UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2019~~March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33388

CAI International, Inc.

(Exact name of registrant as specified in its charter)


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

Steuart Tower, 1 Market Plaza, Suite ~~900~~2400
San Francisco, California		94105
(Address of principal executive offices)		(Zip Code)

415-788-0100

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark of the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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

Common Stock		~~July 31, 2019~~April 24, 2020
Common Stock, $0.0001 par value per share		~~17,419,585~~17,506,453 shares

Table of Contents

CAI INTERNATIONAL, INC.

INDEX


		Page No.
Part I — Financial Information		54
Item 1.	Financial Statements (Unaudited)	54
	Consolidated Balance Sheets at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	54
	Consolidated Statements of ~~Income~~Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	76
	Consolidated Statements of Comprehensive (Loss) Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	87
	Consolidated Statements of Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	98
	Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~	109
	Notes to Unaudited Consolidated Financial Statements	1211
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2622
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3529
Item 4.	Controls and Procedures	3630
Part II — Other Information		3630
Item 1.	Legal Proceedings	3630
Item 1A.	Risk Factors	3630
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3631
Item 3.	Defaults Upon Senior Securities	3631
Item 4.	Mine Safety Disclosures	3731
Item 5.	Other Information	3732
Item 6.	Exhibits	3833
Signatures		3934

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, ~~2018~~2019 filed with the Securities and Exchange Commission (SEC) on March 5, ~~2019~~2020, this Quarterly Report on Form 10-Q and our other reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Reference is also made to such risks and uncertainties detailed from time to time in our other filings with the SEC.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CAI INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(UNAUDITED)



	June 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
Assets
Current assets
Cash	$	22,183	$	20,104	$	87,727	$	19,870
Cash held by variable interest entities		35,105		25,211		21,016		26,594
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
Accounts receivable, net of allowance for doubtful accounts of $6,877 and
$8,171 at March 31, 2020 and December 31, 2019, respectively						86,177		88,452
Current portion of net investment in finance leases						75,730		71,274
Prepaid expenses and other current assets		6,783		1,525		9,638		10,228
Total current assets		557,108		668,487		280,288		216,418
Restricted cash		28,733		30,668		25,799		26,775
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
Rental equipment, net of accumulated depreciation of $640,118 and
$620,990 at March 31, 2020 and December 31, 2019, respectively						2,035,342		2,102,839
Net investment in finance leases						479,276		496,094
Financing receivable		31,948		-		29,739		30,693
Goodwill		15,794		15,794		15,794		15,794
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
Intangible assets, net of accumulated amortization of $5,624 and
$5,221 at March 31, 2020 and December 31, 2019, respectively						3,720		4,123
Other non-current assets		3,692		1,349		8,520		9,029
Total assets (1)	$	2,984,890	$	3,012,617	$	2,878,478	$	2,901,765

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	8,225	$	7,371	$	8,928	$	7,291
Accrued expenses and other current liabilities		21,509		25,069		26,180		30,479
Unearned revenue		6,448		7,573		6,478		6,405
Current portion of debt		313,064		311,381		216,519		218,094
Rental equipment payable		75,810		74,139		4,596		25,137
Total current liabilities		425,056		425,533		262,701		287,406
Debt		1,825,858		1,847,633		1,888,634		1,880,122
Deferred income tax liability		40,006		38,319		31,872		35,376
Other non-current liabilities		1,784		-		5,124		5,621
Total liabilities (2)		2,292,704		2,311,485		2,188,331		2,208,525

Stockholders' equity
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
outstanding 2,199,610 shares, at liquidation preference						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
outstanding 1,955,000 shares, at liquidation preference						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
17,506,453 and 17,479,127 shares at March 31, 2020 and December 31, 2019, respectively						2		2
Additional paid-in capital		100,301		132,666		103,290		102,709
Accumulated other comprehensive loss		(6,589)		(6,513)		(6,767)		(6,630)
Retained earnings		494,607		471,112		489,757		493,294
Total stockholders' equity		692,186		701,132		690,147		693,240
Total liabilities and stockholders' equity	$	2,984,890	$	3,012,617	$	2,878,478	$	2,901,765



	Three Months Ended March 31,
	2020		2019
Revenue
Container lease revenue	$	69,113	$	75,511
Rail lease revenue		5,803		7,881
Logistics revenue		30,106		27,716
Total revenue		105,022		111,108

Operating expenses
Depreciation of rental equipment		27,048		31,784
Impairment of rental equipment		19,167		-
Storage, handling and other expenses		5,748		5,120
Logistics transportation costs		26,815		24,519
Gain on sale of rental equipment		(1,614)		(8,832)
Administrative expenses		11,826		14,396
Total operating expenses		88,990		66,987

Operating income		16,032		44,121

Other expenses
Net interest expense		20,376		23,850
Other expense		246		38
Total other expenses		20,622		23,888

(Loss) income before income taxes		(4,590)		20,233
Income tax (benefit) expense		(3,260)		1,659

Net (loss) income		(1,330)		18,574
Preferred stock dividends		2,207		2,207
Net (loss) income attributable to CAI common stockholders	$	(3,537)	$	16,367

Net (loss) income per share attributable to CAI
common stockholders
Basic	$	(0.20)	$	0.88
Diluted	$	(0.20)	$	0.87

Weighted average shares outstanding
Basic		17,433		18,555
Diluted		17,433		18,870

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018
Revenue

Container lease revenue
$
75,774

$
68,333

$
151,285

$
132,967
Logistics revenue

29,802

28,253

57,518

49,889
Total revenue

105,576

96,586

208,803

182,856

Operating expenses

Depreciation of rental equipment

28,657

26,103

57,069

51,281
Storage, handling and other expenses

4,063

969

7,959

3,297
Logistics transportation costs

26,091

24,330

50,610

42,995
Gain on sale of rental equipment

(1,583)

(2,662)

(3,025)

(4,897)
Administrative expenses

12,338

11,325

25,408

21,550
Total operating expenses

69,566

60,065

138,021

114,226

Operating income

36,010

36,521

70,782

68,630

Other expenses

Net interest expense

20,021

14,594

39,926

27,948
Other expense

119

429

157

394
Total other expenses

20,140

15,023

40,083

28,342

Income before income taxes

15,870

21,498

30,699

40,288
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

9,335

20,297

27,909

37,435
Preferred stock dividends

2,207

1,148

4,414

1,169
Net income attributable to CAI common stockholders
$
7,128

$
19,149

$
23,495

$
36,266

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

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

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

17,648

19,613

18,098

20,013
Diluted

17,926

19,843

18,401

20,258



	Three Months Ended March 31,
	2020		2019

Net (loss) income	$	(1,330)	$	18,574
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		(137)		(81)
Comprehensive (loss) income before preferred stock dividends		(1,467)		18,493
Dividends on preferred stock		(2,207)		(2,207)
Comprehensive (loss) income available to CAI
common stockholders	$	(3,674)	$	16,286

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, 2019	4,155	$	103,865	17,479	$	2	$	102,709	$	(6,630)	$	493,294	$	693,240
Net loss	-		-	-		-		-		-		(1,330)		(1,330)
Preferred stock dividends, $0.53125/share	-		-	-		-		-		-		(2,207)		(2,207)
Foreign currency translation adjustment	-		-	-		-		-		(137)		-		(137)
Exercise of stock options	-		-	8		-		113		-		-		113
Stock-based compensation, net of taxes	-		-	19		-		468		-		-		468
Balances as of March 31, 2020	4,155	$	103,865	17,506	$	2	$	103,290	$	(6,767)	$	489,757	$	690,147

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


									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)
Exercise of stock options	-		-	27		-		107		-		-		107
Stock-based compensation, net of taxes	-		-	12		-		730		-		-		730
Balances as of March 31, 2019	4,155	$	103,865	18,208	$	2	$	119,557	$	(6,594)	$	487,479	$	704,309



