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8-K - MACQUARIE INFRASTRUCTURE COMPANY LLC 8-K - Macquarie Infrastructure Corpa50057719.htm

Exhibit 99.1

Macquarie Infrastructure Company LLC Reports Third Quarter 2011 Financial Results, Declares $0.20 Quarterly Dividend

• Operating businesses performing ahead of guidance

• Proportionately combined free cash flow of $0.79 per share generated

• Atlantic Aviation expected to exit cash flow sweep by year-end

• Cash dividend of $0.20 per share to be paid mid-November

NEW YORK--(BUSINESS WIRE)--November 2, 2011--Macquarie Infrastructure Company LLC (NYSE: MIC) reported consolidated revenue of $251.6 million for the third quarter of 2011, a 17.9% increase compared with the third quarter in 2010.

The Company reported net income from continuing operations, before tax, of $14.6 million for the third quarter of 2011 compared with $11.0 million for the third quarter of 2010. For the nine months ended September 30, 2011 MIC reported net income before tax of $28.1 million compared with a net loss of $8.6 million for the comparable period in 2010.

The MIC Board has approved a cash dividend of $0.20 per share for the quarter ended September 30, 2011. The dividend will be payable on November 17, 2011 to shareholders of record on November 14, 2011.

“We are on pace to achieve year-on-year growth in proportionately combined free cash flow from core operations of more than 12%,” said James Hooke, Chief Executive Officer of Macquarie Infrastructure Company LLC. “The performance of our operating companies in the third quarter was in line with our expectations and produced proportionately combined free cash flow through nine months that is ahead of our guidance.”

Cash Generation

Proportionately combined free cash flow generated in the third quarter of 2011 was $36.4 million, or $0.79 per share, compared with $43.0 million, or $0.94 per share, in the third quarter of 2010. The decrease reflects the contribution in 2010 from a unit of MIC’s bulk liquid storage terminal business that was involved in the Gulf of Mexico oil spill clean-up. Excluding the contribution from this unit, proportionately combined free cash flow would have increased by approximately 12.9%.

MIC regards free cash flow as an important tool in assessing the performance of its capital intensive, cash generative businesses. MIC defines free cash flow as cash from operating activities, less maintenance capital expenditures and changes in working capital.


The following table reflects results of continuing operations for MIC’s businesses for the quarter and year to date periods ended September 30, 2011 and 2010 on a proportionately combined basis. Proportionately combined free cash flow includes the cash generated at MIC’s wholly-owned subsidiaries as well as its 50% interest in the free cash flow generated by IMTT and 50.01% controlling interest in the free cash flow generated by District Energy, all offset by MIC corporate level expenses.

Proportionately combined free cash flow does not fully reflect MIC’s ability to freely deploy generated cash, as it does not reflect required principal payments on indebtedness and other fixed obligations, or dividends, among other items. Free cash flow, as defined by MIC, should be used as a supplemental measure and not in lieu of financial results reported under GAAP. See the attached tables for a reconciliation of consolidated net income attributable to MIC LLC to consolidated EBITDA excluding non-cash items and cash from operating activities to free cash flow.

   

For the Quarter Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1)     IMTT 100%   District Energy 100%
           
 
Gross profit 30,496 15,680 3,393 76,571 N/A 126,140 60,992 6,785
EBITDA excluding non-cash items 26,542 12,072 4,494 32,608 (2,035) 73,681 53,083 8,987
Free cash flow 12,099   6,881   2,898   16,178   (1,696)   36,359 24,197   5,794
 

For the Quarter Ended September 30, 2010

IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Gross profit 40,587 14,726 3,415 73,808 N/A 132,536 81,174 6,829
EBITDA excluding non-cash items 35,095 11,002 4,585 30,887 (4,785) 76,784 70,190 9,169
Free cash flow 22,273   9,257   3,581   13,831   (5,928)   43,013 44,545   7,160
                           
Gross profit variance (24.9)%   6.5%   (0.6)%   3.7%   N/A   (4.8)% (24.9)%   (0.6)%
EBITDA excluding non-cash items variance (24.4)%   9.7%   (2.0)%   5.6%   57.5%   (4.0)% (24.4)%   (2.0)%
Free cash flow variance (45.7)%   (25.7)%   (19.1)%   17.0%   71.4%   (15.5)% (45.7)%   (19.1)%

_____________________

(1) Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
 

For the Nine Months Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1)     IMTT 100%   District Energy 100%
           
Gross profit 87,930 46,204 7,115 224,630 N/A 365,879 175,860 14,228
EBITDA excluding non-cash items 76,764 35,241 9,038 93,846 (5,224) 209,665 153,528 18,073
Free cash flow 39,736   18,224   5,767   45,893   (2,036)   107,584 79,471   11,532
 
 

For the Nine Months Ended September 30, 2010

IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Gross profit 107,215 42,899 7,265 218,064 N/A 375,443 214,430 14,528
EBITDA excluding non-cash items 92,845 31,931 9,345 88,411 (10,071) 212,460 185,689 18,686
Free cash flow 60,823   22,171   6,364   38,293   (9,664)   117,987 121,645   12,726
                           
Gross profit variance (18.0)%   7.7%   (2.1)%   3.0%   N/A   (2.5)% (18.0)%   (2.1)%
EBITDA excluding non-cash items variance (17.3)%   10.4%   (3.3)%   6.1%   48.1%   (1.3)% (17.3)%   (3.3)%
Free cash flow variance (34.7)%   (17.8)%   (9.4)%   19.8%   78.9%   (8.8)% (34.7)%   (9.4)%
_____________________
(1) Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.

Maintenance capital expenditures incurred during the first nine months of 2011 increased to $30.2 million compared with $21.0 million for the comparable period in 2010. As the Company has previously noted, these expenditures were accelerated in order to take advantage of the 100% tax depreciation of capital projects provided for under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.


IMTT

MIC has a 50% equity interest in International-Matex Tank Terminals (IMTT), the operator of one of the largest independent bulk liquid storage terminal businesses in the US. IMTT owns and operates 10 marine storage terminals in the US and is the part owner and operator of two terminals in Canada. The terminals store and handle a wide variety of petroleum grades, chemicals and vegetable and animal oils. To aid in meaningful analysis of the performance of IMTT across periods, the table and discussion below refers to results for 100% of the business, not MIC’s 50% interest.

For the third quarter of 2011 compared with the third quarter of 2010:

  • Terminal revenue increased 11.9%
  • Average storage rental rates increased 13.6%; full-year average storage rental rates are expected to increase by approximately 13.0%
  • Capacity utilization increased to 94.1% from 93.0%; utilization rates for the full-year are expected to be approximately 94%
  • Terminal operating costs increased 9.4%; the increase reflects higher repairs and maintenance, labor and benefits costs
  • The 85.8% decline in environmental response gross profit reflects a reduced level of oil spill clean-up activity; a unit of the business was active in the clean-up of the BP oil spill along the Gulf Coast in 2010

IMTT’s free cash flow for the third quarter declined to $24.2 million in 2011 from $44.5 million in 2010 primarily as a result of the reduced contribution from the environmental response unit and an increase in maintenance capital expenditures and repairs and maintenance expenses. The decline was partially offset by increased terminal gross profit.

