8-K/A

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

^{______________}

FORM 8-K/A

^{______________}

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 16, 2006

^{______________}

MACQUARIE INFRASTRUCTURE COMPANY TRUST

^{(Exact Name of Registrant as Specified in its Charter)}

Delaware	001-32385	20-6196808
(State or Other Jurisdiction of Incorporation)	Commission File Number	(IRS Employer Identification No.)

^{______________}

MACQUARIE INFRASTRUCTURE COMPANY LLC

^{(Exact Name of Registrant as Specified in its Charter)}

Delaware	001-32384	43-2052503
(State or Other Jurisdiction of Incorporation)	Commission File Number	(IRS Employer Identification No.)

125 West 55th Street, New York, New York	10019
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 231-1000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Section 8 – Other Events	1
Item 8.01 – Other Events	1
Section 9 – Financial Statements and Exhibits	1
Item 9.01 Financial Statements and Exhibits	1
EX-23.1: Consent of KPMG LLP
EX-23.2: Consent of Ernst & Young LLP
EX-99.1: Consolidated Financial Statements for the Year Ended December 31, 2006
EX-99.2  Consolidated Financial Statements for the Years Ended December 31, 2005 and 2004 (as restated)
EX-99.3: Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2006
SIGNATURES	3
SIGNATURES	4

i

On May 16, 2006, Macquarie Infrastructure Company LLC (“MIC” or the “Company”) filed a current report on Form 8-K/A with respect to the completion on May 1, 2006 of its acquisition, through its wholly-owned subsidiary, Macquarie Infrastructure Company Inc. (“MIC Inc.”), of 50% of the shares of IMTT Holdings Inc., formerly known as Loving Enterprises, Inc. (“IMTT Holdings”). IMTT Holdings is the ultimate holding company for a group of companies and partnerships that own a bulk liquid storage terminal business operating as International-Matex Tank Terminals (“IMTT”). This current report on Form 8-K/A (this “Report”) amends and restates Section 9, Item 9.01, Financial Statements and Exhibits of the prior report in its entirety.

Section 8. Other Events

Item 8.01 Other Events

On April 27,  2007, IMTT Holdings Inc., formerly known as Loving Enterprises, Inc. (“IMTT”), restated its financial statements for the fiscal years ended December 31, 2005 and 2004 to correct IMTT’s accounting for certain derivative instruments which were originally reported using hedge accounting during those periods, but that did not qualify for such treatment. This determination was made because IMTT’s application of, and documentation related to, hedge accounting under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” as previously reported, was incorrect. In light of the restatement, readers should no longer rely on financial statements and other financial information that were previously filed on May 16, 2006.

Exhibits to this Form 8-K/A include the aforementioned restated audited financial statements of IMTT for the years ended December 31, 2005 and 2004, audited financial statements of IMTT for the year ended December 31, 2006, and an unaudited pro forma condensed combined statement of operations for Macquarie Infrastructure Company Trust for the year ended December 31, 2006. These financial statements and pro forma information update all such previously filed information upon which readers should no longer rely.

Section 9. Financial Statement and Exhibits

Item 9.01 Financial Statements and Exhibits

(a) Financial statements of business acquired.

The audited financial statements of IMTT as of and for the year ended December 31, 2006 are attached as Exhibit 99.1 to this Report and are incorporated into this Item 9.01(a) by reference.

The audited financial statements of IMTT as of and for the years ended December 31, 2005 and 2004 are attached as Exhibit 99.2 to this Report and are incorporated into this Item 9.01(a) by reference.

(b) Pro forma financial information.

The unaudited pro forma condensed combined statement of operations of Macquarie Infrastructure Company Trust (“the Company”) for the year ended December 31, 2006 is attached as Exhibit 99.3 to this Report and is incorporated into this Item 9.01(b) by reference.

The pro forma condensed combined statement of operations should be read in conjunction with the separate financial statements and related notes thereto of the Company, as filed with the Securities and Exchange Commission (“SEC”) in its Form 10-K filed March 1, 2007, the condensed financial statements and related notes thereto of the Company, as filed with the SEC in its Form 10-Q filed May 8, 2007 and in conjunction with the separate financial statements of IMTT and related notes thereto included as Exhibits 99.1 and 99.2 to this Report.

The unaudited pro forma condensed statement of operations should not be considered indicative of actual results that would have been achieved had the acquisitions, dispositions and the other transactions and events described been completed as of the dates or as of the beginning of the period indicated and do not purport to project the financial condition or results of operations and cash flows of the Company for any future date or period.

The pro forma adjustments are based on preliminary estimates, available information and certain assumptions, and may be revised as additional information becomes available. The pro forma adjustments are more fully described in the notes to the unaudited pro forma condensed financial statements.

1

(c) Exhibits:

23.1

Consent of KPMG LLP

23.2

Consent of Ernst & Young LLP

99.1

Audited financial statements of IMTT as of and for the year ended December 31, 2006.

99.2

Audited financial statements of IMTT as of and for the years ended December 31, 2005 and 2004 (as restated).

99.3

Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2006.

2

FORWARD LOOKING STATEMENTS

This filing contains forward-looking statements. We may, in some cases, use words such as “project”, “believe”, “anticipate”, “plan”, “expect”, “estimate”, “intend”, “should”, “would”, “could”, “potentially”, or “may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this report are subject to a number of risks and uncertainties, some of which are beyond the Company’s control including, among other things: its ability to successfully integrate and manage acquired businesses, including the ability to retain or replace qualified employees, manage growth, make and finance future acquisitions, service, comply with the terms of and refinance debt, and implement its strategy; decisions made by persons who control its investments inclu ding the distribution of dividends; its regulatory environment for purposes of establishing rate structures and monitoring quality of service; changes in general economic or business conditions, or demographic trends, including changes to the political environment, economy, tourism, construction and transportation costs, changes in air travel, automobile usage, fuel and gas costs, including the ability to recover increases in these costs from customers; reliance on sole or limited source suppliers, particularly in our gas utility business; foreign exchange fluctuations; environmental risks; and changes in U.S. federal tax law.

Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware could also cause our actual results to differ. In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this release may not occur. These forward-looking statements are made as of the date of this release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

“Macquarie Group” refers to the Macquarie Group of companies, which comprises Macquarie Bank Limited and its worldwide subsidiaries and affiliates.

3

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 hereunto duly authorized.

	MACQUARIE INFRASTRUCTURE COMPANY TRUST
Date:  June 18, 2007	By:	/s/ Peter Stokes
		Name:  Peter Stokes Title: Regular Trustee

4

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 hereunto duly authorized.

	MACQUARIE INFRASTRUCTURE COMPANY LLC
Date:  June 18, 2007	By:	/s/ Peter Stokes
		Name:  Peter Stokes Title: Chief Executive Officer

5

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

The Board of Directors
Macquarie Infrastructure Company LLC:

We consent to the incorporation by reference in the registration statement (No. 333-125226) on Form S-8 and the registration statement (No. 333-138010) on Form S-3 of Macquarie Infrastructure Company Trust of our report dated May 15, 2007 with respect to the consolidated balance sheet of IMTT Holdings, Inc. as of December 31, 2006, and the related consolidated statements of income, shareholders’ equity, comprehensive income and cash flows for the year then ended, which report appears in the June 18, 2007 report on Form 8-K/A of Macquarie Infrastructure Company Trust and Macquarie Infrastructure Company LLC.

/s/ KPMG LLP

New Orleans, Louisiana
June 14, 2007

EX-23.2

Exhibit 23.2

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements:

(1)

Registration Statement (Form S-3 No. 333-138010) and related Prospectus of Macquarie Infrastructure Company Trust and Macquarie Infrastructure Company LLC, and

(2)

Registration Statement (Form S-8 No. 333-125226) pertaining to the Macquarie Infrastructure Company LLC Independent Directors Equity Plan of Macquarie Infrastructure Company Trust and Macquarie Infrastructure Company LLC;

of our report dated April 14, 2006 (except with respect to the matters discussed in the last paragraph of Note 4 and to Notes 7, 10, and 14, as to which the date is April 27, 2007), with respect to the consolidated financial statements of Loving Enterprises, Inc. (currently known as IMTT Holdings, Inc.) included in this Current Report on Form 8-K/A of Macquarie Infrastructure Company Trust and Macquarie Infrastructure Company LLC.

/s/ Ernst & Young LLP

New Orleans, Louisiana
June 14, 2007

EX-99.1

Exhibit 99.1

Independent Auditors’ Report

Board of Directors
IMTT Holdings Inc.:

We have audited the accompanying consolidated balance sheet of IMTT Holdings Inc. as of December 31, 2006, and the related consolidated statements of income, shareholders’ equity and other comprehensive income, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of IMTT Holdings Inc. as of December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

May 15, 2007
New Orleans, Louisiana

1

IMTT HOLDINGS INC.

CONSOLIDATED BALANCE SHEET
December 31, 2006

ASSETS
Current assets:
Cash and temporary investments (Note 2)	$	36,068,000
Accounts and accrued interest receivable, net of allowance of $352,000 (Note 6)		28,915,000
Inventories		5,647,000
Prepaid expenses and deposits (Note 7)		7,444,000
Total current assets	$	78,074,000
Property, plant and equipment (Notes 2, 6 and 9):
Land	$	28,368,000
Terminal and other facilities		839,631,000
	$	867,999,000
Less – Accumulated depreciation		(340,948,000	)
	$	527,051,000
Other assets:
Debt issue costs, net (Note 4)	$	1,093,000
Investment in foreign terminal		4,432,000
Receivable from related parties, net (Note 3)		65,000
Investment in NTL venture (Note 2)		9,473,000
Other (Notes 2 and 5)		10,247,000
	$	25,310,000
	$	630,435,000

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	12,690,000
Accrued liabilities		21,453,000
Dividends payable		14,000,000
Current portion of long-term debt (Note 4)		40,369,000
Total current liabilities	$	88,512,000
Other long-term liabilities (notes 2, 4 and 5)	$	38,054,000
Long-term debt (notes 3, 4 and 8)	$	226,014,000
Deferred income taxes (notes 2 and 7)	$	91,207,000
Commitments and contingencies (note 6)
Shareholders’ equity (notes 9, 10 and 11)	$	186,648,000
	$	630,435,000

The accompanying notes are an integral part of this statement.

2

IMTT HOLDINGS INC.

CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 2006

Revenues:
Tank storage and terminal charges (Note 11)	$	203,882,000
Other rental income		1,634,000
Railroad operations		1,350,000
Other income (Notes 2 and 3)		4,114,000
Environmental response services		18,599,000
Nursery revenues		9,700,000
Total revenues	$	239,279,000
Expenses:
Terminals –
Labor costs (Note 5)	$	53,677,000
Repairs and maintenance (Note 6)		17,886,000
Real and personal property taxes		8,287,000
Other operating		32,243,000
Total terminal operating expenses	$	112,093,000
Environmental response affiliate expenses		11,941,000
Nursery expenses		10,837,000
General and administrative (Notes 3, 4 and 5)		22,350,000
Interest expense (Notes 2, 3 and 4)		15,759,000
Depreciation and amortization (Notes 2 and 9)		31,056,000
Mark-to-market adjustment of non-hedging derivatives (Notes 2 and 4)		(1,930,000	)
	$	202,106,000
Income before income taxes	$	37,173,000
(Provision) Credit for income taxes (Notes 2 and 7):
Current	$	(1,766,000	)
Deferred		(14,793,000	)
	$	(16,559,000	)
Net income	$	20,614,000

The accompanying notes are an integral part of this statement.

3

IMTT HOLDINGS INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2006

Net income	$	20,614,000
Other comprehensive income (loss)
Derivatives (Notes 2 and 4):
Mark-to-market adjustment of interest rate swap agreement		(156,000	)
Reclassification to interest expense of loss on $60 million treasury lock agreement		102,000
Net derivatives		(54,000	)
Minimum pension liability adjustment
Lemont union plan (Note 5)		(179,000	)
Foreign currency translation adjustment		—
Tax effects of items included in other comprehensive income		83,000
Other comprehensive income (loss) (Note 10)		(150,000	)
Comprehensive income	$	20,464,000

The accompanying notes are an integral part of this statement.

4

IMTT HOLDINGS INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
For the Year Ended December 31, 2006

Balance, December 31, 2005 (Note 10)	$	81,121,000
Net income		20,614,000
Other comprehensive income (loss) (Notes 2, 4, 5 and 10)		(150,000	)
Cash contributions, net of related costs (Note 9)		241,892,000
Distributions (Note 11)		(156,829,000	)
Balance, December 31, 2006 (Note 10)	$	186,648,000

The accompanying notes are an integral part of this statement.

5

IMTT HOLDINGS INC.

CONSOLIDATED STATEMENT OF CASH FLOW
For the Year Ended December 31, 2006

Cash flows from operating activities
Net income	$	20,614,000
Adjustments to reconcile net cash provided by operating activities
Depreciation and amortization		31,056,000
Decrease in accounts and accrued interest receivable		15,950,000
(Increase) in inventories		(251,000	)
Decrease in prepaid expenses and deposits		592,000
(Increase) in investment in foreign terminal		(283,000	)
(Increase) in other assets		(620,000	)
(Decrease) in accounts payable		(8,991,000	)
(Decrease) in accrued liabilities		(6,126,000	)
Increase in deferred income taxes		14,793,000
(Decrease) in other long-term liabilities		(1,312,000	)
Amortization of treasury lock agreement		102,000
Loss on sale/retirement of assets		1,277,000
(Gain) on sale of investment in joint venture		(10,000	)
Net operating cash flows	$	66,791,000
Cash flows from investing activities
Purchase of plant assets	$	(88,784,000	)
(Increase) in other assets		(3,791,000	)
Sale of investment in joint venture		130,000
Proceeds from sale of fixed assets		1,905,000
Net investing cash flows	$	(90,540,000	)
Cash flows from financing activities
Net (payments) under U.S. bank syndicate line of credit agreement	$	(34,800,000	)
Net other bank (payments)		(26,640,000	)
Distributions to shareholders		(142,829,000	)
Contributions from shareholders, net of related costs		241,892,000
Net receipts (payments) of receivables/payables with related parties		8,988,000
Loans from shareholders		11,172,000
Debt issue cost incurred		(257,000	)
Net financing cash flows	$	57,526,000
Net increase in cash and temporary investments	$	33,777,000
Net increase (decrease) in cash due to currency translation	$	—
Cash and temporary investments at beginning of year		2,291,000
Cash and temporary investments at end of year	$	36,068,000
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest (net of amount capitalized)	$	14,478,000
Income taxes		2,905,000

The accompanying notes are an integral part of this statement.

6

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(1) Nature of operations and organization

IMTT Holdings Inc. (“IHI”) formerly Loving Enterprises Inc., owns 100% of various corporations and limited liability companies (International Tank Terminals, L.L.C. and Affiliates, “ITT and Affiliates”) who in turn own 100% of various operating entities, primarily partnerships (“IMTT Combined”).  The following chart summarizes the relationship of the various ITT and Affiliates and IMTT Combined entities.

