Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

CAI INTERNATIONAL, INC.

INDEX



		Page No.
Part I — Financial Information		5

Item 1.	Financial Statements (Unaudited)	5

	Consolidated Balance Sheets at ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016	5

	Consolidated Statements of Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~	7

	Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~	8

	Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~	9

	Notes to Unaudited Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3231

Item 4.	Controls and Procedures	3231

Part II — Other Information		3332

Item 1.	Legal Proceedings	3332

Item 1A.	Risk Factors	3332

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3332

Item 3.	Defaults Upon Senior Securities	3332

Item 4.	Mine Safety Disclosures	3332

Item 5.	Other Information	3332

Item 6.	Exhibits	3332

Signatures		3433

Table of Contents

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business, operations, growth strategy and service development efforts. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. When used in this Quarterly Report on Form 10-Q, the words “may,” “might,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe” and other similar expressions are intended to identify forward-looking statements and information. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed with the Securities and Exchange Commission (SEC) on March ~~3, 2016~~13, 2017 and our other reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Reference is also made to such risks and uncertainties detailed from time to time in our other filings with the SEC.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

CAI INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(UNAUDITED)



	June 30,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
Assets
Current assets
Cash	$	15,723	$	17,447	$	12,141	$	15,685
Cash held by variable interest entities		15,903		35,106		20,382		30,449
Accounts receivable, net of allowance for doubtful accounts of $966 and
and $548 at June 30, 2016 and December 31, 2015, respectively		69,013		55,284
Current portion of direct finance leases		24,449		21,158
Accounts receivable, net of allowance for doubtful accounts of $1,543 and
$1,340 at March 31, 2017 and December 31, 2016, respectively						63,426		63,745
Current portion of net investment in direct finance leases						20,154		19,959
Prepaid expenses and other current assets		2,377		2,155		9,598		5,315
Total current assets		127,465		131,150		125,701		135,153
Restricted cash		6,702		7,212		5,937		6,192
Rental equipment, net of accumulated depreciation of $385,571 and
$349,810 at June 30, 2016 and December 31, 2015, respectively		1,795,851		1,748,211
Rental equipment, net of accumulated depreciation of $440,406 and
$421,153 at March 31, 2017 and December 31, 2016, respectively						1,832,291		1,807,010
Net investment in direct finance leases		78,066		82,210		77,036		80,582
Goodwill		15,482		2,905		15,794		15,794
Intangible assets, net of accumulated amortization of $1,512 and
$1,237 at June 30, 2016 and December 31, 2015, respectively		10,860		1,223
Furniture, fixtures and equipment, net of accumulated depreciation of $2,805 and
$2,027 at June 30, 2016 and December 31, 2015, respectively		701		674
Intangible assets, net of accumulated amortization of $3,350 and
$2,681 at March 31, 2017 and December 31, 2016, respectively						9,022		9,691
Furniture, fixtures and equipment, net of accumulated depreciation of $2,924 and
$2,833 at March 31, 2017 and December 31, 2016, respectively						509		550
Other non-current assets						2,020		962
Total assets (1)	$	2,035,127	$	1,973,585	$	2,068,310	$	2,055,934

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	14,417	$	11,962	$	9,873	$	13,804
Accrued expenses and other current liabilities		10,135		4,813		11,529		11,778
Due to container investors		6,528		5,801		6,245		7,077
Unearned revenue		12,085		11,990		8,241		10,613
Current portion of debt		89,159		169,596		85,204		95,527
Rental equipment payable		21,159		10,901		51,357		25,207
Total current liabilities		153,483		215,063		172,449		164,006
Debt		1,360,574		1,249,057		1,377,931		1,380,499
Deferred income tax liability		51,627		48,204		51,401		51,804
Other long term liabilities		3,500		-		1,710		2,121
Total liabilities (2)		1,569,184		1,512,324		1,603,491		1,598,430

Stockholders' equity
Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding
19,317,984 and 20,132,706 shares at June 30, 2016 and December 31, 2015, respectively		2		2
19,192,687 and 19,057,217 shares at March 31, 2017 and December 31, 2016, respectively						2		2
Additional paid-in capital		142,295		148,523		141,846		141,058
Accumulated other comprehensive loss		(7,012)		(7,922)		(7,881)		(8,132)
Retained earnings		330,658		319,735		330,852		324,576
Total CAI stockholders' equity		465,943		460,338
Non-controlling interest		-		923
Total stockholders' equity		465,943		461,261		464,819		457,504
Total liabilities and stockholders' equity	$	2,035,127	$	1,973,585	$	2,068,310	$	2,055,934



	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2016		2015		2016		2015		2017		2016
Revenue
Container lease income	$	51,160	$	55,326	$	102,074	$	109,646	$	52,954	$	51,545
Rail lease income		7,591		3,753		14,848		6,668		8,053		7,257
Logistics revenue		12,382		-		20,546		-		20,499		8,164
Management fee revenue		509		287		1,140		1,544
Total revenue		71,642		59,366		138,608		117,858		81,506		66,966

Operating expenses
Depreciation of rental equipment		24,494		22,029		47,528		43,252		27,972		23,034
Storage, handling and other expenses		9,323		6,994		18,374		13,759		6,953		9,051
Logistics transportation costs		10,140		-		17,082		-		17,071		6,942
Loss (gain) on sale of used rental equipment		3,894		192		4,627		(165)
Loss on sale of used rental equipment										873		733
Administrative expenses		8,933		7,017		17,683		14,228		10,686		8,750
Total operating expenses		56,784		36,232		105,294		71,074		63,555		48,510

Operating income		14,858		23,134		33,314		46,784		17,951		18,456

Other expenses
Net interest expense		10,545		9,047		20,538		17,825		11,672		10,042
Other expense		192		100		322		59		314		130
Other expense		10,737		9,147		20,860		17,884
Total other expenses										11,986		10,172

Net income before income taxes and non-controlling interest		4,121		13,987		12,454		28,900		5,965		8,284
Income tax expense		361		1,057		1,494		2,399		693		1,133

Net income		3,760		12,930		10,960		26,501		5,272		7,151
Net income attributable to non-controlling interest		3		41		37		70		-		34
Net income attributable to CAI common stockholders	$	3,757	$	12,889	$	10,923	$	26,431	$	5,272	$	7,117

Net income per share attributable to CAI common stockholders
Basic	$	0.19	$	0.61	$	0.56	$	1.26	$	0.28	$	0.36
Diluted	$	0.19	$	0.60	$	0.56	$	1.24	$	0.27	$	0.36

Weighted average shares outstanding
Basic		19,372		21,095		19,577		21,000		19,010		19,774
Diluted		19,449		21,398		19,646		21,346		19,231		19,833



	Six Months Ended June 30,				Three Months Ended March 31,
	2016		2015		2017		2016
Cash flows from operating activities
Net income	$	10,960	$	26,501	$	5,272	$	7,151
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		47,686		43,466		28,058		23,113
Amortization of debt issuance costs		1,453		1,338		747		754
Amortization of intangible assets		274		129		669		76
Stock-based compensation expense		908		969		461		470
Unrealized loss on foreign exchange		113		170
Loss (gain) on sale of used rental equipment		4,627		(165)
Loss on disposal of subsidiary		146		-
Unrealized loss (gain) on foreign exchange						236		(7)
Loss on sale of used rental equipment						873		733
Deferred income taxes		1,241		429		601		100
Bad debt expense		162		193		187		150
Changes in other operating assets and liabilities:
Accounts receivable		(8,376)		2,096		(1,069)		(7,993)
Prepaid expenses and other assets		31		(2,273)		(4,134)		(53)
Accounts payable, accrued expenses and other current liabilities		483		(2,675)		(4,763)		4,040
Due to container investors		727		(4,193)		(832)		194
Unearned revenue		88		3,216		(648)		1,383
Net cash provided by operating activities		60,523		69,201		25,658		30,111
Cash flows from investing activities
Purchase of rental equipment		(130,239)		(236,878)		(48,116)		(45,844)
Acquisitions, net of cash acquired		(15,729)		-		-		(6,680)
Net proceeds from sale of used rental equipment		29,944		28,133
Disposal of subsidiary, net of cash disposed of		(460)		-
Proceeds from sale of used rental equipment						19,325		12,740
Purchase of furniture, fixtures and equipment		(49)		(49)		(44)		(25)
Receipt of principal payments from direct financing leases		11,778		10,504		2,741		7,073
Net cash used in investing activities		(104,755)		(198,290)		(26,094)		(32,736)
Cash flows from financing activities
Proceeds from debt		291,990		236,831		85,787		145,200
Principal payments on debt		(261,413)		(104,714)		(100,541)		(136,445)
Debt issuance costs		(941)		(1,662)		-		(10)
Decrease in restricted cash		510		509		255		255
Repurchase of stock		(7,117)		-		-		(6,032)
Exercise of stock options		-		4,645		327		-
Excess tax benefit from share-based compensation awards		-		1,006
Net cash provided by financing activities		23,029		136,615
Net cash (used in) provided by financing activities						(14,172)		2,968
Effect on cash of foreign currency translation		276		(217)		997		206
Net (decrease) increase in cash		(20,927)		7,309		(13,611)		549
Cash at beginning of the period		52,553		53,821		46,134		52,553
Cash at end of the period	$	31,626	$	61,130	$	32,523	$	53,102

Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes	$	487	$	1,887	$	97	$	245
Interest		18,900		16,296		11,504		9,964
Supplemental disclosure of non-cash investing and financing activity
Transfer of rental equipment to direct finance lease	$	10,917	$	18,191	$	1,806	$	8,879
Transfer of direct finance lease to rental equipment						291		-

CAI International, Inc. ~~and~~, together with its subsidiaries (collectively, CAI or the Company), is a transportation finance and logistics company. The Company purchases equipment, primarily intermodal shipping containers and railcars, which it leases to its customers. The Company also manages equipment for third-party investors. In operating its fleet, the Company leases, re-leases and disposes of equipment and contracts for the repair, repositioning and storage of equipment. The Company also provides domestic and international logistics services.

In July 2015, the Company purchased ClearPointt Logistics LLC (ClearPointt), an intermodal logistics company focused on the domestic intermodal market, for approximately $4.1 million. ClearPointt is headquartered in Everett, Washington.

In February 2016, the Company purchased Challenger Overseas LLC (Challenger), a Non-Vessel Operating Common Carrier (NVOCC), for approximately $10.8 ~~million (see Note 4).~~million. Challenger is headquartered in Eatontown, New Jersey.

In June 2016, the Company purchased Hybrid Logistics, Inc. and its affiliate, General Transportation Services, Inc. (collectively, Hybrid), asset light truck brokers, for approximately ~~$11.9 million (see Note 4).~~$12.0 million. Hybrid is headquartered in Portland, Oregon.

The Company’s common stock is traded on the New York Stock Exchange under the symbol “CAI.” The Company’s corporate headquarters are located in San Francisco, California.

The accompanying unaudited consolidated financial statements include the financial statements of ~~the Company,~~CAI International, Inc., its wholly-owned subsidiaries, and its previously 80%-owned subsidiary, CAIJ, Inc. (CAIJ), up to its date of disposal in April 2016. All significant intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal, recurring adjustments necessary to present fairly the Company’s financial position as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015,~~2016, the Company’s results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ and the Company’s cash flows for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 and ~~2015.~~2016. The results of operations and cash flows for the periods presented are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of ~~2016~~2017 or in any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, ~~2015,~~2016, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March ~~3, 2016.~~13, 2017.

~~There~~Container rental equipment is recorded at original cost and depreciated to an estimated residual value on a straight-line basis over its estimated useful life. The estimated useful lives and residual values of the Company’s container equipment are based on historical disposal experience and the Company’s expectations for future used container sale prices. Depreciation estimates are reviewed on a regular basis to determine whether sustained changes have taken place in the useful lives of equipment or assigned residual values, which would suggest that a change in depreciation estimates is warranted.

After the Company conducted its regular depreciation policy review for 2016, it concluded that a change in the estimated residual value for 40-foot high cube dry van containers from $1,650 to $1,400 per container, effective July 1, 2016, was appropriate. The change increased the Company’s depreciation expense by $2.3 million, decreased net income by $2.2 million, and decreased diluted earnings per share by $0.11 for the three months ended March 31, 2017.

The Company continuously monitors disposal prices across its entire portfolio for indications of a sustained market downturn. The Company will adjust its residual value estimates as and when conditions warrant.

Except as described below in “Recent Accounting Pronouncements” there were no changes to the Company’s accounting policies during the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017. See Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015,~~2016, filed with the SEC on March ~~3, 2016,~~13, 2017, for a description of the Company’s significant accounting policies.

~~In May 2014, the Financial Account~~in~~g Standards Board (FASB) issued Accounting Standards Update No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (ASU No. 2014-09). This new standard will replace all current U.S. GAAP guidance on this topic and eliminates industry-specific guidance. Leasing revenue recognition is specifically excluded from this ASU, and therefore, the new standard will only apply to management fee revenue, sales of equipment portfolios, sales of used equipment and the provision of logistics services. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted for interim and annual periods beginning after December 15, 2016. Adoption of the guidance is not expected to have a material impact on the Company’s consolidated financial statements.

~~In February 2015, the FASB issued Accounting Standards Update No. 2015-02,~~ ~~Consolidation (Topic 810): Amendment to the Consolidation Analysis~~ (ASU No. 2015-02). The new guidance changes (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity (VIE) characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. The guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. The Company adopted ASU No. 2015-02 effective January 1, 2016, and adoption had no impact on the Company’s consolidated financial statements.

~~In April 2015, the FASB issued~~Recent Accounting ~~Standards Update No. 2015-03,~~ ~~Simplifying the Presentation of Debt Issuance Costs~~ ~~(ASU No. 2015-03)~~. The new guidance requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The guidance is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU No. 2015-03 effective January 1, 2016. Adoption of the guidance resulted in the reclassification of unamortized debt issuance costs of $12.6 million and $13.0 million as of June 30, 2016 and December 31, 2015, respectively, from prepaid expenses and other current assets to a reduction of debt on the Company’s consolidated balance sheets.

~~In November 2015, the FASB issued Accounting Standards Update No. 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~ (ASU No. 2015-17). The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those years, with early adoption permitted. The new guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively. The Company early adopted ASU No. 2015-07 effective December 31, 2015 on a prospective basis. No prior periods were retrospectively adjusted, and adoption did not have an impact on the Company’s consolidated financial statements.