MIC has been unable to resolve a previously-disclosed dispute with the co-owner of IMTT regarding distributions, despite efforts to do so in accordance with a Shareholders’ Agreement between the parties. Accordingly, on April 18, 2011, MIC initiated formal arbitration proceedings with the Voting Trust of IMTT Holdings Inc. (“Voting Trust”) and IMTT Holdings Inc. under the auspices of the American Arbitration Association, as provided under the Shareholders’ Agreement. MIC believes the Voting Trust’s defenses and claims in the arbitration are without merit. The arbitration process is expected to be completed in the first quarter of 2012.

Assuming the arbitration is resolved in its favor, and subject to favorable economic conditions, the Company intends to increase the cash dividend paid to shareholders by approximately $0.70 per share, per year. Any increase further assumes the continued stable performance of MIC’s operating businesses and remains subject to authorization by the MIC board.

The Gas Company

The Gas Company is the owner and operator of the only regulated (“utility”) gas manufacturing and pipeline distribution network on the islands of Hawaii. The business is also the owner and operator of the largest unregulated (“non-utility”) gas distribution operation on the islands.

For the third quarter of 2011 compared with the third quarter of 2010:

  • Utility contribution margin increased 2.3% to $9.5 million from $9.3 million
  • Non-utility contribution margin increased 8.1% to $13.0 million from $12.0 million
  • The combined volume of gas products sold increased 2.4%

The Gas Company generated $6.9 million of free cash flow in the third quarter of 2011. Free cash flow declined 25.7% versus the comparable period in 2010 primarily as a result of a higher provision for income taxes and expected increases in maintenance capital expenditures partially offset by improved operating results. The Gas Company is a member of MIC’s consolidated tax group and the increased federal income tax liability is expected to be wholly offset by net operating loss carryforwards at the MIC level.

District Energy

MIC’s District Energy business produces chilled water that it distributes via underground pipelines in downtown Chicago to high-rise buildings for use in air conditioning and process cooling systems. The business also operates a site-specific unit that supplies both cooling and heating services to three customers in Las Vegas, Nevada. To aid in meaningful analysis of the performance of District Energy across periods, the table and discussion below refers to results for 100% of the business, not MIC’s 50.01% (controlling) interest.

For the third quarter of 2011 compared with the third quarter of 2010:

  • Cooling consumption revenue decreased 11.9% to $11.1 million from $12.6 million; lower average temperatures in Chicago in the second and third quarters of 2011 compared with 2010 reduced demand for cooling
  • Capacity revenue increased 4.2% to $5.5 million from $5.3 million on an increase in the number of customers being served and inflation adjustments

Free cash flow from District Energy decreased 19.1% to $5.8 million in the third quarter of 2011 compared with the third quarter of 2010. The decrease reflects primarily a higher provision for income taxes.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed-base operations (FBOs) that primarily provide fuel, terminal services and aircraft hangar services to owners and operators of general aviation (GA) aircraft at 66 airports in the US. The network is the largest of its type in the US air transportation industry.

During the third quarter of 2011 Atlantic Aviation completed the acquisitions of FBOs in Portland and Eugene, Oregon. The acquisitions were funded using proceeds from the sale of smaller, non-core FBOs earlier in the year. In addition to expanding Atlantic Aviation’s network into the Pacific Northwest, the acquisitions are expected to produce a net increase in EBITDA generated by the business.

For the third quarter of 2011 compared with the third quarter of 2010:

  • General aviation flight movement, as reported by the FAA, increased 0.7%
  • On a same store basis, gross profit increased 5.2%
  • On a same store basis, the volume of GA fuel sold increased 5.4% and weighted average GA fuel margins increased 0.6%
  • Selling, general and administrative (SG&A) expenses were flat
  • Atlantic Aviation’s leverage ratio decreased to 6.22 times adjusted EBITDA (trailing) including year to date principal payments of $34.5 million
  • Since 2009, Atlantic Aviation has prepaid a total of $171.1 million debt principal

Atlantic’s leverage is expected to fall below 6.0 times adjusted EBITDA (trailing) by year-end. Under the terms of its loan agreement, the business will distribute 50% of the free cash flow it generates so long as leverage remains below 6.0 times. Commencing with the fourth quarter of 2012, absent a refinancing or other modification of the loan agreement, Atlantic will again sweep all excess cash to prepayment of debt principal.


Free cash flow generated by Atlantic Aviation during the third quarter of 2011 increased 17.0% to $16.2 million from $13.8 million in the third quarter of 2010 on improved operating results. The improvement in operations more than offset a $1.7 million increase in maintenance capital expenditures year to date.

Business Outlook

MIC reiterated its guidance of $3.00 per share in proportionately combined free cash flow for the full year. Through nine months ended September 30, 2011 MIC generated $2.34 per share in proportionately combined free cash flow.

MIC also reiterated its guidance regarding an expected increase in maintenance capital expenditures. The Company expects that full year 2011 maintenance capital expenditures will increase by approximately $0.26 per share compared with 2010. Through September, the increased expenditures totaled approximately $0.20 per share. The increase reflects planned expenditures that will take advantage of the 100% tax depreciation provided for in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.

The Company also reaffirmed its segment level full-year EBITDA guidance.

  • IMTT is expected to generate approximately $200.0 million in EBITDA for the year having recorded $153.5 million through nine months.
  • The Gas Company is expected to generate between $47.0 and $50.0 million in EBITDA for the year and has recorded $35.2 million year to date.
  • District Energy is anticipated to generate EBITDA of approximately $23.0 million in 2011 and has produced $18.1 million through nine months.
  • Atlantic Aviation is expected to generate EBITDA in a range between $125.0 and $130.0 million in 2011 and has produced $93.8 million through September 30.

Conference Call and WEBCAST

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, November 3, 2011 to review the Company’s results.

How: To listen to the conference call please dial +1(650) 521-5252 at least 10 minutes prior to the scheduled start time. A webcast of the call will be accessible via the Company’s website at www.macquarie.com/mic.

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company’s website the morning of November 3, 2011 prior to the conference call. A link to the materials will be located on the homepage of the MIC website.

Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on November 3, 2011 through November 18, 2011, at +1(404) 537-3406, Passcode: 18179993. An online archive of the webcast will be available on the Company’s website for one year following the call. MIC-G


About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of three energy-related businesses including a gas production and distribution business in Hawaii, The Gas Company, and a controlling interest in a District Energy business in Chicago, and a 50% interest in a bulk liquid storage terminal business, International-Matex Tank Terminals. MIC also owns and operates an aviation-related airport services business, Atlantic Aviation. The Company is managed by a wholly-owned subsidiary of the Macquarie Group. For additional information, please visit the Macquarie Infrastructure Company website at www.macquarie.com/mic.

Forward-Looking Statements

This filing contains forward-looking statements. MIC 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. Forward-looking statements in this report are subject to a number of risks and uncertainties, some of which are beyond MIC’s control including, among other things: changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; its shared decision-making with co-investors over investments including the distribution of dividends; its regulatory environment establishing rate structures and monitoring quality of service, demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks, fuel and gas costs; its ability to recover increases in costs from customers, reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.