Parent Entities (ITT and Affiliates)		Subsidiary/Operating Entities (IMTT Combined)
99% Ownership	1% Ownership
International Tank Terminals, L.L.C.	ITT-Storage, Inc.	International-Matex Tank Terminals
Bayon of LA, Inc.	ITT-BT Partner, Inc.	BT
International Tank Bayonne, Inc.	ITT-Bayonne Storage, Inc.	IMTT-Bayonne
ITT-BX, Inc.	ITT-BX Storage, Inc.	IMTT-BX
ITT-Pipeline, Inc.	ITT-Pipeline Partner, Inc.	IMTT-Pipeline
ITT-Interterminal Pipeline, Inc.	ITT-Interterminal Pipeline Partner, Inc.	IMTT-Interterminal Pipeline
ITT-BC, Inc.	ITT-BC Storage, Inc.	IMTT-BC
ITT-CX, Inc.	ITT-CX Storage, Inc.	IMTT-CX
ITT-USA, Inc.	ITT-USA Partner, Inc.	IMTT-USA
Hook Terminalling, Inc.	HTC Partner, Inc.	Hook Terminalling Company
ITT-Gretna, L.L.C.	ITT-Gretna Storage, Inc.	IMTT-Gretna
ITT-Chesapeake, Inc.	ITT-Chesapeake Storage, Inc.	IMTT-Chesapeake
ITT-Richmond, Inc.	ITT-Richmond Storage, Inc.	IMTT-Richmond
ITT-Richmond-CA, Inc.	ITT-Richmond-CA Storage, Inc.	IMTT-Richmond-CA
ITT-Lemont, Inc.	ITT-Lemont Storage, Inc.	IMTT-Lemont
ITT-Petroleum Management, Inc.	ITT-SPR Partner, Inc.	IMTT-Petroleum Management
ITT-Geismar, L.L.C.	ITT-Geismar Storage, Inc	IMTT-Geismar
International Environmental Services, Inc.	ITT-IEP Partner, Inc.	International Environmental Partners
ITT-NTL, Inc. (100%)	—	IMTT-NTL, Ltd.

The IMTT Combined entities primarily provide bulk liquid storage and handling services in North America through terminals located on the East, West and Gulf Coasts as well as the Great Lakes region of the United States and in Quebec and Newfoundland, Canada, with the predominant terminals located in New York harbor and on the Mississippi River near the Gulf of Mexico. Petroleum products, vegetable and tropical oils and various chemicals are stored and handled.

International-Matex Tank Terminals (IMTT) is a partnership formed in 1975 to own and operate bulk liquid storage terminal facilities in Louisiana. BT and IMTT -Bayonne are partnerships formed in 1983. BT was formed to purchase Bayonne Industries, Inc. (BII). The IMTT-BX partnership was formed in 1993 to acquire the terminal facility adjacent to Bll’s tank terminal on April 1, 1993. IMTT-BC and IMTT-CX are partnerships organized in 1996 to purchase certain terminal assets in 1997 that are contiguous to the existing Bayonne terminal. Hook Terminalling Company (Hook) is a partnership formed in 2003 to purchase and own land adjoining the existing Bayonne terminal. IMTT-Pipeline and IMTT-Interterminal Pipeline partnerships were formed in 1996 to own an interest in a pipeline utilized in the transfer of products by IMTT-Bayonne and other third parties. In 2004, IMTT-Interterminal Pipeline acquired terminal assets adjacent to the existing Bayonn e terminal. IMTT-Bayonne was formed to lease and operate tank terminal and warehouse facilities owned by BII, IMTT-BX, IMTT-BC, IMTT-CX, Hook and IMTT-Interterminal Pipeline in Bayonne, New Jersey/ New York Harbor. IMTT-Gretna is a partnership formed in 1990 to purchase and operate a bulk liquid storage terminal in Gretna, Louisiana. IMTT-Chesapeake and IMTT-Richmond are partnerships formed in 1991 to purchase and operate bulk liquid storage terminals in Chesapeake and Richmond, Virginia, respectively. IMTT-Petroleum Management is a partnership formed in 1992 to own an interest in a joint venture operating the United States Strategic Petroleum Reserve. IMTT-Richmond-CA is a

7

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(1) Nature of operations and organization – (continued)

partnership formed in 1995 to purchase and operate a bulk liquid storage terminal in Richmond, California. IMTT-Lemont is a partnership formed in 1997 to purchase and operate a terminal facility in Lemont, Illinois. IMTT-NTL, Ltd. is a Canadian corporation formed in 1997 to own an interest in and operate a terminal in Newfoundland, Canada. IMTT-Quebec Inc., a 662/3% owned subsidiary of IMTT, operates a bulk liquid storage terminal located in Quebec, Canada. Due to its immateriality, this investment is accounted for utilizing the equity method of accounting in the accompanying financial statements. IMTT-Geismar is a partnership formed in 2006 to construct and operate a chemical logistics facility in Geismar, Louisiana (see Note 6). In 2006 it derived revenue from and operated a dock under an assigned contract. International Environmental Partners is a partnership formed in 1999 to own an entity that provides environmental response and other services to the termi nals and others. IMTT also owns and operates a floral and plant nursery business.

(2) Summary of significant accounting policies

Combination:

The accounts of IHI have been consolidated with those of ITT and Affiliates as well as those of IMTT Combined after eliminating all intercompany account balances and transactions (“IHI Consolidated”). IMTT Combined consists of the operating partnerships previously described consolidated with their wholly-owned financing subsidiary, IMTT-Finco (“The Partnerships”) further combined with the Canadian corporation, IMTT-NTL, Ltd. (“IMTT Combined”).

Revenue recognition:

Contracts for the rental of storage capacity at the various terminals predominantly have non-cancelable terms of from one to five years. These leases generally provide for the payment of rentals for providing storage capacity throughout their term based on a fixed rate per barrel of capacity leased, as adjusted annually for inflation indices. Leases are classified and accounted for as operating leases and rental revenue is recognized ratably over their term. Revenue from the rendering of ancillary services (e.g. product movement (thruput), heating, mixing, etc.) is recognized as the related services are performed. Thruput revenues are not recognized until the thruput quantity specified in the lease for the applicable period is exceeded. Payments received prior to the related services being performed are recorded as deferred revenue and included in other long-term liabilities in the accompanying balance sheet. Environmental response services re venues are recognized as services are rendered and nursery revenues are recognized upon shipment of product to customers.

Property, plant and equipment:

Property, plant and equipment is carried at cost (as adjusted for the push down accounting method) including applicable construction period interest. Construction period interest of $2,369,000 was capitalized in 2006. Depreciation is provided using the straight-line method over lives which range from 15 to 30 years for the terminal facility and 3 to 8 years for furniture, fixtures and equipment. Costs which are associated with capital additions and improvements or that extend the useful lives or increase service capacity of assets are capitalized; costs of maintenance and repairs are expensed. As a result of the purchase of Van Ommeren’s partnership interest and the application of the push down accounting method thereto as further described in Note 9, property, plant and equipment carrying values were adjusted upward in 2000 by approximately $38.7 million and this adjustment is being amortized over the remaining useful lives of the assets . Terminal fixed assets with a net book value of $520,711,000 at December 31, 2006 are utilized to provide leased storage capacity and related services to customers/ lessees.

8

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(2) Summary of significant accounting policies – (continued)

Other assets:

Costs incurred to deepen vessel draft at the Partnerships’ docks as well as those incurred periodically to maintain draft depths for more than one year are capitalized and amortized over their estimated useful lives (3 to 20 years), as a planned major maintenance activity. In 2006, amounts capitalized were $3,791,000 and amortization of such costs was $1,356,000.

Income taxes:

Income tax expense includes federal and state taxes currently payable as well as deferred taxes arising from temporary differences between income for financial reporting and income tax reporting purposes. Deferred income taxes are accounted for in accordance with Statement of Financial Accounting Standards No. 109. These temporary differences consist primarily of fixed asset basis differences as well as various expenses which affect the financial statements and tax returns in different periods. Differences in the basis of the fixed assets for accounting and income tax reporting purposes exist primarily as a result of different depreciation methods and lives used for financial and income tax reporting purposes, involuntary conversion treatment, for income tax purposes, of proceeds received from asset expropriations and settlement of insurance coverage for property damage, as well as the application of the push down accounting method to the purc hase of Van Ommeren’s partnership interest. Operating loss and tax credit carryforwards are recognized as reductions to deferred income taxes if it is likely that their benefit will be realized.

Investment in NTL venture:

On July 21, 1997 IMTT-NTL, Ltd. acquired a 20% interest in Newfoundland Transshipment Limited (NTL), a Canadian corporation which owns and operates a storage and transshipment terminal located in Newfoundland. The investment is shown in the accompanying balance sheet at cost adjusted for the push down accounting method ($9,473,000 at December 31, 2006). NTL guarantees its shareholders a minimum 12% return on investment. This return on investment ($1,307,000 for 2006) has been recorded as other income in the accompanying income statement as its ultimate realization is reasonably assured based on the nature of its operations and the involvement of major oil companies as customers and shareholders.

Derivatives:

IHI Consolidated has entered into certain derivative instruments to hedge or fix the interest cost of certain borrowings. See Note 4. These derivative instruments are accounted for at fair market value in accordance with SFAS No. 133. To the extent they meet the criteria as an effective cash flow hedge in accordance with that accounting standard, changes in the fair market value of these derivatives are recorded as components of other comprehensive income. Derivative instruments which are determined to be ineffective in meeting hedge criteria are recognized at fair value in the accompanying balance sheet and changes therein are recognized in earnings as a component of periodic net income.

Estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts and disclosures. Some of the more important estimates and assumptions concern depreciation methods and lives, future environmental remediation costs and pension plan discount rates and rates of return on plan assets. Actual results may differ from those estimates and assumptions.

9

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(2) Summary of significant accounting policies – (continued)

Foreign currency translation:

The balance sheet accounts of IMTT-NTL, Ltd. are translated from their foreign currency (Canadian dollars) to U.S. dollars at exchange rates in effect at the end of the year and income statement accounts are translated at average exchange rates for the year. Translation gains or losses as a result of changes in the exchange rate are recorded as a component of other comprehensive income.

Cash and temporary investments:

Cash and temporary investments includes highly liquid investment of excess cash held in money market accounts earning market interest rates and available for operating and other needs on a daily basis.

(3) Related party transactions

During 2006, IHI Consolidated paid or accrued $2,203,000 to entities related to a group of shareholders for legal services and office rent which are recorded as general and administrative expense in the accompanying income statement. IHI Consolidated charged a fee to another entity owned by a group of shareholders of $160,000 in 2006 which is recorded as other income in the accompanying income statement. In 2003 through 2005, employees of entities related to a group of shareholders were participants in the Partnerships’ pension plan and were allocated a portion of the annual benefit cost based on information supplied by the Plan’s actuary. In 2006, these employees became participants of other unrelated benefit plans and the Partnerships’ pension plan recognized the settlement of its liability to this group of employees. See Note 5 for further details. Receivable from affiliates of $65,000 at December 31, 2006 consists of receiva bles from entities owned by a group of shareholders. Interest income recorded on these balances and recognized in the accompanying financial statements is $150,000 for 2006. Interest expense accrued on balances due to an entity related to a group of shareholders was $8,000 for 2006. In accordance with the terms of the shareholders’ agreement, IHI has loans outstanding to a group of shareholders at December 31, 2006 of $11,172,000. Interest accrued on these loans for 2006 was $210,000.

(4) Long-term debt and related derivatives

Long-term debt consists of the following:

Tax-exempt bonds, 3.95% at December 31, 2006	$	30,000,000
Tax-exempt bonds of terminated El Dorado joint venture, 3.95% at December 31, 2006		6,300,000
Unsecured notes payable under revolving bank U.S. credit facility		—
Notes payable under revolving credit facility with a Canadian bank, 5.55% at December 31, 2006		3,907,000
7.15% note purchase agreement with final maturity of November 28, 2016		60,000,000
8% note purchase agreement with final maturity of November 28, 2016		50,000,000
Capitalized land sublease due in monthly installments through October, 2011 with interest at 7%		968,000
Loans from shareholders, 5.50%, due in quarterly installments over a 15 year period beginning March 31, 2008		11,172,000
Notes payable to a bank, 6.35% at December 31, 2006		104,000,000
Other		36,000
	$	266,383,000
Less – Current maturities		(40,369,000	)
	$	226,014,000

10

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(4) Long-term debt and related derivatives – (continued)

In 1993, BII and IMTT-Bayonne issued $30,000,000 of tax-exempt New Jersey Economic Development Authority Dock Facility Revenue Refunding Bonds (the Bonds) to refinance and retire previously issued tax-exempt industrial development revenue bonds. Issue costs related to this financing were capitalized and are being amortized over the life of the Bonds.

In accordance with the terms of the Bond indenture, BII and IMTT-Bayonne select from four interest rate-setting frequency modes; daily, weekly, CP (from 30 to 269 days) and adjustable rate mode (at least six months). The interest rates for these various alternatives are determined by the remarketing agent as the lowest rate that will allow the Bonds to be sold at par based on the current market conditions. For all of 2006 and 2005, the Bond interest rate was set under the daily rate mode.

The Bonds are secured by $30,473,000 of irrevocable letters of credit, which expire November, 2007 (if not extended), issued by the banks under the credit facility discussed below.

The Bonds mature on December 1, 2027 but are subject to optional and mandatory tender, as well as various redemption provisions, at 100% of principal and accrued interest (plus applicable premium if the Bonds are in the adjustable rate mode). When in the daily or weekly rate mode, bondowners may, at their option, tender the Bonds to the remarketing agent for payment of principal and accrued interest.

The Bonds are also subject to mandatory tender provisions in the following cases: 1) each time the interest rate mode is converted, 2) if the related letters of credit are released or allowed to terminate or expire without replacement or extension, 3) substitution of an alternate credit facility for an existing letter of credit, if certain conditions are not met and 4) on each CP rate reset date. After tender, if sufficient funds are not available from remarketing the Bonds, the bondowners could be paid from the proceeds of a draw on the related letters of credit, or, should sufficient funds not be available from letters of credit, the Bonds could be purchased by BII and IMTT-Bayonne. The Bonds may be redeemed at various times at the direction of BII and IMTT-Bayonne while in any rate mode and are also subject to mandatory redemption if the Bonds are determined to be taxable.

IMTT-BC is responsible for the payment of principal (due December 1, 2021) and related interest of a $6.3 million New Jersey Economic Development Authority tax-exempt bond issue of a terminated joint venture. Interest terms on these bonds are similar to those issued by BII and IMTT-Bayonne discussed previously. These bonds are secured by a $6,404,000 irrevocable letter of credit issued by the banks under the credit facility discussed below.

In November, 2001 IMTT-Finco replaced its existing bank credit facility with a new bank credit facility and a $60 million note purchase agreement. IMTT-Finco is the borrower (and supplies funds to the Partnerships) under a $140,000,000 unsecured revolving U.S. credit facility with a seven bank syndicate expiring in November, 2007. The Partnerships guarantee repayment of this debt to the banks and a majority of the outstanding stock of IMTT-NTL, Ltd. and IMTT-Quebec Inc. is pledged in repayment of this debt.

IMTT-Finco can borrow, at its option, (for various periods) under the agreement at either LIBOR plus 1.075% to 1.70%, or the banks’ base lending rate plus .075% to .70%, with the percentage added to each of these borrowing options dependent upon the ratio of debt to earnings before interest, taxes and depreciation and amortization, as defined.

