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Macquarie Infrastructure (MIC)

Filed: 4 Aug 20, 7:05am

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, 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 ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.001 per shareMICNew 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 No
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 No
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 FilerAccelerated Filer  
Non-accelerated FilerSmaller Reporting CompanyEmerging 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
There were 87,021,514 shares of common stock, with $0.001 par value, outstanding at July 31, 2020.


MACQUARIE INFRASTRUCTURE CORPORATION
TABLE OF CONTENTS
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 MIC.
i

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, 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.
ii

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. Six of the eight members of our Board, and all of the members of each of our Audit, Compensation and Nominating and Governance Committees, are independent and have 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 corporations, government agencies and individual customers primarily in the United States (U.S.). Our businesses are organized into four segments:
International-Matex Tank Terminals (IMTT):  a business providing bulk liquid storage and handling services to third-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 operators of general aviation (GA) jet aircraft at 70 airports throughout the U.S.;
MIC Hawaii:  comprising a 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 headquarters in New York City) and a shared services center in Plano, Texas.
Effective October 1, 2018, the Bayonne Energy Center (BEC) and substantially all of our portfolio of solar and wind power generation businesses were classified as discontinued operations and our Contracted Power segment was eliminated. All periods reflect this change. In September 2019, we completed the last of the sales of our solar and wind power generation businesses included in discontinued operations including our majority interest in a renewable power development business. A relationship with a third-party developer of renewable power facilities was reported as a component of Corporate and Other through the expiration of the relationship in July 2019.
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.
We measure EBITDA excluding non-cash items as it reflects our businesses’ ability to effectively manage the amount 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 to assess our ability to fund acquisitions, invest in growth projects, reduce or repay indebtedness and/or return capital to shareholders.
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” 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 1.8 years at June 30, 2020.
At Atlantic Aviation, our focus is on the sale of jet fuel and other services to operators of GA aircraft through our fixed based operations (FBOs). 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, 2019, MIC has paid or declared the following dividends:
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. Given the uncertainty stemming from COVID-19, however, we are working to increase our balance sheet strength and liquidity by, among other things, retaining any excess cash flow. Therefore, on April 2, 2020, we suspended our quarterly cash dividend.
Our Board regularly reviews our dividend policy. In determining whether to issue dividends in the future, our Board will take into account such matters as the ability of our businesses to generate Free Cash Flow, 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 stockholders or by its subsidiaries to the Company, and any other factors that it deems relevant, subject to maintaining a prudent level of 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.
Strategic Alternatives
On October 31, 2019, we announced our intention to pursue strategic alternatives for our Company and have since been actively engaged in processes that could result in the sale of our Company or one or more of our operating businesses. We continue to believe that these efforts will maximize value for stockholders and we are moving the processes forward, although recent volatility in the capital markets, ongoing disruption in business and economic conditions and the limitations on travel and other restrictions on interactions imposed by responses to COVID-19 are expected to slow these processes. The measures undertaken to date, including the suspension of the quarterly 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 SEC on February 25, 2020). Outside of this agreement, we do not have the ability to terminate the Third Amended and Restated Management Services Agreement (Management Services Agreement) between us and our Manager other than in limited circumstances. With this agreement, the Management Services Agreement will terminate 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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Results of Operations
Consolidated
Impact 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 has 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 significantly reduced demand for the products and services provided by our Atlantic Aviation and MIC Hawaii businesses. While GA flight activity began to recover during the second quarter from the low levels recorded in late March and April, the near absence of tourism in Hawaii continues to limit gas sales. 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 negatively affected.
Operations are ongoing at each of our businesses. We have good visibility into the financial performance of IMTT given the contracted nature of its storage revenue, although declines in end user demand could reduce revenue from the provision of uncontracted ancillary services such as blending, packaging or throughput. Revenue from ancillary services in the second quarter was largely flat with the prior comparable period. The majority of the revenue generated by Atlantic Aviation and a substantial portion of that generated by MIC Hawaii is subject to consumer preference, meaning we have limited visibility into the prospects for these businesses over the short to medium term.
A relaxation of travel restrictions and stay-at-home orders contributed to the partial recovery in GA flight activity and the performance of Atlantic Aviation in the second quarter. The Federal Aviation Administration (FAA) reported that U.S. domestic GA flight activity in June was approximately 82% of levels achieved in the prior comparable period, up from approximately 28% in April. Further recovery is likely to depend on the continued rollback of lockdown measures leading to a pickup in business, international and event-driven activity. Tourism in Hawaii has yet to begin to recover and an increase is dependent on consumer travel preferences, an absence of any COVID-19 resurgence resulting in a prolonged lockdown of a significant portion of U.S. and an easing of Hawaii's mandatory quarantine policies. Despite these challenges, each of Atlantic Aviation and MIC Hawaii has benefited from the generation of stable resilient revenue from tenants leasing hangars in the case of Atlantic Aviation and primarily residential consumption of gas in the case of MIC Hawaii.
Based on the performance of our businesses in the second quarter, we remain confident in our ability to fund our ongoing operations, meet all of our financial obligations and fund the various investments in our businesses to which we have committed. We expect to fund these using the approximately $275 million of cash we had on hand at June 30, 2020, which excludes the $599 million prior drawdown on our revolving credit facility, and the cash we expect our operating businesses to generate over the remainder of the year. If, however, significant portions of the U.S. undergo new or renewed lockdowns for a protracted period, our resources may not be sufficient to meet all of our objectives.
In response to the effects of the pandemic, we have remained focused on ensuring the health and safety of our employees and customers while simultaneously implementing a range of cost reduction and cost control initiatives aimed at ensuring both the continuity and the value of our businesses. For example, where possible, we have tried to reduce employee working hours and to maintain healthcare benefits rather than conduct layoffs. Expense reduction initiatives commenced in March 2020 initially yielded savings of approximately $50 million annualized, primarily at Atlantic Aviation. We were able to sustain most of these cost savings throughout the second quarter even as GA flight activity began to recover. Given the levels of flight activity at quarter end, some of the savings will be offset in the future by increases in the number of hours worked and the rehiring of certain previously furloughed employees. As a result, expense savings are now expected to be approximately $25 million annualized.
Consistent with recommendations of federal, state and local authorities, we have developed protocols and plans that we believe will allow staff and customers to access our facilities safely and effectively. We are implementing these as local conditions permit. We believe that our financial controls and reporting systems continue to work effectively and that we have appropriately modified systems, processes and policies to accommodate the need to work remotely.
To increase our available cash, we have drawn on certain of our revolving credit facilities. We drew $599 million on our holding company revolving credit facility and $275 million on the Atlantic Aviation revolving credit facility in mid-March. The $275 million drawn on the Atlantic Aviation revolving credit facility was subsequently repaid on April 30, 2020 and on May 4, 2020, the revolving credit facility commitments were reduced to $10 million solely with respect to letters of credit then outstanding. The drawdowns added to our approximately $300 million of cash then on hand. The cash drawn on our holding company revolving credit facility remains on our balance sheet and, assuming we maintain levels of performance of our businesses seen through the end of June, we do not foresee using that cash. At June 30, 2020, there has been no material deterioration in accounts receivable at any of our operating businesses. If the economic impact of the pandemic is protracted, collection times and the value of uncollectible accounts could increase.
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Results of Operations: Consolidated – (continued)
Our consolidated results of operations are as follows:
Quarter Ended
June 30,
Change
Favorable/(Unfavorable)
Six Months Ended June 30,Change
Favorable/(Unfavorable)
20202019$%20202019$%
($ In Millions, Except Share and Per Share Data) (Unaudited)
Revenue
Service revenue$224  $355  (131) (37) $580  $773  (193) (25) 
Product revenue37  61  (24) (39) 97  125  (28) (22) 
Total revenue261  416  (155) (37) 677  898  (221) (25) 
Costs and expenses
Cost of services75  162  87  54  220  330  110  33  
Cost of product sales18  45  27  60  60  85  25  29  
Selling, general and administrative83  84    179  164  (15) (9) 
Fees to Manager-related party   43  11  15   27  
Depreciation and amortization63  63  —  —  128  126  (2) (2) 
Total operating expenses243  361  118  33  598  720  122  17  
Operating income18  55  (37) (67) 79  178  (99) (56) 
Other income (expense)
Interest income—   (1) (100) —   (4) (100) 
Interest expense(1)
(33) (46) 13  28  (75) (88) 13  15  
Other income (expense), net (2)  200     50  
Net (loss) income from continuing operations before income taxes(13)  (21) NM 96  (89) (93) 
Benefit (provision) for income taxes (2)  NM(4) (26) 22  85  
Net (loss) income from continuing operations(8)  (14) NM 70  (67) (96) 
Discontinued Operations
Net income from discontinued operations before income taxes—   (5) (100) —   (8) (100) 
Provision for income taxes—  (2)  100  —  —  —  —  
Net income from discontinued operations—   (3) (100) —   (8) (100) 
Net (loss) income(8)  (17) (189)  78  (75) (96) 
Net (loss) income from continuing operations(8)  (14) NM 70  (67) (96) 
Net (loss) income from continuing operations attributable to MIC(8)  (14) NM 70  (67) (96) 
Net income from discontinued operations—   (3) (100) —   (8) (100) 
Less: net loss attributable to noncontrolling interests—  (2) (2) (100) —  (3) (3) (100) 
Net income from discontinued operations attributable to MIC—   (5) (100) —  11  (11) (100) 
Net (loss) income attributable to MIC$(8) $11  (19) (173) $ $81  (78) (96) 
Basic (loss) income per share from continuing operations attributable to MIC$(0.09) $0.07  (0.16) NM$0.04  $0.81  (0.77) (95) 
Basic income per share from discontinued operations attributable to MIC—  0.06  (0.06) (100) —  0.13  (0.13) (100) 
Basic (loss) income per share attributable to MIC$(0.09) $0.13  (0.22) (169) $0.04  $0.94  (0.90) (96) 
Weighted average number of shares outstanding: basic86,871,892  86,073,372  798,520   86,779,432  85,973,308  806,124   
___________
NM — Not meaningful.
(1)Interest expense includes non-cash losses on derivative instruments of $1 million and $10 million for the quarter and six months ended June 30, 2020, respectively, compared with non-cash losses of $8 million and $12 million for the quarter and six months ended June 30, 2019, respectively.
Revenue
Consolidated revenues decreased for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 primarily as a result of (i) a decrease in the amount of jet fuel and gas sold by Atlantic Aviation and MIC Hawaii, respectively, due to the impact of COVID-19; (ii) the lower wholesale cost of jet fuel and gas; and (iii) lower
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Results of Operations: Consolidated – (continued)
average storage rates on new and renewing contracts at IMTT. The decrease was partially offset by an increase in the proportion of storage capacity under contract (utilization) at IMTT.
The decrease in consolidated revenue for the six months ended June 30, 2020 also reflects the absence of a $39 million contract termination payment (the termination payment) received by IMTT in the first quarter of 2019, partially offset by the recognition of fees earned on tank cleaning obligations at 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, 2020 compared with the quarter and six months ended June 30, 2019 primarily as a result of (i) a decrease in the amount of jet fuel and gas sold by Atlantic Aviation and MIC Hawaii, respectively, due to the impact of COVID-19; (ii) the lower wholesale cost of jet fuel and gas; and (iii) favorable changes in unrealized gains (losses) on commodity hedge contracts at Hawaii Gas (see “Results of Operations — MIC Hawaii” below).
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased for the quarter ended June 30, 2020 and increased for the six months ended June 30, 2020 versus the prior comparable periods. The decrease in the quarter was primarily due to (i) lower salaries and benefits at IMTT and Atlantic Aviation; (ii) a decline in costs incurred in connection with the evaluation of various investment and acquisition and disposition opportunities; (iii) the absence of consulting expenses incurred during the first half of 2019 in connection with our evaluation of opportunities to improve efficiencies; and (iv) lower professional services fees, primarily in connection with ongoing litigation. These decreases were partially offset by a $7 million provision of estimated costs (in excess of insurance recoveries) for remediating certain environmental matters at Atlantic Aviation and costs incurred associated with COVID-19 response.
For the six months ended June 30, 2020, selling, general and administrative expenses also includes expenses incurred in connection with our pursuit of strategic alternatives, the majority of which were incurred in the first quarter of 2020, resulting in an increase for the six month period ended June 30, 2020.
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 quarter and six months ended June 30, 2020, we incurred base management fees of $4 million and $11 million, respectively, compared with $7 million and $15 million for the quarter and six months ended June 30, 2019, respectively. Base management fees decreased, as calculated in accordance with our Management Services Agreement, due to the reduction in the market capitalization of our Company and the increase in our holding company cash balance. No performance fees were incurred in either of the current or prior comparable periods. The unpaid portion of base management fees and performance fees, if any, at the end of each reporting period is included in the line item Due to Manager-related party in our consolidated condensed balance sheets.
In accordance with the Management Services Agreement, our Manager elected to reinvest any fees to which it was entitled in new primary shares in all of the periods shown below and has currently elected to reinvest future base management fees and performance fees, if any, in new primary shares.
PeriodBase Management
Fee Amount
($ in millions)
Performance
Fee Amount
($ in millions)
Shares
Issued
2020 Activities:
Second quarter 2020$ $—  146,452  
(1)
First quarter 2020 —  181,617  
2019 Activities:
Fourth quarter 2019$ $—  208,881  
Third quarter 2019 —  201,827  
Second quarter 2019 —  192,103  
First quarter 2019 —  184,448  
___________
(1)Our Manager elected to reinvest all of the monthly base management fees for the second quarter of 2020 in new primary shares. We issued 146,452 shares for the quarter ended June 30, 2020, including 52,370 shares that were issued in July 2020 for the June 2020 monthly base management fee.
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Results of Operations: Consolidated – (continued)
Depreciation and Amortization
The increase in depreciation and amortization expense for the six months ended June 30, 2020 compared with the six months ended June 30, 2019 primarily reflects assets placed in service, partially offset by the full amortization of certain airport contract rights at Atlantic Aviation.
Interest Expense, net, and Losses on Derivative Instruments
Interest expense, net, includes non-cash losses on derivative instruments of $1 million and $10 million for the quarter and six months ended June 30, 2020, respectively, compared with non-cash losses of $8 million and $12 million for the quarter and six months ended June 30, 2019, 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 $30 million and $59 million for the quarter and six months ended June 30, 2020, respectively, compared with $31 million and $59 million for the quarter and six months ended June 30, 2019, respectively.
Cash interest primarily reflects a decrease in the weighted average interest rate of debt facilities, partially offset by an increase in average debt balance and lower interest income earned during the quarter and six months ended June 30, 2020. See discussions of interest expense for each of our operating businesses below.
Other Income (Expense), net
Other income (expense), net, primarily includes federal grants received as reimbursement for capital expenditures incurred in prior periods at IMTT for the quarter and six months ended June 30, 2020. For the quarter and six months ended June 30, 2019, other income (expense), net, includes losses on disposal of assets at MIC Hawaii, which is partially offset by fee income from a third-party developer of renewable power facilities for the six month period ended June 30, 2019. The relationship with the developer concluded during July 2019.
Discontinued Operations
We recorded no income from discontinued operations for the quarter and six months ended June 30, 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.  Pursuant to a tax sharing agreement, these businesses pay MIC an amount equal to the federal income tax each would pay on a standalone basis if they were not part of the consolidated group. We expect to incur a federal taxable loss for the year ended December 31, 2020. Under the CARES Act, any net operating loss (NOL) generated in 2020 may be carried back five years.
In addition, our businesses file income tax returns and may pay taxes in the state and local jurisdictions in which they operate. We expect the total current year state income tax liability of our businesses to be approximately $5 million. In calculating our state income tax provision, we have provided a valuation allowance for certain state income tax NOL carryforwards, the use of which is uncertain.

