CAI INTERNATIONAL, INC.

INDEX


		Page No.
Part I — Financial Information		45
Item 1.	Financial Statements (Unaudited)	45
	Consolidated Balance Sheets at June 30, ~~2018~~2019 and December 31, ~~2017~~2018	45
	Consolidated Statements of Income for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018	57
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, ~~2018~~2019 and ~~2017~~2018	68
	Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018	9
	Consolidated Statements of Cash Flows for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018	710
	Notes to Unaudited Consolidated Financial Statements	812
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2026
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3135
Item 4.	Controls and Procedures	3136
Part II — Other Information		3236
Item 1.	Legal Proceedings	3236
Item 1A.	Risk Factors	3236
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3236
Item 3.	Defaults Upon Senior Securities	3236
Item 4.	Mine Safety Disclosures	3237
Item 5.	Other Information	3237
Item 6.	Exhibits	3338
Signatures		3439

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, ~~2017~~2018 filed with the Securities and Exchange Commission (SEC) on ~~February 27, 2018~~March 5, 2019 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,		June 30,		December 31,
	2018		2017		2019		2018
Assets
Current assets
Cash	$	16,462	$	14,735	$	22,183	$	20,104
Cash held by variable interest entities		24,348		20,685		35,105		25,211
Accounts receivable, net of allowance for doubtful accounts of $2,110 and
$1,440 at June 30, 2018 and December 31, 2017, respectively		83,278		68,324
Current portion of net investment in direct finance leases		53,961		30,063
Accounts receivable, net of allowance for doubtful accounts of $3,049 and
$2,042 at June 30, 2019 and December 31, 2018, respectively						97,070		95,942
Current portion of net investment in sales-type and direct finance leases						75,174		75,975
Assets held for sale						320,793		449,730
Prepaid expenses and other current assets		2,541		4,258		6,783		1,525
Total current assets		180,590		138,065		557,108		668,487
Restricted cash		21,066		11,789		28,733		30,668
Rental equipment, net of accumulated depreciation of $550,426 and
$505,546 at June 30, 2018 and December 31, 2017, respectively		2,218,212		2,004,961
Net investment in direct finance leases		275,826		246,450
Rental equipment, net of accumulated depreciation of $604,417 and
$557,559 at June 30, 2019 and December 31, 2018, respectively						1,882,452		1,816,794
Net investment in sales-type and direct finance leases						460,235		473,792
Financing receivable						31,948		-
Goodwill		15,794		15,794		15,794		15,794
Intangible assets, net of accumulated amortization of $4,495 and
$3,407 at June 30, 2018 and December 31, 2017, respectively		6,635		7,723
Furniture, fixtures and equipment, net of accumulated depreciation of $3,265 and
$3,201 at June 30, 2018 and December 31, 2017, respectively		464		338
Intangible assets, net of accumulated amortization of $6,202 and
$5,397 at June 30, 2019 and December 31, 2018, respectively						4,928		5,733
Other non-current assets		1,871		3,008		3,692		1,349
Total assets (1)	$	2,720,458	$	2,428,128	$	2,984,890	$	3,012,617

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	6,530	$	7,831	$	8,225	$	7,371
Accrued expenses and other current liabilities		17,206		15,706		21,509		25,069
Due to container investors		-		1,845
Unearned revenue		7,526		7,811		6,448		7,573
Current portion of debt		159,599		132,049		313,064		311,381
Rental equipment payable		184,258		92,415		75,810		74,139
Total current liabilities		375,119		257,657		425,056		425,533
Debt		1,679,492		1,570,773		1,825,858		1,847,633
Deferred income tax liability		37,099		35,853		40,006		38,319
Other non-current liabilities						1,784		-
Total liabilities (2)		2,091,710		1,864,283		2,292,704		2,311,485

Stockholders' equity
Preferred stock, par value $.0001 per share; authorized 10,000,000 and 5,000,000 at
June 30, 2018 and December 31, 2017, respectively; 8.50% Series A fixed-to-floating rate
cumulative redeemable perpetual preferred stock, issued and outstanding 2,199,610 and 0 shares
at June 30, 2018 and December 31, 2017, respectively, at liquidation preference		54,990		-
Common stock: par value $.0001 per share; authorized 84,000,000 shares; issued and outstanding
19,306,377 and 20,390,622 shares at June 30, 2018 and December 31, 2017, respectively		2		2
Preferred stock, par value $0.0001 per share; authorized 10,000,000
8.50% Series A fixed-to-floating rate cumulative redeemable perpetual preferred stock, issued and
outstanding 2,199,610 shares, at liquidation preference, at June 30, 2019 and December 31, 2018						54,990		54,990
8.50% Series B fixed-to-floating rate cumulative redeemable perpetual preferred stock, issued and
outstanding 1,955,000 shares, at liquidation preference, at June 30, 2019 and December 31, 2018						48,875		48,875
Common stock, par value $0.0001 per share; authorized 84,000,000 shares; issued and outstanding
17,419,585 and 18,764,459 shares at June 30, 2019 and December 31, 2018, respectively						2		2
Additional paid-in capital		146,210		172,325		100,301		132,666
Accumulated other comprehensive loss		(6,360)		(6,122)		(6,589)		(6,513)
Retained earnings		433,906		397,640		494,607		471,112
Total stockholders' equity		628,748		563,845		692,186		701,132
Total liabilities and stockholders' equity	$	2,720,458	$	2,428,128	$	2,984,890	$	3,012,617



	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Revenue
Container lease revenue	$	68,333	$	54,960	$	132,967	$	107,914	$	75,774	$	68,333	$	151,285	$	132,967
Rail lease revenue		9,119		8,127		18,223		16,180
Logistics revenue		28,253		19,605		49,889		40,104		29,802		28,253		57,518		49,889
Total revenue		105,705		82,692		201,079		164,198		105,576		96,586		208,803		182,856

Operating expenses
Depreciation of rental equipment		29,402		27,054		58,249		55,026		28,657		26,103		57,069		51,281
Storage, handling and other expenses		2,613		6,192		6,713		13,145		4,063		969		7,959		3,297
Logistics transportation costs		24,330		16,682		42,995		33,753		26,091		24,330		50,610		42,995
Gain on sale of used rental equipment		(2,719)		(1,749)		(4,914)		(876)
Gain on sale of rental equipment										(1,583)		(2,662)		(3,025)		(4,897)
Administrative expenses		12,160		9,745		23,401		20,431		12,338		11,325		25,408		21,550
Total operating expenses		65,786		57,924		126,444		121,479		69,566		60,065		138,021		114,226

Operating income		39,919		24,768		74,635		42,719		36,010		36,521		70,782		68,630

Other expenses
Net interest expense		18,440		12,285		35,339		23,957		20,021		14,594		39,926		27,948
Other expense (income)		429		(112)		394		202
Other expense										119		429		157		394
Total other expenses		18,869		12,173		35,733		24,159		20,140		15,023		40,083		28,342

Income before income taxes		21,050		12,595		38,902		18,560		15,870		21,498		30,699		40,288
Income tax expense (benefit)		753		(43)		1,467		650
Income tax expense										1,335		847		1,719		1,758

Income from continuing operations										14,535		20,651		28,980		38,530
Loss from discontinued operations, net of income taxes										(5,200)		(354)		(1,071)		(1,095)
Net income		20,297		12,638		37,435		17,910		9,335		20,297		27,909		37,435
Preferred stock dividends		1,148		-		1,169		-		2,207		1,148		4,414		1,169
Net income attributable to CAI common stockholders	$	19,149	$	12,638	$	36,266	$	17,910	$	7,128	$	19,149	$	23,495	$	36,266

Net income per share attributable to CAI common stockholders
Amounts attributable to CAI common stockholders
Net income from continuing operations									$	12,328	$	19,503	$	24,566	$	37,361
Net loss from discontinued operations										(5,200)		(354)		(1,071)		(1,095)
Net income attributable to CAI common stockholders									$	7,128	$	19,149	$	23,495	$	36,266

Net income (loss) per share attributable to CAI common
stockholders
Basic	$	0.98	$	0.66	$	1.81	$	0.94
Continuing operations									$	0.70	$	1.00	$	1.36	$	1.86
Discontinued operations										(0.30)		(0.02)		(0.06)		(0.05)
Total basic									$	0.40	$	0.98	$	1.30	$	1.81
Diluted	$	0.97	$	0.65	$	1.79	$	0.93
Continuing operations									$	0.69	$	0.99	$	1.34	$	1.84
Discontinued operations										(0.29)		(0.02)		(0.06)		(0.05)
Total diluted									$	0.40	$	0.97	$	1.28	$	1.79

Weighted average shares outstanding
Basic		19,613		19,131		20,013		19,071		17,648		19,613		18,098		20,013
Diluted		19,843		19,419		20,259		19,332		17,926		19,843		18,401		20,258


									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid-In		Comprehensive		Retained		Total
	Shares		Amount	Shares		Amount	Capital		Loss		Earnings		Equity
Balances as of December 31, 2018	4,155	$	103,865	18,764	$	2	$	132,666	$	(6,513)	$	471,112	$	701,132
Net income	-		-	-		-		-		-		18,574		18,574
Preferred stock dividends, $0.53125/share	-		-	-		-		-		-		(2,207)		(2,207)
Foreign currency translation adjustment	-		-	-		-		-		(81)		-		(81)
Repurchase of common stock	-		-	(595)		-		(13,946)		-		-		(13,946)
Stock-based compensation	-		-	39		-		837		-		-		837
Balances as of March 31, 2019	4,155	$	103,865	18,208	$	2	$	119,557	$	(6,594)	$	487,479	$	704,309
Net income	-		-	-		-		-		-		9,335		9,335
Preferred stock dividends, $0.53125/share	-		-	-		-		-		-		(2,207)		(2,207)
Foreign currency translation adjustment	-		-	-		-		-		5		-		5
Repurchase of common stock	-		-	(863)		-		(20,172)		-		-		(20,172)
Stock-based compensation	-		-	75		-		916		-		-		916
Balances as of June 30, 2019	4,155	$	103,865	17,420	$	2	$	100,301	$	(6,589)	$	494,607	$	692,186


									Accumulated
							Additional		Other
	Preferred Stock			Common Stock			Paid-In		Comprehensive		Retained		Total
	Shares		Amount	Shares		Amount	Capital		Loss		Earnings		Equity
Balances as of December 31, 2017	-	$	-	20,391	$	2	$	172,325	$	(6,122)	$	397,640	$	563,845
Net income	-		-	-		-		-		-		17,138		17,138
Preferred stock dividends, $0.01181/share	-		-	-		-		-		-		(21)		(21)
Foreign currency translation adjustment	-		-	-		-		-		310		-		310
Issuance of common and preferred stock,
net of offering costs	1,600		40,000	100		-		956		-		-		40,956
Stock-based compensation	-		-	2		-		592		-		-		592
Balances as of March 31, 2018	1,600	$	40,000	20,493	$	2	$	173,873	$	(5,812)	$	414,757	$	622,820
Net income	-		-	-		-		-		-		20,297		20,297
Preferred stock dividends, $0.53125/share	-		-	-		-		-		-		(1,148)		(1,148)
Foreign currency translation adjustment	-		-	-		-		-		(548)		-		(548)
Issuance of common and preferred stock,
net of offering costs	600		14,990	-		-		(370)		-		-		14,620
Repurchase of common stock	-		-	(1,225)				(27,946)						(27,946)
Stock-based compensation	-		-	38		-		653		-		-		653
Balances as of June 30, 2018	2,200	$	54,990	19,306	$	2	$	146,210	$	(6,360)	$	433,906	$	628,748