~~In February 2016, the FASB issued Accounting Standards Update No. 2016-02,~~ ~~Leases~~ (ASU No. 2016-02). The new standard will replace all current U.S. GAAP guidance on this topic. The new guidance will require lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases, with the exception of leases that meet the definition of a short-term lease. Lessor accounting will remain similar to the current model. The guidance is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The new guidance must be adopted using a modified retrospective transition and is not expected to have a material impact on the Company’s consolidated financial statements.Pronouncements

In March 2016, the ~~FASB~~Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU ~~No.~~ 2016-09)~~, which~~. The new standard simplifies ~~several~~certain aspects of the accounting for ~~employee~~ share-based payment transactions, including ~~the accounting for~~ income taxes, ~~forfeitures and statutory tax withholding requirements, as well as~~ classification of ~~related amounts within~~awards and classification on the statement of cash flows. The new guidance isalso allows an entity to make a policy election to account for forfeitures as they occur. The Company adopted ASU 2016-09 effective ~~beginning~~January 1, 2017. Accordingly, excess tax benefits or deficiencies from stock-based compensation are now reflected in the ~~first quarter~~consolidated statements of ~~2017,~~income as a component of the provision for income taxes, whereas they were previously recognized in equity. As a result of the adoption of ASU 2016-09, the Company recognized $1.0 million in deferred tax assets associated with ~~early adoption permitted. We are currently evaluating the impact that~~excess tax benefits not previously recognized in deferred taxes as a cumulative-effect adjustment to retained earnings as of January 1, 2017. Adoption of the new ~~guidance will~~standard did not have a material impact on our provision for income taxes for the three months ended March 31, 2017. The Company elected to apply the change in presentation to the statements of cash flows prospectively and elected to account for forfeitures as they occur, rather than estimate expected forfeitures, which did not have a material impact on the Company’s consolidated financial ~~statements and related disclosures.~~statements.

In August 2016, Hanjin Shipping Co., Ltd. (Hanjin) filed for bankruptcy protection from its creditors. Based on the recovery of Hanjin containers to date and prior experience, the Company believes that most of its containers will be recovered. As of March 31, 2017, the Company has recovered approximately 84% of the containers that were on lease to Hanjin. The Company maintains insurance to cover the value of containers that are unlikely to be recovered from its customers, the cost to recover containers and up to 180 days of lost lease rental income, subject to a deductible of $2.0 million.

During the year ended December 31, 2016, the Company recorded an impairment of $3.2 million representing the book value of containers the Company estimated would not be recovered from Hanjin. As of December 31, 2016, an insurance receivable of $3.8 million was recorded for $1.2 million of estimated unrecoverable containers in excess of the insurance deductible, which was recorded in depreciation expense, and $2.6 million of recovery costs, which was recorded as a reduction to storage, handling and other expenses for the year ended December 31, 2016. An additional insurance receivable of $4.1 million was recorded for $2.2 million of lost lease rental income, recognized as container lease income and $1.9 million of recovery costs, recorded as a reduction to storage, handling and other expenses, during the three months ended March 31, 2017. As of March 31, 2017, the insurance receivable related to this customer was $7.9 million.

The Company regularly performs a review of its container fund arrangements with investors to determine whether or not it has a variable interest in the fund and if the fund is a variable interest entity (VIE). If it is determined that the Company does not have a variable interest in the fund, further analysis is not required and the Company does not consolidate the fund. If it is determined that the Company does have a variable interest in the fund and the fund is a VIE, a further analysis is performed to determine if the Company is a primary beneficiary of the VIE and meets both of the following criteria under FASB ASC Topic 810:

If in the Company’s judgment both of the above criteria are met, the VIE’s financial statements are included in the Company’s consolidated financial statements as required under FASB ASC Topic 810, Consolidation.

The Company currently enters into two types of container fund arrangements with investors which are reviewed under FASB ASC Topic 810, Consolidation. These arrangements include container funds that the Company manages for investors and container funds that have entered into financing arrangements with investors. Several of the funds that the Company manages and funds under financing arrangements are Japanese container funds that were established under separate investment agreements allowed under Japanese commercial laws (see Note ~~13)~~14). Each of the funds is financed by unrelated Japanese third party investors.

The fees earned by the Company for arranging, managing and establishing container funds are commensurate with the level of effort required to provide those services, and are at or above the same level of seniority as other operating liabilities of the funds that are incurred in the normal course of business. As such, the Company does not have a variable interest in the managed containers funds, and does not consolidate those funds. The Company recognizes gain on sale of containers to the unconsolidated funds as sales in the ordinary course of business. No container portfolios were sold to the Japanese funds in the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015.~~2016.

As of ~~June 30, 2016,~~March 31, 2017, the Company has transferred containers, with a total net book value of $~~182.6~~201.9 million at the time of transfer, to Japanese investor funds while concurrently entering into lease agreements for the same containers, under which the Company leases the containers back from the Japanese investors. In accordance with FASB ASC Topic 840, Sale-Leaseback Transactions, the Company concluded these were financing transactions under which sale-leaseback accounting was not applicable.

The terms of the transactions with container funds under financing arrangements include options for the Company to purchase the containers from the funds at a fixed price. As a result of the residual interest resulting from the fixed price call option, the Company concluded that it may absorb a significant amount of the variability associated with the funds’ anticipated economic performance and, as a result, the Company has a variable interest in the funds. The funds are considered VIEs under FASB ASC Topic 810, Consolidation, because, as lessee of the funds, the Company has the power to direct the activities that most significantly impact each entity’s economic performance, including the leasing and managing of containers owned by the funds. As the Company has the power to direct the activities that most significantly impact the economic performance of the VIEs and the variable interest provides the Company with the right to receive benefits from the entity that could potentially be significant to the funds, the Company determined that it is the primary beneficiary of these VIEs and included the VIEs’ assets and liabilities as of ~~June 30, 2016~~March 31, 2017, and December 31, ~~2015,~~2016, and the results of the VIEs’ operations and cash flows for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015~~ in the Company’s consolidated financial statements.

The containers that were transferred to the Japanese investor funds had a net book value of ~~$71.2~~$64.6 million as of ~~June 30, 2016.~~March 31, 2017. The container equipment, together with ~~$15.9~~$20.4 million of cash held by the investor funds that can only be used to settle the liabilities of the VIEs, has been included on the Company’s consolidated balance sheets with the ~~offsetting~~related liability ~~related to the funds~~ presented in the debt section of the Company’s consolidated balance sheets as collateralized financing obligations of ~~$83.7~~$84.8 million and term loans held by VIE of ~~$6.3~~$4.7 million. See Note ~~8(e)~~9(e) and ~~8(f)~~9(f) for additional information. No gain or loss was recognized by the Company on the initial consolidation of the VIEs. Containers sold to the Japanese investor funds during the three months ended ~~June 30,~~March 31, 2016, ~~and 2015~~ had a book ~~values~~value of ~~$6.2 million and $8.0 million, respectively. Containers~~$10.7 million. No containers were sold to ~~the~~ Japanese investor funds during the ~~six~~three months ended ~~June 30, 2016 and 2015 had book values of $16.9 million and $14.8 million, respectively.~~March 31, 2017.

~~During the six months ended June 30,~~In 2016, the Company completed the acquisitions of Challenger and Hybrid, for total consideration of ~~$22.7~~$22.8 million, $6.0 million of which iswas contingent and based on their future performance. The aggregate allocation of the combined purchase price included $1.2 million of cash, $9.9 million of identifiable intangible assets, $12.9 million of residual goodwill, and $1.2 million of net liabilities assumed.

The contingent consideration liability was $2.2 million as of March 31, 2017 and December 31, 2016. Expected future payments of ~~$3.5~~$1.7 million and ~~$2.5~~$0.5 million ~~are~~were recorded in Other long-term liabilities and Accrued expenses and Other current liabilities, respectively, in the Company’s consolidated balance ~~sheet~~sheets at ~~June 30,~~March 31, 2017 and December 31, 2016.

Management believes that the contingent consideration liability of $2.2 million approximates its fair value as of March 31, 2017, based on the fair value of expected future payments estimated based on forecasted future performance. The ~~acquisitions were not material to the Company’s consolidated financial statements, either individually or~~fair value of these liabilities would be categorized as Level 3 in the aggregate. Accordingly, pro forma results of operations related to these business acquisitions during the six months ended June 30, 2016 have not been presented. The Company has included the financial results of these business acquisitions in its consolidated financial statements from their respective date of acquisition.fair value hierarchy.

The following table ~~summarizes the allocation~~provides a summary of the ~~total consideration transferred~~Company’s rental equipment (in thousands):


	March 31,		December 31,
	2017		2016
Dry containers	$	1,335,979	$	1,322,508
Refrigerated containers		353,326		350,776
Other specialized equipment		181,988		164,934
Railcars		401,404		389,945
		2,272,697		2,228,163
Accumulated depreciation		(440,406)		(421,153)
Rental equipment, net of accumulated depreciation	$	1,832,291	$	1,807,010

~~Cash~~

~~1,186~~

~~Accounts receivable~~

~~5,839~~

~~Property and equipment~~

~~145~~

~~Goodwill~~

~~12,577~~

~~Intangible assets~~

~~9,912~~

~~Other assets~~

~~284~~

~~Total assets~~

~~29,943~~

~~Accounts payable~~

~~4,437~~

~~Deferred tax liability~~

~~2,184~~

~~Other liabilities~~

~~605~~

~~Total liabilities~~

~~7,226~~

~~Purchase price~~

~~22,717~~

~~Adjustments to record the assets acquired and liabilities assumed at fair value include the recognition of $9.9 million of intangible assets as follows:~~

~~The following table provides a summary of the Company’s rental equipment (in thousands):~~

The following table represents the components of the Company’s net investment in direct finance leases (in thousands):

In order to estimate the allowance for losses contained in gross finance lease receivables, the Company reviews the credit worthiness of its customers on an ongoing basis. The review includes monitoring credit quality indicators, the aging of customer receivables and general economic conditions.

The categories of gross finance lease receivables based on the Company's internal customer credit ratings can be described as follows:

Tier 1— These customers are typically large international shipping lines that have been in business for many years and have world-class operating capabilities and significant financial resources. In most cases, the Company has had a long commercial relationship with these customers and currently maintains regular communication with them at several levels of management, which provides the Company with insight into the customer's current operating and financial performance. In the Company's view, these customers have the greatest ability to withstand cyclical down turns and would likely have greater access to needed capital than lower-rated customers. The Company views the risk of default for Tier 1 customers to range from minimal to moderate.

Tier 2— These customers are typically either smaller shipping lines or freight forwarders with less operating scale or with a high degree of financial leverage, and accordingly the Company views these customers as subject to higher volatility in financial performance over the business cycle. The Company generally expects these customers to have less access to capital markets or other sources of financing during cyclical down turns. The Company views the risk of default for Tier 2 customers as moderate.

Tier 3— Customers in this category exhibit volatility in payments on a regular basis.

Based on the above categories, the Company's gross finance lease receivables were as follows (in thousands):

~~Contractual maturities of the Company's gross finance lease receivables subsequent to and as of June 30, 2016 for the years ending June 30 were as follows (in thousands):~~

~~The Company amortizes intangible assets on a straight line basis over their estimated useful lives as follows:~~

Total amortization expense was $0.2 million and $0.1 million for the three months ended June 30, 2016 and 2015, respectively, and $0.3 million and $0.1 million for the six months ended June 30, 2016 and 2015, respectively.

~~Intangible assets as of June 30, 2016 and December 31, 2015 were as follows (in thousands):~~

Contractual maturities of the Company's gross finance lease receivables subsequent to and as of March 31, 2017 for the years ending March 31 were as follows (in thousands):

The Company amortizes intangible assets on a straight line-basis over their estimated useful lives as follows:

The Company’s intangible assets as of March 31, 2017 and December 31, 2016 were as follows (in thousands):

Total amortization expense was $0.7 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively, and was included in administrative expenses in the consolidated statements of income.

As of ~~June 30, 2016,~~March 31, 2017, estimated future amortization expenses are as follows (in thousands):

Details of the Company’s debt as of ~~June 30, 2016~~March 31, 2017 and December 31, ~~2015~~2016 were as follows (dollars in thousands):



		June 30, 2016					December 31, 2015							March 31, 2017					December 31, 2016
		Outstanding				Average	Outstanding				Average			Outstanding				Average	Outstanding				Average
Reference		Current		Long-term		Interest	Current		Long-term		Interest	Maturity		Current		Long-term		Interest	Current		Long-term		Interest	Maturity

(a)(i)	Revolving credit facility	$	-	$	535,000	2.2%	$	8,500	$	488,000	1.8%	March 2020	Revolving credit facility	$	1,000	$	523,000	2.7%	$	-	$	526,000	2.5%	March 2020
(a)(ii)	Revolving credit facility - Rail		-		222,000	2.0%		34,500		126,000	1.9%	October 2020	Revolving credit facility - Rail		-		240,500	2.7%		-		223,500	2.4%	October 2020
(a)(iii)													Revolving credit facility		-		6,089	2.0%		-		-	-	September 2020
(b)(i)	Term loan		1,800		22,800	2.6%		1,800		23,700	2.3%	April 2018	Term loan		1,800		21,450	3.0%		1,800		21,900	2.9%	April 2018
(b)(ii)	Term loan		9,000		125,250	2.2%		9,000		129,750	2.2%	October 2019	Term loan		9,000		118,500	2.6%		9,000		120,750	2.3%	October 2019
(b)(iii)	Term loan		7,000		93,000	2.4%		9,940		99,440	1.9%	June 2021	Term loan		7,000		87,750	2.7%		7,000		89,500	2.5%	June 2021
(b)(iv)	Term loan		1,139		18,307	3.4%		1,119		18,881	3.4%	December 2020	Term loan		1,168		17,427	3.4%		1,158		17,723	3.4%	December 2020
(c)	Senior secured notes		6,110		68,050	4.9%		7,175		71,105	4.9%	September 2022
~~(d)~~(v)	Asset backed notes		40,000		222,875	3.4%		40,000		242,875	3.4%	March 2028	Term loan		2,730		45,673	3.6%		2,705		46,365	3.6%	August 2021
~~(e)~~(c)	Collateralized financing obligations		23,053		60,618	1.0%		58,553		53,697	0.7%	June 2019	Senior secured notes		6,110		61,940	4.9%		6,110		64,995	4.9%	September 2022
~~(f)~~(d)	Term loans held by VIE		1,829		4,455	2.6%		1,829		5,748	2.6%	June 2019	Asset-backed notes		40,000		192,875	3.4%		40,000		202,875	3.4%	March 2028
			89,931		1,372,355			172,416		1,259,196
(e)													Collateralized financing obligations		17,675		67,140	1.1%		28,693		71,346	1.1%	September 2019
(f)	Debt issuance costs		(772)		(11,781)			(2,820)		(10,139)			Term loans held by VIE		1,829		2,828	2.7%		2,287		3,541	2.5%	June 2019
	Total Debt	$	89,159	$	1,360,574		$	169,596	$	1,249,057					88,312		1,385,172			98,753		1,388,495
													Debt issuance costs		(3,108)		(7,241)			(3,226)		(7,996)
													Total Debt	$	85,204	$	1,377,931		$	95,527	$	1,380,499

(i) On March 15, 2013, the Company entered into the Third Amended and Restated Revolving Credit Agreement, as amended, with a consortium of banks to finance the acquisition of container rental equipment and for general working capital purposes. On January 30, 2015, the Company entered into an amendment to the Third Amended and Restated Revolving Credit Agreement, pursuant to which the revolving credit facility was amended to extend the maturity date to March 15, 2020, reduce the interest rate, increase the commitment level from $760.0 million to $775.0 million, and revise certain of the covenants and restrictions to provide the Company with additional flexibility.

