UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
_____________________________

FORM 10-Q
_____________________________
(Mark One) 
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2019March 31, 2020
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from            to           
Commission File Number: 001-32384
_____________________________
MACQUARIE INFRASTRUCTURE CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
_____________________________
Delaware43-2052503
(State or Other Jurisdiction of
Incorporation or Organization)
(IRS Employer
Identification No.)
125 West 55th Street
New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
(212) 231-1000
(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report): N/A
_____________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share MIC New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý☒ No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒Accelerated Filer☐   
Non-accelerated Filer☐Smaller Reporting Company☐Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐No ý☒
There were 86,260,54886,853,672 shares of common stock, with $0.001 par value, outstanding at July 30, 2019.at May 1, 2020.
 

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MACQUARIE INFRASTRUCTURE CORPORATION
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  Page
PART I. FINANCIAL INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
1
Quantitative and Qualitative Disclosures About Market Risk
2427
Controls and Procedures
2527
Consolidated Condensed Balance Sheets as of June 30, 2019March 31, 2020 (Unaudited) and December 31, 20182019
2628
Consolidated Condensed Statements of Operations for the Quarters Ended March 31, 2020 and Six Months Ended June 30, 2019 and 2018 (Unaudited)
2830
Consolidated Condensed Statements of Comprehensive Income for the Quarters Ended March 31, 2020 and Six Months Ended June 30, 2019 and 2018 (Unaudited)
3032
Consolidated Condensed Statements of Stockholders’ Equity for the Quarters Ended March 31, 2020 and Six Months Ended June 30, 2019 and 2018 (Unaudited)
3133
Consolidated Condensed Statements of Cash Flows for the Six MonthsQuarters Ended June 30,March 31, 2020 and 2019 and 2018 (Unaudited)
3234
Notes to Consolidated Condensed Financial Statements (Unaudited)
3436
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
5655
Item 1A.
Risk Factors
56
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
5658
Item 3.
Defaults Upon Senior Securities
5758
Item 4.
Mine Safety Disclosures
5758
Item 5.
Other Information
5758
Item 6.
Exhibits
5758
Macquarie Infrastructure Corporation (MIC) 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 Corporation.MIC.

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Cautionary Note Regarding Forward-Looking Statements
In addition to historical information, this quarterly report on Form 10-Q (Quarterly Report) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements may appear throughout this Quarterly Report, including without limitation, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section. We use words such as “believe”, “intend”, “expect”, “anticipate”, “plan”, “may”, “will”, “should”, “estimate”, “potential”, “project” and similar expressions to identify forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, statements regarding the anticipated specific and overall impacts of COVID-19, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the risks identified in our Annual Report on the Form 10-K for the year ended December 31, 2018,2019, this Quarterly Report on Form 10-Q and in other reports we file from time to time with the Securities and Exchange Commission (SEC).
Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond our ability to control or predict. Our forward-looking statements speak only as of the date of this Quarterly Report. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I
FINANCIAL INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of the financial condition and results of operations of Macquarie Infrastructure Corporation (MIC) should be read in conjunction with the consolidated condensed financial statements and the notes to those statements included elsewhere herein.
MIC is a Delaware corporation formed on May 21, 2015. MIC’s predecessor, Macquarie Infrastructure Company LLC, was formed on April 13, 2004. Except as otherwise specified, all references in this Form 10-Q to “MIC”, “we”, “us”, and “our” refer to Macquarie Infrastructure Corporation and its subsidiaries.
MIC is externally managed by Macquarie Infrastructure Management (USA) Inc. (our Manager), pursuant to the terms of a Management Services Agreement, subject to the oversight and supervision of our Board. The majoritySix of the eight members of our Board, and all of the members of each member of all Boardour Audit, Compensation and Nominating and Governance committees, isare independent and hashave no affiliation with Macquarie. Our Manager is a member of the Macquarie Group of companies comprising Macquarie Group Limited and its subsidiaries and affiliates worldwide. Macquarie Group Limited is headquartered in Australia and is listed on the Australian Securities Exchange.
We currently own and operate a portfolio of infrastructure and infrastructure-like businesses that provide services to other corporate,corporations, government agencies and individual customers primarily in the U.S.United States (U.S.). Our businesses are organized into four segments:
•
International-Matex Tank Terminals (IMTT):  a business providing bulk liquid terminallingstorage and handling services to third partiesthird-parties at 17 terminals in the U.S. and two in Canada;
•
Atlantic Aviation:  a provider of jet fuel, terminal, aircraft hangaring and other services primarily to owners and operators of general aviation (GA) jet aircraft at 70 airports throughout the U.S.;
•
MIC Hawaii:  comprising an energya company that processes and distributes gas and provides related services (Hawaii Gas) and several smaller businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii; and
•
Corporate and Other:  comprising MIC Corporate (holding company),company headquarters in New York City) and a shared services center and other smaller businesses.in Plano, Texas.
Effective October 1, 2018, the Bayonne Energy Center (BEC) and substantially all of the Company’sour portfolio of solar and wind power generation businesses were classified as discontinued operations and the Company’sour Contracted Power segment was eliminated. Effective January 1,All periods reflect this change. In September 2019, we completed the Company’slast of the sales of our renewables businesses included in discontinued operations including our majority interest in a renewable power development business was also classified as a discontinued operation and thereafter a sale process related to this interest was commenced. The Company did not restate the prior period related to the commencement of the sale process as the disposition was deemed insignificant.business. A remaining relationship with a third-party developer of renewable power facilities has beenwas reported as a component of Corporate and Other through the expiration of the relationship in July 2019. All prior comparable periods have been restated to reflect this change.
In July 2019, the Company completed the sales of its wind power generating portfolio, all but one of the assets in its solar power generating portfolio and its majority interest in a renewable development business. The remainder of the operating solar portfolio is expected to close in August 2019. For additional information, see Note 3, “Discontinued Operations and Dispositions”, in our Notes to Consolidated Condensed Financial Statements in Part I of this Form 10-Q.
Our businesses generally operate in sectors with barriers to entry including high initial development and construction costs, contracted revenues or the requirement to obtain government approvals and a lack of immediate cost-effective alternatives to the services provided. Collectively, they tend to generate sustainable, stable and growing cash flows over the long-term.
Overview
Use of Non-GAAP measures
In addition to our results under U.S. GAAP, we use certain non-GAAP measures including EBITDA excluding non-cash items and Free Cash Flow to assess the performance and prospects of our businesses. In particular, we use EBITDA excluding non-cash items and Free Cash Flow.
We measure EBITDA excluding non-cash items as it reflects our businesses’ ability to effectively manage the volumeamount of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses.
In analyzing the financial performance of our businesses, we focus primarily on cash generation and Free Cash Flow in particular. We believe investors use Free Cash Flow as a measure of our ability to sustain and potentially increase our quarterly cash dividend and to fund a portion of our growth.
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See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — “Results of Operations — Consolidated — Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” Flow” for further information on our calculation of EBITDA excluding non-cash items and Free Cash Flow and for reconciliations of these non-GAAP measures to the most comparable GAAP measures.
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At IMTT, we focus on providing bulk liquid storage, handling and other services pursuant to “take-or-pay” contracts to customers who place a premium on ease of access and operational flexibility. The revenue weighted average remaining contract life was 1.92.0 years at June 30, 2019.March 31, 2020.
At Atlantic Aviation, our focus is on the sale of jet fuel and other services to owners and pilotsoperators of GA aircraft through our fixed based operations (FBOs) resulting in a gross margin that. The financial performance of the business is positively correlated with the number of GA flight movements (take-offs and landings) in the U.S. and the business’ ability to service a portion of the aircraft involved in those operations.
MIC Hawaii comprises Hawaii Gas and several smaller businesses that generate revenue primarily from the provision of gas services to commercial, residential and governmental customers and the generation of power while engaging in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii.
Dividends
Since January 1, 2018,2019, MIC has paid or declared the following dividends:
Declared Period Covered $ per Share Record Date Payable Date
July 30, 2019 Second quarter 2019 $1.00
 August 12, 2019 August 15, 2019
April 29, 2019 First quarter 2019 1.00
 May 13, 2019 May 16, 2019
February 14, 2019 Fourth quarter 2018 1.00
 March 4, 2019 March 7, 2019
October 30, 2018 Third quarter 2018 1.00
 November 12, 2018 November 15, 2018
July 31, 2018 Second quarter 2018 1.00
 August 13, 2018 August 16, 2018
May 1, 2018 First quarter 2018 1.00
 May 14, 2018 May 17, 2018
February 19, 2018 Fourth quarter 2017 1.44
 March 5, 2018 March 8, 2018
DeclaredPeriod Covered$ per ShareRecord DatePayable Date
February 14, 2020Fourth quarter 2019$1.00March 6, 2020March 11, 2020
October 29, 2019Third quarter 20191.00
November 11, 2019November 14, 2019
July 30, 2019Second quarter 20191.00
August 12, 2019August 15, 2019
April 29, 2019First quarter 20191.00
May 13, 2019May 16, 2019
February 14, 2019Fourth quarter 20181.00
March 4, 2019March 7, 2019
We intend to provide investors with the benefits of access to a portfolio of infrastructure and infrastructure-like businesses that we believe will generate growing amounts of distributable cash flow over time as a result of their positive correlation with inflation and provision of basic services to customers. Consistent with this,Given the uncertainty stemming from COVID-19, however, we intendare working to distribute the majority of theincrease our balance sheet strength and liquidity by, among other things, retaining any excess cash generated from operations offlow. Therefore, on April 2, 2020, we suspended our businesses as a quarterly cash dividend. Our Board has authorized a quarterly cash dividend resulting in the retention of $1.00 per share forapproximately $260 million should the quarter ended June 30, 2019.suspension remain in place through 2020.
Our Board regularly reviews our dividend policy and the proportion of our Free Cash Flow that theany distribution represents (payout ratio).represents. In determining whether to adjustissue dividends in the amount of our quarterly dividend,future, our Board will take into account such matters as the state of the capital markets and general business and economic conditions, the short and long term impacts of, and disruptions in our businesses, and/or in the business or economic environment due to COVID-19, or other non-economic events, the impact of any acquisitions or dispositions related to our pursuit of strategic alternatives, the Company’s financial condition, results of operations, indebtedness levels, capital requirements, capital opportunities and any contractual, legal and regulatory restrictions on the payment of dividends by the Company to its shareholdersstockholders or by its subsidiaries to the Company, and any other factors that it deems relevant, subject to maintaining a prudent level of reserves and without creating undue volatility in the amount of such dividends where possible.reserves. Moreover, the Company’s senior secured credit facility and the debt commitments at our operating businesses contain restrictions that may limit the Company’s ability to pay dividends. Although historically
Strategic Alternatives
On October 31, 2019, we announced our intention to pursue strategic alternatives for our Company and have declared cash dividends on our shares, any or all of these or other factorssince been actively engaged in processes that could result in the modificationsale of our dividend policy,Company or the reduction, modificationone or eliminationmore of our dividendoperating businesses. We continue to believe that these efforts will maximize value for stockholders and we intend to move the processes forward, although recent volatility in the future.
Recent Developments
2.875% Convertible Senior Notes due July 2019
On July 15, 2019,capital markets, ongoing disruption in business and economic conditions and the Company repaid the outstanding balance of $350 millionlimitations on its 2.875% Convertible Senior Notes due July 2019 at maturity using cashtravel and other restrictions on hand.
Business Divestitures
During the fourth quarter of 2018, the Company commenced a sale process involving its portfolios of 142 megawatts (MW) (gross) of solar generation assets and 203 MW (gross) of wind generation assets, both of which had been designated as discontinued operations. In April 2019, the Company entered into agreements for the sale of these portfolios and completed the sale of its wind power generating portfolio and all but one of the assets in its solar power generating portfolio in July 2019. The remainder of the operating solar portfolio is expectedinteractions imposed by responses to close in August 2019. In July 2019, the Company also completed the sale of its majority interest in a renewable power development business. The aggregate gross proceeds to the Company from the above salesCOVID-19 are expected to be approximately $276 million or approximately $210 million net of taxes and transaction related expenses. Upon closingslow these processes. The measures undertaken to date, including the suspension of the transactions involvingquarterly dividend, will provide MIC with additional financial flexibility to proceed with such processes in a manner consistent with maximizing value for stockholders. We have not set a timetable for completing any transaction and there can be no assurance that any transaction(s) will occur on favorable terms or at all.
On October 30, 2019, we entered into a Disposition Agreement with our Manager to facilitate our pursuit of strategic alternatives (see Exhibit 10.3 of our Annual Report on Form 10-K filed with the portfoliosSEC on February 25, 2020). Outside of operating solarthis agreement, we do not have the ability to terminate the Management Services Agreement between us and wind assets, MICour Manager other than in limited circumstances. With this agreement, the Management Services Agreement will deconsolidate $297 millionterminate as to any businesses, or substantial portions thereof, that are sold and, in connection therewith, we will make payments to our Manager calculated in accordance with the Disposition Agreement. The Disposition Agreement will terminate on the earlier to occur of (i) the termination of the Management Services Agreement, and (ii) the sixth anniversary, subject to extension under certain circumstances if a transaction is pending.
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long-term debt. For additional information, see Note 3, “Discontinued OperationsRating Agency Update
On April 15, 2020, Standard and Dispositions”,Poor’s (S&P) lowered Atlantic Aviation’s issuer credit rating to ‘B+’ from ‘BB-’ and Atlantic Aviation’s senior secured debt to ‘BB-’ from ‘BB’. The downgrade was predicated on the impact of COVID-19 related travel restrictions on Atlantic Aviation’s business. On April 22, 2020, S&P lowered MIC’s rating to ‘BB’ from ‘BB+’ and changed the MIC outlook from stable to negative. The downgrade resulted in our Notesa lowering of IMTT’s rating as a subsidiary rating is capped by the parent rating. On a standalone basis IMTT would be rated ‘BBB-’.
On April 17, 2020, Moody's Investors Service (Moody's) lowered its rating of Atlantic Aviation’s senior secured debt to Consolidated Condensed Financial Statements‘B2’ from ‘Ba3’ (including the probability of default rating). The action reflects Moody's expectation that Atlantic Aviation will face a difficult operating environment involving a significant decline in Part IGA flight activity that will lead to earnings pressure and a weaker financial profile.
The ratings actions have no impact on any of this Form 10-Q.Atlantic Aviation, IMTT or MIC’s existing financial covenants. The downgrade of the MIC and IMTT ratings will increase the margin on the drawn portion of each entities’ revolving credit facilities as well as the IMTT Tax-Exempt Bonds by 0.25%. The commitment fees on the undrawn portions of the IMTT and MIC holding company level revolving credit facilities will increase by 0.05%.
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Results of Operations
Consolidated
ConsistentImpact of COVID-19
The impact of COVID-19 has varied across our portfolio of businesses. The reduction in consumption of refined petroleum products associated with the slowing of economic activity, together with increased production of crude oil, has for the time being resulted in increased demand for storage of these products and driven improved performance at IMTT. Conversely, stay-at-home orders and limitations on travel have abruptly reduced demand for the products and services provided by our strategic objectiveAtlantic Aviation and MIC Hawaii businesses. Our businesses are not unique in these respects. The petroleum storage industry has, in general, performed well during the pandemic while the travel and tourism industries, and the businesses reliant on them, have been significantly negatively affected.
In response to the effects of divesting of smallerthe pandemic, we have remained focused on ensuring the health and non-core businesses, in July 2019, we completed the salessafety of our wind power generating portfolio, all but oneemployees and customers while simultaneously implementing a range of cost reduction and cost control initiatives aimed at ensuring both the assetscontinuity and value of our businesses when the crisis is over. For example, where possible, we have tried to reduce employee working hours and to maintain healthcare benefits rather than conduct layoffs. These and other expense reduction initiatives commenced in our solar power generating portfolioMarch 2020 and our majority interest in a renewable development business. The remainder of the operating solar portfolio isare expected to closeyield annualized savings of approximately $50 million assuming current operating conditions continue. We are also evaluating the benefits that may be available to our businesses and their employees under the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act.
We have suspended our cash dividend which will result in August 2019.the retention of approximately $260 million should it remain in place through the end of 2020. We also concluded a relationship with a third party developerimmediately sought to increase cash available by drawing on certain of renewable power facilitiesour credit facilities. We drew $599 million on our holding company revolving credit facility and $275 million on the Atlantic Aviation revolving credit facility in July 2019.mid-March. The drawdowns added to our approximately $300 million of cash already on hand.
In July 2019, weSubsequently on April 30, 2020, Atlantic Aviation fully repaid the outstanding balance on its revolving credit facility and effective May 4, 2020, reduced the commitments on this facility to $10 million resulting in consolidated cash on hand of $350approximately $870 million. The $10 million revolving commitments are in place solely with respect to letters of credit currently outstanding. The amendment of the facility eliminates any leverage-based maintenance covenant on the Atlantic Aviation term loan as long as the letters of credit issued under the facility are cash collateralized and rolled over to standalone letters of credit facilities upon renewal.
Operations are ongoing at each of our businesses. In light of the ongoing impacts of the pandemic on our businesses, the reduced level of economic activity and uncertainty around the timing of any recovery from the impact of the pandemic, we withdrew the financial guidance we had provided to the market on February 25, 2020. We continue to have visibility into the financial performance of IMTT given the contracted nature of its storage revenue although these may be partially offset by reduction in revenue related to the provision of ancillary services including blending, packaging or throughput. The uncontracted nature of the majority of the revenue generated by Atlantic Aviation and MIC Hawaii means that we have extraordinarily limited visibility into the prospects for these businesses over the short to medium term. A relaxation of travel restrictions and stay-at-home orders will likely be an early indication that we could expect improved performance from Atlantic Aviation and MIC Hawaii, although the rate of any such improvement is highly unpredictable given our inability to forecast the consumer response in a post-COVID-19 environment. Given the significant decline in jet fuel sales at Atlantic Aviation and gas sales at MIC Hawaii in April 2020, we do not currently anticipate meaningful improvement during the second quarter of 2020.
With the steps taken to strengthen our liquidity position summarized above, we have no immediate need for additional capital. We expect to fund the operation of our businesses and our financial obligations in 2020 using the approximately $300 million of 2.875% Convertible Senior Notes that matured on July 15, 2019 using cash on hand. The repaymenthand prior to the March 2020 drawdown on our revolving credit facilities and utilizing cash we expect to be generated by our operating businesses over the remainder of the Notes using available cash had no impact on our net debt outstanding (long-term debt less cash). Proforma foryear.We also currently expect to support the salesgrowth of the renewablecash generating capacity of our businesses by using a portion of these resources to fund projects to which we are contractually obligated and which are projected to generate incremental earnings.
Executive Committee
As an additional precaution, our board has established an Executive Committee comprising the deconsolidationChairman (or alternate), the Chief Executive Officer (or alternate) and one of the related debt, leverage at July 31, 2019 was 3.6 times net debt/EBITDA from 4.0 times at the endindependent members of the second quarter.
Forboard (or alternate) to exercise all powers and authority of the quarter and six months ended June 30, 2019, our consolidated results reflect: (i) increasesboard when the board is not in session or in the volumeevent one of fuel soldmore of its members is/are incapacitated. Decisions of the Committee require the approval of a majority of its independent members, and hangar rental income at Atlantic Aviation; (ii)a majority of the positive impact of new utility rates implemented in July 2018 at Hawaii Gas; and (iii)Committee’s independent members may refer any matter to the full board for determination. The Executive Committee does not have powers that, under Delaware corporate law, cannot be delegated including approving a sale of the mechanical contractor business byCompany. In addition, the Executive Committee may not, among other things, reinstate or declare a dividend or amend or terminate the Disposition Agreement with our MIC Hawaii segment and the sale of an environmental services business by our IMTT segment. Our consolidated results for the six months ended June 30, 2019 also included proceeds received in respect of the termination of an agreement with the owner of a refinery at IMTT’s terminal in St. Rose, LA (the refinery termination payment) and fee income from a third party developer of renewable power projects recorded as a component of Corporate and Other. Contributions to the results for the quarter and six months ended June 30, 2019 were partially offset by the expected lower storage utilization levels and average storage rates at IMTT and overall higher professional services fees.Manager.
Results for discontinued operations decreased for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 primarily due to the sale of BEC in October 2018.
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Results of Operations: Consolidated – (continued)

Results Update
Our consolidated results for the quarter ended March 31, 2020 reflect: (i) the absence of a $39 million contract termination payment (the termination payment) received by IMTT in the first quarter of 2019; (ii) a decrease in the sales of jet fuel and gas at Atlantic Aviation and MIC Hawaii, respectively; and (iii) an increase in expenses incurred in connection with our pursuit of strategic alternatives.
For the quarter ended March 31, 2020, there were no contributions to our consolidated results from discontinued operations due to the completion of the sale of the wind and solar power generating portfolios during 2019.
Our consolidated results of operations are as follows:
Quarter Ended
June 30,
 
Change
Favorable/(Unfavorable)
 Six Months Ended
June 30,		 Change
Favorable/(Unfavorable)		Quarter Ended March 31, Change
Favorable/(Unfavorable)
2019 2018 $ % 2019 2018 $ %2020 2019 $ %
($ In Millions, Except Share and Per Share Data) (Unaudited)($ In Millions, Except Share and Per Share Data) (Unaudited)
Revenue                      
Service revenue$355
 $376
 (21) (6) $773
 $779
 $(6) (1)$356
 $418
 (62) (15)
Product revenue61
 60
 1
 2
 125
 124
 1
 1
60
 64
 (4) (6)
Total revenue416
 436
 (20) (5) 898
 903
 (5) (1)416
 482
 (66) (14)
Costs and expenses                      
Cost of services162
 180
 18
 10
 330
 367
 37
 10
145
 168
 23
 14
Cost of product sales45
 41
 (4) (10) 85
 89
 4
 4
42
 40
 (2) (5)
Selling, general and administrative84
 82
 (2) (2) 164
 162
 (2) (1)96
 80
 (16) (20)
Fees to Manager-related party7
 11
 4
 36
 15
 24
 9
 38
7
 8
 1
 13
Depreciation48
 47
 (1) (2) 96
 94
 (2) (2)51
 48
 (3) (6)
Amortization of intangibles15
 17
 2
 12
 30
 33
 3
 9
14
 15
 1
 7
Total operating expenses361
 378
 17
 4
 720
 769
 49
 6
355
 359
 4
 1
Operating income55
 58
 (3) (5) 178
 134
 44
 33
61
 123
 (62) (50)
Other income (expense)                      
Interest income1
 —
 1
 NM
 4
 —
 4
 NM
—
 3
 (3) (100)
Interest expense(1)
(46) (25) (21) (84) (88) (43) (45) (105)(42) (42) —
 —
Other (expense) income, net(2) 6
 (8) (133) 2
 6
 (4) (67)
Other income, net1
 4
 (3) (75)
Net income from continuing operations before income taxes8
 39
 (31) (79) 96
 97
 (1) (1)20
 88
 (68) (77)
Provision for income taxes(2) (12) 10
 83
 (26) (30) 4
 13
(9) (24) 15
 63
Net income from continuing operations$6
 $27
 (21) (78) $70
 $67
 $3
 4
11
 64
 (53) (83)
Discontinued Operations                      
Net income from discontinued operations before income taxes$5
 $9
 (4) (44) $8
 $15
 $(7) (47)—
 3
 (3) (100)
(Provision) benefit for income taxes(2) —
 (2) NM
 —
 1
 (1) (100)
Benefit for income taxes—
 2
 (2) (100)
Net income from discontinued operations$3
 $9
 (6) (67) $8
 $16
 $(8) (50)—
 5
 (5) (100)
Net income$9
 $36
 (27) (75) $78
 $83
 $(5) (6)11
 69
 (58) (84)
       
Net income from continuing operations$6
 $27
 (21) (78) $70
 $67
 $3
 4
11
 64
 (53) (83)
Net income from continuing operations attributable to MIC$6
 $27
 (21) (78) $70
 $67
 $3
 4
11
 64
 (53) (83)
Net income from discontinued operations$3
 $9
 (6) (67) $8
 $16
 $(8) (50)—
 5
 (5) (100)
Less: net loss attributable to noncontrolling interests(2) (2) —
 —
 (3) (32) (29) (91)—
 (1) (1) (100)
Net income from discontinued operations attributable to MIC$5
 $11
 (6) (55) $11
 $48
 $(37) (77)—
 6
 (6) (100)
Net income attributable to MIC$11
 $38
 (27) (71) $81
 $115
 $(34) (30)$11
 $70
 (59) (84)
Basic income per share from continuing operations attributable to MIC$0.07
 $0.32
 (0.25) (78) $0.81
 $0.79
 $0.02
 3
$0.13
 $0.75
 (0.62) (83)
Basic income per share from discontinued operations attributable to MIC0.06
 0.13
 (0.07) (54) 0.13
 0.57
 (0.44) (77)—
 0.07
 (0.07) (100)
Basic income per share attributable to MIC$0.13
 $0.45
 (0.32) (71) $0.94
 $1.36
 $(0.42) (31)$0.13
 $0.82
 (0.69) (84)
Weighted average number of shares outstanding: basic86,073,372
 85,082,209
 991,163
 1
 85,973,308
 84,952,551
 1,020,757
 1
86,686,972
 85,872,132
 814,840
 1
___________
NM — Not meaningful
(1)Interest expense includes non-cash losses on derivative instruments of $8$9 million and $12$4 million for the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, respectively. For the quarter and six months ended June 30, 2018, interest expense includes gains on derivative instruments of $4 million and $14 million, respectively.
TABLE OF CONTENTS
Results of Operations: Consolidated – (continued)

Revenue
Consolidated revenues decreased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily as a result of (i) decrease in the saleamount of jet fuel and gas sold at Atlantic Aviation and MIC Hawaii, respectively; (ii) lower wholesale cost of jet fuel and gas at Atlantic Aviation and MIC Hawaii, respectively; (iii) the absence of the mechanical contractor businesstermination payment received by our MIC Hawaii segment; (ii)IMTT in the salefirst quarter of an environmental services business by IMTT; (iii) lower storage utilization2019; and (iv) lower average storage rates on new and renewing contracts at IMTT; and (iv) lower wholesale cost of fuel,IMTT. These decreases were partially offset by increasesthe recognition of fees earned on tank cleaning obligations and an increase in hangar rentals and volume of fuel soldutilization at Atlantic Aviation. Consolidated revenues for the six months ended June 30, 2019 also included the refinery termination payment received by IMTT.
Cost of Services and Cost of Product Sales
Consolidated cost of services and cost of product sales decreased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily as a result of (i) decrease in the absenceamount of costs related to the mechanical contractor businessjet fuel and gas sold at Atlantic Aviation and MIC Hawaii, and the environmental services business at IMTT;respectively; and (ii) a lower wholesale cost of jet fuel and gas at Atlantic Aviation.
For the quarterAviation and six months ended June 30, 2019, MIC Hawaii, recorded unfavorable changesrespectively. The decrease in consolidated cost of services and cost of product sales was partially offset by realized and unrealized gains (losses)losses on commodity hedgeshedge contracts at Hawaii Gas versus the prior comparable periods. See(see “Results of Operations — MIC Hawaii” below).
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily as a result of,due to (i) higher professional services fees, including costsan increase in expenses incurred in connection with defending litigation and other legal matters;our pursuit of strategic alternatives; (ii) consulting expenses incurred in conjunction with our evaluation of opportunities for improved efficiencies; (iii) higher salaries and benefits;benefits, generally; (iii) contractual increases in rent at Atlantic Aviation; and (iv) expenses relatednon-cash compensation expense incurred in relation to a long-termthe incentive compensation planplans for senior management of theour operating businesses implemented in 2019. The increase in selling, general and administrative expenses was partially offset by the absence of expenses related to businesses that were sold during 2018 and lower costs incurred in connection with the evaluation of various investment and acquisition and disposition opportunities.businesses.
Fees to Manager
Our Manager is entitled to a monthly base management fee based on our market capitalization and potentially a quarterly performance fee based on total stockholder returns relative to a U.S. utilities index. For the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, we incurred base management fees of $7 million and $15$8 million, respectively, compared with $11 million and $24 million for the quarter and six months ended June 30, 2018, respectively. Base management fees decreased for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 primarily due to the Manager’s waiver of two elements of the base management fee to which it is entitled and a reduction in the market capitalization of our Company. For the quarter and six months ended June 30, 2019, base management fees were calculated on the equity market capitalization of our Company less cash on hand at the holding company. No performance fees were incurred in either of the current or prior comparable periods. The unpaid portion of base management fees and performance fees, if any, at the end of each reporting period is included in the line item Due to Manager-related party in our consolidated condensed balance sheets.
In all ofaccordance with the periods shown below,Third Amended and Restated Management Services Agreement, our Manager elected to reinvest any fees to which it was entitled in new primary shares. In accordance withshares in all of the Third Amendedperiods shown below and Restated Management Services Agreement, our Manager has currently elected to reinvest future base management fees and performance fees, if any, in new primary shares.