	Six Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2019		2018
Cash flows from operating activities
Net income	$	37,435	$	17,910	$	27,909	$	37,435
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations, net of income taxes						(1,071)		(1,095)
Income from continuing operations						28,980		38,530
Adjustments to reconcile net income from continuing operations to net cash provided by
operating activities:
Depreciation		58,319		55,211		57,179		51,350
Amortization of debt issuance costs		2,158		1,498		2,011		1,808
Amortization of intangible assets		1,087		1,102		805		1,087
Stock-based compensation expense		1,350		995		1,401		1,206
Reduction in contingent consideration		-		(631)
Unrealized loss on foreign exchange		266		109		90		266
Gain on sale of used rental equipment		(4,914)		(876)
Gain on sale of rental equipment						(3,025)		(4,897)
Deferred income taxes		1,248		411		1,652		1,248
Bad debt expense (recovery)		317		(12)
Bad debt expense						529		315
Changes in other operating assets and liabilities:
Accounts receivable		(14,211)		(5,627)		(922)		(14,567)
Prepaid expenses and other assets		(2,096)		(1,807)		(654)		(2,121)
Accounts payable, accrued expenses and other current liabilities		(1,931)		(3,613)
Due to container investors		(540)		72
Net investment in sales-type and direct financing leases						31,336		-
Accounts payable, accrued expenses and other liabilities						(2,279)		(1,115)
Unearned revenue		(76)		(1,696)		(129)		14
Net cash provided by operating activities of continuing operations						116,974		73,124
Net cash provided by operating activities of discontinued operations						919		5,288
Net cash provided by operating activities		78,412		63,046		117,893		78,412
Cash flows from investing activities
Purchase of rental equipment		(271,961)		(128,593)		(167,442)		(226,033)
Proceeds from sale of used rental equipment		25,458		35,660
Purchase of financing receivable						(36,379)		-
Proceeds from sale of rental equipment						33,479		25,124
Purchase of furniture, fixtures and equipment		(196)		(85)		(249)		(196)
Receipt of principal payments from direct finance leases		19,046		8,942
Receipt of principal payments from financing receivable						973		-
Receipt of principal payments from sales-type and direct financing leases						-		19,046
Net cash used in investing activities of continuing operations						(169,618)		(182,059)
Net cash provided by (used in) investing activities of discontinued operations						122,770		(45,594)
Net cash used in investing activities		(227,653)		(84,076)		(46,848)		(227,653)
Cash flows from financing activities
Proceeds from debt		708,289		155,131		387,082		675,289
Principal payments on debt		(566,937)		(156,036)		(324,263)		(564,953)
Debt issuance costs		(6,201)		(463)		(496)		(6,201)
Proceeds from issuance of common and preferred stock		56,699		-		-		56,699
Repurchase of common stock		(27,946)		-		(34,118)		(27,946)
Dividends paid to preferred stockholders						(4,414)		-
Exercise of stock options		24		1,215		335		24
Net cash provided by (used in) financing activities		163,928		(153)
Net cash provided by financing activities of continuing operations						24,126		132,912
Net cash (used in) provided by financing activities of discontinued operations						(85,056)		31,016
Net cash (used in) provided by financing activities						(60,930)		163,928
Effect on cash of foreign currency translation		(20)		35		(77)		(20)
Net increase (decrease) in cash and restricted cash		14,667		(21,148)
Net increase in cash and restricted cash						10,038		14,667
Cash and restricted cash at beginning of the period (1)		47,209		52,326		75,983		47,209
Cash and restricted cash at end of the period (2)	$	61,876	$	31,178	$	86,021	$	61,876

Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes	$	172	$	134
Interest		27,651		21,638
Supplemental disclosure of non-cash investing and financing activity
Transfer of rental equipment to direct finance lease	$	71,807	$	23,912
Transfer of direct finance lease to rental equipment		-		291
Rental equipment payable		184,258		65,336

711

Table of Contents

CAI INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) The Company and Nature of Operations

Organization

CAI International, Inc., 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.

The Company’s common stock, 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock and 8.50% Series AB Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock are traded on the New York Stock Exchange under the symbols ~~“CAI”~~“CAI,” “CAI-PA” and ~~“CAI-PA,~~“CAI-PB,” respectively. The Company’s corporate headquarters are located in San Francisco, California.

Basis of Presentation

The accompanying unaudited consolidated financial statements include the financial statements of CAI International, Inc. and its wholly-owned subsidiaries. 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, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company’s results of operations for the three and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, and the Company’s cash flows for the six months ended June 30, ~~2018~~2019 and ~~2017.~~2018. Certain reclassifications have been made to prior year financial statements to conform to the current presentation. 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 ~~2018~~2019 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, ~~2017,~~2018, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on ~~February 27, 2018.~~March 5, 2019.

Discontinued Operations

In the quarter ended June 30, 2019, the Company committed to a plan to sell its railcar assets and to reallocate the capital invested in its rail business to other investments. The Company expects a sale to be completed before the end of 2019. As a result, the railcar assets have been reclassified as held for sale in the accompanying unaudited consolidated balance sheets and the operations of the rail business have been reclassified as discontinued operations in the accompanying unaudited consolidated statements of income and cash flows. All prior periods presented in these unaudited consolidated financial statements have been restated to reflect the reclassification of the railcar business as discontinued operations and assets held for sale. See Note 3 – Discontinued Operations for more information.

(2) Accounting Policies and Recent Accounting Pronouncements

~~(a)~~ Recent Accounting Pronouncements

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ~~FASB~~(FASB) issued Accounting Standards Update (ASU) ~~2014-09,~~No. 2016-02, ~~Revenue from Contracts with Customers~~Leases (Topic ~~606)~~842) (ASU ~~2014-09)~~2016-02), ~~which supersedes previous revenue recognition~~and subsequently issued amendments thereto, that replaced existing lease accounting guidance. Leasing revenue recognition is specifically excluded, and therefore, the new standard is only applicable to the Company’s logistics services agreements, management services agreements, and the sale of used rental equipment. The new standard ~~defines~~requires lessors to classify leases as a ~~five-step process~~sales-type, direct financing, or operating lease. A lease is a sales-type lease if any of five criteria are met, each of which indicate that the lease, in effect, transfers control of the underlying asset to ~~achieve~~ the ~~core principle~~lessee. If none of ~~ASU 2014-09, which~~those five criteria are met, but two additional criteria are both met, indicating that the lessor has transferred substantially all of the risks and benefits of the underlying asset to the lessee and a third-party, the lease is a direct financing lease. All leases that are not sales-type or direct financing leases are operating leases. The new standard also established a right-of-use model (ROU) that requires lessees to recognize ~~revenue when promised goods or services are transferred to customers in amounts that reflect~~an ROU asset and lease liability on the ~~consideration the Company expects to receive in exchange~~balance sheet for ~~those goods or services.~~ all leases with a term longer than twelve months.

The Company adopted ASU ~~2014-09~~2016-02, as amended, effective January 1, ~~2018, which did~~2019, using the modified retrospective approach and the effective date as the date of initial application. Consequently, financial information will not ~~have a material impact on~~be updated and the ~~Company’s consolidated financial statements~~disclosures required under the new standard will not be provided for dates and ~~related disclosures. See Note 2(b) for further details.~~

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ (ASU 2016-15), which clarifies the classification of certain cash receipts and cash payments in the statement of cash flows, including debt prepayment or extinguishment costs, settlement of contingent consideration arising from a business combination and insurance settlement proceeds. The Company adopted ASU 2016-15 effectiveperiods before January 1, ~~2018,~~2019. In addition, the Company elected the following practical expedients permitted under the transition guidance within the new standard: (1) the “package of practical expedients,” which ~~did~~does not ~~result in any changes~~require the Company to reassess under the ~~presentation~~new standard its prior conclusions about lease identification, lease classification, and initial direct costs, (2) the short-term lease recognition exemption for its office space leases of ~~amounts shown on the Company’s consolidated statements of cash flows for all periods presented.~~

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ (ASU 2016-18), that requires the inclusion of restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU 2016-18 effective January 1, 2018,twelve months or less, which resulted in the ~~inclusion of~~Company not recognizing an ROU asset or lease liability for these leases, and (3) the ~~Company’s restricted cash balances along with cash in~~practical expedient to not separate lease and non-lease components for leases that qualify for the Company’s consolidated statements of cash flows and separate line items showing changes in restricted cash balances were eliminated from the Company’s consolidated statements of cash flows. ASU 2016-18 was applied retrospectively to all periods presented.

practical expedient.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Adoption of the new standard resulted in the recognition of operating lease ROU assets of $3.7 million and operating lease liabilities of $4.1 million as of January 1, 2019. Adoption did not have an impact on the Company’s consolidated statements of income or cash flows.

Except as described above, there were no changes to the Company’s accounting policies during the six months ended June 30, ~~2018.~~2019. See Note 2 to the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on ~~February 27, 2018,~~March 5, 2019, for a description of the Company’s significant accounting policies.

Accounting Policies

~~(b) Revenue Recognition~~

The Company provides a range of services to its customers incorporating the rental, sale and management of equipment and the provision of logistics services. Revenue for all forms of service is recognized when earned following the guidelines under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, ~~Revenue Recognition~~ ~~and FASB ASC Topic 840,~~ ~~Leases. Revenue is reported net of any related sales tax.~~

(a) Container and Rail Lease Revenue

The Company recognizes revenue from operating leases of its ~~owned~~ equipment as earned over the term of the lease. Where minimum lease payments vary over the lease term, revenue is recognized on a straight-line basis over the term of the lease. The Company recognizes revenue on a cash basis for certain railcar leases that are billed on an hourly or mileage basis through a third-party railcar manager. Early termination of the rental contracts subjects the lessee to a penalty, which is included in lease revenue upon such termination. ~~Finance~~Sales-type and finance lease income, isand interest earned on financing receivables are recognized using the effective interest method, which generates a constant rate of interest over the ~~period~~term of the ~~lease.~~arrangement.

Certain leases include one or more options to renew or purchase the leased rental equipment. The exercise of lease renewal or equipment purchase options is at the sole discretion of the customer.

Included in lease revenue is revenue consisting primarily of fees charged to the lessee for handling, delivery, and ~~repairs,~~repairs. These activities are considered non-lease components of the contract, which are generally accounted for separately from the lease component, and revenue is recognized as ~~earned.~~

earned in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue Recognition. For certain leases of railcar equipment, the Company is responsible for the repair and maintenance of the railcars throughout the lease term. For such leases, the lease and non-lease component are combined as a single lease component, and revenue is recognized as earned in accordance with ASC Topic 842, Leases.

Also included in lease revenue is revenue from management fees earned under equipment management agreements. Management fees are generally calculated as a percentage of the monthly net operating income for an investor’s portfolio and recognized as revenue in the month of service.

(b) Leases

~~Logistics Revenue~~The Company leases office space under operating leases with expiration dates through 2024. The Company determines whether an arrangement constitutes a lease and records lease liabilities and ROU assets on its consolidated balance sheets at lease commencement. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU assets also include any lease pre-payments made and exclude lease incentives. Certain of the Company’s leases include one or more options to renew, which are included in the lease term only when it is reasonably certain that the Company will exercise that option. The Company’s office space leases often include lease and non-lease components, which are combined and accounted for as a single lease component.

For short-term leases, the Company records rent expense in its consolidated statements of income on a straight-line basis over the lease term and records variable lease payments as incurred.��

(3) Discontinued Operations

As discussed in Note 1, railcar assets of $320.8 million and $449.7 million were reclassified as held for sale as of June 30, 2019 and December 31, 2018, respectively, and the related operations of the rail business as discontinued operations in the accompanying unaudited consolidated statements of income and cash flows. The railcar assets are expected to be sold before the end of 2019.

The Company’s logistics business derives its revenue from three principal sources: (1) truck brokerage services, (2) intermodal transportation services, and (3) international ocean freight and freight forwarding services. For truck brokerage services, which typically involve a short transit time, revenue is recognized when delivery has been completed due to the lack of reliable information to reasonably measure progress toward complete satisfaction of the performance obligation. For intermodal transportation services, which can take a longer time to complete, revenue is recognized over time by measuring progress toward complete satisfaction of the performance obligation, utilizing input methods. For any such services completedheld for sale railcar assets as of the end of a reporting period, a percentage of completion method based on costs incurred to date is used to allocate the appropriate revenue to each separate reporting period. The Company provides international freight forwarding servicesdates indicated are made up as an indirect carrier, sometimes referred to as a Non-Vessel Operating Common Carrier (NVOCC). Due to the lack of reliable information to reasonably measure progress toward complete satisfaction of the performance obligation, revenue for these shipments is recognized at the time the freight departs the terminal of origin, which is when the customer is billed and the Company has no further obligation to the customer.follows (in thousands):

The Company reports logistics revenue on a gross basis as it is primarily responsible for fulfilling the promise to provide the specified service desired by the customer and has discretion in establishing the price for the specified service.

~~Unearned Revenue~~

~~The Company records unearned revenue when cash payments are received in advance of the Company satisfying its performance obligations.~~

Payment terms vary by customer and type of service. The term between invoicing and when payment is due is not significant. For certain customers or services, the Company may require payment before the services are delivered to the customer.

~~Practical Expedients~~

~~The Company expenses sales commissions when incurred because the amortization would have been one year or less. These costs are recorded within administrative expenses.~~


	June 30,		December 31,
	2019		2018
Rental equipment	$	326,058	$	448,466
Other assets		2,058		1,264
Loss on classification as held for sale		(7,323)		-
Assets held for sale	$	320,793	$	449,730

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CAI INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Other assets and liabilities of the rail business, including accounts receivable, accrued expenses and other liabilities, deferred tax liabilities and debt, have not been classified as held for sale in the consolidated balance sheets as of June 30, 2019 and December 31, 2018 as they will not be sold by the Company. The ~~Company does not disclose~~rail debt will be repaid upon the ~~value~~sale of ~~unsatisfied performance obligations~~the railcar assets.