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Results of Operations: Consolidated – (continued)
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.
We measure EBITDA excluding non-cash items as it reflects our businesses’ ability to effectively manage the amount 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. Other non-cash items excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries. 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 reflects 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. We use Free Cash Flow as a measure of our ability to fund acquisitions, invest in growth projects, reduce or repay indebtedness and/or return capital to shareholders. 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 assets; (vi) non-cash compensation expense incurred in relation to the incentive plans for senior management of our operating 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 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 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 flow. 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.
7

Results of Operations: Consolidated – (continued)
A reconciliation of net (loss) 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)
20202019$%20202019$%
($ In Millions) (Unaudited)
Net (loss) income from continuing operations$(8) $ $ $70  
Interest expense, net(1)
33  45  75  84  
(Benefit) provision for income taxes(5)   26  
Depreciation and amortization63  63  128  126  
Fees to Manager-related party  11  15  
Other non-cash (income) expense, net(2)
(2)   13  
EBITDA excluding non-cash items - continuing operations$85  $132  (47) (36) $226  $334  (108) (32) 
EBITDA excluding non-cash items - continuing operations$85  $132  $226  $334  
Interest expense, net(1)
(33) (45) (75) (84) 
Non-cash interest expense, net(1)
 1416  25  
Benefit (provision) for current income taxes (2) (2) (9) 
Changes in working capital13    (7) 
Cash provided by operating activities - continuing operations73  108  172  259  
Changes in working capital(13) (9) (7)  
Maintenance capital expenditures(16) (13) (28) (23) 
Free cash flow - continuing operations44  86  (42) (49) 137  243  (106) (44) 
Free cash flow - discontinued operations—   (7) (100) —  14  (14) (100) 
Total Free Cash Flow$44  $93  (49) (53) $137  $257  (120) (47) 
___________
(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 (income) expense, net, includes primarily pension expense of $2 million and $4 million for the quarter and six month periods ended June 30, 2020 and 2019, respectively, unrealized gains (losses) on commodity hedge contracts, non-cash compensation expense incurred in relation to the incentive plans for senior management of our operating businesses and non-cash gains (losses) related to the disposal of assets. Pension expense consists primarily of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Other non-cash (income) expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
8

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. Since IMTT's services are classified as essential, its terminals 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. Plan elements 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) enhancing cleaning and disinfecting of facilities; (iv) limiting interactions between employees through social distancing; (v) mandating the use of personal protective equipment by employees; (vi) modifying shift schedules to reduce exposure between shifts; (vii) limiting terminal access to essential personnel; (viii) requiring all individuals who enter the terminals submit to temperature scans; and (ix) implementing business travel policies consistent with minimizing potential exposure to COVID-19.
As a result of implementing the pandemic response plan, certain operating costs have increased. IMTT expects the increases to total 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 be higher. These cost increases are expected to be partially offset by reduced operating costs as a result of limiting activities to only essential operations and lower labor and healthcare costs.
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 have contributed to an oversupply of petroleum and other liquid products stored and handled by IMTT. During the second quarter of 2020, these factors created conditions in which the expected future value of certain products was higher than its current value and increased demand for storage of these products. Consequently, a substantial portion of IMTT’s available capacity was leased and utilization is now expected to average in the mid-90s% for the remainder of the year up from 86.3% at the end of 2019. At June 30, 2020, utilization was 95.7%. With relatively few storage contracts scheduled to renew during the remainder of the year, average storage rates are unlikely to increase materially in 2020 despite the increase in utilization. IMTT believes that its circumstances are not unique, and that the broader bulk liquid storage industry has experienced similar increases in demand.
Although demand for storage has increased, the level of ancillary services provided during the quarter was flat versus the prior comparable period and may decrease in the future depending on end-user consumption of stored products. Ancillary service revenues are uncontracted and are generated from the provisions of heating, excess throughput, blending, rail or trucking charges among others. Approximately 80% of IMTT’s revenue is contracted/generated from firm commitments. In addition, a sustained decrease in economic activity could have an adverse impact on some of IMTT’s customers which may result in reduced demand for certain of the products stored by IMTT and may result in lower demand for storage. 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 potential impact of COVID-19 on the business.
IMTT is reviewing all maintenance and growth capital expenditures to ensure it is prudently managing its liquidity. Other than a one-year delay in a project at Geismar, LA, no previously announced growth projects have been cancelled or delayed as a result of COVID-19. If conditions worsen, other projects may be delayed, or costs may increase due to a lack of contractor or resource availability. IMTT expects the number of inquiries regarding new growth projects to decline.
While markets for bulk liquid products in general have been less stable as a result of COVID-19, IMTT believes the market for storage and handling of those products, particularly of refined petroleum, will remain constructive over the near term.
Business Update
The financial performance of IMTT is driven 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. Utilization at IMTT averaged 94.6% and 90.0% for the quarter and six months ended June 30, 2020, respectively, compared with 82.9% and 82.7% for the quarter and six months ended June 30, 2019, respectively. Utilization averaged 85.4% for the quarter ended March 31, 2020. The increase in average utilization primarily reflects the effect of a contango market for refined petroleum products. 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 average in the low to mid-90s% for full year 2020.

9

Results of Operations: IMTT – (continued)
IMTT works with existing and new customers continuously to meet their storage and logistics needs. Critical to IMTT’s success is its ability to construct new assets on a build-to-suit basis and/or to repurpose existing tanks and infrastructure 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 efforts will, going forward, (i) increase its customer base; (ii) improve utilization and average storage rates; (iii) increase exposure to new products that it believes have sustainable growth prospects; (iv) generate a larger proportion of its revenue from longer-dated contracts; and (v) reduce its exposure to short-term, cyclical markets with slower growth prospects.
Quarter Ended June 30,Change
Favorable/(Unfavorable)
Six Months Ended June 30,Change
Favorable/(Unfavorable)
2020201920202019
$$$%$$$%
($ In Millions) (Unaudited)
Revenue120  119    252  280  (28) (10) 
Cost of services46  49    96  99    
Selling, general and administrative expenses10   (1) (11) 19  17  (2) (12) 
Depreciation and amortization34  33  (1) (3) 68  66  (2) (3) 
Operating income30  28    69  98  (29) (30) 
Interest expense, net(1)
(10) (15)  33  (25) (28)  11  
Other income, net —   NM —   NM
Provision for income taxes(6) (4) (2) (50) (13) (20)  35  
Net income16    78  34  50  (16) (32) 
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income16   34  50  
Interest expense, net(1)
10  15  25  28  
Provision for income taxes  13  20  
Depreciation and amortization34  33  68  66  
Other non-cash expense, net(2)
    
EBITDA excluding non-cash items68  64    145  168  (23) (14) 
EBITDA excluding non-cash items68  64  145  168  
Interest expense, net(1)
(10) (15) (25) (28) 
Non-cash interest expense, net(1)
—     
Provision for current income taxes(1) (1) (3) (12) 
Changes in working capital(3)  (20) 10  
Cash provided by operating activities54  55  102  146  
Changes in working capital (2) 20  (10) 
Maintenance capital expenditures(13) (8) (19) (14) 
Free cash flow44  45  (1) (2) 103  122  (19) (16) 
___________
NM — Not meaningful.
(1)Interest expense, net, includes non-cash adjustments to derivative instruments and non-cash amortization of deferred financing fee.
(2)Other non-cash expense, net, includes primarily pension expense of $2 million and $4 million for the quarter and six month periods ended June 30, 2020 and 2019, respectively, 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 and losses. Other non-cash expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
10