As of ~~June 30, 2016,~~March 31, 2017, the maximum commitment under the revolving credit facility was $775.0 million. The revolving credit facility may be increased up to a maximum of $960.0 million, in accordance with the terms of the agreement, so long as no default or event of default exists either before or immediately after giving effect to the increase. There is a commitment fee on the unused amount of the total commitment, payable quarterly in arrears. The revolving credit facility provides that swing line loans (short-term borrowings of up to ~~$10.0~~$25.0 million in the aggregate that are payable within 10 business days or at maturity date, whichever comes earlier) and standby letters of credit (up to ~~$15.0~~$30.0 million in the aggregate) will be available to the Company. These credit commitments are part of, and not in addition to, the total commitment provided under the revolving credit facility. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the revolving credit agreement. Interest rates are based on LIBOR for Eurodollar loans and Base Rate for Base Rate loans. In addition to various financial and other covenants, the Company’s revolving credit facility also includes certain restrictions on the Company’s ability to incur other indebtedness or pay dividends to stockholders. As of ~~June 30, 2016,~~March 31, 2017, the Company was in compliance with the terms of the revolving credit facility.

As of ~~June 30, 2016,~~March 31, 2017, the Company had ~~$239.9~~$250.9 million in availability under the revolving credit facility (net of $0.1 million in letters of credit) subject to its ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at ~~June 30, 2016,~~March 31, 2017, the borrowing availability under the revolving credit facility was ~~$66.0~~$72.2 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

The Company’s revolving credit facility, including any amounts drawn on the facility, is secured by substantially all of the assets of the Company (not otherwise used as security for its other credit facilities) including equipment owned by the Company, which had a net book value of ~~$726.2~~$731.1 million as of ~~June 30, 2016,~~March 31, 2017, the underlying leases and the Company’s interest in any money received under such contracts.

(ii) On October 22, 2015, the Company and CAI Rail Inc. (CAI Rail), a wholly-owned subsidiary of the Company, entered into the Second Amended and Restated Revolving Credit Agreement with a consortium of banks, pursuant to which the prior revolving credit facility for CAI Rail was amended to extend the maturity date to October 22, 2020, reduce the interest rate, increase the commitment level from $250.0 million to $500.0 million, which may be increased up to a maximum of $700.0 million subject to certain conditions, and revise certain of the covenants and restrictions under the prior facility to provide the Company with additional flexibility. As of ~~June 30, 2016,~~March 31, 2017, the maximum credit commitment under the revolving credit facility was $500.0 million.

Borrowings under this revolving credit facility bear interest at a variable rate. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the revolving credit agreement. Interest rates are based on LIBOR for Eurodollar loans and Base Rate for Base Rate loans.

As of ~~June 30, 2016,~~March 31, 2017, CAI Rail had ~~$278.0~~$259.5 million in availability under the revolving credit facility, subject to its ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at ~~June 30, 2016,~~March 31, 2017, the borrowing availability under the revolving credit facility was ~~$5.8~~$3.2 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

The agreement governing CAI Rail’s revolving credit facility contains various financial and other covenants. As of ~~June 30, 2016,~~March 31, 2017, CAI Rail was in compliance with the terms of the revolving credit facility. CAI Rail’s revolving credit facility, including any amounts drawn on the facility, is secured by all of the assets of CAI Rail, which had a net book value of ~~$284.8~~$300.4 million as of ~~June 30,~~March 31, 2017, and is guaranteed by the Company.

(iii) On September 23, 2016, the Company and CAI International GmbH (CAI GmbH), a wholly-owned subsidiary of the Company, entered into a Revolving Credit Agreement with a financial institution to finance the acquisition of rental equipment. As of March 31, 2017, the maximum credit commitment under the revolving credit facility was €25.0 million. Borrowings under this revolving credit facility bear interest at a variable rate. Interest rates are based on EURIBOR.

As of March 31, 2017, CAI GmbH had €19.3 million in availability under the revolving credit facility, subject to its ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at March 31, 2017, the borrowing availability under the revolving credit facility was €6.7 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

The agreement governing CAI GmbH’s revolving credit facility contains various financial and other covenants. As of March 31, 2017, CAI GmbH was in compliance with the terms of the revolving credit facility. CAI GmbH’s revolving credit facility, including any amounts drawn on the facility, is secured by all of the assets of CAI GmbH, which had a net book value of €16.5 million as of March 31, 2017, and is guaranteed by the Company.

(i) On March 22, 2013, the Company entered into a $30.0 million five-year term loan agreement with Development Bank of Japan (DBJ). The loan is payable in 19 quarterly installments of $0.5 million starting July 31, 2013 and a final payment of $21.5 million on April 30, 2018. The loan bears interest at a variable rate based on LIBOR. As of ~~June 30, 2016,~~March 31, 2017, the loan had a balance of ~~$24.6~~$23.3 million.

(ii) On December 20, 2010, the Company entered into a term loan agreement with a consortium of banks. Under this loan agreement, the Company was eligible to borrow up to $300.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of the Company’s wholly-owned foreign subsidiaries. The loan agreement is an amortizing facility with a term of six years. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the term loan agreement. The loan bears a variable interest rate based on LIBOR for Eurodollar loans, and Base Rate for base rate loans.

On March 28, 2013, the term loan was amended which reduced the principal balance of the loan from $249.4 million to $125.0 million through payment of $124.4 million from the proceeds of the $229.0 million fixed-rate asset-backed notes issued by the Company’s indirect wholly-owned subsidiary, CAL Funding II Limited (see Note ~~8(d)~~9(d) below).

On October 1, 2014, the Company entered into an amended and restated term loan agreement, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) reduce borrowing rates from LIBOR plus 2.25% to LIBOR plus 1.6% (per annum) for Eurodollar loans, (b) increase the loan commitment from $115.0 million to $150.0 million, (c) extend the maturity date to October 1, 2019, and (d) revise certain of the covenants and restrictions under the prior loan agreement to provide the Company with additional flexibility. As of ~~June 30, 2016,~~March 31, 2017, the term loan had a balance of ~~$134.3~~$127.5 million.

(iii) On April 11, 2012, the Company entered into a term loan agreement with a consortium of banks. The agreement, as amended, provided for a five-year term loan of up to $142.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of the Company.

On June 30, 2016, the Company entered into an amended and restated term loan agreement, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) provide the Company with the ability to increase the commitments under the facility to a maximum of $100.0 million, subject to certain conditions, (2) extend the maturity date to June 30, 2021, and (c) revise certain of the covenants and restrictions under the prior agreement to provide the Company with additional flexibility. The term loan’s outstanding principal is amortized quarterly, with quarterly payments equal to 1.75% multiplied by the original outstanding principal. The amended and restated term loan agreement bears a variable interest rate based on LIBOR for Eurodollar loans, and Base Rate for base rate loans. As of ~~June 30, 2016,~~March 31, 2017, the loan had a balance of ~~$100.0~~$94.8 million.

(iv) On December 22, 2015, the Company ~~and CAI Rail~~ entered into a $20.0 million five-year term loan agreement for CAI Rail with ~~Siemens Financial Services, Inc..~~a financial institution. The term loan’s outstanding principal bears interest at a fixed rate of 3.4% per annum and is amortized quarterly. Any unpaid principal and interest is due and payable on December 22, 2020. The proceeds from the term loan were primarily used to repay outstanding amounts under CAI Rail’s revolving credit facility. As of ~~June 30, 2016,~~March 31, 2017, the loan had a balance of ~~$19.4~~$18.6 million.

(v) On August 30, 2016, CAI Rail entered into a term loan agreement of up to $100.0 million with a consortium of banks for the acquisition of railcars, subject to certain borrowing conditions, which is secured by certain railcars and other assets of CAI Rail. The loan agreement is an amortizing facility with a term of five years. Borrowings under the loan bear interest at a fixed rate as specified in the applicable term note entered into at the time a draw is made under the loan agreement. Principal and interest on the borrowings are payable monthly during the five-year term of the note. At closing of the loan agreement, CAI Rail made a draw of $50.0 million on the facility at a fixed interest rate of 3.6% per annum. Any unpaid principal and interest is due on August 30, 2021. As of March 31, 2017, the loan had a balance of $48.4 million.

The Company’s term loans are secured by rental equipment owned by the Company, which had a net book value of ~~$339.0~~$372.2 million as of ~~June 30, 2016.~~March 31, 2017.

On September 13, 2012, Container Applications Limited (CAL), a wholly-owned subsidiary of the Company, entered into a Note Purchase Agreement with certain institutional investors, pursuant to which CAL issued $103.0 million of its 4.90% Senior Secured Notes due September 13, 2022 (the Notes) to the investors. The Notes are guaranteed by the Company and secured by certain assets of CAL and the Company.

The Notes bear interest at 4.9% per annum, due and payable semiannually on March 13 and September 13 of each year, commencing on March 13, 2013. In addition, CAL is required to make certain principal payments on March 13 and September 13 of each year, commencing on March 13, 2013. Any unpaid principal and interest is due and payable on September 13, 2022. The Note Purchase Agreement provides that CAL may prepay at any time all or any part of the Notes in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding. As of ~~June 30, 2016,~~March 31, 2017, the Notes had a balance of ~~$74.2~~$68.1 million.

The ~~Notes~~Company’s senior secured notes are secured by ~~certain~~ rental equipment owned by the Company, which had a net book value of ~~$97.8~~$91.7 million as of ~~June 30, 2016.~~March 31, 2017.

On October 18, 2012, CAL Funding II Limited (CAL II), a wholly-owned indirect subsidiary of CAI, issued $171.0 million of 3.47% fixed rate asset-backed notes (Series 2012-1 Asset-Backed Notes). Principal and interest on the Series 2012-1 Asset-Backed Notes is payable monthly commencing on November 26, 2012, and the Series 2012-1 Asset-Backed Notes mature in October 2027. The proceeds from the Series 2012-1 Asset-Backed Notes were used to repay part of the Company’s borrowings under its senior revolving credit facility. As of ~~June 30, 2016,~~March 31, 2017, the Series 2012-1 Asset-Backed Notes had a balance of ~~$108.3~~$95.5 million.

On March 28, 2013, CAL II issued $229.0 million of 3.35% fixed rate asset-backed notes (Series 2013-1 Asset-Backed Notes). Principal and interest on the Series 2013-1 Asset-Backed Notes is payable monthly commencing on April 25, 2013, and the Series 2013-1 Asset-Backed Notes mature in March 2028. The proceeds from the Series 2013-1 Asset-Backed Notes were used partly to reduce the balance of the Company’s term loan as described in Note 89 (b)(ii) above, and to partially pay down the Company’s senior revolving credit facility. The Series 2013-1 Asset-Backed Notes had a balance of ~~$154.6~~$137.4 million as of ~~June 30, 2016.~~March 31, 2017.

The Company’s asset-backed notes are secured by certain rental equipment owned by the Company, which had a net book value of ~~$341.6~~$307.4 million as of ~~June 30, 2016.~~March 31, 2017.

The agreements under each of the asset-backed notes described above require the Company to maintain a restricted cash account to cover payment of the obligations. As of ~~June 30, 2016,~~March 31, 2017, the restricted cash account had a balance of ~~$6.7~~$5.9 million.

As of ~~June 30, 2016,~~March 31, 2017, the Company had collateralized financing obligations of $~~83.7~~$84.8 million (see Note 3)4). The obligations had an average interest rate of ~~1.0%~~1.1% as of ~~June 30, 2016~~March 31, 2017 with maturity dates between ~~November 2016~~September 2017 and ~~June~~September 2019. The debt is secured by a pool of containers covered under the financing arrangements.

On June 25, 2014, one of the Japanese investor funds that is consolidated by the Company as a VIE (see Note 3)4) entered into a term loan agreement with a bank. Under the terms of the agreement, the Japanese investor fund entered into two loans; a five-year, amortizing loan of $9.2 million at a fixed interest rate of 2.7%, and a five-year, non-amortizing loan of $1.6 million at a variable interest rate based on LIBOR. The debt is secured by assets of the Japanese investor fund, and is subject to certain borrowing conditions set out in the loan agreement. As of ~~June 30, 2016,~~March 31, 2017, the term loans held by the Japanese investor fund totaled ~~$6.3~~$4.7 million and had an average interest rate of ~~2.6%~~2.7%.

The Company’s term loans held by VIE are secured by rental equipment owned by the Japanese investor fund, which had a net book value of ~~$15.1~~$11.5 million as of ~~June 30, 2016.~~March 31, 2017.

The agreements relating to all of the Company’s debt contain various financial and other covenants. As of ~~June 30, 2016,~~March 31, 2017, the Company was in compliance with all of its debt covenants.

The Company grants stock options from time to time to certain employees and independent directors pursuant to its 2007 Equity Incentive Plan, ~~(Plan),~~ as amended, ~~which was originally adopted on April 23, 2007.~~(Plan). Under the Plan, a maximum of 2,671,980 share awards may be granted.

Stock options granted to employees have a vesting period of four years from grant date, with 25% vesting after one year, and 1/48th vesting each month thereafter until fully vested. Stock options granted to independent directors vest in one year. All of the stock options have a contractual term of ten years.