The following table summarizes the components of income (loss) from discontinued operations in the accompanying unaudited consolidated statements of income for ~~(i) contracts with an original expected length of one year or less~~the three and ~~(ii) contracts with variable consideration for a distinct good or service that forms part of a single performance obligation.~~six months ended June 30, 2019 and 2018 (in thousands):

~~(3)~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenue
Rail lease revenue	$	6,462	$	9,119	$	14,343	$	18,223

Operating expenses
Depreciation of rental equipment		1,878		3,299		5,249		6,968
Storage, handling and other expenses		1,136		1,644		2,360		3,416
Gain on sale of rental equipment		(1,271)		(57)		(8,661)		(17)
Administrative expenses		1,030		835		2,356		1,851
Total operating expenses		2,773		5,721		1,304		12,218

Operating income		3,689		3,398		13,039		6,005

Interest expense		3,184		3,846		7,129		7,391
Income (loss) before income taxes		505		(448)		5,910		(1,386)

Loss on classification as held for sale		7,323		-		7,323		-
Loss from discontinued operations before income taxes		(6,818)		(448)		(1,413)		(1,386)
Income tax benefit		(1,618)		(94)		(342)		(291)
Net loss from discontinued operations	$	(5,200)	$	(354)	$	(1,071)	$	(1,095)

(4) Consolidation of Variable Interest Entities

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, ~~Consolidation:~~Consolidation:

it has power to direct the activities of a VIE that most significantly impact the VIE’s economic performance; and

it has the obligation to absorb losses of the VIE that could be potentially significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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.~~Consolidation.

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

Managed Container Funds

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~~arrangements include only terms and conditions that are ~~incurred~~customarily present in ~~the normal course of business.~~arrangements for similar services. 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 funds during the three and six months ended June 30, ~~2018~~2019 and ~~2017.~~2018.

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CAI INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Collateralized Financing Obligations

The Company has transferred containers 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~~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, ~~2018,~~2019 and December 31, ~~2017,~~2018, and the results of the VIEs’ operations and cash flows for the three and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, in the Company’s consolidated financial statements.

The containers that were transferred to the Japanese investor funds had a net book value of ~~$76.3~~$123.9 million as of June 30, ~~2018.~~2019. The container equipment, together with ~~$24.3~~$35.1 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 related liability presented in the debt section of the Company’s consolidated balance sheets as collateralized financing obligations of ~~$96.4~~$115.4 million and term loans held by VIE of ~~$2.4~~$39.0 million. No gain or loss was recognized by the Company on the initial consolidation of the VIEs. Containers sold to the Japanese investor funds during both the three and six months ended June 30, ~~2018~~2019 had a net book value of $65.0 million. Containers sold to the Japanese investor during the three and ~~2017,~~six months ended June 30, 2018 had a net book value of $7.3 million and ~~$7.2~~$15.2 million, respectively.

(5) Rental Equipment

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


	June 30,		December 31,
	2019		2018
Dry containers	$	1,914,120	$	1,840,304
Refrigerated containers		349,610		341,983
Other specialized equipment		223,139		192,066
		2,486,869		2,374,353
Accumulated depreciation		(604,417)		(557,559)
Rental equipment, net of accumulated depreciation	$	1,882,452	$	1,816,794

(6) Net Investment in Sales-Type and Direct Finance Leases

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



	June 30,		December 31,
	2019		2018
Gross sales-type and finance lease receivables (1)	$	771,868	$	804,511
Unearned income (2)		(236,459)		(254,744)
Net investment in sales-type and direct finance leases	$	535,409	$	549,767

(1)At the inception of the lease, the Company records the total minimum lease payments, executory costs, if any, and unguaranteed residual value as gross sales-type and finance lease receivables. The gross sales-type and finance lease receivables are reduced as customer payments are received. There was $74.3 million and $74.4 million unguaranteed residual value at June 30, 2019 and December 31, 2018, respectively, included in gross sales-type and finance lease receivables. There were no executory costs included in gross sales-type and finance lease receivables as of June 30, 2019 and December 31, 2018.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

~~respectively. Containers sold~~

(2)The difference between the gross sales-type and finance lease receivables and the cost of the equipment or carrying amount at the lease inception is recorded as unearned income. Unearned income, together with initial direct costs, are amortized to income over the ~~Japanese investor funds during the six months ended~~lease term so as to produce a constant periodic rate of return. There were no unamortized initial direct costs as of June 30, ~~2018~~2019 and ~~2017, had a net book value of $15.2 million and $7.2 million, respectively.~~

~~(4) Rental Equipment~~

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

June 30,

December 31,

2018

2017
Dry containers

$
1,727,678

$
1,533,063
Refrigerated containers

344,831

345,744
Other specialized equipment

202,730

160,529
Railcars

493,399

471,171

2,768,638

2,510,507
Accumulated depreciation

(550,426)

(505,546)
Rental equipment, net of accumulated depreciation

$
2,218,212

$
2,004,961

~~(5)~~ December 31, 2018.~~Net Investment in Direct Finance Leases~~

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

June 30,

December 31,

2018

2017
Gross finance lease receivables (1)

$
473,327

$
412,489
Unearned income (2)

(143,540)

(135,976)
Net investment in direct finance leases

$
329,787

$
276,513

~~(1)~~

At the inception of the lease, the Company records the total minimum lease payments, executory costs, if any, and unguaranteed residual value as gross finance lease receivables. The gross finance lease receivables are reduced as customer payments are received. There was $37.9 million and $34.4 million unguaranteed residual value at June 30, 2018 and December 31, 2017, respectively, included in gross finance lease receivables. There were no executory costs included in gross finance lease receivables as of June 30, 2018 and December 31, 2017.

~~(2)~~

The difference between the gross finance lease receivables and the cost of the equipment or carrying amount at the lease inception is recorded as unearned income. Unearned income, together with initial direct costs, are amortized to income over the lease term so as to produce a constant periodic rate of return. There were no unamortized initial direct costs as of June 30, 2018 and December 31, 2017.

In order to estimate the allowance for losses contained in gross sales-type and 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 sales-type and finance lease receivables were as follows (in thousands):



	June 30,		December 31,
	2019		2018
Tier 1	$	704,465	$	698,014
Tier 2		67,403		106,497
Tier 3		-		-
	$	771,868	$	804,511

Contractual maturities of the Company's gross sales-type and finance lease receivables subsequent to June 30, 2019 for the years ending June 30 are as follows (in thousands):


2020	$	114,583
2021		92,599
2022		84,880
2023		85,976
2024		58,190
2025 and thereafter		335,640
	$	771,868

(7) Financing Receivable

In April 2019, the Company entered into an agreement with a customer to purchase rental equipment and to lease the equipment back to the customer on a finance lease. As control of the equipment has been retained by the customer, the Company concluded that sale-leaseback accounting was not applicable and has treated the arrangement as a financing transaction. The amount paid by the Company has been recorded as a financing receivable. Payments made by the customer are recorded as a reduction to the financing receivable and as interest income, calculated using the effective interest method.

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CAI INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

June 30,

December 31,

2018

2017
Tier 1

$
414,440

$
366,629
Tier 2

58,887

45,860
Tier 3

-

-

$
473,327

$
412,489

~~Contractual maturities~~components of the ~~Company's gross finance lease receivables subsequent to June 30, 2018 for the years ending June 30 are as follows~~Company’s financing receivable (in thousands):

2019

$
80,710
2020

63,856
2021

53,202
2022

47,925
2023

40,583
2024 and thereafter

187,051

$
473,327


		June 30,
	Financial statement caption	2019
Current	Prepaid expenses and other current assets	$	3,458
Non-current	Financing receivable		31,948
Total financing receivable		$	35,406

In order to estimate an allowance for losses from financing receivables, the Company reviews the credit worthiness of its customers on an ongoing basis. As of June 30, 2019, the Company’s financing receivable of $35.4 million would be categorized as Tier 1 based on the internal customer credit ratings as described in Note 6.

~~(6)~~(8) Intangible Assets

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


Trademarks and tradenames	2-3 years
Customer relationships	5-8 years

The Company’s intangible assets as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows (in thousands):



	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2018
June 30, 2019
Trademarks and tradenames	$	1,786	$	(1,691)	$	95	$	1,786	$	(1,786)	$	-
Customer relationships		9,344		(2,804)		6,540		9,344		(4,416)		4,928
	$	11,130	$	(4,495)	$	6,635	$	11,130	$	(6,202)	$	4,928
December 31, 2017
December 31, 2018
Trademarks and tradenames	$	1,786	$	(1,411)	$	375	$	1,786	$	(1,786)	$	-
Customer relationships		9,344		(1,996)		7,348		9,344		(3,611)		5,733
	$	11,130	$	(3,407)	$	7,723	$	11,130	$	(5,397)	$	5,733

Amortization expense was ~~$0.5~~$0.4 million and ~~$0.4~~$0.5 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$1.1~~$0.8 million and $1.1 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and was included in administrative expenses in the consolidated statements of income.

As of June 30, ~~2018,~~2019, estimated future amortization expenses are as follows (in thousands):

The Company has entered into various non-cancelable office space leases with original lease periods expiring between 2019 and 2024. As of June 30, 2019, operating lease ROU assets of $2.4 million were reported in other non-current assets in the consolidated balance sheets. As of June 30, 2019, total operating lease liabilities were $3.0 million, of which $1.2 million are due within one year and $1.8 million are due beyond one year and were recorded in accrued expenses and other current liabilities and other non-current liabilities, respectively, in the consolidated balance sheets.

~~(7)~~Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements. Lease expense for lease payments is recognized on a straight-line basis over the lease term and is reported in administrative expenses in the consolidated statements of income.

The weighted-average remaining term of the Company’s operating leases was 3.2 years and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 4.2% as of June 30, 2019.

Maturities of the Company’s operating lease liabilities, which do not include short-term leases, as of June 30, 2019 were as follows (in thousands):

Cash paid for operating leases was $1.2 million during the six months ended June 30, 2019.

As of June 30, 2019, the Company has $6.1 million of undiscounted future payments under additional operating leases that have not yet commenced, which are excluded from the table above. These operating leases are expected to commence in the third quarter of 2019 with lease terms between 3 and 6 years.

The Company leases its rental equipment on either short-term operating leases through master lease agreements, long-term non-cancelable operating leases, or finance leases. The following table summarizes the components of lease revenue (in thousands):

The following represents future minimum rents receivable under long-term non-cancelable operating leases (in thousands):

See Note 6 for contractual maturities of the Company’s gross sales-type and finance lease receivables.

Details of the Company’s debt as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows (dollars in thousands):



	June 30, 2018					December 31, 2017						June 30, 2019					December 31, 2018
	Outstanding				Average	Outstanding				Average		Outstanding				Average	Outstanding				Average
	Current		Long-term		Interest	Current		Long-term		Interest	Maturity	Current		Long-term		Interest	Current		Long-term		Interest	Maturity

Revolving credit	$	5,500	$	322,000	3.8%	$	-	$	528,000	3.2%	June 2023	$	13,000	$	391,500	3.9%	$	4,200	$	301,000	4.2%	June 2023
Revolving credit facility - Rail(1)		-		305,000	3.6%		-		272,000	3.2%	October 2020		-		189,500	3.9%		-		272,500	4.2%	October 2023
Revolving credit facility - Euro		-		19,867	2.0%		-		14,736	2.0%	September 2020		-		19,338	2.0%		-		19,457	2.0%	September 2020
Term loan		1,800		28,200	4.4%		21,900		-	3.4%	April 2023		1,800		26,400	4.6%		1,800		27,300	4.5%	April 2023
Term loan		9,000		107,250	3.7%		9,000		111,750	3.1%	October 2019		107,250		-	4.0%		111,750		-	3.8%	October 2019
Term loan		7,000		79,000	3.8%		7,000		82,500	3.3%	June 2021		7,000		72,000	4.3%		7,000		75,500	4.0%	June 2021
Term loan		1,219		15,909	3.4%		1,198		16,524	3.4%	December 2020
Term loan (1)													1,262		14,647	3.4%		1,240		15,284	3.4%	December 2020
Term loan (1)													2,962		39,157	3.6%		2,909		40,651	3.6%	August 2021
Term loan		2,856		42,119	3.6%		2,805		43,560	3.6%	August 2021		6,000		89,500	4.6%		6,000		92,500	4.6%	October 2023
Senior secured notes		6,110		55,830	4.9%		6,110		58,885	4.9%	September 2022		6,110		49,720	4.9%		6,110		52,775	4.9%	September 2022
Asset-backed notes		100,197		647,711	3.8%		65,307		377,984	3.5%	June 2042
Asset-backed notes 2012-1													17,100		39,900	3.5%		17,100		48,450	3.5%	October 2027
Asset-backed notes 2013-1													22,900		62,975	3.4%		22,900		74,425	3.4%	March 2028
Asset-backed notes 2017-1													25,307		177,149	3.7%		25,307		189,802	3.7%	June 2042
Asset-backed notes 2018-1													34,890		267,490	4.0%		34,890		284,935	4.0%	February 2043
Asset-backed notes 2018-2													34,350		283,388	4.4%		34,350		300,563	4.4%	September 2043
Collateralized financing obligations		28,408		68,018	1.2%		22,549		69,441	1.2%	March 2021		32,939		82,424	1.5%		39,610		67,615	1.2%	December 2021
Term loans held by VIE		1,829		542	3.0%		-		3,286	2.7%	June 2019		5,131		33,887	4.2%		1,456		-	3.3%	June 2019
		163,919		1,691,446			135,869		1,578,666				318,001		1,838,975			316,622		1,862,757
Debt issuance costs		(4,320)		(11,954)			(3,820)		(7,893)				(4,937)		(13,117)			(5,241)		(15,124)
Total Debt	$	159,599	$	1,679,492		$	132,049	$	1,570,773			$	313,064	$	1,825,858		$	311,381	$	1,847,633

The Company maintains its revolving credit facilities to finance the acquisition of rental equipment and for general working capital purposes. As of June 30, ~~2018,~~2019, the Company had ~~$976.7~~$1,065.0 million in total availability under its revolving credit facilities (net of $0.1 million in letters of credit), subject to the Company’s ability to meet the collateral requirements under the agreements governing the facilities. Based on the borrowing base and collateral requirements at June 30, ~~2018,~~2019, the borrowing availability under the Company’s revolving credit facilities was ~~$117.1~~$102.7 million, assuming no additional contributions of assets.