Period 
Base Management
Fee Amount
($ in millions)
 
Performance
Fee Amount
($ in millions)
 
Shares
Issued
2019 Activities:       
Second quarter 2019 $7
 $—
 192,103
(1) 
First quarter 2019 8
 —
 184,448
 
        
2018 Activities:       
Fourth quarter 2018 $9
 $—
 220,208
 
Third quarter 2018 12
 —
 269,286
 
Second quarter 2018 11
 —
 277,053
 
First quarter 2018 13
 —
 265,002
 
Period 
Base Management
Fee Amount
($ in millions)
 
Performance
Fee Amount
($ in millions)
 
Shares
Issued
2020 Activities:       
First quarter 2020 $7
 $—
 181,617
(1) 
        
2019 Activities:       
Fourth quarter 2019 $9
 $—
 208,881
 
Third quarter 2019 8
 —
 201,827
 
Second quarter 2019 7
 —
 192,103
 
First quarter 2019 8
 —
 184,448
 
___________
(1)Our Manager elected to reinvest all of the monthly base management fees for the secondfirst quarter of 20192020 in new primary shares. We issued 192,103181,617 shares for the quarter ended June 30, 2019,March 31, 2020, including 64,60239,206 shares that were issued in July 2019April 2020 for the June 2019March 2020 monthly base management fee.
Depreciation and Amortization
The increase in depreciation and amortization expense for the quarter ended March 31, 2020 compared with the quarter ended March 31, 2019 reflects primarily assets placed in service.


TABLE OF CONTENTS
Results of Operations: Consolidated – (continued)

Depreciation
Depreciation expense increased for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 primarily as a result of assets placed in service.
Amortization of Intangibles
Amortization of intangibles decreased for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 primarily due to sales of certain smaller and non-core businesses in 2018.
Interest Expense, net, and (Losses) Gains on Derivative Instruments
Interest expense, net, includes non-cash losses on derivative instruments of $8$9 million and $12$4 million for the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, respectively, andrespectively. (Losses) gains on derivative instruments of $4 million and $14 million for the quarter and six months ended June 30, 2018, respectively. Gains (losses) on derivatives recorded in interest expense are attributable to the change in fair value of interest rate hedging instruments. Excluding the derivative adjustments, cash interest expense was $31 million and $59increased to $29 million for the quarter and six months ended June 30, 2019, respectively, compared with $25 million and $48March 31, 2020 from $28 million for the quarter and six months ended June 30, 2018. TheMarch 31, 2019 reflecting primarily an increase in cash interest expense reflects primarily an increaseaverage debt balance, partially offset by a decrease in the weighted average interest rate of all debt facilities.facilities and higher interest income earned during the quarter ended March 31, 2019. See discussions of interest expense for each of our operating businesses below.
Other (Expense) Income, net
Other (expense) income, net, decreased forduring the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily due toas a result of the decrease inabsence of fee income from a third partythird-party developer of renewable power facilities. The relationship with the developer concluded during July 2019.
Discontinued Operations
We recorded no income from discontinued operations for the quarter ended March 31, 2020 as we completed the sale of the last of any businesses characterized as discontinued operations in September 2019.
Income Taxes
We file a consolidated federal income tax return that includes the financial results of IMTT, Atlantic Aviation and MIC Hawaii and our allocable share of the taxable income (loss) from the solar and wind facilities in discontinued operations. The solar and wind facilities in which we own less than 100% of the equity are held in limited liability companies that are treated as partnerships for tax purposes.Hawaii.  Pursuant to a tax sharing agreement, thethese businesses included in our consolidated federal income tax return pay MIC an amount equal to the federal income tax each would have paidpay on a standalone basis as if they were not part of the consolidated federal income tax return.  In addition, our businesses file income tax returns and may pay taxes in the state and local jurisdictions in which they operate.
We expect our current year federal taxable income from continuing operations for the year ending December 31, 2019 to be approximately $128 million and current year state income taxes to be approximately $15 million including tax benefits associated with planned capital deployments between $250 million and $275 million. Our federal Net Operating Losses (NOLs) carryforward at December 31, 2018 was $152 million. In calculating our consolidated state income tax provision, we have provided a valuation allowance for certain state income tax NOLs,net operating loss (NOL) carryforwards, the use of which is uncertain. These estimates exclude
We expect to incur a federal taxable loss for the impactyear ended December 31, 2020. Under the CARES Act, any NOL generated in 2020 may be carried back five years.
U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act
On March 27, 2020, President Trump signed the CARES Act into law. The Act includes provisions for federal grants or government-backed loans to businesses, employee benefits and retention credits, easing of gains from announced salescertain income tax rules and a payroll tax deferral, among others. Several of assets concluded and expectedthese provisions may be applicable to be concluded during the third quarter of 2019. The gains,Company or deployment of less than the anticipated amounts of growth capital, would increaseto our federal and state income taxes payable.operating businesses although we currently believe that they are likely to generate an immaterial benefit.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow
In addition to our results under U.S. GAAP, we use certain non-GAAP measures including EBITDA excluding non-cash items and Free Cash Flow to assess the performance and prospects of our businesses. In particular, we use EBITDA excluding non-cash items and Free Cash Flow.
We measure EBITDA excluding non-cash items as it reflects our businesses’ ability to effectively manage the volumeamount of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses. We believe investors use EBITDA excluding non-cash items primarily as a measure of the operating performance of MIC’s businesses and to make comparisons with the operating performance of other businesses whose depreciation and amortization expense may vary widely from ours, particularly where acquisitions and other non-operating factors are involved. We define EBITDA excluding non-cash items as net income (loss) or earnings — the most comparable GAAP measure— before interest, taxes, depreciation and amortization and non-cash items including impairments, unrealized derivative gains and losses, adjustments for other non-cash items and pension expense reflected in the statements of operations. EBITDA excluding non-cash items also excludes base management fees and performance fees, if any, whether paid in cash or stock.
Our businesses are characteristically owners of high-value, long-lived assets capable of generating substantial Free Cash Flow. We define Free Cash Flow as cash from operating activities — the most comparable GAAP measure— which includesreflects cash interest, tax payments and pension contributions, less maintenance capital expenditures, which includes principal repayments on capital lease obligations used to fund maintenance capital expenditures, and excludes changes in working capital.
TABLE OF CONTENTS
Results of Operations: Consolidated – (continued)

We use Free Cash Flow as a measure of our ability to sustain and potentially increase our quarterly cash dividend and funding a portion of our growth. GAAP metrics such as net income (loss) do not provide us with the same level of visibility into our performance and prospects as a result of: (i) the capital intensive nature of our businesses and the generation of non-cash depreciation and amortization; (ii) shares issued to our external Manager under the Management Services Agreement; (iii) our ability to defer all or a portion of current federal income taxes; (iv) non-cash unrealized gains or losses on derivative instruments; (v) gains (losses) on disposal of
TABLE OF CONTENTS
Results of Operations: Consolidated – (continued)

assets; (vi) non-cash compensation expenses relatedexpense incurred in relation to a long-termthe incentive compensation planplans for senior management of theour operating businesses implemented in 2019;businesses; and (vii) pension expenses. Pension expenses primarily consist of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Any cash contributions to pension plans are reflected as a reduction to Free Cash Flow and are not included in pension expense. We believe that external consumers of our financial statements, including investors and research analysts, use Free Cash Flow both to assess MIC’s performance and as an indicator of its success in generating an attractive risk-adjusted total return.
In this Quarterly Report on Form 10-Q, we have disclosed Free Cash Flow on a consolidated basis and for each of our operating segments and MIC Corporate and Other. We believe that both EBITDA excluding non-cash items and Free Cash Flow support a more complete and accurate understanding of the financial and operating performance of our businesses than would otherwise be achieved using GAAP results alone.
Free Cash Flow does not take into consideration required payments on indebtedness and other fixed obligations or other cash items that are excluded from our definition of Free Cash Flow. We note that Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Free Cash Flow should be used as a supplemental measure and not in lieu of our financial results reported under GAAP.
Classification of Maintenance Capital Expenditures and Growth Capital Expenditures
We categorize capital expenditures as either maintenance capital expenditures or growth capital expenditures. As neither maintenance capital expenditure nor growth capital expenditure is a GAAP term, we have adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain our businesses at current levels of operations, capability, profitability or cash flow, while growth capital expenditures primarily provide new or enhanced levels of operations, capability, profitability or cash flows. We consider a number of factors in determining whether a specific capital expenditure will be classified as maintenance or growth.
We do not bifurcate specific capital expenditures into maintenance and growth components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.
TABLE OF CONTENTS
Results of Operations: Consolidated – (continued)

A reconciliation of net income from continuing operations to EBITDA excluding non-cash items from continuing operations and a reconciliation from cash provided by operating activities from continuing operations to Free Cash Flow from continuing operations, on a consolidated basis, is provided below. Similar reconciliations for each of our operating businesses and Corporate and Other follow.
Quarter Ended June 30, 
Change
Favorable/(Unfavorable)
 Six Months Ended June 30, Change
Favorable/(Unfavorable)
2019 2018 $ % 2019 2018 $ %Quarter Ended March 31, Change
Favorable/(Unfavorable)
               2020 2019 $ %
($ In Millions) (Unaudited)($ In Millions) (Unaudited)
Net income from continuing operations$6
 $27
     $70
 $67
    $11
 $64
    
Interest expense, net(1)
45
 25
     84
 43
    42
 39
    
Provision for income taxes2
 12
     26
 30
    9
 24
    
Depreciation48
 47
     96
 94
    51
 48
    
Amortization of intangibles15
 17
     30
 33
    14
 15
    
Fees to Manager-related party7
 11
     15
 24
    7
 8
    
Other non-cash expense, net(2)
9
 2
     13
 11
    7
 4
    
EBITDA excluding non-cash items-continuing operations$132
 $141
 (9) (6) $334
 $302
 32
 11
EBITDA excluding non-cash items - continuing operations$141
 $202
 (61) (30)
                      
EBITDA excluding non-cash items-continuing operations$132
 $141
     $334
 $302
    
EBITDA excluding non-cash items - continuing operations$141
 $202
    
Interest expense, net(1)
(45) (25)     (84) (43)    (42) (39)    
Adjustments to derivative instruments recorded in interest expense(1)
11
 (2)     18
 (11)    
Amortization of debt financing costs(1)
2
 1
     5
 4
    
Amortization of debt discount(1)
1
 1
     2
 2
    
Non-cash interest expense, net(1)
13
 11
    
Provision for current income taxes(2) (4)     (9) (8)    (7) (7)    
Changes in working capital9
 3
     (7) (1)    (6) (16)    
Cash provided by operating activities-continuing operations108
 115
     259
 245
    
Cash provided by operating activities - continuing operations99
 151
    
Changes in working capital(9) (3)     7
 1
    6
 16
    
Maintenance capital expenditures(13) (8)     (23) (18)    (12) (10)    
Free cash flow-continuing operations86
 104
 (18) (17) 243
 228
 15
 7
Free cash flow-discontinued operations7
 20
 (13) (65) 14
 33
 (19) (58)
Free cash flow - continuing operations93
 157
 (64) (41)
Free cash flow - discontinued operations—
 7
 (7) (100)
Total Free Cash Flow$93
 $124
 (31) (25) $257
 $261
 (4) (2)$93
 $164
 (71) (43)
___________
(1)Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023.
(1) Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023.
(2)
Other non-cash expense, net, includes primarily includes pension expense of $2 million and $4 million for the quarterquarters ended March 31, 2020 and six month periods ended June 30, 2019, and 2018, respectively, unrealized gains (losses) on commodity hedges, expenses relatedhedge contracts, non-cash compensation expense incurred in relation to a long-termthe incentive compensation planplans for senior management of theour operating businesses implemented in 2019 and non-cash gains (losses) related to the disposal of assets. Pension expense consists primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.



TABLE OF CONTENTS

Results of Operations: IMTT
Impact of COVID-19
IMTT continues to closely monitor the effects of COVID-19 and is actively managing its response placing a priority on the health and safety of its employees, contractors, their families, customers and the broader communities in which it operates. IMTT's services are classified as essential and its terminals remain operational and there have been no service disruptions related to the pandemic. IMTT has implemented a pandemic response plan and has taken actions that allow it to continue to provide services in a safe and effective manner. Procedures implemented include: (i) a work from home policy for all employees that are able to do so; (ii) limiting operations to only those required to meet safety, regulatory or customer needs; (iii) enhanced cleaning and disinfection of facilities; (iv) limiting interactions between employees through social distancing; (v) increased usage of personal protective equipment; (vi) modification of shift schedules to reduce exposure between shifts; (vii) limiting terminals access to essential personnel; and (viii) requiring all individuals who enter the terminals submit to temperature scans.
As a result of the implementation of these procedures, certain operating costs have increased. IMTT expects the increases to be approximately $5 million in 2020. If conditions worsen and additional measures need to be put into place, for example, having dedicated staff that remain at the terminals full time, these costs may increase. The cost increases are expected to be partially offset by reduced repair and maintenance expense and operating costs due to only essential operations occurring, lower healthcare costs and lower general and administrative expenses.
IMTT is engaged in ongoing communications with its employees, customers, vendors, lenders, ratings agencies and other stakeholders to keep them apprised of its response to the pandemic. COVID-19 and the resulting slowdown in economic activity, together with OPEC’s crude oil pricing and supply decisions, have led to an oversupply of petroleum and other liquid products stored and handled by IMTT. These factors have, in some cases, created conditions in which the expected future value of a product is higher than its current value and has increased demand for storage of these products. As a result, IMTT’s utilization is expected to increase to over 95% by mid-May from 86.3% at the end of 2019 with almost all usable tanks currently leased. In addition, some customers have renewed contracts ahead of their expiration in order to guarantee the availability of storage. The leases entered into in March and April have a volume weighted average duration of approximately one year. IMTT believes that its circumstances are not unique and that the broader bulk liquid storage industry is experiencing similar increases in demand.
Although demand for storage has increased, IMTT believes product handling activities may decrease. Reduced handling activities could reduce the portion of IMTT’s revenue that is not contracted and is based on providing ancillary services such as heating, excess throughput, blending or rail or trucking charges. Approximately 80% of IMTT’s revenue is generated from firm commitments. In addition, a sustained decrease in economic activity could result in reduced demand for certain of the products stored by IMTT and may result in lower demand for storage.
IMTT is reviewing all maintenance and growth capital expenditure projects to ensure it is prudently managing its liquidity. IMTT’s agreement to construct new storage in support of a methanol manufacturing plant being developed by Methanex in Geismar, LA includes a provision which allows Methanex to delay the project by one year. As a result of COVID-19, Methanex exercised this provision and construction of the storage is now expected to start in mid-2021 and be completed in mid-2023. No other previously announced repositioning projects have contract terms that allow the customer to unilaterally delay the project. There has been no other material COVID-19 related impacts to IMTT’s planned capital projects, however, if conditions worsen, other projects may be delayed or costs may increase due to a lack of contractor or resource availability. IMTT also anticipates a reduction in the number of inquiries regarding new growth projects.
IMTT has not experienced any significant impact to its financial controls or reporting systems. Minor modifications have been made to accommodate administrative personnel working remotely.
Although there may be a delay in accounts receivable collections in the future as a result of COVID-19, IMTT has not experienced any collections issues to date and continues to make payments to vendors as due. The business does not foresee any liquidity issues and is compliant with its debt covenants. IMTT has not drawn on its $600 million revolving credit facility, which matures in December 2023, and does not have any other debt maturities until May 2025.
IMTT monitors leading and key performance indicators such as petroleum spot prices and futures curves, throughput volumes, contract renewals and tenor, utilization, rates and accounts receivable in assessing the future impacts COVID-19 may have on the business. In addition, the business is reviewing the benefits that may be available to it under the CARES Act. Initial indications are that these are likely to be immaterial to the business’ results of operations.
The business believes current supply and demand imbalances, particularly with respect to refined petroleum products, are likely to persist over the near term and sustain demand for storage and handling of these products.
TABLE OF CONTENTS
Results of Operations: IMTT – (continued)

Business Update
The financial performance of IMTT is in large part a function ofdriven by the amount of bulk liquid storage capacity the business has under contract (lease) and the rates for storage and other services achieved on those contracts. The portion of IMTT’s storage capacity under contract (utilization) averaged 82.9%85.4% and 82.7%82.5% for the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, respectively, compared with 86.1% and 87.1% for the quarter and six months ended June 30, 2018, respectively. Utilization averaged 82.5%85.2% for the quarter ended MarchDecember 31, 2019. IMTT expectsThe slight increase in average utilization rates toreflects primarily an increase during the balance of 2019.

IMTT expects lower average rates forin storage and handling of clean petroleum products in the New York Harbor associated with seasonal demand. Demand for storage across IMTT's terminals increased at the end of the first quarter and beginning of the second quarter and utilization is expected to continueaverage in the low 90s percent for full year 2020.
On February 20, 2020, IMTT entered into an agreement with Diamond Green Diesel (DGD), a joint venture between Valero Energy Corporation and Darling Ingredients, pursuant to negatively impact its financial results. The business believes thatwhich it will regainconstruct two pipelines connecting its St. Rose, LA terminal with the abilityDGD renewable diesel refinery at Norco, LA five miles away. IMTT will also expand its marine and rail infrastructure and repurpose approximately 790,000 barrels of existing storage capacity from heavy and residual petroleum service to raise prices as the supply of storage in the market tightens.renewable diesel feedstocks and finished product. The impact of lower average ratesproject is expected to be partially offset by an increase in utilization relatedcompleted prior to demand forthe end of 2021.
IMTT works with existing and new customers continuously to meet their storage and logistics ofneeds. Critical to IMTT’s success is its ability to construct new assets on a range of products coinciding with the implementation of the International Maritime Organization’s IMO Marpol Annex VI (IMO 2020) regulations limiting the sulphur content of marine fuel. The new rules go into effect on January 1, 2020. The precise impact of the implementation of IMO 2020 on demand for storagebuild-to-suit basis and/or to repurpose existing tanks and related services cannot be determined with certainty at this time.
IMTT is evaluating and implementing a number of initiatives related to repurposing existing storage capacity and repositioning the overall business:
Repurposing
In early 2018, IMTT announced that it could repurpose up to 3.0 million barrels of capacity on the Lower Mississippi River, of which approximately 1.3 million barrels were completed in 2018. IMTT is evaluating projects which would result in up to 1.0 million barrels of capacity being repurposed, subject to identification of a corresponding amount of customer demand.
Repositioning
Repositioning includes projects intended to leverage IMTT’s existing terminal locations through increases in capacity, capability and connectivity designedinfrastructure to meet these needs. These projects range from simple, inexpensive modifications to large scale developments requiring extensive planning and capital investment. IMTT currently expects these development and repurposing efforts will, going forward, (i) increase its customer demand and/or further diversify the mix of products handled. To date, IMTT has invested approximately $35 million of the approximately $175 million of previously announced repositioning projects. IMTT has experienced delays in the expenditures associated with certain projects in Louisiana due to construction restrictions by the U.S. Army Corps of Engineers as a result of higher than normal water levels on the Mississippi River. Most of the projects that have been delayed would not have been placed in service until late 2019 or early 2020, thus their impact on IMTT’s 2019 financial results is expected to be minimal.
The successful implementation of the repurposing and repositioning initiatives is, over time, expected to, (i)base; (ii) improve utilization and average storage rates; (ii)(iii) increase exposure to thosenew products that we believeit believes have better sustainable growth prospects; (iii)(iv) generate a larger proportion of IMTT’sits revenue from longer-dated contracts; and (iv) reduce IMTT'sits exposure to short-term, contracts for heavycyclical markets with slower growth prospects.
The financial results recorded by IMTT in the first quarter of 2020 reflect the absence of the termination payment received in the first quarter of 2019. The absence of the termination payment impacts each of the revenue, operating income and residual oil storage.net income lines of the GAAP income statement as well as the management reporting line items of EBITDA excluding non-cash items and Free Cash Flow.
TABLE OF CONTENTS
Results of Operations: IMTT – (continued)

Quarter Ended June 30, 
Change
Favorable/(Unfavorable)
 Six Months Ended June 30, Change
Favorable/(Unfavorable)
2019 2018 2019 2018 Quarter Ended March 31, Change
Favorable/(Unfavorable)
$ $ $ % $ $ $ %2020 2019 
               $ $ $ %
($ In Millions) (Unaudited)($ In Millions) (Unaudited)
Revenue119
 129
 (10) (8) 280
 268
 12
 4
132
 161
 (29) (18)
Cost of services49
 50
 1
 2
 99
 104
 5
 5
50
 50
 —
 —
Selling, general and administrative expenses9
 8
 (1) (13) 17
 17
 —
 —
9
 8
 (1) (13)
Depreciation and amortization33
 33
 —
 —
 66
 66
 —
 —
34
 33
 (1) (3)
Operating income28
 38
 (10) (26) 98
 81
 17
 21
39
 70
 (31) (44)
Interest expense, net(1)
(15) (11) (4) (36) (28) (19) (9) (47)(15) (13) (2) (15)
Other income, net1
 —
 1
 NM
Provision for income taxes(4) (8) 4
 50
 (20) (18) (2) (11)(7) (16) 9
 56
Net income9
 19
 (10) (53) 50
 44
 6
 14
18
 41
 (23) (56)
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:                      
Net income9
 19
     50
 44
    18
 41
    
Interest expense, net(1)
15
 11
     28
 19
    15
 13
    
Provision for income taxes4
 8
     20
 18
    7
 16
    
Depreciation and amortization33
 33
     66
 66
    34
 33
    
Other non-cash expense, net(2)
3
 3
     4
 5
    3
 1
    
EBITDA excluding non-cash items64
 74
 (10) (14) 168
 152
 16
 11
77
 104
 (27) (26)
EBITDA excluding non-cash items64
 74
     168
 152
    77
 104
    
Interest expense, net(1)
(15) (11)     (28) (19)    (15) (13)    
Adjustments to derivative instruments recorded in interest expense(1)
5
 (1)     7
 (5)    
Amortization of debt financing costs(1)
—
 —
     1
 —
    
Non-cash interest expense, net(1)
5
 3
    
Provision for current income taxes(1) (4)     (12) (8)    (2) (11)    
Changes in working capital2
 6
     10
 11
    (17) 8
    
Cash provided by operating activities55
 64
     146
 131
    48
 91
    
Changes in working capital(2) (6)     (10) (11)    17
 (8)    
Maintenance capital expenditures(8) (5)     (14) (12)    (6) (6)    
Free cash flow45
 53
 (8) (15) 122
 108
 14
 13
59
 77
 (18) (23)
___________
NM — Not meaningful.
(1)Interest expense, net, includes non-cash adjustments to derivative instruments and non-cash amortization of deferred financing fees.fee.
(2)
Other non-cash expenses,expense, net, includes primarily includes pension expense of $2 million and $4$2 million for the quarterquarters ended March 31, 2020 and six month periods ended June 30, 2019 and 2018, respectively, and expenses relatednon-cash compensation expense incurred in relation to a long-term incentive compensation plan implemented in 2019.plans. Pension expense consists primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
Revenue
IMTT generates the majority of its revenue from contracts comprising a fixed monthly charge for access to or use of a specified amount of capacity, infrastructure or land. The monthly charge typically increases annually with inflation. We refer to revenue generated from such contracts or fixed charges as firm commitments. At June 30, 2019,March 31, 2020, firm commitments had a revenue weighted average remaining contract life of 1.9 years, although some customers, particularly those storing certain petroleum products, are renewing and initiating contracts for shorter durations. Certain contracts for chemical and vegetable oil products are renewing and initiating for longer durations.2.0 years. Revenue from firm commitments, excluding proceedsfees earned on tank cleaning obligations and the termination payment, comprised 80.7% and 80.3% of total revenue for the quarters ended March 31, 2020 and 2019, respectively.
Total revenues decreased for the quarter ended March 31, 2020 compared with the quarter ended March 31, 2019 primarily due to the absence of the termination payment received during the quarter ended March 31, 2019 and the impact of contracts
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Results of Operations: IMTT – (continued)

related to the refinery termination paymentrenewed at lower storage rates in the quarter ended March 31, 2019, comprised 82.4% and 82.1%second half of total revenue for the quarter and trailing twelve months ended June 30, 2019, respectively.
For the quarter ended June 30, 2019, total revenue decreased by $10 million compared with the quarter ended June 30, 2018 primarily due to the absence of revenue as a result of the sale of an environmental services business in April 2018, the decline in utilization and lower average storage rates on new and renewing contracts.