The following table summarizes the Company’s stock option activities for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 and ~~2015:~~2016:



	Six Months Ended June 30,							Three Months Ended March 31,
	2016			2015			2017				2016
		Weighted			Weighted				Weighted				Weighted
		Average			Average				Average				Average
	Number of	Exercise		Number of	Exercise		Number of		Exercise		Number of		Exercise
	Shares	Price		Shares	Price		Shares		Price		Shares		Price
Options outstanding at January 1	1,189,255	$	18.08	1,420,749	$	15.67		1,428,255	$	16.31		1,189,255	$	18.08
Options granted	245,000	$	7.87	177,000	$	21.89		190,500	$	15.89		-	$	-
Options exercised	-	$	-	(396,994)	$	11.70		(60,875)	$	8.44		-	$	-
Options forfeited/cancelled	(6,000)	$	21.99	-	$	-
Options outstanding at June 30	1,428,255	$	16.31	1,200,755	$	17.90
Options outstanding at March 31								1,557,880	$	16.57		1,189,255	$	18.08
Options exercisable	1,013,680	$	17.38	885,855	$	16.45		1,009,555	$	18.21		917,729	$	16.92
Weighted average remaining term	4.9 years			5.3 years				4.5 years				4.7 years

The aggregate intrinsic value of stock options exercised during the ~~six~~three months ended ~~June 30, 2015~~March 31, 2017 was ~~$4.7~~$0.4 million. The aggregate intrinsic value of all options outstanding as of ~~June 30, 2016~~March 31, 2017 was ~~$0.4~~$4.0 million based on the closing price of the Company’s common stock of ~~$7.50~~$15.74 per share on ~~June 30, 2016,~~March 31, 2017, the last trading day of the quarter.

The Company recorded stock-based compensation expense of $0.3 million and ~~$0.4~~$0.4 million for the three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015, respectively, and $0.7 million and $0.8 million for the six months ended June 30, 2016 and 2015,~~ respectively. As of ~~June 30, 2016,~~March 31, 2017, the remaining unamortized stock-based compensation cost relating to stock options granted to the Company’s employees and independent directors was approximately ~~$2.6~~$3.3 million, which is to be recognized over the remaining weighted average vesting period of approximately ~~2.7~~3.0 years.

The fair value of stock options granted to the Company’s employees and independent directors in 2017 was estimated using the Black-Scholes-Merton pricing model using the following weighted average ~~assumptions:~~assumptions. No stock options were granted in the three months ended March 31, 2016:

The expected option term is calculated using the simplified method in accordance with SEC guidance. The expected volatility was derived from the average volatility of the Company’s stock over a period approximating the expected term of the options. The risk-free rate is based on the daily U.S. Treasury yield curve with a term approximating the expected term of the options. No forfeiture rate was estimated on all options granted during the ~~six~~three months ended ~~June 30, 2016 and 2015~~March 31, 2017, as ~~management believes that none of the grantees will leave~~ the Company ~~within the option vesting period.~~accounts for forfeitures as they occur (see Note 2).

The Company grants restricted stock from time to time to certain employees pursuant to the Plan. The restricted stock is valued based on the closing price of the Company’s stock on the date of grant and has a vesting period of four years. The following table summarizes the activity of restricted stock under the Plan:

The Company recognized $0.1 million of stock-based compensation expense relating to restricted stock for both the three months ended ~~June 30, 2016~~March 31, 2017 and ~~2015, and $0.2 million for both the six months ended June 30, 2016 and 2015.~~2016. As of ~~June 30, 2016,~~March 31, 2017, unamortized stock-based compensation expense relating to restricted stock was ~~$0.9~~$1.1 million, which will be recognized over the remaining average vesting period of ~~2.6~~3.0 years.

Stock-based compensation expense is recorded as a component of administrative expenses in the Company’s consolidated statements of income with a corresponding credit to additional paid-in capital in the Company’s consolidated balance sheets.

The consolidated income tax expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015~~ was determined based upon estimates of the Company’s consolidated effective income tax rates for the years ending December 31, ~~2016~~2017 and ~~2015,~~2016, respectively. The difference between the consolidated effective income tax rate and the U.S. federal statutory rate is primarily attributable to foreign income taxes, state income taxes and the effect of certain permanent differences.

The Company’s estimated full year effective tax rate, before certain non-recurring discrete items, was ~~12.0%~~6.0% at ~~June 30, 2016,~~March 31, 2017, compared to ~~8.0%~~13.6% at ~~June 30, 2015.~~March 31, 2016. The ~~higher~~lower estimated full year effective tax rate at ~~June 30, 2016~~March 31, 2017 was due ~~primarily~~ to the growth of the Company’s railcar fleet during the last twelve months. The increase in the proportion of the railcar fleet’s pretax income, combined with a decrease of pretax income in lower tax jurisdictions has led to a correspondingan increase in the proportion of pretax income generated in ~~higher~~lower tax ~~jurisdictions, resulting in an increase in the effective tax rate.~~jurisdictions.

The Company accounts for uncertain tax positions based on an evaluation as to whether it is more likely than not that a position will be sustained on audit, including resolution of any related appeals or litigation processes. This evaluation is based on all available evidence and assumes that the appropriate tax authorities have full knowledge of all relevant information concerning the tax position. Once it has been determined that a tax position is more likely than not to be sustained on its technical merits, the tax benefit recognized is based on the largest amount that is greater than 50% likely of being realized upon ultimate settlement. As of ~~June 30, 2016,~~March 31, 2017, the Company had unrecognized tax benefits of $0.2 million, which if recognized, would reduce the Company’s effective tax rate. Total accrued interest relating to unrecognized tax benefits was less than $0.1 million as of ~~June 30, 2016.~~March 31, 2017. The Company does not believe the total amount of unrecognized tax benefits as of ~~June 30, 2016~~March 31, 2017 will change for the remainder of ~~2016.~~2017.

The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company’s asset-backed notes of $232.9 million and collateralized financing obligations of ~~$83.7~~$84.8 million as of ~~June 30, 2016~~March 31, 2017 were estimated to have a fair value of approximately ~~$81.5~~$222.9 million and $83.9 million, respectively, based on the fair value of estimated future payments calculated using prevailing interest rates. The fair value of these financial instruments would be categorized as Level 32 in the fair value hierarchy. Management believes that the balances of the Company’s revolving credit facilities of ~~$757.0~~$770.6 million, term loans totaling ~~$278.3~~$312.5 million, senior secured notes of ~~$74.2~~$68.1 million, ~~asset-backed notes of $262.9 million,~~term loans held by VIE of ~~$6.3~~$4.7 million and net investment in direct finance leases of ~~$102.5 and liabilities relating to the expected future payments for its acquisitions (see Note 4) of $6.0 million~~$97.2 approximate their fair values as of ~~June 30, 2016.~~March 31, 2017. The fair value of these financial instruments would be categorized as Level 32 in the fair value hierarchy.

In addition to its debt obligations described in Note 89 above, the Company had commitments to purchase approximately ~~$239.9~~$177.4 million of rental equipment as of ~~June 30, 2016; $148.1~~March 31, 2017; $123.4 million in the twelve months ending ~~June 30, 2017, $67.7~~March 31, 2018 and $54.0 million in the twelve months ending ~~June 30, 2018, and $24.1 million in the twelve months ending June 30,~~March 31, 2019. The Company also utilizes certain office facilities and equipment under long-term non-cancellable operating lease agreements with total future minimum lease payments of approximately ~~$2.7~~$1.9 million as of ~~June 30, 2016.~~March 31, 2017.

In April 2017, the Company amended its new railcar delivery schedule to defer delivery of approximately $24.0 million of its remaining $95.0 million 2017 commitments to now be delivered in 2018, with delivery of most of the remaining $71.0 million being deferred to the third and fourth quarter of 2017.

The Company has transferred legal ownership of certain containers to Japanese container funds that were established by Japan Investment Adviser Co., Ltd. (JIA) and CAIJ, Inc. (CAIJ). Prior to April 2016, CAIJ was an 80%-owned subsidiary of CAI with the remaining 20% owned by JIA. Prior to the transfer of containers from the Company, the container funds received contributions from unrelated Japanese investors, under separate Japanese investment agreements allowed under Japanese commercial laws. The contributions were used to purchase container equipment from the Company. Under the terms of the agreements, the CAI-related Japanese entities manage the activities of certain Japanese entities but may outsource the whole or part of each operation to a third party. Pursuant to its services agreements with investors, the Japanese container funds outsourced the general management of their operations to CAIJ. The Japanese container funds also entered into equipment management service agreements and financing arrangements whereby the Company managed the leasing activity of containers owned by the Japanese container funds.

As described in Note 3,4, the Japanese managed container funds and financing arrangements are considered VIEs. However, with the exception of the financing arrangements described in Note 3,4, the Company does not consider its interest in the managed Japanese container funds to be a variable interest. As such, the Company did not consolidate the assets and liabilities, results of operations or cash flows of these funds in its consolidated financial statements.

As described in Note 3,4, the Company has included in its consolidated financial statements, the assets and liabilities, results of operations, and cash flows of the financing arrangements, in accordance with FASB ASC Topic 810, Consolidation.

The Company organizes itself by the nature of the services it provides which includes equipment leasing, equipment management and logistics.

The container leasing segment is aggregated with equipment management and derives its revenue from the ownership and leasing of containers and fees earned for managing container portfolios on behalf of third party investors. The rail leasing segment derives its revenue from the ownership and leasing of railcars. The logistics segment derives its revenue from the provision of logistics services. There are no inter-segment revenues.

With the exception of administrative expenses, operating expenses are directly attributable to each segment. Administrative expenses that are not directly attributable to a segment are allocated to container or rail leasing based on the net book value of equipment in each segment.

The following tables show condensed segment information for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015,~~ reconciled to the Company’s net income before income taxes and non-controlling interest as shown in its consolidated statements of income for such periods (in thousands):

(1) Represents cash disbursements for purchasing of rental equipment as reflected in the consolidated statements of cash flows for the periods indicated.

The Company earns its revenue primarily from ~~international~~intermodal containers which are deployed by its customers in a wide variety of global trade routes. Virtually all of the Company’s containers are used internationally and typically no container is domiciled in one particular place for a prolonged period of time. As such, substantially all of the Company’s long-lived assets are considered to be international, with no single country of use.

The Company’s railcars, with a net book value of $379.5 million as of March 31, 2017, are used primarily to transport cargo within North America.

~~The Company’s railcars, with a net book value of $315.4 million as of June 30, 2016, are used primarily to transport cargo within North America.~~

The following table represents the geographic allocation of revenue for the periods indicated based on customers’ primary domicile (in thousands):

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if their effect is anti-dilutive.

The following table sets forth the reconciliation of basic and diluted net income per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~ (in thousands, except per share data):



									Three Months Ended
	Three Months Ended June 30,				Six Months Ended June 30,				March 31,
	2016		2015		2016		2015		2017		2016
Numerator
Net income attributable to CAI common stockholders used
in the calculation of basic and diluted earnings per share	$	3,757	$	12,889	$	10,923	$	26,431
Net income attributable to CAI common stockholders used in the calculation
of basic and diluted earnings per share									$	5,272	$	7,117
Denominator
Weighted-average shares used in the calculation of basic earnings per share		19,372		21,095		19,577		21,000		19,010		19,774
Effect of dilutive securities:
Stock options and restricted stock		77		303		69		346		221		59
Weighted-average shares used in the calculation of diluted earnings per share		19,449		21,398		19,646		21,346		19,231		19,833

Net income per share attributable to CAI common stockholders:
Basic	$	0.19	$	0.61	$	0.56	$	1.26	$	0.28	$	0.36
Diluted	$	0.19	$	0.60	$	0.56	$	1.24	$	0.27	$	0.36

The calculation of diluted earnings per share for the three months ended ~~June 30,~~March 31, 2017 and 2016, ~~and 2015~~ excluded from the denominator ~~1,069,311~~1,066,787 and ~~572,050~~1,007,682 shares, respectively, of common stock options because their effect would have been anti-dilutive. The calculation of diluted earnings per share for the six months ended June 30, 2016 and 2015 excluded from the denominator 1,038,497 and 572,050 shares, respectively, of common stock option because their effect would have been anti-dilutive.

ITEM 2.2:MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed with the SEC on March ~~3, 2016.~~13, 2017. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those contained in or implied by any forward-looking statements. The financial information included in this discussion and in our consolidated financial statements may not be indicative of our consolidated financial position, operating results, changes in equity and cash flows in the future. See “Special Note Regarding Forward-Looking Statements” included earlier in this report.

Unless the context requires otherwise, references to “CAI,” the “Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to CAI International, Inc. and its subsidiaries.

We are one of the world’s leading transportation finance and logistics companies. We purchase equipment, primarily intermodal shipping containers and railcars, which we lease to our customers. We also manage equipment for third-party investors. In operating our fleet, we lease, re-lease and dispose of equipment and contract for the repair, repositioning and storage of equipment. We also provide domestic and international logistics services.

In July 2015, we purchased ClearPointt Logistics LLC (ClearPointt), an intermodal logistics company focused on the domestic intermodal market, for approximately $4.1 million. ClearPointt is headquartered in Everett, Washington.

In February 2016, we purchased Challenger Overseas LLC (Challenger), a Non-Vessel Operating Common Carrier (NVOCC), for approximately $10.8 million. Challenger is headquartered in Eatontown, New Jersey.

In June 2016, we purchased Hybrid Logistics, Inc. and its affiliate, General Transportation Services, Inc. (collectively, Hybrid), asset light truck brokers, for approximately ~~$11.9~~$12.0 million. Hybrid headquartered in Portland, Oregon.

The following ~~table shows~~tables show the composition of our fleet as of ~~June 30,~~March 31, 2017 and 2016, ~~and 2015~~ and our average utilization for the three ~~and six~~ months ended ~~June 30, 2016~~March 31, 2017 and ~~2015:~~2016:

As of June 30,

2016

2015
Owned container fleet in TEUs

956,389

966,459
Managed container fleet in TEUs

180,900

222,140
Total container fleet in TEUs

1,137,289

1,188,599

Owned container fleet in CEUs

1,019,421

1,008,050
Managed container fleet in CEUs

162,618

200,925
Total container fleet in CEUs

1,182,039

1,208,975

Owned railcar fleet in units

5,936

3,671

The intermodal marine container industry-standard measurement unit is the 20-foot equivalent unit, or TEU, which compares the size of a container to a standard 20-foot container. For example, a 20-foot container is equivalent to one TEU and a 40-foot container is equivalent to two TEUs. Containers can also be measured in cost equivalent units (CEUs), whereby the cost of each type of container is expressed as a ratio relative to the cost of a standard 20-foot dry van container. For example, the CEU ratio for a standard 40-foot dry van container is 1.6 and a 40-foot high cube container is 1.7.

Utilization of containers is computed by dividing the average total units on lease during the period in CEUs, by the average total CEUs in our container ~~fleet.~~fleet during the period. Utilization of railcars is computed by dividing the average number of railcars on lease during the period by the average total number of railcars in our ~~fleet.~~fleet during the period. In both cases, the total fleet excludes new units not yet leased and off-hire units designated for sale. If new units not yet leased are included in the total fleet, total and owned container fleet utilization would be 94.1%, and railcar fleet utilization would be 81.8%, for the three months ended March 31, 2017.