On ~~February 28, 2018, CAL Funding III Limited (CAL Funding III), a wholly-owned indirect subsidiary~~March 29, 2019, one of ~~CAI, issued $332.0 million of 4.0% Class A fixed rate asset-backed notes and $16.9 million of 4.8% Class B fixed rate asset-backed notes (collectively,~~ the ~~Series 2018-1 Asset-Backed Notes). Principal and interest on the Series 2018-1 Asset-Backed Notes~~Japanese investor funds that is ~~payable monthly commencing on March 26, 2018, with the Series 2018-1 Asset-Backed Notes maturing in February 2028. The proceeds were used for general corporate purposes, including repayment of debt~~consolidated by the ~~Company.~~

~~On April 19, 2018, the~~ Company as a VIE (see Note 4) entered into a ~~$30.0 million five-year~~ term loan agreement with a bank. Under the terms of the term loan agreement, the Japanese investor fund entered into a seven-year, amortizing term loan of $40.8 million at a fixed interest rate of 4.2%. The term loan is ~~payable in 19 quarterly installments~~secured by assets of ~~$0.5 million starting July 31, 2018~~the Japanese investor fund, and ~~a final payment of $21.5 million on April 30, 2023. The loan bears interest at a variable rate based on LIBOR.~~

On June 27, 2018, the Company entered into an amendment to its Third Amended and Restated Revolving Credit Agreement, pursuant to which the Company’s senior revolving credit facility was amended to, among other things, increase the commitment level from $960 million to $1.1 billion with the ability to increase the revolving credit facility by an additional $250 million without lender approval,is subject to certain conditions. The amendment also extended the maturity date of the revolving credit facility to June 26, 2023 and revised certain covenants, restrictions and events of default to provide the Company with additional flexibility, including an increaseborrowing conditions set out in the ~~maximum total leverage ratio from 3.75:1.00 to 4.00:1.00, subject to certain conditions.~~

The agreements relating to all of the Company’s debt contain various financial and other covenants. As of June 30, ~~2018,~~2019, the Company was in compliance with all of its ~~debt~~financial and other covenants.

For further information on the Company’s debt instruments, see Note 108 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on ~~February 27, 2018.~~March 5, 2019.

~~The Company grants stock options from time to time to certain employees~~In June 2019, the Company’s stockholders approved the CAI International, Inc. 2019 Incentive Plan (2019 Plan), which replaces the CAI International, Inc. Amended and ~~independent directors pursuant to its~~Restated 2007 Equity Incentive Plan ~~as amended (Plan)~~(2007 Plan). No further awards will be made under the 2007 Plan. Under the 2019 Plan, a maximum of ~~3,421,980~~2,577,075 share awards may be granted. Under the 2019 Plan, the Company may grant incentive and nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance awards and other stock or cash-based awards.

Stock options granted to employees have a vesting period of four years from the 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 months ended June 30, ~~2018~~2019 and ~~2017:~~2018:

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2019 and 2018 was $1.2 million and ~~2017 was~~ less than $0.1 ~~million and $1.8~~ million, respectively. The aggregate intrinsic value of all options outstanding as of June 30, ~~2018~~2019 was ~~$5.9~~$5.8 million based on the closing price of the Company’s common stock of ~~$23.24~~$24.82 per share on June ~~29, 2018,~~28, 2019, the last trading day of the quarter.

The Company recognized stock-based compensation expense relating to stock options of $0.2 million and $0.4 million for the three months ended June 30, 2019 and 2018, respectively, and ~~2017,~~$0.4 million and $0.8 ~~million and $0.7~~ million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. As of June 30, ~~2018,~~2019, the remaining unamortized stock-based compensation cost relating to stock options granted to the Company’s employees and independent directors was approximately ~~$1.6~~$0.8 million, which is to be recognized over the remaining weighted average vesting period of approximately ~~2.2~~1.4 years.

The ~~fair value of~~Company did not grant any stock options ~~granted to the Company’s employees and independent directors was estimated using the Black-Scholes-Merton pricing model using the following weighted average assumptions:~~

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 common 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 months ended June 30, ~~2017, as the Company accounts for forfeitures as they occur.~~2019 and 2018.

The Company grants ~~restricted stock, comprising~~ restricted stock units and restricted stock awards from time to time to certain employees and ~~non-employee~~independent directors pursuant to the 2019 Plan. Restricted stock granted to employees has a vesting period of four years; 25% vesting on each anniversary of the grant date. Restricted stock granted to independent directors vests in one year. The Company recognizes the compensation cost associated with restricted stock over ~~a specified award~~the vesting period based on the closing price of the Company’s common stock on the date of grant.

The Company grants performance stock to ~~selected~~certain executives and other key employees. The performance stock vests at the end of a 3-year performance cycle if certain financial performance targets are met. The Company recognizes compensation cost associated with the performance stock ratably over the 3-year term ~~based on the likelihood of~~when it is considered probable that performance targets ~~being~~will be met. Compensation cost is based on the closing price of the Company’s common stock on the date of grant.

The following table summarizes the activity of restricted stock and performance stock under the 2019 Plan:

The Company recognized ~~$0.4 million and $0.1 million of~~ stock-based compensation expense relating to restricted stock and performance stock awards of $0.5 million and $0.4 million for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and ~~$0.6~~$1.2 million and ~~$0.2~~$0.6 million for the six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. As of June 30, ~~2018,~~2019, unamortized stock-based compensation expense relating to restricted stock and performance stock was ~~$3.7~~$5.6 million, which will be recognized over the remaining average vesting period of ~~2.5~~2.4 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.

In June 2019, the Company’s stockholders approved the CAI International, Inc. 2019 Employee Stock Purchase Plan (ESPP). The ESPP provides a means by which eligible employees may be given an opportunity to purchase shares of the Company’s common stock at a discount using payroll deductions. The ESPP authorizes the issuance of up to 250,000 shares of the Company’s common stock. The ESPP has not yet been implemented and no shares were issued under the ESPP during the three months ended June 30, 2019.

The consolidated income tax expense for the three and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, was determined based upon estimates of the Company’s consolidated annual effective income tax rate for the years ending December 31, ~~2018~~2019 and ~~2017,~~2018, respectively. The difference between the consolidated annual 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 effective tax rate was ~~3.8%~~5.6% at June 30, ~~2018,~~2019, compared to ~~3.5%~~4.4% at June 30, ~~2017.~~

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, ~~2018,~~2019, the Company had unrecognized tax benefits of $0.3 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, ~~2018.~~2019. The Company does not believe the total amount of unrecognized tax benefits as of June 30, ~~2018~~2019 will change for the remainder of ~~2018.~~

~~The Company was notified on May 1, 2017 that its 2015 federal income tax return was selected for examination. The examination was concluded on June 20, 2018 with no impact to tax expense.~~2019.

The carrying amounts ~~reported in the consolidated balance sheets for~~of cash, restricted cash, accounts receivable and accounts payable reflected in the balance sheets as of June 30, 2019 and December 31, 2018, approximate their fair value ~~because of~~due to the ~~immediate or~~ short-term ~~maturity~~nature of these financial ~~instruments.~~assets and liabilities. The carrying value of variable rate debt in the balance sheets as of June 30, 2019 and December 31, 2018 approximates fair value as the changes in their associated interest rates reflect the current market and credit risk is similar to when the loans were originally obtained.

The principal balance of the Company’s fixed-rate term loans, asset-backed notes ~~of $747.9 million~~ and collateralized financing obligations ~~of $96.4~~was $153.5 million, $965.4 million and $115.4 million as of June 30, ~~2018 were estimated to have~~2019, with a fair value of approximately ~~$763.1~~$154.8 million, $972.5 million and ~~$97.7~~$117.3 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 2 in the fair value hierarchy. The principal balance of the Company’s asset-backed notes and collateralized financing obligations was $1,032.7 million and $107.2 million as of December 31, 2018, with a fair value of approximately $1,024.7 million and $108.9 million, respectively. Management believes that the balances of the Company’s ~~revolving credit facilities of $652.4 million, variable-rate term loans of $232.3 million, fixed-rate term loans of $62.1 million,~~ senior secured notes of ~~$61.9~~$55.8 million and $58.9 million and term loans held by VIE of ~~$2.4~~$39.0 million and ~~net investment in direct finance leases of $329.8~~$1.5 million ~~approximate their fair values~~ as of June 30, ~~2018.~~2019 and December 31, 2018, respectively, fixed-rate term loans of $158.6 million as of December 31, 2018, and financing receivable of $35.4 million as of June 30, 2019, approximate their fair values. The fair value of these financial instruments would be categorized as Level 2 in the fair value hierarchy.

In addition to its debt obligations described in Note 79 above, the Company had commitments to purchase approximately ~~$179.7~~$50.8 million of containers and ~~$61.4~~$6.1 million of railcars as of June 30, ~~2018,~~2019, all in the twelve months ending June 30, ~~2019.~~2020.

In October 2018, the Company announced that the Board of Directors approved the repurchase of up to three million shares of its outstanding common stock. The number, price, structure and timing of the repurchases, if any, will be at the Company’s sole discretion and will be evaluated by the Company ~~also utilizes certain office facilities~~depending on prevailing market conditions, corporate needs, and ~~equipment~~other factors. The stock repurchases may be made in the open market, block trades or privately negotiated transactions. This stock repurchase program replaces any available prior share repurchase authorization and may be discontinued at any time. During the six months ended June 30, 2019, the Company repurchased 1.5 million shares of its common stock under ~~long-term non-cancellable operating lease agreements with total future minimum lease payments~~this repurchase plan, at a cost of approximately ~~$4.5 million as~~$34.1 million. As of June 30, ~~2018.~~

2019, approximately 1.0 million shares remained available for repurchase under this share repurchase program.

In October 2017, the Company commenced an ATM offering program with respect to its common stock, which allows the Company to issue and sell up to 2.0 million shares of its common stock. ~~During the six months ended June 30, 2018, the Company issued 100,000 shares of common stock under the ATM offering program for net proceeds of $2.8 million.~~ The Company ~~paid commissions to the sales agent of $0.1 million in connection with the sales of common stock~~did not issue any shares under this ATM offering program during the six months ended June 30, ~~2018. The net proceeds were used for general corporate purposes.~~2019. The Company has remaining capacity to issue and sell up to approximately 1.0 million of additional shares of common stock under this ATM offering program.

In March 2018, the Company completed an underwritten public offering of 1,600,000 shares of its 8.5% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share and liquidation preference $25.00 per share (Series A Preferred Stock), resulting in net proceeds to the Company of approximately $38.3 million, after deducting the underwriting discount and other offering expenses. Dividends on the Series A Preferred Stock accrue daily and are cumulative from and including the date of original issuance and are payable quarterly in arrears on the 15th day of each April, July, October and January. Dividends accrue at the Fixed Dividend Rate (as defined in the certificate of designations for the Series A Preferred Stock (Certificate of Designations)) at an annual rate of 8.5% of the $25.00 liquidation preference per annum from, and including, the date of original issuance to, but not including, April 15, 2023. On and after April 15, 2023, dividends on the Series A Preferred Stock shall accrue at an annual rate equal to the sum of (a) Three-Month LIBOR (as defined in the Certificate of Designations) as calculated on each applicable date and (b) 5.82% of the $25.00 liquidation preference per share of Series A Preferred Stock. The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend rights and rights upon the Company’s liquidation, dissolution or winding up.

The Series A Preferred Stock becomes redeemable by the Company beginning April 25, 2023 for cash at a redemption price of $25.00 per share of Series A Preferred Stock, plus accrued but unpaid dividends thereon to, but not including, the date fixed for redemption. In addition, upon the occurrence of a Change of Control (as defined in the Certificate of Designations), subject to certain restrictions, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice, redeem the Series A Preferred Stock, in whole or in part, within one hundred twenty (120) days after the first date on which such Change of Control occurred, for cash at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends thereon to, but not including, the date fixed for redemption. There is no mandatory redemption of the Series A Preferred Stock or redemption at the option of the holders. Holders of the Series A Preferred Stock generally have no voting rights except for limited voting rights if the Company fails to pay dividends on the Series A Preferred Stock for six or more quarterly periods (whether or not consecutive) or the Company fails to maintain the listing of the Series A Preferred Stock on a National Exchange (as defined in the Certificate of Designations) for a period of 180 consecutive days.