Results of Operations: IMTT – (continued)
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, 2020, firm commitments had a revenue weighted average remaining contract life of 1.8 years. Revenue from firm commitments, excluding fees earned on tank cleaning obligations, comprised 83.4% and 81.7% of total revenue for the quarter and trailing twelve months ended June 30, 2020, respectively.
Total revenue increased for the quarter ended June 30, 2020 compared with the quarter ended June 30, 2019 primarily due to an increase in utilization, partially offset by lower storage rates on new and renewing contracts.
For the six months ended June 30, 2020, total revenue decreased compared with the six months ended June 30, 2019 primarily due to the absence of the termination payment received during the quarter ended March 31, 2019 and the impact of contracts renewed at lower storage rates in the second half of 2019. The decrease in revenue was partially offset by the increase in fees earned on tank cleaning obligations of $12 million, primarily in the first quarter of 2020, and the increase in utilization.
Cost of Services and Selling, General and Administrative Expenses
Cost of services and selling, general and administrative expenses combined decreased for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 primarily due to lower labor, fuel and healthcare costs, partially offset by increased costs associated with COVID-19 response and higher property taxes at Bayonne.
Depreciation and Amortization
Depreciation and amortization expense increased for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 primarily as a result of assets placed in service.
Interest Expense, net
Interest expense, net, includes non-cash losses on derivative instruments of $1 million and $6 million for the quarter and six months ended June 30, 2020, respectively, compared with non-cash losses of $3 million and $5 million for the quarter and six months ended June 30, 2019, respectively. Excluding the derivative adjustments, cash interest expense was $10 million and $20 million in each of the quarter and six month periods ended June 30, 2020 and 2019, respectively.
Other Income, net
Other income, net, primarily includes federal grants received as reimbursement for capital expenditures incurred in prior periods at IMTT for the quarter and six months ended June 30, 2020.
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, 2020, the business expects to pay state and foreign income taxes of approximately $3 million. The Provision for current income taxes of $3 million for the six months ended June 30, 2020 in the above table relates primarily to state income tax expense.
Most 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 over 5 to 30 years using the straight-line method. For federal income tax purposes, these same fixed assets are depreciated 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 constructed in the period after Hurricane Katrina in 2005 were financed with Growth Opportunity (GO) Zone Bonds. GO Zone Bond financed assets are depreciated for tax purposes 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 depreciation except 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 months ended June 30, 2020, IMTT incurred maintenance capital expenditures of $19 million and $18 million on an accrual and cash basis, respectively, compared with $14 million and $16 million on an accrual basis and cash basis, respectively, for the six months ended June 30, 2019. IMTT expects to incur between $40 million and $45 million of maintenance capital expenditures in 2020.
11

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. Since Atlantic Aviation's services are classified as essential, 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 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) enhancing cleaning and disinfecting of facilities; (iii) limiting interactions between employees through social distancing; and (iv) mandating the use of personal protective equipment by employees.
Atlantic Aviation 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 has 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 reduced GA flight activity and the demand for Atlantic Aviation's jet fuel, transient hangarage, aircraft parking and ancillary services from mid-March and throughout the second quarter versus the prior comparable periods.
The FAA reported that GA flight activity at airports on which Atlantic Aviation operates was approximately 21% of the levels recorded in the prior comparable period in April 2020. However, demand for Atlantic Aviation’s services improved significantly during the quarter. In June, flight activity at airports on which Atlantic Aviation operates increased to approximately 77% of the levels recorded in June 2019. However, maintaining and increasing activity levels will depend upon the duration of the pandemic, any governmental response including renewed travel restrictions and the health of the U.S. and global economies, all of which are uncertain. Further, changes in consumer travel preferences, the availability of commercial flights and other factors remain unknown.
In response to the initial decrease in flight activity, Atlantic Aviation engaged in a thorough review of its operational and capital expenditures to ensure it is prudently managing its liquidity. Staffing levels have been reduced to reflect lower levels of demand for services provided with staffing reductions achieved primarily through furloughs or reductions in scheduled hours. As activity levels have begun to recover, some employees have been recalled from furlough and scheduled hours have returned to normal at some locations, although they remain significantly reduced at others. Non-payroll discretionary expenses have been cut or deferred. Similarly, capital expenditures have been reviewed, with certain uncommitted or non-essential items being deferred as well. Atlantic Aviation has also engaged with various of its airport landlords regarding rent relief although such relief is expected to be immaterial to the business’ results of operations.
The decline in GA flight activity reduced Atlantic Aviation’s cash flows in the second quarter both sequentially and versus the prior comparable period. However, assuming flight activity is stable at quarter end levels, we believe that the combination of Atlantic Aviation's existing liquidity and cash generated from ongoing operations will be sufficient to fund ongoing operations and growth capital projects to which it has committed.
The uncertain duration of the pandemic and the impact of mitigation measures implemented by federal, state and local governments, including travel restrictions, border closings, prohibitions on public gatherings and social distancing, as well as a lack of visibility into consumer preferences, uncertainty surrounding the level of operations of commercial airlines and the absence of a material contracted revenue streams, make forecasting the contribution of this business to our results in 2020 impossible at this time.
Business Update
The fundamental driver of the financial performance of Atlantic Aviation is the number of GA flight movements in a year. Based on data reported by the FAA, industry-wide domestic GA flight movements decreased by 46% and 28% in the quarter and six months ended June 30, 2020, respectively, versus the prior comparable periods. These numbers reflect a trough in activity levels in April 2020 at 72% below the prior comparable month, and a recovery through May and June 2020 at 47% and 18%, respectively, versus the prior comparable months. 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 during the second quarter of 2020, together with the implementation of widespread travel restrictions and other efforts to mitigate the spread of COVID-19, contributed to a substantial reduction in GA flight activity beginning in mid-March 2020.
Based on data reported by the FAA, the total number of GA flight movements at airports on which Atlantic Aviation operates decreased by 53% and 31% during the quarter and six months ended June 30, 2020, respectively, versus the prior comparable periods. Activity at these airports was reduced by more than overall domestic U.S. flight activity primarily due to their location in centers of business and economic activity such as New York, Los Angeles and Chicago that have generally
12

Results of Operations: Atlantic Aviation – (continued)
been subject to more stringent lockdown requirements associated with COVID-19. In addition, an increase in the proportion of shorter, domestic flights, together with a reduction in average aircraft size, disproportionately reduced jet fuel sales relative to flight activity at Atlantic Aviation throughout the second quarter.
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. Based on EBITDA excluding non-cash items in the prior calendar year adjusted for the impact of acquisitions, dispositions and lease extensions, the weighted average remaining life of the leases in the Atlantic Aviation portfolio was 19.8 years and 19.4 years at June 30, 2020 and 2019, respectively.
Quarter Ended June 30,Change
Favorable/(Unfavorable)
Six Months Ended June 30,Change
Favorable/(Unfavorable)
2020201920202019
$$$%$$$%
($ In Millions) (Unaudited)
Revenue104  236  (132) (56) 328  494  (166) (34) 
Cost of services (exclusive of depreciation and amortization shown separately below)29  113  84  74  124231  107  46  
Gross margin75  123  (48) (39) 204263  (59) (22) 
Selling, general and administrative expenses59  62    123  123  —  —  
Depreciation and amortization25  26    52  52  —  —  
Operating (loss) income(9) 35  (44) (126) 29  88  (59) (67) 
Interest expense, net(1)
(14) (22)  36  (33) (41)  20  
Benefit (provision) for income taxes (4) 10  NM (13) 14  108  
Net (loss) income(17)  (26) NM(3) 34  (37) (109) 
Reconciliation of net (loss) income to EBITDA
excluding non-cash items and a reconciliation
of cash provided by operating activities to Free Cash Flow:
Net (loss) income(17)  (3) 34  
Interest expense, net(1)
14  22  33  41  
(Benefit) provision for income taxes(6)  (1) 13  
Depreciation and amortization25  26  52  52  
Other non-cash expense, net(2)
    
EBITDA excluding non-cash items17  62  (45) (73) 83  141  (58) (41) 
EBITDA excluding non-cash items17  62  83  141  
Interest expense, net(1)
(14) (22) (33) (41) 
Non-cash interest expense, net(1)
   12  
Benefit (provision) for current income taxes (3) —  (10) 
Changes in working capital  25   
Cash provided by operating activities23  50  82  104  
Changes in working capital(9) (6) (25) (2) 
Maintenance capital expenditures(2) (3) (5) (5) 
Free cash flow12  41  (29) (71) 52  97  (45) (46) 
___________
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 non-cash compensation expense incurred in relation to incentive plans and non-cash gains (losses) related to the disposal of assets. Other non-cash expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
13

Results of Operations: Atlantic Aviation – (continued)
Atlantic Aviation generates most of its revenue from sales of jet fuel. Increases and decreases in the cost of jet fuel are generally passed through to customers. Accordingly, reported revenue will fluctuate based on the cost of jet fuel to Atlantic Aviation and may not reflect the business’ ability to effectively manage the amount of jet fuel sold and 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 amount or margin per gallon. Conversely, a decline in revenue may be attributable to a decrease in the cost of jet fuel and not a reduction in the amount or margin per 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 reflects the business’ ability to drive growth in the amount 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 amount and price throughout the commodity cycle. Gross margin can be 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
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 on which the business operates. Atlantic Aviation seeks to maintain and, where appropriate, increase dollar-based margins on jet fuel sales.
Revenue decreased for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 as a result of a reduction in the amount of jet fuel sold, a decrease in ancillary services provided and, to a lesser extent, a reduction in rental revenue. The decrease in rental revenue was attributable to a reduced number of short-term and overnight hangar rentals, partially offset by revenue from long-term tenants that was consistent with prior periods. The reduced amount of revenue also reflects the lower wholesale cost of jet fuel in the quarter and six months ended June 30, 2020 versus the prior comparable periods. The decrease in the wholesale cost of jet fuel is typically reflected in a corresponding decrease in cost of services, resulting in no impact to gross margin. However, the rapid decline in the wholesale price of jet fuel in the first several months of 2020 resulted in an additional impact to gross margin of approximately $1 million for the six months ended June 30, 2020.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased for the quarter ended June 30, 2020 and were flat for the six months ended June 30, 2020 versus the prior comparable periods. The decrease in the quarter was primarily the result of lower salaries and benefits, maintenance and repair costs and credit card fees. The decrease was partially offset by a $7 million provision of estimated costs (in excess of insurance recoveries) for remediating certain environmental matters. Excluding the provision, selling, general and administrative expenses would have been approximately $10 million lower for the quarter ended June 30, 2020 versus the prior comparable period.
Depreciation and Amortization
Depreciation and amortization decreased for the quarter ended June 30, 2020 and were flat for the six months ended June 30, 2020 versus the prior comparable periods. The decrease in the quarter was primarily as a result of full amortization of certain airport contract rights. For the six months ended June 30, 2020, depreciation and amortization also reflects assets placed in service.
Operating (Loss) Income
Operating (loss) income decreased in the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 due to the decrease in gross margin. The decrease in operating (loss) income for the quarter ended June 30, 2020 is also partially offset by the decrease in selling, general and administrative expenses and depreciation and amortization.
Interest Expense, net
Interest expense, net, includes non-cash losses on derivative instruments of an insignificant amount for the quarter ended June 30, 2020 and $3 million for the six months ended June 30, 2020 compared with non-cash losses of $4 million and $6 million for the quarter and six months ended June 30, 2019, respectively. Excluding the derivative adjustments, cash interest expense was $12 million and $26 million for the quarter and six months ended June 30, 2020, respectively, compared with $15 million and $29 million for the quarter and six months ended June 30, 2019, respectively. The decrease in cash interest expense primarily reflects a lower weighted average interest rate.