	Six Months Ended June 30,				Three Months Ended March 31,
	2019		2018		2020		2019
Cash flows from operating activities
Net income	$	27,909	$	37,435
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:
Net (loss) income					$	(1,330)	$	18,574
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		57,179		51,350		27,314		31,839
Impairment of rental equipment						19,167		-
Amortization of debt issuance costs		2,011		1,808		988		1,202
Amortization of intangible assets		805		1,087		403		403
Stock-based compensation expense		1,401		1,206		874		839
Unrealized loss on foreign exchange		90		266		220		26
Gain on sale of rental equipment		(3,025)		(4,897)		(1,614)		(8,832)
Deferred income taxes		1,652		1,248		(3,504)		630
Bad debt expense		529		315
Bad debt (recovery) expense						(1,076)		738
Changes in other operating assets and liabilities:
Accounts receivable		(922)		(14,567)		4,409		1,158
Prepaid expenses and other assets		(654)		(2,121)		830		(1,132)
Net investment in sales-type and direct financing leases		31,336		-
Net investment in finance leases						17,113		16,442
Accounts payable, accrued expenses and other liabilities		(2,279)		(1,115)		(3,231)		(5,520)
Unearned revenue		(129)		14		(438)		(2,038)
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		117,893		78,412		60,125		54,329
Cash flows from investing activities
Purchase of rental equipment		(167,442)		(226,033)		(27,500)		(141,212)
Purchase of financing receivable		(36,379)		-
Proceeds from sale of rental equipment		33,479		25,124		24,576		180,331
Receipt of principal payments from financing receivable						325		-
Purchase of furniture, fixtures and equipment		(249)		(196)		(310)		(50)
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		(46,848)		(227,653)
Net cash (used in) provided by investing activities						(2,909)		39,069
Cash flows from financing activities
Proceeds from debt		387,082		675,289		110,000		306,582
Principal payments on debt		(324,263)		(564,953)		(103,742)		(382,847)
Debt issuance costs		(496)		(6,201)		-		(419)
Proceeds from issuance of common and preferred stock		-		56,699
Repurchase of common stock		(34,118)		(27,946)		-		(13,946)
Dividends paid to preferred stockholders		(4,414)		-		(2,207)		(2,207)
Exercise of stock options		335		24		113		107
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
Net cash provided by (used in) financing activities						4,164		(92,730)
Effect on cash of foreign currency translation		(77)		(20)		(77)		238
Net increase in cash and restricted cash		10,038		14,667		61,303		906
Cash and restricted cash at beginning of the period (1)		75,983		47,209		73,239		75,983
Cash and restricted cash at end of the period (2)	$	86,021	$	61,876	$	134,542	$	76,889

Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes					$	111	$	91
Interest						19,736		22,544

Supplemental disclosure of non-cash investing and financing activity
Transfer of rental equipment to finance lease					$	5,760	$	8,349
Rental equipment payable						4,596		56,221

1110

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CAI INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) ~~The Company~~Description of Business and ~~Nature of Operations~~Significant Accounting Policies

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 B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock are traded on the New York Stock Exchange under the symbols “CAI,” “CAI-PA” and “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, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Company’s results of operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ and the Company’s cash flows for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. 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 ~~2019~~2020 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, ~~2018,~~2019, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 5, ~~2019.~~

~~Discontinued Operations~~2020.

~~In the quarter ended June 30, 2019,~~Due to market conditions, the Company ~~committed~~decided during the three months ended March 31, 2020 to ~~a plan to sell its railcar assets and to reallocate~~terminate the ~~capital invested in~~sale process for its rail ~~business to other investments. The Company expects a sale to be completed before the end of 2019.~~business. As a result, the railcar assets have been reclassified as held for ~~sale in the accompanying unaudited consolidated balance sheets~~use as of March 31, 2020 and ~~the operations of~~ the rail business ~~have been~~ reclassified as ~~discontinued operations in the accompanying unaudited consolidated statements of income and cash flows.~~a continuing operation. All prior periods presented in ~~these~~the unaudited consolidated financial statements have been restated to reflect the ~~reclassification of the railcar business as discontinued operations and assets held for sale.~~reclassification. See Note 3 – ~~Discontinued Operations~~ Rental Equipmentfor ~~more information.~~further information over the reclassification of the railcar assets as held for use.

Concentration of Credit Risk

~~(2)~~ The Company’s equipment leases and trade receivables subject it to potential credit risk. The Company extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed an on ongoing basis. The Company’s largest customer accounted for 13% of the Company’s total billings during the three months ended March 31, 2020.

Accounting ~~Policies and Recent Accounting Pronouncements~~Policy Updates

~~Recent~~Recently Adopted Accounting Pronouncements

In ~~February~~June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. ~~2016-02,~~2016-13, ~~Leases~~Financial Instruments – Credit Losses (Topic ~~842)~~326) (ASU ~~2016-02),~~2016-13) and subsequently issued ~~amendments thereto,~~amendments. The guidance affects the Company’s net investment in finance leases, financing receivable and accounts receivable for sales of rental equipment and logistics operations. Topic 326 requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that replaced existing lease accounting guidance. The new standard requires lessors to classify leases as a 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 the lessee. If none of 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 an ROU asset and lease liability on the balance sheet for all leases with a term longer than twelve months.

affect collectability. The Company adopted ASU ~~2016-02, as amended,~~2016-13 effective January 1, ~~2019,~~2020, using the modified retrospective ~~approach~~method, which did not have a significant impact on the consolidated financial statements as credit losses are not expected to be significant based on historical loss trends, the financial condition of customers, and ~~the effective date as the date~~external market factors.

Allowance for credit losses – Net investment in finance leases and financing receivable

The allowance for credit losses on net investment in finance leases and financing receivable is estimated on a collective basis by internal customer rating (see Note 4 – Net investment in finance leases for descriptions of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 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 does not require the Company to reassess under the 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 twelve months or less, which resulted in the Company not recognizing an ROU asset or lease liabilityratings). Expected credit losses for these ~~leases,~~financial assets are estimated using a loss-rate methodology which considers historical credit loss information that is adjusted for current conditions and ~~(3) the practical expedient to not separate lease~~reasonable and ~~non-lease components for leases that qualify for the practical expedient.~~ supportable forecasts.

1211

Table of Contents

CAI INTERNATIONAL, INC.

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~~three months ended ~~June 30, 2019.~~March 31, 2020. 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, ~~2018,~~2019, filed with the SEC on March 5, ~~2019,~~2020, for a description of the Company’s significant accounting policies.

~~Accounting Policies~~

~~(a) Container and Rail Lease Revenue~~

The Company recognizes revenue from operating leases of its 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. Sales-type and finance lease income, and interest earned on financing receivables are recognized using the effective interest method, which generates a constant rate of interest over the term of the 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. 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 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~~

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 held for sale railcar assets as of the dates indicated are made up as follows (in thousands):~~

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

~~Table of Contents~~

~~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 rail debt will be repaid upon the sale of the railcar assets.

The following table summarizes the components of income (loss) from discontinued operations in the accompanying unaudited consolidated statements of income for the three and six months ended June 30, 2019 and 2018 (in thousands):

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)~~(2) 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:

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.

The Company currently enters into two types of container fund arrangements with investors which are reviewed under FASB ASC Topic 810, Consolidation. These arrangements include container funds that the Company manages for investors and container funds that have entered into financing arrangements with investors. 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 the arrangements include only terms and conditions that are customarily present in 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. No container portfolios were sold to the funds during the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019.

~~Table of Contents~~

~~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. 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, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, and the results of the VIEs’ operations and cash flows for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ in the Company’s consolidated financial statements.

The containers that were transferred to the Japanese investor funds had a net book value of ~~$123.9~~$103.4 million as of ~~June 30, 2019.~~March 31, 2020. The container equipment, together with ~~$35.1~~$21.0 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 ~~$115.4~~$82.2 million and term loans held by VIE of ~~$39.0~~$35.2 million. No gain or loss was recognized by the Company on the initial consolidation of the VIEs. No containers were sold to the Japanese investor during the three months ended March 31, 2020. Containers sold to the Japanese investor funds during ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 had a net book value of $65.0 million. ~~Containers sold to the Japanese investor during the three and six months ended June 30, 2018 had a net book value of $7.3 million and $15.2 million, respectively.~~

~~(5)~~

Table of Contents

CAI INTERNATIONAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(3) Rental Equipment

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


	June 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
Dry containers	$	1,914,120	$	1,840,304	$	1,881,637	$	1,902,471
Refrigerated containers		349,610		341,983		277,013		282,155
Other specialized equipment		223,139		192,066		221,935		224,924
Railcars						294,875		314,279
		2,486,869		2,374,353		2,675,460		2,723,829
Accumulated depreciation		(604,417)		(557,559)		(640,118)		(620,990)
Rental equipment, net of accumulated depreciation	$	1,882,452	$	1,816,794	$	2,035,342	$	2,102,839

During the three months ended March 31, 2020, an impairment charge of $19.2 million was recognized to reduce the book value of the railcar portfolio, on an individual basis, to the lower of its net book value had the assets not been classified as held for sale, or its estimated fair value at the date when the decision was made not to sell the assets of the railcar business. To assist in the Company’s assessment of fair value, a third-party appraisal was carried out on the railcar fleet using a combination of cost and market approaches. The cost approach utilizes the current replacement cost for a particular car type and calculates an estimated depreciation based on a railcar having a 40-year life and residual value being 10% of the estimated purchase price. The market approach estimates value based on recent market transactions involving similar railcars. The railcars were classified within Level 3 of the fair value hierarchy.

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

(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~~of unguaranteed residual value at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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~~March 31, 2020 and December 31, ~~2018.~~2019.

