UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For The Quarterly Period Ended ~~September 30, 2017~~March 31, 2021



o☐			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-~~number - 001-37827

Triton International Limited

(Exact name of registrant as specified in the charter)



Bermuda						98-1276572
(State or other jurisdiction of incorporation or organization)						~~98-1276572~~ (I.R.S. Employer Identification Number)

~~22 Victoria Street, Hamilton HM12, Bermuda~~ ~~(Address of principal executive office)~~

~~(441) 295-2287~~ ~~(Registrant's telephone number including area code)~~

Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda

(Address of principal executive office)

(441) 294-8033

(Registrant's telephone number including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares, $0.01 par value per share	TRTN	New York Stock Exchange
8.50% Series A Cumulative Redeemable Perpetual Preference Shares	TRTN PRA	New York Stock Exchange
8.00% Series B Cumulative Redeemable Perpetual Preference Shares	TRTN PRB	New York Stock Exchange
7.375% Series C Cumulative Redeemable Perpetual Preference Shares	TRTN PRC	New York Stock Exchange
6.875% Series D Cumulative Redeemable Perpetual Preference Shares	TRTN PRD	New York Stock Exchange

Indicate by check mark whether the ~~registrant~~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 requirement for the past 90 days. Yes ý☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý☒ No o☐

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 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

☐

~~Large Accelerated Filer~~ o

~~Accelerated Filer~~ o

~~Non-accelerated filer~~ ý

~~(Do not check if a smaller reporting company)~~

~~Smaller reporting company~~ o

~~Emerging growth company~~ o

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

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). ~~YES~~ o NO ýYes ☐ No ☒

As of ~~November 8, 2017,~~April 23, 2021, there were ~~80,687,757~~67,372,008 common shares at $0.01 par value per share of the ~~Registrant~~registrant outstanding.

Triton International Limited

Index



	Page No.
Item 1.		Financial Statements (unaudited)	4
		Consolidated Balance Sheets ~~(unaudited)~~ as of ~~September 30, 2017~~March 3 1 , 202 1 and December 31, ~~2016~~20 20	4
		Consolidated Statements of Operations ~~(unaudited)~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	5
		Consolidated Statements of Comprehensive Income ~~(unaudited)~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	6
		Consolidated Statements of Equity for the three months ended March 31, 2021 and 2020	7
		Consolidated Statements of Cash Flows ~~(unaudited)~~ for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020	78
		Notes to Consolidated Financial Statements	89
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	2120
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4030
Item 4.		Controls and Procedures	4131
PART II—OTHER INFORMATION
Item 1.		Legal Proceedings	4232
Item 1A.		Risk Factors	4232
Item 6.2.		~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	4232
~~Signature~~Item 6.		43Exhibits	33
Signature			34

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the Securities and Exchange Commission, or SEC, or in connection with oral statements made to the press, potential investors or others. All statements, other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenues, ~~projected~~future costs, prospects, plans and objectives of management are forward-looking statements. The words "expect," "estimate," "anticipate," "predict," "believe," "think," "plan," "will," "should," "intend," "seek," "potential" and similar expressions and variations are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Forward-looking statements in this report are subject to a number of known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those described in the forward-looking statements, including, but not limited to: the impact of COVID-19 on our business and financial results; decreases in the demand for leased containers; decreases in market leasing rates for containers; difficulties in re-leasing containers after their initial fixed-term leases; customers' decisions to buy rather than lease containers; dependence on a limited number of customers and suppliers; customer defaults; decreases in the selling prices of used containers; extensive competition in the container leasing industry; difficulties stemming from the international nature of Triton's businesses; decreases in demand for international trade; disruption to Triton's operations resulting from political and economic policies of the United States and other countries, particularly China, including but not limited to, the impact of trade wars, duties and tariffs; disruption to Triton's operations from failure of, or attacks on, Triton's information technology systems; disruption to Triton's operations as a result of natural disasters; compliance with laws and regulations related to economic and trade sanctions, security, anti-terrorism, environmental protection and corruption; ability to obtain sufficient capital to support growth; restrictions imposed by the terms of Triton's debt agreements; changes in the tax laws in Bermuda, the United States and other countries; and other risks and uncertainties described in ~~this Report on Form 10-Q,~~ the section entitled "Risk Factors" in our Annual Report on Form 10-K, filed with the SEC on ~~March 17, 2017, as amended~~February 16, 2021 (the "Form 10-K"), in this Report on Form 10-Q and in any other Form 10-Q filed or to be filed by us, as well as in the other documents we file with the SEC from time to time, and such risks and uncertainties are specifically incorporated herein by reference.

Forward-looking statements speak only as of the date the statements are made. Except as required under the federal securities laws and rules and regulations of the SEC, we undertake no obligation to update or revise forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. We caution you not to unduly rely on the forward-looking statements when evaluating the information presented in this report.

~~Table of contents~~

ITEM 1. FINANCIAL STATEMENTS

TRITON INTERNATIONAL LIMITED

Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)


	September 30, 2017		December 31, 2016			March 31, 2021		December 31, 2020
ASSETS:					ASSETS:
Leasing equipment, net of accumulated depreciation of $2,110,332 and $1,787,505	$	8,124,963	$	7,370,519
Leasing equipment, net of accumulated depreciation of $3,497,805 and $3,370,652					Leasing equipment, net of accumulated depreciation of $3,497,805 and $3,370,652	$	9,198,780	$	8,630,696
Net investment in finance leases	309,704		346,810		Net investment in finance leases	271,347		282,131
Equipment held for sale	52,287		99,863		Equipment held for sale	57,568		67,311
Revenue earning assets	8,486,954		7,817,192		Revenue earning assets	9,527,695		8,980,138
Cash and cash equivalents	146,262		113,198		Cash and cash equivalents	233,064		61,512
Restricted cash	84,209		50,294		Restricted cash	153,272		90,484
Accounts receivable, net of allowances of $28,097 and $28,609	197,225		173,585
Accounts receivable, net of allowances of $1,275 and $2,192					Accounts receivable, net of allowances of $1,275 and $2,192	234,682		226,090
Goodwill	236,665		236,665		Goodwill	236,665		236,665
Lease intangibles, net of accumulated amortization of $125,528 and $56,159	177,229		246,598
Insurance receivables	767		17,170
Lease intangibles, net of accumulated amortization of $269,355 and $264,791					Lease intangibles, net of accumulated amortization of $269,355 and $264,791	29,102		33,666
Other assets	49,064		53,126		Other assets	68,919		83,969
Fair value of derivative instruments	3,839		5,743		Fair value of derivative instruments	7,578		9
Total assets	$	9,382,214	$	8,713,571	Total assets	$	10,490,977	$	9,712,533
LIABILITIES AND SHAREHOLDERS' EQUITY:					LIABILITIES AND SHAREHOLDERS' EQUITY:
Equipment purchases payable	$	94,052	$	83,567	Equipment purchases payable	$	342,357	$	191,777
Fair value of derivative instruments	9,078		9,404		Fair value of derivative instruments	68,545		128,872
Accounts payable and other accrued expenses	116,849		143,098		Accounts payable and other accrued expenses	96,989		95,235
Net deferred income tax liability	336,387		317,316		Net deferred income tax liability	342,071		327,431
Debt, net of unamortized deferred financing costs of $42,691 and $19,999	6,790,164		6,353,449
Debt, net of unamortized costs of $53,446 and $42,747					Debt, net of unamortized costs of $53,446 and $42,747	6,916,697		6,403,270
Total liabilities	7,346,530		6,906,834		Total liabilities	7,766,659		7,146,585
Shareholders' equity:					Shareholders' equity:
Common shares, $0.01 par value, 294,000,000 shares authorized, 80,686,940 and 74,376,025 shares issued and outstanding, respectively	807		744
Undesignated shares $0.01 par value, 6,000,000 shares authorized, no shares issued and outstanding	—		—
Preferred shares, $0.01 par value, at liquidation preference					Preferred shares, $0.01 par value, at liquidation preference	555,000		555,000
Common shares, $0.01 par value, 270,000,000 shares authorized, 81,273,334 and 81,151,723 shares issued, respectively					Common shares, $0.01 par value, 270,000,000 shares authorized, 81,273,334 and 81,151,723 shares issued, respectively	813		812
Undesignated shares, $0.01 par value, 7,800,000 shares authorized, 0 shares issued and outstanding					Undesignated shares, $0.01 par value, 7,800,000 shares authorized, 0 shares issued and outstanding	0		0
Treasury shares, at cost, 13,901,326 shares					Treasury shares, at cost, 13,901,326 shares	(436,822)		(436,822)
Additional paid-in capital	887,778		690,418		Additional paid-in capital	902,891		905,323
Accumulated earnings	988,566		945,313		Accumulated earnings	1,765,498		1,674,670
Accumulated other comprehensive income	22,877		26,758
Accumulated other comprehensive income (loss)					Accumulated other comprehensive income (loss)	(63,062)		(133,035)

Total shareholders' equity	1,900,028		1,663,233		Total shareholders' equity	2,724,318		2,565,948
Non-controlling interests	135,656		143,504
Total equity	2,035,684		1,806,737
Total liabilities and shareholders' equity	$	9,382,214	$	8,713,571	Total liabilities and shareholders' equity	$	10,490,977	$	9,712,533

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

~~Table of contents~~

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Operations

(In thousands, except per share ~~amounts)~~data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016			2017			2016				2021		2020
Leasing revenues:													Leasing revenues:
Operating leases	$	296,669		$	242,899		$	832,414		$	560,262		Operating leases	$	339,794	$	312,804
Finance leases	5,451			4,890			17,247			8,886			Finance leases	6,949		8,664

Total leasing revenues	302,120			247,789			849,661			569,148			Total leasing revenues	346,743		321,468