14

Results of Operations: Atlantic Aviation – (continued)
Income Taxes
The taxable income generated by Atlantic Aviation is reported on our consolidated federal income tax return. The business files standalone state income tax returns in most 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. For the year ending December 31, 2020, the business expects to pay state income taxes of approximately $1 million. The business did not record any Provision for current income taxes for the six months ended June 30, 2020.
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 six months ended June 30, 2020, Atlantic Aviation incurred maintenance capital expenditures of $5 million and $7 million on an accrual basis and cash basis, respectively, compared with $5 million on both an accrual basis and cash basis for the six months ended June 30, 2019. Atlantic Aviation expects to incur approximately $10 million of maintenance capital expenditures in 2020.
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. Since businesses within MIC Hawaii's services are classified as essential, its businesses remain operational and there have been no service disruptions related to the pandemic. Hawaii Gas continues to provide safe and reliable gas service 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.
The business has implemented a pandemic response plan and is closely monitoring guidance from the CDC as well as federal, state and local governments with respect to conducting operations safely. As part of its pandemic response plan, Hawaii Gas has separated its workforce into critical (on-site) and non-critical (working remotely) employees. A series of measures have been implemented to reduce the risk of infection among employees including but not limited to: (i) a work from home policy for all employees that are able to do so; (ii) enhancing cleaning and disinfecting of facilities; (iii) limiting interactions between employees through social distancing; (iv) mandating the use of personal protective equipment by employees; (v) modifying shift schedules to reduce exposure between shifts; and (vi) educating customers on alternative payment and customer care options as a means of limiting interactions with employees. Regular meetings are held with management personnel to ensure pandemic-related concerns raised by employees are addressed and appropriate operating procedures are being followed.
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 as federal, state and local governments led mitigation measures, including travel restrictions, prohibition on public gatherings and social distancing, have resulted in a significant decline in economic activity and the number of visitors to Hawaii. Visitor arrivals to Hawaii declined by over 95% in the second quarter versus the prior comparable period, driven partially by a 14-day quarantine requirement implemented by the Governor of Hawaii on March 26, 2020. The decline in visitors has resulted in a significant reduction in hotel occupancy, for services provided by restaurants and commercial laundries and a reduction in the amount of gas consumed by each of these businesses. Collectively, these events resulted in a decline in aggregate gas sales of approximately 40% in the second quarter versus the prior comparable period.
On July 13, 2020, the Governor announced that the 14-day quarantine requirements will be lifted on September 1, 2020 for all arrivals to Hawaii having recently tested negative for COVID-19. However, not all hotels will be opening on that date and the expected recovery in gas consumption may take longer to materialize. In addition to reduced consumption from declining visitor activity, lower oil and oil-derivative prices have resulted in low-margin, high volume interruptible utility customers using lower-cost diesel instead of gas to fuel their operations. Demand for gas by residential customers during the quarter was intact and is expected to remain so.
Hawaii Gas has increased its monitoring of 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.
To ensure Hawaii Gas is prudently managing its liquidity, the business is mitigating the impact of reduced gas sales by implementing cost saving initiatives including a hiring freeze and deferral of vacancy fills of non-critical hires, reductions in overtime, 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 not required for safety reasons and growth projects to which it is not contractually obligated.
15

Results of Operations: MIC Hawaii – (continued)
Hawaii Gas is in regular communication with key counterparties including its supplier of naphtha feedstock for its utility operations and its LPG supplier. The business’ current naphtha feedstock agreement terminates at the end of 2020 and a new naphtha feedstock agreement is expected to be executed prior to the end of 2020. Hawaii Gas is also closely tracking and conservatively managing LPG inventory to reduce its exposure to potential supply chain disruptions. To date, there have been no disruptions in supply or supply logistics. As a result of declines in crude oil and crude oil-derivative prices, Hawaii Gas realized approximately $2 million and $5 million in losses on commodity hedge contracts during the quarter and six months ended June 30, 2020, respectively.
The uncertain duration of the pandemic and the impact of various policies implemented by federal, state and local governments, including travel restrictions, quarantines, prohibitions on public gathering and social distancing, as well as a lack of visibility into consumer preferences, the uncertainty surrounding the level of operations of commercial airlines and/or cruise lines and the absence of material 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 a function of the number of customers served, their consumption of energy and the prices achieved on sales by each of Hawaii Gas’s utility and non-utility operations and under power purchase agreements. The amount of gas consumed is correlated with general economic activity over the long term with tourism being a key component. Consumption trends and rates are a function of, among other factors, energy efficiency, weather, the range of competitive energy sources and MIC Hawaii’s input commodity costs.
16

Results of Operations: MIC Hawaii – (continued)
Quarter Ended June 30,Change
Favorable/(Unfavorable)
Six Months Ended June 30,Change
Favorable/(Unfavorable)
2020201920202019
$$$%$$$%
($ In Millions) (Unaudited)
Revenue37  61  (24) (39) 97  125  (28) (22) 
Cost of product sales (exclusive of depreciation and amortization shown separately below)18  45  27  60  60  85  25  29  
Gross margin19  16   19  37  40  (3) (8) 
Selling, general and administrative expenses  (1) (20) 12  11  (1) (9) 
Depreciation and amortization  —  —    —  —  
Operating income   29  17  21  (4) (19) 
Interest expense, net(1)
(2) (2) —  —  (5) (5) —  —  
Other expense, net—  (2)  100  —  (2)  100  
Provision for income taxes(2) (1) (1) (100) (4) (4) —  —  
Net income   150   10  (2) (20) 
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income   10  
Interest expense, net(1)
    
Provision for income taxes    
Depreciation and amortization    
Other non-cash (income) expense, net(2)
(6)  (3)  
EBITDA excluding non-cash items 14  (7) (50) 22  34  (12) (35) 
EBITDA excluding non-cash items 14  22  34  
Interest expense, net(1)
(2) (2) (5) (5) 
Non-cash interest expense, net(1)
—  —    
Provision for current income taxes(1) —  (3) (3) 
Changes in working capital    
Cash provided by operating activities13  15  19  28  
Changes in working capital(9) (3) (4) (1) 
Maintenance capital expenditures(1) (2) (4) (4) 
Free cash flow 10  (7) (70) 11  23  (12) (52) 
___________
(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 (income) expense, net, includes primarily non-cash adjustments related to unrealized gains (losses) on commodity hedge 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 and losses. Other non-cash (income) expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.
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 to commercial, residential and governmental customers and from the production of electricity.
Hawaii Gas generates most 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 the amount of gas sold and the margins achieved on those sales. For example, an increase in revenue may be attributable to an increase in the wholesale cost of
17

Results of Operations: MIC Hawaii – (continued)
gas passed through to Hawaii Gas’ customers and not an increase in the amount of gas sold or margin achieved. Conversely, a decline in 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 amount of gas sold or margin 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 amount 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 declined for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 primarily as a result of a decrease in the amount of gas sold by Hawaii Gas and lower utility feedstock prices that are passed through to ratepayers. The decrease in the amount of gas sold reflects a decrease in consumption of gas, mainly by commercial and industrial customers, due to reductions in tourism and commercial activity as a result of COVID-19.
Gross margin increased to $19 million for the quarter ended June 30, 2020 from $16 million for the quarter ended June 30, 2019 and decreased to $37 million for the six months ended June 30, 2020 from $40 million for the six months ended June 30, 2019 partially as a result of the favorable changes in the value of unrealized commodity hedge contracts. The business recorded unrealized gains of $6 million and $4 million on commodity hedge contracts for the quarter and six months ended June 30, 2020, respectively, compared with an unrealized loss of $4 million for the quarter and six months ended June 30, 2019. The change in the value of the commodity hedge contracts during the quarter and six months ended June 30, 2020 reflects a favorable movement in the forecast prices of LPG relative to the hedged price.
Excluding the unrealized gains and losses on the commodity hedge contracts, gross margin decreased for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 primarily as a result of a decrease in the amount of gas sold due to the impact of COVID-19 and realized losses from commodity hedge contracts due to the decrease in the market price of LPG.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased for the quarter and six months ended June 30, 2020 compared with the quarter and six months ended June 30, 2019 primarily as a result of increase in salaries and benefits and higher insurance costs.
Operating Income
Operating income increased for the quarter ended June 30, 2020 compared with the quarter ended June 30, 2019 primarily due to the increase in gross margin, partially offset by an increase in selling, general and administrative expenses. Operating income decreased for the six months ended June 30, 2020 compared with the six months ended June 30, 2019 primarily due to the decrease in gross margin and increase in selling, general and administrative expenses.
Interest Expense, net
Interest expense, net, includes non-cash losses on derivative instruments of an insignificant amount for the quarter ended June 30, 2020 and $1 million for the six months ended June 30, 2020 compared with non-cash losses of $1 million in each of the quarter and six month periods ended June 30, 2019. Excluding the derivative adjustments, cash interest expense was $2 million and $4 million in each of the quarter and six month periods ended June 30, 2020 and 2019, respectively. The decrease in cash interest expense primarily reflects a lower weighted average interest rate.
Other expense, net
Other expense, net, primarily includes loss on disposal of assets and other insignificant items for the quarter and six months ended June 30, 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, 2020, the business expects to pay state income taxes of approximately $1 million. The Provision for Current Income Taxes of $3 million for the six months ended June 30, 2020 in the above table includes primarily $2 million of federal income tax expense and $1 million of state income tax expense.
18

Results of Operations: MIC Hawaii – (continued)
Maintenance Capital Expenditures
MIC Hawaii incurred maintenance capital expenditures of $4 million on both on an accrual basis and cash basis for each of the six months period ended June 30, 2020 and 2019. MIC Hawaii expects to incur approximately $8 million of maintenance capital expenditures in 2020.
Results of Operations: Corporate and Other
Our Corporate and Other segment comprises primarily 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)
2020201920202019
$$$%$$$%
($ In Millions) (Unaudited)
Selling, general and administrative expenses  —  —  25  14  (11) (79) 
Fees to Manager-related party   43  11  15   27  
Operating loss(12) (15)  20  (36) (29) (7) (24) 
Interest expense, net(1)
(7) (6) (1) (17) (12) (10) (2) (20) 
Other income, net—  —  —  —  —   (4) (100) 
Benefit for income taxes  —  —  12  11    
Net loss(12) (14)  14  (36) (24) (12) (50) 
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(12) (14) (36) (24) 
Interest expense, net(1)
  12  10  
Benefit for income taxes(7) (7) (12) (11) 
Fees to Manager-related party  11  15  
Other non-cash expense, net —    
EBITDA excluding non-cash items(7) (8)  13  (24) (9) (15) (167) 
EBITDA excluding non-cash items(7) (8) (24) (9) 
Interest expense, net(1)
(7) (6) (12) (10) 
Non-cash interest expense, net(1)
    
(Provision) benefit for current income taxes(2)   16  
Changes in working capital(2) (2) (2) (20) 
Cash used in operating activities(17) (12) (31) (19) 
Changes in working capital   20  
Free cash flow(15) (10) (5) (50) (29)  (30) NM
___________
NM — Not meaningful.
(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.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased for the six months ended June 30, 2020 compared with the six months ended June 30, 2019 primarily due to expenses incurred in connection with our pursuit of strategic alternatives, partially offset by (i) lower costs incurred in connection with the evaluation of various investment and acquisition and disposition opportunities; (ii) the absence of consulting expenses incurred during the first half of 2019 in connection with our evaluation of opportunities to improve efficiencies; and (iii) lower professional services fees, primarily in connection with ongoing litigation.
19

Results of Operations: Corporate and Other – (continued)
Fees to Manager
Fees to Manager for the quarter and six months ended June 30, 2020 comprise base management fees of $4 million and $11 million, respectively, compared with $7 million and $15 million for the quarter and six months ended June 30, 2019, respectively. Base management fees decreased, as calculated in accordance with the Management Services Agreement, primarily due to the reduction in the market capitalization of our Company and the increase in the holding company cash balance. No performance fees were incurred in either of the current or prior comparable periods.
Interest Expense, net
Cash interest expense, net, increased to $6 million and $9 million for the quarter and six months ended June 30, 2020, respectively, compared with $4 million and $6 million for the quarter and six months ended June 30, 2019, respectively. The increase in cash interest expense is primarily due to higher average debt balances, partially offset by lower weighted average interest rate and lower interest income earned during the quarter and six months ended June 30, 2020.
Other Income, net
Other income, net, decreased for the six months ended June 30, 2020 compared with the six months ended June 30, 2019 primarily as a result of the absence of fee income from a third-party developer of renewable power facilities. The relationship with the developer concluded during July 2019.
Income Taxes
The (Provision) benefit for Current Income Taxes of $4 million for the six months ended June 30, 2020 in the above table reflects the current federal income tax recorded by MIC Hawaii offset in consolidation with losses generated by Corporate and Other.
20