On August 31, 2016, Hanjin Shipping Co., Ltd. (Hanjin), the world’ 7th largest container shipping line, announced that it had filed for court protection in South Korea from its creditors. At the time of default, we had approximately 15,000 owned containers on lease to Hanjin representing $40 million of equipment exposure based on net book value, or approximately 2% of our rental revenue assets. We maintain insolvency insurance that covers the value of unreturned containers, damage to recovered containers, recovery costs, legal expenses, and the loss of post-bankruptcy income for a period from the default date to the earlier of the return of the equipment or six months. As discussed below, during the three months ended March 31, 2017, we recognized $2.2 million in container lease revenue from insurance proceeds for lost revenue associated with the bankruptcy of Hanjin.

Three Months Ended ~~June 30, 2016~~March 31, 2017 Compared to Three Months Ended ~~June 30, 2015~~March 31, 2016

The following table summarizes our operating results for the three months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~ (dollars in thousands):

Total revenue for the three months ended ~~June 30, 2016~~March 31, 2017 increased ~~$12.3~~$14.5 million, or ~~21%~~22%, compared to the three months ended ~~June 30, 2015,~~March 31, 2016, due to a ~~$3.8~~$1.4 million, or ~~102%~~3%, increase in container lease income, a $0.8 million, or 11%, increase in rail lease income and a ~~$12.4~~$12.3 million, or 151%, increase in logistics ~~revenue and a $0.2 million, or 77% increase in management fee revenue, partially offset by a $4.2 million, or 8%, decrease in container lease income.~~revenue. Operating expenses for the three months ended ~~June 30, 2016~~March 31, 2017 increased ~~$20.6~~$15.0 million, or ~~57%~~31%, compared to the three months ended ~~June 30, 2015,~~March 31, 2016, as a result of a ~~$2.5~~$4.9 million, or ~~11%~~21%, increase in depreciation expense, a ~~$2.3~~$10.1 million, or ~~33%~~146%, ~~increase in storage, handling and other expenses, a $10.1 million~~ increase in logistics transportation costs, a ~~$3.7~~$0.1 million, or ~~1,928%~~19%, increase in loss on sale of used rental equipment and a $1.9 million, or ~~27%~~22%, increase in administrative expenses, offset by a $2.1 million decrease in storage, handing and other expenses. ~~Other~~Total other expenses, primarily net interest expense, for the three months ended ~~June 30, 2016~~March 31, 2017 increased ~~$1.6~~$1.8 million, or ~~17%~~18%, compared with the same three-month period in ~~2015.~~2016. The increase in revenue was offset by the increase in operating expenses, and resulted in a ~~$9.1~~$1.8 million, or ~~71%~~26%, decrease in net income attributable to CAI common stockholders for the three months ended ~~June 30, 2016~~March 31, 2017 compared to the same three-month period in ~~2015.~~2016.

Revenue. The following discussion explains the significant changes in the composition of our total revenue for the three months ended ~~June 30, 2016~~March 31, 2017, compared to the three months ended ~~June 30, 2015:~~March 31, 2016:

Container Lease Income. Container lease income ~~decreased $4.2~~increased $1.4 million, or 8%3%, to ~~$51.2~~$52.9 million for the three months ended ~~June 30, 2016,~~March 31, 2017, from ~~$55.3~~$51.5 million for the three months ended ~~June 30, 2015. The decrease was primarily~~March 31, 2016. Rental revenue increased by $4.1 million due to a ~~$1.0 million decrease in rental revenue attributable to a 2% decrease~~9% increase in the average number of CEUs of on-lease owned containers, onand we recognized $2.2 million of container lease ~~and~~revenue from insurance proceeds for lost revenue associated with the bankruptcy of Hanjin. The increase in container lease income was partially offset by a ~~$2.6~~$2.9 million decrease ~~in rental revenue~~ resulting from a 5%6% decrease in average owned container per diem rental ~~rates.~~rates, and a decrease reflecting lost revenue related to the bankruptcy of Hanjin. The reduction in average container per diem rental rates has been caused by competitive market pressure, as well as our investment in used containers through sale and leaseback ~~transactions and the acquisition of container portfolios from our managed fleet.~~transactions. Used containers are purchased at a lower price, and command a lower per diem rental rate, than new containers. Approximately ~~28%~~23% of our investment in containers during the last twelve months was in used containers.

New container prices have declined in recent periods, primarily due to a drop in steel prices, leading to decreases in container per diem rates. Demand for new containers has also softened, primarily due to economic conditions in China, resulting in a decline in container rental revenue that may continue in future periods. As a result of current conditions in the container market we are investing more heavily in railcars and expect our revenues in this business to grow in future periods.

Rail Lease Income. Rail lease income increased ~~$3.8~~$0.8 million, or ~~102%~~11%, to ~~$7.6~~$8.1 million for the three months ended ~~June 30, 2016~~March 31, 2017, from ~~$3.8~~$7.3 million for the three months ended ~~June 30, 2015,~~March 31, 2016, primarily as a result of a ~~107%~~10% increase in the average size of our on-lease railcar fleet during the last twelve months. ~~The average lease income per railcar has also increased as new railcars, which command higher per diem rental rates than used railcars, now form a larger percentage of the fleet.~~

Logistics Revenue. Logistics revenue ~~of $12.4~~increased $12.3 million, ~~was recognized~~or 151%, to $20.5 million for the three months ended ~~June 30, 2016, mainly attributable~~March 31, 2017, from $8.2 million for the three months ended March 31, 2016. The increase was primarily due to an additional $11.2 million of revenue from the acquisition of ~~ClearPointt in July 2015,~~ Challenger in February 2016 and Hybrid ~~during the current quarter.~~

~~Management Fee Revenue.~~ ~~Management fee~~in June 2016, as well as new customers generating an additional $1.5 million of revenue ~~increased $0.2 million, or 77%, to $0.5 million for the three months ended~~at ClearPointt, which was acquired in June 30, 2016 from $0.3 million for the three months ended June 30, 2015, primarily due to a non-recurring charge of $0.8 million recorded during the quarter ended June 30, 2015 related to an adjustment of prior period management fees, partially offset by a 24% reduction in the size of the on-lease managed container fleet as a result of our purchase of previously managed container portfolios, and a decrease of 18% in average per diem rates in our managed fleet for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

The size of our managed fleet has decreased in the past several years as market conditions have favored the purchase of container portfolios from our managed container fleet rather than establishing new portfolios. We continue to believe that the management of equipment for third party investors is beneficial to our company and we will continue to pursue those opportunities. At the same time, based on market conditions, we intend to continue to pursue the purchase of container portfolios from our managed fleet if attractive opportunities present themselves. Consequently, market conditions will dictate whether there will be net additions or subtractions from our managed fleet.

Expenses. The following discussion explains the significant changes in expenses for the three months ended ~~June 30, 2016~~March 31, 2017 compared to the three months ended ~~June 30, 2015:~~March 31, 2016:

Depreciation of Rental Equipment. Depreciation of rental equipment increased by ~~$2.5~~$4.9 million, or ~~11%~~21%, to ~~$24.5~~$28.0 million for the three months ended ~~June 30, 2016,~~March 31, 2017, from ~~$22.0~~$23.0 million for the three months ended ~~June 30, 2015.~~March 31, 2016. This increase was primarily attributable to an increase of ~~$1.1~~$2.3 million resulting from a decrease in the residual value estimate for 40-foot high cube dry van containers implemented in 2016, a $1.3 million write-off of rental equipment on lease to a bankrupt customer, an increase of $0.7 million in depreciation inattributable to CAI Rail, reflecting the increase in size of our railcar fleet over the past twelve months, and a ~~$1.2 million impairment charge recorded during~~5% increase in the ~~quarter for certain off-lease damaged containers that we intend to sell.~~average number of CEUs of owned containers.

Storage, Handling and Other Expenses. Storage, handling and other expenses ~~increased~~decreased by ~~$2.3~~$2.1 million, or ~~33%~~23%, to ~~$9.3 million for the three months ended June 30, 2016, from~~ $7.0 million for the three months ended ~~June 30, 2015.~~March 31, 2017, from $9.1 million for the three months ended March 31, 2016. The ~~increase~~decrease was primarily attributable to a ~~$1.6~~$2.9 million ~~increase~~decrease in storage costs caused by a 53% decrease in the average volume of off-lease ~~and for sale~~ owned container equipment ~~increasing by 61%~~ compared to the prior ~~year. In addition, repair~~year, partially offset by a $0.4 million increase in repositioning costs inas a result of moving rental equipment to areas with greater demand, and an increase of $0.4 million related to the Rail business ~~increased by $0.4 million~~ as a result of the increase in the size of the rail fleet.

Logistics Transportation Costs. Logistics transportation costs ofincreased by $10.1 million, ~~was recognized~~or 146%, to $17.1 million for the three months ended ~~June 30, 2016,~~March 31, 2017, from $6.9 million for the three months ended March 31, 2016. The increase was mainly attributable to the acquisition of ~~ClearPointt in July 2015,~~ Challenger in February 2016 and Hybrid ~~during~~in June 2016, as well as an increase of $1.4 million in ClearPointt costs as a result of new customer activity. The gross margin generated from our logistics business increased from $1.2 million for the ~~current quarter.~~three months ended March 31, 2016 to $3.4 million for the three months ended March 31, 2017, primarily due to the acquisitions made in 2016.

Loss on Sale of Used Rental Equipment. We incurred a loss on the sale of used rental equipment of ~~$3.9~~$0.9 million during the three months ended ~~June 30, 2016,~~March 31, 2017, compared to a loss of ~~$0.2~~$0.7 million for the three months ended ~~June 30, 2015.~~March 31, 2016. While there was a reduction of 25% in the average margin per unit, we sold approximately ~~63%~~70% more used containers compared to the prior year, ~~there was~~resulting in a ~~reduction of 24%~~slight increase in ~~the average sale price per unit, reflecting the decline in new equipment prices during the past year, and a reduction of 318% in the average margin per unit. The~~ loss on sale ~~has also been impacted by the strengthening~~ of ~~the dollar compared to other currencies, particularly the Euro.~~used rental equipment.

Administrative Expenses. Administrative expenses increased by $1.9 million, or ~~27%~~22%, to ~~$8.9~~$10.7 million for the three months ended ~~June 30, 2016,~~March 31, 2017, from ~~$7.0~~$8.8 million for the three months ended ~~June 30, 2015.~~March 31, 2016. The increase was primarily a result of ~~$1.8~~$2.0 million of administrative expenses incurred by our newly acquired logistics ~~businesses. There were also higher employee-related costs as a result of an increase in headcount, particularly in our Rail and Logistics businesses.~~ companies.

Net Interest Expense. Net interest expense increased by ~~$1.5~~$1.6 million, or ~~17%~~16%, to ~~$10.5~~$11.7 million for the three months ended ~~June 30, 2016,~~March 31, 2017, from ~~$9.0~~$10.0 million for the three months ended ~~June 30, 2015. The increase in net interest expense~~March 31, 2016. While the average loan principal balance remained relatively consistent between the two periods, there was ~~due primarily to~~ an increase in our average ~~loan principal balance as we continue to increase our borrowings to finance our acquisition of additional rental equipment, particularly in our Rail business and a slight~~interest rate, caused by an increase in ~~average~~LIBOR, from approximately 2.4% to 2.8%, which resulted in an increase in net interest ~~rates.~~expense.

Other ~~Expense.~~ Expense. Other expense ofincreased by $0.2 million, or 142%, to $0.3 million for the three months ended ~~June 30, 2016 increased $0.1 million, or 92%,~~March 31, 2017, from $0.1 million for the three months ended ~~June 30, 2015.~~March 31, 2016. The increase was attributable to a loss on foreign exchange of ~~$0.2~~$0.3 million for the three months ended ~~June 30,~~March 31, 2017, compared to a loss of $0.1 million for the three months ended March 31, 2016. Gains and losses on foreign currency primarily occur when foreign denominated financial assets and liabilities are either settled or ~~remeasured~~re-measured in U.S. dollars. The loss on foreign exchange for the three months ended ~~June 30, 2016~~March 31, 2017 was primarily the result of movements in the U.S. dollar exchange rate against the Euro.

Income Tax Expense. Income tax expense decreased by ~~$0.7~~$0.4 million, or ~~66%~~39%, to ~~$0.4~~$0.7 million for the three months ended ~~June 30, 2016,~~March 31, 2017, from $1.1 million for the three months ended ~~June 30, 2015.~~March 31, 2016. The full year estimated effective tax rate at ~~June 30, 2016,~~March 31, 2017, before certain non-recurring discrete items, was ~~12.0%~~6.0%, compared to ~~8.0%~~13.6% for the three months ended ~~June 30, 2015.~~March 31, 2016. The ~~increase in~~lower estimated full year effective tax rate ~~is primarily attributable to the growth of our railcar fleet during the last twelve months, the profits of which are subject to tax~~ at ~~U.S. rates.~~

~~The following table summarizes our operating results for the six months ended June 30, 2016 and 2015 (dollars in thousands):~~

Total revenue for the six months ended June 30, 2016 increased $20.8 million, or 18%, compared to the six months ended June 30, 2015, due to an $8.2 million, or 123%, increase in rail lease income and a $20.5 million increase in logistics revenue, partially offset by a $7.6 million, or 7%, decrease in container lease income and a $0.4 million, or 26%, decrease in management fee revenue. Operating expenses for the six months ended June 30, 2016 increased $34.2 million, or 48%, compared to the six months ended June 30, 2015, as a result of a $4.3 million, or 10%, increase in depreciation expense, a $4.6 million, or 34%, increase in storage, handling and other expenses, a $17.1 million increase in logistics transportation costs, a $4.8 million, or 2,904%, increase in loss on sale of used rental equipment and a $3.5 million, or 24%, increase in administrative expenses. Other expenses for the six months ended June 30, 2016 increased $3.0 million, or 17%, compared with the same six-month period in 2015. The increase in revenue was offset by the increase in operating expenses, and resulted in a $15.5 million, or 59%, decrease in net income attributable to CAI common stockholders for the six months ended June 30, 2016 compared to the same six-month period in 2015.

~~Revenue.~~ ~~The following discussion explains the significant changes in the composition of our total revenue for the six months ended June 30, 2016 compared to the six months ended June 30, 2015:~~

~~Container Lease Income.~~ Container lease income decreased $7.6 million, or 7%, to $102.1 million for the six months ended June 30, 2016, from $109.6 million for the six months ended June 30, 2015. The decrease was primarily due to a $2.0 million decrease in rental revenue attributable to a 2% decrease in the average number of CEUs of owned containers on lease and a $4.2 million decrease in rental revenue resulting from a 4% decrease in average owned container per diem rental rates. The reduction in average container per diem rental rates has been caused by competitive market pressure, as well as our investment in used containers through sale and leaseback transactions and the acquisition of container portfolios from our managed fleet. Used containers are purchased at a lower price, and command a lower per diem rental rate, than new containers. Approximately 28% of our investment in containers during the last twelve months was in used containers.