(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 lease term so as to produce a constant periodic rate of return. There were no unamortized initial direct costs as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

(3)One major customer represented 65% of the Company’s finance lease portfolio as of March 31, 2020 and December 31, 2019. No other customer represented more than 10% of the Company’s finance lease portfolio in each of those periods.

Contractual maturities of the Company's gross finance lease receivables subsequent to March 31, 2020 for the years ending March 31 are as follows (in thousands):

During 2019, the Company purchased containers and leased back the containers to the seller-lessees through finance leaseback arrangements. As control of the equipment was retained by the customers, the Company concluded that sale-leaseback accounting was not applicable and treated the arrangements as financing transactions. The Company recorded a financing receivable in the amount paid for the containers. Payments made by the seller-lessee are recorded as a reduction to the financing receivable and as interest income, calculated using the effective interest method.

The following table summarizes the components of the Company’s financing receivable (in thousands):

(1)Included in prepaid expenses and other current assets in the consolidated balance sheets.

In order to estimate the allowance for losses contained in ~~gross sales-type~~net investment in finance leases and ~~finance lease receivables,~~financing receivable, 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~~historical credit loss activity, current market and ~~general~~ economic ~~conditions.~~conditions, and reasonable and supportable forecasts.

The ~~categories of gross finance lease receivables based on~~Company uses the ~~Company's internal customer credit ratings can be described as follows:~~following definitions for risk ratings:

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):~~

~~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):~~

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.

~~The following table summarizes~~As of March 31, 2020 and December 31, 2019, based on the ~~components~~most recent analysis performed, the risk category of the Company’s net investment in finance leases and financing receivable, based on year of origination is as follows (in thousands):


		~~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~~


March 31, 2020	2020		2019		2018		2017		2016		Prior		Total
Net investment in finance leases
Tier 1	$	2,880	$	59,580	$	248,821	$	171,092	$	7,200	$	1,654	$	491,227
Tier 2		2,012		31,521		14,473		7,092		2,320		6,406		63,824
Tier 3		-		-		-		-		-		-		-
Total net investment in finance leases	$	4,892	$	91,101	$	263,294	$	178,184	$	9,520	$	8,060	$	555,051

Financing receivable
Tier 1	$	-	$	32,830	$	-	$	-	$	-	$	-	$	32,830
Tier 2		-		693		-		-		-		-		693
Tier 3		-		-		-		-		-		-		-
Total financing receivable	$	-	$	33,523	$	-	$	-	$	-	$	-	$	33,523

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.

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

The Company’s intangible assets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018 were~~2019 consist of customer relationships. The following table summarizes the estimated future amortization expense as ~~follows~~of March 31, 2020 (in thousands):

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount
June 30, 2019

Trademarks and tradenames

$
1,786

$
(1,786)

$
-
Customer relationships

9,344

(4,416)

4,928

$
11,130

$
(6,202)

$
4,928
December 31, 2018

Trademarks and tradenames

$
1,786

$
(1,786)

$
-
Customer relationships

9,344

(3,611)

5,733

$
11,130

$
(5,397)

$
5,733


2021	$	1,609
2022		1,231
2023		474
2024		406
Total intangible assets	$	3,720

Amortization expense related to intangible assets was $0.4 million ~~and $0.5 million~~ for both the three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018, respectively, and $0.8 million and $1.1 million for the six months ended June 30, 2019 and 2018, respectively,~~ and was included in administrative expenses in the consolidated statements of ~~income.~~

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

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.

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 following table summarizes the components of lease expense (in thousands):~~

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 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, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows (dollars in thousands):



	June 30, 2019					December 31, 2018						March 31, 2020					December 31, 2019
	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	$	13,000	$	391,500	3.9%	$	4,200	$	301,000	4.2%	June 2023	$	-	$	682,000	2.4%	$	-	$	624,000	3.3%	June 2023
Revolving credit facility - Rail ~~(1)~~		-		189,500	3.9%		-		272,500	4.2%	October 2023		-		137,500	2.4%		-		137,500	3.3%	October 2023
Revolving credit facility - Euro		-		19,338	2.0%		-		19,457	2.0%	September 2020		21,122		-	2.0%		21,537		-	2.0%	September 2020
Term loan		1,800		26,400	4.6%		1,800		27,300	4.5%	April 2023		1,800		25,050	3.9%		1,800		25,500	3.9%	April 2023
Term loan		107,250		-	4.0%		111,750		-	3.8%	October 2019		7,000		66,750	2.7%		7,000		68,500	3.5%	June 2021
Term loan		7,000		72,000	4.3%		7,000		75,500	4.0%	June 2021		14,967		-	3.4%		15,284		-	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													3,043		36,864	3.6%		3,016		37,635	3.6%	August 2021
Term loan		6,000		89,500	4.6%		6,000		92,500	4.6%	October 2023		6,000		85,000	4.6%		6,000		86,500	4.6%	October 2023
Senior secured notes		6,110		49,720	4.9%		6,110		52,775	4.9%	September 2022		6,110		43,610	4.9%		6,110		46,665	4.9%	September 2022
Asset-backed notes 2012-1		17,100		39,900	3.5%		17,100		48,450	3.5%	October 2027		17,100		27,075	3.5%		17,100		31,350	3.5%	October 2027
Asset-backed notes 2013-1		22,900		62,975	3.4%		22,900		74,425	3.4%	March 2028		22,900		45,800	3.4%		22,900		51,525	3.4%	March 2028
Asset-backed notes 2017-1		25,307		177,149	3.7%		25,307		189,802	3.7%	June 2042		25,307		158,169	3.7%		25,307		164,496	3.7%	June 2042
Asset-backed notes 2018-1		34,890		267,490	4.0%		34,890		284,935	4.0%	February 2043		34,890		241,323	4.0%		34,890		250,045	4.0%	February 2043
Asset-backed notes 2018-2		34,350		283,388	4.4%		34,350		300,563	4.4%	September 2043		34,350		257,625	4.4%		34,350		266,213	4.4%	September 2043
Collateralized financing obligations		32,939		82,424	1.5%		39,610		67,615	1.2%	December 2021		20,595		61,617	1.6%		21,681		69,615	1.5%	February 2026
Term loans held by VIE		5,131		33,887	4.2%		1,456		-	3.3%	June 2019		5,311		29,884	4.2%		5,250		31,234	4.2%	February 2026
		318,001		1,838,975			316,622		1,862,757				220,495		1,898,267			222,225		1,890,778
Debt issuance costs		(4,937)		(13,117)			(5,241)		(15,124)				(3,976)		(9,633)			(4,131)		(10,656)
Total Debt	$	313,064	$	1,825,858		$	311,381	$	1,847,633			$	216,519	$	1,888,634		$	218,094	$	1,880,122

The Company maintains its revolving credit facilities to finance the acquisition of rental equipment and for general working capital purposes. As of ~~June 30, 2019,~~March 31, 2020, the Company had ~~$1,065.0~~$536.8 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, 2019,~~March 31, 2020, the borrowing availability under the Company’s revolving credit facilities was ~~$102.7~~$41.0 million, assuming no additional contributions of assets.

On March 29, 2019, one of the Japanese investor funds that is consolidated by the Company as a VIE (see Note 4) entered into a 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 secured by assets of the Japanese investor fund, and is subject to certain borrowing conditions set out in the term loan agreement.

The agreements relating to all of the Company’s debt contain various financial and other covenants. As of ~~June 30, 2019,~~March 31, 2020, the Company was in compliance with all of its financial and other covenants.

For further information on the Company’s debt instruments, see Note 810 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on March 5, ~~2019.~~2020.

To provide additional liquidity and enhance its financial flexibility in response to recent global economic uncertainty and financial market volatility caused by the COVID-19 pandemic, the Company drew down $70 million from its revolving credit facility as a precautionary measure in March 2020.

On April 27, 2020, the Company repaid in full the outstanding debt associated with the asset-backed notes 2012-1 and 2013-1.

In June 2019, the Company’s stockholders approved the CAI International, Inc. 2019 Incentive Plan (2019 Plan), which ~~replaces~~replaced the CAI International, Inc. Amended and Restated 2007 Equity Incentive Plan (2007 Plan). No further awards will be made under the 2007 Plan. Under the 2019 Plan, a maximum of 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, 2019 and 2018:~~

The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2019 and 2018 was $1.2 million and less than $0.1 million, respectively. The aggregate intrinsic value of all options outstanding as of June 30, 2019 was $5.8 million based on the closing price of the Company’s common stock of $24.82 per share on June 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 $0.4 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, the remaining unamortized stock-based compensation cost relating to stock options granted to the Company’s employees and independent directors was approximately $0.8 million, which is to be recognized over the remaining weighted average vesting period of approximately 1.4 years.