Liquidity and Capital Resources
General
Our primary cash requirements have historically included normal operating expenses, debt service, debt principal payments, payments of dividends and capital expenditures. Our primary source of cash has historically been operating activities, although we have drawn and may draw on credit facilities, issued new equity or debt or sold 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 $275 million drawn on the Atlantic Aviation revolving credit facility was subsequently repaid on April 30, 2020 and on May 4, 2020, the revolving credit facility commitments were reduced to $10 million solely with respect to letters of credit then outstanding. The proceeds were additive to our approximately $300 million of cash then 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 uncertainty of the impact of COVID-19 to our businesses.
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 quarterly dividend.
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, 2020, our consolidated debt outstanding totaled $3,315 million (excluding adjustments for unamortized debt discounts) including the drawings on our revolving credit facility. Our consolidated cash balance totaled $874 million and available capacity under our revolving credit facilities totaled $661 million. With the drawing on the revolving credit facility held in cash, our ratio of net debt/EBITDA was 4.8x at June 30, 2020. Our use of cash to fund a portion of our operations and growth capital projects during 2020, together with an expected lower trailing twelve month EBITDA, will increase our ratio of net debt/EBITDA at year-end.
The following table shows MIC’s debt obligations from continuing operations at July 31, 2020 ($ in millions):
BusinessDebtWeighted Average Remaining Life
(in years)
Balance Outstanding
Weighted
Average Rate(1)
MIC CorporateConvertible Senior Notes3.2  $403  2.00 %
Revolving Facility1.4  599  2.40 %
IMTTSenior Notes5.7  600  3.97 %
Tax-Exempt Bonds5.4  509  2.96 %
Atlantic Aviation
Term Loan(2)
5.4  1,010  4.24 %
MIC Hawaii
Term Loan(2)
3.0  94  1.92 %
Senior Notes2.0  100  4.22 %
Total4.3  $3,315  3.32 %
___________
(1)Reflects annualized interest rate on all facilities including interest rate hedges.
(2) The weighted average remaining life does not reflect the scheduled amortization on these facilities.
21

Liquidity and Capital Resources – (continued)

The following table profiles each revolving credit facility from continuing operations at our businesses and at MIC Corporate as of July 31, 2020 ($ in millions):
BusinessDebtWeighted
Average
Remaining Life
(in years)
Undrawn Amount
Interest Rate(1)
MIC CorporateRevolving Facility1.4  $ LIBOR + 2.25%
IMTTUSD Revolving Facility3.3  550  LIBOR + 1.75%
CAD Revolving Facility3.3  50  Bankers' Acceptance Rate + 1.75%
MIC HawaiiRevolving Facility2.5  60  LIBOR + 1.25%
Total3.2$661  
___________
(1) Excludes commitment fees.
We use revolving credit facilities at IMTT, Hawaii Gas and at our 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 having approximately $1,535 million of liquidity available comprised of cash on hand and undrawn balances on revolving credit facilities. In addition, we believe we will be able to refinance, extend and/or repay the principal amount of maturing long-term debt on terms that can be supported by our businesses on or before maturity.
We capitalize our businesses in part using floating rate bank debt with medium-term maturities of between four and seven years. In general, we hedge any floating rate exposure for the majority of the term of these facilities. We also use longer dated private placement debt and other forms of capital including bond or hybrid debt instruments to capitalize our businesses. In general, the debt facilities of our businesses are non-recourse to the holding company and there are no cross-collateralization or cross-guarantee provisions in these facilities.
Analysis of Consolidated Historical Cash Flows from Continuing Operations
The following section discusses our sources and uses of cash on a consolidated basis from continuing operations. All intercompany activities such as corporate allocations, capital contributions to our businesses and distributions from our businesses have been excluded from the table as these transactions are eliminated on consolidation.
($ In Millions)Six Months Ended June 30,Change
Favorable/(Unfavorable)
20202019
$$$%
Cash provided by operating activities172259(87) (34) 
Cash used in investing activities(148)(103)(45) (44) 
Cash provided by (used in) financing activities506(176)682  NM
___________
NM — Not meaningful.
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 around the components of EBITDA excluding non-cash items on a consolidated basis from continuing operations and for each of our operating businesses and Corporate and Other above.
The decrease in consolidated cash provided by operating activities from continuing operations for the six months ended June 30, 2020 compared with the six months ended June 30, 2019 was primarily due to:
a decrease in EBITDA excluding non-cash items; and
a decrease in the change in accounts payable primarily due to declines in the amount and cost of jet fuel and LPG purchased; partially offset by
22

Liquidity and Capital Resources – (continued)

an increase in the change in accounts receivable resulting from a decline in sales activity and lower retail prices on jet fuel; and
a decrease in current state taxes payable.
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 months ended June 30, 2020 compared with the six months ended June 30, 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 months ended June 30, 2020 and 2019, growth capital deployed totaled $119 million and $91 million, respectively. We continuously evaluate opportunities to prudently deploy capital in bolt-on acquisitions and growth projects across our existing businesses. In 2020 we are undertaking and expect to undertake primarily contract-backed capital projects to which we have already committed having an aggregate value of between $200 million and $225 million.
Financing Activities from Continuing Operations
Cash provided by financing activities includes new equity and debt issuance primarily to fund acquisitions and capital expenditures. Cash used in financing activities includes dividends paid to our stockholders and the repayment of debt principal balances.
The change from consolidated cash used in financing activities from continuing operations for the six months ended June 30, 2019 to cash provided by financing activities from continuing operations for the six months ended June 30, 2020 resulted from the net drawdowns on our revolving credit facilities in response to the potential impacts of COVID-19 and a decrease in dividends paid.
IMTT
At June 30, 2020, IMTT had $1,109 million of debt outstanding consisting of $600 million of fixed rate senior notes and $509 million of Tax-Exempt Bonds. IMTT also has $600 million of revolving credit facilities that was undrawn at June 30, 2020. Cash interest expense was $20 million in each of the six month periods ended June 30, 2020 and 2019. At June 30, 2020, IMTT was in compliance with its financial covenants.
Atlantic Aviation
At June 30, 2020, Atlantic Aviation had $1,010 million of its senior secured first lien term loan facility outstanding. During the six months ended, Atlantic Aviation drew down $275 million on its $350 million senior secured first lien revolving credit facility, which was subsequently fully repaid on April 30, 2020 and on May 4, 2020, the revolving credit facility commitments were reduced to $10 million solely with respect to letters of credit then outstanding. Cash interest expense was $26 million and $29 million for the six months ended June 30, 2020 and 2019, respectively.
MIC Hawaii
At June 30, 2020, MIC Hawaii had total debt outstanding of $194 million consisting of a $100 million of senior secured note borrowings and $94 million of term loans. MIC Hawaii also has a $60 million revolving credit facility that was at June 30, 2020. Cash interest expense was $4 million in each of the six month periods ended June 30, 2020 and 2019. At June 30, 2020, MIC Hawaii was in compliance with its financial covenants.
MIC Corporate
At June 30, 2020, MIC had $403 million of 2.00% Convertible Senior Notes due October 2023 outstanding. In addition, in response to the potential impacts of COVID-19, during the quarter ended March 31, 2020, MIC Corporate borrowed $599 million under its revolving credit facility which remained outstanding at June 30, 2020. Cash interest expense was $9 million and $6 million for the six months ended June 30, 2020 and 2019, respectively. At June 30, 2020, MIC was in compliance with its financial covenants.
23

Liquidity and Capital Resources – (continued)

For a description of the material terms of MIC and its 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, 2019.
Commitments and Contingencies
Except as noted above, at June 30, 2020, there were no material changes in our commitments and contingencies compared with those at December 31, 2019. At June 30, 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, 2019, filed with the SEC on February 25, 2020.
At June 30, 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 on 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 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, 2019 and see Note 2, “Basis of Presentation”, 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.
24

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, 2019. Our exposure to market risk has not changed materially since February 25, 2020, the filing date for our Annual Report on Form 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.
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. During the quarters ended June 30, 2020 and March 31, 2020, we performed a goodwill triggering event analysis of our reportable segments due to the potential impact and uncertainty around COVID-19 on our operations.
At IMTT, we looked at the impact of the supply and demand imbalance in the petroleum market and the significant decline in the price of crude oil. 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 mid-90s% from the mid-80s% at year ended 2019 and accelerated renewal of 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. We began to see signs of recovery for Atlantic Aviation during the second quarter of 2020 and we expect that Hawaii Gas will begin to recover starting within six months and therefore the decrease in business activity is not permanent. We concluded that at June 30, 2020, there were no triggering events at Atlantic Aviation or Hawaii Gas.
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, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2020.
Changes in Internal Control Over Financial Reporting
There have 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 months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
25

MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in Millions, Except Share Data)
June 30,
2020
December 31, 2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$874  $357  
Restricted cash14   
Accounts receivable, net of allowance for doubtful accounts62  97  
Inventories26  31  
Prepaid expenses14  13  
Income tax receivable12  11  
Other current assets16  19  
Total current assets1,018  529  
Property, equipment, land and leasehold improvements, net3,231  3,202  
Operating lease assets, net330  336  
Investment in unconsolidated business  
Goodwill2,044  2,043  
Intangible assets, net705  729  
Other noncurrent assets11  13  
Total assets$7,347  $6,861  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Due to Manager-related party$ $ 
Accounts payable37  67  
Accrued expenses76  86  
Current portion of long-term debt11  12  
Operating lease liabilities - current20  20  
Fair value of derivative liabilities  
Other current liabilities26  35  
Total current liabilities180  230  
Long-term debt, net of current portion3,254  2,654  
Deferred income taxes679  679  
Operating lease liabilities - noncurrent316  320  
Other noncurrent liabilities176  167  
Total liabilities4,605  4,050  
Commitments and contingencies—  —  
See accompanying notes to the consolidated condensed financial statements.
26

MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS – (continued)
($ in Millions, Except Share Data)
June 30,
2020
December 31, 2019
(Unaudited)
Stockholders’ equity(1):
Additional paid in capital$1,127  $1,198  
Accumulated other comprehensive loss(38) (37) 
Retained earnings1,644  1,641  
Total stockholders’ equity2,733  2,802  
Noncontrolling interests  
Total equity2,742  2,811  
Total liabilities and equity$7,347  $6,861  
___________
(1)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, 2020 and December 31, 2019, the Company had 86,969,144 shares and 86,600,302 shares of common stock issued and outstanding, respectively; (ii) 100,000,000 shares of preferred stock, par value $0.001 per share authorized. At June 30, 2020 and December 31, 2019, 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, 2020 and December 31, 2019.
See accompanying notes to the consolidated condensed financial statements.
27

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,
2020201920202019
Revenue
Service revenue$224  $355  $580  $773  
Product revenue37  61  97  125  
Total revenue261  416  677  898  
Costs and expenses
Cost of services75  162  220  330  
Cost of product sales18  45  60  85  
Selling, general and administrative83  84  179  164  
Fees to Manager-related party  11  15  
Depreciation50  48  101  96  
Amortization of intangibles13  15  27  30  
Total operating expenses243  361  598  720  
Operating income18  55  79  178  
Other income (expense)
Interest income—   —   
Interest expense(1)
(33) (46) (75) (88) 
Other income (expense), net (2)   
Net (loss) income from continuing operations before income taxes(13)   96  
Benefit (provision) for income taxes (2) (4) (26) 
Net (loss) income from continuing operations(8)   70  
Discontinued Operations(2)
Net income from discontinued operations before income taxes—   —   
Provision for income taxes—  (2) —  —  
Net income from discontinued operations—   —   
Net (loss) income(8)   78  
Net (loss) income from continuing operations(8)   70  
Net (loss) income from continuing operations attributable to MIC(8)   70  
Net income from discontinued operations—   —   
Less: net loss attributable to noncontrolling interests—  (2) —  (3) 
Net income from discontinued operations attributable to MIC—   —  11  
Net (loss) income attributable to MIC$(8) $11  $ $81  
See accompanying notes to the consolidated condensed financial statements.
28

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,
2020201920202019
Basic (loss) income per share from continuing operations attributable to MIC$(0.09) $0.07  $0.04  $0.81  
Basic income per share from discontinued operations attributable to MIC—  0.06  —  0.13  
Basic (loss) income per share attributable to MIC$(0.09) $0.13  $0.04  $0.94  
Weighted average number of shares outstanding: basic86,871,892  86,073,372  86,779,432  85,973,308  
Diluted (loss) income per share from continuing operations attributable to MIC$(0.09) $0.07  $0.04  $0.81  
Diluted income per share from discontinued operations attributable to MIC—  0.06  —  0.13  
Diluted (loss) income per share attributable to MIC$(0.09) $0.13  $0.04  $0.94  
Weighted average number of shares outstanding: diluted86,871,892  86,099,111  86,838,519  85,998,006  
Cash dividends declared per share$—  $1.00  $—  $2.00  
___________
(1)Interest expense includes non-cash losses on derivative instruments of $1 million and $10 million for the quarter and six months ended June 30, 2020, respectively, compared with non-cash losses of $8 million and $12 million for the quarter and six months ended June 30, 2019, respectively.
(2)See Note 4, “Discontinued Operations and Dispositions”, for discussions on businesses classified as held for sale.
See accompanying notes to the consolidated condensed financial statements.
29

MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
($ in Millions)

Quarter Ended June 30,Six Months Ended June 30,
2020201920202019
Net (loss) income$(8) $ $ $78  
Other comprehensive income (loss), net of taxes:
Translation adjustment (1)
  (1)  
Other comprehensive income (loss)  (1)  
Comprehensive (loss) income(6) 11   80  
Less: comprehensive loss attributable to noncontrolling interests—  (2) —  (3) 
Comprehensive (loss) income attributable to MIC$(6) $13  $ $83  
___________
(1)Translation adjustment is presented net of tax expense of $1 million for the quarter ended June 30, 2020 and both the quarter and six month periods ended June 30, 2019. Tax expense related to translation adjustment for the six months ended June 30, 2020 was insignificant. See Note 10, "Stockholders' Equity", for further discussions.
See accompanying notes to the consolidated condensed financial statements.
30

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

In SharesAdditional
Paid In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
Special
Stock
Common
Stock(1)
Balance at March 31, 2020100  86,814,466  $1,123  $(40) $1,652  $2,735  $ $2,744  
Issuance of shares to Manager—  133,288   —  —   —   
Stock vested under compensation plans(2)
—  21,390  —  —  —  —  —  —  
Stock-based compensation expense—  —   —  —   —   
Comprehensive income (loss), net of taxes—  —  —   (8) (6) —  (6) 
Balance at June 30, 2020100  86,969,144  $1,127  $(38) $1,644  $2,733  $ $2,742  
Balance at December 31, 2019100  86,600,302  $1,198  $(37) $1,641  $2,802  $ $2,811  
Issuance of shares to Manager—  346,653  12  —  —  12  —  12  
Stock vested under compensation plans(2)
—  22,490  —  —  —  —  —  —  
Stock withheld for taxes on vested stock(2)
—  (301) —  —  —  —  —  —  
Stock-based compensation expense—  —   —  —   —   
Dividends to common stockholders(3)
—  —  (87) —  —  (87) —  (87) 
Comprehensive (loss) income, net of taxes—  —  —  (1)   —   
Balance at June 30, 2020100  86,969,144  $1,127  $(38) $1,644  $2,733  $ $2,742  
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   —  —   —   
Stock vested under compensation plans(2)
—  23,646   —  —   —   
Dividends to common stockholders(3)
—  —  (86) —  —  (86) —  (86) 
Distributions to noncontrolling interests—  —  —  —  —  —  (1) (1) 
Comprehensive income (loss), net of taxes—  —  —   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  
Stock vested under compensation plans(2)
—  23,646   —  —   —   
Dividends to common stockholders(3)
—  —  (172) —  —  (172) —  (172) 
Distributions to noncontrolling interests—  —  —  —  —  —  (3) (3) 
Comprehensive income (loss), net of taxes—  —  —   81  83  (3) 80  
Balance at June 30, 2019100  86,195,946  $1,354  $(28) $1,566  $2,892  $146  $3,038  
___________
(1)The Company is authorized to issue 500,000,000 shares of common stock with a par value $0.001 per share.
(2)Stocks vested and issued 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 taxes on vested awards and are available for future grants.
(3)See Note 13, “Related Party Transactions”, for cash dividends paid on shares for each period.
See accompanying notes to the consolidated condensed financial statements.
31

MACQUARIE INFRASTRUCTURE CORPORATION

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

Six Months Ended June 30,
20202019
Operating activities
Net income from continuing operations$ $70  
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Depreciation and amortization of property and equipment101  96  
Amortization of intangible assets27  30  
Amortization of debt financing costs  
Amortization of debt discount  
Adjustments to derivative instruments 22  
Fees to Manager-related party11  15  
Deferred taxes 17  
Other non-cash expense, net  
Changes in other assets and liabilities, net of acquisitions:
Accounts receivable32  (2) 
Inventories (1) 
Prepaid expenses and other current assets(1) (11) 
Accounts payable and accrued expenses(28)  
Income taxes payable(2)  
Other, net—   
Net cash provided by operating activities from continuing operations172  259  
Investing activities
Acquisitions of businesses and investments, net of cash, cash equivalents and restricted cash acquired(13) —  
Purchases of property and equipment(135) (102) 
Loan to project developer—  (1) 
Net cash used in investing activities from continuing operations(148) (103) 
Financing activities
Proceeds from long-term debt874  —  
Payment of long-term debt(281) (3) 
Dividends paid to common stockholders(87) (172) 
Debt financing costs paid—  (1) 
Net cash provided by (used in) financing activities from continuing operations506  (176) 
Net change in cash, cash equivalents and restricted cash from continuing operations530  (20) 
See accompanying notes to the consolidated condensed financial statements.
32

MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS – (continued)
(Unaudited)
($ in Millions)
Six Months Ended June 30,
20202019
Cash flows (used in) provided by discontinued operations:
Net cash used in operating activities$—  $(11) 
Net cash used in investing activities—  (16) 
Net cash provided by financing activities—  27  
Net cash provided by discontinued operations—  —  
Net change in cash, cash equivalents and restricted cash530  (20) 
Cash, cash equivalents and restricted cash, beginning of period358  629  
Cash, cash equivalents and restricted cash, end of period$888  $609  
Supplemental disclosures of cash flow information from continuing operations:
Non-cash investing and financing activities:
Accrued purchases of property and equipment$20  $13  
Leased assets obtained in exchange for new operating lease liabilities  
Taxes paid, net  
Interest paid, net59  67  
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,
20202019
Cash and cash equivalents$874  $573  
Restricted cash14  17  
Cash, cash equivalents and restricted cash included in assets held for sale(1)
—  19  
Total of cash, cash equivalents and restricted cash shown in the consolidated condensed statement of cash flows$888  $609  
___________
(1)Represents cash, cash equivalents and restricted cash related to businesses classified as held for sale. See Note 4, “Discontinued Operations and Dispositions”, for further discussion.
See accompanying notes to the consolidated condensed financial statements.
33

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. Six of the eight members of the Board, and all of the members of each of the Company's Audit, Compensation and Nominating and Governance Committees, are independent and have 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 corporations, government agencies and individual customers primarily in the United States (U.S.). The Company's operations are organized into 4 segments:
International-Matex Tank Terminals (IMTT):  a business providing bulk liquid storage and handling services to third-parties at 17 terminals in the U.S. and 2 in Canada;
Atlantic Aviation:  a provider of jet fuel, terminal, aircraft hangaring and other services primarily to operators of general aviation (GA) jet aircraft at 70 airports throughout the U.S.;
MIC Hawaii:  comprising a 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 headquarters in New York City) and a shared services center 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. All 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 also classified its majority interest in a renewable power development business as a discontinued operation, the sale 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. For additional information, see Note 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 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 U.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, 2019 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 consolidated financial statements for the prior period to conform to current period presentation.
34

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
2. Basis of 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, 2019 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 25, 2020. Operating results for the quarter and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 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 December 31, 2019, the Company had $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 Standard & Poor's rating of A1+ or higher. The Company did 0t have any commercial paper at June 30, 2020.
Income Taxes
The Company files a consolidated federal income tax return that includes the financial results of IMTT, Atlantic Aviation and MIC Hawaii. Pursuant to a 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 federal income tax 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 certain state income tax net operating loss (NOL) carryforwards, the use of which is uncertain.
The Company expects 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 carried back five years.
Recently Issued Accounting Standards
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships and other transactions that reference the London interbank offered rate (LIBOR) or another reference rate expected to be discontinued as a result of reference rate reform. These amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. ASU No. 2020-04 is effective as of March 12, 2020, through December 31, 2022, and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company will evaluate the impact of the adoption of this ASU.

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.

35

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
2. Basis of Presentation– (continued)

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 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. The Company adopted this ASU effective January 1, 2020 and had no impact to the consolidated condensed financial statements.
3. Impact of COVID-19
Impact to MIC Businesses
The impact of COVID-19 has varied across the portfolio of businesses. The reduction in consumption of refined petroleum products associated with the slowing of economic activity has 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 significantly reduced demand for the products and services provided by its Atlantic Aviation and MIC Hawaii businesses. While GA flight activity began to recover during the second quarter from the low levels recorded in late March and April, the near absence of tourism in Hawaii continues to limit gas sales. The 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 negatively affected.
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. Operations are ongoing at each of its businesses. The Company has good visibility into the financial performance of IMTT given the contracted nature of its storage revenue, although declines in end user demand could reduce revenue from the provision of uncontracted ancillary services such as blending, packaging or throughput. Revenue from ancillary services in the second quarter was largely flat with the prior comparable period. The majority of the revenue generated by Atlantic Aviation and a substantial portion of that generated by MIC Hawaii is subject to consumer preference, meaning the Company has limited visibility into the prospects for these businesses over the short to medium term.
A relaxation of travel restrictions and stay-at-home orders contributed to the partial recovery in GA flight activity and the performance of Atlantic Aviation in the second quarter. The Federal Aviation Administration reported that U.S. domestic GA flight activity in June was approximately 82% of levels achieved in the prior comparable period, up from approximately 28% in April. Further recovery is likely to depend on the continued rollback of lockdown measures leading to a pickup in business, international and event-driven activity. Tourism in Hawaii has yet to begin to recover and an increase is dependent on consumer travel preferences, an absence of any COVID-19 resurgence resulting in a prolonged lockdown of a significant portion of U.S. and an easing of Hawaii's mandatory quarantine policies. Despite these challenges, each of Atlantic Aviation and MIC Hawaii has benefited from the generation of stable resilient revenue from tenants leasing hangars in the case of Atlantic Aviation and primarily residential consumption of gas in the case of MIC Hawaii.
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 increased the strength of its balance sheet and its liquidity position.
In March 2020, the Company suspended its cash dividend. 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 then on hand. The cash drawn on the MIC holding company revolving credit facility remains on its balance sheet and, assuming the Company maintains existing levels of performance of its businesses, the Company does not foresee using that cash. At June 30, 2020, there has been no material deterioration in accounts receivable at any of the operating businesses. If the economic impact of the pandemic is protracted, collection times and the value of uncollectible accounts could increase.
36

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
3. Impact of COVID-19 – (continued)

On April 30, 2020, Atlantic Aviation fully repaid the outstanding balance on its revolving credit facility and effective May 4, 2020, the revolving credit facility commitments were reduced to $10 million solely with respect to letters of credit then outstanding. 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.
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 Aviation revolving credit facility, the Company has approximately $1,535 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 June 30, 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 potential impact and uncertainty of COVID-19 on the Company's operations, 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 quarters ended June 30, 2020 and March 31, 2020. Based on the Company’s interim assessment as of June 30, 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 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.
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. 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. Upon closing of the transactions involving the portfolios of operating solar 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 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.
The aggregate gross proceeds to the Company from the above sales were approximately $275 million, or approximately $223 million net of taxes and transaction related expenses. Upon closing of the transactions, the Company recorded a pre-tax gain of approximately $80 million excluding any transaction costs. The Company incurred approximately $10 million in professional fees in relation to these transactions, which is included in Selling, General and Administrative Expenses in the consolidated condensed statement of operations. In 2019, the Company recorded $42 million in current tax expense primarily related to the 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.
37