The $140,000,000 credit facility includes the availability of up to $50 million of letters of credit. Letters of credit outstanding under this facility at December 31, 2006 ($38,808,000) primarily secure obligations of BII, IMTT-Bayonne and IMTT-BC under certain tax-exempt bonds referred to previously. IMTT-Finco had no debt outstanding under this facility at December 31, 2006, thus leaving $101,192,000 available under of this credit facility at December 31, 2006.

11

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(4) Long-term debt and related derivatives – (continued)

IMTT Combined is subject to various covenants under this credit facility. The primary covenants require the maintenance of certain ratios, as defined, of combined 1) debt to earnings before interest, income taxes and depreciation and amortization, 2) earnings before interest, income taxes and depreciation and amortization to interest expense and 3) tangible net worth to tangible net worth at December 31, 2000. The loan agreement also restricts additional indebtedness and guarantees, liens on assets, additional investments and loans, sales or dispositions of assets and change of control, as defined, among other requirements.

IMTT-Finco also entered into a $60 million note purchase agreement in November, 2001 and a $50 million note purchase agreement in April, 2002. These agreements bear interest throughout their term at 7.15% and 8%, respectively. Annually, beginning November 28, 2010, note principal installments of $8,571,500 and $7,142,850, respectively, are due until the final principal payment on November 28, 2016. IMTT-Finco may prepay any portion of the outstanding balance of these notes which may be subject to payment of an additional “make-whole amount”, as defined in the agreement. These agreements contain covenants, guarantees and stock pledges identical to the $140 million bank syndicate credit facility.

In 2002, IMTT-NTL, Ltd. and IMTT-Quebec Inc. entered into a $15 million (U.S. equivalent) revolving credit facility with a Canadian bank. Loans under this facility are available in Canadian dollars at prime or bankers’ acceptances rates plus spreads based on the ratio of debt to earnings before interest, income taxes and depreciation and amortization identical to those under the $140 million bank syndicate U.S. credit facility. This facility which terminates November 28, 2007 has covenants, guarantees and stock pledges identical to the $140 million bank syndicate credit facility.

Costs related to obtaining the $140 million revolving bank credit facility, the $60 and $50 million note purchase agreements and the Canadian bank credit facility have been capitalized and are being amortized over the term of the related debt.

IMTT Combined is in the process of renewing and expanding its U.S. and Canadian bank credit facilities for a five year period with more favorable rates and covenants than contained in its existing agreements. This renewal should be completed in the spring of 2007.

The interest rate on the borrowings under the tax-exempt bonds and the revolving bank credit facilities adjusts periodically depending on their individual terms as previously described. In an effort to achieve a more stable interest cost and reduce the risk of rising interest rates and expense, two interest rate swap agreements with two separate large banks were entered into. The primary terms and the accounting treatment of these financial instruments are described below.

In 1997 the Partnerships entered into a $50,000,000, ten year interest rate swap agreement. Under this agreement, the Partnerships are the fixed rate payers (6.4%) and the bank is the floating rate payer. The floating rate is based on LIBOR (5.37344% at December 31, 2006) determined quarterly. Net interest expense incurred under this agreement for the year ended December 31, 2006 was $665,000 and is included in interest expense in the accompanying income statements.

This interest rate swap agreement was entered into as a cash flow hedge against the interest cost associated with the Partnerships’ variable rate borrowings under the existing bank revolving credit facility in 1997. As a result of the Partnerships’ refinancing activities in 2001 which mitigated the probability of future variable rate borrowings, the interest rate swap agreement was considered ineffective for hedge accounting purposes. The fair value of the interest rate swap agreement ($546,000 as of December 31, 2006) is included in other long-term liabilities in the accompanying balance sheet. Changes in the fair value of the interest rate swap agreement are recognized in the accompanying statement of income ($1,136,000 gain for 2006).

12

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(4) Long-term debt and related derivatives – (continued)

Another interest rate swap agreement was entered into in 2006. This $36.3 million forward interest rate swap agreement becomes effective in October, 2007 for a five year period and is designed to fix the interest rate on an identical amount of tax-exempt debt at the fixed swap rate of 3.41%. The fair market value of this interest rate swap at December 31, 2006 ($156,000) has been recorded in other long-term liabilities and other comprehensive income in the accompanying financial statements.

In connection with the $60 million note purchase agreement previously discussed, a treasury lock agreement was entered into in an effort to limit the risk of future interest rate increases and fix rates at current levels at the time the agreement was entered into. A treasury lock agreement of identical notional amount was settled with a payment of $1,378,000 in 2001. This payment was recorded as a component of other comprehensive income and is being amortized to net income as additional interest expense such that the effective rate of the $60 million note purchase agreement is 7.44% ($102,000 of amortization was recorded in 2006).

As discussed in Note 9, on January 1, 2000 ITT and Affiliates purchased the remaining 49.5% interest in the subsidiaries discussed in Note 1. The consideration for the purchase was in the form of notes payable to the former partner totaling $130,000,000. These notes bore interest at LIBOR plus one percent and contained payment terms of interest only for the first five years with equal annual principal payments over the remaining five-year term of the notes beginning December 31, 2005. These notes also contained terms that subordinated them to any current or future debt of IMTT Combined.

In December, 2005, the $130 million of notes of ITT and Affiliates payable to a former partner (see Note 9) were refinanced with a bank. Principal payments were revised to $13,000,000 annually from December 31, 2005 to December 31, 2010 with the remaining $52 million due December 23, 2012. Interest rates are the same as under the original notes payable to a former partner. IMTT Combined has guaranteed principal payments for the following amounts of this debt:

Effective Date – December 30, 2006	$	13,000,000
December 31, 2006 – December 30, 2007		26,000,000
December 31, 2007 – December 30, 2008		39,000,000
December 31, 2008 – December 30, 2009		52,000,000
December 31, 2009 – December 30, 2010		65,000,000
December 31, 2010 – December 23, 2012		52,000,000

The refinanced debt retains the clause in the original note that it is subordinate to any current or future debt of IMTT Combined. Additionally, after December 31, 2009, if the ratio of debt to earnings before interest, taxes, depreciation and amortization of IMTT Combined exceeds a prescribed ratio, the outstanding debt balance is assumed by IMTT Combined from ITT and Affiliates. Further, the loan agreement restricts IMTT Combined and ITT and Affiliates from pledging assets unless the bank receives an equal security interest in such assets, consolidating or merging with another entity, or incurring a change of control, as defined. The guaranty of IMTT Combined could be accelerated if IMTT Combined defaults under any of its debt obligations. IHI is prohibited from selling or pledging its ownership interests in ITT and Affiliates and IMTT Combined.

With the objective of achieving a stable interest cost and reducing the risk of rising interest rates and expense related to this debt, interest rate swap agreements with two banks were entered into in 2001 with notional amounts and scheduled maturity terms exactly equal to that of the original notes to the former partner. Under these agreements, ITT and Affiliates were the fixed rate payers (7.1475%) and the banks were the floating rate payers. The floating rate was based on LIBOR (5.35% at December 31, 2006) determined monthly. Net interest expense incurred under these agreements for the year ended December 31, 2006 was $1,068,000 and is included in interest expense in the accompanying statement of income. The ITT and Affiliates obligations under these agreements are guaranteed by their wholly-owned subsidiary International-Matex Tank Terminals. On May 31, 2006, these interest rate swap agreements were amended (and the agreement of one of th e banks was assigned to and assumed by the

13

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(4) Long-term debt and related derivatives – (continued)

other bank that was a party to these agreements). The amendments resulted in an increase in the notional amount of the swap agreement to exactly match the terms of the December, 2005 refinancing of the notes payable to a former partner with a bank and a reduction in the fixed rate paid by ITT and Affiliates to 6.29%. No payments were made to settle the fair market value loss of the original agreements but the fixed rate of the amended agreement was designed to repay this loss over the term of the amended agreement. As with the original agreements, payments thereunder are guaranteed by International Matex Tank Terminals. Net interest expense incurred under this agreement for the year 2006 was $686,000 and is included in interest expense in the accompanying income statement. The fair market value loss of the amended swap agreement of $5,114,000 at December 31, 2006 has been included in other long-term liabilities in the accompanying balance sheet and the change i n the fair market value for the year 2006 ($794,000 gain) has been recorded in the accompanying statement of income in accordance with accounting for cash flow derivatives under SFAS No. 133.

(5) Employee benefits

Except for a plan covering certain employees covered by a collective bargaining agreement at the Lemont, Illinois terminal, substantially all employees of the Partnerships are eligible to participate in a defined benefit pension plan (the Plan). Benefits under the Plan are based on years of service and the employees’ highest average compensation for a consecutive five year period. Coincident with the acquisition of terminal facilities in 1997 by IMTT -Lemont, it became the sponsor of a defined benefit plan covering union employees at this terminal (Union Plan). Monthly benefits under this plan are computed based on a benefit rate in effect at the date of the participant’s termination ($45.50 at November 1, 2006) multiplied by the number of years of service. The Partnerships’ contributions to both plans are based on the recommendations of its consulting actuary.

The following table sets forth the obligations and assets (as well as changes therein) of both plans, the resulting funded status and amounts recognized in the accompanying financial statements. (The measurement date for plan assets is October 31).

	The Plan			Union Plan
Changes in benefit obligation:
Benefit obligation at beginning of year	$	46,678,000		$	2,416,000
Service cost		2,965,000			151,000
Interest cost		2,966,000			148,000
Amendments		—			—
Assumption changes		6,607,000			266,000
Actuarial loss (gain)		418,000			(11,000	)
Benefits paid		(1,728,000	)		(48,000	)
Settlement (Note 3)		(2,208,000	)		—
Benefit obligation at end of year	$	55,698,000		$	2,922,000
Changes in plan assets:
Fair value of plan assets at beginning of year	$	24,206,000		$	1,939,000
Actual return on plan assets		2,591,000			210,000
Employer contribution		6,679,000			292,000
Benefits and expenses paid		(1,728,000	)		(48,000	)
Settlement (Note 3)		(1,623,000	)		—
Fair value of plan assets at end of year	$	30,125,000		$	2,393,000

14

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(5) Employee benefits – (continued)

	The Plan			Union Plan
Funded status:	$	(25,573,000	)	$	(529,000	)
Unrecognized net transition obligation		—			—
Unrecognized net actuarial loss(gain)		13,613,000			707,000
Unrecognized prior service cost		1,454,000			119,000
Prepaid (accrued) benefit cost		(10,506,000	)		297,000
Adjustment for minimum pension liability (Note 10)		—			(826,000	)
Recognized pension (liability)	$	(10,506,000	)	$	(529,000	)
Less amount attributable to related entities (Note 3)		(256,000	)		—
Pension (liability) recognized in balance sheet	$	(10,250,000	)	$	(529,000	)
Minimum pension liability:
Accumulated benefit obligation	$	38,128,000		$	2,922,000
Less: Fair value of plan assets		30,125,000			2,393,000
Less: Accrued (prepaid) benefit cost		10,506,000			(297,000	)
Minimum pension liability recognized	$	—		$	826,000
Components of minimum pension liability:
Accumulated other comprehensive income (Note 10)	$	—		$	707,000
Intangible asset		—		$	119,000
Minimum pension liability	$	—		$	826,000

Components of net periodic benefit cost:
Service cost	$	2,965,000		$	151,000
Interest cost		2,966,000			148,000
Expected return on plan assets		(2,343,000	)		(171,000	)
Amortization of prior service cost		170,000			12,000
Amortization of transition obligation		—			—
Recognized net actuarial loss (gain)		585,000			37,000
Settlement (Note 3)		579,000			—
Net periodic benefit cost of the plan	$	4,922,000		$	177,000
Less amount attributable to related entities (Note 3)		—			—
Net periodic benefit cost recognized in statement of income	$	4,922,000		$	177,000
Weighted average assumptions as of December 31:
Discount rate		5.60	%		5.60	%
Expected return on plan assets		8.50	%		8.50	%
Rate of compensation increase		5.47	%		—

As of December 31, 2006 and for the year 2006, the discount rate assumption used in the computation of benefit obligations was changed to 5.60% to better approximate returns available on high quality fixed income investments. The long-term rate of return of pension assets is based on historical results adjusted as necessary for future expectations.

Weighted average asset allocation:
Domestic equity funds	41.1	%	40.7	%
International equity funds	15.4	%	15.3	%
Domestic fixed income funds	38.8	%	39.3	%
Other	4.7	%	4.7	%
Total	100.0	%	100.0	%

15

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(5) Employee benefits – (continued)

Pension asset investment decisions are made with assistance of an outside paid advisor to achieve the multiple goals of high rate of return, diversification and safety.

Expected benefit payments:
Year 2007	$	691,000	$	68,000
Year 2008		879,000		96,000
Year 2009		1,202,000		104,000
Year 2010		1,328,000		128,000
Year 2011		1,555,000		131,000
Years 2012 – 2016		11,647,000		819,000
Anticipated contributions for 2007	$	2,560,000	$	128,000

The Partnerships provide post-retirement life insurance (coverage equal to 25% of final year compensation not to exceed $25,000) and health benefits (coverage for early retirees at least 62 years old on early retirement to age 65, reimbursement of medicare premiums for the Bayonne terminal employees and some smaller health benefits no longer offered) to retired employees. The Partnerships adopted the accounting treatment for post-retirement benefits other than pensions as prescribed by SFAS No. 106 in 2006. As allowed by that accounting standard, the Partnerships elected to defer and amortize the January 1, 2006 transition obligation over ten years.

The following table sets forth the obligation and assets (as well as changes therein) of these plans, the resulting funding status and amounts recognized in the accompanying financial statements. The measurement date for plan assets and liabilities is December 31, 2006.

Changes in benefit obligation:
Benefit obligation at beginning of year	$	3,512,000
Service cost		110,000
Interest cost		192,000
Actuarial (gain)		(1,025,000	)
Benefits paid		(157,000	)
Benefit obligation at end of year	$	2,632,000
Changes in plan assets:
Fair value of plan assets at beginning of year	$	—
Employee contribution		157,000
Benefits paid		(157,000	)
Fair value of plan assets at end of year	$	—
Funded status	$	(2,632,000	)
Unrecognized net transition obligation		3,161,000
Unrecognized net (gain)		(1,025,000	)
Prepaid (accrued) benefit cost	$	(496,000	)
Components of net periodic benefit cost:
Service cost	$	110,000
Interest cost		192,000
Amortization of transition obligation		351,000
Net periodic benefit cost of the plan	$	653,000

16

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(5) Employee benefits – (continued)

Weighted average assumptions as of December 31, 2006:

Discount rate	5.60%
Rate of compensation increase	3.00%

A 10% annual rate of increase in health care costs for the year 2006 was assumed (8.5% at December 31, 2006) decreasing by .75% annually to a 5% annual level.

Expected benefit payments and contributions:
Year 2007	$	190,000
Year 2008		170,000
Year 2009		150,000
Year 2010		150,000
Year 2011		150,000
Year 2012 – 2016		810,000

Assumptions concerning health care cost trend rates can have a significant impact on plan costs and liabilities, as shown below.