For the six months ended June 30, 2019, total revenue increased by $12 million compared with the six months ended June 30, 2018 primarily due to the receipt of a $39 million termination payment related to the shutdown of a refinery.2019. The increasedecrease was partially offset by the absencerecognition of revenue as a result$15 million of the sale offees earned on tank cleaning obligations and an environmental services businessincrease in April 2018, the decline in utilization and lower average storage rates on new and renewing contracts.utilization.
Cost of Services and Selling, General and Administrative Expenses

Cost of services and selling, general and administrative expenses combined were flatincreased for the quarter ended June 30, 2019 and decreased by $5 million for the six months ended June 30, 2019March 31, 2020 compared with the prior comparable periods. The decrease in costs werequarter ended March 31, 2019 primarily due to the absence of costs due to the sale of an environmental services business,higher property taxes at Bayonne and increases in insurance expense, partially offset by an increase in property taxes assessed on the terminal at St. Rose LA, higher laborlower fuel costs expenses related to a long-term incentive compensation plan implemented in 2019 and increased repairrepairs and maintenance costs.expenses.
Depreciation and Amortization
Depreciation and amortization expense increased for the quarter ended March 31, 2020 compared with the quarter ended March 31, 2019 primarily as a result of assets placed in service.
Interest Expense, Netnet
Interest expense, net, includes non-cash losses on derivative instruments of $3$5 million and $5$2 millionfor thequarter and six months ended June 30, 2019, respectively, compared with gains on derivative instruments of $2 million and $6 million for the quarterquarters ended March 31, 2020 and six months ended June 30, 2018,2019, respectively. Excluding the derivative adjustments, cash interest expense was $10 million for both the quarters ended March 31, 2020 and $20 million for the quarter and six months ended June 30, 2019, respectively, compared with $12 million and $23 million for the quarter and six months ended June 30, 2018, respectively. The decreases in cash interest expense reflects lower average debt balances in 2019 compared with 2018.2019.
Income Taxes
The taxable income generated by IMTT is reported on our consolidated federal income tax return. The business files standalone state and foreign income tax returns in the jurisdictions in which it operates. For the year ending December 31, 2019,2020, the business expects to pay state and foreign income taxes of approximately $6$3 million. The Provision for current income taxes of $12$2 million for the six monthsquarter ended June 30, 2019March 31, 2020 in the above table includes $6 million ofrelates primarily to state and foreign income tax expense and $6 million of federal income tax expense.
The majorityMost of the difference between IMTT’s book and federal taxable income relates to depreciation of terminal fixed assets. For book purposes, these fixed assets are depreciated primarily over 5 to 30 years using the straight-line method of depreciation.method. For federal income tax purposes, these same fixed assets are depreciated primarily over 5 to 15 years using accelerated methods. In addition, most terminal fixed assets qualify for federal bonus tax depreciation. A significant portion of the terminal fixed assets in Louisiana that were constructed in the period after Hurricane Katrina in 2005 were financed with GOGrowth Opportunity (GO) Zone Bonds. GO Zone Bond financed assets are depreciated for tax purposes primarily over 9 to 20 years using the straight-line method. Most of the states in which the business operates do not allow the use of bonus tax depreciation. Louisiana allows the use of bonus tax depreciation other thanexcept for assets financed with GO Zone Bonds.
IMTT has state NOL carryforwards that are specific to the state in which they were generated. The utilization of NOL carryforwards may reduce or eliminate state taxable income in the future.
Maintenance Capital Expenditures
For the six monthsquarter ended June 30, 2019,March 31, 2020, IMTT incurred maintenance capital expenditures of $14$6 million and $16$8 million on an accrual basis and cash basis, respectively, compared with $12$6 million and $13$7 million on an accrual basis and cash basis, respectively, for the six monthsquarter ended June 30, 2018.March 31, 2019. IMTT expects to incur between $40 million and $50$45 million of maintenance capital expenditures in 2019 compared with $33 million in 2018. The increase in maintenance capital expenditures in 2019 is the result of an estimated $12 million expenditure on the first phase of the rehabilitation of a pier in Bayonne. The total cost of maintaining the pier is expected to be approximately $30 million and the work is anticipated to be completed within three years.2020.
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Results of Operations: Atlantic Aviation
Impact of COVID-19
Atlantic Aviation continues to closely monitor the effects of COVID-19 and is actively managing its response placing a priority on the health and safety of its employees, contractors, their families, customers and the broader communities in which it operates. Atlantic Aviation's services are classified as essential and its FBOs remain operational and there have been no service disruptions related to the pandemic. The business has implemented a pandemic response plan and is closely monitoring guidance from the Centers for Disease Control and Prevention (CDC) as well as federal, state and local governments with respect to conducting operations safely. In addition to standard operating procedures designed to maintain safe operations, Atlantic Aviation has implemented additional measures including: (i) a work from home policy for all employees that are able to do so; (ii) enhanced cleaning and disinfection of facilities; (iii) limiting interactions between employees through social distancing; and (iv) increased usage of personal protective equipment.
Atlantic Aviation is engaged in ongoing communications with its employees, customers, vendors, lenders, ratings agencies and other stakeholders to keep them apprised of its response to the pandemic. COVID-19 has significantly reduced demand for Atlantic Aviation’s services as federal, state and local governments have implemented pandemic response measures including social distancing, quarantines, travel restrictions, prohibitions on public gatherings and stay-at-home orders. These measures have significantly reduced GA flight activity and the demand for Atlantic Aviation's jet fuel, transient hangarage and aircraft parking and ancillary services. Although the amount of jet fuel sold during the first ten weeks of 2020 was generally consistent with the prior year, at the end of March and through April 2020 jet fuel sales declined by approximately 80%. We do not currently anticipate meaningful improvements during the second quarter of 2020. The duration of the pandemic, the timeline and process for phasing out the governmental response measures, as well as the ability of the U.S. and global economy to restart once they have been lifted, are uncertain. Post-pandemic changes to travel patterns including consumer willingness to travel, the availability of commercial flights and other factors are currently unknown.
In response to the decrease in flight activity, Atlantic Aviation has engaged in a thorough review of its operational and capital expenditures. Staffing levels are being reviewed and reset to reflect the reduced levels of demand for services provided. Staffing reductions have been achieved primarily through furloughs or reductions in scheduled hours. Non-payroll discretionary expenses are being cut or deferred. Similarly, capital expenditures are being reviewed, with uncommitted or non-essential items being deferred as well.
Atlantic Aviation is reviewing the benefits that may be available to it under the CARES Act. The primary benefits available to Atlantic Aviation appear to be those available to most other businesses, including, for example, deferral of payment of certain payroll taxes. Atlantic Aviation is also requesting rent relief from various airport landlords. Initial indications are that these are likely to be immaterial to the business’ results of operations.
Accounts receivable collections are being monitored closely given the uncertainty around the length of time over which travel restrictions will remain in place. Extensions of credit to customers have been restricted, generally, with those deemed to be a higher risk being asked to utilize alternative payment methods. There has been no material deterioration in Atlantic Aviation’s accounts receivable to date. To the extent the financial impact of the pandemic is protracted or government or other support for certain businesses is not forthcoming, collection times and the value of uncollectible accounts could increase.
Atlantic Aviation has not experienced any significant impact to its financial controls or reporting systems. Minor modifications have been made to accommodate administrative personnel working remotely.
On April 30, 2020, Atlantic Aviation fully repaid the outstanding balance on its revolving credit facility and effective May 4, 2020, reduced the commitments on this facility to $10 million solely with respect to letters of credit currently outstanding. The amendment of the facility eliminates any leverage-based maintenance covenant on the Atlantic Aviation term loan as long as the letters of credit issued under the facility are cash collateralized and rolled over to standalone letters of credit facilities upon renewal.
Assuming that the pandemic and its impact on the economy are unchanged relative to their current effects, and Atlantic Aviation's FBOs continue to operate at current significantly reduced levels, the business believes that the combination of its existing liquidity, cash generated from ongoing operations and cost containment efforts will enable the business to continue to operate through 2020 with minimal support from MIC.
The duration of the pandemic and the mitigation measures implemented by the government, including travel restrictions, border closings, prohibitions on public gatherings and social distancing, a lack of visibility into consumer preferences in a post-COVID-19 environment, uncertainty surrounding the level of operations of commercial airlines and the absence of a material level of contracted revenue stream, make forecasting the contribution of this business to our results in 2020 impossible at this time.
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Results of Operations: Atlantic Aviation – (continued)

Business Update
The fundamental driver of the financial performance of Atlantic Aviation is the number of GA flight movements in a givenyear. Over the long-term, the rate of growth in GA flight movements has tended to be positively correlated with the level of economic activity in the U.S. The significant decrease in economic activity at the end of the first quarter of 2020, together with the implementation of widespread travel restrictions and other governmental mitigation measures, contributed to a substantial reduction in GA flight activity at the end of the period. Based on
According to data reported by the Federal Aviation Administration, (FAA), industry-wide domestic GA flight movements was flat for the quarter end June 30, 2019 and increased slightly by 0.1% for the six months ended June 30, 2019 versus the prior comparable periods. The number of GA flight movements tends to be correlated with general economic activity over the long-term. Factors that could impact GA flight movements either positively or negatively in the short-term include traffic constraints due to repairs and maintenance of runways, weather conditions or events, the timing of public and religious holidays and events, including major sporting events.
According to the data reported by the FAA, the total number of GA flight movements at airports whereon which Atlantic Aviation operates decreased by 0.6% and 0.1%10.6% during the quarter and six months ended June 30, 2019, respectively,March 31, 2020 versus the prior comparable periods. As noted above, Atlantic Aviation believes that growth in GA flight movements over the long term will continue to be positively correlated with growth in economic activity and GDP.period.
Atlantic Aviation seeks to extend FBO leases prior to their maturity in order to maintain visibility into the cash generating capacity of these assets over the long-term. Atlantic Aviation calculates a weighted average remaining lease life based on EBITDA excluding non-cash items in the prior calendar year adjusted for the impact of acquisitions, dispositions and dispositions.lease extensions. The weighted average remaining lease life was 19.419.6 years and 19.7 years at June 30,March 31, 2020 and 2019, compared with 20.1 years at June 30, 2018.respectively.
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Results of Operations: Atlantic Aviation – (continued)

Quarter Ended June 30, Change
Favorable/(Unfavorable)		 Six Months Ended June 30, Change
Favorable/(Unfavorable)		Quarter Ended March 31, Change
Favorable/(Unfavorable)
2019 2018 2019 2018 2020 2019 
$ $ $ % $ $ $ %$ $ $ %
($ In Millions) (Unaudited)($ In Millions) (Unaudited)
Revenue236
 233
 3
 1
 494
 480
 14
 3
224
 258
 (34) (13)
Cost of services (exclusive of depreciation and amortization shown separately below)113
 116
 3
 3
 231 233
 2
 1
95 118
 23
 19
Gross margin123
 117
 6
 5
 263 247
 16
 6
129 140
 (11) (8)
Selling, general and administrative expenses62
 57
 (5) (9) 123
 117
 (6) (5)64
 61
 (3) (5)
Depreciation and amortization26
 27
 1
 4
 52
 52
 —
 —
27
 26
 (1) (4)
Operating income35
 33
 2
 6
 88
 78
 10
 13
38
 53
 (15) (28)
Interest expense, net(1)
(22) (4) (18) NM
 (41) (4) (37) NM
(19) (19) —
 —
Other expense, net—
 (1) 1
 100
 —
 (1) 1
 100
Provision for income taxes(4) (8) 4
 50
 (13) (20) 7
 35
(5) (9) 4
 44
Net income9
 20
 (11) (55) 34
 53
 (19) (36)14
 25
 (11) (44)
Reconciliation of net income to EBITDA
excluding non-cash items and a reconciliation
of cash provided by operating activities to Free Cash Flow:		                      
Net income9
 20
     34
 53
    14
 25
    
Interest expense, net(1)
22
 4
     41
 4
    19
 19
    
Provision for income taxes4
 8
     13
 20
    5
 9
    
Depreciation and amortization26
 27
     52
 52
    27
 26
    
Other non-cash expense, net(2)
1
 1
     1
 1
    1
 —
    
EBITDA excluding non-cash items62
 60
 2
 3
 141
 130
 11
 8
66
 79
 (13) (16)
EBITDA excluding non-cash items62
 60
     141
 130
    66
 79
    
Interest expense, net(1)
(22) (4)     (41) (4)    (19) (19)    
Convertible senior notes interest(3)
—
 (2)     —
 (4)    
Adjustments to derivative instruments recorded
in interest expense(1)
6
 (1)     10
 (5)    
Amortization of debt financing costs(1)
1
 —
     2
 1
    
Non-cash interest expense, net(1)
5
 5
    
Provision for current income taxes(3) (7)     (10) (14)    (9) (7)    
Changes in working capital6
 4
     2
 10
    16
 (4)    
Cash provided by operating activities50
 50
     104
 114
    59
 54
    
Changes in working capital(6) (4)     (2) (10)    (16) 4
    
Maintenance capital expenditures(3) (2)     (5) (3)    (3) (2)    
Free cash flow41
 44
 (3) (7) 97
 101
 (4) (4)40
 56
 (16) (29)
___________
NM — Not meaningful
(1)Interest expense, net, includes non-cash adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2)
Other non-cash expense, net, includes primarily includes expenses relatednon-cash compensation expense incurred in relation to a long-term incentive compensation plan implemented in 2019plans and non-cash gains (losses) related to the disposal of assets. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
(3)Represents the cash interest expense related to the holding company level 2.00% Convertible Senior Notes due October 2023 that was reclassified to Atlantic Aviation through December 6, 2018, the date of Atlantic Aviation’s refinancing. The proceeds from this note issuance in October 2016 were used principally to reduce the drawn balance on Atlantic Aviation’s revolving credit facility. Cash interest expense on the note issuance is recorded in Corporate and Other subsequent to December 6, 2018.
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Results of Operations: Atlantic Aviation – (continued)

Atlantic Aviation generates the majoritymost of its revenue from sales of jet fuel. Increases and decreases in the cost of jet fuel are generally passed through to consumers.customers. Accordingly, reported revenue will fluctuate based on the cost of jet fuel to Atlantic Aviation and reported revenue may not reflect the business’ ability to effectively manage volumethe amount of jet fuel sold and gross margin.the margin achieved on those sales. For example, an increase in revenue may be attributable to an increase in the cost of the jet fuel and not an increase in the volume sold to customersamount or margin per gallon earned by the business on those sales.gallon. Conversely, a decline in revenue may be attributable to a decrease in the cost of jet fuel and not a reduction in the volume sold to customersamount or margin per gallon earned by the business.gallon.
Gross margin, which we define as revenue less cost of services, excluding depreciation and amortization, is the effective “top line” for Atlantic Aviation as it is reflective ofreflects the business’ ability to drive growth in the volumeamount of products and services sold and the margins earned on those sales over time. We believe that our investors view gross margin as reflective of our ability to manage volumeamount and price throughout the commodity cycle. Gross margin can be reconciled to operating income — the most comparable GAAP measure measure— by subtracting selling, general and administrative expenses and depreciation and amortization in the table above.
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Results of Operations: Atlantic Aviation – (continued)

Revenue and Gross Margin
The majority of the revenue generated, and the gross margin earned by Atlantic Aviation is the result of fueling GA jet aircraft at facilities located on the 70 U.S. airports at which the business operates. Atlantic Aviation seeks to maintain and, where appropriate, increase dollar-based margins on jet fuel sales.
Revenue and gross margin are driven, in part, by the volume of fuel sold and the dollar-based margin/fee per gallon on those sales. Revenue increaseddecreased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 as a result of increasesa decrease in hangar rentals and the volumeamount of jet fuel sold partially offset byand lower wholesale cost of jet fuel. The decrease in the wholesale cost of jet fuel was offset byis reflected in a corresponding decrease in cost of services that, along with the increase in other services, contributed to an increase inservices.

The impact of reduced flight activity on Atlantic Aviation’s gross margin for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018. The result for the quarter and six months ended June 30, 2019 does not include any material contribution from acquisitionswas exacerbated by a significant decline in the prior comparable periods.wholesale price of jet fuel during the first quarter of 2020. While Atlantic Aviation’s overall exposure is limited given its modest inventory volumes, the decline of 65% in the wholesale price of jet fuel in the first quarter of 2020 resulted in a loss on fuel in inventory that reduced gross margin by an estimated $2 million.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily as a result of higher salaries and benefits expenses related to a long-term incentive compensation plan implementedand contractual increases in 2019, rent and professional fees.rent.
Depreciation and Amortization
Depreciation and amortization expense decreasedincreased for the quarter ended June 30, 2019March 31, 2020 compared with the quarter ended June 30, 2018March 31, 2019 primarily as a result of intangible assets that have been fully amortized. placed in service.
Operating Income
Operating income increased fordecreased in the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018 primarilyMarch 31, 2019 due to the increasedecrease in gross margin partially offset by the increaseand increases in selling, general and administrative expenses.expenses and depreciation and amortization.
Interest Expense, Netnet
Interest expense, net, includes non-cash losses on derivative instruments of $4$3 million and $6$2 million for the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, respectively, and gains on derivative instruments of $2 million and $7 million for the quarter and six months ended June 30, 2018, respectively. Excluding the derivative adjustments, cash interest expense was $15 million and $29$14 million for both the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, respectively, compared with $7 million and $13 million for the quarter and six months ended June 30, 2018, respectively. The increase in cash interest expense reflects a higher average debt balance and a higher weighted average interest rate.
Cash interest expense for the quarter and six months ended June 30, 2018 includes the cash interest paid on the $403 million of holding company level 2.00% Convertible Senior Notes issued in October 2016. The proceeds from this note issuance in October 2016 were used principally to reduce the drawn balance of Atlantic Aviation’s revolving credit facility. Cash interest expense on this note issuance is included in Corporate and Other subsequent to December 6, 2018, the date of Atlantic Aviation's refinancing.2019.
Income Taxes
The taxable income generated by Atlantic Aviation is includedreported on our consolidated federal income tax return. The business files standalone state income tax returns in the majoritymost of the states in which it operates. The tax expense in the table above includes both state income taxes and the portion of the consolidated federal income tax liability attributable to the business. The Provision for current income taxes of $9 million for the quarter ended March 31, 2020 in the above table includes $5 million of state income tax expense and $4 million of federal income tax expense.
Atlantic Aviation has state NOL carryforwards that are specific to the state in which they were generated. The utilization of NOL carryforwards may reduce or eliminate state taxable income in the future.
Maintenance Capital Expenditures
For the quarter ended March 31, 2020, Atlantic Aviation incurred maintenance capital expenditures of $3 million and $6 million on an accrual basis and cash basis, respectively, compared with $2 million on both an accrual basis and cash basis for the quarter ended March 31, 2019.
Results of Operations: MIC Hawaii
Impact of COVID-19
MIC Hawaii continues to closely monitor the effects of COVID-19 and is actively managing its response placing a priority on the health and safety of its employees, contractors, their families, customers and the broader communities in which it operates. Businesses within MIC Hawaii's services are classified as essential and its businesses remain operational and there have been no service disruptions related to the pandemic. Hawaii Gas continues to provide safe and reliable gas to both utility and non-utility customers while the other MIC Hawaii businesses continue to fulfill their respective commitments to deliver clean and renewable energy. Hawaii Gas has implemented a pandemic response plan to ensure safe operation of critical infrastructure and has separated its workforce into critical and non-critical employees, with the latter working remotely. A series of measures have been implemented to reduce the risk of infection among critical employees who are required to work on site, including but not limited to, (i) a work from home policy for all employees that are able to do so; (ii) enhanced cleaning and disinfection of facilities; (iii) limiting interactions between employees through social distancing; (iv) increased usage of personal protective equipment; (v) modification
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Results of Operations: Atlantic Aviation MIC Hawaii– (continued)

Forof shift schedules to reduce exposure between shifts; and (vi) educating customers on alternative payment and customer care options. In addition, MIC Hawaii has increased the year ending Decemberfrequency of monitoring leading and key performance indicators such as Liquefied Petroleum Gas (LPG) prices and forward curve, gas production, LPG delivery schedules and accounts receivable and accounts payable aging to ensure operational effectiveness and adequate liquidity are maintained throughout the pandemic.
MIC Hawaii is engaged in ongoing communications with its employees, customers, vendors, lenders and other stakeholders to keep them apprised of its response to the pandemic. COVID-19 and the related disruption in business and economic activity and the governmental mitigation measures, including travel restrictions, prohibition on public gatherings and social distancing, have led to a significant decline in economic activity and the number of visitors to Hawaii. Visitor arrivals to Hawaii declined by over 95% through April versus the prior comparable period, driven partially by a 14-day quarantine requirement for all visitors to Hawaii announced by the Governor on March 21, 2020 and effective March 26, 2020. The resulting significant decline in hotel occupancy levels has led to reductions in hotel operations, including temporary closures and reduced gas consumption by a significant number of commercial customers, including the hotels and restaurants. In addition to reduced consumption from declining visitor activity, lower oil and oil-derivative prices have led low-margin, but higher volume, interruptible utility customers to use lower-cost diesel instead of gas to fuel their operations. Demand for gas by residential customers has been and is expected to remain intact. Currently, these events are expected to result in an aggregate decline in total gas sales of approximately 30% to 40%.  
Because travel restrictions were implemented in late March, the impact on commercial gas sales and revenue were relatively minor for the quarter ended March 31, 2020. The overall decline in results for the quarter ended March 31, 2020 compared with the quarter ended March 31, 2019 were primarily due to the business expects to pay state income taxes of approximately $7 million. The Provision for current income taxes of $10 million for the six months ended June 30, 2019decline in the above table includes $7 millionamount of federal income tax expensegas sold to utility interruptible and $3 million of state income tax expense.
At December 31, 2018, Atlantic Aviation had approximately $15 million of state NOL carryforwards. State NOL carryforwards are specificresidential customers, together with realized losses on commodity hedge contracts described below. Hawaii Gas expects COVID-19 impacts to be more significant in the near term and potentially the medium term to the stateextent the pandemic and restrictive travel policies remain in which the NOL was generatedplace and various states impose limitationsdepending on the utilizationlength of NOL carryforwards. Therefore,time it takes for normal economic business activity to resume.
Hawaii Gas is mitigating the business may incur state income tax liabilitiesimpact of reduced gas sales by implementing cost saving initiatives including a hiring freeze and deferral of vacancy fills of non-critical hires, reductions in the future, even if its consolidated state taxable income is less than $15 million.
Maintenance Capital Expenditures
For the six months ended June 30, 2019, Atlantic Aviation incurredovertime, deferral of non-safety related maintenance and repair work and reductions in general and administrative expenses such as IT system upgrades. Hawaii Gas has also deferred discretionary maintenance capital expenditures and growth projects to which it is not contractually obligated and not required for safety reasons. The renewal of $5 million on both an accrual basisa collective bargaining agreement that was scheduled to expire in April has been extended to June 2020 by mutual agreement. Hawaii Gas is continuing to evaluate and cash basis, comparedimplement additional cost saving initiatives. In addition, the business is reviewing the benefits that may be available to it under the CARES Act. Initial indications are that these are likely to be immaterial to the business’ results of operations.
Hawaii Gas is in regular communication with $3 million on both an accrual basiskey counterparties including its supplier of naphtha feedstock for its utility operations and cash basisits LPG supplier. To date, there has been no disruption in supply or supply logistics. Hawaii Gas is closely tracking and conservatively managing LPG inventory to reduce its exposure to supply chain disruptions. As a result of declines in oil and oil-derivative prices, LPG prices for the six monthsquarter ended June 30, 2018.March 31, 2020 decreased, resulting in realized losses on Hawaii Gas’ commodity hedge contracts.
Results of Operations: MIC Hawaii has not experienced any significant impact to its financial controls or reporting systems. Minor modifications have been made to accommodate administrative personnel working remotely. In addition, the pandemic has not had any significant impact on its ability to collect payment from customers or to pay vendors. MIC Hawaii does not foresee needing additional liquidity. MIC Hawaii has not drawn on its $60 million revolving credit facility, which matures in February 2023. Its nearest mandatory debt maturity is in August 2022.
The duration of the pandemic and the mitigation measures implemented by the government, including travel restrictions, quarantines, prohibitions on public gathering and social distancing, a lack of visibility into consumer preferences in a post-COVID-19 environment, uncertainty surrounding the level of operations of commercial airlines and/or cruise lines and the absence of a material level of contracted revenue streams, make forecasting the contribution of this business to our results in 2020 impossible at this time.
Business Update
The financial performance of MIC Hawaii is in large part a function of the number of customers served, and their consumption of energy and the prices achieved inon sales by each of Hawaii Gas’s utility and non-utility operations and under power purchase agreements. The numberamount of customers served tends to begas consumed is correlated with general economic activity over the long term while customer consumptionwith tourism being a key component. Consumption trends and rates are dependent on customer demand, which is a function of, among other factors, energy efficiency, weather, the range of competitive energy sources and MIC Hawaii’s input commodity costs.
The increase in EBITDA excluding non-cash items from our MIC Hawaii businesses for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 primarily reflects the impact of the Hawaii Gas utility general rate case and the sale of the mechanical contractor business, partially offset by a decrease in the volume of gas sold by Hawaii Gas. The increase in EBITDA excluding non-cash itemsdecreased contribution from MIC Hawaii for the six monthsquarter ended June 30,March 31, 2020 compared with the quarter ended March 31, 2019 alsoprincipally reflects lower propane costs.
On December 21, 2018, the Hawaii Public Utilities Commission issued a Final Decision and Orderdecrease in the rate case filed by Hawaii Gas in August 2017, authorizing an increase in regulated revenueamount of approximately $9 million or 8%. New rates went into effect on July 1, 2018.
gas sold.
TABLE OF CONTENTS
Results of Operations: MIC Hawaii – (continued)

Quarter Ended June 30, Change
Favorable/(Unfavorable)		 Six Months Ended June 30, Change
Favorable/(Unfavorable)		Quarter Ended March 31, Change
Favorable/(Unfavorable)
2019 2018 2019 2018 2020 2019 
$ $ $ % $ $ $ %$ $ $ %
($ In Millions) (Unaudited)($ In Millions) (Unaudited)
Product revenue61
 60
 1
 2
 125
 124
 1
 1
Service revenue—
 15
 (15) (100) —
 33
 (33) (100)
Total revenue61
 75
 (14) (19) 125
 157
 (32) (20)
Revenue60
 64
 (4) (6)
Cost of product sales (exclusive of depreciation and amortization shown separately below)45
 41
 (4) (10) 85
 89
 4
 4
42
 40
 (2) (5)
Cost of services (exclusive of depreciation and amortization shown separately below)—
 14
 14
 100
 —
 30
 30
 100
Cost of revenue – total45
 55
 10
 18
 85
 119
 34
 29
Gross margin16
 20
 (4) (20) 40
 38
 2
 5
18
 24
 (6) (25)
Selling, general and administrative expenses5
 8
 3
 38
 11
 15
 4
 27
6
 6
 —
 —
Depreciation and amortization4
 4
 —
 —
 8
 9
 1
 11
4
 4
 —
 —
Operating income7
 8
 (1) (13) 21
 14
 7
 50
8
 14
 (6) (43)
Interest expense, net(1)
(2) (2) —
 —
 (5) (3) (2) (67)(3) (3) —
 —
Other expense, net(2) —
 (2) NM
 (2) (1) (1) (100)
Provision for income taxes(1) (2) 1
 50
 (4) (3) (1) (33)(2) (3) 1
 33
Net income2
 4
 (2) (50) 10
 7
 3
 43
3
 8
 (5) (63)
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:                      
Net income2
 4
     10
 7
    3
 8
    
Interest expense, net(1)
2
 2
     5
 3
    3
 3
    
Provision for income taxes1
 2
     4
 3
    2
 3
    
Depreciation and amortization4
 4
     8
 9
    4
 4
    
Other non-cash expense (income), net(2)
5
 (1)     7
 5
    
Other non-cash expense, net(2)
3
 2
    
EBITDA excluding non-cash items14
 11
 3
 27
 34
 27
 7
 26
15
 20
 (5) (25)
EBITDA excluding non-cash items14
 11
     34
 27
    15
 20
    
Interest expense, net(1)
(2) (2)     (5) (3)    (3) (3)    
Adjustments to derivative instruments recorded in interest expense(1)
—
 —
     1
 (1)    
Non-cash interest expense, net(1)
1
 1
    
Provision for current income taxes—
 —
     (3) (1)    (2) (3)    
Changes in working capital3
 —
     1
 (6)    (5) (2)    
Cash provided by operating activities15
 9
     28
 16
    6
 13
    
Changes in working capital(3) —
     (1) 6
    5
 2
    
Maintenance capital expenditures(2) (1)     (4) (3)    (3) (2)    
Free cash flow10
 8
 2
 25
 23
 19
 4
 21
8
 13
 (5) (38)
___________
NM — Not meaningful
(1)Interest expense, net, includes non-cash adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees.
(2)
Other non-cash expense, (income), net, includes primarily includes non-cash adjustments related to unrealized gains (losses) on commodity hedges, expenses related to a long-term incentive compensation plan implemented in 2019hedge contracts, pension expense and non-cash compensation expense incurred in relation to incentive plans. Pension expense consists primarily of interest cost, expected return on plan assets and amortization of actuarial and performance gains (losses) related to the disposal of assets.and losses. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
TABLE OF CONTENTS
Results of Operations: MIC Hawaii – (continued)

MIC Hawaii comprises Hawaii Gas and several smaller businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii. The businesses of MIC Hawaii generate revenue primarily from the provision of gas services to commercial, residential and governmental customers and from the generationproduction of power.electricity.
Hawaii Gas generates a significant portionmost of its revenue from the sale of gas. Accordingly, revenue can fluctuate based on the wholesale cost of gas to Hawaii Gas and may not reflect the business’ ability to effectively manage volumethe amount of gas sold and gross margin.the margins achieved on those sales. For example, an increase in revenue may be attributable to an increase in the wholesale cost of gas passed through to Hawaii Gas’ customers and not an increase in the volumeamount of gas sold to customers or margin per therm earned by the business.achieved. Conversely, a decline in
TABLE OF CONTENTS
Results of Operations: MIC Hawaii – (continued)

revenue may be attributable to a decrease in the wholesale cost of gas passed through to Hawaii Gas’ customers and not a reduction in the volumeamount of gas sold to customers or margin per therm earned by the business.achieved.
Gross margin, which we define as revenue less cost of product sales, excluding depreciation and amortization, is the effective “top line” for Hawaii Gas as it is reflective of the business’ ability to drive growth in the volumeamount of products sold and the margins earned on those sales over time. We believe that investors use gross margin to evaluate the business as it is reflective of our performance in managing volume and price throughout the commodity cycle. Gross margin is reconciled to operating income — the most comparable GAAP measure — by subtracting selling, general and administrative expenses and depreciation and amortization in the table above.

Revenue and Gross Margin

Revenue decreaseddeclined for the quarter and six months ended June��30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily as a result of a decrease in the saleamount of gas sold by Hawaii Gas and lower utility feedstock prices that are passed through to ratepayers. The decrease in the mechanical contractor business. Excluding the sale, revenue increasedamount of gas sold reflects switching by select customers to lower cost alternative fuels and a decrease in commercial sales due to COVID-19.
Gross margin declined to $18 million for the quarter and six month ended June 30, 2019 compared withMarch 31, 2020 from $24 million for the quarter and six months ended June 30, 2018 primarilyMarch 31, 2019 partially as a result of the impact of the Hawaii Gas utility rate case.

Gross margin decreased by $4 million for the quarter ended June 30, 2019 compared with the quarter ended June 30, 2018 primarily as a result ofunfavorable changes in the value of unrealized commodity hedges.hedge contracts. The business recorded an unrealized losslosses of $4$2 million on commodity hedges for both the quarter and six months ended June 30, 2019 compared with an unrealized gain of $1 million and unrealized loss of $3 million for the quarter and six months ended June 30, 2018, respectively. The changehedge contracts for the quarter ended June 30, 2019 versusMarch 31, 2020 compared with an insignificant unrealized gain for the quarter ended June 30, 2018March 31, 2019. The change in the value of the commodity hedge contracts during the quarter ended March 31, 2020 reflects an unfavorable movement in the forward curve for propaneforecast prices of LPG relative to hedge contracts in place and an increase in the proportion of expected propane purchases hedged.

hedged price.
Excluding the impact of changes inunrealized losses on the value of commodity hedges and the sale of the mechanical contractor business,hedge contracts, gross margin increaseddecreased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter ended March 31, 2019 primarily as a result of decrease in the amount of gas sold and six months ended June 30, 2018 primarilyrealized losses from commodity hedge contracts due to the increase in contribution margin per therm from the utility rate case, partially offset by the decrease in the volume of gas sold by Hawaii Gas. The increase for the six month period also reflects lower propane costs at Hawaii Gas.LPG costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 due to the absence of costs from the mechanical contractor business. Excluding the sale of the mechanical contractor business, selling, general and administrative expenses wereremained flat for the quarter ended June 30, 2019 and increased by approximately $1 million for the six months ended June 30, 2019 versus the prior comparable periods. Selling, general and administrative expenses also included cost related to a long-term incentive compensation plan implemented in 2019.