Equipment trading revenues	11,974			9,820			30,213			9,820			Equipment trading revenues	25,945		15,380
Equipment trading expenses	(10,605		)	(9,588		)	(27,124		)	(9,588		)	Equipment trading expenses	(17,804)		(13,447)
Trading margin	1,369			232			3,089			232			Trading margin	8,141		1,933

Net gain (loss) on sale of leasing equipment	10,263			(12,319		)	25,063			(16,086		)
Net gain on sale of leasing equipment													Net gain on sale of leasing equipment	21,967		4,077


Operating expenses:													Operating expenses:
Depreciation and amortization	128,581			112,309			370,552			272,585			Depreciation and amortization	143,307		132,695
Direct operating expenses	13,833			27,815			51,396			54,298			Direct operating expenses	9,370		23,248
Administrative expenses	21,233			17,456			66,268			45,136			Administrative expenses	20,921		19,225
Transaction and other costs	32			59,570			3,340			66,517
Provision for doubtful accounts	783			22,372			1,244			22,201

Provision (reversal) for doubtful accounts													Provision (reversal) for doubtful accounts	(2,464)		4,279

Total operating expenses	164,462			239,522			492,800			460,737			Total operating expenses	171,134		179,447
Operating income (loss)	149,290			(3,820		)	385,013			92,557			Operating income (loss)	205,717		148,031
Other expenses:													Other expenses:
Interest and debt expense	73,795			55,437			208,076			122,626			Interest and debt expense	54,623		69,002
Realized loss on derivative instruments, net	20			864			902			2,268
Unrealized loss (gain) on derivative instruments, net	629			(3,487		)	(80		)	5,243
Write-off of deferred financing costs	4,073			—			4,116			141
Other expense (income), net	164			214			(1,552		)	(775		)

Debt termination expense													Debt termination expense	0		31
Other (income) expense, net													Other (income) expense, net	(481)		(3,584)
Total other expenses	78,681			53,028			211,462			129,503			Total other expenses	54,142		65,449
Income (loss) before income taxes	70,609			(56,848		)	173,551			(36,946		)	Income (loss) before income taxes	151,575		82,582
Income tax expense (benefit)	11,063			(7,719		)	29,688			(5,536		)	Income tax expense (benefit)	11,737		5,546
Net income (loss)	$	59,546		$	(49,129	)	$	143,863		$	(31,410	)	Net income (loss)	$	139,838	$	77,036
Less: income attributable to noncontrolling interest	2,390			2,082			6,425			4,886
Net income (loss) attributable to shareholders	$	57,156		$	(51,211	)	$	137,438		$	(36,296	)
Net income (loss) per common share—Basic	$	0.76		$	(0.74	)	$	1.85		$	(0.72	)
Net income (loss) per common share—Diluted	$	0.75		$	(0.74	)	$	1.84		$	(0.72	)

Less: dividend on preferred shares													Less: dividend on preferred shares	10,513		9,825
Net income (loss) attributable to common shareholders													Net income (loss) attributable to common shareholders	$	129,325	$	67,211
Net income per common share—Basic													Net income per common share—Basic	$	1.93	$	0.94
Net income per common share—Diluted													Net income per common share—Diluted	$	1.92	$	0.94
Cash dividends paid per common share	$	0.45		$	0.90		$	1.35		$	0.90		Cash dividends paid per common share	$	0.57	$	0.52
Weighted average number of common shares outstanding—Basic	75,214			69,336			74,245			50,090			Weighted average number of common shares outstanding—Basic	66,935		71,596
Dilutive restricted shares and share options	493			—			402			—
Dilutive restricted shares													Dilutive restricted shares	282		202
Weighted average number of common shares outstanding—Diluted	75,707			69,336			74,647			50,090			Weighted average number of common shares outstanding—Diluted	67,217		71,798

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

~~Table of contents~~

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Comprehensive Income ~~(Loss)~~

(In thousands)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income (loss) $ 59,546
$ (49,129 ) $ 143,863
$ (31,410 )
Other comprehensive income (loss):
Change in fair value of derivative instruments designated as cash flow hedges (net of income tax effect of $(542), $312, $(2,651) and $312, respectively) (1,011 ) 574
(4,928 ) 574
Reclassification of (gain) loss on interest rate swap agreements designated as cash flow hedges (net of income tax effect of $(56), $(100), $405 and $(100), respectively) (104 ) (184 ) 896
(184 )
Foreign currency translation adjustment 39
57
151
(87 )
Other comprehensive (loss) income, net of tax (1,076 ) 447
(3,881 ) 303
Comprehensive income 58,470
(48,682 ) 139,982
(31,107 )
Less:
Comprehensive income attributable to noncontrolling interest 2,390
2,082
6,425
4,886
Comprehensive income (loss), attributable to shareholders $ 56,080
$ (50,764 ) $ 133,557
$ (35,993 )


	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	139,838	$	77,036
Other comprehensive income (loss), net of tax:
Change in derivative instruments designated as cash flow hedges	62,850		(120,140)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges	7,102		1,411

Foreign currency translation adjustment	21		(262)
Other comprehensive income (loss), net of tax	69,973		(118,991)
Comprehensive income	209,811		(41,955)
Less:

Dividend on preferred shares	10,513		9,825
Comprehensive income attributable to common shareholders	$	199,298	$	(51,780)

Tax (benefit) provision on change in derivative instruments designated as cash flow hedges	$	2,558	$	(9,474)
Tax (benefit) provision on reclassification of (gain) loss on derivative instruments designated as cash flow hedges	$	468	$	(152)

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

~~Table of contents~~

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Shareholders' Equity

(In thousands, except share amounts)

(Unaudited)


	Preferred Shares			Common Shares			Treasury Shares			Add'l Paid in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2020	22,200,000	$	555,000	81,151,723	$	812	13,901,326	$	(436,822)	$	905,323	$	1,674,670	$	(133,035)	$	2,565,948

Share-based compensation	—	—		207,077	2		—	—		1,713		—		—		1,715

Share repurchase to settle shareholder tax obligations	—	—		(85,466)	(1)		—	—		(4,145)		—		—		(4,146)
Net income (loss)	—	—		—	—		—	—		—		139,838		—		139,838
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		69,973		69,973


Common shares dividend declared	—	—		—	—		—	—		—		(38,497)		—		(38,497)
Preferred shares dividend declared	—	—		—	—		—	—		—		(10,513)		—		(10,513)
Balance as of March 31, 2021	22,200,000	$	555,000	81,273,334	$	813	13,901,326	$	(436,822)	$	902,891	$	1,765,498	$	(63,062)	$	2,724,318


`	Preferred Shares			Common Shares			Treasury Shares			Add'l Paid in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income		Total Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance as of December 31, 2019	16,200,000	$	405,000	80,979,833	$	810	8,771,345	$	(278,510)	$	902,725	$	1,533,845	$	(31,633)	$	2,532,237
Issuance of preferred shares, net of offering expenses	6,000,000	150,000		—	—		—	—		(5,171)		—		—		144,829
Share-based compensation	—	—		184,644	2		—	—		1,603		—		—		1,605
Treasury shares acquired	—	—		—	—		1,365,620	(37,488)		—		—		—		(37,488)
Share repurchase to settle shareholder tax obligations	—	—		(53,609)	(1)		—	—		(2,155)		—		—		(2,156)
Net income (loss)	—	—		—	—		—	—		—		77,036		—		77,036
Other comprehensive income (loss)	—	—		—	—		—	—		—		0		(118,991)		(118,991)


Common shares dividend declared	—	—		—	—		—	—		—		(37,427)		—		(37,427)
Preferred shares dividend declared	—	—		—	—		—	—		—		(9,395)		—		(9,395)
Balance as of March 31, 2020	22,200,000	$	555,000	81,110,868	$	811	10,136,965	$	(315,998)	$	897,002	$	1,564,059	$	(150,624)	$	2,550,250

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016				2021		2020
Cash flows from operating activities:							Cash flows from operating activities:
Net income (loss)	$	143,863		$	(31,410	)	Net income (loss)	$	139,838	$	77,036
Adjustments to reconcile net income (loss) to net cash provided by operating activities:							Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	370,552			272,585			Depreciation and amortization	143,307		132,695
Amortization of deferred financing costs and other debt related amortization	10,185			3,374
Amortization of leasing revenue adjustments	67,592			25,726
Share compensation expense	4,491			4,334
Amortization of deferred debt cost and other debt related amortization							Amortization of deferred debt cost and other debt related amortization	1,142		3,595

Lease related amortization							Lease related amortization	4,857		7,054

Share-based compensation expense							Share-based compensation expense	1,715		1,605
Net (gain) loss on sale of leasing equipment	(25,063		)	16,086			Net (gain) loss on sale of leasing equipment	(21,967)		(4,077)

Unrealized (gain) loss on derivative instruments	(80		)	5,243			Unrealized (gain) loss on derivative instruments	0		297
Write-off of deferred financing costs	4,116			141
Debt termination expense							Debt termination expense	0		31
Deferred income taxes	28,372			(6,773		)	Deferred income taxes	11,615		5,505
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable	(1,097		)	15,928			Accounts receivable	(10,828)		(3,775)
Accounts payable and other accrued expenses	(36,198		)	26,679			Accounts payable and other accrued expenses	1,886		(15,111)
Net equipment sold for resale activity	5,292			2,595
Cash received for settlement of interest rate swaps	2,117			—
Net equipment sold (purchased) for resale activity							Net equipment sold (purchased) for resale activity	1,579		1,435
Cash received (paid) for settlement of interest rate swaps							Cash received (paid) for settlement of interest rate swaps	5,558		0
Cash collections on finance lease receivables, net of income earned							Cash collections on finance lease receivables, net of income earned	12,866		15,466
Other assets	648			2,974			Other assets	9,420		(23,796)
Net cash provided by operating activities	574,790			337,482
Net cash provided by (used in) operating activities							Net cash provided by (used in) operating activities	300,988		197,960
Cash flows from investing activities:							Cash flows from investing activities:
Purchases of leasing equipment and investments in finance leases	(1,185,481		)	(384,739		)	Purchases of leasing equipment and investments in finance leases	(579,211)		(62,406)
Proceeds from sale of equipment, net of selling costs	136,647			102,376			Proceeds from sale of equipment, net of selling costs	53,512		49,498
Cash collections on finance lease receivables, net of income earned	45,146			22,315
Cash and cash equivalents acquired	—			50,349