~~The Company did not grant any stock options during the six months ended June 30, 2019 and 2018.~~

The following table summarizes the Company’s stock option activities for the three months ended March 31, 2020 and 2019:

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2020 and 2019 was $0.1 million and $0.5 million, respectively. The aggregate intrinsic value of all options outstanding as of March 31, 2020 was $1.0 million based on the closing price of the Company’s common stock of $14.14 per share on March 31, 2020, the last trading day of the quarter.

The Company recognized stock-based compensation expense relating to stock options of $0.2 million for both the three months ended March 31, 2020 and 2019. As of March 31, 2020, the remaining unamortized stock-based compensation cost relating to stock options granted to the Company’s employees and independent directors was approximately $0.4 million, which is to be recognized over the remaining weighted average vesting period of approximately 0.7 years.

The Company did not grant any stock options during the three months ended March 31, 2020 and 2019.

The Company grants restricted stock units to certain employees and restricted stock awards to independent directors from time to time ~~to certain employees and 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 the vesting period based on the closing price of the Company’s common stock on the date of grant.

The Company grants performance stock units to 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 when it is considered probable that performance targets 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:

Weighted

Average

Number of

Grant Date

Shares

Fair Value
Outstanding at December 31, 2018

204,730

$
20.45
Granted

166,939

$
25.37
Vested

(80,509)

$
20.86
Forfeited

(6,804)

$
21.52
Outstanding at June 30, 2019

284,356

$
23.20



		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Outstanding at December 31, 2019	281,736	$	23.18
Granted	94,497	$	28.63
Vested	(44,046)	$	22.59
Outstanding at March 31, 2020	332,187	$	24.81

The Company recognized stock-based compensation expense relating to restricted stock and performance stock ~~awards~~ of ~~$0.5~~$0.7 million and ~~$0.4~~$0.6 million for the three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018, respectively, and $1.2 million and $0.6 million for the six months ended June 30, 2019 and 2018,~~ respectively. As of ~~June 30, 2019,~~March 31, 2020, unamortized stock-based compensation expense relating to restricted stock and performance stock was ~~$5.6~~$5.8 million, which will be recognized over the remaining average vesting period of ~~2.4~~2.1 years.

Stock-based compensation expense is recorded as a component of administrative expenses in the Company’s consolidated statements of ~~income~~operations 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 first offering period under the ESPP ~~has not yet been implemented and no~~commenced in December 2019. No shares were issued under the ESPP during the three months ended ~~June 30, 2019.~~March 31, 2020. The Company recognized stock-based compensation expense relating to the ESPP of less than $0.1 million for the three months ended March 31, 2020.

The consolidated income tax expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ was determined based upon estimates of the Company’s consolidated annual effective income tax rate for the years ending December 31, ~~2019~~2020 and ~~2018,~~2019, 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 before discrete items was ~~5.6%~~9.1% at ~~June 30, 2019,~~March 31, 2020, compared to ~~4.4%~~an effective tax rate of 8.2% at ~~June 30, 2018.~~ March 31, 2019. Discrete items during the three months ended March 31, 2020 primarily related to the impairment of railcar assets (Note 3) charge of $19.2 million, which resulted in a tax benefit of $4.5 million.

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, 2019,~~March 31, 2020, 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, 2019.~~March 31, 2020. The Company does not believe the total amount of unrecognized tax benefits as of ~~June 30, 2019~~March 31, 2020 will change for the remainder of ~~2019.~~2020.

Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following fair value hierarchy when selecting inputs for its valuation techniques, with highest priority given to Level 1:

The carrying amounts of cash, restricted cash, accounts receivable and accounts payable reflected in the balance sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, approximate their fair value due to the short-term nature of these financial assets and liabilities. The carrying value of ~~variable rate~~variable-rate debt in the balance sheets as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 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 and collateralized financing obligations was ~~$153.5 million, $965.4~~$864.5 million and ~~$115.4~~$82.2 million as of ~~June 30, 2019,~~March 31, 2020, with a fair value of approximately ~~$154.8 million, $972.5~~ $836.8million and ~~$117.3~~ $83.3million, 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 fixed-rate term loans, asset-backed notes and collateralized financing obligations was ~~$1,032.7~~$148.4 million, $898.2 million and ~~$107.2~~$91.3 million as of December 31, ~~2018,~~2019, with a fair value of approximately ~~$1,024.7~~$151.0 million, $911.0 million and ~~$108.9~~$93.0 million, respectively. Management believes that the balances of the Company’s senior secured notes of ~~$55.8~~$49.7 million and ~~$58.9~~$52.8 million, ~~and~~ term loans held by VIE of ~~$39.0~~$35.2 million and ~~$1.5~~$36.5 million, and financing receivable of $33.5 million and $34.4 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, and the fixed-rate term loans of ~~$158.6~~$145.9 million as of ~~December~~March 31, ~~2018, and financing receivable of $35.4 million as of June 30, 2019,~~2020, 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 96 above, the Company had commitments to purchase approximately ~~$50.8~~$3.8 million of containers ~~and $6.1 million of railcars~~ as of ~~June 30, 2019,~~March 31, 2020, all in the twelve months ending ~~June 30, 2020.~~March 31, 2021.

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 depending on prevailing market conditions, corporate needs, and 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~~The Company ~~repurchased 1.5 million~~did not repurchase any shares ~~of its common stock~~ under this repurchase plan ~~at a cost of approximately $34.1 million.~~during the three months ended March 31, 2020. As of ~~June 30, 2019,~~March 31, 2020, 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. The Company did not issue any shares under this ATM offering program during the six months ended June 30, 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. 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. The Company did not issue any shares under this ATM offering program during the six months ended June 30, 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 1416 to the consolidated financial statements in the Company’ Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on March 5, ~~2019.~~2020.

~~In May 2018,~~The Company is responsible for settling income tax liabilities of certain employees related to stock-based compensation. The Company is then reimbursed for those amounts by the employees. At March 31, 2020 and December 31, 2019, the Company ~~purchased, and subsequently cancelled, 1,225,214 shares~~had a liability of ~~its common stock, from~~$1.2 million representing tax due to the UK tax authorities in respect of an ~~affiliate of Andrew S. Ogawa in a privately-negotiated transactions. Mr. Ogawa is a member~~officer of the ~~Company’s Board~~Company. The Company also included in its balance sheets at March 31, 2020 and December 31, 2019 a current asset of ~~Directors. The stock was purchase at a price of $22.81 per share, which represented a 2% discount~~$1.2 million, representing the amount that will be reimbursed to the ~~closing price on the date of purchase.~~Company by that officer.

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 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 and~~revenues.

With the exception of administrative expenses, operating expenses are directly attributable to each segment. Administrative expenses that are not directly attributable to a segment are allocated to 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,~~March 31, 2020 and 2019, ~~and 2018,~~ reconciled to the Company’s income before income taxes as shown in its consolidated statements of ~~income~~operations 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~~March 31, 2020 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.~~2019.

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

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

The following table sets forth the reconciliation of basic and diluted net income per share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands, except per share data):

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018
Numerator

Net income from continuing operations

$
12,328

$
19,503

$
24,566

$
37,361
Net income (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
Denominator

Weighted-average shares used in per share computation - basic

17,648

19,613

18,098

20,013
Effect of dilutive securities:

Stock options and restricted stock

278

230

303

245
Weighted-average shares used in per share computation - diluted

17,926

19,843

18,401

20,258

Net income (loss) per share attributable to CAI common

stockholders:

Basic

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

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




	Three Months Ended March 31,
	2020		2019
Numerator
Net (loss) income attributable to CAI common stockholders	$	(3,537)	$	16,367
Denominator
Weighted-average shares used in per share computation - basic		17,433		18,555
Effect of dilutive securities:
Stock options and restricted stock		-		315
Weighted-average shares used in per share computation - diluted		17,433		18,870

Net (loss) income per share attributable to CAI
common stockholders:
Basic	$	(0.20)	$	0.88
Diluted	$	(0.20)	$	0.87

~~The calculation~~Certain options, restricted stock and restricted stock units issued under employee benefits plans are excluded from the computation of diluted earnings per share ~~for the three months ended June 30,~~because they were anti-dilutive. At March 31, 2020, all outstanding options, restricted stock and restricted stock units were excluded. At March 31, 2019, ~~and 2018, excluded from the denominator 146,116and 161,870~~128,969 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, 2019~~restricted stock and ~~2018, excluded from the denominator 126,184and 161,163 shares, respectively, of common~~restricted stock ~~options because their effect would have been anti-dilutive~~ units were excluded.

2521

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the SEC on March 5, ~~2019.~~2020. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those contained in or implied by any forward-looking statements. The financial information included in this discussion and in our consolidated financial statements may not be indicative of our consolidated financial position, operating results, changes in equity and cash flows in the future. See “Special Note Regarding Forward-Looking Statements” included earlier in this Quarterly Report on Form 10-Q.

