,315			$	11,864

Property, equipment, land and leasehold improvements, goodwill and total assets for the Company’s reportable segments as of June 30 were as follows ($ in thousands) (unaudited):

		Property, Equipment, Land and Leasehold Improvements								Goodwill								Total Assets
		2010				2009(1)				2010(2)				2009(2)				2010				2009
The Gas Company		$	143,641			$	143,251			$	120,193			$	120,193			$	352,623			$	336,565
District Energy			148,882				146,837				18,646				18,646				231,081				228,510
Atlantic Aviation			276,670				289,275				377,343				377,343				1,452,519				1,505,430
Total		$	569,193			$	579,363			$	516,182			$	516,182			$	2,036,223			$	2,070,505

Reconciliation of reportable segments’ total assets to consolidated total assets ($ in thousands) (unaudited):

		As of June 30,
		2010				2009
Total assets of reportable segments		$	2,036,223			$	2,070,505
Investment in IMTT			213,858				200,408
Assets of discontinued operations held for sale			—				95,148
Corporate and other			(17,905	)			(8,699	)
Total consolidated assets		$	2,232,176			$	2,357,362

14. Related Party Transactions

Management Services Agreement with Macquarie Infrastructure Management (USA) Inc. (the Manager)

As of June 30, 2010, the Manager held 3,797,557 LLC interests of the Company, which were acquired concurrently with the closing of the initial public offering in December 2004 and by reinvesting base management and performance fees in the Company. In addition, the Macquarie Group held LLC interests acquired in open market purchases.

The Company entered into a management services agreement, or Management Agreement, with the Manager pursuant to which the Manager manages the Company’s day-to-day operations and oversees the management teams of the Company’s operating businesses. In addition, the Manager has the right to appoint the Chairman of the Board of the Company, and an alternate, subject to minimum equity ownership, and to

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

14. Related Party Transactions  – (continued)

assign, or second, to the Company, on a permanent and wholly-dedicated basis, employees to assume the role of Chief Executive Officer and Chief Financial Officer and second or make other personnel available as required.

In accordance with the Management Agreement, the Manager is entitled to a quarterly base management fee based primarily on the Company’s market capitalization, and a performance fee, based on the performance of the Company’s stock relative to a U.S. utilities index. For the six months ended June 30, 2010 and 2009, the Company incurred base management fees of $4.5 million and $1.3 million, respectively. The unpaid portion of the fees at the end of each reporting period is included in due to manager-related party in the consolidated condensed balance sheets. The Manager elected to reinvest the base management fee of $2.2 million for the first quarter of 2010 in LLC interests and the Company issued 155,375 LLC interests to the Manager during the second quarter of 2010. The base management fee of $2.3 million for the second quarter of 2010 will be paid in cash during the third quarter of 2010.

The Manager is not entitled to any other compensation and all costs incurred by the Manager, including compensation of seconded staff, are paid by the Manager out of its management fee. However, the Company is responsible for other direct costs including, but not limited to, expenses incurred in the administration or management of the Company and its subsidiaries and investments, income taxes, audit and legal fees, acquisitions and dispositions and its compliance with applicable laws and regulations. During the six months ended June 30, 2010 and 2009, the Manager charged the Company $169,000 and $136,000, respectively, for reimbursement of out-of-pocket expenses. The unpaid portion of the out-of-pocket expenses at the end of the reporting period is included in due to manager-related party in the consolidated condensed balance sheet.

Advisory and Other Services from the Macquarie Group

The Macquarie Group, and wholly-owned subsidiaries within the Macquarie Group, including Macquarie Bank Limited, or MBL, and Macquarie Capital (USA) Inc., or MCUSA, have provided various advisory and other services and incurred expenses in connection with the Company’s equity raising activities, acquisitions and debt structuring for the Company and its businesses. Underwriting fees are recorded in members’ equity as a direct cost of equity offerings. Advisory fees and out-of-pocket expenses relating to acquisitions are expensed as incurred. Debt arranging fees are deferred and amortized over the term of the credit facility. Amounts relating to these transactions comprise the following ($ in thousands):

Six Months Ended June 30, 2010

Strategic review of alternatives available to the Company  – advisory services from MCUSA		$	500

Long-Term Debt

Until March 31, 2010, the Company had a revolving credit facility provided by various financial institutions, including entities within the Macquarie Group. The facility was repaid in full during 2009 and no amounts were outstanding under the revolving credit facility as of December 31, 2009 or at the facility’s

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

14. Related Party Transactions  – (continued)

maturity on March 31, 2010. Amounts relating to the Macquarie Group’s portion of this revolving credit facility comprised of the following ($ in thousands):

Six Months Ended June 30, 2010

Revolving credit facility commitment provided by Macquarie Group during January 1, 2010 through March 30, 2010(1)		$	4,444
Revolving credit facility commitment provided by Macquarie Group at March 31, 2010(2)			—
Portion of revolving credit facility commitment from Macquarie Group drawn down, as of March 31, 2010(2)(3)			—
Interest expense on Macquarie Group portion of the drawn down commitment, for the quarter ended March 31, 2010			—
Commitment fees to the Macquarie Group, for quarter ended March 31, 2010			5