MIC’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which MIC is not currently aware could also cause its 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 release may not occur. These forward-looking statements are made as of the date of this release. MIC undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

“Macquarie Group” refers to the Macquarie Group of companies, which comprises Macquarie Group Limited and its worldwide subsidiaries and affiliates. Macquarie Infrastructure Company LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Company LLC.


MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)
   
September 30, December 31,
2011

2010 (1)

ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 21,817 $ 24,563
Accounts receivable, less allowance for doubtful accounts of $664 and $613, respectively 59,516 47,845
Inventories 18,836 17,063
Prepaid expenses 5,480 6,321
Deferred income taxes 18,530 19,030
Other   16,152     10,605  
Total current assets 140,331 125,427
Property, equipment, land and leasehold improvements, net 556,914 563,451
Equipment lease receivables 33,130 35,663
Investment in unconsolidated business 229,679 223,792
Goodwill 516,094 514,253
Intangible assets, net 670,472 705,862
Other   25,225     28,294  
Total assets $ 2,171,845   $ 2,196,742  
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 3,535 $ 3,282
Accounts payable 30,768 36,036
Accrued expenses 25,435 23,047
Current portion of long-term debt 43,048 49,325
Fair value of derivative instruments 42,260 43,496
Other   16,541     16,100  
Total current liabilities 161,587 171,286
Long-term debt, net of current portion 1,079,101 1,089,559
Deferred income taxes 168,584 156,328
Fair value of derivative instruments 26,072 51,729
Other   40,342     41,145  
Total liabilities   1,475,686     1,510,047  
Commitments and contingencies - -
Members’ equity:

LLC interests, no par value; 500,000,000 authorized; 46,207,881 LLC interests issued and outstanding at September 30, 2011 and 45,715,448 LLC interests issued and outstanding at December 31, 2010

957,506 964,430
Additional paid in capital 21,956 21,956
Accumulated other comprehensive loss (21,677 ) (25,812 )
Accumulated deficit   (254,374 )   (269,425 )
Total members’ equity 703,411 691,149
Noncontrolling interests   (7,252 )   (4,454 )
Total equity   696,159     686,695  
Total liabilities and equity $ 2,171,845   $ 2,196,742  
 
(1) Reclassified to conform to current period presentation.

MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and Per Share Data)
       
Quarter Ended Nine Months Ended
September 30, 2011 September 30, 2010 September 30, 2011 September 30, 2010
 
 
Revenue
Revenue from product sales $ 159,834 $ 129,217 $ 474,480 $ 374,412
Revenue from product sales - utility 35,088 28,232 105,782 83,517
Service revenue 55,420 54,598 154,590 157,598
Financing and equipment lease income   1,236     1,251     3,784     3,767  
Total revenue   251,578     213,298     738,636     619,294  
Costs and expenses
Cost of product sales 107,475 78,843 326,026 235,784
Cost of product sales - utility 29,205 22,467 86,842 66,931
Cost of services 15,860 16,625 40,704 41,088
Selling, general and administrative 50,706 50,486 150,685 150,742
Fees to manager - related party 3,465 2,380 11,253 6,837
Depreciation 10,072 6,973 25,905 21,897
Amortization of intangibles 8,637 8,743 33,400 26,154
Loss on disposal of assets   518     -     1,743     -  
Total operating expenses   225,938     186,517     676,558     549,433  
Operating income 25,640 26,781 62,078 69,861
Other income (expense)
Interest income 3 2 104 22
Interest expense(1) (14,638 ) (24,844 ) (48,973 ) (98,505 )
Equity in earnings and amortization charges of investee 2,436 7,804 14,068 19,171
Other income, net   1,200     1,269     805     821  
Net income (loss) from continuing operations before income taxes 14,641 11,012 28,082 (8,630 )
(Provision) benefit for income taxes   (5,137 )   (2,036 )   (11,635 )   12,541  
Net income from continuing operations $ 9,504 $ 8,976 $ 16,447 $ 3,911
Net income from discontinued operations, net of taxes   -     -     -     81,199  
Net income $ 9,504 $ 8,976 $ 16,447 $ 85,110
Less: net income (loss) attributable to noncontrolling interests   3,128     34     1,396     (1,317 )
Net income attributable to MIC LLC $ 6,376   $ 8,942   $ 15,051   $ 86,427  

Basic income per share from continuing operations attributable to MIC LLC interest holders

$ 0.14 $ 0.20 $ 0.33 $ 0.12

Basic income per share from discontinued operations attributable to MIC LLC interest holders

  -     -     -     1.78  
Basic income per share attributable to MIC LLC interest holders $ 0.14   $ 0.20   $ 0.33   $ 1.90  
Weighted average number of shares outstanding: basic   46,088,783     45,715,448     45,908,258     45,493,982  

Diluted income per share from continuing operations attributable to MIC LLC interest holders

$ 0.14 $ 0.20 $ 0.33 $ 0.12

Diluted income per share from discontinued operations attributable to MIC LLC interest holders

  -     -     -     1.78  
Diluted income per share attributable to MIC LLC interest holders $ 0.14   $ 0.20   $ 0.33   $ 1.90  
Weighted average number of shares outstanding: diluted   46,106,708     45,747,437     45,934,013     45,592,577  
Cash distributions declared per share $ 0.20   $ -   $ 0.60   $ -  
(1)  

Interest expense includes non-cash gains on derivative instruments of $4.6 million and $9.6 million for the quarter and nine months ended September 30, 2011, respectively. For the quarter and nine months ended September 30, 2010, interest expense includes non-cash losses on derivative instruments of $3.8 million and $35.5 million, respectively.


MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)
   
Nine Months Ended
September 30, 2011 September 30, 2010
 
Operating activities
Net income $ 16,447 $ 85,110

Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:

Net income from discontinued operations before noncontrolling interests - (81,199 )
Depreciation and amortization of property and equipment 30,874 26,807
Amortization of intangible assets 33,400 26,154
Loss on disposal of assets 949 -
Equity in earnings and amortization charges of investees (14,068 ) (19,171 )
Equity distributions from investees - 15,000
Amortization of debt financing costs 3,074 3,299
Non-cash derivative (gains) losses (9,573 ) 35,497
Base management fees settled in LLC interests 11,253 2,189
Equipment lease receivable, net 2,271 2,202
Deferred rent 272 217
Deferred taxes 8,680 (13,685 )
Other non-cash expenses, net 2,305 2,908
Changes in other assets and liabilities:
Accounts receivable (11,380 ) (5,254 )
Inventories (791 ) (895 )
Prepaid expenses and other current assets (3,450 ) 878
Due to manager - related party 1 2,383
Accounts payable and accrued expenses (1,455 ) (221 )
Income taxes payable 548 (1,281 )
Other, net   (2,192 )   (956 )
Net cash provided by operating activities from continuing operations 67,165 79,982
 