Other	67			(366		)	Other	15		(216)
Net cash used in by investing activities	(1,003,621		)	(210,065		)
Net cash provided by (used in) investing activities							Net cash provided by (used in) investing activities	(525,684)		(13,124)
Cash flows from financing activities:							Cash flows from financing activities:
Issuance (redemption) of common shares, net of underwriter expenses	192,932			(3,527		)
Issuance of preferred shares, net of underwriting discount							Issuance of preferred shares, net of underwriting discount	0		145,275
Purchases of treasury shares							Purchases of treasury shares	0		(34,357)
Redemption of common shares for withholding taxes							Redemption of common shares for withholding taxes	(4,146)		(2,156)

Debt issuance costs	(32,738		)	(5,718		)	Debt issuance costs	(13,803)		0
Borrowings under debt facilities	2,782,825			367,700			Borrowings under debt facilities	1,504,850		530,000
Payments under debt facilities and capital lease obligations	(2,334,409		)	(365,697		)
(Increase) decrease in restricted cash	(33,915		)	23,736
Dividends paid	(99,586		)	(51,620		)
Cash paid for settlement of employee taxes related to equity vesting	(71		)	(672		)
Distributions to noncontrolling interest	(14,273		)	(19,185		)
Payments under debt facilities and finance lease obligations							Payments under debt facilities and finance lease obligations	(979,199)		(425,073)
Dividends paid on preferred shares							Dividends paid on preferred shares	(10,513)		(9,395)
Dividends paid on common shares							Dividends paid on common shares	(38,153)		(37,110)

Other	1,130			—			Other	0		(410)
Net cash provided by (used in) financing activities	461,895			(54,983		)	Net cash provided by (used in) financing activities	459,036		166,774
Net increase in cash and cash equivalents	$	33,064		$	72,434
Cash and cash equivalents, beginning of period	113,198			56,689
Cash and cash equivalents, end of period	$	146,262		$	129,123
Net increase (decrease) in cash, cash equivalents and restricted cash							Net increase (decrease) in cash, cash equivalents and restricted cash	$	234,340	$	351,610
Cash, cash equivalents and restricted cash, beginning of period							Cash, cash equivalents and restricted cash, beginning of period	151,996		168,972
Cash, cash equivalents and restricted cash, end of period							Cash, cash equivalents and restricted cash, end of period	$	386,336	$	520,582
Supplemental disclosures:							Supplemental disclosures:
Interest paid							Interest paid	$	42,133	$	53,795
Income taxes paid (refunded)							Income taxes paid (refunded)	$	155	$	139
Right-of-use asset for leased property							Right-of-use asset for leased property	$	0	$	0
Supplemental non-cash investing activities:							Supplemental non-cash investing activities:
Equipment purchases payable	$	94,052		$	62,638		Equipment purchases payable	$	342,357	$	29,109

The accompanying Notes to the Unaudited Consolidated Financial Statements are an integral part of these statements.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Description of the Business, Basis of Presentation and ~~Significant~~ Accounting ~~Policies~~Policy Updates

Description of the Business

Triton International Limited ("Triton" or the "Company"), through its subsidiaries, leases intermodal transportation equipment, primarily maritime containers, and provides maritime container management services through a worldwide network of service subsidiaries, third-party depots and other facilities. The majority of the Company's business is derived from leasing its containers to shipping line customers through a variety of long-term and short-term contractual lease arrangements. The Company also sells containers from its equipment leasing fleet as well as containers specifically acquired for resale from third parties. The Company's registered office is located in Bermuda.

On July 12, 2016, Triton Container International Limited ("TCIL") and TAL International Group, Inc. ("TAL") combined in an all-stock merger (the "Merger"). Under the terms of the transaction agreement, TCIL and TAL combined under a newly formed company, Triton.

The consideration for the transaction was paid with Triton common shares. TAL stockholders received one Triton common share in exchange for each TAL common share and TCIL shareholders received approximately 0.8 Triton common shares for each TCIL common share. The fair value of the consideration, or the purchase price, was approximately $510.2 million. This amount was derived based on the fair value of the shares issued to TAL stockholders on July 12, 2016 when the closing share price was $15.28 per share.

Basis of Presentation

The unaudited consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ~~(“GAAP”~~("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all information and footnotes required by GAAP for complete financial statements.

The interim consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2021; the consolidated statements of operations, ~~and~~the consolidated statements of comprehensive income, ~~for~~and the ~~three and nine months ended September 30, 2017 and 2016,~~consolidated statements of shareholders' equity and the consolidated statements of cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020, are unaudited. The consolidated balance sheet as of December 31, ~~2016,~~2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures required by GAAP. ~~These~~The unaudited interim financial statements have been prepared on a basis consistent with the ~~Company’s~~Company's annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to state fairly the ~~Company’s~~Company's financial position, ~~as of September 30, 2017 and its consolidated~~ results of operations, ~~and~~ comprehensive income, ~~for the three~~shareholders' equity, and ~~nine months ended September 30, 2017 and 2016, and its~~ cash flows for the ~~nine months ended September 30, 2017 and 2016.~~periods presented. The financial data and the other financial information disclosed in the notes to the financial statements related to these periods are also unaudited. The consolidated results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, ~~2017~~2021 or for any other future annual or interim period.

The unaudited consolidated financial statements include TAL’s results of operations after July 12, 2016, the Merger completion date. The consolidated financial statements presented for periods prior to the Merger represent the historical financial statements of TCIL, the accounting acquirer in the Merger.

These financial statements should be read in conjunction with the ~~Company’s~~Company's audited consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2016~~2020 included in the ~~Company’s~~Company's Annual Report on Form 10-K which was filed with the SEC on ~~March 17, 2017.~~February 16, 2021. The unaudited consolidated financial statements include the accounts of the Company and its ~~wholly owned~~wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain changes in presentation have been made to conform the prior period presentation to current period reporting.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Note 1—Description of the Business and Significant Accounting Policies (continued)~~

Use of Estimates

The preparation of ~~consolidated~~ financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts ~~reported~~of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in the financial statements. ~~Actual results could differ from those estimates.~~ Such estimates include, but are not limited to, the Company's estimates in connection with ~~purchase accounting,~~leasing equipment, including residual ~~value,~~values and depreciable lives, ~~value~~values of assets held for sale and ~~estimates related to the bankruptcy of a lessee (including amounts~~other long lived assets, provision for ~~recoveries under insurance policies as described below).~~

~~Lessee Bankruptcy in 2016~~

~~On August 31, 2016, Hanjin Shipping Co. ("Hanjin"), a lessee of the Company, filed~~income tax, allowance for court protection and immediately began a liquidation process. At that time, the Company had approximately 87,000 container units on lease to Hanjin with a net book value of $243.3 million. The Company recorded a charge of $29.7 million during the third quarter ended September 30, 2016 comprised of bad debt expense and a charge for costs not expected to be recovered due to deductibles in our credit insurance policies. As of September 30, 2017, the Company had gained control or negotiated the release of 93% of its containers previously leased to Hanjin of which approximately 82% are now leased to other customers or have been sold.

The Company maintained credit insurance to cover the value of such containers that are unrecoverable, costs incurred to recover containers and a portion of lost lease revenue (limited up to six months or until a container is recovered, repaired, and available for re-lease) all subject to a deductible. The insurance policies did not cover its pre-default receivables. The Company has collected an advance partial payment from its insurance providers of $45 million. The Company currently believes that any further losses will be recoverable under the insurance policies, subject to deductible limits.

~~Pro Forma Disclosure~~

The following table provides the unaudited pro forma results of operations, which gives effect to the Merger as if it had occurred on January 1, 2016. The pro forma results of operations reflects adjustments (i) to leasing revenues for the amortization of the excess of the fair value of operating lease contracts over the current market rate (ii) to adjust depreciation and amortization expense resulting from the write-down of leasing equipment to fair value and (iii) to eliminate non-recurring charges that were incurred in connection with the transactions including acquisition-relateddoubtful accounts, share-based compensation, ~~transaction costs related to legal, accounting,~~goodwill and ~~other advisory fees, and transaction costs related to retention and benefit costs.~~intangible assets. Actual results could differ from those estimates.

The unaudited pro forma results do not include any anticipated synergies or other expected benefits of the Merger. The unaudited pro forma financial information presented below is not necessarily indicative of either future results of operations or results that might have been achieved had the Merger occurred as of January 1, 2016 (in thousands):

Three months ended, September 30, 2016 Nine months ended September 30, 2016
Total leasing revenues $ 261,977
$ 815,256
Net (loss) income attributable to shareholders $ (2,377 ) $ 9,996

Concentration of Credit Risk

The Company's equipment ~~lease~~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 on an ongoing basis. The Company's ~~two~~three largest customers ~~CMA CGM and Mediterranean Shipping Company,~~ accounted for ~~19%~~21%, 14%, and ~~14%~~10%, respectively, of the Company's lease billings during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2021.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

~~Note 1—Description of the Business and Significant Accounting Policies (continued)~~

~~New Accounting Pronouncements~~

~~Recently Adopted Accounting Standards Updates~~

~~In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. ASU No. 2016-09 ("ASU No. 2016-09") Compensation - Stock Compensation (Topic 718)~~ ~~Improvements to Employee Share-Based Payment Accounting~~. The guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classificationFor information on the statement of cash flows. Under this ASU, all excess tax benefits and deficiencies related to employee share-based compensation will be recognized within the provision for income taxes rather than additional paid-in capital. The Company adopted the guidance on January 1, 2017 which resulted in the recognition of excess tax benefits for prior periods as a reduction in our Net deferred income tax liability account and an increase in accumulated earnings in the amount of $6.6 million. The Company has not recognized any excess tax benefits for the three and nine months ended September 30, 2017. In addition, the adoption of this ASU had no impact on the consolidated financial statements with respect to forfeited awards since historically the Company’s forfeitures have been minimal and therefore had not estimated a forfeitures rate.