	Using Stated Assumptions		One Percentage Point
			Decrease		Increase
Service cost	$	110,000	$	103,000	$	118,000
Interest cost		192,000		183,000	$	202,000
Accumulated post retirement benefit obligation		2,623,000		2,540,000		2,716,000

In accordance with SFAS No. 158, non-public employers sponsoring defined benefit pension and other post retirement plans are required to present the net funded position of these plans in the financial statements (rather than the footnotes in accordance with current generally accepted accounting principles) for fiscal years ending after June 15, 2007. The Partnerships intend to adopt SFAS No. 158 in its 2007 financial statements.

The Partnerships have established a supplementary, non-qualified benefit plan for certain management employees whose compensation exceeds the maximum eligible for inclusion in the qualified defined benefit plan. Under this plan, the Partnerships fund additional compensation to the affected employees on a pre-tax basis that will allow them to make a contribution to a separate investment account which the employees own that will provide the actuarial equivalent of the benefits available as if all of the employees’ compensation had been included in the qualified defined benefit plan. Expense related to this plan of $664,000 in 2006 is recorded as additional compensation and primarily included in general and administrative expense in the accompanying financial statements.

The Partnerships have established defined contribution Section 401 (k) employee benefit plans. Under the primary plan, employees who are eighteen years old and have six months of service are eligible to participate. Employees may contribute up to the maximum allowable for Federal income tax purposes and the Partnerships’ matching contribution is determined each year by management. In 2006, the Partnerships elected to match 5% of employee contributions. Total expense for the 401 (k) plans recognized for 2006 was $157,000.

The Partnerships purchase life insurance for certain management employees and provide for the repayment of premiums paid through deferred compensation arrangements. Under this program, various amounts of life insurance are purchased and paid for by the Partnerships and receivables are recorded from each management employee, along with accrued interest. At retirement or termination of service, funds are provided to the plan participants under deferred compensation agreements to provide for the repayment of premiums paid and ownership of the policies is transferred at that time. Expense related to the deferred compensation arrangements is recorded annually as employee service is rendered to the Partnerships. Expense associated with providing this benefit of $398,000 for 2006 is recorded in general and administrative expense in the accompanying financial statements.

17

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(6) Commitments and contingencies

IHI Consolidated is involved in various lawsuits, claims and inquiries (including environmental matters) which are routine to the nature of its business. Management believes that resolution of these matters will not result in any material adverse effect on the financial statements.

Many of the entities comprising IMTT Combined are subject to compliance with federal and state environmental regulations, some of which require environmental remediation and ongoing monitoring activities. Depending upon the nature and circumstances of such activities, certain of the expenditures related thereto have been recorded as operating expenses in the accompanying income statements and others are capitalized as such expenditures are incurred.

A summary of these environmental remediation matters follows.

As a result of an equipment failure and subsequent product release and clean-up in 2003 in Richmond, California, a consent order was entered into requiring the California terminal to implement enhanced containment systems to mitigate the effect of future accidental releases. This containment system is in the process of implementation and should be completed in 2007 at an estimated remaining cost of $1.3 million to $1.5 million.

An accidental product release and subsequent clean-up at the Lemont, Illinois terminal revealed a more extensive contamination problem which existed at the time of the purchase of this facility from its former owners. The Lemont terminal entered into a consent order with the state of Illinois to remediate the contamination. Remediation is also required as a result of the renewal of a lease with a government agency for a portion of the terminal. This remediation effort, consisting of among other things, the implementation of extraction and monitoring wells and soil treatment, is estimated to span a period of ten to twenty years or more at a cost of $10 million to $15 million.

The Bayonne, New Jersey terminal which has been acquired and aggregated over a 23 year period, contains pervasive remediation requirements that were assumed at the time of purchase from the various former owners. One former owner retained environmental remediation responsibilities for a purchased site as well as sharing other remediation costs. These remediation requirements are documented in two memoranda of agreement and an administrative consent order with the state of New Jersey. Remediation efforts entail removal of free product, soil treatment, repair/replacement of sewer systems, and the implementation of containment and monitoring systems. These remediation activities are estimated to span a period of ten to twenty or more years at a cost ranging from $49.9 to $79.9 million.

The remediation activities described previously at the three terminals are estimated based on currently available information, in undiscounted U.S. dollars and are inherently subject to relatively large fluctuation. Management believes that the cost of the foregoing remediation activities ($61.2 million to $96.4 million in total) is capitalizable in accordance with generally accepted accounting principles (E.I.T.F. 90-8) as such costs are recoverable and improve the property as compared with its condition when acquired and either 1) extend the life, increase the capacity or improve the safety and/or efficiency of the property or 2) mitigate or prevent environmental contamination that has yet to occur that may result from future operations or activities. During 2006 approximately $3.7 million of such expenditures were incurred and capitalized within property, plant and equipment. For the year ended December 31, 2006 approximately $3.4 million o f environmental related cost that did not meet the capitalization criteria were charged to operations.

In 2005, IMTT Combined entered into a commitment to construct and operate a chemical liquid logistics facility in Geismar, Louisiana with an estimated total cost of $168,000,000. At December 31, 2006, $36.2 million of costs related to this project has been incurred and included in property, plant and equipment in the accompanying balance sheet. Completion of construction is estimated in the spring of 2008.

18

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(6) Commitments and contingencies – (continued)

Hurricane Katrina struck the Gulf Coast of the United States on August 29, 2005 and affected three of the terminals owned by IMTT Combined as well as its environmental response and plant nursery operations located in south Louisiana. With the exception of deductibles under its property and liability insurance coverages ($325,000, which were expensed in 2005) and certain betterments which will be undertaken in connection with the repair of storm damage (and capitalized as additions to fixed assets), all expenditures incurred in the repair and clean up of Hurricane Katrina related damages will be reimbursed by insurance coverage and therefore no significant net gain or loss as a result of storm related damage was recognized in the accompanying financial statements. A receivable balance of $3,150,000 at December 31, 2006, for unreimbursed Katrina related costs is included in accounts receivable in the accompanying balance sheet. All of the affect ed facilities returned to operation shortly after the storm with relatively insignificant loss of revenue, some of which should be recoverable from business interruption insurance which will be recognized after December 31, 2006 when settlement is made and funds are received (the same also applies to certain costs incurred in the temporary relocation of the headquarters office). Receipt of final settlement of Hurricane Katrina insurance claims is expected in early 2007.

(7) Income taxes

IHI Consolidated provides for income taxes in accordance with the asset and liability method as prescribed by SFAS No. 109.

The components of the income tax expense shown in the accompanying income statement are as follows:

	Current		Deferred		Total
U.S. federal	$	726,000	$	13,031,000	$	13,757,000
State and local		1,040,000		1,762,000		2,802,000
Total income tax expense	$	1,766,000	$	14,793,000	$	16,559,000

Income tax expense differs from income tax computed at the federal statutory rate of 35% of income before income taxes as shown in the accompanying financial statement, as follows:

Income tax expense based on federal statutory rate	$	13,011,000
State income tax provisions		2,802,000
Adjustments to actual tax returns		842,000
Others, net		(96,000	)
Total income tax expense recorded in accompanying financial statements	$	16,559,000

Deferred income taxes have been recorded in the accompanying balance sheet for the tax effects of temporary differences that impact the financial statements and income tax returns in different periods, offset partially by carryforwards for federal and state income tax purposes of unused net operating losses and tax credits. The primary components of deferred income tax liabilities (assets) are as follows:

Fixed asset basis differences	$	125,571,000
Pension expense in excess of contributions		(4,365,000	)
Interest rate swap agreement differences		(2,357,000	)
Other comprehensive income items		(503,000	)
Net operating loss and tax credit carryforwards		(26,978,000	)
Others, net		(4,038,000	)
Net deferred taxes as shown in accompanying balance sheet	$	87,330,000

19

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(7) Income taxes – (continued)

Deferred income taxes are classified as follows in the accompanying balance sheet.

Current tax (asset)	$	(3,877,000	)
Deferred tax liability		91,207,000
Net deferred tax liability	$	87,330,000

There is no valuation allowance for deferred tax assets at December 31, 2006 as management believes deferred tax assets will be realized through future operations and the reversal of taxable temporary differences.

Net operating loss (N.O.L.) and tax credit carryforwards outstanding as of December 31, 2006 expire as follows:

Year of Expiration	Federal N.O.L.		State N.O.L.
2007	$	—	$	2,688,000
2008		—		2,643,000
2009		—		4,361,000
2010		—		3,812,000
2011		—		8,925,000
2012		—		8,242,000
2013		—		6,266,000
2014		—		620,000
2015		—		1,461,000
2016		—		12,974,000
2017		78,000		14,902,000
2018		—		11,646,000
2019		—		6,599,000
2020		3,000		1,976,000
2021		49,000		2,873,000
2022		11,188,000		3,752,000
2023		15,516,000		5,000
2024		21,416,000		6,000
2025		1,581,000		7,000
2026		75,000		—
	$	49,906,000	$	93,758,000

$5,056,000 of federal alternative minimum tax credits have unlimited carryforward periods.

(8) Fair value of financial instruments

The fair value of financial instruments (as defined by SFAS No. 107) contained in the accompanying balance sheets approximates the carrying amount for all assets and liabilities except for the two note purchase agreements totaling $110 million included in long-term debt in the accompanying balance sheets whose estimated fair market value at December 31, 2006 was approximately $119 million.

(9) Change in ownership

In January, 2000 International Tank Terminals, L.L.C. and its affiliates acquired Van Ommeren Tank Terminals Gulf Coast, Inc. and affiliates’ interest in each of the entities comprising IMTT Combined. The consideration for the purchase was in the form of $130 million of notes payable to the Van Ommeren affiliates by International Tank Terminals, L.L.C. and its affiliates. These notes bore interest at LIBOR plus one percent and contained payment

20

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(9) Change in ownership – (continued)

terms of interest only for the first five years with equal annual principal payments over the remaining five year term of the notes. Although International Tank Terminals, L.L.C. and its affiliates were the makers of these notes, they contained additional terms that subordinated them to any current or future debt of IMTT Combined. As a result of the application of the push down accounting method to this transaction in 2000, total equity and assets (primarily fixed assets) were increased by approximately $42,209,000 and depreciation and amortization expense related thereto increased $3,490,000 annually. As described more fully in Note 4, these notes were refinanced with a bank in December, 2005.

On May 1, 2006, Loving Enterprises, Inc. (Loving) which was the 100% owner of International Tank Terminals, L.L.C. and its affiliates (owners of 100% of IMTT Combined), transferred a 50% interest to Macquarie Infrastructure Company Trust for $250 million and Loving changed its name to IMTT Holdings Inc. Certain costs related to this transaction totaling approximately $8.1 million have been charged against the proceeds and the net amount of $241.9 million was recognized in shareholders’ equity.

(10) Accumulated other comprehensive income

Shareholders’ equity includes accumulated other comprehensive income. Changes in the components of accumulated other comprehensive income for 2006 are as follows:

	Derivatives			Minimum Pension Liability Adjustment			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income/(Loss)
Balance January 1, 2006	$	(623,000	)	$	(529,000	)	$	548,000	$	(604,000	)
Other comprehensive income (loss) for the year		29,000			(179,000	)		—		(150,000	)
Balance, December 31, 2006	$	(594,000	)	$	(708,000	)	$	548,000	$	(754,000	)

(11) Subsequent event

Subsequent to December 31, 2006 dividends to shareholders of $14,000,000 were paid.

(12) Future minimum rental revenue

Future minimum rental revenues for the remaining unexpired term of lease agreements in existence at December 31, 2006 for terminal storage capacity are as follows.

Year	Amounts
2007	$	146,180,000
2008		113,762,000
2009		113,477,000
2010		63,533,000
2011		31,705,000
2012 and thereafter		20,821,000
Total	$	489,478,000

21

IMTT HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2006

(13) Additional balance sheet detail

Additional detail of the components of certain balance sheet captions follows.

Prepaid expenses and deposits:
Prepaid insurance	$	3,209,000
Deferred income tax asset		3,877,000
Other		358,000
Total	$	7,444,000
Other assets:
Deferred compensation plan receivables/investments	$	4,198,000
Deferred dredging costs		4,361,000
Other		1,688,000
Total	$	10,247,000
Accrued liabilities:
Utilities	$	1,645,000
Damage claim settlement accrual		3,175,000
Accrued payables		2,135,000
Accrued health claims		1,838,000
Vacation pay provision		1,514,000
Accrued workmen’s compensation claims		1,252,000
Accrued interest		5,527,000
Other		4,367,000
Total	$	21,453,000

(14) Subsequent event (unaudited)

On June 7, 2007 IMTT Combined refinanced its existing U.S. and Canadian revolving bank facilities as well as its $60 million and $50 million note purchase agreements. On that date a five year, $625 million non-reducing revolving credit facility with a nineteen bank syndicate was entered into and proceeds under this new bank facility were utilized to refinance existing bank debt as well as to pay off and retire the note purchase agreements (including approximately $12.3 million of make-whole payments). The new revolving bank credit facility also incorporates provisions that allow for lower interest rates and less restrictive covenants than under the previous credit facilities.

22

EX-99.2

Exhibit 99.2

Report of Independent Auditors

The Board of Directors
Loving Enterprises, Inc.

We have audited the accompanying consolidated balance sheets of Loving Enterprises, Inc. as of December 31, 2005 and 2004, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall fi nancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Loving Enterprises, Inc. as of December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 14 to the consolidated financial statements, the consolidated financial statements as of and for the years ended December 31, 2005 and 2004 have been restated.

/s/ Ernst & Young LLP

New Orleans, Louisiana
April 14, 2006, except with respect
to matters discussed in the last
paragraph of Note 4 and to Notes 7,
10, and 14, as to which the date is
April 27, 2007

LOVING ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS
December 31, 2005 and 2004

	2005			2004
ASSETS
Current assets:
Cash	$	2,291,000		$	1,117,000
Accounts and accrued interest receivable, net of allowance of $264,000 ($306,000 in 2004)		44,531,000			28,599,000
Inventories		5,396,000			3,278,000
Prepaid expenses and deposits (Note 7)		7,580,000			5,815,000
Total current assets	$	59,798,000		$	38,809,000
Property, plant and equipment (Note 2):
Land	$	26,261,000		$	26,141,000
Terminal and other facilities		746,493,000			710,365,000
	$	772,754,000		$	736,506,000
Less – Accumulated depreciation		(314,399,000	)		(286,506,000	)
	$	458,355,000		$	450,000,000
Other assets:
Debt issue costs, net (Note 4)	$	960,000		$	1,294,000
Investment in foreign terminal		4,149,000			3,510,000
Receivable from related parties, net		9,053,000			1,012,000
Investment in NTL venture (Note 2)		9,473,000			8,581,000
Other (Note 2)		7,447,000			7,348,000
	$	31,082,000		$	21,745,000
	$	549,235,000		$	510,554,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,691,000		$	9,395,000
Accrued liabilities		27,302,000			19,605,000
Total current liabilities	$	47,993,000		$	29,000,000
Deferred revenue (Note 2)	$	—		$	12,000
Other long-term liabilities (Notes 4 and 5)	$	28,020,000		$	35,419,000
Long-term debt (Note 4)	$	316,310,000		$	320,375,000
Deferred income taxes (Notes 2 and 7)	$	75,791,000		$	60,718,000
Commitments and contingencies (Note 6)
Shareholders’ equity (Notes 9, 10, 11 and 14):	$	81,121,000		$	65,030,000
	$	549,235,000		$	510,554,000

The accompanying notes are an integral part of these balance sheets.