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

Overview

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

The following tables show the composition of our fleet as of ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ and our average utilization for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:



	As of June 30,				As of March 31,
	2019		2018		2020		2019
Owned container fleet in TEUs		1,553,231		1,293,361		1,590,880		1,522,907
Managed container fleet in TEUs		69,805		77,680		66,721		72,363
Total container fleet in TEUs		1,623,036		1,371,041		1,657,601		1,595,270

Owned container fleet in CEUs		1,584,456		1,344,842		1,622,354		1,551,465
Managed container fleet in CEUs		63,492		70,772		82,705		65,872
Total container fleet in CEUs		1,647,948		1,415,614		1,705,059		1,617,337

Owned railcar fleet in units		5,631		7,430		5,459		5,609

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 ~~96.0% and 96.6%~~95.8% for both the total ~~container fleet~~ and ~~the~~ owned container fleet, and ~~84.5% and 85.7%~~82.1% for the railcar fleet, for the three ~~and six~~ months ended ~~June 30, 2019, respectively~~March 31, 2020.

On March 11, 2020, the World Health Organization (WHO) declared the outbreak of a novel coronavirus (COVID-19) as a global pandemic, which continues to spread throughout the United States and around the world. There are many uncertainties regarding the COVID-19 pandemic, including the anticipated duration of the pandemic, and the extent of local and worldwide social, political, and economic disruption it may cause.

In late January 2020, China implemented extensive work restrictions to control the ~~quarter ended June 30, 2019, we committed~~outbreak, which led to a ~~plan~~steep drop in exports from China. Work restrictions in China started to ease in March 2020, and export volumes from China have continued to increase since that time. However, the spread of COVID-19 to other parts of the world and the strong actions taken by many countries to reduce exposures have led to a sharp decrease in global economic activity during the beginning of the second quarter of 2020, which we expect to continue during 2020. While the COVID-19 pandemic and the related global economic effects have not materially impacted our business, operations, or financial results to date, we do expect that the global economic impact will result in a decline in overall incremental demand for our services over the remainder of the year and elevates the risk of delayed payment or default by our customers. Moreover, it may have far-reaching impacts on many aspects of our operations, both directly through our ability to obtain cost effective financing and maintain equipment utilization, and indirectly through its impact on customers, equipment manufacturers, shippers, carriers, our employees, and the market generally, and the scope, severity and nature of these impacts continue to evolve.

Distress in the global economy, including trade volumes and a slowdown in global demand, could generally lead to lower per diem lease rates for our container and rail equipment, the overall value of our equipment, or our ability to continue to sell used containers. In addition, adverse effects on the economy as a whole could potentially reduce demand for our ~~railcar assets as we believe it is~~leased equipment and logistics services, and a prolonged slowdown in trade volumes due to the pandemic could also significantly increase the financial challenges facing our customers, which may lead to delays in payments of leases, defaults on obligations owed to us, and overall credit risk of our customers.

Worldwide financial markets have recently experienced periods of extraordinary disruption and volatility, which has been exacerbated by the COVID-19 pandemic. Any sustained disruption in the ~~best interest~~capital markets from the COVID-19 pandemic could negatively impact our ability to raise capital to fund additional container purchases or service our outstanding debt. We have implemented remote work arrangements and have restricted business travel effective mid-March 2020, and to date, these arrangements have not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting, and disclosure controls and procedures.

The extent to which the COVID-19 outbreak impacts our ~~shareholders~~business and operations will depend on future developments that are highly uncertain and cannot be predicted. For additional information regarding the risk and uncertainties that we could encounter as a result of the COVID-19 pandemic and related global conditions, see “The continued spread of the COVID-19 pandemic may have a material adverse impact on our business, financial condition and results of operations” in Item 1A. “Risk Factors” in this Quarterly Reports on Form 10-Q.

Due to ~~reallocate~~market conditions, we decided during the ~~capital invested in~~three months ended March 31, 2020 to terminate the sale process for our rail ~~business to other investments. We expect a sale to be completed before the end of 2019.~~business. As a result, the railcar assets have been ~~classified~~reclassified as held for ~~sale~~use as of March 31, 2020 and ~~the operations of~~ the rail business ~~have been classified~~reclassified 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.a continuing operation. See Note 3 – ~~Discontinued Operations~~ Rental Equipmentto the consolidated financial statements in this Quarterly Report on Form 10-Q for ~~more information.~~ further information over the reclassification of the railcar assets as held for use.

Results of Operations - Three Months Ended ~~June 30, 2019~~March 31, 2020 Compared to Three Months Ended ~~June 30, 2018~~March 31, 2019

The following table summarizes our results of operations for the three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ (dollars in thousands):

The ~~increase~~decrease in total revenue for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, was attributable to a ~~$7.4~~$6.4 million, or ~~11%~~8%, ~~increase~~decrease in container lease revenue and a ~~$1.5~~$2.1 million, or 5%26%, decrease in rail lease revenue, partially offset by a $2.4 million, or 9%, increase in logistics revenue. The increase in operating expenses for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, was ~~as a~~primarily the result of a ~~$3.1~~$19.2 million impairment charge recorded in the current year related to our rail assets, a $7.2 million, or ~~319%~~82% decrease in gain on sale of rental equipment, a $2.3 million, or 9%, increase in logistics transportation costs, and a $0.6 million, or 12% increase in storage, handling and other expenses, partially offset by a $4.7 million, or 15%, decrease in depreciation expense and a $2.6 million, or ~~10%, increase in depreciation expense, a $1.8 million, or 7%, increase in logistics transportation costs, a $1.0 million, or 9%, increase~~18% decrease in administrative ~~expenses, and a $1.1 million, or 41%, decrease in gain on sale of used rental equipment.~~expenses. Total other expenses for the three months ended ~~June 30, 2019 increased~~March 31, 2020 decreased compared with the three months ended ~~June 30, 2018,~~March 31, 2019, primarily due to a ~~$5.4~~$3.5 million, or ~~37%~~15%, ~~increase~~decrease in net interest expense. Total dividends of $2.2 million on our preferred stock were recorded in both the three months ended ~~June 30, 2019, compared to total dividends of $1.1 million for the three months ended June 30, 2018.~~March 31, 2020 and 2019. The ~~increase~~decrease in revenue ~~offset by the~~and increase in operating expenses, partially offset by the decrease in total other expenses ~~and preferred stock dividends~~ resulted in a decrease in net income attributable to CAI common stockholders for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018,~~March 31, 2019, of ~~$12.0~~$19.9 million.

The ~~increase~~decrease in container lease revenue for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018~~March 31, 2019 was mainly attributable to ~~an $11.1~~a $6.2 million decrease in rental revenue resulting from a 10% reduction in average owned container per diem rental rates and a $3.3 million decrease in rental revenue arising from a change to cash-based revenue recognition for a certain customer due to collectability issues, partially offset by a $3.5 million increase in rental revenue ~~primarily due to~~resulting from a ~~19%~~6% increase in the average number of CEUs of on-lease owned ~~containers, partially offset by~~containers.

The decrease in rail lease revenue for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was mainly attributable to a ~~$3.2 million~~23% decrease ~~resulting from~~in the average size of the railcar fleet as a ~~5% reduction~~result of the sale of 1,946 cars in ~~average owned container per diem rental rates.~~February 2019.

The increase in logistics revenue for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018~~March 31, 2019 was primarily due to an increase in volume, partially offset by a decrease in rates in our ~~international freight forwarding business.~~intermodal and truck brokerage operations. The gross margin percentage fell from ~~13.9%~~11.5% for the three months ended ~~June 30, 2018~~March 31, 2019 to ~~12.4%~~10.9% for the three months ended ~~June 30, 2019~~March 31, 2020, due primarily to lower margins being achieved in our intermodal and truck brokerage operations.

Depreciation expense for the three months ended March 31, 2020 decreased compared to the three months ended March 31, 2019. While there was a 6% increase in the average size of our owned container fleet during the last twelve months, 18% of containers purchased during the same period were used, which depreciate at a lower rate or are already fully depreciated.

There was no depreciation expense during the three months ended March 31, 2020 due to held for sale accounting for the railcar assets, which were classified as held for use during the three months ended March 31, 2019. See impairment of rental equipment below for further information.

An impairment charge of $19.2 million was recognized during the three months ended March 31, 2020 to reduce the book value of the railcar portfolio, on an individual basis, to the lower of its net book value had the assets not been classified as held for sale, or its estimated fair value at the date when the decision was made not to sell the assets of the railcar business. For additional information on the impairment, see Note 3 to our consolidated financial statements in this Quarterly Report on Form 10-Q.

The increase in depreciation expense for the three months ended June 30, 2019 compared to the three months ended June 30, 2018 was primarily attributable to a 13% increase in the average size of our owned container fleet during the twelve months ended June 30, 2019.