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
4. Discontinued Operations and Dispositions  – (continued)
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 were 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. 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.
Summarized financial information for discontinued operations included in the Company’s consolidated condensed statement of operations for the quarter and six months ended June 30, 2019 are as follows ($ in millions):
Quarter Ended June 30, 2019Six Months Ended June 30, 2019
Product revenue$18  $34  
Cost of product sales(3) (6) 
Selling, general & administrative expenses(3) (7) 
Interest expense, net(7) (12) 
Other expense, net—  (1) 
Net income from discontinued operations before income taxes$ $ 
Provision for income taxes(2) —  
Net income from discontinued operations$ $ 
Less: net loss attributable to noncontrolling interests(2) (3) 
Net income from discontinued operations attributable to MIC$ $11  
5. Income per Share
Following is a reconciliation of the basic and diluted (loss) income per share computations ($ in millions, except share and per share data):
Quarter Ended June 30,Six Months Ended June 30,
2020201920202019
Numerator:
Net (loss) income from continuing operations attributable to MIC$(8) $ $ $70  
Diluted net (loss) income from continuing operations attributable
to MIC
$(8) $ $ $70  
Basic and diluted net income from discontinued operations
attributable to MIC
$—  $ $—  $11  
Denominator:
Weighted average number of shares outstanding: basic86,871,892  86,073,372  86,779,43285,973,308
Dilutive effect of restricted stock unit grants(1)
—  25,739  59,08724,698
Weighted average number of shares outstanding: diluted86,871,892  86,099,111  86,838,51985,998,006
___________
(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.
38

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
5. Income per Share - (continued)
Quarter Ended June 30,Six Months Ended June 30,
2020201920202019
Income per share:
Basic (loss) income per share from continuing
operations attributable to MIC
$(0.09) $0.07  $0.04  $0.81  
Basic income per share from discontinued operations
attributable to MIC
—  0.06  —  0.13
Basic (loss) income per share attributable to MIC$(0.09) $0.13  $0.04  $0.94  
Diluted (loss) income per share from continuing
operations attributable to MIC
$(0.09) $0.07  $0.04  $0.81  
Diluted income per share from discontinued
operations attributable to MIC
—  0.06  —  0.13
Diluted (loss) income per share attributable to MIC$(0.09) $0.13  $0.04  $0.94  

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,
2020201920202019
Restricted stock unit grants87,059  —  —  —  
2.875% Convertible Senior Notes due July 2019(1)
—  4,408,660  —  4,396,058  
2.00% Convertible Senior Notes due October 20233,634,173  3,634,173  3,634,173  3,634,173  
Total3,721,232  8,042,833  3,634,173  8,030,231  
___________
(1)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. The weighted average shares reflect the “if-converted” impact to dilutive common stock through the maturity date of the Note.
6. Property, Equipment, Land and Leasehold Improvements
Property, equipment, land and leasehold improvements at June 30, 2020 and December 31, 2019 consisted of the following ($ in millions):
June 30,
2020
December 31, 2019
Land$319  $319  
Buildings40  40  
Leasehold and land improvements835  813  
Machinery and equipment2,972  2,951  
Furniture and fixtures53  52  
Construction in progress222  143  
4,441  4,318  
Less: accumulated depreciation(1,210) (1,116) 
Property, equipment, land and leasehold improvements, net$3,231  $3,202  
39

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)

7. Intangible Assets and Goodwill
Intangible assets at June 30, 2020 and December 31, 2019 consisted of the following ($ in millions):
June 30, 2020December 31, 2019
Contractual arrangements$923  $921  
Non-compete agreements14  14  
Customer relationships352  352  
Trade names16  16  
Technology  
1,314  1,312  
Less: accumulated amortization(609) (583) 
Intangible assets, net$705  $729  

The goodwill balance by reportable segments as of June 30, 2020 is comprised of the following ($ in millions):
IMTTAtlantic AviationMIC HawaiiTotal
Goodwill acquired in business combinations, net of disposals, at
December 31, 2019
$1,430  $619  $123  $2,172  
Accumulated impairment charges—  (123) (3) (126) 
Other(2) (1) —  (3) 
Balance at December 31, 20191,428  495  120  2,043  
Goodwill related to 2020 acquisition—   —   
Balance at June 30, 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. The 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.
At September 30, 2019, the Company 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. During the quarters ended June 30, 2020 and March 31, 2020, the Company performed a goodwill triggering event analysis of its reportable segments due to the potential impact and uncertainty around COVID-19 on its operations.
At IMTT, the Company looked at the impact of the supply and demand imbalance in the petroleum market and the significant decline in the price of crude oil. 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 mid-90s% from the mid-80s% at year ended 2019 and accelerated renewal of some customer contracts. Given the positive impacts to IMTT, the Company 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, 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 began to see signs of recovery for Atlantic Aviation during the second quarter of 2020 and expects that Hawaii Gas will begin to recover starting within six months and therefore the decrease in business activity is not permanent. The Company concluded that at June 30, 2020, there were no triggering events at Atlantic Aviation or Hawaii Gas.
40

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
8. Long-Term Debt
At June 30, 2020 and December 31, 2019, the Company’s consolidated long-term debt balance comprised of the following ($ in millions):
June 30,
2020
December 31, 2019
IMTT$1,109  $1,109  
Atlantic Aviation1,010  1,015  
MIC Hawaii194  195  
MIC Corporate988  388  
Total3,301  2,707  
Current portion(11) (12) 
Long-term portion3,290  2,695  
Unamortized deferred financing costs(1)
(36) (41) 
Long-term portion less unamortized debt discount and deferred financing costs$3,254  $2,654  
___________
(1)The weighted average remaining life of the deferred financing costs at June 30, 2020 was 4.9 years.
At June 30, 2020, the total undrawn capacity on the revolving credit facilities was $661 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, 2020, MIC Corporate had $599 million of its $600 million senior secured revolving credit facility drawn. 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, 2019.
2.00% Convertible Senior Notes due October 2023 (2.00% Convertible Senior Notes)
At June 30, 2020 and December 31, 2019, the Company had $389 million and $388 million, respectively, outstanding on its seven-year, 2.00% Convertible Senior Notes. At June 30, 2020 and December 31, 2019, the fair value of the liability component of the Notes was approximately $340 million and $370 million, respectively. At June 30, 2020, the conversion rate was 9.0290 shares of common stock per $1,000 principal amount.
The 2.00% Convertible Senior Notes consisted of the following ($ in millions):
June 30,
2020
December 31, 2019
Liability Component:
Principal$403  $403  
Unamortized debt discount(14) (15) 
Long-term debt, net of unamortized debt discount389  388  
Unamortized deferred financing costs(5) (6) 
Net carrying amount$384  $382  
Equity Component$27  $27  


41

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
8. Long-Term Debt  – (continued)
For the quarter and six month periods ended June 30, 2020 and 2019, the Company recognized $3 million and $6 million in interest expense, respectively, related to the 2.00% Convertible Senior Notes, of which $2 million and $4 million, respectively, related to the principal portion outstanding. The remaining portion of the interest expense related to the amortization of debt discount and deferred financing costs.
IMTT
At June 30, 2020 and December 31, 2019, IMTT had $600 million of fixed rate senior notes and $509 million of Tax-Exempt Bonds outstanding. IMTT also had $600 million in revolving credit facilities that remained undrawn at June 30, 2020 and December 31, 2019. At June 30, 2020 and December 31, 2019, the fair value of the fixed rate senior notes was approximately $660 million and $635 million, respectively.
Atlantic Aviation
At June 30, 2020 and December 2019, Atlantic Aviation had $1,010 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.
As noted above, Atlantic Aviation drew down $275 million on its revolving credit facility on March 17, 2020. 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 then 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.

MIC Hawaii
At June 30, 2020 and December 2019, Hawaii Gas had $100 million of fixed rate senior notes outstanding, that had a fair value of approximately $105 million at both periods. Hawaii Gas also had an $80 million term loan outstanding and a $60 million revolving credit facility that remained undrawn at June 30, 2020 and December 31, 2019.
In addition, MIC Hawaii's solar facilities had a term loan outstanding of $14 million and $15 million at June 30, 2020 and December 31, 2019, respectively.
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, 2020, the Company had $3,315 million of current and long-term debt (excluding adjustments for unamortized debt discounts), of which $865 million was economically hedged with interest rate contracts, $1,103 million was fixed rate debt and $1,347 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 Contracts
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 LPG supply costs and Hawaii Gas may not always be able to pass through 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. Hawaii Gas does not use commodity derivative instruments for speculative or trading purposes. Over-the-counter derivative instruments used by Hawaii Gas to hedge forecasted purchases of LPG are generally settled at expiration of the contract.
42

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
9. 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, 2020 and December 31, 2019 were ($ in millions):
Assets (Liabilities) at Fair Value
Balance Sheet ClassificationJune 30,
2020
December 31, 2019
Fair value of derivative instruments - other current assets$—  $ 
Fair value of derivative instruments - other noncurrent assets—   
Total derivative contracts - assets$—  $ 
Fair value of derivative instruments - current liabilities$(8) $(7) 
Total derivative contracts – liabilities$(8) $(7) 

The Company’s hedging activities for the quarters and six months ended June 30, 2020 and 2019 and the related location within the consolidated condensed statements of operations were ($ in millions):
Income Statement ClassificationAmount of (Loss) Gain Recognized in
Consolidated Condensed Statements of Operations
Quarter Ended June 30,Six Months Ended June 30,
2020201920202019
Interest expense - interest rate caps$—  $(4) $(3) $(6) 
Interest expense - interest rate swaps(1) (4) (7) (6) 
Cost of product sales - commodity swaps (6) (1) (5) 
Total$ $(14) $(11) $(17) 
10. Stockholders' Equity
Macquarie Infrastructure Corporation Short-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 (2016 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.
The following represents unvested STIP RSU grants through June 30, 2020:
STIP Grants (at Target)
Number of RSUs
(in units)
Weighted Average Grant-Date Fair Value
(per share)
Unvested balance at December 31, 2019—  $—  
Granted55,66124.50  
Forfeited(1,119)24.50  
Unvested balance at June 30, 202054,542$24.50  

43

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
10. Stockholders’ Equity – (continued)
At June 30, 2020, the grant date fair value of the unvested awards was approximately $1 million, of which an insignificant amount of compensation expense was recorded for the quarter and six months ended June 30, 2020. At June 30, 2020, the unrecognized compensation cost related to unvested RSU awards is expected to be recognized over a weighted-average period of 1.3 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.
The following represents unvested Special RSU grants through June 30, 2020:
Special RSU Grants
Number of RSUs
(in units)
Weighted Average Grant-Date Fair Value
(per share)
Unvested balance at December 31, 2018—  $—  
Granted6,06740.30  
Unvested balance at December 31, 20196,06740.30  
Vested(1,100)40.30  
Unvested balance at June 30, 20204,967$40.30  

Compensation expense related to the Special RSU grants for the quarter and six months ended June 30, 2020 was not significant and is expected to be recognized over a weighted-average period of 0.8 years.
Macquarie Infrastructure Corporation Long-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 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, 2020 at the target level of performance:
LTIP Grants (at Target)
Number of PSUs
(in units)
Weighted Average Grant-Date Fair Value
(per share)
Unvested balance at December 31, 2018—  $—  
Granted134,67139.59  
Forfeited(9,477)39.26  
Unvested balance at December 31, 2019125,19439.62  
Forfeited(5,416) 39.26  
Unvested balance at June 30, 2020119,778$39.64  

At June 30, 2020, depending upon actual performance, the number of PSUs to be issued will vary from 0 to 221,088, net of forfeitures. At June 30, 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, 2020, the Company recognized approximately $1 million of compensation expense related to the LTIP. At June 30, 2020, the unrecognized compensation cost related to unvested PSU awards was approximately $3 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 1.5 years.
44

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 months ended June 30, 2020 and 2019 ($ in millions):
Post-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, 2018$(16) $(14) $(30) 
Translation adjustment—    
Balance at June 30, 2019$(16) $(12) $(28) 
Balance at December 31, 2019$(25) $(12) $(37) 
Translation adjustment—  (1) (1) 
Balance at June 30, 2020$(25) $(13) $(38) 
___________
(1)Translation adjustment is presented net of tax expense of $1 million for the six months ended June 30, 2019. Tax expense related to translation adjustment for the six months ended June 30, 2020 was insignificant.
11. Reportable Segments
At June 30, 2020, the Company’s businesses consisted of 4 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. All 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 also classified its majority interest in a renewable power development business as a discontinued operation, the sale 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. For additional information, see Note 4, “Discontinued Operations and Dispositions”.
IMTT
IMTT provides bulk liquid storage, handling and other services in North America through 17 terminals located in the U.S., 1 terminal in Quebec, Canada and 1 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 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. 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 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 railroad operations. These revenues are generally recognized at a point in time as services are performed.
45