~~Recently Issued Accounting Standards Updates~~

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) that replaces existing lease accounting guidance. Among other things, in the amendments in ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

~~A lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and~~

~~A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.~~

The accounting that will be applied by lessors under ASC 842 is largely unchanged from previous GAAP. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and ASC 606, ~~Revenue from Contracts with Customers~~. The new lease guidance will become effective for the Company for periods beginning after December 15, 2018. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), amending previous updates regarding this topic. Leasing revenue recognition is specifically excluded from this ASU, and therefore, the new standard will only apply to equipment trading revenues and sales of leasing equipment. The Company expects the impact of adoption of this ASU to be minimal since the majority of its sales contracts are for containers and do not contain multiple elements. The effective date is interim periods beginning after December 15, 2017. The standard allows for either “full retrospective” adoption, meaning the standard is applied to all of the periods presented, or “modified retrospective” adoption, meaning the standard is applied only to the most current period presented in the financial statements. The Company plans to adopt the standard on its required effective date of January 1, 2018, using the modified retrospective approach. The Company does not expect the impact of this standard to be material to its consolidated financial statements and related disclosures.

~~In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326)~~ ~~Measurement of Credit Losses on Financial Instruments.~~ The guidance affects trade receivables and net investments in leases. The guidance 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 affect collectability. The new guidance will be effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Different components of the guidance require modified retrospective and/or prospective adoption. Based on the composition of the Company's receivables, current market conditions, and historical credit loss activity, the Company does not expect the adoption of this ASU to have a significant impact on the consolidated financial statements.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Note 1—Description of the Business and Significant Accounting Policies (continued)~~

~~In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230):~~ ~~Classification of Certain Receipts and Cash Payments~~. The updated amendment provides guidance as to where certain cash flow items are presented, including, debt prepayment or debt extinguishment costs and proceeds from the settlement of insurance claims. The update to the standard is effective for the Company for periods beginning after December 15, 2017. The Company does not expect the adoption of this ASU to have a significant impact on the consolidated financial statements.

~~In October 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory~~. The ASU eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory. As a result, the tax expense from the intercompany sale of assets, other than inventory, and associated changes to deferred taxes will be recognized when the sale occurs even though the pre-tax effects of the transaction have not been recognized. The update to the standard is effective for the Company for periods beginning after December 15, 2017. The Company does not expect the adoption of this ASU to have a significant impact on its consolidated financial statements.

~~In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230):~~ ~~Restricted Cash~~. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The Company currently presents changes in restricted cash and cash equivalents in the financing section of its statement of cash flows. The new guidance will not impact financial results, but will result in a change in the presentation of restricted cash and restricted cash equivalents within the statement of cash flows. The update to the standard is effective for the Company for periods beginning after December 15, 2017. The Company currently plans to adopt this guidance in the first quarter of 2018 using the retrospective approach.

~~In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~. The guidance eliminates Step 2 from the goodwill impairment test. In addition, the amendment eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. For public companies, this ASU is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is in the process of evaluating the impact of this ASU on the consolidated financial statements.

~~In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718):~~ ~~Scope of Modification Accounting.~~ ASU 2017-09 provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions, or award classification and would not be required if the changes are considered non-substantive. This ASU is effective for interim periods beginning after December 15, 2017 and is required to be applied on a prospective basis. The Company does not expect the adoption of this ASU to have a significant impact on the consolidated financial statements.

~~In August 2017, FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815):~~ ~~Targeted Improvements to Accounting for Hedging Activities.~~ ASU 2017-12 changes the recognition and presentation requirements of hedge accounting, including: eliminating the requirement to separately measure and report hedge ineffectiveness; and presenting all items that affect earnings in the same income statement line item as the hedged item. The ASU also provides new alternatives for: applying hedge accounting to additional hedging strategies; measuring the hedged item in fair value ~~hedges~~ of interest rate risk; reducing the cost and complexity of applying hedge accounting by easing the requirements for effectiveness testing, hedge documentation and application of the critical terms match method; and reducing the risk of material error correction if a company applies the shortcut method inappropriately. This ASU is effective for interim periods beginning after December 15, 2018. The Company is in the process of evaluating the impact of this ASU on the consolidated financial statements.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Note 1—Description of the Business and Significant Accounting Policies (continued)~~

In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842) which provides additional implementation guidance on the previously issued ASU 2016-02 ~~Leases (Topic 842)~~. ASU 2016-02 requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. The Company is in the process of evaluating the impact of this ASU on the consolidated financial statements.

~~Note 2—Fair Value of Financial Instruments~~

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 utilizes the following fair value hierarchy when selecting inputs for its valuation techniques, with the highest priority given to Level 1:

~~Level 1—Financial assets and liabilities whose values are based on observable inputs such as quoted prices for identical instruments in active markets.~~

Level 2—Financial assets and liabilities whose values are based on observable inputs such as (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, or (iii) model-derived valuations in which all significant inputs are observable in active markets.

~~Level 3—Financial assets and liabilities whose values are derived from valuation techniques based on one or more significant unobservable inputs.~~

~~The Company’s debt fair value was measured using Level 2 inputs. The carrying value and debt fair value are summarized in the following table (in thousands):~~

September 30,
2017 December 31,
2016
Liabilities
Total debt(1) - carrying value $ 6,864,816
$ 6,415,664
Total debt(1) - fair value $ 6,919,303
$ 6,316,229

(1) Excludes unamortized deferred financing costs of $42.7 million and $20.0 million and purchase price debt adjustments of $32.0 million and $42.2 million as of September 30, 2017 and December 31, 2016, respectively.

~~The Company’s~~ equipment held for sale, debt, and the fair value ~~is measured using Level~~of derivative instruments, please refer to Note 2 ~~inputs~~ - "Equipment Held for Sale", Note 7 - "Debt" and ~~is based on recent sales prices and other factors.~~ Note 8 - "Derivative Instruments", respectively.

Note 2—Equipment Held for Sale

The Company's equipment held for sale is recorded at the lower of fair value less cost to sell, or carrying value at the time identified for sale. Fair value is measured using Level 2 inputs and anis based predominantly on recent sales prices. The following table summarizes the portion of equipment held for sale in the consolidated balance sheet that have been impaired and written down to fair value less cost to sell (in thousands):


	March 31, 2021		December 31, 2020
Equipment held for sale	$	1,868	$	4,001

An impairment charge is recorded when the carrying value of the asset exceeds its fair ~~value.~~value less cost to sell. The following table summarizes the ~~portion of the Company’s equipment held for sale measured at fair value and the cumulative~~Company's net impairment charges recorded ~~to net~~in Net gain ~~(loss)~~ on sale of leasing equipment ~~through~~on the ~~periods indicated below~~consolidated statements of operations (in thousands):

September 30,
2017 December 31,
2016
Assets
Equipment held for sale - assets at fair value(1) $ 8,383
$ 41,067
Cumulative impairment charges(2) $ (2,939 ) $ (12,063 )


	Three Months Ended March 31,
	2021		2020
Impairment (loss) reversal on equipment held for sale	$	5	$	(1,490)
Gain (loss) on sale of equipment, net of selling costs	21,962		5,567
Net gain on sale of leasing equipment	$	21,967	$	4,077

(1) Represents the carrying value of containers included in equipment held for sale in the consolidated balance sheets that have been impaired to write down the value of the containers to their estimated fair value less cost to sell.

~~(2) Represents the cumulative impairment charges recognized on equipment held for sale from the date of designated held for sale status to the indicated period end date.~~

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

Note ~~2—Fair Value~~3—Intangible Assets

Intangible assets consist of ~~Financial Instruments (continued)~~lease intangibles for leases acquired with lease rates above market in a business combination. The following table summarizes the amortization of intangible assets as of March 31, 2021 (in thousands):

~~The Company recognized net impairment charges of $0.3~~


Years ending December 31,	Total Intangible Assets
2021	$	11,985
2022	$	10,497
2023	$	4,657
2024	$	1,963


Total	$	29,102

Amortization expense related to intangible assets was $4.6 million and ~~net impairment reversals of $0.6~~$6.2 million for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2021, and 2020, respectively. ~~There were $13.2 million of net impairment charges for the three and nine months ended September 30, 2016.~~

~~For the fair value of derivatives, see Note 6 - "Derivative Instruments".~~

Cash and cash equivalents, accounts receivable, equipment purchases payable, and accounts payable carrying amounts approximate fair values because of the short-term nature of these instruments. The Company’s other financial and non-financial assets, which include leasing equipment, finance leases, intangible assets and goodwill, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required and the Company determines that these other financial and non-financial assets are impaired after completing an evaluation, these assets should be written down to their fair value.

Note ~~3—Share Based~~4—Share-Based Compensation ~~and Other Equity Matters~~

The Company recognizes share-based compensation expense for share-based payment transactions based on the grant ~~date’s calculated~~date fair value. The expense is recognized over the employee's requisite service period, which is generally the vesting period of the equity award.