Depreciation and Amortization
Depreciation and amortization expense decreased for the six months ended June 30, 2019March 31, 2020 compared with the six monthsquarter ended June 30, 2018 primarilyMarch 31, 2019 as a result of the sale of the mechanical contractor business.higher salaries and benefits and insurance, partially offset by a decrease in sales and marketing costs.
Operating Income
Operating income decreased for the quarter ended June 30, 2019March 31, 2020 compared with the quarter ended June 30, 2018March 31, 2019 primarily due to the decrease in gross margin, partially offset by the decrease in selling, general and administrative expenses. Operating income increased for the six months ended June 30, 2019 compared with the six months ended June 30, 2018 primarily due to the decrease in selling, general and administrative expenses, increase in gross margin and the decrease in depreciation and amortization expense.
TABLE OF CONTENTS
Results of Operations: MIC Hawaii – (continued)

Other expense, net
Other expense, net, primarily includes loss on disposal of assets for the quarter ended June 30, 2019 and other insignificant items.margin.
Interest Expense, Netnet
Interest expense, net, includes non-cash losses on derivative instruments of $1 million for both the quarter and six months ended June 30, 2019March 31, 2020 compared with gains on derivative instruments of $1 millioninsignificant losses for the six monthsquarter ended June 30, 2018.March 31, 2019. Excluding the derivative adjustments, cash interest expense was $2 million for both the quarters ended March 31, 2020 and $4 million for the quarter and six month periods ended June 30, 2019 and 2018, respectively.2019.
Income Taxes
The taxable income generated by the MIC Hawaii businesses is reported on our consolidated federal income tax return. The businesses file standalone state income tax returns in Hawaii. The tax expense in the table above includes both the state income tax and the portion of the consolidated federal income tax liability attributable to the businesses. For the year ending December 31, 2019, the businesses expect to pay state income taxes of approximately $1 million. The Provision for current income taxesCurrent Income Taxes of $3$2 million for the six monthsquarter ended June 30, 2019March 31, 2020 in the above table includes primarily $2 million of federal income tax expense and $1 million of state income tax expense.
Maintenance Capital Expenditures
For the six monthsquarter ended June 30, 2019,March 31, 2020, MIC Hawaii incurred maintenance capital expenditures of $4$3 million on both on an accrual basis and cash basis respectively, compared with $3$2 million on both an accrual basis and cash basis for the six monthsquarter ended June 30, 2018.March 31, 2019.
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Results of Operations: Corporate and Other
Our Corporate and Other segment comprises primarily comprises results from MIC Corporate, our shared services center and from our relationship with a developer of renewable power facilities (formerly reported in Contracted Power). The relationship with the developer concluded during July 2019.
Quarter Ended June 30, Change
Favorable/(Unfavorable)		 Six Months Ended June 30, Change
Favorable/(Unfavorable)		Quarter Ended March 31, Change
Favorable/(Unfavorable)
2019 2018 2019 2018 2020 2019 
$ $ $ % $ $ $ %$ $ $ %
($ In Millions) (Unaudited)($ In Millions) (Unaudited)
Selling, general and administrative expenses8
 10
 2
 20
 14
 15
 1
 7
17
 6
 (11) (183)
Fees to Manager-related party7
 11
 4
 36
 15
 24
 9
 38
7
 8
 1
 13
Operating loss(15) (21) 6
 29
 (29) (39) 10
 26
(24) (14) (10) (71)
Interest expense, net(1)
(6) (8) 2
 25
 (10) (17) 7
 41
(5) (4) (1) (25)
Other income, net—
 7
 (7) (100) 4
 8
 (4) (50)—
 4
 (4) (100)
Benefit for income taxes7
 6
 1
 17
 11
 11
 —
 —
5
 4
 1
 25
Net loss(14) (16) 2
 13
 (24) (37) 13
 35
(24) (10) (14) (140)
Reconciliation of net loss to EBITDA excluding non-cash items and a reconciliation of cash used in operating activities to Free Cash Flow:                      
Net loss(14) (16)     (24) (37)    (24) (10)    
Interest expense, net(1)
6
 8
     10
 17
    5
 4
    
Benefit for income taxes(7) (6)     (11) (11)    (5) (4)    
Fees to Manager-related party7
 11
     15
 24
    7
 8
    
Other non-cash (income) expense, net—
 (1)     1
 —
    
Other non-cash expense, net—
 1
    
EBITDA excluding non-cash items(8) (4) (4) (100) (9) (7) (2) (29)(17) (1) (16) NM
EBITDA excluding non-cash items(8) (4)     (9) (7)    (17) (1)    
Interest expense, net(1)
(6) (8)     (10) (17)    (5) (4)    
Convertible senior notes interest(2)
—
 2
     —
 4
    
Amortization of debt financing costs(1)
1
 1
     2
 3
    
Amortization of debt discount(1)
1
 1
     2
 2
    
Non-cash interest expense, net(1)
2
 2
    
Benefit for current income taxes2
 7
     16
 15
    6
 14
    
Changes in working capital(2) (7)     (20) (16)    —
 (18)    
Cash used in operating activities(12) (8)     (19) (16)    (14) (7)    
Changes in working capital2
 7
     20
 16
    —
 18
    
Free cash flow(10) (1) (9) NM
 1
 —
 1
 NM
(14) 11
 (25) NM
               
___________
NM — Not meaningfulmeaningful.
(1)Interest expense, net, included non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023.
(2)Represents the cash interest expense related to the 2.00% Convertible Senior Notes due October 2023 reclassified to Atlantic Aviation through December 6, 2018, the date of Atlantic Aviation’s refinancing. The proceeds from this note issuance in October 2016 were used principally to reduce the drawn balance on Atlantic Aviation’s revolving credit facility. Cash interest expense on this note issuance is included in Corporate and Other subsequent to December 6, 2018.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased for the quarter ended March 31, 2020 compared with the quarter ended March 31, 2019 primarily due to expenses incurred in connection with our pursuit of strategic alternatives, partially offset by the absence of consulting expenses incurred during the first quarter of 2019 in connection with our evaluation of opportunities to improve efficiencies.
Fees to Manager
Fees to Manager for the quarter ended March 31, 2020 comprise base management fees of $7 million compared with $8 million for the quarters ended March 31, 2020 and 2019, respectively. Base management fees decreased primarily due to the reduction in the market capitalization of our Company. No performance fees were incurred in either of the current or prior comparable periods.
TABLE OF CONTENTS
Results of Operations: Corporate and Other – (continued)

Selling, General and Administrative ExpensesInterest Expense, net
Selling, general and administrative expenses decreased for the quarter and six months ended June 30, 2019 compared with the quarter and six months ended June 30, 2018 primarily dueCash interest expense, net, increased to lower costs incurred in connection with the evaluation of various investment and acquisition and disposition opportunities and lower professional services fees, primarily in connection with defending litigation. The decreases were partially offset by consulting expenses incurred in connection with our evaluation of opportunities for improved efficiencies.
Fees to Manager
Fees to Manager for the quarter and six months ended June 30, 2019 comprise base management fees of $7 million and $15 million, respectively, compared with $11 million and $24$3 million for the quarter and six months endedJune 30, 2018, respectively. Base management fees decreased for the quarter and six months ended June 30, 2019 versus the prior comparable periods primarily due to the Manager’s waiver of two elements of the base management fee to which it is entitled and a reduction in the market capitalization of our Company. For the quarter and six months ended June 30, 2019, base management fees were calculated on the equity market capitalization of our Company less cash on hand at the holding company. No performance fees were incurred in either of the current or prior comparable period.
Interest Expense, Net
Cash interest expense was $4 million and $6March 31, 2020 from $2 million for the quarter and six months ended June 30,March 31, 2019 compared with $4 millionprimarily as and $8 million for result of higher average debt balances, partially offset by higher interest income earned in the quarter and six months ended June 30, 2018. The decrease in cash interest expense for the six months ended June 30, 2019 compared with the six months ended June 30, 2018 primarily reflects a lower debt balance.
Cash interest expense for the quarter and six months ended June 30, 2018 excludes the cash interest paid on the $403 million of MIC Corporate 2.00% Convertible Senior Notes issued in October 2016 through the date of the refinancing of Atlantic Aviation’s debt on December 6, 2018. The proceeds from this note issuance in October 2016 were used principally to reduce the drawn balance of Atlantic Aviation’s revolving credit facility. Cash interest expense on this note issuance is included in Corporate and Other subsequent to December 6, 2018.March 31, 2019.
Other Income, Netnet
Other income, net, decreased for the quarter and six months ended June 30, 2019March 31, 2020 compared with the quarter and six months ended June 30, 2018March 31, 2019 primarily as a result of a reduction inthe absence of fee income from a third partythird-party developer of renewable power facilities. The relationship with the developer concluded during July 2019.
Income Taxes
The Benefit for current income taxesCurrent Income Taxes of $16$6 million for the six monthsquarter ended June 30, 2019March 31, 2020 in the above table includes $15 million ofreflects the current federal income tax benefit and $1 million of state income tax benefit. The federal income tax benefit represents the combined federal income tax payablerecorded by IMTT, Atlantic Aviation and MIC Hawaii that is offset in consolidation with the application of MIC holding company level NOLs. At December 31, 2018, we had $152 million in federal NOLs available to offset taxable incomelosses generated by our consolidated businesses.MIC Corporate and Other.
TABLE OF CONTENTS

Liquidity and Capital Resources
General
Our primary cash requirements includehave historically included normal operating expenses, debt service, debt principal payments, payments of dividends and capital expenditures. Our primary source of cash ishas historically been operating activities, although we have drawn and may draw on credit facilities, to fund capital expenditures, issueissued new equity or debt or sellsold assets to generate cash.
We may from time to time seek to purchase or retire our outstanding debt in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on market conditions, our liquidity needs and other factors.
On March 17, 2020, we drew down a total of $874 million on two revolving credit facilities. We drew $599 million on our $600 million holding company level revolving credit facility and drew $275 million on the $350 million revolving credit facility at Atlantic Aviation. The proceeds were additive to our approximately $300 million of cash already on hand. Although we had and continue to have no immediate need for the additional liquidity, the drawdowns were deemed prudent to preserve financial flexibility in light of the disruption in the global markets and the unpredictability of the sustained impact to our businesses caused by COVID-19.
On April 30, 2020, Atlantic Aviation fully repaid the outstanding balance on its revolving credit facility and effective May 4, 2020, reduced the commitments on this facility to $10 million. Prior to the reduction in the revolving credit facility commitments, the debt supporting Atlantic Aviation under its credit agreement comprised a $350 million revolving credit facility and a $1,012 million term loan. The term loan remains outstanding. The $10 million revolving commitments are in place solely with respect to letters of credit currently outstanding (and such commitments will be reduced after each existing letter of credit expires or otherwise terminates).
In connection with the repayment of the revolving credit facility and reduction in commitments, we and the required revolving lenders amended certain terms of the credit agreement.  Prior to such amendment, Atlantic Aviation covenanted to maintain its ratio of net debt/EBITDA at or below 5.5x over a trailing twelve-month period. Going forward, such financial covenant will not be applicable so long as letters of credit issued under the credit facility are cash collateralized and rolled over to standalone letter of credit facilities upon renewal.
In addition to drawing on our holding company level revolving credit facility, we have determined to improve our liquidity and financial flexibility in light of COVID-19 by suspending our dividend. We currently expect to retain approximately $260 million if the suspension remains in effect through the end of 2020. Over the remainder of 2020, we currently expect to fund our operations, service our debt, make state tax payments, fund essential maintenance capital expenditures, deploy growth capital and make required principal repayments using cash generated from the operations of our businesses and the $300 million of cash on hand prior to the March 2020 drawing on our holding company level revolving credit facility.
At June 30, 2019,March 31, 2020, our consolidated debt outstanding from continuing operations totaled $3,079$3,592 million (excluding adjustments for unamortized debt discounts), including the drawings on our revolving credit facilities. Our consolidated cash balance totaled $1,156 million including the proceeds from continuing operations totaled $573 millionthe revolving credit facilities and consolidatedthe available capacity under our revolving credit facilities was reduced from continuing operations totaled $1,610 million excluding lettersat December 31, 2019 to $736 million at March 31, 2020. With the cash drawn on the revolving credit facilities held in cash, our ratio of credit outstandingnet debt/EBITDA was 4.3x as of $49 million. On July 15, 2019, we repaid the outstanding balance of $350 million on our 2.875% Convertible Senior Notes due July 2019 at maturity usingMarch 31, 2020. We expect to use cash on hand.hand to partially fund our operations and growth capital during 2020, which will increase our net debt at year-end.
The following table shows MIC’s debt obligations at July 29, 2019 ($ in millions):
Business Debt 
Weighted Average Remaining Life
(in years)
 Balance Outstanding 
Weighted
Average Rate(1)
MIC Corporate Convertible Senior Notes 4.2
 $403
 2.00%
IMTT Senior Notes 6.7
 600
 3.97%
  
Tax-Exempt Bonds(2)
 6.4
 509
 2.95%
Atlantic Aviation 
Term Loan(3)(4)
 6.4
 1,020
 5.50%
MIC Hawaii 
Term Loan(4)
 4.1
 95
 2.63%
  Senior Notes 3.0
 100
 4.22%
Total(5)
   5.9
 $2,727
 4.02%
___________
(1)Reflects annualized interest rate on all facilities including interest rate hedges.
(2)On December 5, 2018, IMTT completed the amendment of its existing $509 million Tax-Exempt bonds and extended the maturity to December 2025.
(3)On December 6, 2018, Atlantic Aviation completed the refinancing of its prior term loan facility with a $1,025 million Term Loan facility maturing in December 2025.
(4)The weighted average remaining life does not reflect the scheduled amortization on these facilities.
(5)Excludes debt obligations of discontinued operations.
The following table profiles each revolving credit facility from continuing operations at our businesses and at MIC Corporate as of July 29, 2019May 1, 2020 ($ in millions):
Business Debt 
Weighted
Average
Remaining Life
(in years)
 Undrawn Amount 
Interest Rate(1)
MIC Corporate(2)
 Revolving Facility 2.4
 $600
 LIBOR + 2.00%
IMTT(3)
 USD Revolving Facility 4.4
 550
 LIBOR + 1.50%
  CAD Revolving Facility 4.4
 50
 Bankers' Acceptance Rate + 1.50%
Atlantic Aviation(4)
 Revolving Facility 4.4
 350
 LIBOR + 2.25%
MIC Hawaii(5)
 Revolving Facility 3.5
 60
 LIBOR + 1.25%
Total(6)
   3.6
 $1,610
  
Business Debt 
Weighted Average Remaining Life
(in years)
 Balance Outstanding 
Weighted
Average Rate(1)
MIC Corporate Convertible Senior Notes 3.4
 $403
 2.00%
  Revolving Facility 1.7
 599
 2.55%
IMTT Senior Notes 6.0
 600
 3.97%
  Tax-Exempt Bonds 5.6
 509
 2.98%
Atlantic Aviation 
Term Loan(2)
 5.6
 1,012
 4.33%
MIC Hawaii 
Term Loan(2)
 3.3
 94
 2.04%
  Senior Notes 2.3
 100
 4.22%
Total   4.5
 $3,317
 3.38%

___________
(1)Excludes commitment fees.
(2)On January 3, 2018, the Company completed the refinancing and upsizing of its senior secured revolving credit facility and extended its maturity to January 2022. The applicable margin on the interest rate is based on a ratings grid.
TABLE OF CONTENTS
Liquidity and Capital Resources – (continued)


(3)(1)On December 5, 2018, IMTT completed the amendment of its $550 million USD revolving credit facility and $50 million CAD revolving credit facility and extended the maturity for bothReflects annualized interest rate on all facilities to December 2023. Theincluding interest rate hedges. Where applicable, margin on the interest rate is based on either a ratings or leverage grid.rates are reflective of the April 2020 rating agencies updates.
(2) The weighted average remaining life does not reflect the scheduled amortization on these facilities.
The following table profiles each revolving credit facility from continuing operations at our businesses and at MIC Corporate as of May 1, 2020 ($ in millions):
Business 
Debt(1)
 
Weighted
Average
Remaining Life
(in years)
 Undrawn Amount 
Interest Rate(2)
MIC Corporate Revolving Facility 1.7
 $1
 LIBOR + 2.25%
IMTT USD Revolving Facility 3.6
 550
 LIBOR + 1.75%
  CAD Revolving Facility 3.6
 50
 Bankers' Acceptance Rate + 1.75%
MIC Hawaii Revolving Facility 2.8
 60
 LIBOR + 1.25%
Total   3.5
 $661
  
___________
(4)(1)On December 6, 2018,Excludes $10 million of revolving commitments at Atlantic Aviation completedwhich is in place solely with respect to the refinancing of its prior revolving credit facility with a $350 million revolving credit facility maturing in December 2023. The applicable margin on the interest rate is based on a leverage grid.
(5)On February 12, 2018, Hawaii Gas completed the refinancing of its existing $60 million revolving credit facility and extended its maturity to February 2023.
(6)Excludes letters of credit currently outstanding under its revolving credit facility. Such commitments will be reduced after each existing letter of $66 million.credit expires or otherwise terminates.
We will, in general, apply available cash to(2) Excludes commitment fees. Where applicable, the repaymentinterest rates are reflective of revolving credit facility balances as a means of minimizing interest expense and periodically draw on those facilities to fund growth projects and for general corporate purposes.the April 2020 rating agencies updates.
We use revolving credit facilities at each ofIMTT and Hawaii Gas, a business within the MIC Hawaii segment, and at our operating companies and the holding company as a means of maintaining access to sufficient liquidity to meet future requirements, manage interest expense and fund growth projects. We base our assessment of the sufficiency of our liquidity and capital resources on the assumptions that:
our businesses overall generate,having approximately $1,530 million of liquidity available comprised of cash on hand and are expected to continue to generate, significant operating cash flow;
the ongoing capital expenditures associated with our businesses are readily funded from their respective operating cash flow or available debt facilities; and
undrawn balances on its revolving credit facilities. In addition, we believe we will be able to refinance, extend and/or repay the principal amount of maturing long-term debt on terms that can be supported by our businesses.businesses on or before maturity.
We capitalize our businesses in part using floating rate bank debt with medium-term maturities of between four and seven years. In general, we hedge any floating rate exposure for the majority of the term of these facilities. We also use longer dated private placement debt and other forms of capital including bond or hybrid debt instruments to capitalize our businesses. In general, the debt facilities of our businesses are non-recourse to the holding company and there are no cross-collateralization or cross-guarantee provisions in these facilities.
Analysis of Consolidated Historical Cash Flows from Continuing Operations
The following section discusses our sources and uses of cash on a consolidated basis from continuing operations. All intercompany activities such as corporate allocations, capital contributions to our businesses and distributions from our businesses have been excluded from the table as these transactions are eliminated on consolidation.
($ In Millions)Six Months Ended June 30,
Change
Favorable/(Unfavorable)
Quarter Ended March 31,
Change
Favorable/(Unfavorable)
2019 2018  2020 2019 
$ $ $ % $ $ $ %
Cash provided by operating activities 259 245 14
 6
 99 151 (52) (34)
Cash used in investing activities (103) (58) (45) (78) (84) (45) (39) (87)
Cash used in financing activities (176) (157) (19) (12)
Cash provided by (used in) financing activities 784 (90) 874
 NM
__________
NM — Not meaningful.
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Liquidity and Capital Resources – (continued)


Operating Activities from Continuing Operations
Cash provided by (used in) operating activities is generally comprised of EBITDA excluding non-cash items (as defined by us), less cash interest, tax and pension payments and changes in working capital. See ““Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations” for discussions ofaround the components of EBITDA excluding non-cash items on a consolidated basis from continuing operations and for each of our businesses above.
The increasedecrease in consolidated cash provided by operating activities from continuing operations for the six monthsquarter ended June 30, 2019March 31, 2020 compared with the six monthsquarter ended June 30, 2018March 31, 2019 was primarily due to:
an increasea decrease in EBITDA excluding non-cash items; and
a favorable movementdecrease in the change in accounts payable and accrued expenses primarily due to a decline in the timingamount and cost of payments related to property taxes,jet fuel purchases, and salaries and benefits; and
an increase in deferred revenue;LPG purchased; partially offset by
an unfavorable movementincrease in the change in accounts receivable due to timing of collectionsresulting from declines in sales activity and lower retail prices on fuel sales and storage contracts;jet fuel.
timing of payments of insurance premiums;
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Liquidity and Capital Resources – (continued)


an increase in interest expense; and
an increase in current state taxes.
Investing Activities from Continuing Operations
Cash provided by investing activities include proceeds from divestitures of businesses and disposal of fixed assets. Cash used in investing activities include acquisitions of businesses in new and existing segments and capital expenditures. Acquisitions of businesses are generally funded by raising additional equity and/or drawing on credit facilities.
In general, maintenance capital expenditures are funded from cash provided by operating activities and growth capital expenditures are funded by drawing on our available credit facilities or with equity capital. See ““Management's Discussion and Analysis of Financial Condition and Result of Operations - Results of Operations” for discussions on maintenance capital expenditures for each of our businesses.
The increase in consolidated cash used in investing activities from continuing operations for the six monthsquarter ended June 30, 2019March 31, 2020 compared with the six months ended June 30, 2018 was primarily due to:
increase in capital expenditures during 2019; and
the absence in 2019 of proceeds received from the sale of non-core businesses in 2018; partially offset by
an acquisition during the quarter ended March 31, 2018.2019 resulted from an increase in capital expenditures and an acquisition of an FBO at an airport on which Atlantic Aviation already operated.
Capital Deployment (includes both continuing and discontinued operations)
Capital deployment includes growth capital expenditures and “bolt-on” acquisitions, the majority of which are expected to generate incremental earnings. For the six monthsquarters ended June 30,March 31, 2020 and 2019, and 2018, growth capital deployed totaled $91$67 million and $102$40 million, respectively. Capital deployed from continuing operations for the six months ended June 30, 2019 was $77 million.
We continuously evaluate opportunities to prudently deploy capital in bolt-on acquisitions and growth projects whether inacross our existing businesses or new lines of business. Webusinesses. In 2020 we are undertaking and expect to undertake a number ofprimarily contract-backed capital projects related to the repurposingwhich we have already committed having an aggregate value of between $200 million and repositioning of certain assets at IMTT and the enhancement of the capabilities of the businesses in our other segments. We estimate that the majority of our 2019 growth capital expenditures will be made in support of IMTT. In total, we expect to deploy $250 million to $275 million of growth capital during 2019.$225 million.
Financing Activities from Continuing Operations
Cash provided by financing activities includes primarily includes new equity issuance and debt issuance related to acquisitions and capital expenditures. Cash used in financing activities includes primarily includes dividends to our shareholdersstockholders and the repayment of debt principal balances on maturing debt.
The increase inchange from consolidated cash used in financing activities from continuing operations for the six monthsquarter ended June 30,March 31, 2019 compared withto cash provided by financing activities from continuing operations for the six monthsquarter ended June 30, 2018 was primarily due to:
higher net borrowings during 2018 primarilyMarch 31, 2020 resulted from the drawdowns on our revolving credit facilities in response to fund an acquisition, growth capital expenditures and general corporate purposes; partially offset by
a decrease in dividends paid to shareholders in 2019.the potential impacts of COVID-19.
IMTT
At June 30, 2019,March 31, 2020, IMTT had $1,109 million of debt outstanding consisting of $600 million of senior notes and $509 million of tax-exempt bonds. IMTT also hasTax-Exempt Bonds. IMTT’s $600 million inof revolving credit facilities which wereremained undrawn at June 30, 2019. For the six months ended June 30, 2019 and 2018, cashMarch 31, 2020. Cash interest expense was $20$10 million for both the quarters ended March 31, 2020 and $23 million, respectively.2019. At June 30, 2019,March 31, 2020, IMTT was in compliance with its financial covenants.
Atlantic Aviation
At June 30, 2019,March 31, 2020, Atlantic Aviation had $1,022$1,287 million outstanding, comprising of $1,012 million on its senior secured first lien term loan facility and $275 million drawn on its $350 million senior secured first lien revolving credit facility. On April 30, 2020, Atlantic Aviation also has a $350 millionfully repaid the outstanding balance on its revolving credit facility that was undrawn at June 30, 2019.
Forand effective May 4, 2020, reduced the six months ended June 30, 2019 and 2018, cash interest expense was $29commitments on this facility to $10 million and $13 million, respectively. Cash interest expense forsolely with respect to letters of credit currently outstanding. The amendment of the six months ended June 30, 2018 includes the cash interest paidfacility eliminates any leverage-based maintenance covenant on the $403 million of holding company level 2.00% Convertible Senior Notes issued in October 2016 through the refinancing of the business’ debt on December 6, 2018. The proceeds from this note issuance in October 2016 were used principally to reduce the drawn balance of Atlantic Aviation’s revolving credit facility. Cash interest expense on this note issuance is included in MIC Corporate and Other subsequent to December 6, 2018. At June 30, 2019, Atlantic Aviation was in compliance with its financial covenants.term loan as long as the letters of credit issued under the facility are cash collateralized and rolled over to standalone letters of credit facilities upon renewal.
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Liquidity and Capital Resources – (continued)