Derivative Instruments and Hedging Activities

The Company has derivative instruments in place to fix the interest rate on certain outstanding variable-rate term loan facilities. MBL has provided interest rate swaps for Atlantic Aviation and The Gas Company. At June 30, 2010, Atlantic Aviation had $786.6 million of its variable-rate term loans hedged, of which MBL provided the interest rate swaps for a notional amount of $278.8 million. The remainder of the swaps are from an unrelated third party. During the six months ended June 30, 2010, Atlantic Aviation made net payments to MBL of $7.0 million in relation to these swaps.

As discussed in Note 9, “Long-Term Debt”, for the six months ended June 30, 2010, Atlantic Aviation paid $3.2 million in interest rate swap breakage fees, of which $383,000 was paid to MBL.

In August 2010, Atlantic Aviation used $9.9 million of excess cash flow to prepay $9.0 million of the outstanding principal balance of the term loan debt and incurred $935,000 in interest rate swap breakage fees, of which $65,000 was paid to MBL.

At June 30, 2010, The Gas Company had $160.0 million of its term loans hedged, of which MBL provided the interest rate swaps for a notional amount of $48.0 million. The remainder of the swaps are from an unrelated third party. During the six months ended June 30, 2010, The Gas Company made net payments to MBL of $1.1 million in relation to these swaps.

Other Transactions

On March 30, 2009, The Gas Company entered into licensing agreements with Utility Service Partners, Inc. and America’s Water Heater Rentals, LLC, both indirect subsidiaries of Macquarie Group Limited, to enable these entities to offer products and services to The Gas Company’s customer base. No payments were made under these arrangements during the six months ended June 30, 2010.

On August 29, 2008, Macquarie Global Opportunities Partners, or MGOP, a private equity fund managed by the Macquarie Group, completed the acquisition of the jet membership, retail charter and fuel management business units previously owned by Sentient Jet Holdings, LLC. The new company is called Sentient Flight Group (referred to hereafter as “Sentient”). Sentient was an existing customer of Atlantic Aviation. For the six

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

14. Related Party Transactions  – (continued)

months ended June 30, 2010, Atlantic Aviation recorded $8.4 million in revenue from Sentient. As of June 30, 2010, Atlantic Aviation had $132,000 in receivables from Sentient, which is included in accounts receivable in the consolidated condensed balance sheets. During the quarter ended June 30, 2010, Atlantic Aviation paid $15,000 to Sentient for charter services rendered.

In addition, the Company and several of its subsidiaries have entered into a licensing agreement with the Macquarie Group related to the use of the Macquarie name and trademark. The Macquarie Group does not charge the Company any fees for this license.

15. Income Taxes

The Company expects to incur a net operating loss for federal consolidated income tax purposes for the year ending December 31, 2010. The Company believes that it will be able to utilize the projected federal and certain state consolidated 2010 and prior year net operating losses. Accordingly, the Company has not provided a valuation allowance against any deferred tax assets generated in 2010, except as noted below. Two of the Company’s businesses, IMTT and District Energy, are less than 80% owned by the Company, and those businesses file separate federal consolidated income tax returns.

In the first six months of 2010, the Company revised the valuation allowance from $20.6 million at December 31, 2009 to $8.0 million, a decrease of $12.6 million. Approximately $2.6 million of this decrease was recorded in benefit for income taxes from continuing operations in the consolidated condensed statements of operations during the six months ended June 30, 2010, and the remaining $10.0 million decrease recorded in discontinued operations.

As discussed in Note 5, “Discontinued Operations”, as a result of the approval of the sale of PCAA's assets in bankruptcy and the expected dissolution of PCAA during 2010, the Company has reduced its valuation allowance on the realization of a portion of the deferred tax assets attributable to its basis in PCAA and its consolidated federal net operating loss.

The Company and its subsidiaries file separate and combined state income tax returns. In calculating its consolidated projected effective state tax rate for 2010, the Company has taken into consideration an expected need to provide a valuation allowance for certain state income tax net operating loss carryforwards, the utilization of which is not assured beyond a reasonable doubt. In addition, the Company and its subsidiaries expect to incur certain expenses that will not be deductible in determining state taxable income. Accordingly, these expenses have also been excluded in projecting the Company’s effective state tax rate.

Uncertain Tax Positions

At December 31, 2009, the Company and its subsidiaries had a reserve of approximately $336,000 for benefits taken during 2009 and prior tax periods attributable to tax positions for which the probability of recognition is considered to be less than more likely than not. There was no material change in that reserve as of June 30, 2010, and no material change is expected for the year ended December 31, 2010.

16. Legal Proceedings and Contingencies

There are no material legal proceedings other than as disclosed in Part I, Item 3 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed with the SEC on February 25, 2010.

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