The Company recognized ~~$1.2 million and $4.5 million of~~ share-based compensation expense in administrative expenses of $1.7 million and $1.6 million for the three ~~and nine~~ months ended ~~September 30, 2017. The Company recognized $2.0 million~~March 31, 2021 and ~~$4.3 million of share-based~~2020, respectively. Share-based compensation expense ~~in administrative expenses~~includes charges for ~~the three~~performance-based shares and ~~nine months ended September 30, 2016.~~units that are deemed probable to vest.

As of ~~September 30, 2017,~~March 31, 2021, the total unrecognized compensation expense related to non-vested restricted ~~shares~~share awards and units was approximately ~~$8.4~~$15.6 million, which is expected to be recognized on a straight-line basis through ~~2020.~~2024.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, the Company ~~granted 121,702~~issued 207,077 restricted shares, ~~to certain employees~~ and canceled ~~1,962~~85,466 vested shares to settle payroll taxes on behalf of employees. Additional shares may be ~~granted~~issued based upon the satisfaction of certain performance criteria.

Note 5—Other Equity Matters

Share Repurchase Program

The Company's ~~performance measured against selected peers. During~~Board of Directors authorized repurchases of shares up to a specified dollar amount as part of its repurchase program. Purchases under the ~~nine~~repurchase program may be made in the open market or privately negotiated transactions, and may include transactions pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases may be made from time to time at the Company's discretion and the timing and amount of any share repurchases will be determined based on share price, market conditions, legal requirements, and other factors. The repurchase program does not obligate the Company to acquire any particular amount of common shares, and the Company may suspend or discontinue the repurchase program at any time.

The Company did not repurchase any shares during the three months ended ~~September 30, 2017,~~March 31, 2021 and currently has $102.1 million available under the share repurchase program.

Preferred Shares

The following table summarizes the Company's preferred share issuances (the "Series"):


Preferred Share Offering	Issuance	Liquidation Preference (in thousands)		# of Shares(1)
Series A 8.50% Cumulative Redeemable Perpetual Preference Shares ("Series A")	March 2019	$	86,250	3,450,000
Series B 8.00% Cumulative Redeemable Perpetual Preference Shares ("Series B")	June 2019	143,750		5,750,000
Series C 7.375% Cumulative Redeemable Perpetual Preference Shares ("Series C")	November 2019	175,000		7,000,000
Series D 6.875% Cumulative Redeemable Perpetual Preference Shares ("Series D")	January 2020	150,000		6,000,000

		$	555,000	22,200,000

(1) Represents number of shares authorized, issued, and outstanding.

Each Series of preferred shares may be redeemed at the Company's option, at any time after approximately five years from original issuance, in whole or in part at a redemption price, which is equal to the issue price, of $25.00 per share plus an amount equal to all accumulated and unpaid dividends, whether or not declared. The Company may also redeem each Series of preferred shares prior to the lapse of the five year period upon the occurrence of certain events as described in each agreement, such as transactions that either transfer ownership of substantially all assets to a single entity or establish a majority voting interest by a single entity, and cause a downgrade or withdrawal of rating by the rating agency within 60 days of the event. If the Company ~~granted 38,675~~does not elect to redeem each Series, holders of preferred shares may have the right to ~~directors which vested immediately.~~convert their preferred shares into common shares.

~~On September 12, 2017,~~Holders of preferred shares generally have no voting rights. If the Company ~~completed a common share offering~~fails to pay dividends for six or more quarterly periods (whether or not consecutive), holders will be entitled to elect two additional directors to the Board of Directors and the size of the Board of Directors will be increased to accommodate such election. Such right to elect two directors will continue until such time as there are no accumulated and unpaid dividends in ~~which it sold 5,350,000~~arrears.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dividends

Dividends on shares of each Series are cumulative from the date of original issue and will be payable quarterly in arrears on the 15th day of March, June, September and December of each year, when, as and if declared by the Company's Board of Directors. Dividends will be payable equal to the stated rate per annum of the $25.00 liquidation preference per share. The Series rank senior to the Company's common shares ~~at a public offering price~~with respect to dividend rights and rights upon the Company's liquidation, dissolution or winding up, whether voluntary or involuntary.

The Company paid the following quarterly dividends during the three months ended March 31, 2021 and 2020 on its issued and outstanding Series (in millions except for the per-share amounts):


		Series A		Series B		Series C		Series D
Record Date	Payment Date	Aggregate Payment	Per Share Payment(1)	Aggregate Payment	Per Share Payment	Aggregate Payment	Per Share Payment(1)	Aggregate Payment	Per Share Payment(1)
March 8, 2021	March 15, 2021	$1.8	$0.53	$2.9	$0.50	$3.2	$0.46	$2.6	$0.43



March 9, 2020	March 16, 2020	$1.8	$0.53	$2.9	$0.50	$3.2	$0.46	$1.5	$0.24

(1) Rounded to the nearest whole cent.

As of ~~$32.75 per share. On September 22, 2017,~~March 31, 2021, the Company ~~sold an additional 802,500~~had cumulative unpaid preferred dividends of $1.8 million.

Common Share Dividends

The Company paid the following quarterly dividends during the three months ended March 31, 2021 and 2020 on its issued common shares at a public offering price of $32.75 per share pursuant to the full exercise of an option granted to the underwriters in connection with the offering. The aggregate net proceeds received by the Company from the offering, including the exercise of the option, amounted to $192.9 million after deducting underwriting discounts and commissions, and before deducting total expenses incurred in connection with the offering of approximately $1.5 million. The net proceeds will be used for general corporate purposes, including the purchase of containers.shares:

Record Date

Payment Date

Aggregate Payment

Per Share Payment

March 12, 2021

March 26, 2021

$38.2 Million

$0.57

March 13, 2020

March 27, 2020

$37.1 Million

$0.52

Accumulated Other Comprehensive Income

The following table summarizes the components of accumulated other comprehensive income (loss), net of tax, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 (in thousands):


	Cash Flow Hedges		Foreign Currency Translation		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2020	$	(128,526)	$	(4,509)	$	(133,035)
Change in derivative instruments designated as cash flow hedges(1)	62,850		0		62,850
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	7,102		0		7,102
Foreign currency translation adjustment	0		21		21
Balance as of March 31, 2021	$	(58,574)	$	(4,488)	$	(63,062)


	Cash Flow Hedges		Foreign Currency Translation		Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2019	$	(27,096)	$	(4,537)	$	(31,633)
Change in derivative instruments designated as cash flow hedges(1)	(120,140)		0		(120,140)
Reclassification of (gain) loss on derivative instruments designated as cash flow hedges(1)	1,411		0		1,411

Foreign currency translation adjustment	0		(262)		(262)
Balance as of March 31, 2020	$	(145,825)	$	(4,799)	$	(150,624)

(1) Refer to Note 8 - "Derivative Instruments" for reclassification impact on the Consolidated Statements of Operations

Cash Flow
Hedges Foreign
Currency
Translation Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2016 $ 31,182
$ (4,424 ) $ 26,758
Change in fair value of derivative instruments designated as cash flow hedges (4,928 ) —
(4,928 )
Reclassification of loss on interest rate swap agreements designated as cash flow hedges 896
—
896
Foreign currency translation adjustment —
151
151
Other comprehensive (loss) income (4,032 ) 151
(3,881 )
Balance as of September 30, 2017 $ 27,150
$ (4,273 ) $ 22,877

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note ~~3—Share Based Compensation~~6—Leases

Lessee

The Company leases multiple office facilities which are contracted under various cancelable and ~~Other Equity Matters (continued)~~non-cancelable operating leases, most of which provide extension or early termination options. The Company's lease agreements do not contain any residual value guarantees or material restrictive covenants.

Cash Flow
Hedges Foreign
Currency
Translation Accumulated Other Comprehensive (Loss) Income
Balance as of December 31, 2015 $ —
$ (3,666 ) $ (3,666 )
Change in fair value of derivative instruments designated as cash flow hedges 574
—
574
Reclassification of realized (gain) on interest rate swap agreements designated as cash flow hedges (184 ) —
(184 )
Foreign currency translation adjustment —
(87 ) (87 )
Other comprehensive income (loss) 390
(87 ) 303
Balance as of September 30, 2016 $ 390
$ (3,753 ) $ (3,363 )
As of March 31, 2021, the weighted average implicit rate was 3.84% and the weighted average remaining lease term was 2.6 years.

The following table summarizes the ~~reclassifications out~~impact of ~~accumulated other comprehensive income~~the Company's leases in its financial statements (in thousands):


Balance Sheet	Financial statement caption	March 31, 2021		December 31, 2020
Right-of-use asset - operating	Other assets	$	4,750	$	5,062
Lease liability - operating	Accounts payable and other accrued expenses	$	5,697	$	6,088


		Three Months Ended March 31,
Income Statement	Financial statement caption	2021		2020
Operating lease cost(1)	Administrative expenses	$	722	$	759

(1) Includes short-term leases that are immaterial.

Cash paid for amounts of lease liabilities included in operating cash flows was $0.7 million and $0.8 million for the three months ended March 31, 2021 and March 31, 2020, respectively.