1

LOVING ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2005 and 2004

	2005 (Restated)			2004 (Restated)
Revenues:
Tank storage and terminal charges (Note 12)	$	195,642,000		$	176,356,000
Other rental income		1,460,000			1,582,000
Railroad operations		1,581,000			1,530,000
Other income (Notes 2 and 3)		4,430,000			4,168,000
Environmental response services		37,107,000			16,124,000
Nursery revenues		10,404,000			10,907,000
Total revenues	$	250,624,000		$	210,667,000
Expenses:
Terminals –
Labor costs (Note 5)	$	50,566,000		$	46,819,000
Other operating		44,185,000			35,835,000
Repairs and maintenance		15,611,000			15,014,000
Real and personal property taxes		8,353,000			7,799,000
Total terminal operating expenses	$	118,715,000		$	105,467,000
Environmental response affiliates		24,774,000			9,720,000
Nursery expenses		10,268,000			11,136,000
General and administrative (Notes 3 and 4)		22,834,000			20,911,000
Interest (Notes 2 and 4)		22,100,000			22,269,000
Depreciation and amortization (Notes 2 and 9)		29,524,000			29,929,000
Mark-to-market adjustment of non-hedging derivatives (Notes 2, 4 and 14)		(9,616,000	)		(8,650,000	)
	$	218,599,000		$	190,782,000
Income before income taxes	$	32,025,000		$	19,885,000
(Provision) credit for income taxes (Notes 2 and 7):
Current	$	(950,000	)	$	43,000
Deferred		(13,403,000	)		(8,185,000	)
	$	(14,353,000	)	$	(8,142,000	)
Net income	$	17,672,000		$	11,743,000

The accompanying notes are an integral part of these statements.

2

LOVING ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2005 and 2004

	2005 (Restated)			2004 (Restated)
Net income	$	17,672,000		$	11,743,000
Other comprehensive income:
Derivatives (Notes 2, 4 and 14):
Reclassification to interest expense of loss on $60 million treasury lock agreement		95,000			88,000
		95,000			88,000
Minimum pension liability adjustment
Lemont union plan (Note 5)		(157,000	)		(48,000	)
Foreign currency translation adjustment		418,000			—
Tax effects of items included in other comprehensive income		(137,000	)		(15,000	)
Other comprehensive income (Notes 10 and 14)		219,000			25,000
Comprehensive income	$	17,891,000		$	11,768,000

The accompanying notes are an integral part of these statements.

3

LOVING ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Years Ended December 31, 2005 and 2004

	(Restated)
Balance, December 31, 2003	$	62,262,000
Net income		11,743,000
Distributions		(9,000,000	)
Cash contributions		—
Other comprehensive income (Notes 2, 4, 5, 10 and 14)		25,000
Balance, December 31, 2004 (Note 10)	$	65,030,000
Net income		17,672,000
Distributions (Note 11)		(1,800,000	)
Cash contributions		—
Other comprehensive income (Notes 2, 4, 5, 10 and 14)		219,000
Balance, December 31, 2005 (Note 10)	$	81,121,000

The accompanying notes are an integral part of these statements.

4

LOVING ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2005 and 2004

	2005 (Restated)			2004 (Restated)
Cash flows from operating activities
Net income	$	17,672,000		$	11,743,000
Adjustments to reconcile net cash provided by operating activities
Depreciation and amortization		29,524,000			29,929,000
Bad debt expense		—			134,000
Decrease (Increase) in accounts and accrued interest receivable		(15,655,000	)		(6,062,000	)
Decrease (Increase) in inventories		(2,118,000	)		(713,000	)
Decrease (Increase) in prepaid expenses and deposits		(288,000	)		(69,000	)
Decrease (Increase) in investment in foreign terminal		(639,000	)		336,000
Decrease (Increase) in other assets		(415,000	)		(563,000	)
(Decrease) Increase in accounts payable		11,213,000			1,012,000
(Decrease) Increase in accrued liabilities		7,492,000			3,803,000
(Decrease) Increase in deferred income taxes		13,403,000			8,185,000
(Decrease) Increase in deferred revenue		(12,000	)		(30,000	)
(Decrease) Increase in other long-term liabilities		(7,404,000	)		(6,212,000	)
Amortization of treasury lock agreement		95,000			88,000
(Gain)/loss on sale/retirement of assets		(257,000	)		2,000
Uncollected charges to affiliates		(905,000	)		(870,000	)
Net operating cash flows	$	51,706,000		$	40,713,000
Cash flows from investing activities
Purchase of plant assets	$	(36,762,000	)	$	(48,648,000	)
Investment in affiliates		—			—
Decrease (increase) in other assets		(621,000	)		(2,528,000	)
Sale of assets		293,000			143,000
Net investing cash flows	$	(37,090,000	)	$	(51,033,000	)
Cash flows from financing activities
Net borrowings (payments) under bank syndicate U.S. line of credit agreement	$	(3,400,000	)	$	21,200,000
Net other borrowings (payments)		(1,272,000	)		(7,833,000	)
Distributions to shareholders		(1,800,000	)		(10,000,000	)
Contributions from shareholders		—			—
Net receipts (payments) of receivables/payables with related parties		(6,988,000	)		6,807,000
Debt issue cost incurred		—			—
Net financing cash flows	$	(13,460,000	)	$	10,174,000
Net increase (decrease) in cash	$	1,156,000		$	(146,000	)
Net increase (decrease) in cash due to currency translation		18,000			—
Cash at beginning of year		1,117,000			1,263,000
Cash at end of year	$	2,291,000		$	1,117,000
Supplemental disclosure of cash flow information
Cash paid (received) during the period for:
Interest (net of amount capitalized)	$	25,306,000		$	22,844,000
Income taxes		675,000			(1,028,000	)

The accompanying notes are an integral part of these statements.

5

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(1) Nature of operations and organization

Loving Enterprises, Inc. (“Loving”) owns 100% of various corporations and limited liability companies (International Tank Terminals, L.L.C. and Affiliates, “ITT and Affiliates”) who in turn own 100% of various operating entities, primarily partnerships, (“IMTT Combined”). The following chart summarizes the relationship of the various ITT and Affiliates and IMTT Combined entities.

Parent Entities (ITT and Affiliates)		Subsidiary/Operating Entities (IMTT Combined)
99% Ownership	1% Ownership
International Tank Terminals, L.L.C.	ITT-Storage, Inc.	International-Matex Tank Terminals
Bayon of LA, Inc.	ITT-BT Partner, Inc.	BT
International Tank Bayonne, Inc.	ITT-Bayonne Storage, Inc.	IMTT-Bayonne
ITT-BX, Inc.	ITT-BX Storage, Inc.	IMTT-BX
ITT-Pipeline, Inc.	ITT-Pipeline Partner, Inc.	IMTT-Pipeline
ITT-Interterminal Pipeline, Inc.	ITT-Interterminal Pipeline Partner, Inc.	IMTT-Interterminal Pipeline
ITT-BC, Inc.	ITT-BC Storage, Inc.	IMTT-BC
ITT-CX, Inc.	ITT-CX Storage, Inc.	IMTT-CX
ITT-USA, Inc.	ITT-USA Partner, Inc.	IMTT-USA
Hook Terminalling, Inc.	HTC Partner, Inc.	Hook Terminalling Company
ITT-Gretna, L.L.C.	ITT-Gretna Storage, Inc.	IMTT-Gretna
ITT-Chesapeake, Inc.	ITT-Chesapeake Storage, Inc.	IMTT-Chesapeake
ITT-Richmond, Inc.	ITT-Richmond Storage, Inc.	IMTT-Richmond
ITT-Richmond-CA, Inc.	ITT-Richmond-CA Storage, Inc.	IMTT-Richmond-CA
ITT-Lemont, Inc.	ITT-Lemont Storage, Inc.	IMTT-Lemont
ITT-Petroleum Management, Inc.	ITT-SPR Partner, Inc.	IMTT-Petroleum Management
International Environmental Services, Inc.	ITT-IEP Partner, Inc.	International Environmental Partners
ITT-NTL, Inc. (100%)	—	IMTT-NTL, Ltd.

The IMTT Combined entities primarily provide bulk liquid storage and handling services in North America through terminals located on the East, West and Gulf Coasts as well as the Great Lakes region of the United States and in Quebec and Newfoundland, Canada, with the predominant terminals located in the New York harbor and on the Mississippi River near the Gulf of Mexico. Petroleum products, vegetable and tropical oils and various chemicals are stored and handled.

International-Matex Tank Terminals (IMTT) is a partnership formed in 1975 to own and operate bulk liquid storage terminal facilities in Louisiana. BT and IMTT-Bayonne are partnerships formed in 1983. BT was formed to purchase Bayonne Industries, Inc. (BII). The IMTT-BX partnership was formed in 1993 to acquire the terminal facility adjacent to Bll’s tank terminal on April 1, 1993. IMTT-BC and IMTT-CX are partnerships organized in 1996 to purchase certain terminal assets in 1997 that are contiguous to the existing Bayonne terminal. Hook Terminalling Company (Hook) is a partnership formed in 2003 to purchase and own land adjoining the existing Bayonne terminal. IMTT-Pipeline and IMTT-Interterminal Pipeline partnerships were formed in 1996 to own an interest in a pipeline utilized in the transfer of products by IMTT-Bayonne and other third parties. In 2004, IMTT-Interterminal Pipeline acquired terminal assets adjacent to the existi ng Bayonne terminal. IMTT-Bayonne was formed to lease and operate tank terminal and warehouse facilities owned by BII, IMTT-BX, IMTT-BC, IMTT-CX, Hook and IMTT-Interterminal Pipeline in Bayonne, New Jersey/ New York Harbor. IMTT-Gretna is a partnership formed in 1990 to purchase and operate a bulk liquid storage terminal in Gretna, Louisiana. IMTT-Chesapeake and IMTT-Richmond are partnerships formed in 1991 to purchase and operate bulk liquid storage terminals in Chesapeake and Richmond, Virginia, respectively. IMTT-Petroleum Management is a partnership formed in 1992 to own an interest in a joint venture operating the United States Strategic Petroleum Reserve. IMTT-Richmond-CA is a partnership formed in 1995 to purchase and operate a bulk liquid storage terminal in Richmond, California. IMTT-Lemont is a partnership formed in 1997 to purchase and operate a terminal facility in Lemont, Illinois. IMTT-NTL, Ltd. is a Canadian corporation formed in 1997 to own an interest in and operate a terminal in N ewfoundland, Canada. IMTT-Quebec Inc., a 662/3% owned subsidiary of IMTT, operates a bulk liquid storage terminal located in

6

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(1) Nature of operations and organization – (continued)

Quebec, Canada. Due to its immateriality, this investment is accounted for utilizing the equity method of accounting in the accompanying financial statements. International Environmental Partners is a partnership formed in 1999 to own an entity that provides environmental response and other services to the terminals and others. IMTT also owns and operates a floral and plant nursery business.

(2) Summary of significant accounting policies

Combination:

The accounts of Loving have been consolidated with those of ITT and Affiliates as well as those of IMTT Combined after eliminating all intercompany account balances and transactions (“Loving Consolidated”). IMTT Combined consists of the operating partnerships previously described consolidated with their wholly-owned financing subsidiary, IMTT-Finco (“The Partnerships”) further combined with the Canadian corporation, IMTT-NTL, Ltd. (IMTT Combined).

Revenue recognition:

Leases for the rental of storage capacity at the various terminals predominantly have non-cancelable terms of from one to five years. These leases generally provide for the payment of rentals for providing storage capacity throughout their term based on a fixed rate per barrel of capacity leased, as adjusted annually for inflation indices. Leases are classified and accounted for as operating leases and rental revenue is recognized ratably over their term. Revenue from the rendering of ancillary services (e.g. product movement (thruput), heating, mixing, etc.) is recognized as the related services are performed. Thruput revenues are not recognized until the thruput quantity specified in the lease for the applicable period is exceeded. Payments received prior to the related services being performed are recorded as Deferred Revenue in the accompanying balance sheet. Environmental response services revenues are recognized as services are rend ered and nursery revenues are recognized upon shipment of product to customers.

Property, plant and equipment:

Property, plant and equipment is carried at cost (as adjusted for the push down accounting method) including applicable construction period interest. Construction period interest of $721,000 and $958,000 was capitalized in 2005 and 2004, respectively. Depreciation is provided using the straight-line method over lives which range from 15 to 30 years for the terminal facility and 3 to 8 years for furniture, fixtures and equipment. Costs which are associated with capital additions and improvements or that extend the useful lives or increase service capacity of assets are capitalized; costs of maintenance and repairs are expensed. As a result of the purchase of Van Ommeren’s partnership interest and the application of the push down accounting method thereto as further described in Note 9, property, plant and equipment carrying values were adjusted upward in 2000 by approximately $38.7 million and this adjustme nt is being amortized over the remaining useful lives of the assets. Terminal fixed assets with a net book value of $451,557,000 at December 31, 2005 are utilized to provide leased storage capacity and related services to customers/ lessees.

Other assets:

Costs incurred to deepen vessel draft at the Partnerships’ docks as well as those incurred periodically to maintain draft depths for more than one year are capitalized and amortized over their estimated useful lives (3 to 20 years).

7

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(2) Summary of significant accounting policies – (continued)

Income taxes:

Income tax expense includes federal and state taxes currently payable as well as deferred taxes arising from temporary differences between income for financial reporting and income tax reporting purposes. Deferred income taxes are accounted for in accordance with Statement of Financial Accounting Standards No. 109. These temporary differences consist primarily of fixed asset basis differences as well as various expenses which affect the financial statements and tax returns in different periods. Differences in the basis of the fixed assets for accounting and income tax reporting purposes exist primarily as a result of different depreciation methods and lives used for financial and income tax reporting purposes, involuntary conversion treatment, for income tax purposes, of proceeds received from asset expropriations and settlement of insurance coverage for property damage, as well as the application of the push down accounting method to the purchase of Van Ommeren’s partnership interest. Operating loss and tax credit carryforwards are recognized as reductions to deferred income taxes if it is likely that their benefit will be realized.

Joint venture accounting:

In conjunction with the acquisition of a chemical terminal facility by IMTT-BC in Bayonne, New Jersey in 1997, IMTT-BC also acquired a 50% interest in a joint venture (EI Dorado) with a customer which encompassed approximately 540,000 barrels of additional chemical storage capacity. As a result of the effect of a series of related agreements, the joint venture’s assets were to be purchased by IMTT-BC in 2004 and therefore these assets ($14.2 million) have been included within property, plant and equipment in the accompanying balance sheets and depreciated in accordance with existing accounting policies. Also, specific joint venture debt was the primary responsibility of the respective joint venturer and therefore IMTT-BC has only recorded joint venture debt and interest expense for which it was primarily responsible. (See Note 4 for further details)  In 2004, IMTT-BC purchased the remaining 50% interest in the El Dorado joint venture rather than purchasing its assets. The joint venture was then terminated and its debt assumed by each joint venturer as previously described.