~~Rail Lease Income.~~ Rail lease income increased $8.2 million, or 123%, to $14.8 million for the six months ended June 30, 2016 from $6.7 million for the six months ended June 30, 2015, primarily as a result of a 110% increase in the average size of our on-lease railcar fleet during the last twelve months. The average lease income per railcar has also increased as new railcars, which command higher per diem rental rates than used railcars, now form a larger percentage of the fleet.

~~Logistics Revenue.~~ Logistics revenue of $20.5 million was recognized for the six months ended June 30, 2016, mainly attributable to the acquisition of ClearPointt in July 2015, Challenger in February 2016 and Hybrid during the current quarter.

~~Management Fee Revenue.~~ Management fee revenue decreased $0.4 million, or 26%, to $1.1 million for the six months ended June 30, 2016 from $1.5 million for the six months ended June 30, 2015, primarily due to a 24% reduction in the size of the on-lease managed container fleet as a result of our purchase of previously managed container portfolios, and a decrease of 17% in average per diem rates in our managed fleet for the six months ended June 30, 2016 compared to the six months ended June 30, 2015, partially offset by a non-recurring charge of $0.8 million recorded during the quarter ended June 30, 2015 related to an adjustment of prior period management fees.

~~Expenses.~~ ~~The following discussion explains the significant changes in expenses for the six months ended June 30, 2016 compared to the six months ended June 30, 2015:~~

~~Depreciation of Rental Equipment.~~ ~~Depreciation of rental equipment increased by $4.3 million, or 10%, to $47.5 million~~for the six months ended June 30, 2016, from $43.3 million for the six months ended June 30, 2015. This increase was primarily attributable to an increase of $2.3 million in depreciation in CAI Rail, reflecting the increase in size of our railcar fleet over the past twelve months and a $1.8 million impairment charge recorded during the period for certain off-lease damaged containers that we intend to sell.

~~Storage, Handling and Other Expenses.~~ Storage, handling and other expenses increased by $4.6 million, or 34%, to $18.4 million for the six months ended June 30, 2016, from $13.8 million for the six months ended June 30, 2015. The increase was primarily attributable to a $3.9 million increase in storage costs caused by the average volume of off-lease owned container equipment increasing by 73% compared to the prior year. In addition, repair costs in the Rail business increased by $0.6 million as a result of the increase in the size of the rail fleet.

~~Logistics Transportation Costs.~~ Logistics transportation costs of $17.1 million was recognized for the six months ended June 30, 2016, mainly attributable to the acquisition of ClearPointt in July 2015, and Challenger in February 2016 and Hybrid and General Transportation during the current quarter.

~~Loss (Gain) on Sale of Used Rental Equipment.~~ We incurred a loss on the sale of used rental equipment of $4.6 million during the six months ended June 30, 2016, compared to a gain of $0.2 million for the six months ended June 30, 2015. While we sold approximately 39% more used containers compared to prior year, there was a reduction of 16% in the average sale price per unit, reflecting the decline in new equipment prices during the past year, and a reduction of 705% in the average margin per unit. The loss on sale has also been impacted by the strengthening of the dollar compared to other currencies, particularly the Euro.

~~Administrative Expenses.~~ Administrative expenses increased by $3.5 million, or 24%, to $17.7 million for the six months ended June 30, 2016, from $14.2 million for the six months ended June 30, 2015. The increase was primarily a result of $2.9 million of administrative expenses incurred by our newly acquired logistics businesses. There were also higher employee-related costs as a result of an increase in headcount, particularly in our Rail and Logistics businesses.

~~Net Interest Expense~~. Net interest expense increased by $2.7 million, or 15%, to $20.5 million for the six months ended June 30, 2016, from $17.8 million for the six months ended June 30, 2015. The increase in net interest expenseMarch 31, 2017 was due ~~primarily~~ to an increase in ~~our average loan principal balance as we continue to increase our borrowings to finance our acquisition~~the proportion of ~~additional rental equipment, particularly~~pretax income generated in ~~our Rail business and a slight increase in average interest rates.~~

~~Other Expense.~~ Other expense of $0.3 million for the six months ended June 30, 2016 increased $0.3 million, or 445%, from expense of less than $0.1 million for the six months ended June 30, 2015. The increase was attributable to a loss on foreign exchange of $0.3 million for the six months ended June 30, 2016. Gains and losses on foreign currency primarily occur when foreign denominated financial assets and liabilities are either settled or remeasured in U.S. dollars. The loss on foreign exchange for the six months ended June 30, 2016 was primarily the result of movements in the U.S. dollar exchange rate against the Euro.

~~Income Tax Expense.~~ ~~Income~~lower tax expense decreased by $0.9 million, or 38%, to $1.5 million for the six months ended June 30, 2016, from $2.4 million for the six months ended June 30, 2015. The full year estimated effective tax rate at June 30, 2016, before certain non-recurring discrete items, was 12.0%, compared to 8.0% at June 30, 2015. The increase in rate is primarily attributable to the growth of our railcar fleet during the last twelve months, the profits of which are subject to tax at U.S. rates.jurisdictions.

Our principal sources of liquidity have been cash flows from operations, sales of equipment, ~~portfolios,~~ borrowings from financial institutions and equity offerings. We believe that cash flow from operations, future sales of equipment ~~portfolios~~ and borrowing availability under our credit facilities are sufficient to meet our liquidity needs for at least the next 12 months.

We have typically funded a significant portion of the purchase price for new equipment through borrowings under our credit facilities. However, from time to time we have funded new equipment acquisitions through the use of working capital.

(i) On March 15, 2013, we entered into the Third Amended and Restated Revolving Credit Agreement, as amended, with a consortium of banks to finance the acquisition of container rental equipment and for general working capital purposes. As of ~~June 30, 2016,~~March 31, 2017, the maximum commitment under the revolving credit facility was $775.0 million, which may be increased to a maximum of $960.0 million under certain conditions described in the agreement. As of ~~June 30, 2016,~~March 31, 2017, we had an outstanding balance of ~~$535.0~~$524.0 million and availability of ~~$239.9~~$250.9 million under the revolving credit facility (net of $0.1 million in letters of credit), subject to our ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at ~~June 30, 2016,~~March 31, 2017, the borrowing availability under the revolving credit facility was ~~$66.0~~$72.2 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default.

There is a commitment fee on the unused amount of the total commitment, payable quarterly in arrears. The revolving credit facility provides that swing line loans (short-term borrowings of up to ~~$10.0~~$25.0 million in the aggregate that are payable within 10 business days or at maturity date, whichever comes earlier) and standby letters of credit (up to ~~$15.0~~$30.0 million in the aggregate) will be available to us. These credit commitments are part of, and not in addition to, the maximum credit commitment. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar Rate loans as defined in the revolving credit facility. Interest rates are based on LIBOR for Eurodollar loans and Base Rate for Base Rate loans. As of ~~June 30, 2016,~~March 31, 2017, the average interest rate on the revolving credit facility was ~~2.2%~~2.7%. The revolving credit facility will mature in March 2020.

We use the revolving credit facility primarily to fund the purchase of containers and for general working capital needs. As of March 31, ~~2016,~~2017, we had commitments to purchase ~~$14.8~~$10.5 million of containers and had rental equipment payable of ~~$11.9~~$50.3 million. We have typically used our cash flow from operations and the proceeds from sales of equipment portfolios to third-party investors to repay our revolving credit facility. As we expand our owned fleet, the revolving credit facility balance will be higher and will result in higher interest expense.

(ii) On October 22, 2015, we entered into the Second Amended and Restated Revolving Credit Agreement for CAI Rail with a consortium of banks, pursuant to which the prior revolving credit facility was amended. As of ~~June~~September 30, 2016, the maximum credit commitment under the revolving credit facility was $500.0 million. CAI Rail’s revolving credit facility may be increased up to a maximum of $700.0 million, in accordance with the terms of the agreement. Borrowings under this revolving credit facility bear interest at a variable rate. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar loans, as defined in the revolving credit agreement. Interest rates are based on LIBOR for Eurodollar loans and Base Rate for Base Rate loans. As of ~~June 30, 2016,~~March 31, 2017, the average interest rate under the agreement was ~~2.0%~~2.7%.

As of ~~June 30, 2016, the~~March 31, 2017, we had an outstanding balance under CAI Rail’s revolving credit facility ~~was $222.0 million. As~~ of ~~June 30, 2016, we had $278.0~~$240.5 million inand availability of $259.5 million under the facility, subject to our ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at ~~June 30, 2016,~~March 31, 2017, the borrowing availability under the revolving credit facility was ~~$5.8~~$3.2 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default. The revolving credit facility for CAI Rail matures in October 2020.

We use the revolving credit facility primarily to fund the purchase of railcars. As of ~~June 30, 2016,~~March 31, 2017, we had commitments to purchase ~~$225.1~~$166.9 million of railcars; ~~$133.3~~$112.9 million in the twelve months ending ~~June 30, 2017, $67.7~~March 31, 2018 and $54.0 million in the twelve months ending ~~June 30, 2018 and $24.1 million in the twelve months ending June 30,~~March 31, 2019. We also had rental equipment payable of ~~$9.2~~$1.1 million as of ~~June 30, 2016.~~March 31, 2017.

(iii) On September 23, 2016, we entered into a Revolving Credit Agreement for CAI International GmbH (CAI GmbH) with a financial institution to finance the acquisition of rental equipment. As of March 31, 2017, the maximum credit commitment under the revolving credit facility was €25.0 million. Borrowings under this revolving credit facility bear interest at a variable rate. Interest rates are based on EURIBOR. As of March 31, 2017, the average interest rate under the agreement was 2.0%.

As of March 31, 2017, we had an outstanding balance under the agreement of €5.7 million ($6.1 million) and availability of €19.3 million under the revolving credit facility, subject to our ability to meet the collateral requirements under the agreement governing the facility. Based on the borrowing base and collateral requirements at March 31, 2017, the borrowing availability under the revolving credit facility was €6.7 million, assuming no additional contribution of assets. The entire amount of the facility drawn at any time plus accrued interest and fees is callable on demand in the event of certain specified events of default. The revolving credit agreement for CAI GmbH matures in September 2020.

(i) On March 22, 2013, we entered into a $30.0 million five-year loan agreement with Development Bank of Japan (DBJ). The loan is payable in 19 quarterly installments of $0.5 million starting July 31, 2013 and a final payment of $21.5 million on April 30, 2018. The loan bears a variable interest rate based on LIBOR. As of ~~June 30, 2016,~~March 31, 2017, the loan had a balance of ~~$24.6~~$23.3 million and an average interest rate of ~~2.6%~~3.0%.

(ii) On December 20, 2010, we entered into a term loan agreement with a consortium of banks. Under this loan agreement, we were eligible to borrow up to $300.0 million, subject to certain borrowing conditions, which amount is secured by certain assets of our wholly owned foreign subsidiaries. The loan agreement is an amortizing facility with a term of six years. The interest rates vary depending upon whether the loans are characterized as Base Rate loans or Eurodollar rate loans, as defined in the term loan agreement. The loan bears a variable interest rate based on LIBOR for Eurodollar loans and Base Rate for base rate loans.

On March 28, 2013, the term loan agreement was amended which reduced the principal balance of the loan from $249.4 million to $125.0 million through payment of $124.4 million from the proceeds of the $229.0 million fixed-rate asset-backed notes issued by the Company’s indirect wholly-owned subsidiary, CAL Funding II Limited (see paragraph (ii) of Asset-Backed Notes below).

On October 1, 2014, we entered into an amended and restated term loan agreement, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) reduce borrowing rates from LIBOR plus 2.25% to LIBOR plus 1.6% (per annum) for Eurodollar loans, (b) increase the loan commitment from $115.0 million to $150.0 million, (c) extend the maturity date to October 1, 2019, and (d) revise certain of the covenants and restrictions under the prior loan agreement to provide the Company with additional flexibility. As of ~~June 30, 2016,~~March 31, 2017, the term loan had a balance of ~~$134.3~~$127.5 million and average interest rate of ~~2.2%~~2.6%.

(iii) On April 11, 2012, we entered into a term loan agreement with a consortium of banks. The agreement, as amended, provided for a five-year term loan of up to $142.0 million, subject to certain borrowing conditions, which amount is secured by certain of our assets.

On June 30, 2016, we entered into an amended and restated term loan agreement, pursuant to which the prior loan agreement was refinanced. The amended and restated term loan agreement, which contains similar terms to the prior loan agreement, was amended to, among other things: (a) provide us with the ability to increase the commitments under the facility to a maximum of $100.0 million, subject to certain conditions, (2) extend the maturity date to June 30, 2021, and (c) revise certain of the covenants and restrictions under the prior agreement to provide us with additional flexibility. The term loan’s outstanding principal is amortized quarterly, with quarterly payments equal to 1.75% multiplied by the original outstanding principal. The amended and restated term loan agreement bears a variable interest rate based on LIBOR for Eurodollar loans, and Base Rate for base rate loans. As of ~~June 30, 2016,~~March 31, 2017, the loan had a balance of ~~$100.0~~$94.8 million and an interest rate of ~~2.4%~~2.7%.

(iv) On December 22, 2015, we entered into a $20.0 million five-year term loan agreement for CAI Rail with ~~Siemens Financial Services, Inc..~~a financial institution. The term loan’s outstanding principal bears interest at a fixed rate of 3.4% per annum and is amortized quarterly. Any unpaid principal and interest is due and payable on December 22, 2020. The proceeds from the term loan were primarily used to repay outstanding amounts under CAI Rail’s revolving credit facility. As of ~~June 30, 2016,~~March 31, 2017, the loan had a balance of ~~$19.4~~$18.6 million.

up to $100.0 million with a consortium of banks for the acquisition of railcars, subject to certain borrowing conditions, which is secured by certain of our railcars and other assets. The loan agreement is an amortizing facility with a term of five years. Borrowings under the loan bear interest at a fixed rate as specified in the applicable term note entered into at the time a draw is made under the loan agreement. Principal and interest on the borrowings are payable monthly during the five-year term of the note. At closing of the loan agreement, we made a draw of $50.0 million on the facility at a fixed interest rate of 3.6% per annum. Any unpaid principal and interest is due on August 30, 2021. As of March 31, 2017, the loan had a balance of $48.4 million.