In April 2018, the Company sold an additional 170,900 shares of Series A Preferred Stock upon the partial exercise by the underwriters of their option to purchase additional Series A Preferred Stock, resulting in net proceeds to the Company of approximately $4.1 million, after deducting the underwriting discount of $0.1 million.

The net proceeds were used for repayment of debt and general corporate purposes.

In May 2018, the Company commenced an ATM offering program with respect to its Series A Preferred Stock, which allows the Company to issue and sell up to 2.2 million shares of its Series A Preferred Stock. ~~During the three months ended June 30, 2018, the Company issued 428,710 shares of Series A Preferred Stock under the ATM offering program for net proceeds of $10.5 million.~~ The Company ~~paid commissions to the sales agent of $0.2 million in connection with the sales of Series A Preferred Stock~~did not issue any shares under this ATM offering program during the ~~three~~six months ended June 30, ~~2018. The net proceeds were used for repayment of debt and general corporate purposes.~~2019. The Company has remaining capacity to issue and sell up to approximately 1.8 million of additional shares of Series A Preferred Stock under this ATM offering program.

In August 2018, the Company completed an underwritten public offering of 1,700,000 shares of its 8.5% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share and liquidation preference $25.00 per share (Series B Preferred Stock), resulting in net proceeds to the Company of approximately $41.2 million, after deducting the underwriting discount. The Company sold an additional 255,000 shares of Series B Preferred Stock upon the exercise by the underwriters of their option to purchase additional Series B Preferred Stock, resulting in net proceeds to the Company of approximately $6.2 million, after deducting the underwriting discount of $0.2 million. The net proceeds were used for repayment of debt and general corporate purposes.

For further information on the Company’s shareholders’ equity, see Note 14 to the consolidated financial statements in the Company’ Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 5, 2019.

In May 2018, the Company purchased, and subsequently cancelled, 1,225,214 shares of its common stock, from an affiliate of Andrew S. Ogawa in a privately-negotiated ~~transaction.~~transactions. Mr. Ogawa is a member of the Company’s Board of Directors. The stock was ~~purchased~~purchase at a price of $22.81 per share, which represented a 2% discount to the closing price on the date of purchase.

The Company organizes itself by the nature of the services it provides which includes equipment leasing (consisting of container leasing and rail leasing) and logistics.

As disclosed in Note 3, the Company’s railcar assets have been reclassified as held for sale in the accompanying unaudited consolidated balance sheets and the operations of the rail business have been reclassified as discontinued operations in the accompanying unaudited consolidated statements of income. As a result, the Company will no longer report Rail leasing as a segment. The Company revised prior period information to conform to current period presentation.

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~~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 material inter-segment ~~revenues.~~

~~With the exception of administrative expenses,~~revenues and operating expenses are directly attributable to each segment. ~~Administrative expenses that are not directly attributable to a segment are allocated to the segments based upon relative asset values or revenue.~~

The following tables show condensed segment information for the three and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, reconciled to the Company’s income before income taxes 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 summary below presents total assets for the Company's segments as of the dates indicated (in thousands):

(2) Includes goodwill of $15.8 million as of June 30, 2019 and December 31, 2018.

(3) Represents total assets related to discontinued operations, including assets held for sale of $320.8 million and $449.7 million as of June 30, 2019 and December 31, 2018, respectively.

The Company earns its revenue primarily from 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 $457.0 million as of June 30, 2018, 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,~~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, ~~2018~~2019 and ~~2017~~2018 (in thousands, except per share data):

The calculation of diluted earnings per share for the three months ended June 30, ~~2018~~2019 and ~~2017,~~2018, excluded from the denominator ~~161,870~~146,116 and ~~858,739~~161,870 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, ~~2018~~2019 and ~~2017,~~2018, excluded from the denominator ~~161,163~~ 126,184and ~~936,486~~161,163 shares, respectively, of common stock options because their effect would have been ~~anti-dilutive.~~anti-dilutive

The intermodal marine container industry-standard measurement unit is the 20-foot equivalent unit (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 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 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, utilization would be ~~97.0%~~96.0% and ~~97.3%~~96.6% for both the total container fleet ~~96.9%~~ and ~~97.2% for~~ the owned container fleet, and ~~77.9%~~84.5% and ~~76.6%~~85.7% for the railcar fleet, for the three and six months ended June 30, ~~2018,~~2019, respectively.

In the quarter ended June 30, 2019, we committed to a plan to sell our railcar assets as we believe it is in the best interest of our shareholders to reallocate the capital invested in our rail business to other investments. We expect a sale to be completed before the end of 2019. As a result, the railcar assets have been classified as held for sale and the operations of the rail business have been classified as discontinued operations in the unaudited consolidated financial statements in this Quarterly Report on Form 10-Q. All prior periods presented in the unaudited consolidated financial statements have been restated to reflect the reclassification. See Note 3 – Discontinued Operations to the consolidated financial statements in this Quarterly Report on Form 10-Q for more information.

Results of Operations - Three Months Ended June 30, ~~2018~~2019 Compared to Three Months Ended June 30, ~~2017~~2018

The following table summarizes our ~~operating~~ results of operations for the three months ended June 30, ~~2018~~2019 and ~~2017~~2018 (dollars in thousands):

~~Total~~The increase in total revenue for the three months ended June 30, ~~2018 increased $23.0 million, or 28%,~~2019 compared to the three months ended June 30, ~~2017, due~~2018, was attributable to a ~~$13.4~~$7.4 million, or ~~24%~~11%, increase in container lease revenue and a ~~$1.0~~$1.5 million, or ~~12%, increase in rail lease revenue and an $8.6 million, or 44%~~5%, increase in logistics revenue. ~~Operating~~The increase in operating expenses for the three months ended June 30, ~~2018 increased $7.9 million, or 14%,~~2019 compared to the three months ended June 30, ~~2017,~~2018, was as a result of a ~~$7.6~~$3.1 million, or ~~46%~~319%, increase in storage, handling and other expenses, a $2.6 million, or 10%, increase in depreciation expense, a $1.8 million, or 7%, increase in logistics transportation costs, a ~~$2.3~~$1.0 million, or 9%, increase in ~~depreciation expense, and a $2.4 million, or 25%, increase in~~ administrative ~~expenses, partially offset by a $3.6 million, or 58% decrease in storage, handling and other~~ expenses, and a ~~$1.0~~$1.1 million, or ~~55%~~41%, ~~increase~~decrease in gain on sale of used rental equipment. Total other expenses for the three months ended June 30, ~~2018~~2019 increased ~~$6.7 million, or 55%,~~ compared with the three months ended June 30, ~~2017,~~2018, primarily due to a ~~$6.2~~$5.4 million, or ~~50%~~37%, increase in net interest expense. ~~A dividend~~Total dividends of $2.2 million on our preferred stock were recorded in the three months ended June 30, 2019, compared to total dividends of $1.1 million ~~on our 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock (Series A Preferred Stock) was recorded in~~for the three months ended June 30, 2018. The increase in revenue, ~~partially~~ offset by the increase in operating expenses, ~~the increase in~~ total other expenses, and ~~the Series A Preferred Stock dividend~~preferred stock dividends resulted in a ~~$6.5 million, or 52%, increase~~decrease in net income attributable to CAI common stockholders for the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017.~~

The increase in container lease revenue for the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017~~2018 was mainly attributable to ~~a $9.1~~an $11.1 million increase in rental revenue, primarily due to a ~~28%~~19% increase in the average number of CEUs of on-lease owned containers, partially offset by a 1%$3.2 million decrease resulting from a 5% reduction in ~~the~~average owned container per diem ~~rate. In addition to the net increase in~~ rental ~~revenue, there was an increase of $4.4 million in finance lease income as a result of an increase in our investment in direct finance leases between the two periods.~~

Rail lease revenue increased for the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily as a result of a 9% increase in the average size of our on-lease railcar fleet during the last twelve months and a $0.2 million increase in repair fee revenue.

The increase in logistics revenue for the three months ended June 30, ~~2018,~~2019 compared to the three months ended June 30, ~~2017,~~2018 was primarily due to ~~a combination of increased load numbers and increased rates~~an increase in volume in our ~~intermodal and truck brokerage operations. Transportation costs increased at a slightly higher rate than revenue due to increased carrier costs and resulted in a decrease in the~~international freight forwarding business. The gross margin percentage fell from ~~14.9% for the three months ended June 30, 2017 to~~ 13.9% for the three months ended June 30, ~~2018.~~2018 to 12.4% for the three months ended June 30, 2019 due primarily to lower margins being achieved in our intermodal and truck brokerage operations.

The increase in depreciation expense for the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017~~2018 was primarily attributable to ana 13% increase in the average size of ~~the~~our owned container fleet during the ~~impact of which was partially offset by an increase in container equipment on direct finance leases which is not depreciated.~~

~~The increase in depreciation expense for the three~~twelve months ended June 30, 2018 compared to the three months ended June 30, 2017 was primarily attributable to an increase in the average size of the railcar fleet during the three months ended June 30, 2018 as well as an increase in the proportion of new railcars in the fleet.

The ~~decrease~~increase in storage, handling and other expenses for the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017~~2018 was primarily attributable to a $1.4 million credit recorded in recovery costs in the prior year as a result of insurance proceeds received relating to the bankruptcy of Hanjin Shipping Co. Ltd. (Hanjin) ~~in August 2016, a~~, $0.9 million ~~decrease in repair and positioning fees and a $1.1 million decrease~~increase in storage, handling and ~~handling~~repair expenses ~~both~~ due to ~~a decrease~~an increase in the average size of the off-lease fleet and a 2% increase in average utilization between the two periods, and the impact of a $0.5 million container liability insurance premium recorded during the three months ended June 30, 2017, related to the Hanjin insurance claim.

~~The increase in storage, handling and other expenses for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 was primarily attributable to a~~ $0.2 million increase in ~~storage expenses as the size of the railcar fleet increased and utilization decreased by 3%, between the two periods.~~

While we sold approximately ~~33% fewer~~34% more CEUs of used containers during the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017,~~2018, there was a ~~significant increase~~decrease of 56% in the average ~~sales price~~gain per unit, ~~which reflected the recovery~~resulting in ~~new equipment prices~~a decrease in ~~the last twelve months as well as a limited supply of used equipment.~~gain on sale.

Administrative expenses for the three months ended June 30, 2019 remained relatively consistent with the three months ended June 30, 2018.

The increase in administrative expenses for the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017~~2018 was primarily attributable to a $0.4 million increase in payroll-related costs, largely due to increased incentive compensation, a $0.2 million increase in rent expense between the two periods, and a $0.6 million reduction in contingent consideration liability related to acquisitions that was recorded during the three months ended June 30, 2017.

~~Administrative expenses for the three months ended June 30, 2018 remained consistent with the three months June 30, 2017.~~

~~The increase in administrative expenses for the three months ended June 30, 2018 compared to the three months ended June 30, 2017 was primarily attributable to a $0.4~~$0.5 million increase in payroll-related costs between the two periods due to additional ~~headcount.~~

headcount and $0.5 million of severance and other restructuring costs in the three months ended June 30, 2019 resulting from the closure of an office.

The increase in net interest expense for the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017~~2018 was due primarily to an increase in ~~the~~our average loan principal balance between the two periods, as we continue to increase borrowings to finance the acquisition of additional rental equipment, as well as an increase in the average interest rate on our outstanding debt, caused by an increase in LIBOR, from approximately ~~3.0%~~3.6% as of June 30, 2018 to ~~3.6%.~~3.9% as of June 30, 2019.

Other expense, representing a loss on foreign exchange of $0.1 million for the three months ended June 30, 2019, decreased from a loss of $0.4 million for the three months ended June 30, 2018, ~~increased $0.5 million from a gain of $0.1 million for the three months ended June 30, 2017,~~ primarily as a result of movements in the U.S. Dollar exchange rate against the Euro.

The increase in income tax expense for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 was mainly attributable to an increase in the estimated effective tax rate. The estimated effective tax rate at June 30, ~~2018~~2019 was ~~3.8%,~~5.6% compared to ~~3.5% for the three months ended~~4.4% at June 30, ~~2017.~~2018. The increase in estimated effective tax rate ~~at June 30, 2018~~ was primarily caused by an increase in the amount of interest income generated by foreign direct finance leases subject to both foreign and U.S. income tax.

An accrual for preferred stock dividends of ~~$1.1~~$2.2 million was recorded in the three months ended June 30, ~~2018 as a result of 2.2.~~2019 attributable to 2.2 million shares of Series A Preferred Stock and 2.0 million shares of Series B Preferred Stock being issued and sold in ~~2018. See Note 12~~2018 and outstanding as of June 30, 2019, compared to ~~our consolidated financial statements~~an accrual of $1.1 million recorded in ~~this Quarterly Report on Form 10-Q~~the three months ended June 30, 2018 for ~~additional information related to our~~2.2 million shares of Series A Preferred ~~Stock.~~Stock outstanding as of June 30, 2018.