Lessor

Amounts Reclassified From Accumulated Other Comprehensive Income
Affected Line Item
in the Consolidated
Statements of Income
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Reclassification of (gain) loss on interest rate swap agreements $ (160 ) $ (284 ) $ 1,301
$ (284 ) Interest and debt expense
Income tax (benefit) expense 56
100
(405 ) 100
Income tax expense
Amounts reclassified from accumulated other comprehensive income, net of tax $ (104 ) $ (184 ) $ 896
$ (184 ) Net income

~~Note 4—Net Investment in Finance Leases~~

The following table summarizes the components of the net investment in finance leases (in thousands):

September 30,
2017 December 31,
2016
Future minimum lease payment receivable $ 302,652
$ 353,811
Estimated residual values 64,584
65,793
Gross finance lease receivables 367,236
419,604
Unearned income (57,532 ) (72,794 )
Net investment in finance leases, net of allowances $ 309,704
$ 346,810


	March 31, 2021		December 31, 2020
Future minimum lease payment receivable(1)	$	338,471	$	355,755
Estimated residual receivable(2)	53,789		53,892

Gross finance lease receivables(3)	392,260		409,647
Unearned income(4)	(120,913)		(127,516)
Net investment in finance leases(5)	$	271,347	$	282,131

(1) There were no executory costs included in gross finance lease receivables as of March 31, 2021 and December 31, 2020.

(2) The Company's finance leases generally include a purchase option at nominal amounts that is reasonably certain to be exercised, and therefore, the Company has immaterial residual value risk for assets.

(3) The gross finance lease receivable is reduced as billed to customers and reclassified to accounts receivable until paid by customers.

(4) There were no unamortized initial direct costs as of March 31, 2021 and December 31, 2020.

(5) One major customer represented 77% and 75% of the Company's finance lease portfolio as of March 31, 2021 and December 31, 2020, respectively. No other customer represented more than 10% of the Company's finance lease portfolio in each of those periods.

The Company’s finance lease portfolio lessees are primarily comprised of the largest international shipping lines. In its estimate of expected credit losses, the Company evaluates the overall credit quality of its finance lease portfolio. The Company considers an account past due when a payment has not been received in accordance with the terms of the related lease agreement and maintains allowances, if necessary, for doubtful ~~accounts and estimated losses resulting from the inability of its lessees to make required payments under finance leases.~~accounts. These allowances are based on, but not limited to, historical experience which includes stronger and weaker economic cycles, each ~~lessee’s~~lessee's payment history, ~~management’s~~management's current assessment of each ~~lessee’s~~lessee's financial condition, consideration of current economic conditions and reasonable market forecasts. As of March 31, 2021, the ~~recoverability.~~ ~~The~~ Company ~~currently~~ does not have an allowance on its gross finance lease ~~receivables.~~receivables and does not have any material past due balances.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5—7—Debt

The ~~following~~ table below summarizes the ~~components~~Company's key terms and carrying value of debt (in thousands):

September 30,
2017 December 31,
2016
Institutional notes $ 2,388,857
$ 2,233,874
Asset backed securitization (ABS) notes 2,450,199
1,384,235
Term loan facilities 1,752,443
1,332,030
Asset backed warehouse facility 45,000
660,000
Revolving credit facilities 115,000
708,750
Capital lease obligations 113,317
96,775
Total debt outstanding 6,864,816
6,415,664
Deferred financing costs (42,691 ) (19,999 )
Purchase price debt adjustment (31,961 ) (42,216 )
Debt, net $ 6,790,164
$ 6,353,449


	Contractual Weighted Avg Interest Rate(1)	Maturity Range(1)		March 31, 2021		December 31, 2020
		From	To
Institutional notes	4.59%	Jun 2021	Jun 2029	$	1,611,371	$	1,642,314
Asset-backed securitization term notes	1.98%	Aug 2023	Feb 2031	4,076,059		2,920,807
Term loan facility	1.61%	Nov 2023	Nov 2023	820,000		840,000
Asset-backed securitization warehouse	1.96%	Nov 2027	Nov 2027	20,000		264,000
Revolving credit facilities	1.76%	Sep 2023	Jul 2024	426,400		760,500
Finance lease obligations	4.93%	Feb 2024	Feb 2024	16,746		17,304
Total debt outstanding				6,970,576		6,444,925
Unamortized debt costs				(53,446)		(42,747)
Unamortized debt premiums & discounts				(1,941)		(599)
Unamortized fair value debt adjustment				1,508		1,691
Debt, net of unamortized costs				$	6,916,697	$	6,403,270

(1) Data as of March 31, 2021.

The fair value of total debt outstanding was $7,034.8 million and $6,536.5 million as of March 31, 2021 and December 31, 2020, respectively, and was measured using Level 2 inputs.

As of ~~September 30, 2017,~~March 31, 2021, the maximum borrowing levels for the Asset-backed Securitization ("ABS") warehouse and the revolving credit facilities are $1,125.0 million and $1,560.0 million, respectively. These facilities are governed by borrowing bases that limit borrowing capacity to an established percentage of relevant assets. As of March 31, 2021, the availability under these credit facilities without adding additional container assets to the borrowing base was approximately $828.8 million.

The Company is subject to certain financial covenants under its debt agreements. The agreements remain the obligations of the respective subsidiaries, and all related debt covenants are calculated at the subsidiary level. As of March 31, 2021 and December 31, 2020, the Company ~~had $4,354.2 million~~was in compliance with all financial covenants in accordance with the terms of its debt ~~outstanding on facilities with fixed interest rates and $2,510.6 million of debt outstanding on facilities with interest rates based on floating rate indices (primarily LIBOR).~~ agreements.

The Company ~~economically~~ hedges the risks associated with fluctuations in interest rates on a portion of its ~~floating rate borrowings~~floating-rate debt by entering into interest rate swap agreements that convert a portion of its floating rate debt to a fixed rate basis. As of September 30, 2017, the Company had interest rate swaps in place with a notional amount of $1,760.6 million to fix the floating interest rates on a portion of its floating rate debt obligations. The Company recognized $4.1 million of write-off of deferred financing costs for the three and nine months ended September 30, 2017. Write-off of deferred financing costs for the three and nine months ended September 30, 2016 were immaterial.

~~The Company is subject to certain financial covenants under its debt facilities, and as of~~ ~~September 30, 2017, was in compliance with all such covenants.~~

~~Debt Facilities~~

Effective April 1, 2017, both TAL and TCIL obtained the necessary consents from lenders and noteholders to appoint TCIL as manager of all of TAL’s container fleet including those containers in special purpose entities of TAL. TCIL replaced TAL International Container Corporation, a wholly owned subsidiary of TAL, as manager.

~~Institutional Notes~~

On July 13, 2017, the Company completed an offering of $250.0 million of senior secured notes. The Series 2017 A-1 notes had an original principal amount of $105.0 million, an interest rate of 4.35%, and a scheduled maturity of June 30, 2027. The 2017 Series A-2 notes had an original principal amounts of $145.0 million, an interest rate of 4.64%, and a scheduled maturity of June 30, 2029.

~~Asset Backed Securitization (ABS) Notes~~

~~On April 7, 2017, the Company completed an offering of $281.0 million of Class A fixed rate asset-backed notes. The notes have an interest rate of 4.50% and a scheduled maturity of April 20, 2027.~~

On June 15, 2017, the Company completed an offering of $318.9 million of Class A and B fixed rate asset-backed notes. The notes have a contractual weighted average interest rate of 3.57% and a scheduled maturity date of June 21, 2027.

~~On July 20, 2017, the Company terminated and paid down $80.1 million of its principal amount on an asset-backed note.~~

~~On August 14, 2017, the Company terminated and paid down $257.4 million of its principal amount on an asset-backed note.~~

On August 23, 2017, the Company completed an offering of $450.0 million of Class A and B fixed rate asset-backed notes. The notes have a contractual weighted average interest rate of 3.66% and a scheduled maturity of August 20, 2027.

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Note 5—Debt (continued)~~

On September 29, 2017, the Company completed an offering of $540.0 million asset-backed notes. The notes have an interest rate of one-month LIBOR plus 2.15% margin with a scheduled maturity date of September 20, 2022.

~~Term Loan Facilities~~

On January 20, 2017, the Company increased its borrowing on a term loan facility by $50.0 million. This incremental borrowing has an interest rate of one-month LIBOR plus 2.35% margin and a scheduled maturity date of December 19, 2020 which is aligned with the previous loans under the facility.

On January 25, 2017, the Company increased its borrowing on a term loan facility by $50.0 million. This incremental borrowing has an interest rate of one-month LIBOR plus 2.50% margin and a scheduled maturity date of June 20, 2022 which is aligned with the previous loans under the facility.

On February 24, 2017, the Company secured financing on its property for $18.8 million. This arrangement has an interest rate of three-month LIBOR plus 2.25% margin and a scheduled maturity date of March 1, 2020.

On March 13, 2017, the Company increased its borrowings on a term loan facility by $25.0 million. This incremental borrowing has an interest rate of one-month LIBOR plus 2.50% margin and a scheduled maturity date of June 20, 2022 which is aligned with the previous loans under this facility.

On June 16, 2017, the Company entered into a term loan facility of $260.0 million. The term loan facility has an interest rate of three-month LIBOR plus 2.25% margin and a scheduled maturity date of June 16, 2022.

On June 20, 2017, the Company increased its borrowings on a long term loan facility by $50.0 million. This incremental borrowing has an interest rate of three-month LIBOR plus 2.25% margin and a scheduled maturity date of June 20, 2021 which is aligned with the previous loans under this facility.

~~Asset Backed Securitization Warehouse Facilities~~

On March 10, 2017, the Company entered into a floating rate ABS warehouse facility with a borrowing capacity of $400.0 million. The first $200.0 million of this commitment has a one year revolving period followed by an eighteen month term period. The second $200.0 million of this commitment has a two year revolving period followed by a three year term period. This ABS warehouse facility has a contractual weighted average interest rate of three-month LIBOR plus a margin ranging from 2.25% to 4.25% with a scheduled maturity date of March 21, 2022.

On September 29, 2017, the Company terminated an ABS warehouse facility which had a borrowing capacity of $750.0 million and entered into a new ABS warehouse facility with a borrowing capacity of $400.0 million. This ABS warehouse facility has a contractual weighted average interest rate of one-month LIBOR plus a margin ranging from 1.85% to 2.85% with a scheduled maturity date of September 20, 2024.