(i) On October 18, 2012, CAL II issued $171.0 million of 3.47% fixed rate asset-backed notes (Series 2012-1 Asset-Backed Notes). Principal and interest on the Series ~~2102-1~~2012-1 Asset-Backed Notes is payable monthly commencing on November 26, 2012, and the Series 2012-1 Asset-Backed Notes mature in October 2027. The proceeds from the Series 2012-1 Asset-Backed Notes were used to repay part of the Company’s borrowings under its senior revolving credit facility. The Series 2012-1 Asset-Backed Notes had a balance of ~~$108.3~~$95.5 million as of ~~June 30, 2016.~~March 31, 2017.

(ii) On March 28, 2013, CAL II issued $229.0 million of 3.35% fixed rate asset-backed notes (Series 2013-1 Asset-Backed Notes). Principal and interest on the Series 2013-1 Asset-Backed Notes is payable monthly commencing on April 25, 2013, and the Series 2013-1 Asset-Backed Notes mature in March 2028. The proceeds from the new Series 2013-1 Asset-Backed Notes were used partly to reduce the balance of the Company’s term loan with a consortium of banks as described in paragraph (ii) of Term Loan Facilities above, and to partially pay down the Company’s senior revolving credit facility. The Series 2013-1 Asset-Backed Notes had a balance of ~~$154.6~~$137.4 million as of ~~June 30, 2016.~~March 31, 2017.

On September 13, 2012, our wholly-owned subsidiary, Container Applications Limited (CAL), entered into a Note Purchase Agreement with certain institutional investors, pursuant to which CAL issued $103.0 million of its 4.90% Senior Secured Notes due September 13, 2022 (the Notes) to the investors. The Notes are guaranteed by us and secured by certain of our assets and those of CAL.

On June 25, 2014, one of the Japanese investor funds that is consolidated by us as a VIE (see Note 34 to our unaudited consolidated financial statements) entered into a term loan agreement with a bank. Under the terms of the agreement, the Japanese investor fund entered into two loans; a five-year, amortizing loan of $9.2 million at a fixed interest rate of 2.7%, and a five-year, non-amortizing loan of $1.6 million at a variable interest rate based on LIBOR. The debt is secured by assets of the Japanese investor fund, and is subject to certain borrowing conditions set out in the loan agreement. As of ~~June 30, 2016,~~March 31, 2017, the term loans held by the Japanese investor fund totaled ~~$6.3~~$4.7 million and had an average interest rate of ~~2.6%~~2.7%.

As of ~~June 30, 2016,~~March 31, 2017, we had collateralized financing obligations totaling ~~$83.7~~$84.8 million (see Note 34 to our unaudited consolidated financial statements). The obligations had an average interest rate of ~~1.0%~~1.1% as of ~~June 30, 2016~~March 31, 2017, with maturity dates between ~~November 2016~~September 2017 and ~~June~~September 2019.

Our term loans, senior secured notes, asset-backed notes, collateralized financing obligations, and term loans held by VIEs ~~and capital lease obligations~~ are secured by specific pools of rental equipment and other assets owned by the Company, the underlying leases thereon and the Company’s interest in any money received under such contracts.

In addition to customary events of default, our revolving credit facilities and term loans contain restrictive covenants, including limitations on certain liens, indebtedness and investments. In addition, all of our debt facilities contain various restrictive financial and other covenants. The financial covenants in our debt facilities require us to ~~maintain~~maintain: (1) a consolidated funded debt to consolidated tangible net worth ratio of no more than 3.75:1.00, and in the case of our asset-backed notes, of no more than 4.50:1.00; and (2) a fixed charge coverage ratio of at least 1.20:1.00, and in the case of our asset-backed notes, of at least 1.10:1.00. As of ~~June 30, 2016,~~March 31, 2017, we were in compliance with all of our debt covenants.

Under certain conditions, as defined in our credit agreements with our banks and/or note holders, we are subject to certain cross default provisions that may result in an acceleration of principal repayments if an uncured default condition were to exist. Our asset-backed notes are not subject to any such cross default provisions.

The following table sets forth certain cash flow information for the ~~six~~three months ended ~~June 30,~~March 31, 2017 and 2016 ~~and 2015~~ (in thousands):

Net cash provided by operating activities of ~~$60.5~~$25.7 million for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017, decreased ~~$8.7~~$4.5 million from ~~$69.2~~$30.1 million for the ~~six~~three months ended ~~June 30, 2015.~~March 31, 2016. The decrease was due to a ~~$5.5~~$4.6 million ~~decrease~~increase in net income as adjusted for depreciation, amortization and other non-cash items and a ~~$3.2~~$9.0 million decrease in our net working capital adjustments. The ~~decrease~~increase in net income as adjusted for non-cash items was primarily due to an increase of $4.9 million in depreciation expense, an increase of $0.6 million in amortization of intangible assets, a ~~$15.5~~$0.2 million increase in unrealized loss on foreign exchange, and a $0.5 million increase in deferred income taxes, partially offset by a $1.9 million decrease in net ~~income, partially offset by an increase of $4.2 million in depreciation expense and an increase of $4.8 million in loss on sale of used rental equipment.~~income. Net working capital used in operating activities of ~~$7.0~~$11.4 million in the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017, was due to ~~an $8.4~~a $1.1 million increase in accounts receivable, primarily caused by an increase in ~~rail~~ lease and logistic billings and the timing of receipts, a $4.1 million increase in prepaid expenses and other assets, primarily due to an increase in the insurance receivable related to the Hanjin bankruptcy, a $4.8 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments, a $0.8 million decrease in due to container investors as a result of the decreasing managed fleet, and a $0.6 million decrease in unearned revenue. Net working capital used in operating activities of $2.4 million in the three months ended March 31, 2016, was due to an $8.0 million increase in accounts receivable, primarily caused by the timing of receipts, partially offset by a ~~$0.5~~$4.0 million increase in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments, and a $0.7 million increase in due to container investors. Net working capital used in operating activities of $3.8 million in the six months ended June 30, 2015 was due to a $2.3 increase in prepaid expenses and other assets, a $2.7 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments and a $4.2 million decrease in amounts due to container investors, primarily as a result of a decrease in the average managed container fleet, partially offset by a $2.1 million decrease in accounts receivable, primarily caused by the timing of receipts, and a $3.2$1.4 million increase in unearned revenue, caused by an increase in the amount of advanced billings.

Net cash used in investing activities decreased ~~$93.5~~$6.6 million to ~~$104.8~~$26.1 million for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017, from ~~$198.3~~$32.7 million for the ~~six~~three months ended ~~June 30, 2015.~~March 31, 2016. The decrease in cash usage was primarily attributable to a ~~$106.6~~$6.7 million decrease in acquisition costs and a $6.6 million increase in proceeds from the sale of used containers, partially offset by a $2.3 million increase in the purchase of rental equipment ~~partially offset by the $15.7~~and a $4.3 million ~~acquisitions of our new logistics companies, an increase of $1.8 million in cash proceeds received from sales of used rental equipment and an increase of $1.3 million~~decrease in receipt of principal payments from direct ~~finance~~financing leases.

Net cash ~~provided by~~used in financing activities for the ~~six~~three months ended ~~June 30, 2016 decreased $113.6~~March 31, 2017, increased $17.1 million compared to the ~~six~~three months ended ~~June 30, 2015,~~March 31, 2016, primarily as a result of lower net borrowings being required to finance the acquisition of rental equipment. During the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, our net cash ~~inflow from~~outflow for borrowings was ~~$30.6~~$14.8 million compared to ~~$132.1~~a cash inflow of $8.8 million for the ~~six~~three months ended ~~June 301, 2015,~~March 31, 2016, reflecting a decrease in ~~investment in~~net borrowings used for the acquisition of rental equipment during the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017, compared to the ~~six~~three months ended ~~June 30, 2015. The~~March 31, 2016. This decrease was ~~also attributable to an increase~~partially offset by a decrease of ~~$7.1~~$6.0 million used to repurchase our stock pursuant to our previously announced stock repurchase plan and a ~~decrease of $4.6~~$0.3 million increase in proceeds received ~~from~~for the exercise of stock options.

Directors had approved the repurchase of up to one million shares of our outstanding common stock.On February 4, 2016, the Company’s Board of Directors approved a one million share increase in the previously approved share repurchase program bringing the total authorized for repurchase to two million shares of our outstanding common stock. The number, price, structure and timing of the repurchases, if any, will be at our sole discretion and future repurchases will be evaluated by us depending on market conditions, liquidity needs and other factors. Stock repurchases may be made in the open market, block trades or privately negotiated transactions. The repurchase authorization does not have an expiration date and does not oblige us to acquire any particular amount of our common stock. As of March 31, 2017, approximately 0.8 million shares remained available for repurchase under our share repurchase plan.

The following table sets forth our contractual obligations and commercial commitments by due date as of ~~June 30, 2016~~March 31, 2017 (in thousands):



	Payments Due by Period														Payments Due by Period
			Less than		1-2		2-3		3-4		4-5		More than				Less than		1-2		2-3		3-4		4-5		More than
	Total		1 year		years		years		years		years		5 years		Total		1 year		years		years		years		years		5 years
Total debt obligations:
Revolving credit facilities	$	757,000	$	-	$	-	$	-	$	535,000	$	222,000	$	-	$	770,589	$	1,000	$	-	$	523,000	$	246,589	$	-	$	-
Term loans		278,295		18,939		39,978		17,219		115,512		86,647		-		312,497		21,698		41,489		120,686		25,010		103,614		-
Senior secured notes		74,160		6,110		6,110		6,110		6,110		6,110		43,610		68,050		6,110		6,110		6,110		6,110		6,110		37,500
Asset-backed notes		262,875		40,000		40,000		40,000		40,000		40,000		62,875		232,875		40,000		40,000		40,000		40,000		40,000		32,875
Collateralized financing obligations		83,671		23,053		23,151		37,467		-		-		-		84,814		17,675		25,477		41,662		-		-		-
Term loans held by VIE		6,284		1,829		1,829		2,626		-		-		-		4,657		1,829		1,829		999		-		-		-
Interest on debt and capital lease obligations (1)		135,381		35,341		33,015		31,111		22,631		8,512		4,771		131,873		40,949		37,570		34,030		12,951		4,923		1,450
Rental equipment payable		21,159		21,159		-		-		-		-		-		51,357		51,357		-		-		-		-		-
Rent, office facilities and equipment		2,659		1,694		824		141		-		-		-		1,927		1,285		312		112		95		98		25
Equipment purchase commitments		239,900		148,112		67,696		24,092		-		-		-		177,395		123,396		53,999		-		-		-		-
Total contractual obligations	$	1,861,384	$	296,237	$	212,603	$	158,766	$	719,253	$	363,269	$	111,256	$	1,836,034	$	305,299	$	206,786	$	766,599	$	330,755	$	154,745	$	71,850

See Note 89 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of the terms of our debt.

As of ~~June 30, 2016,~~March 31, 2017, we had no material off-balance sheet arrangements or obligations other than noted below. An off-balance sheet arrangement includes any contractual obligation, agreement or transaction arrangement involving an unconsolidated entity under which we would have: (1) retained a contingent interest in transferred assets; (2) an obligation under derivative instruments classified as equity; (3) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development services with us; or (4) made guarantees.

We have transferred ownership of certain equipment to Japanese equipment funds which were established by Japan Investment Adviser Co., Ltd. (JIA) and CAIJ. Prior to April 2016 CAIJ was an 80%-owned subsidiary of CAI with the remaining 20% owned by JIA. Prior to the purchase of equipment from us, the purchasing entities received contributions from unrelated Japanese investors, under separate Japanese investment agreements allowed under Japanese commercial laws. The contributions were used to purchase equipment from us. Under the terms of the agreements, the CAI-related Japanese entities managed each of the investments but may outsource the whole or part of each operation to a third party. Pursuant to its services agreements with investors, the Japanese equipment funds outsourced the general management of their operations to CAIJ. The Japanese equipment funds also entered into equipment management service agreements and financing arrangements whereby we manage the leasing activity of equipment owned by the Japanese equipment funds. The profit or loss from each investment will substantially belong to each respective investor, except with respect to certain financing arrangements where the terms of the transaction provide us with an option to purchase equipment at a fixed price. If we decide to exercise our purchase options and resell equipment to a third party, we would realize any profit from the sale. See Notes 34 and 1314 to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

Container rental equipment is recorded at original cost and depreciated to an estimated residual value on a straight-line basis over its estimated useful life. The estimated useful lives and residual values of our container equipment are based on historical disposal experience and our expectations for future used container sale prices. Depreciation estimates are reviewed on a regular basis to determine whether sustained changes have taken place in the useful lives of our equipment or assigned residual values, which would suggest that a change in depreciation estimates is warranted.

After we conducted our regular depreciation policy review for 2016, we concluded that a change in the estimated residual value for 40-foot high cube dry van containers from $1,650 to $1,400 per container, effective July 1, 2016, was appropriate. The change increased our depreciation expense by $2.3 million, decreased net income by $2.2 million, and decreased diluted earnings per share by $0.11 for the three months ended March 31, 2017.

We continuously monitor disposal prices across our entire portfolio for indications of a sustained market downturn. If necessary, we will adjust our estimates if there are indicators that the current weak market for containers will be sustained over a longer time horizon.

There have been no changes to our accounting policies during the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017. See Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016, filed with the SEC on March ~~3, 2016.~~13, 2017.

In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. In November 2016, the FASB also issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which will require amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-15 and ASU 2016-18 are effective for interim and annual periods beginning after December 15, 2017, using a retrospective transition method to each period presented. We are currently evaluating the potential impact adoption of the standard will have on our consolidated statements of cash flows.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02). The FASB issued ASU 2016-02 to increase transparency and comparability among organization be recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessors will account for leases using an approach that is substantially equivalent to existing U.S. GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective transition. We plan to adopt this guidance effective January 1, 2019 and are currently evaluating the potential impact adoption will have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which supersedes previous revenue recognition guidance. ASU 2014-09 requires that a company recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. Companies will need to use more judgment and estimates than under the guidance currently in effect, including estimating the amount of variable revenue to recognize over each identified performance obligation. Additional disclosures will be required to help users of financial statements understand the nature, amount and timing of revenue and cash flows arising from contracts. In July 2016, the FASB deferred the effective date for interim and annual periods beginning after December 15, 2017. Early adoption is permitted to the original effective date of periods beginning after December 15, 2016. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We plan to adopt this guidance effective January 1, 2018 using the modified retrospective approach and are currently in the process of evaluating the impact adoption will have on our consolidated financial statements and related disclosures. While we have not completed our full assessment, we do not believe that adoption will have a material impact on the amount or timing of revenue recognized or our revenue recognition policies. We expect to complete our assessment of the impact towards the end of 2017.