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 is recognized at a point in time as services are performed. Fuel services are recorded net of 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: (i) Hawaii Gas, Hawaii’s only government-franchised gas utility and an unregulated LPG distribution business providing gas and related services to commercial, residential and governmental customers; and (ii) controlling interests in 2 solar facilities on Oahu.
Revenue from the Hawaii Gas business is generated from the distribution and sales of synthetic natural gas (SNG), LPG, liquefied natural gas (LNG) and renewable natural gas (RNG). Revenue is primarily a function of the amount 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.
The renewables projects within MIC Hawaii sell substantially all of the electricity generated at a fixed price to primarily electric utility customers pursuant to long-term 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 MIC Corporate (holding company headquarters in New York City) and a shared services center 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.
46

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11. Reportable Segments  – (continued)
Revenue from external customers for the Company’s consolidated reportable segments were ($ in millions):
Quarter Ended June 30, 2020
IMTTAtlantic
Aviation
MIC
Hawaii
Total Reportable Segments
Service revenue
Terminal services$19  $—  $—  $19  
Lease100  —  —  100  
Fuel—  58  —  58  
Hangar—  24  —  24  
Other 22  —  23  
Total service revenue120  104  —  224  
Product revenue
Lease—  —    
Gas—  —  32  32  
Other—  —    
Total product revenue—  —  37  37  
Total revenue$120  $104  $37  $261  

Quarter Ended June 30, 2019
IMTTAtlantic
Aviation
MIC
Hawaii
Total Reportable Segments
Service revenue
Terminal services$22  $—  $—  $22  
Lease95  —  —  95  
Fuel—  173  —  173  
Hangar—  23  —  23  
Other 40  —  42  
Total service revenue119  236  —  355  
Product revenue
Lease—  —    
Gas—  —  57  57  
Other—  —    
Total product revenue—  —  61  61  
Total revenue$119  $236  $61  $416  
47

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11. Reportable Segments  – (continued)
Six Months Ended June 30, 2020
IMTTAtlantic
Aviation
MIC
Hawaii
Total Reportable Segments
Service revenue
Terminal services$56  $—  $—  $56  
Lease193  —  —  193  
Fuel—  208  —  208  
Hangar—  49  —  49  
Other 71  —  74  
Total service revenue252  328  —  580  
Product revenue
Lease—  —    
Gas—  —  89  89  
Other—  —    
Total product revenue—  —  97  97  
Total revenue$252  $328  $97  $677  
Six Months Ended June 30, 2019
IMTTAtlantic
Aviation
MIC
Hawaii
Intercompany AdjustmentsTotal Reportable Segments
Service revenue
Terminal services$46  $—  $—  $—  $46  
Lease230  —  —  (1) 229  
Fuel—  354  —  —  354  
Hangar—  46  —  —  46  
Other 94  —  —  98  
Total service revenue280  494  —  (1) 773  
Product revenue
Lease—  —   —   
Gas—  —  117  —  117  
Other—  —   —   
Total product revenue—  —  125  —  125  
Total revenue$280  $494  $125  $(1) $898  

In accordance with 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 amount 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.

48

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

Quarter Ended June 30, 2020
IMTTAtlantic
Aviation
MIC
Hawaii
Corporate and OtherTotal Reportable Segments
Net income (loss)$16  $(17) $ $(12) $(8) 
Interest expense, net10  14    33  
Provision (benefit) for income taxes (6)  (7) (5) 
Depreciation and amortization34  25   —  63  
Fees to Manager-related party—  —  —    
Other non-cash expense (income), net  (6)  (2) 
EBITDA excluding non-cash items$68  $17  $ $(7) $85  

Quarter Ended June 30, 2019
IMTTAtlantic
Aviation
MIC
Hawaii
Corporate and OtherTotal Reportable Segments
Net income (loss)$ $ $ $(14) $ 
Interest expense, net15  22    45  
Provision (benefit) for income taxes   (7)  
Depreciation and amortization33  26   —  63  
Fees to Manager-related party—  —  —    
Other non-cash expense, net   —   
EBITDA excluding non-cash items$64  $62  $14  $(8) $132  
Six Months Ended June 30, 2020
IMTTAtlantic
Aviation
MIC
Hawaii
Corporate and OtherTotal Reportable Segments
Net income (loss)$34  $(3) $ $(36) $ 
Interest expense, net25  33   12  75  
Provision (benefit) for income taxes13  (1)  (12)  
Depreciation and amortization68  52   —  128  
Fees to Manager-related party—  —  —  11  11  
Other non-cash expense (income), net  (3)   
EBITDA excluding non-cash items$145  $83  $22  $(24) $226  
Six Months Ended June 30, 2019
IMTTAtlantic
Aviation
MIC
Hawaii
Corporate and OtherTotal Reportable Segments
Net income (loss)$50  $34  $10  $(24) $70  
Interest expense, net28  41   10  84  
Provision (benefit) for income taxes20  13   (11) 26  
Depreciation and amortization66  52   —  126  
Fees to Manager-related party—  —  —  15  15  
Other non-cash expense, net    13  
EBITDA excluding non-cash items$168  $141  $34  $(9) $334  
49

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
11. Reportable Segments  – (continued)
Reconciliations of total reportable segments’ EBITDA excluding non-cash items to consolidated net (loss) income from continuing operations before income taxes were ($ in millions):
Quarter Ended June 30,Six Months Ended June 30,
2020201920202019
Total reportable segments EBITDA excluding non-cash items$85  $132  $226  $334  
Interest income—   —   
Interest expense(33) (46) (75) (88) 
Depreciation and amortization(63) (63) (128) (126) 
Fees to Manager-related party(4) (7) (11) (15) 
Other income (expense), net (9) (5) (13) 
Total consolidated net (loss) income from continuing
operations before income taxes
$(13) $ $ $96  

Capital expenditures, on a cash basis, for the Company’s reportable segments were ($ in millions):
Quarter Ended June 30,Six Months Ended June 30,
2020201920202019
IMTT$51  $38  $106  $64  
Atlantic Aviation10  14  21  27  
MIC Hawaii   10  
Corporate and Other—   —   
Total capital expenditures of reportable segments$64  $58  $135  $102  

Property, equipment, land and leasehold improvements, net, and total assets for the Company’s reportable segments were ($ in millions):
Property, Equipment,
Land and Leasehold
Improvements, net
Total Assets
June 30,
2020
December 31, 2019June 30,
2020
December 31, 2019
IMTT$2,358  $2,323  $4,120  $4,172  
Atlantic Aviation562  567  1,934  2,060  
MIC Hawaii301  301  519  537  
Corporate and Other10  11  774  92  
Total consolidated assets$3,231  $3,202  $7,347  $6,861  
50

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 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, 2020 ($ in millions):
Lease
Revenue
(ASC 842)
Contract
Revenue
(ASC 606)
Total
Long-Term
Revenue
2020 remaining$180  $44  $224  
2021206  47  253  
2022121  32  153  
202380  23  103  
202433   42  
Thereafter127  20  147  
Total$747  $175  $922  

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).
13. Related Party Transactions
Management Services
At June 30, 2020 and December 31, 2019, the Manager held 13,600,444 shares and 13,253,791 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 June 30, 2020 represented 15.64% of the Company's outstanding common stock.
Since January 1, 2019, the Company paid the Manager cash dividends on shares held for the following periods:
DeclaredPeriod Covered$ per
Share
Record DatePayable DateCash Paid to Manager
(in millions)
February 14, 2020Fourth quarter 2019$1.00  March 6, 2020March 11, 2020$13  
October 29, 2019Third quarter 20191.00  November 11, 2019November 14, 201913  
July 30, 2019Second quarter 20191.00  August 12, 2019August 15, 201913  
April 29, 2019First quarter 20191.00  May 13, 2019May 16, 201913  
February 14, 2019Fourth quarter 20181.00  March 4, 2019March 7, 201913  

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.
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 stockholder
51

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Related Party Transactions  – (continued)
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 quarter and six months ended June 30, 2020, the Company incurred base management fees of $4 million and $11 million, respectively, compared with $7 million and $15 million for the quarter and six months ended June 30, 2019, respectively. The Company did not incur any performance fees for the quarters and six months periods ended June 30, 2020 and 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 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:
52

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Related Party Transactions  – (continued)
PeriodBase Management
Fee Amount
($ in millions)
Performance
Fee Amount
($ in millions)
Shares
Issued
2020 Activities:
Second quarter 2020$ $—  146,452
(1)
First quarter 2020 —  181,617  
2019 Activities:
Fourth quarter 2019$ $—  208,881  
Third quarter 2019 —  201,827  
Second quarter 2019 —  192,103  
First quarter 2019 —  184,448  
___________
(1)The Manager elected to reinvest all of the monthly base management fees for the second quarter of 2020 in new primary shares. The Company issued 146,452 shares for the quarter ended June 30, 2020, including 52,370 shares that were issued in July 2020 for the June 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 quarter and six months ended June 30, 2020, the Manager charged the Company $16,000 and $304,000, respectively, for reimbursement of out-of-pocket expenses compared with $331,000 and $577,000, respectively, for the quarter and six months ended June 30, 2019. 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. During the quarter ended June 30, 2020, the Company expensed $60,000 in legal fees incurred by the Manager related to the Shareholder Litigation. For additional information, see Note 14, "Legal Proceedings and Contingencies", for further discussions.
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 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
The Company has a $600 million senior secured revolving credit facility at the holding company level where Macquarie Capital Funding LLC has a $40 million commitment. For the quarter and six months ended June 30, 2020, the Company incurred interest expense of $274,000 and $361,000, respectively, related to Macquarie Capital Funding LLC’s portion of the MIC senior secured revolving credit facility compared with $41,000 and $75,000 for the quarter and six months ended June 30, 2019, respectively.
53

MACQUARIE INFRASTRUCTURE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
13. Related Party Transactions  – (continued)
Other Transactions
From time to time, indirect subsidiaries within Macquarie Group may enter into contracts with IMTT to lease capacity. For the quarter and six months ended June 30, 2020, revenue from these contracts totaled approximately $1 million and $2 million, respectively. The revenue from these contracts for the quarter and six months ended June 30, 2019 were insignificant.
Other Related Party Transactions
In the six months ended June 30, 2020, the Company incurred $25,000 for advisory services from a former Board member.
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. 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.
54

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, 2019, filed with the SEC on February 25, 2020, except for the following:
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.
55

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, 2019, filed with the SEC on February 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. We cannot predict whether the continued impact of the pandemic will permanently change our customers' behavior, such as a permanent reduction in business travel or a general reluctance to use air travel for leisure, which could materially impact our businesses. 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 risks posed by information technology systems breaches.
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 impacted 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
56

resume. The situation surrounding COVID-19 remains fluid and the potential for material effects on our operating results, financial condition and liquidity increases the longer the pandemic impacts activity levels in the U.S. and globally.
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 general reaction to COVID-19, as well as governmental travel restrictions, quarantines, shelter in place orders and prohibitions on large public gatherings, and the deterioration in economic conditions, have significantly reduced GA activity and the demand for Atlantic Aviation’s products and services. 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' 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 daily volume of SNG to operate safely, the plant will be required to stop production until minimum thresholds can again be 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. Additionally, the reliability and pricing of the feedstock supply for the SNG plant could be adversely impacted by COVID-19, potentially resulting in higher cost of gas which would be passed onto Hawaii Gas' customers. The sustained impact of COVID-19 could have a material adverse effect on the results of operations, financial condition and liquidity of MIC Hawaii.
57

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits
An exhibit index has been filed as part of this Report on page E-1 and is incorporated herein by reference.
58

EXHIBIT INDEX
NumberDescription
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 June 30, 2020, formatted in XBRL and contained in Exhibit 101.
___________
* Filed herewith.
** Furnished herewith.

E-1

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: August 4, 2020By:/s/ Christopher Frost
Name: Christopher Frost
Title:  Chief Executive Officer
Dated: August 4, 2020By:/s/ Liam Stewart
Name: Liam Stewart
Title:  Chief Financial Officer