~~Revolving Credit Facilities~~

On June 16, 2017, the Company terminated a $450.0 million revolving credit facility and increased its credit limit on a separate facility from $600.0 million to $1,025.0 million, and extended the term of the facility to June 16, 2022. This revolving credit facility’s interest rate remained at one-month LIBOR plus 2.00% margin.

~~Capital Lease Obligations~~

The Company entered into two lease transactions with financial institutions to finance the purchase of new containers for approximately $35 million during the first quarter of 2017. The lease transactions are accounted for as capital leases over the term period of eight years and contain two early buyout options.

~~Note 6—Derivative Instruments~~

~~Interest Rate Swaps~~

The Company has entered into interest rate swap agreements to manage interest rate risk exposure. Interest rate swap agreements are utilized to effectively modify the Company's exposure to interest rate risk by converting a portion of its floating ratefloating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. ~~Such~~The following table summarizes the Company's outstanding fixed-rate and floating-rate debt as of March 31, 2021 (in thousands):


	Balance Outstanding	Contractual Weighted Avg Interest Rate	Maturity Range		Weighted Avg Remaining Term
			From	To
Excluding impact of derivative instruments:
Fixed-rate debt	$5,057,512	2.86%	Jun 2021	Feb 2031	4.4 years
Floating-rate debt	$1,913,064	1.67%	Aug 2023	Nov 2027	2.6 years

Including impact of derivative instruments:
Fixed-rate debt	$5,057,512	2.86%
Hedged floating-rate debt	$1,697,600	3.57%
Total fixed and hedged debt	6,755,112	3.04%
Unhedged floating-rate debt	215,464	1.67%
Total	$6,970,576	3.00%

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company issued the following ABS fixed rate series during the three months ended March 31, 2021:

Date

Total Offering

Contractual Weighted Avg Interest Rate

Expected Maturity

February 3, 2021

$502.9 Million

1.69%

Feb 2031

March 17, 2021

$725.0 Million

1.89%

Dec 2030

Institutional Notes

In accordance with the Company's institutional note agreements, interest payments are due semi-annually. Institutional note maturities typically range from 7 - 12 years, with level principal payments due annually following an interest-only period. The institutional notes are pre-payable (in whole or in part) at the Company's option at any time, subject to certain provisions in the note agreements, including the payment of a make-whole premium in respect to such prepayment. These facilities provide for an advance rate against the net book values of designated eligible equipment.

Asset-Backed Securitization Term Notes

Under the Company's ABS facilities, indirect wholly-owned subsidiaries of the Company issue ABS notes. These subsidiaries are intended to be bankruptcy remote so that such assets are not available to creditors of the Company or its affiliates until and unless the related secured borrowings have been fully discharged. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings.

The Company’s borrowings under the ABS facilities amortize in monthly installments, typically in level payments over five or more years. These facilities provide for an advance rate against the net book values of designated eligible equipment. The net book values for purposes of calculating eligible equipment is determined according to the related debt agreement and may be different than those calculated per U.S. GAAP. The Company is required to maintain restricted cash balances on deposit in designated bank accounts equal to three to nine months of interest expense depending on the terms of each facility.

Term Loan Facility

The term loan facility amortizes in quarterly installments. This facility provides for an advance rate against the net book values of designated eligible equipment.

Asset-Backed Securitization Warehouse

Under the Company’s asset-backed warehouse facility, an indirect wholly-owned subsidiary of the Company issues ABS notes. This subsidiary is intended to be bankruptcy remote so that such assets are not available to creditors of the Company or its affiliates until and unless the related secured borrowings have been fully discharged. These transactions do not meet accounting requirements for sales treatment and are recorded as secured borrowings.

The Company's asset-backed warehouse facility has a borrowing capacity of $1,125.0 million that is available on a revolving basis until November 13, 2023, paying interest at LIBOR plus 1.85%, after which any borrowings will convert to term notes with a maturity date of November 15, 2027, paying interest at LIBOR plus 2.85%.

During the revolving period, the borrowing capacity under this facility is determined by applying an advance rate against the net book values of designated eligible equipment. The net book values for purposes of calculating eligible equipment are determined according to the related debt agreement and may be different than those calculated per U.S. GAAP. The Company is required to maintain restricted cash balances on deposit in designated bank accounts equal to three months of interest expense.

Revolving Credit Facilities

The revolving credit facilities have a maximum borrowing capacity of $1,560.0 million. These facilities provide for an advance rate against the net book values of designated eligible equipment.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Finance Lease Obligations

Certain containers are leased with a financial institution. The lease is accounted for as a finance lease, with interest expense recognized on a level yield basis over the period preceding early purchase options, which is five to seven years from the transaction date.

Note 8—Derivative Instruments

Interest Rate Swaps / Caps

The Company enters into derivative agreements to manage interest rate risk exposure. Interest rate swap agreements are utilized to limit the Company's exposure to interest rate risk by converting a portion of its floating-rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. Interest rate swaps involve the receipt of ~~floating rate~~floating-rate amounts in exchange for ~~fixed rate~~fixed-rate interest payments over the lives of the agreements without an exchange of the underlying principal amounts. The Company also utilizes interest rate cap agreements to manage the Company's exposure to rising interest rates by placing a ceiling on the rate that will be paid under certain floating-rate debt agreements.

The counterparties to ~~the Company's interest rate swap~~these agreements are highly rated financial institutions. In the unlikely event that the counterparties fail to meet the terms of ~~the interest rate swap~~these agreements, the Company's exposure is limited to the interest rate differential on the notional amount at each monthly settlement period over the life of the agreements. The Company does not anticipate any non-performance by the counterparties. Substantially all of the assets of certain indirect, wholly owned subsidiaries of the Company have been pledged as collateral for the underlying indebtedness and the amounts payable under the interest rate swap agreements for each of these entities. In addition, certainCertain assets of the Company's subsidiaries are pledged as collateral for various credit facilities and the amounts payable under certain agreements.

In conjunction with the issuance of ABS notes, the Company canceled the following interest rate ~~swap agreements.~~swaps that were in place to hedge the impact of interest rate changes on fixed-rate debt issuances:

Derivative Instrument

Date Canceled

Notional Amount

Funds Received

Interest rate swap

January 25, 2021

$150.0 million

$0.3 million

Interest rate swap

January 27, 2021

$150.0 million

$0.3 million

Interest rate swap

February 19, 2021

$150.0 million

$2.4 million

Interest rate swap

February 19, 2021

$150.0 million

$2.4 million

As of ~~September 30, 2017,~~March 31, 2021, the Company had interest rate swap and cap agreements in place to fix or limit the floating interest rates on a portion of the borrowings under its debt facilities as summarized below:

Derivatives

~~Net~~ Notional Amount

Weighted Average

Fixed Leg (Pay) Interest Rate

Cap Rate

Weighted Average

Remaining Term

Interest ~~rate swaps~~Rate Swap(1)

$~~1,760.6~~1,697.6 Million

~~1.70%~~2.02%

~~3.5~~n/a

4.8 years

Interest Rate Cap

$200.0 Million

n/a

5.5%

2.7 years

~~Interest Rate Swaps Activity~~

(1) The ~~Company entered into two interest rate swap agreements during the first quarter~~impact of ~~2017 for a~~forward starting swaps will increase total notional amount by $350.0 million and increase the weighted average remaining term to 5.8 years.

Unrealized losses of ~~$400~~$28.6 million ~~that involve the receipt of floating rate amounts in exchange for fixed rate interest payments in order~~related to fix the interest rate on a portion of the borrowings under its floating rate debt facilities. The agreements are non-amortizing over a one year term. The Company has designated these interest rate swap agreements as cash flow hedges for accounting purposes.

The Company terminated three interest rate swap agreements during the third quarter of 2017 with a total notional value of $193.1 million. The Company also terminated two interest rate cap agreements during the third quarter with a total notional value of $69.2 million which did not impact its consolidated financial statements, as the interest rate cap value per the contract exceeded actual interest rates.

~~Fair Value of Derivative Instruments~~

The Company has elected to use the income approach to value its interest rate swap agreements. This approach uses observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a present discounted amount. The Level 2 inputs for the interest rate swap and ~~forward valuations~~cap agreements included in accumulated other comprehensive income (loss) are ~~limited~~expected to ~~quoted prices for similar assets or liabilities~~be recognized in ~~active markets~~Interest and ~~inputs other than quoted prices that are observable for~~debt expense over the asset or liability (specifically LIBOR and swap rates, basis swap adjustments and credit risk at commonly quoted intervals). The following table summarizes the fair value hierarchy for its derivative instruments (in thousands):next twelve months.