On July 21, 1997 IMTT-NTL, Ltd. acquired a 20% interest in Newfoundland Transshipment Limited (NTL), a Canadian corporation which owns and operates a storage and transshipment terminal located in Newfoundland. The investment is shown in the accompanying balance sheet at cost adjusted for the push down accounting method ($9,473,000 and $8,581,000 at December 31, 2005 and 2004, respectively). NTL guarantees its shareholders a minimum 12% return on investment. This return on investment ($1,399,000 and $1,060,000 for 2005 and 2004, respectively) has been recorded as other income in the accompanying income statements as its ultimate realization is reasonably assured based on the nature of its operations and the involvement of major oil companies as customers and shareholders.

Derivatives:

Loving Consolidated has entered into certain derivative instruments to hedge or fix the interest cost of certain borrowings. See Note 4. These derivative instruments are accounted for at fair market value in accordance with SFAS No. 133. To the extent they meet the criteria as an effective cash flow hedge in accordance with that accounting standard, changes in the fair market value of these derivatives are recorded as components of other comprehensive income. Derivative instruments which are determined to be ineffective in meeting hedge criteria are recognized at fair value in the accompanying balance sheet and changes therein are recognized in earnings as a component of periodic net income.

Estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts and disclosures. Some of the more important estimates and assumptions concern depreciation methods and lives, future environmental remediation costs and pension plan discount rates and rates of return on plan assets. Actual results may differ from those estimates and assumptions.

8

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(2) Summary of significant accounting policies – (continued)

Foreign currency translation:

The balance sheet accounts of IMTT-NTL, Ltd. are translated from their foreign currency (Canadian dollars) to U.S. dollars at exchange rates in effect at the end of the year and income statement accounts are translated at average exchange rates for the year. Translation gains or losses as a result of changes in the exchange rate are recorded as a component of other comprehensive income.

(3) Related party transactions

During 2005 and 2004, Loving Consolidated paid or accrued $2,869,000 and $3,092,000, respectively, to related entities for legal services and office rent. In addition, the Partnerships charged a management fee of $450,000 to another related entity in 2005 and 2004. In 2003, employees of related entities became participants in the Partnerships’ pension plan and were allocated a portion of the annual benefit cost based on information supplied by the Plan’s actuary. See Note 5 for further details. Receivable from related parties primarily consists of net receivable balances from entities owned by shareholders of Loving. Interest income recorded on balances due from a related entity was $346,000 in 2005 and $274,000 in 2004. Interest expense accrued on balances due to a related entity was $39,000 and $111,000 for the years 2005 and 2004.  Also see Note 6 for a description of a guaranty of debt obligations of a related entity.

(4) Long-term debt and related derivatives

Long-term debt consists of the following:

	2005	2004
Tax-exempt bonds, 3.73% at December 31, 2005 (2.20% at December 31, 2004)	$30,000,000	$30,000,000
Tax-exempt bonds of terminated El Dorado joint venture, 3.73% at December 31, 2005 (2.20% at December 31, 2004) (Note 2)	6,300,000	6,300,000
Unsecured notes payable under revolving bank U.S. credit facility averaging 6.18% at December 31, 2005 (3.83% at December 31, 2004)	34,800,000	38,200,000
Notes payable under revolving credit facility with a Canadian Bank, 4.805% at December 31, 2005 (4.07% at December 31, 2004)	5,174,000	5,839,000
7.15% note purchase agreement with final maturity of November 28, 2016	60,000,000	60,000,000
8% note purchase agreement with final maturity of November 28, 2016	50,000,000	50,000,000
Note payable to former partner, 3.42% at December 31, 2004 (refinanced below)	—	130,000,000
Note payable to a bank, 5.38875% at December 31, 2005	130,000,000	—
Other	36,000	36,000
	$316,310,000	$320,375,000
Less – Current maturities	—	—
	$316,310,000	$320,375,000

In 1993, BII and IMTT-Bayonne issued $30,000,000 of tax-exempt New Jersey Economic Development Authority Dock Facility Revenue Refunding Bonds (the Bonds) to refinance and retire previously issued tax-exempt industrial development revenue bonds. Issue costs related to this financing were capitalized and are being amortized over the life of the Bonds.

In accordance with the terms of the Bond indenture, BII and IMTT-Bayonne select from four interest rate-setting frequency modes; daily, weekly, CP (from 30 to 269 days) and adjustable rate mode (at least six months). The interest rates for these various alternatives are determined by the remarketing agent as the lowest rate that will allow the Bonds to be sold at par based on the current market conditions. For all of 2005 and 2004, the Bond interest rate was set under the daily rate mode.

9

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(4) Long-term debt and related derivatives – (continued)

The Bonds are secured by $30,473,000 of irrevocable letters of credit, which expire November, 2007 (if not extended), issued by the banks under the credit facility discussed below.

The Bonds mature on December 1, 2027 but are subject to optional and mandatory tender, as well as various redemption provisions, at 100% of principal and accrued interest (plus applicable premium if the Bonds are in the adjustable rate mode). When in the daily or weekly rate mode, bondowners may, at their option, tender the Bonds to the remarketing agent for payment of principal and accrued interest.

The Bonds are also subject to mandatory tender provisions in the following cases: 1) each time the interest rate mode is converted, 2) if the related letters of credit are released or allowed to terminate or expire without replacement or extension, 3) substitution of an alternate credit facility for an existing letter of credit, if certain conditions are not met and 4) on each CP rate reset date. After tender, if sufficient funds are not available from remarketing the Bonds, the bondowners could be paid from the proceeds of a draw on the related letters of credit, or, should sufficient funds not be available from letters of credit, the Bonds could be purchased by BII and IMTT-Bayonne. The Bonds may be redeemed at various times at the direction of BII and IMTT-Bayonne while in any rate mode and are also subject to mandatory redemption if the Bonds are determined to be taxable.

In connection with the purchase of an interest in the EI Dorado joint venture discussed in Note 2, related lease agreements and subsequent termination of the joint venture, IMTT-BC is responsible for the payment of principal (due December 1, 2021) and related interest (beginning May 1, 2001) of a $6.3 million New Jersey Economic Development Authority tax-exempt bond issue by the terminated joint venture. Prior to May 1, 2001, the other joint venture participant was responsible for the payment of interest on these bonds. Interest terms on these bonds are similar to those issued by BII and IMTT-Bayonne discussed previously. These bonds are secured by a $6,404,000 irrevocable letter of credit issued by the banks under the credit facility discussed below.

In November, 2001 IMTT-Finco replaced its existing bank credit facility with a new bank credit facility and a $60 million note purchase agreement. IMTT-Finco is the borrower (and supplies funds to the Partnerships) under a $140,000,000 unsecured revolving U.S. credit facility with a seven bank syndicate expiring in November, 2007. The Partnerships guarantee repayment of this debt to the banks and a majority of the outstanding stock of IMTT-NTL, Ltd. and IMTT-Quebec Inc. is pledged in repayment of this debt.

IMTT-Finco can borrow, at its option, (for various periods) under the agreement at either LIBOR plus 1.075% to 1.70%, or the banks’ base lending rate plus .075% to .70%, with the percentage added to each of these borrowing options dependent upon the ratio of debt to earnings before interest, taxes and depreciation and amortization, as defined.

The $140,000,000 credit facility includes the availability of up to $50 million of letters of credit. Letters of credit outstanding under this facility at December 31, 2005 ($38,562,000) primarily secure obligations of BII, IMTT-Bayonne and IMTT-BC under certain tax-exempt bonds referred to previously. IMTT-Finco had $34,800,000 of debt outstanding under this facility at December 31, 2005, thus leaving $66,638,000 available under of this credit facility at December 31, 2005.

IMTT Combined is subject to various covenants under this credit facility. The primary covenants require the maintenance of certain ratios, as defined, of combined 1) debt to earnings before interest, income taxes and depreciation and amortization, 2) earnings before interest, income taxes and depreciation and amortization to interest expense and 3) tangible net worth to tangible net worth at December 31, 2000. The loan agreement also restricts additional indebtedness and guarantees, liens on assets, additional investments and loans, sales or dispositions of assets, and changes of control, as defined, among other requirements.

IMTT-Finco entered into a $60 million note purchase agreement in November, 2001 (as discussed above) and a $50 million note purchase agreement in April, 2002. These agreements bear interest throughout their term at 7.15% and 8%, respectively. Annually, beginning November 28, 2010, note principal installments of $8,571,500 and

10

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(4) Long-term debt and related derivatives – (continued)

$7,142,850, respectively, are due until the final principal payment on November 28, 2016. IMTT-Finco may prepay any portion of the outstanding balance of these notes which may be subject to payment of an additional “make-whole amount”, as defined in the agreement. These agreements contain covenants, guarantees and stock pledges identical to the $140 million bank syndicate credit facility.

In 2002, IMTT-NTL, Ltd. and IMTT-Quebec Inc. entered into a $15 million (U.S. equivalent) revolving credit facility with a Canadian bank. Loans under this facility are available in Canadian dollars at prime or bankers’ acceptances rates plus spreads based on the ratio of debt to earnings before interest, income taxes and depreciation and amortization identical to those under the $140 million bank syndicate U.S. credit facility. This facility which terminates November 28, 2007 has covenants, guarantees and stock pledges identical to the $140 million bank syndicate credit facility.

Costs related to obtaining the $140 million revolving bank credit facility, the $60 and $50 million note purchase agreements and the Canadian bank credit facility have been capitalized and are being amortized over the term of the related debt.

Also, in connection with the purchase of an interest in the EI Dorado joint venture and a related agreement, IMTT-BC purchased the remaining joint venture interest on January 2, 2004 for $7,071,000.

The interest rate on the borrowings under the tax-exempt bonds and the revolving bank credit facilities adjusts periodically depending on their individual terms as previously described. In an effort to achieve a more stable interest cost and reduce the risk of rising interest rates and expense, an interest rate swap agreement with a large bank was entered into. The primary terms and the accounting treatment of this financial instrument is described below.

In 1997 the Partnerships entered into a $50,000,000, ten year interest rate swap agreement. Under this agreement, the Partnerships are the fixed rate payers (6.4%) and the bank is the floating rate payer. The floating rate is based on LIBOR (4.13% and 2.0525% at December 31, 2005 and 2004) determined quarterly. Net interest expense incurred under this agreement for the years ended December 31, 2005 and 2004 was $1,570,000 and $2,515,000, respectively, and is included in interest expense in the accompanying income statements.

The interest rate swap agreement was entered into as a cash flow hedge against the interest cost associated with the Partnerships’ variable rate borrowings under a previous bank revolving credit facility. As a result of the Partnerships’ refinancing activities (initiated in 2000 and completed in late 2001 and early 2002) which mitigated the probability of future variable rate borrowings at that time, the interest rate swap agreement was considered ineffective for hedge accounting purposes. The fair value of the interest rate swap agreement ($1,681,000 and $4,318,000 loss as of December 31, 2005 and 2004, respectively) is included in other long-term liabilities in the accompanying balance sheets. Changes in the fair value of the interest rate swap agreement are recognized in the accompanying statement of income ($2,637,000 and $2,313,000 gain in 2005 and 2004).

In connection with the $60 million note purchase agreement previously discussed, a treasury lock agreement was entered into in an effort to limit the risk of future interest rate increases and fix rates at current levels at the time the agreement was entered into. The treasury lock agreement of identical notional amount was settled with a payment of $1,378,000 in 2001. This payment was recorded as a component of other comprehensive income and is being amortized to net income as additional interest expense such that the effective rate of the $60 million note purchase agreement is 7.44% ($95,000 of amortization was recorded in 2005, $88,000 in 2004 and $102,000 will be amortized in 2006).

As discussed in Note 9, on January 1, 2000 ITT and Affiliates purchased the remaining 49.5% interest in the subsidiaries discussed in Note 1. The consideration for the purchase was in the form of notes payable to the former partner totaling $130,000,000. These notes bore interest at LIBOR plus one percent and contained payment terms of interest only for the first five years with equal annual principal payments over the remaining five-year term of the notes beginning December 31, 2005. These notes also contained terms that subordinated them to any current or future debt of IMTT Combined.

11

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(4) Long-term debt and related derivatives – (continued)

In December, 2005, the $130 million of notes payable of ITT and Affiliates to a former partner were refinanced with a bank. Principal payments were revised to $13,000,000 annually from December 31, 2005 (payment actually due and made on January 3, 2006) to December 31, 2010 with the remaining $52 million due December 23, 2012. Interest rates are the same as under the original notes payable to the former partner. Beginning no later than June 23, 2006 IMTT Combined will guaranty the following amounts of this debt:

Effective Date – December 30, 2006	$	13,000,000
December 31, 2006 – December 30, 2007		26,000,000
December 31, 2007 – December 30, 2008		39,000,000
December 31, 2008 – December 30, 2009		52,000,000
December 31, 2009 – December 30, 2010		65,000,000
December 31, 2010 – December 23, 2012		52,000,000

The effective date of this guaranty is dependent upon the receipt of a waiver of a loan covenant by IMTT Combined from its bank and note purchase agreement creditors which prohibits this guaranty. If this waiver is not received by June 23, 2006, IMTT Combined would be obligated to pay to the bank $13 million of the outstanding principal balance. Further, if this waiver is not received by December 23, 2006, all remaining unpaid amounts under the notes ($104 million) become due and payable. IMTT Combined believes it will receive these waivers prior to June 23, 2006. Also, the January 3, 2006 and December 31, 2006 $13 million principal payments were/will be funded under the revolving bank U.S. credit facility which expires November 28, 2007. Based on the foregoing, all debt outstanding under the refinanced notes to a bank ($130 million at December 31, 2005) is classified as long-term in the accompanying balance sheets. This refinanced debt also retains the clause in the original note that it is subordinate to any current or future debt of IMTT Combined. Additionally, after December 31, 2009, if the ratio of debt to earnings before interest, taxes, depreciation and amortization of IMTT Combined exceeds a prescribed ratio, the then outstanding debt balance payable to the bank is assumed by IMTT Combined from ITT and Affiliates. The loan agreement restricts IMTT Combined and ITT and Affiliates from selling assets, consolidating or merging with another entity, selling or pledging ownership interests or incurring a change of control, as defined. The guaranty of IMTT Combined could be accelerated if either IMTT Combined or the former partner defaults under any of their respective debt obligations. Management considers the likelihood of any such defaults to be remote.

With the objective of achieving a stable interest cost and reducing the risk of rising interest rates and expense related to this debt, interest rate swap agreements with two banks were entered into in 2001 with notional amounts and scheduled maturity terms equal to that of the original notes to the former partner. Under these agreements, ITT and Affiliates are the fixed rate payers (7.1475%) and the banks are the floating rate payers. The floating rate is based on LIBOR (4.389% at December 31, 2005 and 2.42% at December 31, 2004) determined monthly. Net interest expense incurred under these agreements for the years ended December 31, 2005 and 2004 was $5,084,000 and $7,557,000, respectively, and is included in interest expense in the accompanying statements of income. The ITT and Affiliates obligations under these agreements are guaranteed by their wholly - -owned subsidiary International-Matex Tank Terminals. In the previously issued 2005 and 2004 financial statements, these interest rate swap agreements were accounted for as effective cash flow hedges with changes in fair market value reflected in other comprehensive income. It was subsequently determined that the criteria for hedge accounting in accordance with SFAS No. 133 were not applicable and changes in fair market value (and related deferred income taxes) have been reclassified from other comprehensive income to net income in the accompanying financial statements. See Notes 10 and 14 for further details. Fair market value of these agreements at December 31, 2005 and 2004 ($5,908,000 and $12,287,000 loss, respectively) has been included in other long-term liabilities in the accompanying balance sheets.