Cash interest expense was $14 million for both the quarters ended March 31, 2020 and 2019. At March 31, 2020, Atlantic Aviation was in compliance with its financial covenants.
MIC Hawaii
At June 30, 2019,March 31, 2020, MIC Hawaii had total debt outstanding of $195$194 million consisting of $100 million in term loans and senior secured note borrowings and $95 million in term loan debt. MIC Hawaii also has a $60 million revolving credit facility that was undrawn at June 30, 2019.undrawn. Cash interest expense was $4$2 million for both the six month periodsquarters ended June 30, 2019March 31, 2020 and 2018.2019. At June 30, 2019,March 31, 2020, MIC Hawaii was in compliance with its financial covenants.
MIC Corporate
At June 30, 2019,March 31, 2020, MIC had $350$403 million and $403 million in two tranches of Convertible Senior Notes outstanding. The tranches bear interest at 2.875% and 2.00%, respectively. On July 15, 2019, we repaid the outstanding balance of $350 million 2.875% Convertible Senior Notes due July 2019 at maturity using cash on hand.October 2023 outstanding. In addition, during the quarter ended March 31, 2020, MIC Corporate also has a $600borrowed $599 million under its revolving credit facility that was undrawn at June 30, 2019.
in response to the potential impacts of COVID-19. Cash interest expense at MIC Corporate totaled $6was $3 million and $8$2 million for the six monthsquarters ended June 30,March 31, 2020 and 2019, and 2018, respectively. Cash interest expense for the six months ended June 30, 2018 excludes the cash interest paid on the $403 million ofAt March 31, 2020, MIC Corporate 2.00% Convertible Senior Notes issued in October 2016. The proceeds from this note issuance in October 2016 were used principally to reduce the drawn balance of Atlantic Aviation’s revolving credit facility. Cash interest expense on this note issuance is included in MIC Corporate and Other subsequent to December 6, 2018, the date of Atlantic Aviation's refinancing.
At June 30, 2019, MIC Corporate was in compliance with its financial covenants.
For a description of the material terms and debt covenants of MIC and its businesses,businesses' debt facilities, see Note 9, “Long-Term Debt”, in Part II, Item 8, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2019.
Commitments and Contingencies
Except as noted above, at June 30, 2019,March 31, 2020, there were no material changes in our commitments and contingencies compared with those at December 31, 2018.2019. At June 30, 2019,March 31, 2020, we did not have any material purchase obligations. For a discussion of our other future obligations, due by period, under the various contractual obligations, off-balance sheet arrangements and commitments, please see “Liquidity and Capital Resources — Commitments and Contingencies” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, filed with the SEC on February 20, 2019.25, 2020.
At June 30, 2019,March 31, 2020, we did not have any material reserves for contingencies. We have other contingencies occurring in the normal course of business, including pending legal and administrative proceedings that are not reflected at this time as they are not ascertainable.
Our sources of cash to meet these obligations include:
cash generated from our operations (see “Operating Activities” in “Liquidity and Capital Resources”);
the issuance of shares or debt securities (see “Financing Activities” in “Liquidity and Capital Resources”);
refinancing of our current credit facilities aton or before maturity (noting that it may be more difficult and/or costly to obtain financing while global markets continue to be disrupted by the impacts of COVID-19 (see “Financing Activities” in “Liquidity and Capital Resources”);
cash available from our undrawn balances on credit facilities (see “Financing Activities” in “Liquidity and Capital Resources”); and
if advantageous, sale of all or part of any of our businesses (see “Investing Activities” in “Liquidity and Capital Resources”).
Critical Accounting Policies and Estimates
For critical accounting policies and estimates, see “Critical Accounting Policies and Estimates” in Part II, Item 7 and Note 2, “Summary of Significant Accounting Policies”, in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 20182019 and see Note 2, “Basis of Presentation”, and Note 4, “Implementation of ASU 2016-02”, in our Notes to Consolidated Condensed Financial Statements in Part I of this Form 10-Q for recently issued accounting standards. Our critical accounting policies and estimates have not changed materially from the description contained in our Annual Report.
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Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk, see Part II, Item 7A “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2019. Our exposure to market risk has not changed materially since February 20, 2019,25, 2020, the filing date for our Annual Report on Form 10-K.10-K, except as follows:
reductions in target interest rates by the Federal Reserve that have lowered the cost of borrowing; and
decreases in the price of crude oil and refined petroleum products, particularly jet fuel, that have lowered the cost of products provided by each of Atlantic Aviation and Hawaii Gas; partially offset by
the increase in the volatility of equity markets; and
the impact of lower LPG prices on our commodity hedge contracts.
Interim Goodwill Review
We test for goodwill impairment at the reporting unit level on an annual basis on October 1st of each year and between annual tests if a triggering event indicates the possibility of an impairment. We monitor changing business conditions as well as industry and economic factors, among others, for events which could trigger the need for an interim impairment analysis.
During the quarter ended March 31, 2020, we performed a goodwill triggering event analysis of our reportable segments and the Company as a whole due to the decline in our market capitalization and the impact and uncertainty around COVID-19. At September 30, 2019, we performed an impairment analysis resulting in the fair value of our reporting units exceeding its aggregate book value by $2.2 billion, or 33%. Approximately $1.9 billion of the excess was attributed to Atlantic Aviation, approximately $280 million to Hawaii Gas and approximately $20 million to IMTT.
At IMTT, we looked at the impact of the supply and demand imbalance in the petroleum market and the significant decline in pricing on crude oil. In addition, COVID-19 and the resulting slowdown in economic activity, led to an oversupply of petroleum and other liquid products stored and handled by IMTT. These factors have increased the utilization levels at IMTT to the low to mid 90s percent and accelerated renewal on some customer contracts. Given the positive impacts to IMTT, we concluded there were no triggering events at IMTT.
At Atlantic Aviation and Hawaii Gas, using the market approach performed in the September 2019 impairment analysis, we performed sensitivities to EBITDA and concluded that it was not more likely than not that the book value of the businesses was greater than the fair value. Management currently expects these businesses will begin to show business recovery starting within six months and therefore the decrease in business activity is not permanent. We concluded that at March 31, 2020, there were no triggering events at Atlantic Aviation and Hawaii Gas.
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Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the direction and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures (as such term is defined under Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The purpose of disclosure controls is to ensure that information required to be disclosed in our reports filed with or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Based on this evaluation, due to a material weakness in internal control over financial reporting at Atlantic Aviation described in Part II, Item 9A of our Form 10-K for the year ended December 31, 2018, because such material weakness has not yet been remediated, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2019.March 31, 2020.
Changes in Internal Control Over Financial Reporting
Effective January 1, 2019, we adopted ASC Topic 842, Leases. The adoption of this accounting standard required the implementation of new internal controls over reporting of operating leases. For example, we implemented new controls related to the adoption process and a new IT system to capture, calculate, and account for leases, and gather the necessary data to properly account for leases under ASC 842. There were no otherhave not been any changes in our internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) that occurred during the six monthsquarter ended June 30, 2019March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than as described below under the caption “Remediation.”
Remediation
As previously described in Part II, Item 9A of our Form 10-K for the year ended December 31, 2018, we began implementing remediation measures to address the control deficiencies that led to the material weakness mentioned above. The remediation measures at Atlantic Aviation include the following:
(i)reinforcing the importance of the performance of the fuel gallon and pricing management review procedures and controls;
(ii)developing and maintaining documentation to be utilized by FBO personnel in performing revenue procedures and controls;
(iii)training control owners on revenue procedures and controls;
(iv)re-enforcing accountability for compliance with internal control policies and procedure; and
(v)enhancing the existing centralized revenue control review and monitoring function.
We are in the process of implementing and testing these enhanced internal controls and related procedures. We believe that these actions will be sufficient to remediate the material weakness and strengthen our internal control over financial reporting. The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to December 31, 2019.
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MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in Millions, Except Share Data)

June 30,
2019		 December 31, 2018March 31,
2020		 December 31, 2019
(Unaudited)  (Unaudited)  
ASSETS      
Current assets:      
Cash and cash equivalents$573
 $589
$1,156
 $357
Restricted cash17
 23
1
 1
Accounts receivable, net of allowance for doubtful accounts97
 95
71
 97
Inventories31
 29
24
 31
Prepaid expenses16
 13
14
 13
Fair value of derivative instruments4
 11
Income tax receivable12
 11
Other current assets34
 12
16
 19
Current assets held for sale(1)
730
 648
Total current assets1,502
 1,420
1,294
 529
Property, equipment, land and leasehold improvements, net3,127
 3,141
3,220
 3,202
Operating lease assets, net326
 —
332
 336
Investment in unconsolidated business9
 8
8
 9
Goodwill2,043
 2,043
2,044
 2,043
Intangible assets, net759
 789
717
 729
Fair value of derivative instruments4
 15
Other noncurrent assets13
 28
11
 13
Total assets$7,783
 $7,444
$7,626
 $6,861
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Due to Manager-related party$3
 $3
$2
 $3
Accounts payable49
 38
34
 67
Accrued expenses72
 86
83
 86
Current portion of long-term debt364
 361
286
 12
Operating lease liabilities – current20
 —
Operating lease liabilities - current19
 20
Fair value of derivative liabilities13
 7
Other current liabilities45
 33
26
 35
Current liabilities held for sale(1)
388
 317
Total current liabilities941
 838
463
 230
Long-term debt, net of current portion2,653
 2,653
3,253
 2,654
Deferred income taxes685
 681
679
 679
Operating lease liabilities – noncurrent312
 —
Operating lease liabilities - noncurrent318
 320
Other noncurrent liabilities154
 155
169
 167
Total liabilities4,745
 4,327
4,882
 4,050
Commitments and contingencies—
 —
—
 —
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MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS – (continued)
($ in Millions, Except Share Data)

June 30,
2019		 December 31, 2018March 31,
2020		 December 31, 2019
(Unaudited)  (Unaudited)  
Stockholders’ equity(2):
   
Stockholders’ equity(1):
   
Additional paid in capital$1,354
 $1,510
$1,123
 $1,198
Accumulated other comprehensive loss(28) (30)(40) (37)
Retained earnings1,566
 1,485
1,652
 1,641
Total stockholders’ equity2,892
 2,965
2,735
 2,802
Noncontrolling interests(3)
146
 152
9
 9
Total equity3,038
 3,117
2,744
 2,811
Total liabilities and equity$7,783
 $7,444
$7,626
 $6,861
___________
(1)See Note 3, “Discontinued Operations and Dispositions”, for further discussion on assets and liabilities held for sale.
(2)
The Company is authorized to issue the following classes of stock: (i) 500,000,000 shares of common stock, par value $0.001 per share. At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company had 86,195,94686,814,466 shares and 85,800,30386,600,302 shares of common stock issued and outstanding, respectively; (ii) 100,000,000 shares of preferred stock, par value $0.001 per share.share authorized. At June 30, 2019March 31, 2020 and December 31, 2018, no2019, 0 preferred stocks were issued or outstanding; and (iii) 100 shares of special stock, par value $0.001 per share, issued and outstanding to its Manager as at June 30, 2019March 31, 2020 and December 31, 2018.
(3)Includes $138 million and $141 million of noncontrolling interest related to discontinued operations at June 30, 2019 and December 31, 2018, respectively. See Note 3, “Discontinued Operations and Dispositions”, for further discussions.2019.
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MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ in Millions, Except Share and Per Share Data)

 Quarter Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Revenue       
Service revenue$355
 $376
 $773
 $779
Product revenue61
 60
 125
 124
Total revenue416
 436
 898
 903
Costs and expenses       
Cost of services162
 180
 330
 367
Cost of product sales45
 41
 85
 89
Selling, general and administrative84
 82
 164
 162
Fees to Manager-related party7
 11
 15
 24
Depreciation48
 47
 96
 94
Amortization of intangibles15
 17
 30
 33
Total operating expenses361
 378
 720
 769
Operating income55
 58
 178
 134
Other income (expense)       
Interest income1
 —
 4
 —
Interest expense(1)
(46) (25) (88) (43)
Other (expense) income, net(2) 6
 2
 6
Net income from continuing operations before income taxes8
 39
 96
 97
Provision for income taxes(2) (12) (26) (30)
Net income from continuing operations$6
 $27
 $70
 $67
        
Discontinued Operations(2)
       
Net income from discontinued operations before income taxes$5
 $9
 $8
 $15
(Provision) benefit for income taxes(2) —
 —
 1
Net income from discontinued operations$3
 $9
 $8
 $16
Net income$9
 $36
 $78
 $83
Net income from continuing operations$6
 $27
 $70
 $67
Net income from continuing operations attributable to MIC$6
 $27
 $70
 $67
Net income from discontinued operations$3
 $9
 $8
 $16
Less: net loss attributable to noncontrolling interests(2) (2) (3) (32)
Net income from discontinued operations attributable to MIC$5
 $11
 $11
 $48
Net income attributable to MIC$11
 $38
 $81
 $115

 Quarter Ended March 31,
 2020 2019
Revenue   
Service revenue$356
 $418
Product revenue60
 64
Total revenue416
 482
Costs and expenses   
Cost of services145
 168
Cost of product sales42
 40
Selling, general and administrative96
 80
Fees to Manager-related party7
 8
Depreciation51
 48
Amortization of intangibles14
 15
Total operating expenses355
 359
Operating income61
 123
Other income (expense)   
Interest income—
 3
Interest expense(1)
(42) (42)
Other income, net1
 4
Net income from continuing operations before income taxes20
 88
Provision for income taxes(9) (24)
Net income from continuing operations11
 64
    
Discontinued Operations(2)
   
Net income from discontinued operations before income taxes—
 3
Benefit for income taxes—
 2
Net income from discontinued operations—
 5
Net income11
 69
    
Net income from continuing operations11
 64
Net income from continuing operations attributable to MIC11
 64
Net income from discontinued operations—
 5
Less: net loss attributable to noncontrolling interests—
 (1)
Net income from discontinued operations attributable to MIC—
 6
Net income attributable to MIC$11
 $70
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MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – (continued)
(Unaudited)
($ in Millions, Except Share and Per Share Data)

Quarter Ended June 30, Six Months Ended June 30,Quarter Ended March 31,
2019 2018 2019 20182020 2019
Basic income per share from continuing operations attributable to
MIC
$0.07
 $0.32
 $0.81
 $0.79
$0.13
 $0.75
Basic income per share from discontinued operations attributable to
MIC
0.06
 0.13
 0.13
 0.57
—
 0.07
Basic income per share attributable to MIC$0.13
 $0.45
 $0.94
 $1.36
$0.13
 $0.82
Weighted average number of shares outstanding: basic86,073,372
 85,082,209
 85,973,308
 84,952,551
86,686,972
 85,872,132
Diluted income per share from continuing operations attributable to
MIC
$0.07
 $0.32
 $0.81
 $0.79
$0.13
 $0.73
Diluted income per share from discontinued operations attributable to
MIC
0.06
 0.13
 0.13
 0.57
—
 0.06
Diluted income per share attributable to MIC$0.13
 $0.45
 $0.94
 $1.36
$0.13
 $0.79
Weighted average number of shares outstanding: diluted86,099,111
 85,091,945
 85,998,006
 84,962,138
86,718,067
 93,913,267
Cash dividends declared per share$1.00
 $1.00
 $2.00
 $2.00
$—
 $1.00
___________
(1)Interest expense includes losses on derivative instruments of $8$9 million and $12$4 million for the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, respectively. Interest expense includes gains on derivative instruments of $4 million and $14 million for the quarter and six months ended June 30, 2018, respectively.
(2)See Note 3,4, “Discontinued Operations and Dispositions”, for discussions on businesses classified as held for sale.
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MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
($ in Millions)


Quarter Ended June 30, Six Months Ended June 30,Quarter Ended March 31,
2019 2018 2019 20182020 2019
Net income$9
 $36
 $78
 $83
$11
 $69
Other comprehensive income (loss), net of taxes:       
Other comprehensive loss, net of taxes:   
Translation adjustment (1)
2
 (2) 2
 (3)(3) —
Other comprehensive income (loss)2
 (2) 2
 (3)
Other comprehensive loss(3) —
Comprehensive income11
 34
 80
 80
8
 69
Less: comprehensive loss attributable to noncontrolling
interests
(2) (2) (3) (32)—
 (1)
Comprehensive income attributable to MIC$13
 $36
 $83
 $112
$8
 $70
___________
(1)
Translation adjustment is presented net of tax expense of $1 million for the quarter and six months ended June 30, 2019. For the quarter and six months ended June 30, 2018, translation adjustment is presented net of tax benefit of $1 million.$1 million for the quarter ended March 31, 2020. See Note 10, "Stockholders' Equity", for further discussions.

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MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
($ in Millions, Except Share Data)


 In Shares 
Additional
Paid In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Stockholders’
Equity
 
Noncontrolling
Interests(2)
 
Total
Equity
 
Special
Stock
 
Common
Stock(1)
 
Balance at March 31, 2019100
 85,982,332
 $1,432
 $(30) $1,555
 $2,957
 $149
 $3,106
Issuance of shares to Manager—
 189,968
 7
 —
 —
 7
 —
 7
Issuance of shares to independent directors—
 23,646
 1
 —
 —
 1
 —
 1
Dividends to common stockholders(3)
—
 —
 (86) —
 —
 (86) —
 (86)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1) (1)
Comprehensive income (loss), net of taxes—
 —
 —
 2
 11
 13
 (2) 11
Balance at June 30, 2019100
 86,195,946
 $1,354
 $(28) $1,566
 $2,892
 $146
 $3,038
                
Balance at December 31, 2018100
 85,800,303
 $1,510
 $(30) $1,485
 $2,965
 $152
 3,117
Issuance of shares to Manager—
 371,997
 15
 —
 —
 15
 —
 15
Issuance of shares to independent directors—
 23,646
 1
 —
 —
 1
 —
 1
Dividends to common stockholders(3)
—
 —
 (172) —
 —
 (172) —
 (172)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (3) (3)
Comprehensive income (loss), net of taxes—
 —
 —
 2
 81
 83
 (3) 80
Balance at June 30, 2019100
 86,195,946
 $1,354
 $(28) $1,566
 $2,892
 $146
 $3,038

In Shares 
Additional
Paid In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Stockholders’
Equity
 
Noncontrolling
Interests(2)
 
Total
Equity
In Shares 
Additional
Paid In
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Retained
Earnings
 
Total
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
Special
Stock
 
Common
Stock(1)
 
Special
Stock
 
Common
Stock(1)
 
Balance at March 31, 2018100
 84,902,562
 $1,729
 $(31) $1,420
 $3,118
 $166
 $3,284
Balance at December 31, 2019100
 86,600,302
 $1,198
 $(37) $1,641
 $2,802
 $9
 $2,811
Issuance of shares to Manager—
 274,388
 11
 —
 —
 11
 —
 11
—
 213,365
 9
 —
 —
 9
 —
 9
Issuance of shares to independent directors—
 9,435
 1
 —
 —
 1
 —
 1
Stock vested under compensation plans(2)
—
 1,100
 —
 —
 —
 —
 —
 —
Stock withheld for taxes on vested stock(2)
—
 (301) —
 —
 —
 —
 —
 —
Stock-based compensation expense—
 —
 3
 —
 —
 3
 —
 3
Dividends to common stockholders(3)
—
 —
 (87) —
 —
 (87) —
 (87)
Comprehensive (loss) income, net of taxes—
 —
 —
 (3) 11
 8
 —
 8
Balance at March 31, 2020100
 86,814,466
 $1,123
 $(40) $1,652
 $2,735
 $9
 $2,744
               
Balance at December 31, 2018100
 85,800,303
 $1,510
 $(30) $1,485
 $2,965
 $152
 $3,117
Issuance of shares to Manager—
 182,029
 8
 —
 —
 8
 —
 8
Dividends to common stockholders(3)
—
 —
 (85) —
 —
 (85) —
 (85)—
 —
 (86) —
 —
 (86) —
 (86)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1) (1)—
 —
 —
 —
 —
 —
 (2) (2)
Comprehensive (loss) income, net of taxes—
 —
 —
 (2) 38
 36
 (2) 34
Balance at June 30, 2018100
 85,186,385
 $1,656
 $(33) $1,458
 $3,081
 $163
 $3,244
               
Balance at December 31, 2017100
 84,733,957
 $1,840
 $(30) $1,343
 $3,153
 $197
 3,350
Issuance of shares to Manager—
 441,003
 22
 —
 —
 22
 —
 22
Issuance of shares, net of offering costs—
 1,916
 —
 —
 —
 —
 —
 —
Issuance of shares to independent directors—
 9,435
 1
 —
 —
 1
 —
 1
Issuance of shares pursuant to conversion of convertible senior notes—
 74
 —
 —
 —
 —
 —
 —
Dividends to common stockholders(3)
—
 —
 (207) —
 —
 (207) —
 (207)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (2) (2)
Comprehensive (loss) income, net of taxes—
 —
 —
 (3) 115
 112
 (32) 80
Balance at June 30, 2018100
 85,186,385
 $1,656
 $(33) $1,458
 $3,081
 $163
 $3,244
Comprehensive income (loss), net of taxes—
 —
 —
 —
 70
 70
 (1) 69
Balance at March 31, 2019100
 85,982,332
 $1,432
 $(30) $1,555
 $2,957
 $149
 $3,106
___________
(1)The Company is authorized to issue 500,000,000 shares of common stock with a par value $0.001 per share.
(2)Includes $138 millionStocks vested and $150 millionissued under the 2016 Omnibus Employee Incentive Plan and 2014 Independent Directors' Equity Plan. Under the 2016 Omnibus Employee Incentive Plan, shares are withheld for the employee portion of noncontrolling interest related to discontinued operations at June 30, 2019taxes on vested awards and 2018, respectively. See Note 3, “Discontinued Operations and Dispositions”,are available for further discussions.future grants.
(3)See Note 14,13, “Related Party Transactions”, for cash dividends paid on shares for each period.


TABLE OF CONTENTS
MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in Millions)


Six Months Ended June 30,Quarter Ended March 31,
2019 20182020 2019
Operating activities      
Net income from continuing operations$70
 $67
$11
 $64
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:      
Depreciation and amortization of property and equipment96
 94
51
 48
Amortization of intangible assets30
 33
14
 15
Amortization of debt financing costs5
 4
2
 3
Amortization of debt discount2
 2
1
 1
Adjustments to derivative instruments22
 (7)12
 7
Fees to Manager-related party15
 24
7
 8
Deferred taxes17
 22
2
 17
Other non-cash expense, net9
 7
5
 4
Changes in other assets and liabilities, net of acquisitions:      
Accounts receivable(2) 15
23
 (11)
Inventories(1) (2)7
 —
Prepaid expenses and other current assets(11) —
(2) (5)
Accounts payable and accrued expenses1
 (15)(27) (2)
Income taxes payable3
 1
4
 7
Other, net3
 —
(11) (5)
Net cash provided by operating activities from continuing operations259
 245
99
 151
Investing activities      
Acquisitions of businesses and investments, net of cash, cash equivalents and restricted cash acquired—
 (12)(13) —
Purchases of property and equipment(102) (86)(71) (44)
Loan to project developer(1) (18)—
 (1)
Loan repayment from project developer—
 17
Proceeds from sale of business, net of cash divested—
 41
Net cash used in investing activities from continuing operations(103) (58)(84) (45)
Financing activities      
Proceeds from long-term debt—
 209
874
 —
Payment of long-term debt(3) (156)(3) (3)
Dividends paid to common stockholders(172) (207)(87) (86)
Debt financing costs paid(1) (3)—
 (1)
Net cash used in financing activities from continuing operations(176) (157)
Net cash provided by (used in) financing activities from continuing operations784
 (90)
Net change in cash, cash equivalents and restricted cash from continuing operations(20) 30
799
 16
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MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS – (continued)
(Unaudited)
($ in Millions)

Six Months Ended June 30,Quarter Ended March 31,
2019 20182020 2019
Cash flows (used in) provided by discontinued operations:      
Net cash (used in) provided by operating activities$(11) $21
Net cash used in operating activities$—
 $(13)
Net cash used in investing activities(16) (24)—
 (8)
Net cash provided by (used in) financing activities27
 (14)
Net cash used in discontinued operations—
 (17)
Effect of exchange rate changes on cash and cash equivalents—
 (1)
Net cash provided by financing activities—
 23
Net cash provided by discontinued operations—
 2
Net change in cash, cash equivalents and restricted cash(20) 12
799
 18
Cash, cash equivalents and restricted cash, beginning of period629
 72
358
 629
Cash, cash equivalents and restricted cash, end of period$609
 $84
$1,157
 $647
   
Supplemental disclosures of cash flow information from continuing operations:      
Non-cash investing and financing activities:      
Accrued purchases of property and equipment$13
 $15
$25
 $12
Issuance of shares to Manager15
 22
9
 8
Issuance of shares to independent directors1
 1
Leased assets obtained in exchange for new operating lease liabilities5
 1
Taxes paid, net6
 8
3
 1
Interest paid, net67
 51
21
 31
The following table provides a reconciliation of cash, cash equivalents and restricted cash from both continuing and discontinued operations reported within the consolidated condensed balance sheets that is presented in the consolidated condensed statements of cash flows:
As of June 30,As of March 31,
2019 20182020 2019
Cash and cash equivalents$573
 $53
$1,156
 $603
Restricted cash – current17
 11
Restricted cash - current1
 23
Cash, cash equivalents and restricted cash included in assets held for sale(1)
19
 20
—
 21
Total of cash, cash equivalents and restricted cash shown in the consolidated condensed statement of cash flows$609
 $84
$1,157
 $647
___________
(1)Represents cash, cash equivalents and restricted cash related to businesses classified as held for sale. See Note 3,4, “Discontinued Operations and Dispositions”, for further discussion.
TABLE OF CONTENTS

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Description of Business
Macquarie Infrastructure Corporation (MIC) is a Delaware corporation formed on May 21, 2015. MIC’s predecessor, Macquarie Infrastructure Company LLC, was formed on April 13, 2004. Macquarie Infrastructure Corporation, both on an individual entity basis and together with its consolidated subsidiaries, is referred to in these financial statements as the “Company” or “MIC”.
MIC is externally managed by Macquarie Infrastructure Management (USA) Inc. (the Manager) pursuant to the terms of a Management Services Agreement, subject to the oversight and supervision of the Board. The majoritySix of the eight members of the Board, and all of the members of each member of all Boardthe Company's Audit, Compensation and Nominating and Governance committees, isare independent and hashave no affiliation with Macquarie. The Manager is a member of the Macquarie Group of companies comprising Macquarie Group Limited and its subsidiaries and affiliates worldwide. Macquarie Group Limited is headquartered in Australia and is listed on the Australian Securities Exchange.
The Company owns its businesses through its direct wholly-owned subsidiary MIC Ohana Corporation, the successor to Macquarie Infrastructure Company Inc. The Company owns and operates a portfolio of infrastructure and infrastructure-like businesses that provide services to other corporate,corporations, government agencies and individual customers primarily in the U.S.United States (U.S.). The businessesCompany's operations are organized into four4 segments:
•
International-Matex Tank Terminals (IMTT):  a business providing bulk liquid terminallingstorage and handling services to third partiesthird-parties at 17 terminals in the U.S. and two2 in Canada;
•
Atlantic Aviation:  a provider of jet fuel, terminal, aircraft hangaring and other services primarily to owners and operators of general aviation (GA) jet aircraft at 70 airports throughout the U.S.;
•
MIC Hawaii:  comprising an energya company that processes and distributes gas and provides related services (Hawaii Gas) and several smaller businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii; and
•
Corporate and Other:  comprising MIC Corporate (holding company),company headquarters in New York City) and a shared services center and other smaller businesses.in Plano, Texas.
Effective October 1, 2018, the Bayonne Energy Center (BEC) and substantially all of the Company’s portfolio of solar and wind power generation businesses were classified as discontinued operations and the Company’s Contracted Power segment was eliminated. EffectiveAll periods reflect this change. In July 2019, the Company completed the sales of its wind power generating portfolio and all but one of the assets in its solar power generating portfolio. The sale of the remaining solar facility closed during September 2019. On January 1, 2019, the Company’sCompany also classified its majority interest in a renewable power development business was also classified as a discontinued operation, and thereafter a sale process related to this interest was commenced. The Company did not restate the prior period related to the commencement of the sale process as the disposition was deemed insignificant.of which closed in July 2019. A remaining relationship with a third-party developer of renewable power facilities has been reported as a component of Corporate and Other through the expiration of the relationship in July 2019. All prior comparable periods have been restated to reflect this change.
In July 2019, the Company completed the sales of its wind power generating portfolio, all but one of the assets in its the solar power generating portfolio and its majority interest in a renewable development business. The remainder of the operating solar portfolio is expected to close in August 2019. For additional information, see Note 3,4, “Discontinued Operations and Dispositions”,.
In October 2019, in addition to the active management of the existing portfolio of businesses, the Board resolved to simultaneously pursue strategic alternatives including potentially a sale of the Company or its operating businesses as a means of unlocking additional value for further discussions.stockholders. The Company has not set a timetable for completing any transaction and there can be no assurance that any transaction(s) will occur on favorable terms or at all.
2. Basis of Presentation
The unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United StatesU.S. and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP 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 consolidated balance sheet at December 31, 20182019 has been derived from audited financial statements but does not include all of the information and notes required by GAAP for complete financial statements. Certain reclassifications were made to the financial statements for the prior period to conform to current period presentation.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
2. Basis of Presentation –Presentation– (continued)


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, 20182019 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 20, 2019.25, 2020. Operating results for the quarter and six months ended June 30, 2019March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 20192020 or for any future interim periods.
Use of Estimates
The preparation of unaudited consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures related thereto at the date of the unaudited consolidated condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Management evaluates these estimates and assumptions on an ongoing basis.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited interim consolidated condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Financial Instruments
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 competitive interest rates assigned to these financial instruments. The fair values of the Company’s other debt instruments fall within level 1 or level 2 of the fair value hierarchy.
At June 30,December 31, 2019, the Company had $55$40 million of commercial paper included in cash and cash equivalents. Commercial paper consists of maturities of three months or less and are issued by counterparties with a Standard & PoorPoor's rating of A1+. or higher. The Company did not have any commercial paper at DecemberMarch 31, 2018.2020.
Income Taxes
The Company expectsfiles a consolidated federal income tax return that includes the financial results of IMTT, Atlantic Aviation and MIC Hawaii.  Pursuant to incura tax sharing agreement these businesses pay MIC an amount equal to the federal income tax each would pay on a standalone basis as if they were not part of the consolidated taxablefederal income from continuing operationstax return.  In addition, the businesses file income tax returns and may pay taxes in the state and local jurisdictions in which they operate. In calculating its state income tax provision, the Company has provided a valuation allowance for the year ending December 31, 2019, which will be fully offset by the Company’scertain state income tax net operating loss (NOL) carryforwards. carryforwards, the use of which is uncertain.
The Company believes that it willexpects to incur a federal taxable loss for the year ended December 31, 2020. Under the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act, any NOL generated in 2020 may be able to utilize allcarried back five years. The Company is currently assessing the impact of its federal prior year NOLs, which will begin to expire after 2029 and completely expire after 2035.this provision of the CARES Act.
Recently Issued Accounting Standards
In August 2018, the FASB issued ASU No. 2018-14, Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20): Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in ASU 2018-14 update disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in this update are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company will include appropriate disclosures related to defined benefit plans in accordance with the standard when it adopts the provisions of this ASU.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in ASU 2018-13 update the disclosure requirements on fair value measurements, including the consideration of costs and benefits. The disclosure modifications focused on Level 3 fair value measurements, and also eliminate the minimum disclosure requirements. The amendments in this update are effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this Update and delay adoption of the additional disclosures until their effective date. The Company is currently evaluatingadopted this ASU effective January 1, 2020 and had no impact to the impact of the adoption of this ASU.consolidated condensed financial statements.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