Investing activities
Acquisitions of businesses and investments, net of cash acquired (23,068 ) -
Proceeds from sale of assets 16,999 -
Purchases of property and equipment (23,496 ) (12,462 )
Investment in capital leased assets (24 ) (2,400 )
Other   52     630  
Net cash used in investing activities from continuing operations (29,537 ) (14,232 )
 
Financing activities
Proceeds from long-term debt 13,406 -
Proceeds on line of credit facilities 4,400 -
Dividends paid to holders of LLC interests (18,376 ) -
Contributions received from noncontrolling interests - 300
Distributions paid to noncontrolling interests (5,123 ) (1,935 )
Payment of long-term debt (34,570 ) (56,336 )
Debt financing costs paid (4 ) (186 )
Change in restricted cash - 2,236
Payment of notes and capital lease obligations   (107 )   (102 )
Net cash used in financing activities from continuing operations   (40,374 )   (56,023 )
Net change in cash and cash equivalents from continuing operations   (2,746 )   9,727  

MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS- (continued)
(Unaudited)
($ In Thousands)
   
Nine Months Ended
September 30, 2011 September 30, 2010
 
Cash flows (used in) provided by discontinued operations:
Net cash used in operating activities $ - $ (12,703 )
Net cash provided by investing activities - 134,356
Net cash used in financing activities   -     (124,183 )
Cash used in discontinued operations(1) - (2,530 )
Change in cash of discontinued operations held for sale(1) - 2,385
Net change in cash and cash equivalents (2,746 ) 9,582
Cash and cash equivalents, beginning of period   24,563     27,455  
Cash and cash equivalents, end of period - continuing operations $ 21,817   $ 37,037  
 

Supplemental disclosures of cash flow information for continuing operations:

Non-cash investing and financing activities:
Accrued purchases of property and equipment $ 859   $ 1,208  
Issuance of LLC interests to manager for base management fees $ 11,002   $ 4,083  
Issuance of LLC interests to independent directors $ 450   $ 450  
Taxes paid $ 2,382   $ 2,059  
Interest paid $ 55,178   $ 59,737  

(1)

 

Cash of discontinued operations held for sale is reported in assets of discontinued operations held for sale in the accompanying consolidated condensed balance sheets. The cash used in discontinued operations is different than the change in cash of discontinued operations held for sale due to intercompany transactions that are eliminated in consolidation.


CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

                 
 

Quarter Ended

Change Nine Months Ended Change
September 30, Favorable/(Unfavorable) September 30, Favorable/(Unfavorable)
2011 2010 $ % 2011 2010 $ %
($ In Thousands) (Unaudited)
Revenue
Revenue from product sales $ 159,834 $ 129,217 30,617 23.7 $ 474,480 $ 374,412 100,068 26.7
Revenue from product sales - utility 35,088 28,232 6,856 24.3 105,782 83,517 22,265 26.7
Service revenue 55,420 54,598 822 1.5 154,590 157,598 (3,008 ) (1.9 )
Financing and equipment lease income   1,236     1,251     (15 ) (1.2 )   3,784     3,767     17   0.5
Total revenue   251,578     213,298     38,280   17.9   738,636     619,294     119,342   19.3
Costs and expenses
Cost of product sales 107,475 78,843 (28,632 ) (36.3 ) 326,026 235,784 (90,242 ) (38.3 )
Cost of product sales - utility 29,205 22,467 (6,738 ) (30.0 ) 86,842 66,931 (19,911 ) (29.7 )
Cost of services   15,860     16,625     765   4.6   40,704     41,088     384   0.9
Gross profit 99,038 95,363 3,675 3.9 285,064 275,491 9,573 3.5

Selling, general and administrative

50,706

50,486

(220

)

(0.4

)

150,685

150,742

57

-

Fees to manager - related party 3,465 2,380 (1,085 ) (45.6 ) 11,253 6,837 (4,416 ) (64.6 )
Depreciation 10,072 6,973 (3,099 ) (44.4 ) 25,905 21,897 (4,008 ) (18.3 )
Amortization of intangibles 8,637 8,743 106 1.2 33,400 26,154 (7,246 ) (27.7 )
Loss on disposal of assets   518     -     (518 ) NM   1,743     -     (1,743 ) NM
Total operating expenses   73,398     68,582     (4,816 ) (7.0 )   222,986     205,630     (17,356 ) (8.4 )
Operating income 25,640 26,781 (1,141 ) (4.3 ) 62,078 69,861 (7,783 ) (11.1 )
Other income (expense)
Interest income 3 2 1 50.0 104 22 82 NM
Interest expense(1) (14,638 ) (24,844 ) 10,206 41.1 (48,973 ) (98,505 ) 49,532 50.3
Equity in earnings and amortization charges of investees 2,436 7,804 (5,368 ) (68.8 ) 14,068 19,171 (5,103 ) (26.6 )
Other income, net   1,200     1,269     (69 ) (5.4 )   805     821     (16 ) (1.9 )
Net income (loss) from continuing operations before income taxes 14,641 11,012 3,629 33.0 28,082 (8,630 ) 36,712 NM
(Provision) benefit for income taxes   (5,137 )   (2,036 )   (3,101 ) (152.3 )   (11,635 )   12,541     (24,176 ) (192.8 )
Net income from continuing operations $ 9,504 $ 8,976 528 5.9 $ 16,447 $ 3,911 12,536 NM
Net income from discontinued operations, net of taxes   -     -     -   -   -     81,199     (81,199 ) (100.0 )
Net income $ 9,504 $ 8,976 528 5.9 $ 16,447 $ 85,110 (68,663 ) (80.7 )
Less: net income (loss) attributable to noncontrolling interests   3,128     34     (3,094 ) NM   1,396     (1,317 )   (2,713 ) NM
Net income attributable to MIC LLC $ 6,376   $ 8,942     (2,566 ) (28.7 ) $ 15,051   $ 86,427     (71,376 ) (82.6 )
NM - Not meaningful

(1)

 

Interest expense includes non-cash gains on derivative instruments of $4.6 million and $9.6 million for the quarter and nine months ended September 30, 2011, respectively. For the quarter and nine months ended September 30, 2010, interest expense includes non-cash losses on derivative instruments of $3.8 million and $35.5 million, respectively.


MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF CONSOLIDATED NET INCOME FROM CONTINUING OPERATIONS

TO EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

               
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/(Unfavorable)   September 30, Favorable/(Unfavorable)
2011 2010 $ % 2011 2010 $ %
($ In Thousands) (Unaudited)
 
Net income attributable to MIC LLC from continuing operations(1) $ 6,376 $ 8,942 $ 15,051 $ 5,364
Interest expense, net(2) 14,635 24,842 48,869 98,483
Provision (benefit) for income taxes 5,137 2,036 11,635 (12,541 )
Depreciation(3) 10,072 6,973 25,905 21,897
Depreciation - cost of services(3) 1,664 1,639 4,969 4,910
Amortization of intangibles(4) 8,637 8,743 33,400 26,154
(Gain) loss on disposal of assets (204 ) - 949 -
Equity in (earnings) losses and amortization charges of investees(5) (2,436 ) 2,196 (14,068 ) (4,171 )
Base management fees settled/to be settled in LLC interests 3,465 - 11,253 2,189
Other non-cash expense, net   4,286     902       3,973     1,672    
EBITDA excluding non-cash items from continuing operations $ 51,632   $ 56,273   (4,641 ) (8.2 ) $ 141,936   $ 143,957   (2,021 ) (1.4 )
 
EBITDA excluding non-cash items from continuing operations $ 51,632 $ 56,273 $ 141,936 $ 143,957
Interest expense, net(2) (14,635 ) (24,842 ) (48,869 ) (98,483 )
Interest rate swap breakage fees(2) (515 ) (1,484 ) (2,247 ) (4,689 )
Non-cash derivative (gains) losses recorded in interest expense(2) (4,093 ) 5,307 (7,326 ) 40,186
Amortization of debt financing costs(2) 1,014 1,043 3,074 3,299
Equipment lease receivables, net 778 751 2,271 2,202
Provision/benefit for income taxes, net of changes in deferred taxes (1,827 ) 325 (2,955 ) (1,144 )
Changes in working capital   (6,476 )   963     (18,719 )   (5,346 )
Cash provided by operating activities 25,878 38,336 67,165 79,982
Changes in working capital 6,476 (963 ) 18,719 5,346
Maintenance capital expenditures   (5,197 )   (3,053 )     (12,271 )   (6,802 )  
Free cash flow from continuing operations $ 27,157   $ 34,320   (7,163 ) (20.9 ) $ 73,613   $ 78,526   (4,913 ) (6.3 )

(1)

 

Net income attributable to MIC LLC from continuing operations excludes net income attributable to noncontrolling interests of $3.1 million and $1.4 million for the quarter and nine months ended September 30, 2011, respectively, and net income attributable to noncontrolling interests of $34,000 and net loss attributable to noncontrolling interests of $1.453 million for the quarter and nine months ended September 30, 2010, respectively.

(2)

Interest expense, net, includes non-cash gains (losses) on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.

(3)

Depreciation - cost of services includes depreciation expense for District Energy, which is reported in cost of services in our consolidated condensed statements of operations. Depreciation and Depreciation - cost of services does not include acquisition- related step-up depreciation expense of $2.0 million and $5.5 million for the quarter and nine months ended September 30, 2011, respectively, and $1.7 million and $5.2 million for the quarter and nine months ended September 30, 2010, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated condensed statements of operations.

(4)

Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $520,000 for the quarter and nine months ended September 30, 2011, respectively, and $283,000 and $850,000 for the quarter and nine months ended September 30, 2010, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated condensed statements of operations.

(5)

Equity in earnings and amortization charges of investees in the above table includes our 50% share of IMTT's earnings, offset by distributions we received only up to our share of the earnings recorded.


MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING

NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

               

IMTT

 
Quarter Ended Nine Months Ended
September 30, September 30,
Change Change
2011 2010 Favorable/(Unfavorable) 2011 2010 Favorable/(Unfavorable)
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Terminal revenue 102,794 91,825 10,969 11.9 310,245 278,122 32,123 11.5
Environmental response revenue 11,775   90,377   (78,602 ) (87.0 ) 22,105   169,353   (147,248 ) (86.9 )
Total revenue 114,569 182,202 (67,633 ) (37.1 ) 332,350 447,475 (115,125 ) (25.7 )
Costs and expenses
Terminal operating costs 46,289 42,300 (3,989 ) (9.4 ) 140,459 124,846 (15,613 ) (12.5 )
Environmental response operating costs 7,288   58,728   51,440   87.6 16,031   108,199   92,168   85.2
Total operating costs 53,577 101,028 47,451 47.0 156,490 233,045 76,555 32.8
Terminal gross profit 56,505 49,525 6,980 14.1 169,786 153,276 16,510 10.8
Environmental response gross profit 4,487   31,649   (27,162 ) (85.8 ) 6,074   61,154   (55,080 ) (90.1 )
Gross profit 60,992 81,174 (20,182 ) (24.9 ) 175,860 214,430 (38,570 ) (18.0 )
General and administrative expenses 7,995 10,839 2,844 26.2 23,575 29,802 6,227 20.9
Depreciation and amortization 16,052   16,602   550   3.3 48,087   46,136   (1,951 ) (4.2 )
Operating income 36,945 53,733 (16,788 ) (31.2 ) 104,198 138,492 (34,294 ) (24.8 )
Interest expense, net(1) (24,319 ) (20,586 ) (3,733 ) (18.1 ) (45,313 ) (58,485 ) 13,172 22.5
Other income 94 220 (126 ) (57.3 ) 1,214 1,581 (367 ) (23.2 )
Provision for income taxes (5,537 ) (15,546 ) 10,009 64.4 (24,984 ) (35,902 ) 10,918 30.4
Noncontrolling interest 94   153   (59 ) (38.6 ) 185   (247 ) 432   174.9
Net income 7,277   17,974   (10,697 ) (59.5 ) 35,300   45,439   (10,139 ) (22.3 )
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income 7,277 17,974 35,300 45,439
Interest expense, net(1) 24,319 20,586 45,313 58,485
Provision for income taxes 5,537 15,546 24,984 35,902
Depreciation and amortization 16,052 16,602 48,087 46,136
Other non-cash income (102 ) (518 )   (156 ) (273 )  
EBITDA excluding non-cash items 53,083   70,190   (17,107 ) (24.4 ) 153,528   185,689   (32,161 ) (17.3 )
 
EBITDA excluding non-cash items 53,083 70,190 153,528 185,689
Interest expense, net(1) (24,319 ) (20,586 ) (45,313 ) (58,485 )
Non-cash derivative losses recorded in interest expense(1) 15,345 11,041 18,653 33,094
Amortization of debt financing costs(1) 808 618 2,426 1,328
Provision for income taxes, net of changes in deferred
taxes (6,181 ) (6,580 ) (13,765 ) (10,812 )
Changes in working capital (17,621 ) 7,761   (30,468 ) (19,693 )
Cash provided by operating activities 21,115 62,444 85,061 131,121
Changes in working capital 17,621 (7,761 ) 30,468 19,693
Maintenance capital expenditures (14,539 ) (10,138 )   (36,058 ) (29,169 )  
Free cash flow 24,197   44,545   (20,348 ) (45.7 ) 79,471   121,645   (42,174 ) (34.7 )
 
(1) Interest expense, net, includes non-cash losses on derivative instruments and non-cash amortization of deferred financing fees.