(5) Employee benefits

Except for a plan covering certain employees covered by a collective bargaining agreement at the Lemont, Illinois terminal, substantially all employees of the Partnerships are eligible to participate in a defined benefit pension plan (the Plan). Benefits under the Plan are based on years of service and the employees’ highest average

12

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(5) Employee benefits – (continued)

compensation for a consecutive five year period. Coincident with the acquisition of terminal facilities in 1997 by IMTT-Lemont, it became the sponsor of a defined benefit plan covering union employees at this terminal (Union Plan). Monthly benefits under this plan are computed based on a benefit rate in effect at the date of the participant’s termination ($44.05 at November 1, 2005) multiplied by the number of years of service. The Partnerships’ contributions to both plans are based on the recommendations of its consulting actuary.

The following table sets forth the obligations and assets (as well as changes therein) of both plans, the resulting funded status and amounts recognized in the accompanying financial statements. (The measurement date for the plan assets is October 31)

	2005						2004
	The Plan			Union Plan			The Plan			Union Plan
Changes in benefit obligation:
Benefit obligation at beginning of year	$	39,364,000		$	2,048,000		$	38,813,000		$	1,845,000
Service cost		2,181,000			118,000			2,033,000			113,000
Interest cost		2,661,000			136,000			2,413,000			124,000
Amendments		—			—			—			—
Assumption changes		4,047,000			170,000			—			—
Actuarial loss (gain)		239,000			(7,000	)		(2,334,000	)		11,000
Benefits paid		(1,814,000	)		(49,000	)		(1,561,000	)		(45,000	)
Benefit obligation at end of year	$	46,678,000		$	2,416,000		$	39,364,000		$	2,048,000
Changes in plan assets:
Fair value of plan assets at beginning of year	$	22,123,000		$	1,840,000		$	20,810,000		$	1,693,000
Actual return on plan assets		1,764,000			148,000			1,201,000			100,000
Employer contribution		2,133,000			—			1,673,000			92,000
Benefits and expenses paid		(1,814,000	)		(49,000	)		(1,561,000	)		(45,000	)
Fair value of plan assets at end of year	$	24,206,000		$	1,939,000		$	22,123,000		$	1,840,000
Funded status:	$	(22,472,000	)	$	(477,000	)	$	(17,241,000	)	$	(208,000	)
Unrecognized net transition obligation		—			—			—			—
Unrecognized net actuarial loss(gain)		8,585,000			528,000			4,139,000			371,000
Unrecognized prior service cost		1,624,000			131,000			1,794,000			143,000
Prepaid (accrued) benefit cost		(12,263,000	)		182,000			(11,308,000	)		306,000
Adjustment for minimum pension liability (Note 10)		—			(659,000	)		—			(514,000	)
Recognized pension (liability)	$	(12,263,000	)	$	(477,000	)	$	(11,308,000	)	$	(208,000	)
Less amount attributable to related entities (Note 3)		(256,000	)		—			(254,000	)		—
Pension (liability) recognized in balance sheet	$	(12,007,000	)	$	(477,000	)	$	(11,054,000	)	$	(208,000	)
Minimum pension liability:
Accumulated benefit obligation	$	32,223,000		$	2,416,000			$27,505,000		$	2,048,000
Less: Fair value of plan assets		24,206,000			1,939,000			22,123,000			1,840,000
Less: Accrued (prepaid) benefit cost		12,263,000			(182,000	)		11,308,000			(306,000	)
Minimum pension liability recognized	$	—		$	659,000		$	—		$	514,000
Components of minimum pension liability:
Accumulated other comprehensive income (Note 10)	$	—		$	529,000		$	—		$	372,000
Intangible asset		—			130,000			—			142,000
Minimum pension liability	$	—		$	659,000		$	—		$	514,000

13

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(5) Employee benefits – (continued)

	2005						2004
	The Plan			Union Plan			The Plan			Union Plan
Components of net periodic benefit cost:
Service cost	$	2,181,000		$	118,000		$	2,033,000		$	113,000
Interest cost		2,661,000			136,000			2,413,000			124,000
Expected return on plan assets		(1,959,000	)		(154,000	)		(1,816,000	)		(146,000	)
Amortization of prior service cost		170,000			12,000			170,000			12,000
Amortization of transition obligation		—			—			—			—
Recognized net actuarial loss (gain)		35,000			11,000			—			10,000
Net periodic benefit cost of the plan	$	3,088,000		$	123,000		$	2,800,000		$	113,000
Less amount attributable to related entities (Note 3)		(176,000	)		—			(134,000	)		—
Net periodic benefit cost recognized in statement of income	$	2,912,000		$	123,000		$	2,666,000		$	113,000
Weighted average assumptions as of December 31:
Discount rate		6.25	%		6.25	%		6.75	%		6.75	%
Expected return on plan assets		8.50	%		8.50	%		8.50	%		8.50	%
Rate of compensation increase		5.47	%		—			5.47	%		—

As of December 31, 2005, the discount rate assumption used in the computation of benefit obligations was changed to 6.25% to better approximate returns available on high quality fixed income investments. The long-term rate of return of pension assets is based on historical results adjusted as necessary for future expectations.

Weighted average asset allocation:
Domestic equity funds	61.3	%	63.1	%	60.2	%	59.7	%
International equity funds	5.6	%	5.7	%	5.2	%	5.1	%
Domestic fixed income funds	27.0	%	27.9	%	31.0	%	30.5	%
Other	6.1	%	3.3	%	3.7	%	4.7	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

Pension asset investment decisions are made with assistance of an outside paid advisor to achieve the multiple goals of high rate of return, diversification and safety.

	The Plan		Union Plan
Expected benefit payments:
Year 2006	$	672,000	$	49,000
Year 2007		777,000		67,000
Year 2008		963,000		95,000
Year 2009		1,302,000		103,000
Year 2010		1,394,000		129,000
Years 2011 – 2015		10,598,000		745,000
Anticipated contributions for 2006	$	6,245,000	$	—

The Partnerships have established a supplementary, non-qualified benefit plan for certain employees whose compensation exceeds the maximum eligible for inclusion in the qualified defined benefit plan. Under this plan the Partnerships fund additional compensation to the affected employees on a pre-tax basis that will allow them to make a contribution to a separate investment account which the employee owns that will provide the actuarial equivalent of the benefits available as if all of the employees’ compensation had been included in the qualified defined benefit plan. Expense related to this plan recorded as additional compensation in the accompanying financial statements was $527,000 in 2005 and $456,000 in 2004.

14

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(5) Employee benefits – (continued)

The Partnerships have established defined contribution Section 401 (k) employee benefit plans. Under the primary plan, employees who are eighteen years old and have six months of service are eligible to participate. Employees may contribute up to the maximum allowable for Federal income tax purposes and the Partnerships’ matching contribution is determined each year by management. In 2005, and 2004, the Partnerships elected to match 5% of employee contributions. Total expense for the 401 (k) plans for 2005 and 2004 was $150,000 and $119,000, respectively.

IMTT Combined purchases life insurance for certain management employees and provides for the repayment of premiums paid through deferred compensation arrangements. Under this program various amounts of life insurance are purchased and paid for by IMTT Combined and receivables are recorded from each management employee, along with accrued interest. At retirement or termination of service, funds are provided to the plan participants under deferred compensation agreements to provide for the repayment of premiums paid and ownership of the policies is transferred at that time. Expense related to the deferred compensation arrangements is recorded annually as employee service is rendered to IMTT Combined. Expense associated with providing this benefit of $401,000 and $386,000 for 2005 and 2004, respectively, is recorded in general and administrative expense in the accompanying financial statements.

(6) Commitments and contingencies

Loving Consolidated is involved in various lawsuits, claims and inquiries (including environmental matters) which are routine to the nature of its business. Management believes that resolution of these matters will not result in any material adverse effect on the financial statements.

Many of the entities comprising IMTT Combined are subject to compliance with federal and state environmental regulations, some of which require environmental remediation and ongoing monitoring activities. Depending upon the nature and circumstances of such activities, certain of the expenditures related thereto have been recorded as operating expenses in the accompanying income statements and others are capitalized as such expenditures are incurred.

A summary of these environmental remediation matters follows.

As a result of an equipment failure and subsequent product release and clean-up in 2003 in Richmond, California, a consent order was entered into requiring the California terminal to implement enhanced containment systems to mitigate the effect of future accidental releases. This containment system will be implemented in the next one or two years at an estimated cost of $2.5 million to $3 million.

An accidental product release and subsequent clean-up at the Lemont, Illinois terminal revealed a more extensive contamination problem than that which was believed to have existed at the time of the purchase of this facility from its former owners. The Lemont terminal entered into a consent order with the state of Illinois to remediate the contamination. Remediation is also required as a result of the renewal of a lease with a government agency for a portion of the terminal. This remediation effort, consisting of among other things, the implementation of extraction and monitoring wells and soil treatment, is estimated to span a period of ten to twenty years or more at a cost of $10 million to $15 million.

The Bayonne, New Jersey terminal which has been acquired and aggregated over a 22 year period, contains pervasive remediation requirements that were assumed at the time of purchase from the various former owners. One former owner retained environmental remediation responsibilities for a purchased site as well as sharing other remediation costs. These remediation requirements are documented in two memoranda of agreement and an administrative consent order with the state of New Jersey. Remediation efforts entail removal of free product, soil treatment, repair/replacement of sewer systems, and the implementation of containment and monitoring systems. These remediation activities are estimated to span a period of ten to twenty years or more at a cost ranging from $49.5 to $79.5 million.

15

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(6) Commitments and contingencies – (continued)

The remediation activities described above at the three terminals are estimated based on currently available information, in undiscounted U.S. dollars and are inherently subject to relatively large fluctuation. Management believes that the cost of the foregoing remediation activities ($62.0 million to $97.5 million in total) is capitalizable in accordance with generally accepted accounting principles (E.I.T.F. 90-8) as such costs are recoverable and improve the property as compared with its condition when acquired and either 1) extend the life, increase the capacity or improve the safety and/or efficiency of the property or 2) mitigate or prevent environmental contamination that has yet to occur that may result from future operations or activities. During 2005 and 2004 approximately $2.5 million and $3.4 million, respectively, of such expenditures were incurred and capitalized within property, plant and equipment. For the y ears ended December 31, 2005 and 2004 approximately $3.9 million and $4.2 million, respectively, of environmental related cost that did not meet the capitalization criteria were charged to operations.

In 2005, IMTT Combined entered into a commitment to construct and operate a chemical liquid logistics facility in Geismar, Louisiana with an estimated cost of $130,000,000.

Hurricane Katrina struck the Gulf Coast of the United States on August 29, 2005 and affected three of the terminals owned by IMTT Combined as well as its environmental response and plant nursery operations located in south Louisiana. With the exception of deductibles under its property and liability insurance coverages ($325,000, which were expensed in 2005) and certain betterments which will be undertaken in connection with the repair of storm damage (and capitalized as additions to fixed assets), all expenditures incurred in the repair and clean up of Hurricane Katrina related damages will be reimbursed by insurance coverage and therefore no significant net gain or loss as a result of storm related damage was recognized in the accompanying 2005 financial statements. All of the affected facilities returned to operation shortly after the storm with relatively insignificant loss of revenue, some of which should be recoverable from bus iness interruption insurance which will be recognized after December 31, 2005 when settlement is made and funds are received (the same also applies to certain costs incurred in the temporary relocation of the headquarters office).

International Tank Terminals, L.L.C. guarantees all obligations related to a $24 million bank line of credit of a related entity and charged a fee of $455,000 for 2005 and $420,000 for 2004 which is recorded as other income in the accompanying financial statements.

(7) Income taxes

Loving Consolidated provides for income taxes in accordance with the asset and liability method as prescribed by SFAS Statement No. 109.

The components of the income tax expense shown in the accompanying income statements are as follows:

	2005 Restated		2004 Restated
Current expense (credit)	$	950,000	$	(43,000	)
Deferred expense, excluding carryforwards		10,293,000		15,641,000
(Increase) decrease in operating loss and tax credit carryforwards		3,110,000		(7,456,000	)
Total income tax expense	$	14,353,000	$	8,142,000

16

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(7) Income taxes – (continued)

Income tax expense differs from income tax computed at the federal statutory rate of 35% for 2005 and 34% for 2004 of income before income taxes as shown in the accompanying financial statements, as follows:

	2005 Restated			2004 Restated
Income tax expense based on federal statutory rate	$	11,209,000		$	6,761,000
State income tax provisions		1,841,000			1,143,000
Increase in effective federal statutory rate		1,465,000			—
Others, net		(162,000	)		238,000
Total income tax expense recorded in accompanying financial statements	$	14,353,000		$	8,142,000

Deferred income taxes have been recorded in the accompanying balance sheets for the tax effects of temporary differences that impact the financial statements and income tax returns in different periods, offset partially by carryforwards for federal and state income tax purposes of unused net operating losses and tax credits. The primary components of deferred income tax liabilities (assets) are as follows:

	2005			2004
Fixed asset basis differences	$	124,646,000		$	117,880,000
Pension expense in excess of contributions		(3,362,000	)		(4,135,000	)
Other comprehensive income items		(97,000	)		(3,125,000	)
Net operating loss and tax credit carryforwards		(41,453,000	)		(44,563,000	)
Fair market value of interest rate swap agreements		(2,683,000	)		(2,475,000	)
Others, net		(4,431,000	)		(4,502,000	)
Net deferred taxes as shown in accompanying balance sheet	$	72,620,000		$	59,080,000

Deferred income taxes are classified as follows in the accompanying balance sheet.

	2005			2004
Current tax (asset)	$	(3,171,000	)	$	(1,638,000	)
Deferred tax liability		75,791,000			60,718,000
Net deferred tax liability	$	72,620,000		$	59,080,000

Net operating loss (N.O.L.) and tax credit carryforwards outstanding as of December 31, 2005 expire as follows:

Year of Expiration	Federal N.O.L.		State N.O.L.
2006	$	—	$	2,420,000
2007		—		4,221,000
2008		—		10,953,000
2009		—		10,053,000
2010		—		3,955,000
2011		—		13,916,000
2012		78,000		8,796,000
2013		—		1,196,000
2014		—		646,000
2015		—		2,556,000
2016		—		13,748,000
2017		—		14,871,000
2018		—		11,595,000
2019		—		6,450,000

17

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(7) Income taxes – (continued)

Year of Expiration	Federal N.O.L.	State N.O.L.
2020	8,356,000	2,828,000
2021	24,372,000	3,348,000
2022	29,842,000	3,751,000
2023	15,516,000	4,000
2024	7,701,000	—
2025	25,000	—

$4,330,000 of federal alternative minimum tax credits and $313,000 of New Jersey state tax credits have unlimited carryforward periods.

(8) Fair value of financial instruments

The fair value of financial instruments (as defined by SFAS Statement No. 107) contained in the accompanying balance sheets approximates the carrying amount for all assets and liabilities except for the two note purchase agreements totaling $110 million included in long-term debt in the accompanying balance sheets whose estimated fair market value at December 31, 2005 and 2004 was approximately $112 million and $119 million, respectively.