3. Impact of COVID-19
Impact to MIC Businesses
The impact of COVID-19 has varied across the Company’s businesses. The reduction in consumption of refined petroleum products associated with the slowing of economic activity, together with increased production of crude oil, has for the time being resulted in increased demand for storage of these products and driven improved performance at IMTT. Conversely, stay-at-home orders and limitations on travel have abruptly reduced demand for the products and services provided by Atlantic Aviation and MIC Hawaii. The petroleum storage industry has, in general, performed well during the pandemic while the travel and tourism industries, and the businesses reliant on them, have been significantly negatively affected.
The Company continues to closely monitor the effects of COVID-19 and is actively managing its response placing a priority on the health and safety of its employees, contractors, their families, customers and the broader communities in which it operates. MIC businesses are classified as essential services and remain operational and there have been no service disruptions related to the pandemic. The Company has implemented a pandemic response plan and has taken actions that allow it to continue to provide services in a safe and effective manner. Procedures implemented include: (i) a work from home policy for all employees that are able to do so; (ii) limiting operations to only those required to meet safety, regulatory or customer needs; (iii) enhanced cleaning and disinfection of facilities; (iv) limiting interactions between employees through social distancing; (v) increased usage of personal protective equipment; (vi) modification of shift schedules to reduce exposure between shifts; (vii) limiting IMTT terminals access to essential personnel; and (viii) requiring all individuals who enter the IMTT terminals submit to temperature scans.
The Company is also reviewing the benefits that may be available under the CARES Act. The Act includes provisions for federal grants or government-backed loans to businesses, employee benefits and retention credits, easing of certain income tax rules and a payroll tax deferral, among others. Several of these provisions may be applicable to the Company or to its operating businesses. Initial indications are that these are likely to be immaterial to the business’ results of operations.
In light of the ongoing impacts of the pandemic on the Company, the reduced level of economic activity and uncertainty around the timing of any recovery from the impact of the pandemic, the Company withdrew its financial guidance it had provided to the market on February 25, 2020. The Company has visibility into the financial performance of IMTT given the contracted nature of its storage revenue although these may be partially offset by reduction in revenue related to the provision of ancillary services including blending, packaging or throughput. The uncontracted nature of the majority of the revenue generated by each of Atlantic Aviation and MIC Hawaii means that the Company has extraordinarily limited visibility into the prospects for these businesses over the short to medium term. A relaxation of travel restrictions and stay-at-home orders will likely be an early indication that the Company could expect improved performance from Atlantic Aviation and MIC Hawaii, although the rate of any improvement is highly unpredictable given the inability to forecast the consumer response in a post-COVID-19 environment. Given the significant decline in jet fuel sales at Atlantic Aviation and gas sales at MIC Hawaii in April 2020, the Company does not currently anticipate meaningful improvement during the second quarter of 2020.
Impact to Liquidity and Balance Sheet
In light of the disruption in the global markets and the unpredictability of the sustained impact to its businesses caused by COVID-19, during March and April 2020, the Company took certain measures to preserve financial flexibility and increase the strength of its balance sheet and its liquidity position.
In March 2020, the Company suspended its cash dividend. The suspension will result in the retention of approximately $260 million should it remain in place through the end of 2020. In addition, in March 2020, the Company drew down a total of $874 million on revolving credit facilities including $599 million on its MIC holding company level revolving credit facility and $275 million on the Atlantic Aviation revolving credit facility. The proceeds were additive to the approximately $300 million of cash already on hand. Although the Company has and continues to have no immediate need for the additional liquidity, the drawdowns were deemed prudent to preserve financial flexibility.
On April 30, 2020, Atlantic Aviation fully repaid the outstanding balance on its revolving credit facility and effective May 4, 2020, reduced the commitments on this facility to $10 million. The $10 million revolving commitments are in place solely with respect to letters of credit currently outstanding (and such commitments will be reduced after each existing letter of credit expires or otherwise terminates). In connection with the repayment of the revolving credit facility and reduction in commitments, Atlantic Aviation and its lenders amended the credit agreement to remove the covenant requiring the Company to maintain a ratio of net debt/EBITDA at or below 5.5x over a trailing twelve-month period. Such financial covenant will not be applicable so long as letters of credit issued under the credit facility are cash collateralized and rolled over to stand-alone letter of credit facilities upon renewal.
TABLE OF CONTENTS
MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
3. Impact of COVID-19 – (continued)


With the steps taken to strengthen its financial position summarized above, the Company has no immediate need for additional capital. Subsequent to the repayment and reduction in commitments related to the Atlantic revolving credit facility, the Company has approximately $1,530 million of liquidity available comprised of cash on hand and undrawn balances on its revolving credit facilities. Over the next twelve months, the Company currently expects to fund its operations, service its debt, make state tax payments, fund essential maintenance capital expenditures, deploy growth capital and make required principal repayments using cash generated from the operations of its businesses and cash on hand.
At March 31, 2020, each of the operating businesses and MIC Corporate were in compliance with their financial covenants in accordance with its debt agreements.
Impact to Goodwill and Long-Lived Assets
Due to the decline in the Company’s market capitalization and the impact and uncertainty around COVID-19, the Company performed a triggering event analysis on its goodwill, property, equipment, land and leasehold improvements and intangible assets at a reportable segment level during the quarter ended March 31, 2020. Based on the Company’s interim assessment as of March 31, 2020, the Company determined that there were no triggering events that required an interim impairment analysis of its goodwill, property, equipment, land and leasehold improvements and intangible assets.
4. Discontinued Operations and Dispositions
The Company accounts for disposals that represent a strategic shift that should have or will have a major effect on operations as discontinued operations. The results of discontinued operations are reported in discontinued operations in the consolidated condensed statement of operations for current and prior periods commencing in the period in which the business or group of businesses meets the criteria of a discontinued operation. These results include any gain or loss recognized on disposal or adjustment of the carrying amount to fair value less cost to sell.
Bayonne Energy Center (BEC) Sale
On October 12, 2018, the Company concluded the sale of BEC and received cash of $657 million, net of the assumption of the outstanding debt balance of $244 million by the buyer and subject to post-closing working capital adjustments, resulting in a loss of approximately $17 million (excluding any transaction costs). During the year ended December 31, 2018, the Company incurred $9 million in professional fees in relation to this transaction, which was included in selling, general and administrative expenses in the consolidated statement of operations. The Company guaranteed its subsidiary’s payment and certain post-closing indemnity obligations under the purchase agreement.
Renewable Businesses Sale
During the fourth quarter of 2018, the Company commenced a sale process involving its portfolios of 142 megawatts (MW) (gross) of solar generation assets and 203 MW (gross) of wind generation assets, both of which had been designated as discontinued operations.assets. In AprilJuly 2019, the Company entered into agreements for the sale of these portfolios and completed the salesales of its wind power generating portfolio and all but one of the assets in its solar power generating portfolio in July 2019.portfolio. The remaindersale of the remaining solar facility closed during September 2019. Upon closing of the transactions involving the portfolios of operating solar portfolio is expected to close in August 2019.and wind assets, MIC deconsolidated $295 million of long-term debt. In July 2019, the Company also completed the sale of its majority interest in a renewable power development business. The aggregate gross proceeds to the Company from the above sales are expected to be approximately $276 million or approximately $210 million net of taxes and transaction related expenses. The Company may be entitled to a deferred purchase price from the sale of its interest in the renewable power development business based on the sale of certain projects by the purchaser in the future. Upon closing
The aggregate gross proceeds to the Company from the above sales were approximately $275 million, or approximately$223 million net of the transactions involving the portfolios of operating solartaxes and wind assets, MIC will deconsolidate $297 million of long-term debt.
transaction related expenses. Upon closing of the transactions, the Company estimatesrecorded a pre-tax gain of approximately $80$80 million excluding any transaction costs. CostThe Company incurred through date was approximately $3$10 million in professional fees in relation to these transactions, which is included in selling, generalSelling, General and administrative expensesAdministrative Expenses in the consolidated condensed statement of operations, and is expected to incur a total of approximately $10operations. In 2019, the Company recorded $42 million in professional fees uponcurrent tax expense primarily related to the conclusion of the sale in the third quarter of 2019.gain on sale.
The combination of the disposal of BEC in October 2018 and the commencement of the sale process of substantially all of its portfolio of solar and wind facilities represented a strategic shift for the Company that will have a major effect on operations. Accordingly, beginning in the fourth quarter of 2018, these businesses were classified as discontinued operations and the Contracted Power segment was eliminated. There was no write-down of the carrying amount of the solar and wind facility assets as a result of this change in classification. The assets and liabilities of the solar and wind facilities have been classified as held for sale in the consolidated condensed balance sheets up until the date those assets are disposed. All prior periods have been restated to reflect these changes.
During the first quarter of 2019, the Company also commenced the sale of its majority interest in its renewable power development business that was reported as part of the Company’s Corporate and Other segment in the fourth quarter of 2018. Accordingly, beginning in the first quarter of 2019, the results of this business waswere classified as discontinued operations and the assets and liabilities of this business have been classified as held for sale in the consolidated condensed balance sheets through the date of sale. The Company did not restate the prior period related to the commencement of the sale process involving its majority interest in a renewable power development business as the disposition is insignificant. A remaining relationship with a third-party developer of renewable power facilities has been reported as a component of Corporate and Other through the expiration of the relationship in July 2019.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
3.4. Discontinued Operations and Dispositions  – (continued)

The following is a summary of the assets and liabilities held for sale included in the Company’s consolidated condensed balance sheets related to its former Contracted Power segment as of June 30, 2019 and December 31, 2018 ($ in millions):
 June 30,
2019		 December 31, 2018
Assets   
Cash and cash equivalents$4
 $3
Restricted cash15
 14
Accounts receivable, net9
 9
Other current assets29
 5
Total current assets57
 31
Property, equipment, land and leasehold improvements, net639
 606
Operating lease assets, net20
 —
Intangible assets, net9
 9
Other noncurrent assets5
 2
Total assets$730
 $648
Liabilities   
Accounts payable and accrued expenses$11
 $7
Current portion of long-term debt22
 20
Notes payable34
 —
Other current liabilities1
 1
Total current liabilities68
 28
Long term debt, net of current portion274
 283
Operating lease liabilities20
 —
Other noncurrent liabilities26
 6
Total liabilities$388
 $317
Noncontrolling interests$138
 $141
Summarized financial information for discontinued operations included in the Company’s consolidated condensed statement of operations for the quarters and six monthsquarter ended June 30,March 31, 2019 and 2018 areis as follows ($ in millions):
 Quarter Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Product revenue$18
 $42
 $34
 $77
Cost of product sales(3) (6) (6) (12)
Selling, general & administrative expenses(3) (7) (7) (14)
Depreciation and amortization—
 (15) —
 (30)
Interest expense, net(7) (5) (12) (6)
Other expense, net—
 —
 (1) —
Net income from discontinued operations before income taxes$5
 $9
 $8
 $15
(Provision) benefit for income taxes(2) —
 —
 1
Net income from discontinued operations$3
 $9
 $8
 $16
Less: net loss attributable to noncontrolling interests(2) (2) (3) (32)
Net income from discontinued operations attributable to MIC$5
 $11
 $11
 $48

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
3. Discontinued Operations and Dispositions  – (continued)

Other Dispositions
The Company continues to review strategic options available, including with respect to certain other, smaller businesses in its portfolio in an effort to rationalize its portfolio and enhance the infrastructure characteristics of its businesses. Consistent with this, the Company sold (i) an environmental services business by IMTT in April 2018; (ii) its equity interests in projects involving two properties in May 2018; and (iii) the mechanical contractor business within MIC Hawaii in November 2018. Collectively, the sale of these business is insignificant and do not qualify for discontinued operations.
Prior to the execution of the sale agreement for the mechanical contractor business, the Company wrote-down the value of its investment in this business to reflect its underperformance during the third quarter of 2018. In total, the Company wrote-down approximately $30 million, including fixed assets and intangible assets of approximately $9 million, as well as reserving for certain contract related amounts recorded in other current liabilities and other expenses.
4. Implementation of ASU 2016-2
On February 25, 2016, FASB issued ASU No. 2016-2, Leases (Topic 842), which requires a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-2 requires all leases with an initial term greater than one year to be recognized on the balance sheet as a right-of-use (ROU) asset and a lease liability. The Company also serves as a lessor primarily through operating leases. The accounting for lessors has not fundamentally changed except for changes to conform and align existing guidance to the lessee guidance under ASU 2016-2, as well as to the revenue recognition guidance in ASC 606, Revenue.
The substantial population of the Company’s newly recognized ROU assets and lease liabilities relate to Atlantic Aviation’s operating leases of land, buildings and certain equipment. ROU assets represent the Company’s right to use an underlying asset for the lease term and the lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The considerations given for the incremental borrowing rate used in determining the present value of lease payments were the Company’s recent debt refinancing and amendment during 2018 and the Company’s credit rating.
Upon adoption of ASU No. 2016-2, the Company recorded ROU assets and corresponding lease liabilities of $351 million and $358 million, respectively, of which $19 million and $21 million related to asset and liabilities held for sale, respectively. The adoption of this ASU did not have a material impact on its consolidated condensed statements of operations, liquidity or debt covenant compliance under its current agreements.
The Company adopted the standard effective January 1, 2019 utilizing the modified retrospective method, which allowed the Company, where it was the lessee or lessor to recognize and measure leases at the beginning of the period of adoption without modifying the comparative period financial statements. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carryforward the historical lease classification. The Company also made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. Further, the standard did not have a material impact on the accounting and reporting requirements for existing operating leases where the Company is the lessor as it has elected the practical expedient whereby the Company will not separate a qualifying contract into its lease and non-lease components. The Company also determined that the accounting for sales taxes, certain lessor costs and certain requirements related to variable payments in contracts did not have a material effect on the consolidated condensed balance sheet, statement of operations or statement of cash flows.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

5. Leases
The Company has operating leases primarily for land, buildings, office space and certain office equipment under non-cancellable lease agreements. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The exercise of these lease renewal options is at the Company’s sole discretion.
For the quarter and six months ended June 30, 2019, the Company’s operating lease expenses recorded within the consolidated condensed statement of operations were as follows ($ in millions):
Income Statement Classification Quarter Ended
June 30, 2019		 Six Months Ended
June 30, 2019
Cost of services $1
 $1
Cost of product sales —
 1
Selling, general and administrative 12
 25
Total operating lease expense(1)
 $13
 $27
___________
(1)Includes leases less than one year, which are not significant.
Cash paid for operating leases are reported in operating activities on the consolidated condensed statement of cash flows.
At June 30, 2019, the weighted-average remaining operating lease term was 19 years and weighted average discount rate was approximately 9%. The following table represents the future maturities of lease liabilities at June 30, 2019 ($ in millions):
2019 remaining $23
2020 45
2021 43
2022 42
2023 41
Thereafter 538
Total lease payment $732
Less: interest (400)
Present value of lease liability $332

Future minimum lease commitments at December 31, 2018 ($ in millions):
2019 $48
2020 44
2021 41
2022 40
2023 39
Thereafter 461
Total $673
 Quarter Ended March 31, 2019
Product revenue$16
Cost of product sales(3)
Selling, general & administrative expenses(4)
Interest expense, net(5)
Other expense, net(1)
Net income from discontinued operations before income taxes$3
Benefit for income taxes2
Net income from discontinued operations$5
Less: net loss attributable to noncontrolling interests(1)
Net income from discontinued operations attributable to MIC$6

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

6.5. Income per Share
Following is a reconciliation of the basic and diluted income per share computations ($ in millions, except share and per share data):
Quarter Ended June 30, Six Months Ended June 30,Quarter Ended March 31,
2019 2018 2019 20182020 2019
Numerator:          
Net income from continuing operations attributable to MIC$6
 $27
 $70
 $67
$11
 $64
Interest expense attributable to 2.875% Convertible Senior Notes due July 2019, net
of taxes
—
 2
Interest expense attributable to 2.00% Convertible Senior Notes due October 2023,
net of taxes
—
 3
Diluted net income from continuing operations attributable to
MIC
$6
 $27
 $70
 $67
$11
 $69
Basic and diluted net income from discontinued operations
attributable to MIC
$5
 $11
 $11
 $48
$—
 $6
Denominator:          
Weighted average number of shares outstanding: basic86,073,372
 85,082,209
 85,973,308 84,952,55186,686,972 85,872,132
Dilutive effect of restricted stock unit grants(1)
25,739
 9,736
 24,698 9,58731,095 23,646
Dilutive effect of 2.875% Convertible Senior Notes due July 2019(2)
—
 4,383,316
Dilutive effect of 2.00% Convertible Senior Notes due October 2023—
 3,634,173
Weighted average number of shares outstanding: diluted86,099,111
 85,091,945
 85,998,006 84,962,13886,718,067 93,913,267
___________
(1) Dilutive effect of restricted stock unit grants includes grants to independent directors under the 2014 Independent Director
(1)Dilutive effect of restricted stock unit grants includes grants to independent directors under the 2014 Independent Directors' Equity Plan and certain employees of the Company's operating businesses under the 2016 Omnibus Employee Incentive Plan.
(2)On July 15, 2019, the Company fully repaid the outstanding balance on the 2.875% Convertible Senior Notes due July 2019 at maturity using cash on hand.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
5. Income per Share  – (continued)

 Quarter Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Income per share:       
Basic income per share from continuing operations
    attributable to MIC
$0.07
 $0.32
 $0.81
 $0.79
Basic income per share from discontinued operations
    attributable to MIC
0.06
 0.13
 0.13 0.57
Basic income per share attributable to MIC$0.13
 $0.45
 $0.94
 $1.36
Diluted income per share from continuing operations
    attributable to MIC
$0.07
 $0.32
 $0.81
 $0.79
Diluted income per share from discontinued operations
    attributable to MIC
0.06
 0.13
 0.13 0.57
Diluted income per share attributable to MIC$0.13
 $0.45
 $0.94
 $1.36
 Quarter Ended March 31,
 2020 2019
Income per share:   
Basic income per share from continuing operations attributable to MIC$0.13
 $0.75
Basic income per share from discontinued operations attributable to MIC—
 0.07
Basic income per share attributable to MIC$0.13
 $0.82
Diluted income per share from continuing operations attributable to MIC$0.13
 $0.73
Diluted income per share from discontinued operations attributable to MIC—
 0.06
Diluted income per share attributable to MIC$0.13
 $0.79


The following represents the weighted average potential dilutive shares of common stock that were excluded from the diluted income per share calculation:
 Quarter Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
2.875% Convertible Senior Notes due July 20194,408,660
 4,371,233
 4,396,058
 4,354,813
2.00% Convertible Senior Notes due October 20233,634,173
 3,634,173
 3,634,173
 3,629,489
Total8,042,833
 8,005,406
 8,030,231
 7,984,302
 Quarter Ended March 31,
 2020 2019
2.00% Convertible Senior Notes due October 20233,634,173
 —


6. Property, Equipment, Land and Leasehold Improvements
Property, equipment, land and leasehold improvements at March 31, 2020 and December 31, 2019 consisted of the following ($ in millions):
 March 31,
2020		 December 31, 2019
Land$319
 $319
Buildings40
 40
Leasehold and land improvements828
 813
Machinery and equipment2,962
 2,951
Furniture and fixtures53
 52
Construction in progress182
 143
 4,384
 4,318
Less: accumulated depreciation(1,164) (1,116)
Property, equipment, land and leasehold improvements, net$3,220
 $3,202

7. Intangible Assets and Goodwill
Intangible assets at March 31, 2020 and December 31, 2019 consisted of the following ($ in millions):
 March 31, 2020 December 31, 2019
Contractual arrangements$923
 $921
Non-compete agreements14
 14
Customer relationships352
 352
Trade names16
 16
Technology9
 9
 1,314
 1,312
Less: accumulated amortization(597) (583)
Intangible assets, net$717
 $729

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

7. Property, Equipment, Land and Leasehold Improvements
Property, equipment, land and leasehold improvements at June 30, 2019 and December 31, 2018 consisted of the following ($ in millions):
 June 30,
2019		 December 31, 2018
Land$319
 $319
Buildings40
 40
Leasehold and land improvements785
 770
Machinery and equipment2,821
 2,783
Furniture and fixtures46
 45
Construction in progress139
 113
 4,150
 4,070
Less: accumulated depreciation(1,023) (929)
Property, equipment, land and leasehold improvements, net$3,127
 $3,141

8. Intangible Assets and Goodwill  – (continued)
Intangible assets at June 30, 2019 and December 31, 2018 consisted of the following ($ in millions):
 June 30
2019		 December 31, 2018
Contractual arrangements$921
 $921
Non-compete agreements14
 14
Customer relationships353
 353
Trade names16
 16
Technology9
 9
 1,313
 1,313
Less: accumulated amortization(554) (524)
Intangible assets, net$759
 $789

The goodwill balance by reportable segments as of June 30, 2019March 31, 2020 is comprised of the following ($ in millions):
Goodwill acquired in business combinations, net of disposals$2,172
IMTT Atlantic Aviation MIC Hawaii Total
Goodwill acquired in business combinations, net of disposals, at
December 31, 2019
$1,430
 $619
 $123
 $2,172
Accumulated impairment charges(126)—
 (123) (3) (126)
Other(3)(2) (1) —
 (3)
Balance at June 30, 2019$2,043
Balance at December 31, 20191,428
 495
 120
 2,043
Goodwill related to 2020 acquisition—
 1
 —
 1
Balance at March 31, 2020$1,428
 $496
 $120
 $2,044

The Company tests for goodwill impairment at the reporting unit level on an annual basis on October 1st of each year and between annual tests if a triggering event indicates impairment. ThereThe Company monitors changing business conditions as well as industry and economic factors, among others, for events which could trigger the need for an interim impairment analysis.
During the quarter ended March 31, 2020, the Company performed a goodwill triggering event analysis of its reportable segments and the Company as a whole due to the decline in its market capitalization and the impact and uncertainty around COVID-19. At September 30, 2019, the Company performed an impairment analysis resulting in the fair value of its reporting units exceeding its aggregate book value by $2.2 billion, or 33%. Approximately $1.9 billion of the excess was attributed to Atlantic Aviation, approximately $280 million to Hawaii Gas and approximately $20 million to IMTT.
At IMTT, the Company looked at the impact of the supply and demand imbalance in the petroleum market and the significant decline in pricing on crude oil. In addition, COVID-19 and the resulting slowdown in economic activity, led to an oversupply of petroleum and other liquid products stored and handled by IMTT. These factors have increased the utilization levels at IMTT to the low to mid 90s percent and accelerated renewal on some customer contracts. Given the positive impacts to IMTT, the Company concluded there were no triggering events indicatingat IMTT.
At Atlantic Aviation and Hawaii Gas, using the market approach performed in the September 2019 impairment foranalysis, the Company performed sensitivities to EBITDA and concluded that it was not more likely than not that the book value of the businesses was greater than the fair value. The Company currently expects these businesses will begin to show business recovery starting within six months ended June 30, 2019 and 2018.therefore the decrease in business activity is not permanent. The Company concluded that at March 31, 2020, there were no triggering events at Atlantic Aviation and Hawaii Gas.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

9.8. Long-Term Debt
At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company’s consolidated long-term debt balance comprised of the following ($ in millions):
June 30,
2019		 December 31, 2018March 31,
2020		 December 31, 2019
IMTT$1,109
 $1,109
$1,109
 $1,109
Atlantic Aviation1,022
 1,025
1,287
 1,015
MIC Hawaii195
 196
194
 195
MIC Corporate736
 734
988
 388
Total3,062
 3,064
3,578
 2,707
Current portion(364) (361)(286) (12)
Long-term portion2,698
 2,703
3,292
 2,695
Unamortized deferred financing costs(1)
(45) (50)(39) (41)
Long-term portion less unamortized debt discount and deferred financing costs$2,653
 $2,653
$3,253
 $2,654
___________
(1)The weighted average remaining life of the deferred financing costs at June 30, 2019March 31, 2020 was approximately 65.1 years.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
8. Long-Term Debt  – (continued)

At June 30, 2019,March 31, 2020, the total undrawn capacity on the revolving credit facilities was $1,610$736 million excluding letters of credit outstanding of $49$12 million. On March 17, 2020, the Company drew down a total of $874 million on two revolving credit facilities. This comprised of $599 million on its $600 million holding company level revolving credit facility and $275 million on the $350 million revolving credit facility at Atlantic Aviation. Although the Company does not have immediate need for the additional liquidity, the drawdowns were deemed prudent to preserve financial flexibility in light of the disruption in the global markets and the unpredictability of the sustained impact to its businesses caused by COVID-19. See Atlantic Aviation below for discussions on subsequent repayment and amendment to its revolving credit facility.
MIC Corporate
At June 30, 2019 and DecemberMarch 31, 2018,2020, MIC Corporate had a$599 million of its $600 million senior secured revolving credit facility that remained undrawn.
2.875% Convertible Senior Notes due July 2019
At June 30, 2019 anddrawn. The proceeds of this borrowing may be used for working capital, general corporate or other purposes. The senior secured revolving credit facility was undrawn at December 31, 2018, the Company had $350 million aggregate principal outstanding on its five-year, 2.875% convertible senior notes due July 2019, which approximated its fair value. On July 15, 2019, at maturity, the Company fully repaid the outstanding balance on the convertible senior notes using cash on hand.2019.
2.00% Convertible Senior Notes due October 2023 (2.00% Convertible Senior Notes)
At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company had $386$389 million and $384$388 million, respectively, outstanding on its seven-year, 2.00% convertible senior notes due October 2023.Convertible Senior Notes. At June 30,March 31, 2020 and December 31, 2019, the fair value of the liability component of these convertible senior notesthe Notes was approximately $345 million.
On October 13, 2018, the Company increased$310 million and $370 million, respectively. At March 31, 2020, the conversion rate towas 9.0290 shares of common stock per $1,000 principal amount. The adjustment was made, in accordance with the indenture governing the senior notes, on the anniversary of the convertible senior notes issuance and reflects the impact of dividends paid by the Company.
The 2.00% Convertible Senior Notes due October 2023 consisted of the following ($ in millions):
June 30,
2019		 December 31, 2018March 31,
2020		 December 31, 2019
Liability Component:      
Principal$403
 $403
$403
 $403
Unamortized debt discount(17) (19)(14) (15)
Long-term debt, net of unamortized debt discount386
 384
389
 388
Unamortized deferred financing costs(7) (7)(6) (6)
Net carrying amount$379
 $377
$383
 $382
Equity Component$27
 $27
$27
 $27

For the quarters ended March 31, 2020 and 2019, the Company incurred interest expense of $3 million related to the 2.00% Convertible Senior Notes, of which $1 million primarily related to the amortization of debt discount.
IMTT
At March 31, 2020 and December 31, 2019, IMTT had $600 million of fixed rate senior notes, $509 million of Tax-Exempt Bonds, and $600 million in revolving credit facilities that remained undrawn. At March 31, 2020 and December 31, 2019, the fair value of the fixed rate senior notes was approximately $540 million and $635 million, respectively.
Atlantic Aviation
At March 31, 2020 and December 2019, Atlantic Aviation had $1,012 million and $1,015 million, respectively, outstanding on its seven-year senior secured first lien term loan facility. Atlantic Aviation also had a five-year, $350 million senior secured first lien revolving credit facility that was undrawn at December 31, 2019. During the quarter ended March 31, 2020, Atlantic Aviation borrowed $275 million on its revolving credit facility.
On April 30, 2020, Atlantic Aviation fully repaid the outstanding balance on its revolving credit facility and effective May 4, 2020, reduced the commitments on this facility to $10 million solely with respect to letters of credit currently outstanding. The amendment of the facility eliminates any leverage-based maintenance covenant on the Atlantic Aviation term loan as long as the letters of credit issued under the facility are cash collateralized and rolled over to standalone letters of credit facilities upon renewal.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
9.8. Long-Term Debt  – (continued)