The following table summarizes our results of discontinued operations for the three months ended June 30, 2019 and 2018 (in thousands):

The decrease in rail lease revenue for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, was primarily attributable to a decrease in the size of the on-lease railcar fleet between the two periods. The decrease in operating expenses for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, was as a result of a $1.4 million, or 43%, decrease in depreciation expense, a $1.2 million, or 2,130% increase in gain on sale of rental equipment and a $0.5 million, or 31%, decrease in storage, handing and other expenses, partially offset by a $0.2 million, or 23% increase in administrative expenses. The decrease in interest expense for the three months ended June 30, 2019 compared with the three months ended June 30, 2018, was primarily attributable to a decrease in our average loan principal balance between the two periods. The decrease in revenue and the $7.3 million loss on classification as held for sale, partially offset by the decrease in operating expenses and interest expense resulted in an increase in net loss from discontinued operations for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, of $4.8 million.

Results of Operations - Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

The following table summarizes our results from operations for the six months ended June 30, 2019 and 2018 (dollars in thousands):

The ~~following table summarizes our operating results for the six months ended June 30, 2018 and 2017 (dollars~~increase in ~~thousands):~~

~~Total~~total revenue for the six months ended June 30, ~~2018 increased $36.9 million, or 22%,~~2019 compared to the six months ended June 30, ~~2017, due~~2018, was attributable to ~~a $25.1~~an $18.3 million, or ~~23%~~14%, increase in container lease revenue and a ~~$2.0~~$7.6 million, or ~~13%, increase in rail lease revenue and a $9.8 million, or 24%~~15.3%, increase in logistics revenue. ~~Operating~~The increase in operating expenses for the six months ended June 30, ~~2018 increased $5.0 million, or 4%,~~2019 compared to the six months ended June 30, ~~2017,~~2018, was as a result of a ~~$9.2~~$7.6 million, or ~~27%~~18%, increase in logistics transportation costs, a ~~$3.2~~$5.8 million, or 6%11%, increase in depreciation expense, ~~and~~ a ~~$3.0~~$4.7 million, or ~~15%~~141%, increase ~~in administrative expenses, partially offset by a $6.4 million, or 49%, decrease~~ in storage, handling and other expenses, a $3.9 million, or 18%, increase in administrative expenses, and a ~~$4.0~~$1.9 million, or ~~461%~~38%, ~~increase~~decrease in gain on sale of used rental equipment. Total other expenses for the six months ended June 30, ~~2018~~2019 increased ~~$11.6 million, or 48%,~~ compared with the six months ended June 30, ~~2017,~~2018, primarily due to a ~~$11.4~~$12.0 million, or ~~48%~~43%, increase in net interest expense. ~~A dividend~~Total dividends of $4.4 million on our preferred stock was recorded in the six months ended June 30, 2019, compared to total dividends of $1.2 million ~~on our Series A Preferred Stock was recorded in~~for the six months ended June 30, 2018. The increase in revenue, ~~partially~~ offset by the ~~increases~~increase in operating expenses, total other expenses, and ~~the~~preferred stock dividend ~~on our Series A Preferred Stock,~~ resulted in ~~an $18.4 million, or 102%, increase~~a decrease in net income attributable to CAI common stockholders for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017.~~

The increase in container lease revenue for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017~~2018 was mainly attributable to a ~~$16.9~~$24.1 million increase in rental revenue, primarily due to a ~~28%~~21% increase in the average number of CEUs of on-lease owned containers, ~~and $2.2~~partially offset by a $4.6 million ofdecrease resulting from a 4% reduction in average owned container ~~lease revenue from insurance proceeds recognized during the six months ended June 30, 2017. In addition to the increase in~~per diem rental ~~revenue, there was an increase of $8.5 million in finance lease income as a result of an increase in our investment in direct finance leases between the two periods.~~

Rail lease revenue increased for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily as a result of a 6% increase in the average size of our on-lease railcar fleet during the last twelve months and a $1.5 million increase in repair fee revenue.

The increase in logistics revenue for the six months ended June 30, ~~2018,~~2019 compared to the six months ended June 30, ~~2017,~~2018 was due to ~~a combination of increased load numbers~~an increase in volume and ~~increased~~freight rates in our intermodal and truck brokerage operations. Transportation costs increased at a slightly higher rate than revenue due primarily to increased ~~carrier costs~~volume in our lower margin intermodal business and resulted in a decrease in the gross margin percentage from ~~15.8% for the six months ended June 30, 2017 to~~ 13.8% for the six months ended June 30, ~~2018.~~

~~Depreciation expense of $51.3 million~~2018 to 12.0% for the six months ended June 30, 2018 remained relatively consistent with depreciation expense of $249.5 million for the six months ended June 30, 2017. While there was an increase in depreciation expense attributable to an increase in the average size of our owned fleet, the increase was partially offset by a $1.3 million write-off2019.

Depreciation of rental equipment ~~on lease to a bankrupt customer, which was recognized during the six months ended June 30, 2017, and an increase in assets on direct finance leases.~~

The increase in depreciation expense for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017~~2018 was primarily attributable to ana 15% increase in the average size of ~~the railcar~~our owned container fleet ~~and an impairment charge of $0.6 million related to off-lease railcars designated for scrap recognized~~ during the ~~six~~twelve months ended June 30, ~~2018.~~

The decrease in storage, handling and other expenses for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 was primarily attributable to a $3.6 million decrease in storage and handling expenses, as well as a $2.0 million decrease in repair and positioning fees, both due to a decrease in the average size of the off-lease fleet and a 2% increase in average utilization between the two periods, a $1.4 million credit recorded in recovery costs as a result of insurance proceeds received relating to the Hanjin bankruptcy, and the impact of a $0.5 million container liability insurance premium recorded during the six months ended June 30, 2017, related to the Hanjin insurance claim.

The increase in storage, handling and other expenses for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017~~2018 was primarily attributable to a ~~$0.4~~$1.4 million credit recorded in recovery costs in the prior year as a result of insurance proceeds received relating to the bankruptcy of Hanjin, a $1.7 million increase in storage, handling and ~~handling~~repair expenses asdue to an increase in the average size of the ~~railcar~~off-lease fleet ~~increased~~ and ~~utilization decreased by 5%, between the two periods, as well as~~ a ~~$0.4~~$0.5 million increase in ~~repair related costs.~~

While we sold approximately ~~50% fewer~~36% more CEUs of used containers during the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017,~~2018, there was a ~~significant increase~~decrease of 55% in the average ~~sales~~gain per unit, ~~which reflected the recovery~~resulting in ~~the new equipment prices~~a decrease in ~~the last twelve months as well as a limited supply of sued equipment.~~gain on sale.

The increase in administrative expenses for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017~~2018 was primarily attributable to a ~~$0.6~~$0.7 million increase in payroll-related costs, largely due to increased incentive compensation and increased stock-based compensation expense, a ~~$0.4~~$0.3 million increase in ~~rent expense between the two periods,~~legal and professional fees, and a ~~$0.6~~$0.3 million ~~reduction~~increase in ~~contingent consideration liability related~~marketing expenses due to ~~acquisitions recorded during the six months ended June 30, 2017.~~an increased effort to promote our brand and services.

~~Administrative~~The increase in administrative expenses ~~of $2.6 million~~ for the six months ended June 30, ~~2018 remained relatively consistent with administrative expenses of $2.4 million for the six months ended June 30, 2018.~~

~~The increase in administrative expenses of $0.5 million for the six months ended June 30, 2018~~2019 compared to the six months ended June 30, ~~2017~~2018 was primarily ~~caused by an~~attributable to a $1.9 million increase ~~of $0.5million~~ in ~~payroll related~~payroll-related costs between the two periods due to additional ~~headcount.~~

headcount and $0.5 million of severance and other restructuring costs in the six months ended June 30, 2019 resulting from the closure of an office.

The increase in net interest expense for the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017~~2018 was due primarily to an increase in ~~the~~our average loan principal balance between the two periods, as we continue to increase borrowings to finance the acquisition of additional rental equipment, as well as an increase in the average interest rate on our outstanding debt, caused by an increase in LIBOR, from approximately ~~3.0%~~3.6% as of June 30, 2018 to ~~3.6%.~~3.9% as of June 30, 2019.

Other expense, representing a loss on foreign exchange of $0.2 million for the six months ended June 30, 2019, decreased from a loss of $0.4 million for the six months ended June 30, 2018, ~~increased $0.2 million from $0.2 million for the six months ended June 30, 2017,~~ primarily as a result of movements in the U.S. Dollar exchange rate against the Euro.

~~The~~Income tax expense for the six months ended June 30, 2019 remained relatively consistent compared to the six months ended June 30, 2018. While income before tax decreased between the two periods, the estimated effective tax rate increased from 4.4% at June 30, 2018 ~~was 3.8%, compared~~ to ~~3.5%~~5.6% at June 30, ~~2017.~~2019. The increase in estimated effective tax rate ~~at June 30, 2018~~ was primarily caused by an increase in the amount of interest income generated by foreign direct finance leases subject to both foreign and U.S. income tax.

An accrual for preferred stock dividends of $4.4 million was recorded in the six months ended June 30, 2019 attributable to 2.2 million shares of Series A Preferred Stock and 2.0 million shares of Series B Preferred Stock being issued and sold in 2018 and outstanding as of June 30, 2019, compared to an accrual of $1.2 million recorded in the six months ended June 30, 2018 for 2.2 million shares of Series A Preferred Stock outstanding as of June 30, 2018.

The following table summarizes our results of discontinued operations for the six months ended June 30, 2019 and 2018 (in thousands):

~~An accrual~~The decrease in rail lease revenue for ~~preferred stock dividends of $1.2 million was recorded in~~the six months ended June 30, 2019 compared to the six months ended June 30, 2018, was primarily attributable to a decrease in the size of the on-lease railcar fleet between the two periods. The decrease in operating expenses for the six months ended June 30, 2019 compared to the six months ended June 30, 2018, was as a result of ~~2.2.~~an $8.6 million ~~shares~~increase in gain on sale of ~~Series A Preferred Stock being issued~~rental equipment, a $1.7 million, or 25%, decrease in depreciation expense, and ~~sold~~a $1.1 million, or 31%, decrease in ~~2018. See Note 12~~storage, handing and other expenses, partially offset by a $0.5 million, or 27% increase in administrative expenses. The decrease in interest expense for the six months ended June 30, 2019 compared with the six months ended June 30, 2018, was primarily attributable to a decrease in our ~~consolidated financial statements~~average loan principal balance between the two periods. The decrease in ~~this Quarterly Report~~revenue and the $7.3 million loss on ~~Form 10-Q~~classification as held for ~~additional information related to our Series A Preferred Stock.~~sale, partially offset by the decrease in operating expenses and interest expense resulted in net income from discontinued operations for the six months ended June 30, 2019 remaining relatively consistent with the six months ended June 30, 2018.

As of June 30, ~~2018,~~2019, we had cash and cash equivalents of ~~$61.9~~$57.3 million, including ~~$24.3~~$35.1 million of cash held by variable interest entities (VIEs). Our principal sources of liquidity are cash in-flows provided by operating activities, proceeds from the sale of rental equipment, borrowings from financial institutions, and equity and debt offerings. Our cash in-flows are used to finance capital expenditures and meet debt service requirements.

As of June 30, ~~2018,~~2019, our outstanding indebtedness and current maximum borrowing level was as follows (in thousands):

As of June 30, ~~2018,~~2019, we had ~~$976.7~~$1,065.0 million in availability under our revolving credit facilities (net of $0.1 million in letters of credit), subject to our ability to meet the collateral requirements under the agreements governing the facilities. Based on the borrowing base and collateral requirements at June 30, ~~2018,~~2019, the borrowing availability under our revolving credit facilities was ~~$117.1~~$102.7 million, assuming no additional contributions of assets.

On February 28, 2018, CAL Funding III Limited (CAL Funding III), our wholly-owned indirect subsidiary, issued $332.0 million of 4.0% Class A fixed rate asset-backed notes and $16.9 million of 4.8% Class B fixed rate asset-backed notes (collectively, the Series 2018-1 Asset-Backed Notes). Principal and interest on the Series 2018-1 Asset-Backed Notes is payable monthly commencing on March 26, 2018, with the Series 2018-1 Asset-Backed Notes maturing in February 2028. The proceeds were used for general corporate purposes, including repayment of outstanding debt.

On April 19, 2018, we entered into a $30.0 million five-year term loan agreement with a bank. The loan is payable in 19 quarterly installments of $0.5 million starting July 31, 2018 and a final payment of $21.5 million on April 30, 2023. The loan bears interest at a variable rate based on LIBOR.