The Gas Company                
 
Quarter Ended Nine Months Ended
September 30, September 30,
2011 2010

Change

Favorable/(Unfavorable)

2011 2010

Change

Favorable/(Unfavorable)

$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Contribution margin
Revenue - utility 35,088 28,232 6,856 24.3 105,782 83,517 22,265 26.7
Cost of revenue - utility 25,547   18,904   (6,643 ) (35.1 ) 76,758   56,178   (20,580 ) (36.6 )
Contribution margin - utility 9,541 9,328 213 2.3 29,024 27,339 1,685 6.2
Revenue - non-utility 28,056 23,214 4,842 20.9 82,342 72,760 9,582 13.2
Cost of revenue - non-utility 15,041   11,179   (3,862 ) (34.5 ) 45,413   37,024   (8,389 ) (22.7 )
Contribution margin - non-utility 13,015 12,035 980 8.1 36,929 35,736 1,193 3.3
Total contribution margin 22,556 21,363 1,193 5.6 65,953 63,075 2,878 4.6
Production 1,867 1,718 (149 ) (8.7 ) 5,321 5,126 (195 ) (3.8 )
Transmission and distribution 5,009   4,919   (90 ) (1.8 ) 14,428   15,050   622   4.1
Gross profit 15,680 14,726 954 6.5 46,204 42,899 3,305 7.7
Selling, general and administrative expenses 4,414 4,259 (155 ) (3.6 ) 12,672 12,557 (115 ) (0.9 )
Depreciation and amortization 1,843   1,492   (351 ) (23.5 ) 5,418   4,926   (492 ) (10.0 )
Operating income 9,423 8,975 448 5.0 28,114 25,416 2,698 10.6
Interest expense, net(1) (2,415 ) (5,047 ) 2,632 52.1 (7,912 ) (15,780 ) 7,868 49.9
Other income (expense) 70 1 69 NM (209 ) (10 ) (199 ) NM
Provision for income taxes (2,689 ) (1,538 ) (1,151 ) (74.8 ) (7,901 ) (3,769 ) (4,132 ) (109.6 )
Net income(2) 4,389   2,391   1,998   83.6 12,092   5,857   6,235   106.5
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income(2) 4,389 2,391 12,092 5,857
Interest expense, net(1) 2,415 5,047 7,912 15,780
Provision for income taxes 2,689 1,538 7,901 3,769
Depreciation and amortization 1,843 1,492 5,418 4,926
Other non-cash expenses 736   534     1,918   1,599    
EBITDA excluding non-cash items 12,072   11,002   1,070   9.7 35,241   31,931   3,310   10.4
 
EBITDA excluding non-cash items 12,072 11,002 35,241 31,931
Interest expense, net(1) (2,415 ) (5,047 ) (7,912 ) (15,780 )
Non-cash derivative losses recorded in interest expense(1) 35 2,734 932 8,945
Amortization of debt financing costs(1) 119 120 358 359
Provision for income taxes, net of changes in deferred taxes (562 ) 1,478 (4,107 ) (1,276 )
Changes in working capital (1,030 ) 1,483   (7,479 ) (1,320 )
Cash provided by operating activities 8,219 11,770 17,033 22,859
Changes in working capital 1,030 (1,483 ) 7,479 1,320
Maintenance capital expenditures (2,368 ) (1,030 )   (6,288 ) (2,008 )  
Free cash flow 6,881   9,257   (2,376 ) (25.7 ) 18,224   22,171   (3,947 ) (17.8 )

NM - Not meaningful

(1)

 

Interest expense, net, includes non-cash losses on derivative instruments and non-cash amortization of deferred financing fees.

(2)

Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.


District Energy

               
 
Quarter Ended Nine Months Ended
September 30, September 30,
2011 2010

Change

Favorable/(Unfavorable)

2011 2010

Change

Favorable/(Unfavorable)

$ $ $ % $ $ $ %

 

($ In Thousands) (Unaudited)

 
Cooling capacity revenue 5,523 5,302 221 4.2 16,282 15,835 447 2.8
Cooling consumption revenue 11,091 12,596 (1,505 ) (11.9 ) 19,445 21,503 (2,058 ) (9.6 )
Other revenue 688 823 (135 ) (16.4 ) 2,281 2,490 (209 ) (8.4 )
Finance lease revenue 1,236   1,251   (15 ) (1.2 ) 3,784   3,767   17   0.5
Total revenue 18,538   19,972   (1,434 ) (7.2 ) 41,792   43,595   (1,803 ) (4.1 )
Direct expenses — electricity 6,697 8,202 1,505 18.3 12,318 14,189 1,871 13.2
Direct expenses — other(1) 5,056   4,941   (115 ) (2.3 ) 15,246   14,878   (368 ) (2.5 )
Direct expenses — total 11,753 13,143 1,390 10.6 27,564 29,067 1,503 5.2
Gross profit 6,785 6,829 (44 ) (0.6 ) 14,228 14,528 (300 ) (2.1 )
Selling, general and administrative expenses 764 793 29 3.7 2,449 2,350 (99 ) (4.2 )
Amortization of intangibles 345   345   -   - 1,023   1,023   -   -
Operating income 5,676 5,691 (15 ) (0.3 ) 10,756 11,155 (399 ) (3.6 )
Interest expense, net(2) (4,566 ) (6,862 ) 2,296 33.5 (11,750 ) (20,866 ) 9,116 43.7
Other income 1,201 1,427 (226 ) (15.8 ) 1,312 1,536 (224 ) (14.6 )
(Provision) benefit for income taxes (865 ) (23 ) (842 ) NM 132 3,464 (3,332 ) (96.2 )
Noncontrolling interest (212 ) (198 ) (14 ) (7.1 ) (638 ) (590 ) (48 ) (8.1 )
Net income (loss) 1,234   35   1,199   NM (188 ) (5,301 ) 5,113   96.5

 

Reconciliation of net income (loss) to EBITDA excluding non- cash items:

Net income (loss) 1,234 35 (188 ) (5,301 )
Interest expense, net(2) 4,566 6,862 11,750 20,866
Provision (benefit) for income taxes 865 23 (132 ) (3,464 )
Depreciation(1) 1,664 1,639 4,969 4,910
Amortization of intangibles 345 345 1,023 1,023
Other non-cash expenses 313   265     651   652    
EBITDA excluding non-cash items 8,987   9,169   (182 ) (2.0 ) 18,073   18,686   (613 ) (3.3 )
 
EBITDA excluding non-cash items 8,987 9,169 18,073 18,686
Interest expense, net(2) (4,566 ) (6,862 ) (11,750 ) (20,866 )
Non-cash derivative losses recorded in interest expense(2) 1,865 4,180 3,808 13,006
Amortization of debt financing costs(2) 171 171 511 511
Equipment lease receivable, net 778 751 2,271 2,202
Provision/benefit for income taxes, net of changes in deferred taxes (1,277 ) - (1,092 ) -
Changes in working capital (789 ) (92 ) (608 ) (3,661 )
Cash provided by operating activities 5,169 7,317 11,213 9,878
Changes in working capital 789 92 608 3,661
Maintenance capital expenditures (164 ) (249 )   (289 ) (813 )  
Free cash flow 5,794   7,160   (1,366 ) (19.1 ) 11,532   12,726   (1,194 ) (9.4 )

NM - Not meaningful

(1)

 

Includes depreciation expense of $1.7 million and $5.0 million for the quarter and nine months ended September 30, 2011, respectively, and $1.6 million and $4.9 million for the quarter and nine months ended September 30, 2010, respectively.

(2)

Interest expense, net, includes non-cash losses on derivative instruments and non-cash amortization of deferred financing fees.