(9) Change in ownership

In January, 2000 ITT and Affiliates acquired Van Ommeren Tank Terminals Gulf Coast, Inc. and affiliates’ interest in each of the entities comprising IMTT Combined. The consideration for the purchase was in the form of $130 million of notes payable to the Van Ommeren affiliates by ITT and Affiliates. These notes bore interest at LIBOR plus one percent and contained payment terms of interest only for the first five years with equal annual principal payments over the remaining five year term of the notes beginning December 31, 2005. Although ITT and Affiliates were the makers of these notes, they contained additional terms that subordinated them to any current or future debt of IMTT Combined. As described more fully in Note 4, these notes were refinanced with a bank in December, 2005.  As a result of the application of the push down accounting method to this transaction in 2000, total equity and assets (prima rily fixed assets) of IMTT Combined were increased by approximately $42,209,000 and depreciation and amortization expense related thereto increased $3,490,000 annually.

(10) Accumulated other comprehensive income

Shareholders’ equity includes accumulated other comprehensive income. Changes in the components of accumulated other comprehensive income for 2005 and 2004 are as follows:

	Derivatives			Minimum Pension Liability Adjustment			Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income/(Loss)
Balance, January 1, 2004, as previously reported	$	(12,347,000	)	$	(324,000	)	$	130,000	$	(12,541,000	)
Reclassification of change in fair market value of interest rate swap (Note 4)		11,693,000			—			—		11,693,000
Balance, January 1, 2004, as restated	$	(654,000	)	$	(324,000	)	$	130,000	$	(848,000	)
Other comprehensive income (loss) for the year, as restated		73,000			(48,000	)*		—		25,000
Balance, December 31, 2004, as restated	$	(581,000	)	$	(372,000	)	$	130,000	$	(823,000	)
Other comprehensive income (loss) for the year, as restated		(42,000	)		(157,000	)*		418,000		219,000
Balance, December 31, 2005, as restated	$	(623,000	)	$	(529,000	)	$	548,000	$	(604,000	)

——————

*

Includes charge of $12,000 in 2004 and 2005 for change in intangible asset related to IMTT-Lemont union pension plan.

18

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(11) Subsequent events

On April 14, 2006 the current shareholders of Loving signed an agreement to sell a 50% interest in Loving for $250 million. This agreement also provides for a special $100 million distribution to the current shareholders of Loving. Additionally, the completion of this agreement is subject to various conditions including approval of amendments to certain loan provisions by current creditors as well as review and approval by federal and state regulatory bodies.

Subsequent to December 31, 2005 dividends to shareholders of $450,000 have been paid.

(12) Future minimum rental revenue

Future minimum rental revenues for the remaining unexpired term of lease agreements in existence at December 31, 2005 for terminal storage capacity are as follows.

Year	Amounts
2006	$	125,214,000
2007		93,428,000
2008		50,799,000
2009		37,901,000
2010		28,024,000
2011 and thereafter		14,277,000
Total	$	349,643,000

(13) Additional balance sheet detail

Additional detail of the components of certain balance sheet captions follows.

	2005		2004
Prepaid expenses and deposits:
Prepaid insurance	$	3,505,000	$	3,422,000
Deferred income tax asset		3,171,000		1,638,000
Other		904,000		755,000
Total	$	7,580,000	$	5,815,000
Other assets:
Deferred compensation plan receivables	$	2,415,000	$	2,180,000
Deferred dredging costs		1,927,000		2,305,000
Deferred compensation plan investments		935,000		798,000
Deposits		1,133,000		1,080,000
Other		1,037,000		985,000
Total	$	7,447,000	$	7,348,000
Accrued liabilities:
Utilities	$	3,079,000	$	3,297,000
Accrued spill response job costs		6,198,000		—
Damage claim settlement accrual		3,175,000		—
Accrued payables		4,275,000		4,195,000
Other		10,575,000		12,113,000
Total	$	27,302,000	$	19,605,000

19

LOVING ENTERPRISES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

(14) Restatement

As discussed in Note 4, the accompanying 2005 and 2004 financial statements have been restated to correct the accounting for interest rate swap agreements in accordance with SFAS No. 133. The restatement has no effect on the January 1, 2004 balance of shareholders’ equity or on any balances shown in the 2005 and 2004 balance sheets as the restatement resulted in offsetting changes to retained earnings and accumulated other comprehensive income. The effect of the restatement on the previously reported statements of income and comprehensive income and the amounts of previously reported other comprehensive income are summarized below.

	Increase/(Decrease)
	2005			2004
Net income
Mark to market adjustment of non-hedging derivatives	$	6,979,000		$	6,337,000
Deferred income taxes		(2,683,000	)		(2,475,000	)
Net Income	$	4,296,000		$	3,862,000
Other comprehensive income
Mark to market adjustment of $130 million interest rate swap agreements	$	(6,979,000	)	$	(6,337,000	)
Deferred income taxes		2,683,000			2,475,000
Other Comprehensive Income	$	(4,296,000	)	$	(3,862,000	)
Comprehensive Income	$	—		$	—

20

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

On May 16, 2006, the Company filed an amended current report on Form 8-K/A with respect to the completion on May 1, 2006 of its acquisition, through a wholly-owned subsidiary, of 50% of the shares of IMTT Holdings Inc., formerly known as Loving Enterprises, Inc. (“IMTT Holdings”). IMTT Holdings is the ultimate holding company for a group of companies and partnerships that own a bulk liquid storage terminal business operating as International-Matex Tank Terminals (“IMTT”). The restated audited financial statements and unaudited interim financial information required in compliance with Rule 3-05 of Regulation S-X, and the pro forma financial information required in compliance with Article 11 of Regulation S-X, are disclosed in this filing in Exhibits 99.1, 99.2 and 99.3.

On June 27, 2006, the Company filed an amended current report on Form 8-K/A with respect to the completion on June 7, 2006 of its acquisition, through a wholly-owned subsidiary, of K-1 HGC Investment, L.L.C. (subsequently renamed Macquarie HGC Investment LLC) (“MHGI”), which owns HGC Holdings, L.L.C. (subsequently renamed HGC Holdings LLC) (“HGC”) and The Gas Company, LLC (“TGC”). MHGI, together with its wholly owned subsidiary, HGC Investment Corporation, are the sole members of HGC, and HGC is the sole member of TGC. TGC is a Hawaii limited liability company that owns and operates the regulated synthetic natural gas distribution business in Hawaii and distributes and sells liquefied petroleum gas through unregulated operations. The audited financial statements and unaudited interim financial information required in compliance with Rule 3-05 of Regulation S-X, and the pro forma financi al information required in compliance with Article 11 of Regulation S-X, were disclosed in that filing.

On August 22, 2006, the Company filed a current report on Form 8-K with respect to the sale, through its wholly-owned subsidiary Communications Infrastructure LLC, of 16,517,413 stapled securities of Macquarie Communications Infrastructure Group (ASX: MCG) (“MCG”).

On October 2, 2006, the Company filed a current report on Form 8-K with respect to the sale, through its wholly-owned subsidiary South East Water LLC, of its 17.5% minority interest in the holding company for South East Water.

On January 5, 2007, the Company filed a current report on Form 8-K with respect to the sale, through its wholly-owned subsidiary Macquarie Yorkshire LLC, of its interest in Macquarie Yorkshire Limited, the holding company for its 50% interest in Connect M1-A1 Holdings Limited, which is the indirect holder of the Yorkshire Link toll road concession. The pro forma financial information required in compliance with Article 11 of Regulation S-X, was disclosed in that filing.

The following unaudited pro forma condensed combined statement of operations for the year ended December 31, 2006 gives effect to the acquisitions of IMTT and TGC as if these transactions had occurred on January 1, 2006, and the dispositions of MCG stapled securities, MYL and SEW as if these transactions had occurred on December 31, 2005. Certain reclassifications were made to the historical financial statements to conform to the current presentation.

In August 2006 and October 2006, MIC used the cash proceeds from the sale of our investments in MCG and SEW, respectively, to reduce its borrowings under the acquisition credit facility at the Macquarie Infrastructure Company Inc. level. The impact on interest expense from the reduction of borrowings from the sale of our investments in both MCG and SEW has not been included in the pro forma condensed combined statement of operations.

On October 30, 2006, MIC completed an offering of shares of trust stock under its existing shelf registration statement which generated approximately $252.8 million in net proceeds. Most of these proceeds were used to repay the remaining balance under the acquisition credit facility at the Macquarie Infrastructure Company Inc. level. The impact on interest expense from the reduction of borrowings from the offering of shares has not been included in the pro forma condensed combined statement of operations.

We have included pro forma earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP measure, as we consider it to be an important measure of our overall performance. We believe EBITDA provides additional insight into the performance of our operating companies and our ability to service our obligations and support our ongoing distribution policy.

1

MACQUARIE INFRASTRUCTURE COMPANY TRUST

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2006
($ in thousands, except number of shares and per share data)

		MIC		Acquisitions			Dispositions						Pro Forma Adjustments		Pro Forma Combined
				IMTT	TGC		MCG		SEW		MYL
		$		$	$		$		$		$		$		$
Revenue
Revenue from product sales		313,298		—	71,944		—		—		—		—		385,242
Service revenue		201,835		—	—		—		—		—		—		201,835
Financing and equipment lease income		5,118		—	—		—		—		—		—		5,118
Total revenue		520,251		—	71,944		—		—		—		—		592,195
Costs and expenses
Cost of product sales		206,802		—	48,176		—		—		—		—		254,978
Cost of services		92,542		—	—		—		—		—		—		92,542
Selling, general and administrative		120,252		—	10,965		—		—		—		—		131,217
Fees to manager		18,631		—	—		—		—		—		—		18,631
Depreciation		12,102		—	2,353		—		—		—		169	(1)	14,624
Amortization of intangibles		43,846		—	2		—		—		—		368	(2)	44,216
Total operating expenses		494,175		—	61,496		—		—		—		537		556,208
Operating income		26,076		—	10,448		—		—		—		(537	)	35,987
Other income (expense)
Dividend income		8,395		—	—		(2,352	)	(6,043	)	—		—		—
Interest income		4,887		—	463		—		—		(1,708	)	—		3,642
Interest expense		(77,746	)	—	(3,786	)	—		—		1,087		(6,595	)(3)	(87,040	)
Equity in earnings and amortization charges of investees		12,558		3,739	—		—		—		(9,029	)	(1,040	)(4)	6,228
Losses on derivative instruments		(1,373	)	—	—		—		—		—		3,286	(5)	1,913
Gain on sale of equity investment		3,412		—	—		—		—		(3,412	)	—		—
Gain on sale of investment		49,933		—	—		—		(49,933	)	—		—		—
Gain on sale of marketable securities		6,738		—	—		(6,738	)	—		—		—		—
Other income (expense), net		594		—	(1,876	)	—		—		—		(391	)(6)	(1,673	)
Income (loss) before income taxes and minority interests		33,474		3,739	5,249		(9,090	)	(55,976	)	(13,062	)	(5,277	)	(40,943	)
Income tax benefit (expense)		16,421		—	(2,062	)	162		—		—		997	(7)	15,518
Minority interests		23		—	—		—		—		—		—		23
Net income (loss)		49,918		3,739	3,187		(8,928	)	(55,976	)	(13,062	)	(4,280	)	(25,402	)
Basic and diluted income (loss) per share	$	1.73												$	(0.88	)
Weighted average number of shares of trust stock outstanding:
Basic		28,895,522													28,895,522
Diluted		28,912,346													28,895,522
Reconciliation of net income (loss) to EBITDA
Net income (loss)		49,918		3,739	3,187		(8,928	)	(55,976	)	(13,062	)	(4,280	)	(25,402	)
Interest expense, net		72,859		—	3,323		—		—		621		6,595	(3)	83,398
Income tax (benefit) expense		(16,421	)	—	2,062		(162	)	—		—		(997	)(7)	(15,518	)
Depreciation expense(8)		21,366		—	2,353		—		—		—		169	(1)	23,888
Amortization of intangibles(8)		43,846		—	2		—		—		—		368	(2)	44,216
EBITDA		171,568		3,739	10,927		(9,090	)	(55,976	)	(12,441	)	1,855		110,582

2

		Year Ended December 31, 2006
		($ in thousands)
(1)	Depreciation
	Additional depreciation expense reflecting the Company’s share in the increase in value of certain TGC tangible assets, depreciated over 9 years.	$	(169	)
(2)	Amortization
	Additional amortization expense reflecting the Company’s share in the increase in value of certain TGC intangible assets, depreciated over a period of 3 to 9 years.	$	(368	)
(3)	Interest expense
	Increase in interest expense assuming the amount drawn under MIC’s revolving credit facility relating to the IMTT purchase was outstanding for the entire year ended December 31, 2006.	$	(3,694	)
	Increase in interest expense assuming the amount drawn under MIC’s revolving credit facility relating to the TGC purchase was outstanding for the entire year ended December 31, 2006.	$	(2,781	)
	Adjustment to interest expense assuming the amount drawn under TGC’s term loan ($160.0 million) was outstanding for the entire year ended December 31, 2006.	$	86
	Amortization of deferred financing costs of $3.3 million relating to TGC’s term loan ($160.0 million).	$	(206	)
		$	(6,595	)
	In August 2006 and October 2006, MIC used the cash proceeds from the sale of our investments in MCG and SEW, respectively (as well as proceeds received from our equity raise), to reduce its borrowings under the acquisition credit facility at the Macquarie Infrastructure Company Inc. level. The impact on interest expense if the borrowings under the facility had been lower throughout the entire year ended December 31, 2006 by the amount of the sale proceeds, would have been a reduction in interest expense of $4.5 million. This impact on interest expense has not been included in the above pro forma statement of operations.
(4)	Equity in earnings and amortization charges of investee
	Additional amortization and depreciation expense reflecting the Company’s share in the increase in value of certain IMTT tangible and intangible assets, depreciated over a period of 5 to 30 years, net of tax impact.	$	(1,576	)
	Net elimination of certain intercompany business relationships that ceased upon the acquisition of our 50% interest of IMTT.	$	48
	Elimination of interest expense of $32.6 million of debt that was repaid by IMTT Holdings using the proceeds of our equity investment.	$	488
		$	(1,040	)
(5)	Losses on derivative instruments
	Removal of net losses on foreign currency forward contracts entered into to hedge distributions and sale proceeds from offshore investments.	$	3,286
(6)	Other income (expense)
	Removal of net gains on foreign currency forward contracts entered into to hedge distributions and sale proceeds from offshore investments, and other foreign currency gains and losses.	$	(391	)
(7)	Income tax benefit
	Adjustment to record estimated tax benefit relating to the pro forma adjustments.	$	997
(8)	Depreciation includes $5.7 million and $3.6 million for our district energy and airport parking businesses, respectively, which are included in cost of services. Depreciation and amortization of intangibles do not include our pro forma share of MYL and IMTT depreciation and amortization expense. Our share of MYL amortization expense for the year ended December 31, 2006 was $3.9 million. Our pro forma share of IMTT depreciation and amortization expense, arising from purchase accounting, for the same period was $8.0 million. These items are included in equity in earnings and amortization charges of investees.
	Grand Total of All Adjustments	$	(4,280	)

3