On June 27, 2018, we entered into an amendment to our Third Amended and Restated Revolving Credit Agreement, pursuant to which our senior revolving credit facility was amended to, among other things, increase the commitment level from $960 million to $1.1 billion, with the ability to increase the revolving credit facility by an additional $250.0 million without lender approval, subject to certain conditions. The amendment also extended the maturity date of the revolving credit facility to June 23, 2023 and revised certain covenants, restrictions and events of default to provide us with additional flexibility, including an increase in the maximum total leverage ratio from 3.75:1.00 to 4.00:1.00, subject to certain conditions.

For further information on our debt instruments, see Note 710 to the consolidated financial statements in this Quarterly Report on Form 10-Q and Note 108 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on ~~February 27, 2018.~~

Assuming that our ~~lenders remain solvent,~~customers meet their contractual commitments, we currently believe that cash provided by operating activities and existing cash, proceeds from the sale of rental equipment, and borrowing availability under our debt facilities are sufficient to meet our liquidity needs for at least the next twelve months. We will continue to monitor our liquidity and the credit markets.

In addition to customary events of default, the agreements governing our indebtedness contain restrictive covenants, including limitations on certain liens, indebtedness and investments. In addition, the agreements governing our indebtedness contain various restrictive financial and other covenants. The financial covenants in the agreements governing our indebtedness require us to maintain: (1) in the case of our debt facilities, 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) in the case of our debt facilities, 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, ~~2018,~~2019, we were in compliance with all of ~~the applicable debt~~our financial and other covenants.

The following table sets forth certain cash flow information for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 (in thousands):

Net cash provided by operating activities of continuing operations was ~~$78.4~~$117.0 million for the six months ended June 30, ~~2018,~~2019, an increase of ~~$15.4~~$43.8 million compared to ~~$63.0~~$73.1 million for the six months ended June 30, ~~2017.~~2018. The increase was due to a ~~$21.5~~$45.1 million increase in our net working capital adjustments, partially offset by a $1.3 million decrease in income from continuing operations as adjusted for depreciation, amortization and other non-cash ~~items, partially offset by a $6.2~~items. The decrease of $1.3 million ~~increase in our net working capital adjustments. The increase~~ in net income as adjusted for non-cash items was primarily due to a $9.5 million decrease in income from continuing operations, partially offset by an increase of ~~$19.5 million in net income and an increase of $3.1~~$5.8 million in depreciation expense ~~partially offset by~~and a ~~$4.0~~decrease of $1.9 million ~~increase~~ in the gain on sale of ~~used~~ rental equipment.

Net working capital provided by operating activities of $27.4 million in the six months ended June 30, 2019, was due to a $31.3 million decrease in net investment in sales-type and direct financing leases, primarily due to receipt of principal payments, partially offset by a $0.9 million increase in accounts receivable, primarily caused by the timing of cash receipts from customers, a $0.7 million increase in prepaid expenses and other assets, and a $2.3 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments. Net working capital used in operating activities of ~~$18.9~~$17.8 million in the six months ended June 30, ~~2018,~~ was due to a ~~$14.2~~$14.6 million increase in accounts receivable, primarily caused by an increase in lease and logistics activity, a $2.1 million increase in prepaid expenses and other assets, and a $1.9 million increase in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments. Net working capital used in operating activities of $12.7 million in the six months ended June 30, 2017, was due to a $5.6 million increase in accounts receivable, primarily caused by an increase in lease and logistics activity, a $1.8 million increase in prepaid expenses and other assets, primarily due to an increase in the insurance receivable related to the Hanjin bankruptcy, a $3.6$1.1 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of ~~payments, and a $1.7 million decrease in unearned revenue, primarily due a decrease in deferred payments for a Rail contract.~~

Net cash used in investing activities of continuing operations was ~~$227.7~~$169.6 million for the six months ended June 30, 2019, a decrease of $12.4 million compared to net cash used in investing activities of $182.1 million for the six months ended June 30, 2018. The increase in cash was primarily attributable to a $58.6 million decrease in purchase of rental equipment and an $8.3 million increase in proceeds from sale of rental equipment, partially offset by a $36.4 million decrease for the purchase of a financing receivable and a $19.0 million decrease in receipt of principal payments from sales-type and direct financing leases.

Net cash provided by financing activities from continuing operations was $24.1 million for the six months ended June 30, 2019, a decrease of $108.8 million compared to net cash provided by financing activities of $132.9 million for the six months ended June 30, 2018. During the six months ended June 30, 2019, our net cash inflow from borrowings was $62.8 million compared to net cash inflow of $110.3 million for the six months ended June 30, 2018, an increase of $143.6 million compared to $84.1 million for the six months ended June 30, 2017. The increase in cash usage was primarily attributable to a $143.4 million increase in the purchase of rental equipment.

Net cash provided by financing activities was $163.9 million for the six months ended June 30, 2018, an increase of $164.1 million compared to net cash used in financing activities of $0.2 million for the six months ended June 30, 2017. During the

~~six months ended June 30, 2018, our net cash inflow from borrowings was $141.4 million compared to a net cash outflow of $0.9 million for the six months ended June 30, 2017,~~ which reflected ~~an increase~~a decrease in net borrowings used for the acquisition of rental equipment during the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017.~~2018. The ~~increase~~decrease was also a result of a $56.7 million ~~increase~~decrease in proceeds received from the issuance of common stock and ~~Series A Preferred Stock~~preferred stock, a $6.2 million increase in the repurchase of common stock, and a $4.4 million increase in dividends paid to preferred stockholders during the six months ended June 30, ~~2018, partially offset by a $27.9 million repurchase of common stock and a $6.2 million increase in debt issuance costs during the six months ended June 30, 2018.~~

Net cash provided by discontinued operations was $38.6 million for the six months ended June 30, 2019, an increase of $47.9 million compared to net cash used by discontinued operations of $9.3 million for the six months ended June 30, 2018. The increase in cash was primarily attributable to a $168.4 million increase in net cash provided by investing activities of discontinued operations, mainly as a result of proceeds received from the sale of railcar assets, partially offset by a $116.1 million increase in net cash used in financing activities of discontinued operations due to an increase in net cash outflow from borrowings for rail operations and a $4.4 million decrease in net cash provided by operating activities of discontinued operations.

In ~~December 2015,~~October 2018, we announced that our Board of Directors ~~had~~ approved the repurchase of up to ~~one~~three million shares of our outstanding common stock. In February 2016, our 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 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 prevailing market conditions, ~~liquidity~~corporate needs, and other factors. ~~Stock~~The stock repurchases may be made in the open market, block trades or privately negotiated transactions. ~~The~~This stock repurchase program replaces any available prior share repurchase authorization ~~does not have an expiration date~~ and ~~does not oblige us to acquire~~may be discontinued at any ~~particular amount~~time. During the six months ended June 30, 2019, we repurchased 1.5 million shares of our common stock. under this repurchase plan, at a cost of approximately $34.1 million. As of June 30, ~~2018~~,2019, approximately ~~0.8~~1.0 million shares remained available for repurchase under our ~~stock~~share repurchase ~~plan.~~

In May 2018, we purchased, and subsequently cancelled, 1.2 million shares of its common stock, from an affiliate of Andrew S. Ogawa in a privately-negotiated transaction. Mr. Ogawa is a member of our Board of Directors. The stock was purchased at a price of $22.81 per share, which represented a 2% discount to the closing price on the date of purchase.

In October 2017, we commenced an ATM offering program with respect to our common stock, which allows us to issue and sell up to 2.0 million shares of our common stock. ~~During the six months ended June 30, 2018, we issued 100,000~~We did not issue any shares ~~of common stock under the ATM offering program for net proceeds of $2.7 million. We paid commissions to the sales agent of $0.1 million in connection with the sales of common stock~~ under this ATM ~~offering~~ program during the six months ended June 30, ~~2018.~~2019. We ~~did not issue and sell any shares of common stock under this ATM offering during the three months ended June 30, 2018. The net proceeds were used for general corporate purposes. As of~~ ~~June 30, 2018, we~~ have remaining capacity to issue up to approximately 1.0 million of additional shares of common stock under this ATM offering program.

In March 2018, we completed an underwritten public offering of 1,600,000 shares of our 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share and liquidation preference $25.00 per share (Series A Preferred Stock), resulting in net proceeds to us of approximately $38.3 million, after deducting the underwriting discount and other offering expenses.

In April 2018, we sold an additional 170,900 shares of our Series A Preferred Stock upon the exercise by the underwriters of their option to purchase additional Series A Preferred Stock, resulting in net proceeds to us of approximately $4.1 million, after deducting the underwriting discount.

~~See Note 12 to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information related to our Series A Preferred Stock.~~

In May 2018, we commenced an ATM offering program with respect to our Series A Preferred Stock, which allows us to issue and sell up to 2.2 million shares of our Series A Preferred Stock. ~~During~~We did not issue any shares under this ATM program during the ~~three~~six months ended June 30, 2018, we issued 428,710 shares of Series A Preferred Stock under the ATM offering program for net proceeds of $10.5 million. We paid commissions to the sales agent of $0.2 million in connection with the sales of Series A Preferred Stock under this ATM offering program during the three months ended June 30, 2018. The net proceeds were used for debt repayment and general corporate purposes.2019. We have remaining capacity to issue up to approximately 1.8 million of additional shares of Series A Preferred Stock under this ATM offering program.

The following table sets forth our contractual obligations and commercial commitments by due date as of June 30, ~~2018~~2019 (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(1)	$	652,367	$	5,500	$	-	$	324,867	$	-	$	322,000	$	-	$	613,338	$	13,000	$	19,338	$	-	$	391,500	$	189,500	$	-
Term loans(1)		294,353		21,876		120,273		91,518		37,886		22,800		-		367,978		126,274		97,518		43,886		28,800		71,500		-
Senior secured notes		61,940		6,110		6,110		6,110		6,110		37,500		-		55,830		6,110		6,110		6,110		37,500		-		-
Asset-backed notes		747,908		100,197		100,197		100,197		100,197		83,072		264,048		965,449		134,547		134,547		134,547		117,422		94,547		349,839
Collateralized financing obligations		96,427		28,407		33,058		27,969		6,992		-		-		115,363		32,939		27,974		36,966		-		-		17,484
Term loans held by VIE		2,371		1,829		542		-		-		-		-		39,018		5,131		5,367		5,599		5,841		6,096		10,984
Interest on debt and capital lease obligations ~~(1)~~(2)		243,362		64,212		56,984		42,819		30,877		25,676		22,795		303,807		76,212		67,373		56,960		49,200		20,425		33,637
Rental equipment payable		184,258		184,258		-		-		-		-		-		75,810		75,810		-		-		-		-		-
Rent, office facilities and equipment		4,505		2,370		1,079		431		342		143		140		3,340		1,433		692		565		429		221		-
Equipment purchase commitments - Containers		179,698		179,698		-		-		-		-		-		50,774		50,774		-		-		-		-		-
Equipment purchase commitments - Rail		61,401		61,401		-		-		-		-		-		6,117		6,117		-		-		-		-		-
Total contractual obligations	$	2,528,589	$	655,859	$	318,242	$	593,911	$	182,404	$	491,191	$	286,982	$	2,596,824	$	528,347	$	358,919	$	284,633	$	630,692	$	382,289	$	411,944

As of June 30, ~~2018,~~2019, we had no material off-balance sheet arrangements or obligations that have or are reasonably likely to have a current or future effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

~~Except for the adoption of Accounting Standards Update (ASU) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606),~~ ~~there~~There have been no changes to our critical accounting policies during the six months ended June 30, ~~2018.~~2019. See Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC on ~~February 27, 2018.~~

In ~~February~~June 2016, the Financial Accounting Standards Board ~~(FASB)~~ issued ~~ASU~~Accounts Standards Update (ASU) No. ~~2016-02,~~2016-13, ~~Leases~~Financial Instruments – Credit Losses (Topic ~~842)~~326) (ASU ~~2016-02)~~2016-13). ~~The FASB issued ASU 2016-02 to increase transparency~~This guidance affects net investment in sales-type and ~~comparability among organizations recognizing lease assets~~direct finance leases 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~~amendments in this update replace the incurred loss impairment methodology in current U.S. GAAP ~~for sales-type leases, direct financing leases~~with a methodology that reflects expected credit losses. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, current conditions, 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 liabilityreasonable and ~~the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable.~~supportable information that affects collectability. ASU ~~2016-02~~2016-13 is effective for ~~interim and annual periods~~fiscal years beginning after December 15, ~~2018,~~2019, including interim periods within those fiscal years and with early adoption permitted ~~and must~~for fiscal years beginning after December 15, 2018. Further, ASU 2018-19 was issued in November 2018 to clarify that operating lease receivables should be ~~adopted using a modified retrospective transition. We plan to adopt this guidance effective January 1, 2019~~accounted for under the new lease standard, Topic 842, and are not within the scope of Topic 326. The Company is currently evaluating the potential impact ~~adoption will have~~of Topic 326 on ~~our~~its consolidated financial statements and related disclosures. ~~We expect to complete our assessment of the impact towards the end of 2018.~~

The most recent adopted accounting pronouncements are described in Note ~~2(b)~~2 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. During the six months ended June 30, ~~2018,~~2019, 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 relative value of the U.S. Dollar has ~~increased~~decreased our revenues and expenses denominated in foreign currencies. ~~However, the~~The associated decrease in the value of certain foreign currencies as compared to the U.S. Dollar ~~will~~has also ~~cause~~caused assets held at some of our foreign subsidiaries to decrease in value ~~relative~~when translated to ~~the~~ US ~~dollar.~~dollars. For the six months ended June 30, ~~2018,~~2019, we recognized a loss on foreign exchange of ~~$0.4~~$0.2 million. A 10% change in foreign exchange rates would not have a material impact on our 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, ~~2018,~~2019, the principal amount of debt outstanding under the variable-rate arrangements of our revolving credit facilities was ~~$652.4~~$613.3 million. In addition, at June 30, ~~2018,~~2019, we had balances on our variable-rate term loans of ~~$294.4 million and our variable-rate term loans held by VIE of $2.4~~$214.4 million. As of June 30, ~~2018,~~2019, our total outstanding variable-rate debt was ~~$885.2~~$827.8 million, which represented ~~48%~~38% of our total debt at that date. The average interest rate on our variable-rate debt was ~~3.7%~~4.0% as of June 30, ~~2018,~~2019, 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 would increase or decrease interest expense by approximately ~~$8.8~~$8.3 million annually assuming debt remains constant at June 30, ~~2018~~2019 levels.