Atlantic Aviation

               
 
 
Quarter Ended

Nine Months Ended

September 30,

September 30,

2011 2010 Change

Favorable/(Unfavorable)

2011 2010 Change

Favorable/(Unfavorable)

$ $ $ % $ $ $ %

 

($ In Thousands) (Unaudited)

Revenue
Fuel revenue 131,778 106,003 25,775 24.3 392,138 301,652 90,486 30.0
Non-fuel revenue 38,118   35,877   2,241   6.2 116,582   117,770   (1,188 ) (1.0 )
Total revenue 169,896 141,880 28,016 19.7 508,720 419,422 89,298 21.3
Cost of revenue
Cost of revenue-fuel 89,217 64,590 (24,627 ) (38.1 ) 270,949 189,337 (81,612 ) (43.1 )
Cost of revenue-non-fuel 4,108   3,482   (626 ) (18.0 ) 13,141   12,021   (1,120 ) (9.3 )
Total cost of revenue 93,325 68,072 (25,253 ) (37.1 ) 284,090 201,358 (82,732 ) (41.1 )
Fuel gross profit 42,561 41,413 1,148 2.8 121,189 112,315 8,874 7.9
Non-fuel gross profit 34,010   32,395   1,615   5.0 103,441   105,749   (2,308 ) (2.2 )
Gross profit 76,571   73,808   2,763   3.7 224,630   218,064   6,566   3.0
Selling, general and administrative expenses 43,430 42,969 (461 ) (1.1 ) 130,105 129,762 (343 ) (0.3 )
Depreciation and amortization 16,521 13,879 (2,642 ) (19.0 ) 52,864 42,102 (10,762 ) (25.6 )
Loss on disposal of assets 518   -   (518 ) NM 1,743   -   (1,743 ) NM
Operating income 16,102 16,960 (858 ) (5.1 ) 39,918 46,200 (6,282 ) (13.6 )
Interest expense, net(1) (7,655 ) (12,938 ) 5,283 40.8 (29,209 ) (61,612 ) 32,403 52.6
Other expense (18 ) (101 ) 83 82.2 (195 ) (645 ) 450 69.8
(Provision) benefit for income taxes (3,396 ) (1,580 ) (1,816 ) (114.9 ) (4,236 ) 6,471   (10,707 ) (165.5 )
Net income (loss)(2) 5,033   2,341   2,692   115.0 6,278   (9,586 ) 15,864   165.5
 
Reconciliation of net income (loss) to EBITDA excluding non-cash items:
Net income (loss)(2) 5,033 2,341 6,278 (9,586 )
Interest expense, net(1) 7,655 12,938 29,209 61,612
Provision (benefit) for income taxes 3,396 1,580 4,236 (6,471 )
Depreciation and amortization 16,521 13,879 52,864 42,102
(Gain) loss on disposal of assets (204 ) - 949 -
Other non-cash expenses 207   149     310   754    
EBITDA excluding non-cash items 32,608   30,887   1,721   5.6 93,846   88,411   5,435   6.1
 
EBITDA excluding non-cash items 32,608 30,887 93,846 88,411
Interest expense, net(1) (7,655 ) (12,938 ) (29,209 ) (61,612 )
Interest rate swap breakage fees(1) (515 ) (1,484 ) (2,247 ) (4,689 )
Non-cash derivative (gains) losses recorded in interest expense(1) (5,993 ) (1,602 ) (12,066 ) 18,237
Amortization of debt financing costs(1) 724 753 2,205 2,225
Provision/benefit for income taxes, net of changes in deferred taxes (326 ) (11 ) (942 ) (298 )
Changes in working capital (4,620 ) (2,526 ) (7,482 ) 136  
Cash provided by operating activities 14,223 13,079 44,105 42,410
Changes in working capital 4,620 2,526 7,482 (136 )
Maintenance capital expenditures (2,665 ) (1,774 )   (5,694 ) (3,981 )  
Free cash flow 16,178   13,831   2,347   17.0 45,893   38,293   7,600   19.8
NM - Not meaningful

(1)

 

Interest expense, net, includes non-cash gains (losses) on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.

(2)

Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.


MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA

EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

                 

For the Quarter Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Net income (loss) attributable to MIC LLC from continuing operations 3,639 4,389 617 5,033 (6,716 ) 6,962 7,277 1,234
Interest expense (income), net(2) 12,160 2,415 2,283 7,655 (1 ) 24,512 24,319 4,566
Provision (benefit) for income taxes 2,769 2,689 433 3,396 (1,813 ) 7,473 5,537 865
Depreciation 7,670 1,638 832 8,434 - 18,574 15,339 1,664
Amortization of intangibles 357 205 173 8,087 - 8,821 713 345
Gain on sale of assets - - - (204 ) - (204 ) - -
Base management fee paid in LLC interests - - - - 3,465 3,465 - -
Other non-cash (income) expense (51 )   736     157     207     3,030     4,079   (102 )   313  
EBITDA excluding non-cash items 26,542     12,072     4,494     32,608     (2,035 )   73,681   53,083     8,987  
 
EBITDA excluding non-cash items 26,542 12,072 4,494 32,608 (2,035 ) 73,681 53,083 8,987
Interest (expense) income, net(2) (12,160 ) (2,415 ) (2,283 ) (7,655 ) 1 (24,512 ) (24,319 ) (4,566 )
Interest rate swap breakage fees(2) - - - (515 ) - (515 ) - -
Non-cash derivative losses (gains) recorded in interest expense, net(2) 7,673 35 933 (5,993 ) - 2,647 15,345 1,865
Amortization of deferred finance charges(2) 404 119 86 724 - 1,333 808 171
Equipment lease receivables, net - - 389 - - 389 - 778
Provision/benefit for income taxes, net of changes in deferred taxes (3,091 ) (562 ) (639 ) (326 ) 338 (4,279 ) (6,181 ) (1,277 )
Changes in working capital (8,811 )   (1,030 )   (395 )   (4,620 )   (37 )   (14,892 ) (17,621 )   (789 )
Cash provided by (used in) operating activities 10,558 8,219 2,585 14,223 (1,733 ) 33,852 21,115 5,169
Changes in working capital 8,811 1,030 395 4,620 37 14,892 17,621 789
Maintenance capital expenditures (7,270 )   (2,368 )   (82 )   (2,665 )   -     (12,385 ) (14,539 )   (164 )
 
Free cash flow 12,099     6,881     2,898     16,178     (1,696 )   36,359   24,197     5,794  
 
 

For the Quarter Ended September 30, 2010

($ in Thousands) (Unaudited) IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Net income (loss) attributable to MIC LLC from continuing operations 8,987 2,391 18 2,341 (3,629 ) 10,107 17,974 35
Interest expense (income), net(2) 10,293 5,047 3,432 12,938 (5 ) 31,705 20,586 6,862
Provision (benefit) for income taxes 7,773 1,538 11 1,580 (1,105 ) 9,798 15,546 23
Depreciation 8,083 1,286 820 5,687 - 15,876 16,166 1,639
Amortization of intangibles 218 206 173 8,192 - 8,789 436 345
Other non-cash (income) expense (259 )   534     133     149     (46 )   511   (518 )   265  
EBITDA excluding non-cash items 35,095     11,002     4,585     30,887     (4,785 )   76,784   70,190     9,169  
 