For the quarter and six month periods ended June 30, 2019 and 2018, the Company recognized $3 million and $6 million in interest expense, respectively, related to the 2.00% Convertible Senior Notes due October 2023, of which $1 million and $2 million, respectively, related to the amortization of debt discount.
IMTT
In December 2018, IMTT entered into the Second Amendment to Credit Agreement (the Amendment) which, among other things, extended the maturity date of its $600 million revolving credit facilities from May 21, 2020 to December 5, 2023 and extended the maturity date of its $509 million Tax Exempt Bonds purchase facility from May 21, 2022 to December 5, 2025. In connection with the Amendment, supplemental indentures were entered into with respect to the $509 million of outstanding Tax Exempt Bonds. The Tax Exempt Bonds were reissued and sold to certain lenders under the IMTT Credit Agreement pursuant to the bond purchase facility. The supplemental indentures provide for (i) an interest rate on the Tax Exempt Bonds of 80% of one month LIBOR plus applicable margin plus 0.45% and (ii) an extension of the date on which holders have the right to require repurchase of the Tax Exempt Bonds from May 21, 2022 to December 5, 2025.
At June 30, 2019, IMTT also had $600 million of fixed rate senior notes outstanding, that had a fair value of approximately $620 million, and $600 million in revolving credit facilities that was undrawn at June 30, 2019 and December 31, 2018.
Atlantic Aviation
In December 2018, Atlantic Aviation refinanced its debt and entered into a credit agreement (the New AA Credit Agreement) that provides for a seven-year $1,025 million senior secured first lien term loan facility and a five-year, $350 million senior secured first lien revolving credit facility, which was undrawn at June 30, 2019 and December 31, 2018.
MIC Hawaii
At June 30,March 31, 2020 and December 2019, Hawaii Gas had $100 million of fixed rate senior notes outstanding, that had a fair value of approximately $100 million and $105 million, andrespectively. Hawaii Gas also had an $80 million term loan outstanding. The remaining balance of $15 million related to a term loan for the solar facilities in Hawaii. Hawaii Gas also hasoutstanding and a $60 million revolving credit facility that was undrawn at June 30, 2019March 31, 2020 and December 31, 2018.2019.
In addition, MIC Hawaii's solar facilities had a term loan outstanding of $14 million and $15 million at March 31, 2020 and December 31, 2019, respectively.
10.9. Derivative Instruments and Hedging Activities
Interest Rate Contracts
The Company and certain of 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 agreements, primarily using interest rate swaps and from time to time using interest rate caps, to manage fluctuations in cash flows resulting from interest rate risk on a portion of its debt with a variable-rate component. Interest rate swaps change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the interest rate swaps, the Company receives variable interest rate payments and makes fixed interest rate payments, thereby creating the equivalent of fixed-rate debt for the portion of the debt that is swapped.
At June 30, 2019,March 31, 2020, the Company had $3,079$3,592 million of current and long-term debt, of which $946$865 million was economically hedged with interest rate contracts, $1,452$1,103 million was fixed rate debt and $681$1,624 million was unhedged. The Company does not use hedge accounting. All movements in the fair value of the interest rate derivatives are recorded directly through earnings.
Commodity Price HedgesContracts
The risks associated with fluctuations in the prices that Hawaii Gas, a business within the MIC Hawaii reportable segment, pays for liquefied petroleum gas (LPG) is principally a result of market forces reflecting changes in supply and demand for LPG and other energy commodities. Hawaii Gas’ gross margin (revenue less cost of product sales excluding depreciation and amortization) is sensitive to changes in propaneLPG supply costs and Hawaii Gas may not always be able to pass through product cost increases fully or on a timely basis, particularly when product costs rise rapidly. In order to reduce the volatility of the business’ LPG market price risk, Hawaii Gas has used and expects to continue to use over-the-counter commodity derivative instruments including price swaps.instruments. Hawaii Gas does not use commodity derivative instruments for speculative or trading purposes. Over-the-counter derivative commodity instruments used by Hawaii Gas to hedge forecasted purchases of LPG are generally settled at expiration of the contract.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
10. Derivative Instruments and Hedging Activities – (continued)

Financial Statement Location Disclosure for Derivative Instruments
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 use 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 assets and liabilities within the consolidated condensed balance sheets at June 30, 2019March 31, 2020 and December 31, 20182019 were ($ in millions):
  Assets (Liabilities) at Fair Value
Balance Sheet Classification June 30,
2019		 December 31, 2018
Fair value of derivative instruments – current assets $4
 $11
Fair value of derivative instruments – noncurrent assets 4
 15
Total derivative contracts – assets $8
 $26
Fair value of derivative instruments – other current liabilities $(6) $(3)
Fair value of derivative instruments – other noncurrent liabilities (1) —
Total derivative contracts – liabilities $(7) $(3)
  Assets (Liabilities) at Fair Value
Balance Sheet Classification March 31,
2020		 December 31, 2019
Fair value of derivative instruments - other current assets $—
 $3
Fair value of derivative instruments - other noncurrent assets —
 2
Total derivative contracts - assets $—
 $5
Fair value of derivative instruments - current liabilities $(13) $(7)
Fair value of derivative instruments - other noncurrent liabilities (2) —
Total derivative contracts – liabilities $(15) $(7)

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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
9. Derivative Instruments and Hedging Activities – (continued)

The Company’s hedging activities for the quarters ended March 31, 2020 and six months ended June 30, 2019 and 2018 and the related location within the consolidated condensed statements of operations were ($ in millions):
Income Statement Classification 
Amount of (Loss) Gain Recognized
in Consolidated Condensed Statements of Operations
 Quarter Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
Interest expense – interest rate caps $(4) $2
 $(6) $7
Interest expense – interest rate swaps (4) 2
 (6) 7
Cost of product sales – commodity swaps (6) 3
 (5) 1
Total $(14) $7
 $(17) $15
Income Statement Classification 
Amount of (Loss) Gain Recognized in
Consolidated Condensed Statements of Operations for the Quarters Ended March 31,
 2020 2019
Interest expense - interest rate caps $(3) $(2)
Interest expense - interest rate swaps (6) (2)
Cost of product sales - commodity swaps (5) 1
Total $(14) $(3)

11.10. Stockholders' Equity
2016 Omnibus Employee Incentive Plan (2016 Plan)
On May 18, 2016, the Company adopted the 2016 Omnibus Employee Incentive Plan (Plan).Plan. The 2016 Plan provides for the issuance of equity awards to attract, retain, and motivate employees, consultants and others who perform services for the Company and its subsidiaries. Under the 2016 Plan, the Compensation Committee determines the persons who will receive awards, the time at which they are granted and the terms of the awards. Type of awards include stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, cash-based awards and other stock-based awards. Shares of common stock underlying forfeited awards and the shares withheld for the employee portion for taxes on vested awards are available for future grants. On March 28, 2019, the Company’s Board adopted Amendment No. 1 to the 2016 Plan (the Amendment), which was approved in May 2019 by the Company’s shareholdersstockholders at the 2019 Annual Meeting of Shareholders. The Amendment, among other things, increased the number of shares of common stock available for grant under the 2016 Plan from 500,000 to 1,500,000.
Macquarie Infrastructure Corporation Short TermShort-Term Incentive Plan (STIP) for MIC Operating Businesses —  Restricted Stock Units (RSUs)
During the first quarter of 2019, the Company established the STIP to provide cash and stock-based incentives to eligible employees of its operating businesses under the Company’s 2016 Omnibus Employee Incentive Plan. In general, the cash component comprises approximately 75% of any incentive award and is paid in a lump-sum. The remaining 25% of any incentive award is in the form of RSUs representing an interest in the common stock of the Company. RSUs are granted following assessment of performance against Key Performance Indicators post the one-year performance period and vest in two equal annual installments following the grant date. Through June 30, 2019, no
The following represents unvested STIP RSU grants through March 31, 2020:
 STIP Grants
 
Number of RSUs
(in units)
 
Weighted Average Grant-Date Fair Value
(per share)
Unvested balance at December 31, 2019—
 $—
Granted55,661 24.50
Unvested balance at March 31, 202055,661 $24.50

At March 31, 2020, the grant date fair value of RSUs under the STIP had been made.unvested awards was approximately $1 million, of which an insignificant amount of compensation expense was recorded for the quarter ended March 31, 2020. At March 31, 2020, the unrecognized compensation cost related to unvested RSU awards is expected to be recognized over a weighted-average period of 1.5 years.
From time to time, the Company can issue RSUs to award or retain employees, or to attract new employees, or other reasons by providing special grants of RSUs. Vesting dates and terms can vary for each award at the discretion of the Company.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11.10. Stockholders’ Equity – (continued)

The following represents unvested Special RSUs grantedRSU grants through 2019:March 31, 2020:
 2019 Special Grants
 
Number of RSUs
(in units)
 
Weighted Average Grant-Date Fair Value
(per share)
Unvested at December 31, 2018—
 $—
Granted6,067 40.30
Unvested at June 30, 20196,067 $40.30
 Special Grants
 
Number of RSUs
(in units)
 
Weighted Average Grant-Date Fair Value
(per share)
Unvested balance at December 31, 2018—
 $—
Granted6,067 40.30
Unvested balance at December 31, 20196,067 40.30
Vested(1,100) 40.30
Unvested balance at March 31, 20204,967 $40.30


Compensation expense related to the Special RSU grants for the quarter and six months ended June 30, 2019March 31, 2020 was not significant. At June 30, 2019, the costsignificant and is expected to be recognized over a weighted-average period of 1.6 years.1.0 years.
Macquarie Infrastructure Corporation Long TermLong-Term Incentive Plan (LTIP) for MIC Operating Businesses —  Performance Stock Units (PSUs)
During the first quarter of 2019, the Company established the LTIP pursuant to which it may make stock-based incentive awards to eligible employees of its operating businesses. The awards would take the form of PSUs convertible into common stock of the Company as authorized under its 2016 Omnibus Employee Incentive Plan. The number of PSUs a participant may be awarded reflects a target level of performance by the participant. The participant may be awarded more (over performance limit) or less (threshold limit) than the target number of PSUs based on their achievements relative to Key Performance Indicators during the three-year performance period. Following finalization of the participant’s performance review at the end of the third year of the program, the Company may award the PSUs.
The following represents unvested LTIP PSU grants through June 30, 2019March 31, 2020 at the target level of performance:
2019 LTIP (at Target)LTIP (at Target)
Number of PSUs
(in units)
 
Weighted Average Grant-Date Fair Value
(per share)
Number of PSUs
(in units)
 
Weighted Average Grant-Date Fair Value
(per share)
Unvested at December 31, 2018—
 $—
Unvested balance at December 31, 2018—
 $—
Granted134,671 $39.59
134,671 39.59
Forfeited(5,794) $39.26
(9,477) 39.26
Unvested at June 30, 2019128,877 $39.61
Unvested balance at December 31, 2019125,194 39.62
Forfeited(2,952) 39.26
Unvested balance at March 31, 2020122,242 $39.63

At June 30, 2019,March 31, 2020, depending upon actual performance, the number of PSUs to be issued will vary from zero0 to 237,011,225,400, net of forfeitures. At June 30, 2019,March 31, 2020, the grant date fair value of the unvested awards was approximately $5 million, reflecting target performance by all participants. During the quarter and six months ended June 30, 2019,March 31, 2020, the Company recognized approximately $1 millionan insignificant amount of compensation expense related to the LTIP. At June 30, 2019,March 31, 2020, the unrecognized compensation cost related to unvested PSU awards was approximately $4$4 million at target level performance. If target level performance is achieved, the unrecognized cost is expected to be recognized over a weighted-average period of 2.51.8 years.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11.10. Stockholders’ Equity – (continued)

Accumulated Other Comprehensive Loss, net of taxes
The following represents the changes and balances to the components of accumulated other comprehensive loss, net of taxes, for the six monthsquarters ended June 30,March 31, 2020 and 2019 and 2018 ($ in millions):
Post-Retirement Benefit Plans, net of taxes 
Translation Adjustment, net of taxes(1)
 Total Stockholders’ Accumulated Other Comprehensive Loss, net of taxesPost-Retirement Benefit Plans, net of taxes 
Translation Adjustment, net of taxes(1)
 Total Stockholders’ Accumulated Other Comprehensive Loss, net of taxes
Balance at December 31, 2017$(20) $(10) $(30)
Balance at December 31, 2018$(16) $(14) $(30)
Balance at March 31, 2019$(16) $(14) $(30)
     
Balance at December 31, 2019$(25) $(12) $(37)
Translation adjustment—
 (3) (3)—
 (3) (3)
Balance at June 30, 2018$(20) $(13) $(33)
     
Balance at December 31, 2018$(16) $(14) $(30)
Translation adjustment—
 2
 2
Balance at June 30, 2019$(16) $(12) $(28)
Balance at March 31, 2020$(25) $(15) $(40)

___________
(1)Translation adjustment is presented net of tax expense of $1 million and tax benefit of $1 million for the six monthsquarter ended June 30, 2019 and 2018, respectively.March 31, 2020.
12.11. Reportable Segments
At June 30, 2019,March 31, 2020, the Company’s businesses consisted of four4 reportable segments: IMTT, Atlantic Aviation, MIC Hawaii and Corporate and Other.
Effective October 1, 2018, BEC and substantially all of the Company’s portfolio of solar and wind power generation businesses were classified as discontinued operations and the Company’s Contracted Power segment was eliminated. EffectiveAll periods reflect this change. In July 2019, the Company completed the sales of its wind power generating portfolio and all but one of the assets in its solar power generating portfolio. The sale of the remaining solar facility closed during September 2019. On January 1, 2019, the Company’sCompany also classified its majority interest in a renewable power development business was also classified as a discontinued operation, and thereafter a sale process related to this interest was commenced. The Company did not restate the prior period related to the commencement of the sale process as the disposition was deemed insignificant.of which closed in July 2019. A remaining relationship with a third-party developer of renewable power facilities has been reported as a component of Corporate and Other through the expiration of the relationship in July 2019. All prior comparable periods have been restated to reflect this change.
In July 2019, the Company completed the sales of its wind power generating portfolio, all but one of the assets in its solar power generating portfolio and its majority interest in a renewable development business. The remainder of the operating solar portfolio is expected to close in August 2019. For additional information, see Note 3,4, “Discontinued Operations and Dispositions”, for further discussions..
IMTT
IMTT provides bulk liquid storage, handling and other services in North America through 17 terminals located in the United States, oneU.S., 1 terminal in Quebec, Canada and one1 partially owned terminal in Newfoundland, Canada. IMTT derives the majority of its revenue from storage and handling of refined petroleum products, various chemicals, renewable fuels, and vegetable and tropical oils. Based on storage capacity, IMTT operates one of the largest third-party bulk liquid terminals businesses in the United States.U.S.
Revenue from IMTT is generated from the following sources and recorded in service revenue.
Lease.  These are contracts with predominantly non-cancelable terms for access to and the use of storage capacity at the various terminals owned and operated by the business. At June 30, 2019, these contracts had a revenue weighted average remaining contract life of 1.9 years. These contracts generally require payments in exchange for the provision of storage capacity and product movement (throughput) throughout their term based on a fixed rate per barrel of capacity leased. A majority of the contracts include terms that adjust the fixed rate annually for inflation. These contracts are accounted for as operating leases and the related lease income is recognized in service revenue over the term of the contract based upon the rate specified. Revenue is recognized in accordance with ASC 842, Leases.
Terminal services.  Revenue from the provision of ancillary services includes activities such as heating, mixing and blending, and is recognized as the related services are performed (point in time) based on contract rates. Other terminal services also include payments received prior to the related services being performed or as a reimbursement for specific fixed asset additions or
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
12. Reportable Segments  – (continued)

improvements related to a customer’s contract and are recorded as deferred revenue and ratably recognized as revenues over the contract term.
Other.  Other revenue is comprised primarily of environmental response service activities through the date of sale and railroad operations. These revenues are generally recognized at a point in time as services are performed.
TABLE OF CONTENTS
MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11. Reportable Segments  – (continued)

Atlantic Aviation
Atlantic Aviation derives the majority of its revenue from jet fuel delivery services and from other airport services, including de-icing and aircraft hangar rental. All of the revenue of Atlantic Aviation is generated at airports in the U.S. The business currently operates at 70 airports.
Revenue from Atlantic Aviation is recorded in service revenue. Services provided by Atlantic Aviation include:
Fuel.  Revenue from jet fuel sales areis recognized at a point in time as services are performed. Fuel services are recorded net of volume discounts and rebates.
Hangar.  Hangar rentals includes both month-to-month rentals and rentals from longer term contracts. Hangar rental revenue excludes transient customer overnight hangar usage (see Other FBO services below).
Other FBO services.  Other fixed based operation (FBO) services consist principally of de-icing services, landing, concession, transient overnight hangar usage, terminal use and fuel distribution fees that are recognized as sales of services. Revenue from these transactions is recorded based on the service fee earned.
MIC Hawaii
MIC Hawaii primarily comprises ofcomprises: (i) Hawaii Gas, Hawaii’s only government-franchised gas utility and an unregulated liquefied petroleum gasLPG distribution business providing gas and related services to commercial, residential and governmental customers; and (ii) controlling interests in two2 solar facilities on Oahu.
Revenue from the Hawaii Gas business is generated from the distribution and sales of synthetic natural gas (SNG), liquefied petroleum gas (LPG),LPG, liquefied natural gas (LNG) and renewable natural gas (RNG). Revenue is primarily a function of the volumeamount of SNG, LPG, LNG and RNG consumed by customers and the price per British Thermal Unit or gallon charged to customers. Revenue levels, without organic growth, will generally track global commodity prices, namely petroleum and natural gas, as its products are derived from these commodities.
Revenue from Hawaii Gas is recorded in product revenue. Hawaii Gas recognizes revenue when products are delivered. Sales of gas to customers are billed on a monthly-cycle basis. Earned but unbilled revenue is accrued and included in accounts receivable and revenue. This is based on the amount of gas that has been delivered but not billed to customers from the latest meter reading or billed delivery date to the end of an accounting period. The related costs are charged to expense.
Renewable Businesses
The renewables projects within MIC Hawaii and discontinued operations sell substantially all of the electricity generated at a fixed price to primarily electric utility customers pursuant to long-term (typically 20 – 25 years) power purchase agreements (PPAs). of 20 years. Substantially all of the PPAs are accounted for as operating leases and have no minimum lease payments and all of the lease income under these leases is recorded within product revenue when the electricity is delivered.
Corporate and Other
Corporate and Other comprises of MIC Corporate (holding company),company headquarters in New York City) and a shared services center and other smaller businesses.in Plano, Texas.
All of the MIC business segments are managed separately and management has chosen to organize the Company around the distinct products and services offered. Selected information by segment is presented in the following tables.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
12.11. Reportable Segments  – (continued)

Revenue from external customers for the Company’s consolidated reportable segments were ($ in millions):
 Quarter Ended June 30, 2019
 IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Intercompany Adjustments Total Reportable Segments
Service revenue         
Terminal services$22
 $—
 $—
 $—
 $22
Lease95
 —
 —
 —
 95
Fuel—
 173
 —
 —
 173
Hangar—
 23
 —
 —
 23
Other2
 40
 —
 —
 42
Total service revenue$119
 $236
 $—
 $—
 $355
Product revenue         
Lease$—
 $—
 $1
 —
 $1
Gas—
 —
 57
 —
 57
Other—
 —
 3
 —
 3
Total product revenue$—
 $—
 $61
 $—
 $61
Total revenue$119
 $236
 $61
 $—
 $416


Quarter Ended June 30, 2018Quarter Ended March 31, 2020
IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Intercompany Adjustments Total Reportable SegmentsIMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Total Reportable Segments
Service revenue                
Terminal services$21
 $—
 $—
 $—
 $21
$37
 $—
 $—
 $37
Lease102
 —
 —
 (1) 101
93
 —
 —
 93
Fuel—
 174
 —
 —
 174
—
 150
 —
 150
Hangar—
 22
 —
 —
 22
—
 25
 —
 25
Construction—
 —
 14
 —
 14
Other6
 37
 1
 —
 44
2
 49
 —
 51
Total service revenue$129
 $233
 $15
 $(1) $376
$132
 $224
 $—
 $356
Product revenue                
Lease$—
 $—
 $1
 $—
 $1
$—
 $—
 $1
 $1
Gas—
 —
 57
 —
 57
—
 —
 57
 57
Other—
 —
 2
 —
 2
—
 —
 2
 2
Total product revenue$—
 $—
 $60
 $—
 $60
$—
 $—
 $60
 $60
Total revenue$129
 $233
 $75
 $(1) $436
$132
 $224
 $60
 $416

TABLE OF CONTENTS
MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
12. Reportable Segments  – (continued)

 Six Months Ended June 30, 2019
 IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Intercompany Adjustments Total Reportable Segments
Service revenue         
Terminal services$46
 $—
 $—
 $—
 $46
Lease230
 —
 —
 (1) 229
Fuel—
 354
 —
 —
 354
Hangar—
 46
 —
 —
 46
Other4
 94
 —
 —
 98
Total service revenue$280
 $494
 $—
 $(1) $773
Product revenue         
Lease$—
 $—
 $2
 $—
 $2
Gas—
 —
 117
 —
 117
Other—
 —
 6
 —
 6
Total product revenue$—
 $—
 $125
 $—
 $125
Total revenue$280
 $494
 $125
 $(1) $898
Six Months Ended June 30, 2018Quarter Ended March 31, 2019
IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Intercompany Adjustments Total Reportable SegmentsIMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Intercompany Adjustments Total Reportable Segments
Service revenue                  
Terminal services$47
 $—
 $—
 $—
 $47
$24
 $—
 $—
 $—
 $24
Lease206
 —
 —
 (2) 204
135
 —
 —
 (1) 134
Fuel—
 351
 —
 —
 351
—
 181
 —
 —
 181
Hangar—
 44
 —
 —
 44
—
 23
 —
 —
 23
Construction—
 —
 31
 —
 31
Other15
 85
 2
 —
 102
2
 54
 —
 —
 56
Total service revenue$268
 $480
 $33
 $(2) $779
$161
 $258
 $—
 $(1) $418
Product revenue                  
Lease$—
 $—
 $2
 $—
 $2
$—
 $—
 $1
 $—
 $1
Gas—
 —
 117
 —
 117
—
 —
 60
 —
 60
Other—
 —
 5
 —
 5
—
 —
 3
 —
 3
Total product revenue$—
 $—
 $124
 $—
 $124
$—
 $—
 $64
 $—
 $64
Total revenue$268
 $480
 $157
 $(2) $903
$161
 $258
 $64
 $(1) $482

In accordance with FASB ASC 280, Segment Reporting, the Company has disclosed earnings before interest, taxes, depreciation and amortization (EBITDA) excluding non-cash items as a key performance indicator for the businesses. EBITDA excluding non-cash items is reflective of the businesses’ ability to effectively manage the volumeamount of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of its businesses. The Company defines EBITDA excluding non-cash items as net income (loss) or earnings — the most comparable GAAP measure — before interest, taxes, depreciation and amortization and non-cash items including impairments, unrealized derivative gains and losses, adjustments for other non-cash items and pension expense reflected in the statements of operations.
EBITDA excluding non-cash items for the Company’s consolidated reportable segments from continuing operations is shown in the tables below ($ in millions). Allocations of corporate expenses, intercompany fees and the tax effect have been excluded as they are eliminated in consolidation.
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
12.11. Reportable Segments  – (continued)

Quarter Ended June 30, 2019Quarter Ended March 31, 2020
IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Corporate and Other Total Reportable SegmentsIMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Corporate and Other Total Reportable Segments
Net income (loss)$9
 $9
 $2
 $(14) $6
$18
 $14
 $3
 $(24) $11
Interest expense, net15
 22
 2
 6
 45
15
 19
 3
 5
 42
Provision (benefit) for income taxes4
 4
 1
 (7) 2
7
 5
 2
 (5) 9
Depreciation29
 15
 4
 —
 48
31
 16
 4
 —
 51
Amortization of intangibles4
 11
 —
 —
 15
3
 11
 —
 —
 14
Fees to Manager-related party—
 —
 —
 7
 7
—
 —
 —
 7
 7
Other non-cash expense3
 1
 5
 —
 9
Other non-cash expense, net3
 1
 3
 —
 7
EBITDA excluding non-cash items$64
 $62
 $14
 $(8) $132
$77
 $66
 $15
 $(17) $141
 Quarter Ended June 30, 2018
 IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Corporate and Other Total Reportable Segments
Net income (loss)$19
 $20
 $4
 $(16) $27
Interest expense, net11
 4
 2
 8
 25
Provision (benefit) for income taxes8
 8
 2
 (6) 12
Depreciation29
 16
 2
 —
 47
Amortization of intangibles4
 11
 2
 —
 17
Fees to Manager-related party—
 —
 —
 11
 11
Other non-cash expense (income)3
 1
 (1) (1) 2
EBITDA excluding non-cash items$74
 $60
 $11
 $(4) $141
 Six Months Ended June 30, 2019
 IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Corporate and Other Total Reportable Segments
Net income (loss)$50
 $34
 $10
 $(24) $70
Interest expense, net28
 41
 5
 10
 84
Provision (benefit) for income taxes20
 13
 4
 (11) 26
Depreciation58
 30
 8
 —
 96
Amortization of intangibles8
 22
 —
 —
 30
Fees to Manager-related party—
 —
 —
 15
 15
Other non-cash expense4
 1
 7
 1
 13
EBITDA excluding non-cash items$168
 $141
 $34
 $(9) $334
 Six Months Ended June 30, 2018
 IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Corporate and Other Total Reportable Segments
Net income (loss)$44
 $53
 $7
 $(37) $67
Interest expense, net19
 4
 3
 17
 43
Provision (benefit) for income taxes18
 20
 3
 (11) 30
Depreciation58
 29
 7
 —
 94
Amortization of intangibles8
 23
 2
 —
 33
Fees to Manager-related party—
 —
 —
 24
 24
Other non-cash expense5
 1
 5
 —
 11
EBITDA excluding non-cash items$152
 $130
 $27
 $(7) $302
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MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
12. Reportable Segments  – (continued)


 Quarter Ended March 31, 2019
 IMTT 
Atlantic
Aviation
 
MIC
Hawaii
 Corporate and Other Total Reportable Segments
Net income (loss)$41
 $25
 $8
 $(10) $64
Interest expense, net13
 19
 3
 4
 39
Provision (benefit) for income taxes16
 9
 3
 (4) 24
Depreciation29
 15
 4
 —
 48
Amortization of intangibles4
 11
 —
 —
 15
Fees to Manager-related party—
 —
 —
 8
 8
Other non-cash expense, net1
 —
 2
 1
 4
EBITDA excluding non-cash items$104
 $79
 $20
 $(1) $202
Reconciliations of total reportable segments’ EBITDA excluding non-cash items to consolidated net income from continuing operations before income taxes were ($ in millions):
Quarter Ended June 30, Six Months Ended June 30,Quarter Ended March 31,
2019 2018 2019 20182020 2019
Total reportable segments EBITDA excluding non-cash items$132
 $141
 $334
 $302
$141
 $202
Interest income1
 —
 4
 —
—
 3
Interest expense(46) (25) (88) (43)(42) (42)
Depreciation(48) (47) (96) (94)(51) (48)
Amortization of intangibles(15) (17) (30) (33)(14) (15)
Fees to Manager-related party(7) (11) (15) (24)(7) (8)
Other expense, net(9) (2) (13) (11)(7) (4)
Total consolidated net income from continuing operations
before income taxes
$8
 $39
 $96
 $97
$20
 $88

Capital expenditures, on a cash basis, for the Company’s reportable segments were ($ in millions):
Quarter Ended June 30, Six Months Ended June 30,Quarter Ended March 31,
2019 2018 2019 20182020 2019
IMTT$38
 $15
 $64
 $24
$55
 $26
Atlantic Aviation14
 17
 27
 36
11
 13
MIC Hawaii5
 5
 10
 11
5
 5
Corporate and other1
 9
 1
 15
Total capital expenditures of reportable segments$58
 $46
 $102
 $86
$71
 $44

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11. Reportable Segments  – (continued)

Property, equipment, land and leasehold improvements, net, goodwill and total assets for the Company’s reportable segments and its reconciliation to consolidated total assets were ($ in millions):
Property, Equipment,
Land and Leasehold
Improvements, net
 Goodwill Total Assets
Property, Equipment,
Land and Leasehold
Improvements, net
 Total Assets
June 30,
2019		 December 31, 2018 June 30,
2019		 December 31, 2018 June 30,
2019		 December 31, 2018March 31,
2020		 December 31, 2019 March 31,
2020		 December 31, 2019
IMTT$2,252
 $2,249
 $1,427
 $1,427
 $4,109
 $4,020
$2,337
 $2,323
 $4,098
 $4,172
Atlantic Aviation564
 565
 496
 496
 2,021
 1,676
568
 567
 1,967
 2,060
MIC Hawaii302
 300
 120
 120
 527
 501
302
 301
 519
 537
Corporate and other9
 27
 —
 —
 396
 599
13
 11
 1,042
 92
Total assets of reportable segments$3,127
 $3,141
 $2,043
 $2,043
 $7,053
 $6,796
Assets held for sale—
 —
 —
 —
 730
 648
Total consolidated assets$3,127
 $3,141
 $2,043
 $2,043
 $7,783
 $7,444
$3,220
 $3,202
 $7,626
 $6,861