While we actively manage our interest exposure by adjusting the ratio of floating and fixed-rate debt, we do not currently participate in hedging in the form of interest rate swaps or other derivative instruments 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, ~~2018~~2019 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, ~~2018,~~2019, 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 in the “Risk Factors” in Part 1: Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 filed with the SEC on ~~February 27, 2018.~~March 5, 2019. 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 and preferred 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 Form 10-Q. ~~Except as described 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, ~~2017.~~

~~Changes to U.S. trade policy, tariff and import/export regulations may have a material adverse effect on our business,financial condition and results of operations.~~

Changes in U.S. or international, political, regulatory and economic conditions or in laws and policies governing foreign trade and investment in the territories or countries where we currently conduct our business, could adversely affect our business. The U.S. presidential administration has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., including various types of metal shipping containers manufactured in China (including container types that we own in our fleet), economic sanctions on corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business.

As a result of recent policy changes of the U.S. presidential administration and recent U.S. government proposals, there may be greater restrictions and economic disincentives on international trade. The new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods. We do a significant amount of business that would be impacted by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products and services, and as a result, could have an adverse effect on our business, financial condition and results of operations.

See below 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)

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
~~(Do not check if a smaller reporting company)~~		Emerging growth company	☐

Common Stock		July 31, ~~2018~~2019
Common Stock, ~~$.0001~~$0.0001 par value per share		~~19,306,377~~17,419,585 shares


	Three months		Six months
	ended June 30,		ended June 30,
	2019		2019
Lease revenue - sales-type and direct financing leases
Profit at lease commencement	$	-	$	-
Interest income on lease receivable		10,934		22,324
		10,934		22,324
Lease revenue - operating leases		61,146		122,462
Other revenue		3,100		5,905
Interest income on financing receivable		594		594
Total lease revenue	$	75,774	$	151,285



		Six Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2019				2018
			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		859,560	$	16.44		1,428,255	$	16.31		850,167	$	16.46		859,560	$	16.44
Options granted		-	$	-		230,500	$	16.80
Options exercised		(9,393)	$	14.76		(205,100)	$	10.30		(125,504)	$	14.14		(9,393)	$	14.76
Options forfeited										(3,000)	$	12.88		-	$	-
Options expired										(10,000)	$	26.41		-	$	-
Options outstanding at June 30		850,167	$	16.46		1,453,655	$	17.24		711,663	$	16.75		850,167	$	16.46
Options exercisable		593,043	$	17.71		982,531	$	18.30		586,408	$	17.58		593,043	$	17.71
Weighted average remaining term		6.1 years				4.8 years				5.9 years				6.1 years

Le
Title of each class	Trading symbols	Name of exchange on which registered
Common Stock, par value $0.0001 per share	CAI	New York Stock Exchange
8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share	CAI-PA	New York Stock Exchange
8.50% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share	CAI-PB	New York Stock Exchange


2019	$	80,710
2020		63,856
2021		53,202
2022		47,925
2023		40,583
2024 and thereafter		187,051
	$	473,327


2019	$	1,702
2020		1,609	$	1,609
2021		1,609		1,609
2022		950		948
2023		474		474
2024 and thereafter		291
2024				288
	$	6,635	$	4,928



2020	$	1,309
2021		692
2022		565
2023		429
2024		221
2025 and thereafter		-
Total lease payments		3,216
Less imputed interest		(213)
Total operating lease liabilities	$	3,003


	As of
	June 30, 2019
2020	$	161,298
2021		139,138
2022		120,972
2023		93,681
2024		52,921
2025 and thereafter		95,453
Total	$	663,463


	Three Months Ended June 30, 2018								Three Months Ended June 30, 2019
	Container Leasing		Rail Leasing		Logistics		Total		Container Leasing		Logistics		Total
Total revenue	$	68,333	$	9,119	$	28,253	$	105,705	$	75,774	$	29,802	$	105,576
Total operating expenses		31,081		6,026		28,679		65,786		38,156		31,410		69,566
Operating income (loss)		37,252		3,093		(426)		39,919		37,618		(1,608)		36,010
Net interest and other expenses (income)		15,031		3,846		(8)		18,869		20,144		(4)		20,140
Income (loss) before income taxes	$	22,221	$	(753)	$	(418)	$	21,050	$	17,474	$	(1,604)	$	15,870
Goodwill	$	-	$	-	$	15,794	$	15,794
Total assets	$	2,211,492	$	465,513	$	43,453	$	2,720,458
Purchase of rental equipment (1)	$	148,777	$	10,421	$	-	$	159,198	$	59,352	$	-	$	59,352


	Three Months Ended June 30, 2017								Six Months Ended June 30, 2019
	Container Leasing		Rail Leasing		Logistics		Total		Container Leasing		Logistics		Total
Total revenue	$	54,960	$	8,127	$	19,605	$	82,692	$	151,285	$	57,518	$	208,803
Total operating expenses		32,234		5,375		20,315		57,924		76,870		61,151		138,021
Operating income (loss)		22,726		2,752		(710)		24,768		74,415		(3,633)		70,782
Net interest and other expenses		9,395		2,778		-		12,173
Net interest and other expenses (income)										40,091		(8)		40,083
Income (loss) before income taxes	$	13,331	$	(26)	$	(710)	$	12,595	$	34,324	$	(3,625)	$	30,699
Goodwill	$	-	$	-	$	15,794	$	15,794
Total assets	$	1,684,166	$	386,648	$	39,890	$	2,110,704
Purchase of rental equipment (1)	$	76,479	$	3,998	$	-	$	80,477	$	167,442	$	-	$	167,442


	Six Months Ended June 30, 2018
	Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	132,967	$	18,223	$	49,889	$	201,079
Total operating expenses		62,430		12,932		51,082		126,444
Operating income (loss)		70,537		5,291		(1,193)		74,635
Net interest and other expenses (income)		28,353		7,391		(11)		35,733
Income (loss) before income taxes	$	42,184	$	(2,100)	$	(1,182)	$	38,902
Purchase of rental equipment (1)	$	225,893	$	46,068	$	-	$	271,961


	Six Months Ended June 30, 2017								Six Months Ended June 30, 2018
	Container Leasing		Rail Leasing		Logistics		Total		Container Leasing		Logistics		Total
Total revenue	$	107,914	$	16,180	$	40,104	$	164,198	$	132,967	$	49,889	$	182,856
Total operating expenses		69,518		10,504		41,457		121,479		63,144		51,082		114,226
Operating income (loss)		38,396		5,676		(1,353)		42,719		69,823		(1,193)		68,630
Net interest and other expenses		18,809		5,349		1		24,159
Net interest and other expenses (income)										28,353		(11)		28,342
Income (loss) before income taxes	$	19,587	$	327	$	(1,354)	$	18,560	$	41,470	$	(1,182)	$	40,288
Purchase of rental equipment (1)	$	113,973	$	14,620	$	-	$	128,593	$	226,033	$	-	$	226,033



	As of June 30,				As of June 30,
	2018		2017		2019		2018
Owned container fleet in TEUs		1,293,361		962,111		1,553,231		1,293,361
Managed container fleet in TEUs		77,680		149,218		69,805		77,680
Total container fleet in TEUs		1,371,041		1,111,329		1,623,036		1,371,041

Owned container fleet in CEUs		1,344,842		1,049,057		1,584,456		1,344,842
Managed container fleet in CEUs		70,772		134,400		63,492		70,772
Total container fleet in CEUs		1,415,614		1,183,457		1,647,948		1,415,614

Owned railcar fleet in units		7,430		6,560		5,631		7,430


	Three Months Ended June 30,				Increase				Three Months Ended June 30,				Increase/(Decrease)
	2018		2017		Amount		Percent		2019		2018		Amount		Percent
Total revenue	$	105,705	$	82,692	$	23,013	28	%	$	105,576	$	96,586	$	8,990	9	%
Operating expenses		65,786		57,924		7,862	14	%		69,566		60,065		9,501	16	%
Total other expenses		18,869		12,173		6,696	55	%		20,140		15,023		5,117	34	%
Net income attributable to CAI common stockholders		19,149		12,638		6,511	52	%		7,128		19,149		(12,021)	(63)	%


	Three Months Ended June 30,				Increase
($ in thousand)	2018		2017		Amount		Percent
Rail lease revenue	$	9,119	$	8,127	$	992	12	%


	Six Months Ended June 30,				Decrease
($ in thousand)	2019		2018		Amount		Percent
Container leasing	$	3,025	$	4,897	$	(1,872)	(38)	%



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, 2019 – April 30, 2019	273,883	$	24.05	273,883	1,588,753
May 1, 2019 – May 31, 2019(2)	479,698		23.11	476,606	1,112,147
June 1, 2019 – June 30, 2019	112,147		22.78	112,147	1,000,000
Total	865,728	$	23.37	862,636	1,000,000


Exhibit No.		Description
3.1		Amended and Restated Certificate of Incorporation of CAI International, Inc. (incorporated by reference to Exhibit 3.1 ofto our Registration Statement on Form S-1, as amended, File No. 333-140496 filed on April 24, 2007).
3.2		Certificate of Amendment to the Amended and Restated Certificate of Incorporation of CAI International, Inc., dated June 4, 2018 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 5, 2018).
3.3		Certificate of Designations of Rights and Preferences of 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, dated March 28, 2018 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on March 28, 2018).
3.4		Certificate of Designations of Rights and Preferences of 8.50% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, dated August 10, 2018 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on August 10, 2018).
3.5		Amended and Restated Bylaws of CAI International, Inc. (incorporated by reference to Exhibit 3.1 ofto our Current Report on Form 8-K filed on March 10, 2009).
~~10.1~~10.1*		~~Stock Repurchase Agreement, dated May 1, 2018, between~~ CAI International, Inc. ~~and the Ogawa Family Trust dated 7/6/98~~2019 Incentive Plan (incorporated by reference to Exhibit 10.1 ~~of our Current Report on Form 8-K filed on May 1, 2018).~~
~~10.2~~		~~At the Market Issuance Sales Agreement, dated May 2, 2018, between CAI International, Inc. and B. Riley FBR, Inc. (incorporated by reference~~ to ~~Exhibit 1.1 of our Current Report on Form 8-K filed on May 2, 2018).~~
~~10.3~~		Amendment No. 6 to Third Amended and Restated Revolving Credit Agreement, dated June 26, 2018, by and among CAI International, Inc., Container Applications Limited, the guarantors named therein, Bank of America, N.A., as a lender and administrative agent, the other lending institutions party thereto, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”), MUFG Union Bank, N.A. and Wells Fargo Bank, N.A., as syndication agents, Merrill Lynch, as lead arranger and book runner, and ABN AMRO Capital USA, LLC, Compass Bank, Bank of Montreal, Royal Bank of Canada and PNC Bank, National Association, as documentation agents (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on June ~~28, 2018)~~13, 2019).
10.2*		CAI International, Inc. 2019 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on June 13, 2019).
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, ~~2018~~2019 and December 31, ~~2017,~~2018, (ii) Consolidated Statements of Income for the three and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018, (iv) Consolidated Statements of Stockholders’ Equity for the three and ~~2017, (iv)~~six months ended June 30, 2019 and 2018, (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018, and ~~2017, and (v)~~(vi) Notes to Unaudited Consolidated Financial Statements.


	CAI International, Inc.
	(Registrant)

August ~~3, 2018~~7, 2019	/s/ VICTOR M. GARCIA
	Victor M. Garcia
	President and Chief Executive Officer
	(Principal Executive Officer)

August ~~3, 2018~~7, 2019	/s/ TIMOTHY B. PAGE
	Timothy B. Page
	Chief Financial Officer
	(Principal Financial and Accounting Officer)