EBITDA excluding non-cash items 35,095 11,002 4,585 30,887 (4,785 ) 76,784 70,190 9,169
Interest (expense) income, net(2) (10,293 ) (5,047 ) (3,432 ) (12,938 ) 5 (31,705 ) (20,586 ) (6,862 )
Interest rate swap breakage fees(2) - - - (1,484 ) - (1,484 ) - -
Non-cash derivative losses (gains) recorded in interest expense, net(2) 5,521 2,734 2,090 (1,602 ) (5 ) 8,738 11,041 4,180
Amortization of deferred finance charges(2) 309 120 86 753 (1 ) 1,267 618 171
Equipment lease receivables, net - - 376 - - 376 - 751
Provision/benefit for income taxes, net of changes in deferred taxes (3,290 ) 1,478 - (11 ) (1,142 ) (2,965 ) (6,580 ) -
Changes in working capital 3,881     1,483     (46 )   (2,526 )   2,098     4,889   7,761     (92 )
Cash provided by (used in) operating activities 31,222 11,770 3,659 13,079 (3,830 ) 55,900 62,444 7,317
Changes in working capital (3,881 ) (1,483 ) 46 2,526 (2,098 ) (4,889 ) (7,761 ) 92
Maintenance capital expenditures (5,069 )   (1,030 )   (125 )   (1,774 )   -     (7,998 ) (10,138 )   (249 )
 
Free cash flow 22,273     9,257     3,581     13,831     (5,928 )   43,013   44,545     7,160  

 

(1)

 

Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.

(2)

Interest (expense) income, net, includes non-cash gains (losses) on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.


MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA

EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

               

For the Nine Months Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%   The Gas Company   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Net income (loss) attributable to MIC LLC from continuing operations 17,650 12,092 (94 ) 6,278 (17,199 ) 18,727 35,300 (188 )
Interest expense (income), net(2) 22,657 7,912 5,876 29,209 (2 ) 65,652 45,313 11,750
Provision (benefit) for income taxes 12,492 7,901 (66 ) 4,236 (370 ) 24,193 24,984 (132 )
Depreciation 23,157 4,801 2,485 21,104 - 51,547 46,314 4,969
Amortization of intangibles 887 617 512 31,760 - 33,775 1,773 1,023

Loss on disposal of assets

- - - 949 - 949 - -
Base management fee paid in LLC interests - - - - 11,253 11,253 - -
Other non-cash (income) expense (78 )   1,918     326     310     1,094     3,570   (156 )   651  
EBITDA excluding non-cash items 76,764     35,241     9,038     93,846     (5,224 )   209,665   153,528     18,073  
 
EBITDA excluding non-cash items 76,764 35,241 9,038 93,846 (5,224 ) 209,665 153,528 18,073

Interest (expense) income, net(2)

(22,657 ) (7,912 ) (5,876 ) (29,209 ) 2 (65,652 ) (45,313 ) (11,750 )
Interest rate swap breakage fees(2) - - - (2,247 ) - (2,247 ) - -

Non-cash derivative losses (gains) recorded in interest expense, net(2)

9,327 932 1,904 (12,066 ) - 97 18,653 3,808
Amortization of deferred finance charges(2) 1,213 358 256 2,205 - 4,032 2,426 511
Equipment lease receivables, net - - 1,136 - - 1,136 - 2,271
Provision/benefit for income taxes, net of changes in deferred taxes (6,883 ) (4,107 ) (546 ) (942 ) 3,186 (9,292 ) (13,765 ) (1,092 )
Changes in working capital (15,234 )   (7,479 )   (304 )   (7,482 )   (3,150 )   (33,649 ) (30,468 )   (608 )
Cash provided by (used in) operating activities 42,531 17,033 5,608 44,105 (5,186 ) 104,090 85,061 11,213
Changes in working capital 15,234 7,479 304 7,482 3,150 33,649 30,468 608
Maintenance capital expenditures (18,029 )   (6,288 )   (145 )   (5,694 )   -     (30,156 ) (36,058 ) (289 )
 
Free cash flow 39,736     18,224     5,767     45,893     (2,036 )   107,584   79,471     11,532  
 
 
 

For the Nine Months Ended September 30, 2010

($ in Thousands) (Unaudited) IMTT 50% The Gas Company District Energy 50.01% Atlantic Aviation MIC Corporate Proportionately Combined(1) IMTT 100% District Energy 100%
 
Net income (loss) attributable to MIC LLC from continuing operations 22,720 5,857 (2,651 ) (9,586 ) (4,777 ) 11,562 45,439 (5,301 )
Interest expense, net(2) 29,243 15,780 10,435 61,612 225 117,295 58,485 20,866
Provision (benefit) for income taxes 17,951 3,769 (1,732 ) (6,471 ) (6,375 ) 7,142 35,902 (3,464 )
Depreciation 22,412 4,309 2,455 17,588 - 46,764 44,823 4,910
Amortization of intangibles 657 617 512 24,514 - 26,299 1,313 1,023
Base management fee paid in LLC interests - - - - 2,189 2,189 - -
Other non-cash (income) expense (137 )   1,599     326     754     (1,333 )   1,210   (273 )   652  
EBITDA excluding non-cash items 92,845     31,931     9,345     88,411     (10,071 )   212,460   185,689     18,686  
 
EBITDA excluding non-cash items 92,845 31,931 9,345 88,411 (10,071 ) 212,460 185,689 18,686
Interest expense, net(2) (29,243 ) (15,780 ) (10,435 ) (61,612 ) (225 ) (117,295 ) (58,485 ) (20,866 )
Interest rate swap breakage fees(2) - - - (4,689 ) - (4,689 ) - -

Non-cash derivative losses (gains) recorded in interest expense, net (2)

16,547 8,945 6,504 18,237 (2 ) 50,231 33,094 13,006
Amortization of deferred finance charges(2) 664 359 256 2,225 204 3,708 1,328 511
Equipment lease receivables, net - - 1,101 - - 1,101 - 2,202
Provision/benefit for income taxes, net of changes in deferred taxes (5,406 ) (1,276 ) - (298 ) 430 (6,550 ) (10,812 ) -
Changes in working capital (9,847 )   (1,320 )   (1,831 )   136     (501 )   (13,362 ) (19,693 )   (3,661 )
Cash provided by (used in) operating activities 65,561 22,859 4,940 42,410 (10,165 ) 125,604 131,121 9,878
Changes in working capital 9,847 1,320 1,831 (136 ) 501 13,362 19,693 3,661
Maintenance capital expenditures (14,585 )   (2,008 )   (407 )   (3,981 )   -     (20,980 ) (29,169 )   (813 )
 
Free cash flow 60,823     22,171     6,364     38,293     (9,664 )   117,987   121,645     12,726  

(1)

 

Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.

(2)

Interest expense, net, includes non-cash gains (losses) on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.

CONTACT:
Macquarie Infrastructure Company LLC
Investor Relations:
Jay A. Davis, 212-231-1825
jay.davis@macquarie.com
or
Media Relations:
Paula Chirhart, 212-231-1310
paula.chirhart@macquarie.com