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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

13.12. Long-Term Contracted Revenue
Long-term contracted revenue consists of revenue from future minimum lease revenue accounted in accordance with ASC 842, Leases, and estimated revenue to be recognized in the future related to performance conditions that are unsatisfied or partially unsatisfied accounted for in accordance with ASC 606, Revenue from Contracts with Customers. The recognition pattern for contracts that are considered leases is generally consistent with the recognition pattern that would apply if such contracts were not accounted for as leases and were instead accounted for under ASC Topic 606. Accordingly, the Company has combined the required lessor disclosures for future lease income with the disclosures for contracted revenue in the table below. The following long-term contracted revenue were in existence at June 30, 2019March 31, 2020 ($ in millions):
Lease
Revenue
(ASC 842)
 
Contract
Revenue
(ASC 606)
 
Total
Long-Term
Revenue
Lease
Revenue
(ASC 842)
 
Contract
Revenue
(ASC 606)
 
Total
Long-Term
Revenue
2019 remaining$149
 $37
 $186
2020183
 44
 227
2020 remaining$251
 $59
 $310
2021100
 30
 130
181
 39
 220
202262
 25
 87
103
 31
 134
202338
 18
 56
70
 22
 92
202428
 9
 37
Thereafter103
 18
 121
115
 19
 134
Total$635
 $172
 $807
$748
 $179
 $927

The above table does not include the future minimum lease revenue from the renewable businesses within the MIC Hawaii reportable segment. The payments from these leases are considered variable as they are based on the output of the underlying assets (i.e. energy generated).
14.13. Related Party Transactions
Management Services
At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Manager held 12,849,43513,467,156 shares and 12,477,43813,253,791 shares, respectively, of the Company’s common stock. Pursuant to the terms of the Third Amended and Restated Management Services Agreement (Management Services Agreement), the Manager may sell these shares at any time. Under the Management Services Agreement, the Manager, at its option, may reinvest base management fees and performance fees, if any, in shares of the Company. The Manager’s holdings at March 31, 2020 represented 15.51% of the Company's outstanding common stock.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Related Party Transactions  – (continued)

Since January 1, 2018,2019, the Company paid the Manager cash dividends on shares held for the following periods:
Declared Period Covered $ per
Share		 Record Date Payable Date Cash Paid to Manager
(in millions)		 Period Covered $ per
Share		 Record Date Payable Date Cash Paid to Manager
(in millions)
February 14, 2020 Fourth quarter 2019 $1.00
 March 6, 2020 March 11, 2020 $13
October 29, 2019 Third quarter 2019 1.00
 November 11, 2019 November 14, 2019 13
July 30, 2019 Second quarter 2019 $1.00
 August 12, 2019 August 15, 2019 
(1) 

 Second quarter 2019 1.00
 August 12, 2019 August 15, 2019 13
April 29, 2019 First quarter 2019 1.00
 May 13, 2019 May 16, 2019 $13
 First quarter 2019 1.00
 May 13, 2019 May 16, 2019 13
February 14, 2019 Fourth quarter 2018 1.00
 March 4, 2019 March 7, 2019 13
 Fourth quarter 2018 1.00
 March 4, 2019 March 7, 2019 13
October 30, 2018 Third quarter 2018 1.00
 November 12, 2018 November 15, 2018 12
July 31, 2018 Second quarter 2018 1.00
 August 13, 2018 August 16, 2018 11
May 1, 2018 First quarter 2018 1.00
 May 14, 2018 May 17, 2018 6
February 19, 2018 Fourth quarter 2017 1.44
 March 5, 2018 March 8, 2018 8
___________
(1)The amount of dividend payable to the Manager for the second quarter of 2019 will be determined on August 12, 2019, the record date.
Under the Management Services Agreement, subject to the oversight and supervision of the Company’s Board, the Manager is responsible for and oversees the management of the Company’s operating businesses. In addition, the Manager has the right to appoint the Chairman of the Board, subject to minimum equity ownership, and to assign, or second, to the Company, two of its employees to serve as chief executive officer and chief financial officer of the Company and seconds or makes other personnel available as required.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
14. Related Party Transactions  – (continued)

In accordance with the Management Services Agreement, the Manager is entitled to a monthly base management fee based primarily on the Company’s market capitalization, and potentially a quarterly performance fee based on total shareholderstockholder returns relative to a U.S. utilities index. Currently, the Manager has elected to reinvest the future base management fees and performance fees, if any, in additional shares. For the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, the Company incurred base management fees of $7 million and $15$8 million, respectively, compared with $11 million and $24 million for the quarter and six months ended June 30, 2018, respectively. The Company did not incur any performance fees for the quarterquarters ended March 31, 2020 and six month periods ended June 30, 2019 and 2018.2019.
Effective November 1, 2018, the Manager waived two elements of the base management fee to which it was entitled under the terms of the Management Services Agreement. In effect, the waivers cap the base management fee at 1% of the Company’s equity market capitalization less any cash balances at the holding company. The waiver applies only to the calculation of the base management fees and not to the remainder of the Management Services Agreement. The Manager reserves the right to revoke the waivers and revert to the prior terms of the Management Services Agreement, subject to providing the Company with not less than a one year notice. A revocation of the waiver would not trigger a recapture of previously waived fees. As part of the Disposition Agreement entered into between the Company and its Manager, discussed below, the Manager has agreed not to revoke the waiver during the term of the Disposition Agreement.
Disposition Agreement
To facilitate the Company’s pursuit of strategic alternatives, the Company announced that it has entered into a Disposition Agreement (Disposition Agreement) with its Manager on October 30, 2019 (see Exhibit 10.3 of the Form 10-K filed on February 25, 2020). Outside of the Disposition Agreement, the Company has limited ability to terminate the Management Services Agreement. The Disposition Agreement provides for the termination of the Company’s external management relationship with its Manager as to any businesses, or substantial portions thereof, that are sold (including if the Company itself is sold). In connection therewith, the Company will make a payment to its Manager of approximately 2.9% to 6.1% of the net proceeds generated in the event of such sales, subject to a minimum amount of payments for all sales in the aggregate in the event of a Qualifying Termination Event (QTE) of (i) $50 million plus (ii) 1.5% multiplied by proceeds in excess of $500 million in the aggregate. A ‘‘QTE’’ means (i) the sale of the Company or (ii) a transaction or series of transactions resulting in a third party or parties acquiring all the assets of the Company. The Disposition Agreement provides that the Management Services Agreement will terminate upon the occurrence of a QTE or upon mutual agreement of the parties. If the Management Services Agreement has not been terminated prior to the sixth anniversary of the Disposition Agreement, its Manager and its independent directors will engage in reasonable, good faith discussions regarding a potential internalization or other framework for a termination of the Management Services Agreement.
The Disposition Agreement provides that if a QTE occurs on or prior to January 1, 2022 (subject to extension under certain circumstances for up to six months thereafter), then the Company will pay its Manager an additional payment of $25 million. The Disposition Agreement further provides that its Manager will receive a make-whole payment following a QTE, to the extent that the aggregate management fees paid to its Manager through the date of the QTE were less than (i) $20 million per year for the two years following the date of the Disposition Agreement and (ii) $10 million per year for any period thereafter. In addition, following a QTE, its Manager will be paid in cash all accrued and unpaid management fees, including fees of $8.5 million waived in accordance with the Limited Waiver, which waived fees would have been payable through October 31, 2019. The Manager has agreed not to exercise its right to retract the Limited Waiver for periods after October 31, 2019 and prior to the termination of the
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Related Party Transactions  – (continued)

Disposition Agreement. The Disposition Agreement will terminate on the earlier to occur of (i) the termination of the Management Services Agreement and (ii) the sixth anniversary of the agreement, subject to extension under certain circumstances if a transaction is pending.
The unpaid portion of the base management fees and performance fees, if any, at the end of each reporting period is included in Due to Manager-related party in the consolidated condensed balance sheets. The following table shows the Manager's reinvestment of its base management fees and performance fees, if any, in shares:
Period 
Base Management
Fee Amount
($ in millions)
 
Performance
Fee Amount
($ in millions)
 
Shares
Issued
2019 Activities:       
Second quarter 2019 $7
 $—
 192,103
(1) 
First quarter 2019 8
 —
 184,448
 
        
2018 Activities:       
Fourth quarter 2018 $9
 $—
 220,208
 
Third quarter 2018 12
 —
 269,286
 
Second quarter 2018 11
 —
 277,053
 
First quarter 2018 13
 —
 265,002
 
Period 
Base Management
Fee Amount
($ in millions)
 
Performance
Fee Amount
($ in millions)
 
Shares
Issued
2020 Activities:       
First quarter 2020 $7
 $—
 181,617
(1) 
        
2019 Activities:       
Fourth quarter 2019 $9
 $—
 208,881
 
Third quarter 2019 8
 —
 201,827
 
Second quarter 2019 7
 —
 192,103
 
First quarter 2019 8
 —
 184,448
 
___________
(1)The Manager elected to reinvest all of the monthly base management fees for the secondfirst quarter of 20192020 in new primary shares. The Company issued 192,103181,617 shares for the quarter ended June 30, 2019,March 31, 2020, including 64,60239,206 shares that were issued in July 2019April 2020 for the June 2019March 2020 monthly base management fee.
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 base 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, income taxes, audit and legal fees, acquisitions and dispositions and its compliance with applicable laws and regulations. During the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, the Manager charged the Company $331,000$288,000 and $577,000,$246,000, respectively, for reimbursement of out-of-pocket expenses compared with $141,000 and $409,000, respectively, for quarter and six months ended June 30, 2018.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 sheets.
Macquarie Group - Other Services
The Company uses the resources of the Macquarie Group with respect to a range of advisory, procurement, insurance, hedging, lending and other services. Engagements involving members of the Macquarie Group are reviewed and approved by the Audit Committee of the Company’s Board. Macquarie Group affiliates are engaged on an arm’s length basis and frequently as a member of a syndicate of providers whose other members establish the terms of the interaction.
Advisory Services
The Macquarie Group, and wholly-owned subsidiaries within the Macquarie Group, including Macquarie Bank Limited (MBL) and Macquarie Capital (USA) Inc. (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
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
14. Related Party Transactions  – (continued)

fees are recorded in stockholders’ 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.
Long-Term Debt
In January 2018, theThe Company completed the refinancing and upsizing of itshas a $600 million senior secured revolving credit facility to $600 million from $410 million and extendedat the maturity through January 3, 2022. As part of the refinancing and upsizing, MIHI LLC’s $50 million commitment was replaced by a $40 million commitment from Macquarie Capital Funding LLC. As part of the closing, the Company paidholding company level where Macquarie Capital Funding LLC $80,000 in closing fees.
has a $40 million commitment. For the quarterquarters ended March 31, 2020 and six months ended June 30, 2019, the Company incurred interest expense of $41,000$87,000 and $75,000,$34,000, respectively, related to Macquarie Capital Funding LLC’s portion of the MIC senior secured revolving credit facility compared with $130,000 and $237,000 for the quarter and six months ended June 30, 2018, respectively.facility.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Related Party Transactions  – (continued)

Other Transactions
In May 2018, the Company sold its equity interest in projects involving two properties to Macquarie Infrastructure and Real Assets, Inc. (MIRA Inc.), an affiliate of the Manager, for their cost of $27 million. The Company retained the right to 20% of any gain on a subsequent sale by MIRA Inc. to a third party of a more than 50% interest in either or both of the projects.
From time to time, indirect subsidiaries within Macquarie Group may enter into contracts with IMTT to lease capacity. TheFor the quarter ended March 31, 2020, revenue from these contracts fortotaled approximately $1 million.
Other Related Party Transactions
In the quarter and six months ended June 30, 2019 were insignificant.March 31, 2020, the Company incurred $25,000 for advisory services from a former Board member.
15.14. Legal Proceedings and Contingencies
The Company and its subsidiaries are subject to legal proceedings arising in the ordinary course of business. In management’s opinion, the Company has adequate legal defenses and/or insurance coverage with respect to the eventuality of such actions and does not believe the outcome of any pending legal proceedings will be material to the Company’s financial position or result of operations.
Shareholder Litigation
On April 23, 2018, a complaint captioned City of Riviera Beach General Employees Retirement System v. Macquarie Infrastructure Corp., et al., Case 1:18-cv-03608 (VSB), was filed in the United States District Court for the Southern District of New York. A substantially identical complaint captioned Daniel Fajardo v. Macquarie Infrastructure Corporation, et al., Case No. 1:18-cv-03744 (VSB) was filed in the same court on April 27, 2018. Both complaints asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder on behalf of a putative class consisting of all purchasers of MIC common stock between February 22, 2016 and February 21, 2018. The named defendants in both cases were the Company and four current or former officers of MIC and one of its subsidiaries, IMTT Holdings LLC. The complaints in both actions allege that the Company and the individual defendants knowingly made material misstatements and omitted material facts in its public disclosures concerning the Company’s and IMTT’s business and the sustainability of the Company’s dividend to stockholders. On January 30, 2019, the Court issued an opinion and order consolidating the two cases, appointing Moab Partners, L.P. (Moab) as Lead Plaintiff and approving Moab’s selection of lead counsel. On February 20, 2019, Moab filed a consolidated class action complaint. In addition to the claims noted above, the consolidated class action complaint also asserts claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 relating to the Company’s November 2016 secondary public offering of common stock. The consolidated amended complaint also adds Macquarie Infrastructure Management (USA) Inc., Barclays Capital Inc. and seven additional current or former officers or directors of MIC as defendants. On April 22, 2019, the Company and the other defendants filed motions to dismiss the consolidated class action complaint in its entirety, with prejudice. Briefing concluded on July 22, 2019. The Company intends to continue to vigorously contest the claims asserted, which the Company believes are entirely meritless.
On August 9, 2018, a shareholder derivative complaint captioned Phyllis Wright v. Liam Stewart, et al., Case No. 1:18-cv-07174 (VSB), was filed in the United States District Court for the Southern District of New York. A substantially identical complaint captioned Raymond Greenlee v. James Hooke, et al., Case No. 1:18-cv-09339 (VSB) was filed in the same court on October 12, 2018. A third and substantially similar shareholder derivative complaint captioned Kim Johnson v. Liam Stewart, et al., Case No. 1:18-cv-011062 (VSB) was filed in the same court on November 27, 2018. Each of the shareholder derivative complaints assert derivative claims on behalf of the Company against certain of its current and former officers and directors arising out of the same subject matter at issue in the City of Riviera Beach and Fajardo complaints discussed above. The causes of action asserted include violation of Section 14(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, waste of corporate assets, unjust enrichment, and aiding and abetting breach of fiduciary duty. A motion to consolidate the three actions is currently pending.
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
15. Legal Proceedings and Contingencies – (continued)

Proceedings in the Wright, Greenlee and Johnson cases are otherwise stayed pending resolution of the motions to dismiss the securities class actions described above. The Company expects that the named defendants will vigorously contest the claims asserted in the Wright, Greenlee and Johnson complaints.
16. Subsequent Events
Dividend
On July 30, 2019, the Board declared a dividend of $1.00 per share for the quarter ended June 30, 2019, which is expected to be paid on August 15, 2019 to holders of record on August 12, 2019.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings
There have been no changes to legal proceedings set forth under Part I, Item 3 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, filed with the SEC on February 20, 2019,25, 2020, except for the following:
IMTT Bayonne Terminal - Department of Labor
IMTT received a letter, dated February 21, 2020, from the United States Department of Labor Occupational Safety and Health Administration (OSHA) concerning an investigation involving violations of the Occupational Safety and Health Act of 1970. Under the letter, IMTT was issued nine violations related to a safety event that occurred at its Bayonne, New Jersey terminal in August 2019, which may result in penalties up to $122,000. IMTT is in discussions with OSHA to settle the citation and implement any corrective actions necessary.
Shareholder Litigation
On April 23, 2018, a complaint captioned City of Riviera Beach General Employees Retirement System v. Macquarie Infrastructure Corp., et al., Case 1:18-cv-03608 (VSB), was filed in the United States District Court for the Southern District of New York. A substantially identical complaint captioned Daniel Fajardo v. Macquarie Infrastructure Corporation, et al., Case No. 1:18-cv-03744 (VSB) was filed in the same court on April 27, 2018. Both complaints asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder on behalf of a putative class consisting of all purchasers of MIC common stock between February 22, 2016 and February 21, 2018. The named defendants in both cases were the Company and four current or former officers of MIC and one of its subsidiaries, IMTT Holdings LLC. The complaints in both actions allege that the Company and the individual defendants knowingly made material misstatements and omitted material facts in its public disclosures concerning the Company’s and IMTT’s business and the sustainability of the Company’s dividend to stockholders. On January 30, 2019, the Court issued an opinion and order consolidating the two cases, appointing Moab Partners, L.P. (Moab) as Lead Plaintiff and approving Moab’s selection of lead counsel. On February 20, 2019, Moab filed a consolidated class action complaint. In addition to the claims noted above, the consolidated class action complaint also asserts claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 relating to the Company’s November 2016 secondary public offering of common stock. The consolidated amended complaint also adds Macquarie Infrastructure Management (USA) Inc., Barclays Capital Inc. and seven additional current or former officers or directors of MIC as defendants. On April 22, 2019, the Company and the other defendants filed motions to dismiss the consolidated class action complaint in its entirety, with prejudice. Briefing concluded on July 22, 2019. The Company intends to continue to vigorously contest the claims asserted, which the Company believes are entirely meritless.
On August 9, 2018, a shareholder derivative complaint captioned Phyllis Wright v. Liam Stewart, et al., Case No. 1:18-cv-07174 (VSB), was filed in the United States District Court for the Southern District of New York. A substantially identical complaint captioned Raymond Greenlee v. James Hooke, et al., Case No. 1:18-cv-09339 (VSB) was filed in the same court on October 12, 2018. A third and substantially similar shareholder derivative complaint captioned Kim Johnson v. Liam Stewart, et al., Case No. 1:18-cv-011062 (VSB) was filed in the same court on November 27, 2018. Each of the shareholder derivative complaints assert derivative claims on behalf of the Company against certain of its current and former officers and directors arising out of the same subject matter at issue in the City of Riviera Beach and Fajardo complaints discussed above. The causes of action asserted include violation of Section 14(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, waste of corporate assets, unjust enrichment, and aiding and abetting breach of fiduciary duty. A motion to consolidate the three actions is currently pending. Proceedings in the Wright, Greenlee and Johnson cases are otherwise stayed pending resolution of the motions to dismiss the securities class actions described above. The Company expects that the named defendants will vigorously contest the claims asserted in the Wright, Greenlee and Johnson complaints.

Atlantic Aviation - Stewart LLC- Environmental Notices of Violation
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On June 27, 2019, the New York State Department of Environmental Conservation issued three Notices of Violation (NOV) to Atlantic Aviation Stewart LLC (AASL), an indirect subsidiary of the Company, alleging violations of petroleum and chemical bulk storage regulations in connection with the discharge of firefighting foam concentrate at AASL’s FBO operation at the New York Stewart International Airport. It is estimated that penalties and fines on account of the NOVs will exceed $100,000.
Item 1A. Risk Factors
There have been no material changes to the risk factors set forth under Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, filed with the SEC on February 20, 2019.25, 2020, except as follows:
COVID-19 is adversely impacting our businesses and could have a material adverse effect on our results of operations, financial condition, liquidity, capital expenditures and the trading value of our securities.
COVID-19 has negatively impacted the global economy, disrupted financial markets, disrupted supply chains, significantly reduced travel and interrupted business activity. Federal, state and local governments have implemented mitigation measures including travel restrictions, stay-at-home orders, border closings, restrictions on public gatherings, social distancing, shelter-in-place restrictions and limitations on business operations. Although the Company’s businesses are considered essential services, these government actions have adversely affected the ability of our employees, customers, suppliers and other business partners to conduct business activities, and could do so for an extended period of time. This could have a material adverse effect on our results of operations, financial condition, liquidity, capital expenditures and the trading value of our securities. In particular, risks include:
•
Impact on demand for our services and supply chain disruption. Restrictions on travel, public gatherings and stay-at-home orders have significantly reduced the demand for Atlantic Aviation’s services, including jet fuel sales and ancillary services. Tourism in Hawaii has significantly declined, resulting in the scaling back or closure of hotels and restaurants, which has significantly reduced the volume of gas required by Hawaii Gas’ commercial and industrial customers. In addition, disruptions in the supply chain could result in delay or an inability to obtain products, supplies and services needed in our operations.
•
Impact on employees and on cybersecurity. Many of our management and office personnel are working remotely, and many employees at our facilities are working reduced hours, are on furlough and/or are abiding by social distancing procedures. In addition, our operations may be negatively affected by employee illness and quarantines. Further, our management team has been required to devote large amounts of time and resources to mitigate the impact of the pandemic, thereby diverting attention from other Company priorities. In addition, the large scale remote working environment increases the risk that our information technology systems could be breached.
•
Impact on liquidity and financial metrics. The ongoing effect of the pandemic on our business has impacted our liquidity position and the cost of and ability to access funds from financial institutions and the capital markets, has caused a deterioration in our financial metrics or the business environment that has negatively impacts our credit ratings, and could make it more difficult to meet the financial covenants in our credit facilities.
•
Impact on capital expenditures and costs. We are reviewing and deferring certain non-essential capital expenditures, including certain growth capital expenditures. If we are unable to deploy growth capital as planned, our long term development prospects and ability to meet competitive challenges could be negatively impacted. We are also experiencing an increase in costs as a result of the Company’s pandemic response measures.
•
Impact on our customers' ability to pay. The pandemic's impact on the financial condition and operating results of our customers, and on the business environment generally, may result in delayed payments from customers and uncollectable accounts receivable, and could also result in the bankruptcy, insolvency or cessation of the business of certain of our customers.
•
Impact on trading and asset value. COVID-19 has resulted in volatile trading markets and meaningfully lower stock prices for many companies, including the trading price of our common stock. In addition, the ongoing impact of the pandemic on our businesses could cause an impairment to goodwill or long-lived assets of the Company.
•
Impact on our pursuit of strategic alternatives. In October 2019, we announced that we were pursuing strategic alternatives, which could result in, among other things, a sale of one or more of our businesses or potentially of the Company. COVID-19 has adversely affected economies and financial markets worldwide, impacted our stock price, affected the availability of financing, restricted travel and business activity, and adversely impacted the businesses of parties that may be interested in engaging in a strategic transaction. These effects have resulted in a slowdown in our process of pursuing strategic alternatives, and may make it more difficult for us to complete any strategic transactions at favorable valuations or at all.
The effects of COVID-19 on our businesses may continue for an extended period, and the ultimate impact on the Company of the pandemic will depend on future developments which are highly uncertain and cannot be predicted including, without limitation, the duration and severity of the pandemic, the duration of governmental mitigation measures, the effectiveness of the actions taken to contain and treat the disease, and the length of time it takes for normal economic and operating conditions to resume.
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COVID-19 could negatively impact IMTT’s business.
Although IMTT has recently experienced an increase in storage demand, the sustained impacts of COVID-19 could result in decreased demand for certain products that IMTT stores and for certain ancillary services (such as heating, blending and transportation) that IMTT provides.  In addition, IMTT’s New York Harbor and Lower Mississippi River operations are located in geographic areas that have been severely affected by the pandemic, and IMTT could be negatively impacted by employee illness, quarantines and governmental orders and health directives put in place as mitigation measures. COVID-19 could adversely impact the operating results, financial condition and liquidity of IMTT.
COVID-19 has significantly reduced demand for Atlantic Aviation’s products and services.
The governmental travel restrictions, quarantines, shelter-in-place orders and prohibitions on large gatherings, as well as the deterioration in economic conditions, have significantly reduced GA activity and the demand for Atlantic Aviation’s products and services. At the end of March and April 2020, Atlantic experienced a decline in jet fuel sales of approximately 80%. The sustained impact of COVID-19 could have a material adverse effect on the results of operations, financial condition and liquidity of Atlantic Aviation.
COVID-19 has significantly reduced demand for Hawaii Gas’ products and services, and Hawaii Gas may experience supply chain disruption.
COVID-19 has greatly reduced the number of visitors to Hawaii, which has significantly reduced the demand for gas from Hawaii Gas' commercial customers, particularly hotels and restaurants. Hawaii Gas’ synthetic natural gas (SNG) plant is subject to minimum operating thresholds, and if demand declines such that the SNG plant is not producing the requisite SNG daily volume, the plant will be required to stop production until minimum thresholds are again met. While Hawaii Gas has developed and tested alternative plans to continue delivery of gas to its utility customers in the event production at the SNG plant is stopped, there can be no assurances that these alternative plans would operate as designed or be as effective and efficient from an operating or financial performance perspective as operating the SNG plant to produce gas. The sustained impact of COVID-19 could have a material adverse effect on the results of operations, financial condition and liquidity of MIC Hawaii.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.Atlantic Aviation FBO Inc. (“AA FBO”), a wholly-owned indirect subsidiary of the Company, entered into the First Amendment (the “Amendment”), dated as of April 29, 2020, among AA FBO, Atlantic Aviation FBO Holdings LLC (“Holdings”), the direct parent of AA FBO, JPMorgan Chase Bank, N.A., as administrative agent and the several lenders party thereto, to the Credit Agreement, dated as of December 6, 2018 (the “AA Credit Agreement”), among AA FBO, Holdings, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the several lenders party thereto. Pursuant to the Amendment, effective May 4, 2020, revolving commitments were reduced to $10 million under the revolving credit facility portion of the AA Credit Agreement, and in connection with the Amendment on April 30, 2020, AA FBO repaid in full the outstanding revolving credit facility. Prior to the reduction in the revolving credit facility size, the debt provided for in the AA Credit Agreement was comprised of a $350 million revolving credit facility and a $1,012 million term loan. Such term loan remains outstanding. The remaining $10 million revolving commitments are staying in place solely with respect to the existing letters of credit currently outstanding under the revolving credit facility (and such commitments will be reduced after each existing letter of credit expires or otherwise terminates). The Amendment also provides that the covenant in the AA Credit Agreement by AA FBO to maintain its ratio of net debt/EBITDA at or below 5.5x over a trailing twelve-month period will not be applicable so long as letters of credit issued under the AA Credit Agreement are cash collateralized and rolled over to standalone letter of credit facilities upon renewal.
Certain of the lenders under the AA Credit Agreement and the Amendment and their related entities have provided, and may in the future provide, commercial and investment banking or other financial services to the Company and its businesses, for which they have received, and may in the future receive, customary compensation and expense reimbursement.
Item 6. Exhibits
An exhibit index has been filed as part of this Report on page E-1 and is incorporated herein by reference.
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EXHIBIT INDEX
NumberDescription
3.1
Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 21, 2015).
3.2
Amended and Restated Bylaws of the Registrant, dated as of February 18, 2016 (incorporated by reference to Exhibit 3.2 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 23, 2016).
10.1*
First Amendment, dated as of April 29, 2020, to the Credit Agreement, dated as of December 6, 2018, among Atlantic Aviation FBO Inc., Atlantic Aviation FBO Holdings Inc., JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto.
31.1*
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
31.2*
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32.1**
Section 1350 Certification of Chief Executive Officer
32.2**
Section 1350 Certification of Chief Financial Officer
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104The cover page from the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL and contained in Exhibit 101.
___________
*Filed herewith.
**Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
MACQUARIE INFRASTRUCTURE CORPORATION
(Registrant)
   
Dated: July 31, 2019May 5, 2020By:/s/ Christopher Frost
  Name: Christopher Frost
  Title:  Chief Executive Officer
   
Dated: July 31, 2019May 5, 2020By:/s/ Liam Stewart
  Name: Liam Stewart
  Title:  Chief Financial Officer
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EXHIBIT INDEX
NumberDescription
3.1
Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 21, 2015).
3.2
Amended and Restated Bylaws of the Registrant, dated as of February 18, 2016 (incorporated by reference to Exhibit 3.2 of the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 23, 2016).
10.1
Amendment No. 1 to Macquarie Infrastructure Corporation 2016 Omnibus Employee Incentive Plan (incorporated by reference to Appendix A of the Registrant's Definitive Proxy Statement filed with the SEC on April 2, 2019).
31.1*
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
31.2*
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32.1**
Section 1350 Certification of Chief Executive Officer
32.2**
Section 1350 Certification of Chief Financial Officer
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
___________
*Filed herewith.
**Furnished herewith.

E-1E-2