The increase in storage, handling and other expenses for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018~~March 31, 2019 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), $0.9~~$0.7 million increase in storage, handling and repair expenses due to an increase in the average size of the off-lease fleet, ~~and~~partially offset by a ~~$0.2~~$0.1 million ~~increase~~decrease in container liability insurance.

While we sold approximately 34% more CEUs of used containers during the three months ended June 30, 2019 compared to the three months ended June 30, 2018, there was a decrease of 56% in the average gain per unit, resulting in a decrease in gain on sale.

~~Administrative~~Storage, handling and other expenses for the three months ended ~~June 30, 2019~~March 31, 2020 remained relatively consistent with the three months ended ~~June 30, 2018.~~March 31, 2019.

Gain on sale of rental equipment for the three months ended March 31, 2020 remained relatively consistent with the three months ended March 31, 2019.

The ~~increase~~decrease in gain on sale of rental equipment for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was mainly attributable to the sale of 1,946 railcars in February 2019 for a total gain of $7.0 million.

The decrease in administrative expenses for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018~~March 31, 2019 was primarily attributable to a ~~$0.5~~$0.6 million ~~increase~~decrease in incentive-based compensation.

The decrease in administrative expenses for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to a $0.3 million decrease in payroll-related costs, largely due to decreased incentive-based and stock-based compensation expenses and a decrease in allocated overhead costs resulting from the decrease in size of the railcar fleet between the two periods.

The decrease in administrative expenses for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to a $1.0 million decrease in payroll-related costs between the two periods due to ~~additional headcount and $0.5 million~~a reduction in headcount.

The ~~increase~~decrease in net interest expense for the three months ended ~~June 30, 2019~~March 31, 2020 compared to the three months ended ~~June 30, 2018~~March 31, 2019 was due primarily to ~~an increase~~a slight decrease in our average loan principal balance between the two periods, as we ~~continue to increase borrowings to finance the~~decreased acquisition ~~of additional~~activity for rental equipment, as well as ~~an increase~~a decrease in the average interest rate on our outstanding debt ~~caused by an increase in LIBOR,~~ from approximately ~~3.6% as of June 30, 2018 to~~ 3.9% as of ~~June 30, 2019.~~

Other expense, representing a loss on foreign exchange of $0.2 million for the three months ended March 31, 2020, increased from a loss of less than $0.1 million for the three months ended ~~June 30,~~March 31, 2019, ~~decreased from a loss of $0.4 million for the three months ended June 30, 2018,~~ primarily as a result of movements in the U.S. Dollar exchange rate against the Euro.

The ~~increase~~decrease in income tax expense for the three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~the~~ three months ended ~~June 30, 2018~~March 31, 2019 was mainly attributable to ~~an increase~~a decrease in the estimated effective tax rate. The full-year estimated effective tax rate before discrete items was 9.1% at ~~June 30, 2019 was 5.6%~~March 31, 2020, compared to ~~4.4%~~an effective tax rate of 8.2% at ~~June 30, 2018.~~March 31, 2019. Discrete items during the three months ended March 31, 2020 primarily related to the impairment of railcar assets charge of $19.2 million, which resulted in a tax benefit of $4.5 million. The increase in the estimated full-year effective tax rate before discrete items was primarily ~~caused by~~due to 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~~Preferred stock dividends of $2.2 million was recorded in the three 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 $1.1 million recorded in the three 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 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 comparedMarch 31, 2020 remained consistent 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 increase in total revenue for the six months ended June 30, 2019 compared to the six months ended June 30, 2018, was attributable to an $18.3 million, or 14%, increase in container lease revenue and a $7.6 million, or 15.3%, increase in logistics revenue. The increase 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 a $7.6 million, or 18%, increase in logistics transportation costs, a $5.8 million, or 11%, increase in depreciation expense, a $4.7 million, or 141%, increase in storage, handling and other expenses, a $3.9 million, or 18%, increase in administrative expenses, and a $1.9 million, or 38%, decrease in gain on sale of used rental equipment. Total other expenses for the six months ended June 30, 2019 increased compared with the six months ended June 30, 2018, primarily due to a $12.0 million, or 43%, increase in net interest expense. 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 for the six months ended June 30, 2018. The increase in revenue, offset by the increase in operating expenses, total other expenses, and preferred stock dividend resulted in a decrease in net income attributable to CAI common stockholders for the six months ended June 30, 2019 compared to the six months ended June 30, 2018.

The increase in container lease revenue for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was mainly attributable to a $24.1 million increase in rental revenue, primarily due to a 21% increase in the average number of CEUs of on-lease owned containers, partially offset by a $4.6 million decrease resulting from a 4% reduction in average owned container per diem rental rates.

The increase in logistics revenue for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was due to an increase in volume and freight rates in our intermodal and truck brokerage operations. Transportation costs increased at a slightly higher rate than revenue due primarily to increased volume in our lower margin intermodal business and resulted in a decrease in the gross margin percentage from 13.8% for the six months ended June 30, 2018 to 12.0% for the six months ended June 30,March 31, 2019.

The increase in depreciation expense for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was primarily attributable to a 15% increase in the average size of our owned container fleet during the twelve months ended June 30, 2019.

The increase in storage, handling and other expenses for the six months ended June 30, 2019 compared to the six months ended June 30, 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, a $1.7 million increase in storage, handling and repair expenses due to an increase in the average size of the off-lease fleet and a $0.5 million increase in container liability insurance.

While we sold approximately 36% more CEUs of used containers during the six months ended June 30, 2019 compared to the six months ended June 30, 2018, there was a decrease of 55% in the average gain per unit, resulting in a decrease in gain on sale.

The increase in administrative expenses for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was primarily attributable to a $0.7 million increase in payroll-related costs, largely due to increased incentive compensation and increased stock-based compensation expense, a $0.3 million increase in legal and professional fees, and a $0.3 million increase in marketing expenses due to an increased effort to promote our brand and services.

The increase in administrative expenses for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was primarily attributable to a $1.9 million increase in payroll-related costs between the two periods due to additional 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, 2019 compared to the six months ended June 30, 2018 was due primarily to an increase in 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 3.6% as of June 30, 2018 to 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, primarily as a result of movements in the U.S. Dollar exchange rate against the Euro.

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 to 5.6% at June 30, 2019. The increase in estimated effective tax rate 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):~~

The decrease in rail lease revenue for 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 an $8.6 million increase in gain on sale of rental equipment, a $1.7 million, or 25%, decrease in depreciation expense, and a $1.1 million, or 31%, decrease in 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 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 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, 2019,~~March 31, 2020, we had cash and cash equivalents of ~~$57.3~~$134.5 million, including ~~$35.1~~$21.0 million of cash held by variable interest entities (VIEs). and $25.8 million of restricted cash. 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, 2019,~~March 31, 2020, our outstanding indebtedness and current maximum borrowing level was as follows (in thousands):

As of ~~June 30, 2019,~~March 31, 2020, we had ~~$1,065.0~~$536.8 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, 2019,~~March 31, 2020, the borrowing availability under our revolving credit facilities was ~~$102.7~~$41.0 million, assuming no additional contributions of assets.

To provide additional liquidity and enhance our financial flexibility in response to recent global economic uncertainty and financial market volatility caused by the COVID-19 pandemic, we drew down $70 million from our revolving credit facility as a precautionary measure in March 2020.

On April 27, we repaid in full two asset-backed credit facilities which provided additional liquidity of approximately $40 million, increasing our total available liquidity to approximately $155 million.

For further information on our debt instruments, see Note 109 to the consolidated financial statements in this Quarterly Report on Form 10-Q and Note 810 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on March 5, ~~2019.~~2020.

We continue to monitor the COVID-19 outbreak and its impact on our overall liquidity position and outlook. The ultimate impact that COVID-19 may have on our operational and financial performance over the next 12 months is currently uncertain and will depend on certain developments, including, among others, the impact of COVID-19 on our customers and the magnitude and duration of the pandemic. Assuming that our 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, 2019,~~March 31, 2020, we were in compliance with all of our financial and other ~~covenants.~~covenants and we expect to remain in compliance for at least the next twelve months.

The following table sets forth certain cash flow information for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and 2018~~ (in thousands):

Net cash provided by operating activities ~~of continuing operations~~ was ~~$117.0~~$60.1 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, an increase of ~~$43.8~~$5.8 million compared to ~~$73.1~~$54.3 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The increase was due to a ~~$45.1~~$9.8 million increase in our net working capital adjustments, partially offset by a ~~$1.3~~$4.0 million decrease in net income ~~from continuing operations~~ as adjusted for depreciation, amortization and other non-cash items. The decrease of ~~$1.3~~$4.0 million in net income as adjusted for non-cash items was primarily due to a ~~$9.5~~$19.2 million impairment charge recognized in the current period to reclassify railcar assets as held for use and a $7.2 million decrease in ~~income from continuing operations, partially offset by an increase of $5.8 million in depreciation expense and a decrease of $1.9 million in the~~ gain on sale of rental ~~equipment.~~ equipment due to a large sale of railcars in the prior year, partially offset by a $19.9 million decrease in net income, a decrease of $4.5 million in depreciation expense, a $4.1 million decrease in deferred income taxes, and a decrease of $1.8 million in bad debt expense due to receipt of payments from a previously reserved for customer.