The most recent adopted accounting pronouncements ~~that are relevant to our business~~ are described in Note 2(b) to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

Market risk represents the risk of changes in value of a financial instrument, derivative or non-derivative, caused by fluctuations in foreign exchange rates and interest rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.

Foreign Exchange Rate Risk. Although we have significant foreign-based operations, the U.S. Dollar is our primary operating currency. Thus, most of our revenue and expenses are denominated in U.S. Dollars. We have equipment sales in British Pound Sterling, Euros and Japanese Yen and incur overhead costs in foreign currencies, primarily in British Pound Sterling and Euros. ~~CAI Consent Sweden AB, one of our wholly-owned subsidiaries, has significant amounts of revenue as well as expenses denominated in Euros and Swedish Krone.~~ During the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, the U.S. Dollar increased in value in relation to other major foreign currencies (such as the Euro and British Pound Sterling). The increase in the U.S. Dollar has decreased our revenues and expenses denominated in foreign currencies. The increase in the value of the U.S. Dollar relative to foreign currencies will also result in U.S. dollar denominated assets held at some of our foreign subsidiaries to increase in value relative to the foreign subsidiaries’ local currencies. For the ~~six~~three months ended ~~June 30, 2016,~~March 31, 2017, we recognized a loss on foreign exchange of $0.3 million. A 10% change in foreign exchange rates would not have a material impact on our business, financial position, results of operations or cash flows.

Interest Rate Risk. The nature of our business exposes us to market risk arising from changes in interest rates to which our variable-rate debt is linked. As of ~~June 30, 2016,~~March 31, 2017, the principal amount of debt outstanding under the variable-rate arrangements of our revolving credit facilities was ~~$757.0~~$770.6 million. In addition, at ~~June 30, 2016,~~March 31, 2017, we had balances on our variable-rate term loans of ~~$258.9~~$245.5 million and term loans held by VIE of ~~$6.3~~$4.7 million. The average interest rate on our variable rate debt was ~~2.2%~~2.7% as of ~~June 30, 2016~~March 31, 2017, based on LIBOR plus a margin based on certain conditions set forth in our debt agreements.

A 1.0% increase or decrease in underlying interest rates for these debt obligations will increase or decrease interest expense by approximately $10.2 million annually assuming debt remains constant at ~~June 30, 2016~~March 31, 2017 levels.

We do not currently participate in hedging in the form of interest rate swaps or other transactions to manage the market risks described above.

In accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the Exchange Act), we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that as of ~~June 30, 2016~~March 31, 2017 our disclosure controls and procedures were effective with respect to controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and are accumulated and communicated to the Company’s management, including the Company’s principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under Exchange Act) that occurred during the quarter ended ~~June 30, 2016,~~March 31, 2017, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time we may be a party to litigation matters or disputes arising in the ordinary course of business, including in connection with enforcing our rights under our leases. Currently, we are not a party to any legal proceedings which are material to our business, financial condition, results of operations or cash flows.

Before making an investment decision, investors should carefully consider the risks described below and in the “Risk Factors” in Part 1: Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed with the SEC on March ~~3, 2016.~~13, 2017. These risks are not the only ones facing our company. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations. Any of these risks could adversely affect our business, cash flows, financial condition and results of operations. The trading price of our common stock could fluctuate due to any of these risks, and investors may lose all or part of their investment. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in this Quarterly Report on Form10-Q. ~~Except as set forth below, there~~There have been no material changes in our risk factors from those discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016.

~~Lessee defaults may adversely affect our business, financial condition, results~~

We believe that the risk of large lessee defaults remains elevated. Excess vessel capacity over the last several years has led to low ocean freight rates, which has resulted in large financial losses for certain carriers. For example, two major Asian shipping lines have entered into restructuring negotiations with their creditors, one of which has recently been completed. We expect excess vessel capacity to persist and freight rates to remain under pressure, which could adversely affect the credit worthiness of our customers. A large lessee default could have a material adverse effect on our business, financial condition, results of operations and cash flow.

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which are incorporated by reference herein.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which are incorporated by reference herein.~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.~~


Delaware		94-3109229
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Steuart Tower, 1 Market Plaza, Suite 900
San Francisco, California		94105
(Address of principal executive offices)		(Zip Code)


Common		~~July 31, 2016~~April 30, 2017
Common Stock, $.0001 par value per share		~~19,257,453~~19,253,739 shares


	~~Amount~~		~~Estimated Life~~
~~Tradenames~~	$	~~1,188~~		~~5 years~~
~~Customer relationships~~		~~8,724~~		~~8 years~~



	June 30,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
Gross finance lease receivables (1)	$	124,402	$	124,747	$	117,915	$	123,563
Unearned income (2)		(21,887)		(21,379)		(20,725)		(23,022)
Net investment in direct finance leases	$	102,515	$	103,368	$	97,190	$	100,541



	June 30,		December 31,		March 31,		December 31,
	2016		2015		2017		2016
Tier 1	$	80,367	$	86,981	$	71,635	$	74,777
Tier 2		44,035		37,766		46,280		48,786
Tier 3		-		-		-		-
	$	124,402	$	124,747	$	117,915	$	123,563


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐



2017	$	32,048
2018		38,283
2019		20,538
2020		12,606
2021		10,089
2022 and thereafter		10,838
	$	124,402


~~Trademarks and tradenames~~	~~1-10 years~~
~~Customer relationships~~	~~8 years~~



	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2016
Trademarks and tradenames	$	3,028	$	(1,355)	$	1,673
Customer relationships		9,344		(157)		9,187
	$	12,372	$	(1,512)	$	10,860
December 31, 2015
Trademarks and tradenames	$	1,840	$	(1,218)	$	622
Customer relationships		620		(19)		601
	$	2,460	$	(1,237)	$	1,223



2018	$	28,186
2019		26,176
2020		35,278
2021		11,473
2022		11,102
2023 and thereafter		5,700
	$	117,915


Trademarks and tradenames	2-3 years
Customer relationships	8 years


2017	$	1,546
2018		1,519	$	1,731
2019		1,519		1,404
2020		1,519		1,167
2021		1,405		1,167
2022 and thereafter		3,352
2022				1,167
2023 and thereafter				2,386
	$	10,860	$	9,022



	Number of	Weighted
	Shares of	Average
	Restricted	Grant Date
	Stock	Fair Value
Restricted stock outstanding, December 31, 2015	48,025	$	22.70
Restricted stock granted	34,500	$	7.87
Restricted stock vested	(13,535)	$	23.43
Restricted stock forfeited	(2,344)	$	21.96
Restricted stock outstanding, June 30, 2016	66,646	$	14.90


	Three Months Ended June 30, 2016								Three Months Ended March 31, 2017
	Container Leasing		Rail Leasing		Logistics		Total		Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	51,669	$	7,591	$	12,382	$	71,642	$	52,954	$	8,053	$	20,499	$	81,506
Total operating expenses		40,048		4,202		12,534		56,784		37,284		5,129		21,142		63,555
Operating income		11,621		3,389		(152)		14,858		15,670		2,924		(643)		17,951
Total other expenses		9,228		1,509		-		10,737		9,414		2,571		1		11,986
Net income before income taxes and non-controlling interest	$	2,393	$	1,880	$	(152)	$	4,121	$	6,256	$	353	$	(644)	$	5,965
Goodwill	$	-	$	-	$	15,482	$	15,482	$	-	$	-	$	15,794	$	15,794
Total assets	$	1,672,310	$	323,456	$	39,361	$	2,035,127	$	1,643,211	$	385,958	$	39,141	$	2,068,310
Purchase of rental equipment(1)	$	28,235	$	56,160	$	-	$	84,395	$	37,494	$	10,622	$	-	$	48,116


	Three Months Ended June 30, 2015								Three Months Ended March 31, 2016
	Container Leasing		Rail Leasing		Logistics		Total		Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	55,613	$	3,753	$	-	$	59,366	$	51,545	$	7,257	$	8,164	$	66,966
Total operating expenses		33,882		2,350		-		36,232		36,287		3,794		8,429		48,510
Operating income		21,731		1,403		-		23,134		15,258		3,463		(265)		18,456
Total other expenses		8,516		631		-		9,147		8,770		1,402		-		10,172
Net income before income taxes and non-controlling interest	$	13,215	$	772	$	-	$	13,987	$	6,488	$	2,061	$	(265)	$	8,284
Goodwill									$	-	$	-	$	8,994	$	8,994
Total assets	$	1,786,209	$	168,091	$	-	$	1,954,300	$	1,710,858	$	265,122	$	18,822	$	1,994,802
Purchase of rental equipment	$	79,877	$	68,669	$	-	$	148,546
Purchase of rental equipment (1)									$	20,218	$	25,626	$	-	$	45,844


	Six Months Ended June 30, 2016
	Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	103,214	$	14,848	$	20,546	$	138,608
Total operating expenses		76,335		7,996		20,963		105,294
Operating income		26,879		6,852		(417)		33,314
Total other expenses		17,949		2,911		-		20,860
Net income before income taxes and non-controlling interest	$	8,930	$	3,941	$	(417)	$	12,454
Purchase of rental equipment	$	48,453	$	81,786	$	-	$	130,239


	Six Months Ended June 30, 2015
	Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	111,190	$	6,668	$	-	$	117,858
Total operating expenses		66,624		4,450		-		71,074
Operating income		44,566		2,218		-		46,784
Total other expenses		16,709		1,175		-		17,884
Net income before income taxes and non-controlling interest	$	27,857	$	1,043	$	-	$	28,900
Purchase of rental equipment	$	154,803	$	82,075	$	-	$	236,878



	As of March 31,
	2017		2016
Owned container fleet in TEUs		933,241		969,994
Managed container fleet in TEUs		155,362		193,269
Total container fleet in TEUs		1,088,603		1,163,263

Owned container fleet in CEUs		1,024,176		1,025,413
Managed container fleet in CEUs		139,873		173,618
Total container fleet in CEUs		1,164,049		1,199,031

Owned railcar fleet in units		6,546		5,338



	As of June 30,
	2016	2015
Owned container fleet in TEUs	956,389	966,459
Managed container fleet in TEUs	180,900	222,140
Total container fleet in TEUs	1,137,289	1,188,599

Owned container fleet in CEUs	1,019,421	1,008,050
Managed container fleet in CEUs	162,618	200,925
Total container fleet in CEUs	1,182,039	1,208,975

Owned railcar fleet in units	5,936	3,671



	Three Months Ended		Six Months Ended		Three Months Ended
	June 30,		June 30,		March 31,
	2016	2015	2016	2015	2017		2016
Average container fleet utilization in CEUs	92.8%	93.3%	92.0%	93.4%		95.4%		91.2%
Average owned container fleet utilization in CEUs	93.6%	94.3%	92.8%	94.3%		95.7%		92.0%
Average railcar fleet utilization	95.4%	94.3%	95.8%	94.0%		92.7%		93.5%



	Six Months Ended
	June 30,				Increase/(Decrease)
	2016		2015		Amount		Percent
Total revenue	$	138,608	$	117,858	$	20,750	18	%
Operating expenses		105,294		71,074		34,220	48
Other expenses		20,860		17,884		2,976	17
Net income attributable to CAI common stockholders		10,923		26,431		(15,508)	(59)



Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(1)
January 1, 2017—January 31, 2017	—	$	—	—	806,388
February 1, 2017—February 28, 2017	—		—	—	806,388
March 1, 2017—March 31, 2017	—		—	—	806,388
Total	—	$	—	—	806,388



Period	Total Number of Shares (or Units) Purchased(1)		Average Price Paid per Share (or Unit) (1)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs(1)
April 1, 2016—April 30, 2016	-	$	-	-	1,206,888
May 1, 2016—May 31, 2016	2,816		7.44	-	1,206,888
June 1, 2016—June 30, 2016	139,469		7.76	139,469	1,067,419
Total	142,285	$	7.75	139,469	1,067,419


	CAI International, Inc.
	(Registrant)

May 4, 2017	/s/ VICTOR M. GARCIA
	Victor M. Garcia
	President and Chief Executive Officer
	(Principal Executive Officer)

May 4, 2017	/s/ TIMOTHY B. PAGE
	Timothy B. Page
	Chief Financial Officer
	(Principal Financial and Accounting Officer)


Exhibit No.		Description
3.1		Amended and Restated Certificate of Incorporation of CAI International, Inc. (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1, as amended, File No. 333-140496 filed on April 24, 2007).

3.2		Amended and Restated Bylaws of CAI International, Inc. (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on March 10, 2009).

10.1*		Amendment No. 1 to the Service Agreement, dated March 7, 2017, between Container Applications International (UK) Limited and Daniel Hallahan.

31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016, (ii) Consolidated Statements of Income for the three months ended March 31, 2017 and 2016, (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016, (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, and (v) Notes to Unaudited Consolidated Financial Statements.


	~~CAI International, Inc.~~
	~~(Registrant)~~

~~August 9, 2016~~	~~/s/ VICTOR M. GARCIA~~
	~~Victor M. Garcia~~
	~~President and Chief Executive Officer~~
	~~(Principal Executive Officer)~~

~~August 9, 2016~~	~~/s/ TIMOTHY B. PAGE~~
	~~Timothy B. Page~~
	~~Chief Financial Officer~~
	~~(Principal Financial and Accounting Officer)~~


~~2.1#~~	Stock Purchase Agreement, dated June 1, 2016, among CAI International, Inc.. Hybrid Logistics, Inc., General Transportation Service, Inc., the shareholders named therein, and Zions Bank, a division of ZB, National Association, as escrow agent.

~~3.1~~	Amended and Restated Certificate of Incorporation of CAI International, Inc. (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1, as amended, File No. 333-140496 filed on April 24, 2007).

~~3.2~~	~~Amended and Restated Bylaws of CAI International, Inc. (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on March 10, 2009).~~

10.1*	~~CAI International, Inc. 2007 Equity Incentive Plan (as amended effective June 3, 2016) (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on June 8, 2016).~~

~~10.2~~	Amended and Restated Term Loan Agreement, dated June 30, 2016, among Container Applications Limited, CAI International, Inc., the lending institutions from time to time listed on Schedule 1 hereto, Suntrust Bank, as administrative agent for itself and other lenders and Suntrust Robinson Humphrey, Inc., as sole lead arranger and bookrunner (incorporated by reference to Exhibit 99.1 of our Current Report on Form 8-K filed on July 7, 2016).

~~31.1~~	~~Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31.2~~	~~Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~32.1~~	~~Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~	~~Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101~~	The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015, (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015 ~~and (v) Notes to Unaudited Consolidated Financial Statements.~~

*	~~Management contract or compensatory plan.~~

#	Certain schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K under the Exchange Act. We hereby undertake to supplementally furnish copies of any omitted schedules to the SEC upon request.