Net working capital provided by operating activities of ~~$27.4~~$18.7 million in the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, was due to a ~~$31.3~~$17.1 million decrease in net investment in ~~sales-type and direct financing~~finance leases, primarily due to receipt of principal payments, ~~partially offset by~~ a ~~$0.9~~$4.4 million ~~increase~~decrease in accounts receivable, primarily caused by the timing of cash receipts from customers, and a ~~$0.7~~$0.8 million ~~increase~~decrease in prepaid expenses and other assets, ~~and~~partially offset by a ~~$2.3~~$3.2 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments. Net working capital ~~used in~~provided by operating activities of ~~$17.8~~$8.9 million in the ~~six~~three months ended ~~June 30,~~March 31, 2019 was due to a ~~$14.6~~$16.4 million ~~increase~~decrease in net investment in finance leases, primarily due to receipt of principal payments, and a $1.2 million decrease in accounts receivable, primarily caused by ~~an increase in lease and logistics activity,~~the timing of cash receipts from customers, partially offset by a ~~$2.1 million increase in prepaid expenses and other assets, and a $1.1~~$5.5 million decrease in accounts payable, accrued expenses and other liabilities, primarily caused by the timing of payments, a $2.0 million decrease in unearned revenue, and a $1.1 million increase in prepaid expenses and other current assets, primarily as a result of timing of payments.

Net cash used in investing activities ~~of continuing operations~~ was ~~$169.6~~$2.9 million for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, a decrease of ~~$12.4~~$42.0 million compared to net cash ~~used in~~provided by investing activities of ~~$182.1~~$39.1 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. The ~~increase~~decrease in cash was primarily attributable to a ~~$58.6~~$155.8 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~~$113.7 million decrease in ~~receipt~~purchase of ~~principal payments from sales-type and direct financing leases.~~rental equipment.

Net cash provided by financing activities ~~from continuing operations~~ was ~~$24.1~~$4.2 million for the ~~six~~three months ended ~~June 30, 2019, a decrease~~March 31, 2020, an increase of ~~$108.8~~$96.9 million compared to net cash ~~provided by~~used in financing activities of ~~$132.9~~$92.7 million for the ~~six~~three months ended ~~June 30, 2018.~~March 31, 2019. During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, our net cash inflow from borrowings was ~~$62.8~~$6.3 million compared to net cash ~~inflow~~outflow of ~~$110.3~~$76.3 million for the ~~six~~three months ended ~~June 30, 2018, which reflected a decrease in net borrowings used for the acquisition of rental equipment during the six months ended June 30, 2019 compared to the six months ended June 30, 2018.~~March 31, 2019. The ~~decrease~~increase was also a result of a ~~$56.7~~$13.9 million decrease ~~in proceeds received from the issuance of common stock and 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, 2019.~~

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.stock.

In October 2018, we announced that our Board of Directors approved the repurchase of up to three million shares of our outstanding common stock. The number, price, structure and timing of the repurchases, if any, will be at our sole discretion and will be evaluated by us depending on prevailing market conditions, corporate needs, and 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, we repurchased 1.5 million~~We did not repurchase any shares ~~of our common stock~~ under this repurchase plan ~~at a cost of approximately $34.1 million.~~during the three months ended March 31, 2020. As of ~~June 30, 2019,~~March 31, 2020, approximately 1.0 million shares remained available for repurchase under our share repurchase program.

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. We did not issue any shares under this ATM program during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. We have remaining capacity to issue up to approximately 1.0 million of additional shares of common stock under this ATM offering program.

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. We did not issue any shares under this ATM program during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. 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, 2019~~March 31, 2020 (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)~~	$	613,338	$	13,000	$	19,338	$	-	$	391,500	$	189,500	$	-	$	840,622	$	21,122	$	-	$	-	$	819,500	$	-	$	-
Term loans ~~(1)~~		367,978		126,274		97,518		43,886		28,800		71,500		-		246,474		32,810		111,414		7,800		94,450		-		-
Senior secured notes		55,830		6,110		6,110		6,110		37,500		-		-		49,720		6,110		6,110		37,500		-		-		-
Asset-backed notes		965,449		134,547		134,547		134,547		117,422		94,547		349,839		864,538		134,547		134,547		127,422		94,547		94,547		278,928
Collateralized financing obligations		115,363		32,939		27,974		36,966		-		-		17,484		82,211		20,595		37,842		6,290		-		-		17,484
Term loans held by VIE		39,018		5,131		5,367		5,599		5,841		6,096		10,984		35,195		5,311		5,540		5,780		6,034		6,287		6,243
Interest on debt and capital lease obligations ~~(2)~~(1)		303,807		76,212		67,373		56,960		49,200		20,425		33,637		231,008		64,500		55,786		47,394		25,826		13,924		23,578
Rental equipment payable		75,810		75,810		-		-		-		-		-		5,124		5,124		-		-		-		-		-
Rent, office facilities and equipment		3,340		1,433		692		565		429		221		-		7,229		2,860		2,672		1,192		395		110		-
Equipment purchase commitments - Containers		50,774		50,774		-		-		-		-		-		3,766		3,766		-		-		-		-		-
Equipment purchase commitments - Rail		6,117		6,117		-		-		-		-		-
Total contractual obligations	$	2,596,824	$	528,347	$	358,919	$	284,633	$	630,692	$	382,289	$	411,944	$	2,365,887	$	296,745	$	353,911	$	233,378	$	1,040,752	$	114,868	$	326,233

As of ~~June 30, 2019,~~March 31, 2020, 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.

There have been no changes to our critical accounting policies during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. See Critical Accounting Policies and Estimates in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on March 5, ~~2019.~~2020.

~~In June 2016, the Financial Accounting Standards Board issued Accounts Standards Update (ASU) No. 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 326)~~ (ASU 2016-13). This guidance affects net investment in sales-type and direct finance leases and the amendments in this update replace the incurred loss impairment methodology in current U.S. GAAP 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 reasonable and supportable information that affects collectability. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years and with early adoption permitted 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 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 of Topic 326 on its consolidated financial statements and related disclosures.

The most recent adopted accounting pronouncements are described in Note 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.

COVID-19 outbreak. The effects of the infectious disease, COVID-19, are rapidly evolving globally and are uncertain. Our business could be adversely affected by this outbreak. Any prolonged restrictive measures in order to control the spread of COVID-19 or other adverse public health developments around the globe may have a material and adverse effect on the demand for our rental equipment, credit risk of our customers, logistics services, operations and financial condition.

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~~three months ended ~~June 30, 2019,~~March 31, 2020, 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 decreased our revenues and expenses denominated in foreign currencies. The associated decrease in the value of certain foreign currencies as compared to the U.S. Dollar has also caused assets held at some of our foreign subsidiaries to decrease in value when translated to US dollars. For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we recognized a loss on foreign exchange of $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, 2019,~~March 31, 2020, the principal amount of debt outstanding under the variable-rate arrangements of our revolving credit facilities was ~~$613.3~~$840.6 million. In addition, at ~~June 30, 2019,~~March 31, 2020, we had balances on our variable-rate term loans of ~~$214.4~~$100.6 million. As of ~~June 30, 2019,~~March 31, 2020, our total outstanding variable-rate debt was ~~$827.8~~$941.2 million, which represented ~~38%~~44% of our total debt at that date. The average interest rate on our variable-rate debt was ~~4.0%~~2.4% as of ~~June 30, 2019,~~March 31, 2020, 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 ~~$8.3~~$9.4 million annually assuming debt remains constant at ~~June 30, 2019~~March 31, 2020 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, 2019~~March 31, 2020 our disclosure controls and procedures were not effective ~~with respect~~due to ~~controls~~a material weakness in internal control over financial reporting described in management’s annual report on internal control over financial reporting in our Annual Report on Form 10-K for the year ended December 31, 2019.

Remediation 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~~We have taken actions to improve our internal control over financial reporting, including implementing plans as identified in Item 9A of our 2019 Form 10-K, to address our material weakness. The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that remediation of this material weakness will be completed in 2020.

Except as noted above, 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, 2019,~~March 31, 2020, 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, ~~2018~~2019 filed with the SEC on March 5, ~~2019.~~2020. 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. ~~There~~Except as set forth below, 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, ~~2018.~~2019.

The continued spread of the COVID-19 pandemic may have a material adverse impact on our business, financial condition and results of operations.

The ongoing COVID-19 pandemic has resulted in a significant impact to businesses and supply chains globally. The imposition of work and travel restrictions, as well as other actions by government authorities to contain the outbreak, have led to extended shutdowns of certain businesses, lower factory production, reduced volumes of global imports and exports and disruptions both of global and domestic transportation. The supply chain disruptions and government actions to counter the pandemic further exacerbated financial challenges faced by our shipping line and other customers. Additionally, the economic uncertainty created by the pandemic is affecting demand in several manufacturing sectors and is expected to result in a slowdown in the global economy, the extend or duration of which are uncertain. Further, in response to the pandemic, many businesses, including ourselves, have implemented remote working arrangements for their employees during the first quarter of 2020 that may continue, in whole or in part, for an extended period. Risks associated with the COVID-19 pandemic on our business include, but are not limited to:

The magnitude of the COVID-19 pandemic, including the extent of any impact on our business, financial position, results of operations or liquidity, which could be material, cannot be reasonably determined at this time due to the rapid development and fluidity of the situation. The effects of the pandemic on our business will depend on its duration and severity, whether business disruptions will continue and the overall impact on the global economy.

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.


	Three Months Ended March 31,
	2020		2019
Lease revenue - operating leases	$	60,399	$	69,197
Interest income on finance leases		11,623		11,390
Other revenue		2,217		2,805
Interest income on financing receivable		677		-
Total lease revenue	$	74,916	$	83,392



	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



	March 31,		December 31,
	2020		2019
Gross finance lease receivables (1)	$	783,471	$	806,019
Unearned income (2)		(228,420)		(238,651)
Net investment in finance leases		555,051		567,368
Allowance for credit losses		(45)		-
Net investment in finance leases, net of allowance for credit losses	$	555,006	$	567,368


2021	$	116,727
2022		109,491
2023		105,485
2024		85,857
2025		60,034
2026 and thereafter		305,877
	$	783,471


	March 31,		December 31,
	2020		2019
Gross financing receivable	$	43,957	$	45,530
Unearned income		(10,434)		(11,111)
		33,523		34,419
Allowance for credit losses		(1)		-
Total financing receivable	$	33,522	$	34,419
Amounts due within one year (1)		3,783		3,726
Amounts due beyond one year (2)		29,739		30,693
Total financing receivable	$	33,522	$	34,419



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenue
Container lease revenue	$	75,774	$	68,333	$	151,285	$	132,967
Logistics revenue		29,802		28,253		57,518		49,889
Total revenue		105,576		96,586		208,803		182,856

Operating expenses
Depreciation of rental equipment		28,657		26,103		57,069		51,281
Storage, handling and other expenses		4,063		969		7,959		3,297
Logistics transportation costs		26,091		24,330		50,610		42,995
Gain on sale of rental equipment		(1,583)		(2,662)		(3,025)		(4,897)
Administrative expenses		12,338		11,325		25,408		21,550
Total operating expenses		69,566		60,065		138,021		114,226

Operating income		36,010		36,521		70,782		68,630

Other expenses
Net interest expense		20,021		14,594		39,926		27,948
Other expense		119		429		157		394
Total other expenses		20,140		15,023		40,083		28,342

Income before income taxes		15,870		21,498		30,699		40,288
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		9,335		20,297		27,909		37,435
Preferred stock dividends		2,207		1,148		4,414		1,169
Net income attributable to CAI common stockholders	$	7,128	$	19,149	$	23,495	$	36,266

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
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
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		17,648		19,613		18,098		20,013
Diluted		17,926		19,843		18,401		20,258


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



	Net investment in		Financing
December 31, 2019	finance leases		receivable
Tier 1	$	502,265	$	33,694
Tier 2		65,103		725
Tier 3		-		-
	$	567,368	$	34,419


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



	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2019
Trademarks and tradenames	$	1,786	$	(1,786)	$	-
Customer relationships		9,344		(4,416)		4,928
	$	11,130	$	(6,202)	$	4,928
December 31, 2018
Trademarks and tradenames	$	1,786	$	(1,786)	$	-
Customer relationships		9,344		(3,611)		5,733
	$	11,130	$	(5,397)	$	5,733


	Three months		Six months
	ended June 30,		ended June 30,
	2019		2019
Operating lease cost	$	586	$	1,186
Short-term lease cost		16		31
Variable lease cost		84		157
Total lease cost	$	686	$	1,374



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, 2019						Three Months Ended March 31, 2020
	Container Leasing		Logistics		Total		Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	75,774	$	29,802	$	105,576	$	69,113	$	5,803	$	30,106	$	105,022
Total operating expenses		38,156		31,410		69,566		36,639		21,374		30,977		88,990
Operating income (loss)		37,618		(1,608)		36,010		32,474		(15,571)		(871)		16,032
Net interest and other expenses (income)		20,144		(4)		20,140		18,520		2,105		(3)		20,622
Income (loss) before income taxes	$	17,474	$	(1,604)	$	15,870	$	13,954	$	(17,676)	$	(868)	$	(4,590)
Purchase of rental equipment (1)	$	59,352	$	-	$	59,352	$	27,500	$	-	$	-	$	27,500


	Three Months Ended June 30, 2018
	Container Leasing		Logistics		Total
Total revenue	$	68,333	$	28,253	$	96,586
Total operating expenses		31,386		28,679		60,065
Operating income (loss)		36,947		(426)		36,521
Net interest and other expenses (income)		15,031		(8)		15,023
Income (loss) before income taxes	$	21,916	$	(418)	$	21,498
Purchase of rental equipment (1)	$	148,917	$	-	$	148,917

	Six Months Ended June 30, 2019
	Container Leasing		Logistics		Total
Total revenue	$	151,285	$	57,518	$	208,803
Total operating expenses		76,870		61,151		138,021
Operating income (loss)		74,415		(3,633)		70,782
Net interest and other expenses (income)		40,091		(8)		40,083
Income (loss) before income taxes	$	34,324	$	(3,625)	$	30,699
Purchase of rental equipment (1)	$	167,442	$	-	$	167,442


	Six Months Ended June 30, 2018						Three Months Ended March 31, 2019
	Container Leasing		Logistics		Total		Container Leasing		Rail Leasing		Logistics		Total
Total revenue	$	132,967	$	49,889	$	182,856	$	75,511	$	7,881	$	27,716	$	111,108
Total operating expenses		63,144		51,082		114,226
Total operating expenses (income)								38,409		(1,212)		29,790		66,987
Operating income (loss)		69,823		(1,193)		68,630		37,102		9,093		(2,074)		44,121
Net interest and other expenses (income)		28,353		(11)		28,342		19,947		3,945		(4)		23,888
Income (loss) before income taxes	$	41,470	$	(1,182)	$	40,288	$	17,155	$	5,148	$	(2,070)	$	20,233
Purchase of rental equipment (1)	$	226,033	$	-	$	226,033	$	108,090	$	33,122	$	-	$	141,212


	Three Months Ended June 30,				Increase/(Decrease)				Three Months Ended March 31,				Change
	2019		2018		Amount		Percent		2020		2019		Amount		Percent
Total revenue	$	105,576	$	96,586	$	8,990	9	%	$	105,022	$	111,108	$	(6,086)	(5)	%
Operating expenses		69,566		60,065		9,501	16	%		88,990		66,987		22,003	33	%
Total other expenses		20,140		15,023		5,117	34	%		20,622		23,888		(3,266)	(14)	%
Net income attributable to CAI common stockholders		7,128		19,149		(12,021)	(63)	%
Net (loss) income attributable to CAI common stockholders										(3,537)		16,367		(19,904)	(122)	%


	Three Months Ended June 30,				Increase				Three Months Ended March 31,				Change
($ in thousand)	2019		2018		Amount		Percent		2020		2019		Amount		Percent
Container lease revenue	$	75,774	$	68,333	$	7,441	11	%	$	69,113	$	75,511	$	(6,398)	(8)	%


	Three Months Ended June 30,				Decrease
($ in thousand)	2019		2018		Amount		Percent
Container leasing	$	1,583	$	2,662	$	(1,079)	(41)	%



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 to 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 to our Current Report on Form 8-K filed on March 10, 2009).
10.1*		~~CAI International, Inc. 2019 Incentive Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on June 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, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, (ii) Consolidated Statements of ~~Income~~Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ (iii) Consolidated Statements of Comprehensive Income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ (iv) Consolidated Statements of Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ (v) Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ and (vi) Notes to Unaudited Consolidated Financial Statements.


	CAI International, Inc.
	(Registrant)

~~August 7, 2019~~May 5, 2020	/s/ VICTOR M. GARCIA
	Victor M. Garcia
	President and Chief Executive Officer
	(Principal Executive Officer)

~~August 7, 2019~~May 5, 2020	/s/ TIMOTHY B. PAGE
	Timothy B. Page
	Chief Financial Officer
	(Principal Financial and Accounting Officer)