~~Location of Derivative Instruments in Financial Statements~~

Asset Derivatives Liability Derivatives
Derivative Instrument September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Interest rate swap contracts, designated as cash flow hedges $ 1,143
$ 526
$ 8,886
$ 8,728
Interest rate swap contracts, not designated 2,696
5,217
192
676
Fair value of derivative instruments $ 3,839
$ 5,743
$ 9,078
$ 9,404

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Note 6—Derivative Instruments (continued)~~

The following table summarizes the impact of derivative instruments on the consolidated statements of operations and the consolidated statements of comprehensive income ~~(loss)~~on a pretax basis (in thousands):


		Three Months Ended March 31,
	Financial statement caption	2021		2020
Non-Designated Derivative Instruments
Realized (gains) losses	Other (income) expense, net	$	0	$	(235)

Unrealized (gains) losses	Other (income) expense, net	$	0	$	297
Designated Derivative Instruments
Realized (gains) losses	Interest and debt (income) expense	$	7,570	$	1,259
Unrealized (gains) losses	Comprehensive (income) loss	$	(65,408)	$	129,614

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three Months Ended September 30, Nine Months Ended September 30,
Derivative instrument Financial statement caption 2017 2016 2017 2016
Non-designated interest rate swaps Realized loss on derivative instruments, net $ 20
$ 864
$ 902
$ 2,268
Non-designated interest rate swaps Unrealized loss (gain) on derivative instruments, net $ 629
$ (3,487 ) $ (80 ) $ 5,243
Designated interest rate swaps Other comprehensive income (loss) $ (1,553 ) $ 886
$ (7,579 ) $ 886
Designated interest rate swaps Interest and debt (income)expense $ (160 ) $ (284 ) $ 1,301
$ (284 )

Fair Value of Derivative Instruments

The Company has elected to use the income approach to value its interest rate swap and cap agreements, using Level 2 market expectations at the measurement date and standard valuation techniques to convert future values to a single discounted present value. The Level 2 inputs for the interest rate swap and cap valuations are inputs other than quoted prices that are observable for the asset or liability (specifically LIBOR and swap rates and credit risk at commonly quoted intervals). In response to the expected phase out of LIBOR, the Company continues to work with its counterparties to identify an alternative reference rate. Substantially all of the Company's debt agreements already include transition language, and the Company also adopted various practical expedients which will facilitate the transition.

The Company presents the fair value of derivative financial instruments on a gross basis as a separate line item on the consolidated balance sheet. As of March 31, 2021 and December 31, 2020, the Company has no material non-designated instruments.

Any amounts of cash collateral posted related to derivative instruments are included in Other assets on the consolidated balance sheet and are presented in operating activities of the consolidated statements of cash flows. As of March 31, 2021, the Company has cash collateral of $28.4 million related to interest rate swap contracts.

Note 7—9—Segment and Geographic Information

Segment Information

The Company operates its business in one industry, intermodal transportation equipment, and has ~~two~~2 operating segments which also represent its ~~two~~ reporting segments:

•Equipment ~~leasing—~~leasing - the Company owns, leases and ultimately disposes of containers and chassis from its lease ~~fleet, as well as manages containers owned by third parties.~~fleet.

•Equipment ~~trading—~~trading - the Company purchases containers from shipping line customers, and other sellers of containers, and resells these containers to container retailers and users of containers for storage or one-way shipment. Included in the equipment trading segment revenues are leasing revenues from equipment purchased for resale that is currently on lease until the containers are dropped off.

~~The Company acquired~~

These operating segments were determined based on the ~~equipment trading segment as part~~chief operating decision maker's review and resource allocation of the ~~Merger on July 12, 2016. Prior to the Merger, the Company operated in only one segment - equipment leasing~~products and ~~therefore all income and assets were attributed to the leasing segment for periods prior to the Merger.~~services offered.

The following tables summarizes our segment information and the consolidated totals reported (in thousands):


	Three Months Ended March 31,
	2021						2020
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Total leasing revenues	$	343,805	$	2,938	$	346,743	$	321,037	$	431	$	321,468
Trading margin	0		8,141		8,141		0		1,933		1,933
Net gain on sale of leasing equipment	21,967		0		21,967		4,077		0		4,077
Depreciation and amortization expense	143,137		170		143,307		132,518		177		132,695
Interest and debt expense	54,221		402		54,623		68,699		303		69,002

Segment income (loss) before income taxes(1)	142,189		9,386		151,575		81,517		1,393		82,910
Purchases of leasing equipment and investments in finance leases(2)	$	579,211	$	0	$	579,211	$	62,406	$	0	$	62,406

(1) Segment income before income taxes excludes unrealized gains or losses on derivative instruments and debt termination expense. The Company recorded an unrealized loss on derivative instruments of $0.3 million for the three months ended March 31, 2020, included in other (income)/expense, net, and an immaterial amount for debt termination expense for the three months ended March 31, 2020.

(2) Represents cash disbursements for purchases of leasing equipment and investments in finance lease as reflected in the consolidated statements of cash flows for the periods indicated, but excludes cash flows associated with the purchase of equipment held for resale.

Three Months Ended September 30,
2017 2016
Equipment
Leasing Equipment
Trading Totals Equipment
Leasing Equipment
Trading Totals
Total leasing revenues $ 301,282
$ 838
$ 302,120
$ 247,011
$ 778
$ 247,789
Trading margin —
1,369
1,369
—
232
232
Net gain (loss) on sale of leasing equipment 10,263
—
10,263
(12,319 ) —
(12,319 )
Depreciation and amortization expense 128,428
153
128,581
112,134
175
112,309
Interest and debt expense 73,466
329
73,795
55,124
313
55,437
Realized loss on derivative instruments, net 20
—
20
864
—
864
Income before income taxes(1) 73,232
2,079
75,311
(56,356 ) (3,979 ) (60,335 )

~~(1)~~

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Note 7—Segment and Geographic Information (continued)~~

Nine Months Ended September 30,
2017 2016
Equipment
Leasing Equipment
Trading Totals Equipment
Leasing Equipment
Trading Totals
Total leasing revenues $ 847,136
$ 2,525
$ 849,661
$ 568,370
$ 778
$ 569,148
Trading margin —
3,089
3,089
—
232
232
Net gain (loss) on sale of leasing equipment 25,063
—
25,063
(16,086 ) —
(16,086 )
Depreciation and amortization expense 370,081
471
370,552
272,410
175
272,585
Interest and debt expense 206,959
1,117
208,076
122,313
313
122,626
Realized loss on derivative instruments, net 902
—
902
2,268
—
2,268
Income before income taxes(1) 173,330
4,257
177,587
(27,583 ) (3,979 ) (31,562 )

~~(1)~~

Segment income before income taxes excludes unrealized gains or losses on interest rate swaps and the write-off of deferred financing costs. Unrealized gains on interest rate swaps were $0.1 million and unrealized losses on interest rate swaps were $5.2 million for the nine months ended September 30, 2017 and 2016, respectively. There were $4.1 million and $0.1 million write-offs of deferred financing costs for the nine months ended September 30, 2017 and 2016, respectively.


	March 31, 2021						December 31, 2020
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Equipment held for sale	$	30,415	$	27,153	$	57,568	$	43,275	$	24,036	$	67,311
Goodwill	220,864		15,801		236,665		220,864		15,801		236,665
Total assets	$	10,390,561	$	100,416	$	10,490,977	$	9,612,251	$	100,282	$	9,712,533

Balance as of September 30, 2017 Balance as of December 31, 2016
Equipment
Leasing Equipment
Trading Totals Equipment
Leasing Equipment
Trading Totals
Equipment held for sale $ 39,666
$ 12,621
$ 52,287
$ 81,804
$ 18,059
$ 99,863
Goodwill 220,864
15,801
236,665
220,864
15,801
236,665
Total assets 9,337,450
44,764
9,382,214
8,660,786
52,785
8,713,571

There are no intercompany revenues or expenses between segments. Certain administrative expenses have been allocated between segments based on an estimate of services provided to each segment. A portion of the Company's equipment purchased for resale ~~was purchased through certain sale-leaseback transactions with our shipping line customers. Due to~~in the ~~expected longer term nature~~equipment trading segment may be leased for a period of ~~these transactions, these purchases are~~time and is reflected as leasing equipment as opposed to equipment held for sale and the cash flows associated with these transactions are reflected as purchases of leasing equipment and proceeds from the sale of equipment in investing activities in the Company's consolidated statements of cash flows.

Geographic Segment Information

The Company generates the majority of its leasing revenues from international containers which are deployed by its customers in a wide variety of global trade routes. ~~Substantially all~~The majority of the Company's leasing related revenue is denominated in U.S. dollars.

The following table summarizes the geographic allocation of equipment leasing revenues for the three months ended March 31, 2021 and 2020 based on customers' primary domicile (in thousands):


	Three Months Ended March 31,
	2021		2020
Total equipment leasing revenues:
Asia	$	123,894	$	120,806
Europe	186,373		164,263
Americas	24,713		26,261
Bermuda	575		443
Other International	11,188		9,695
Total	$	346,743	$	321,468

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total leasing revenues:
Asia $ 127,205
$ 114,579
$ 361,975
$ 287,736
Europe 133,752
107,219
376,414
215,545
Americas 31,014
15,671
80,464
38,144
Other 9,504
10,205
29,771
27,375
Bermuda 645
115
1,037
348
Total $ 302,120
$ 247,789
$ 849,661
$ 569,148

~~TRITON INTERNATIONAL LIMITED~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~Note 7—Segment and Geographic Information (continued)~~

~~The following table summarizes the geographic allocation of equipment trading revenues based on customers' primary domicile (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total equipment trading revenues:
Asia $ 6,582
$ 5,330
$ 15,063
$ 5,330
Europe 2,510
2,297
6,728
2,297
Americas 1,973
1,386
5,672
1,386
Other 909
807
2,728
807
Bermuda —
—
22
—
Total $ 11,974
$ 9,820
$ 30,213
$ 9,820

Since the majority of the Company's containers are used internationally, where no one container is domiciled in one particular place for a prolonged period of time, ~~substantially~~ all of the Company's long-lived assets are considered to be international.

~~Note 8—Commitments~~

~~Purchase Commitments~~

At ~~September 30, 2017, commitments for capital expenditures totaled approximately $263.2 million.~~

~~Retention Bonus Plan~~

TCIL established a bonus plan in 2011 to award bonuses to certain employees for continued service (the “Retention Bonus Plan”). In accordance with the terms of the Retention Bonus Plan agreement, specified bonus amounts, plus interest compounded annually, were paid to all participants in the Retention Bonus Plan in June 2017.

The Company established a retention bonus plan (the “Plan”) in 2015 to award bonuses to certain employees for continued service who were not included in the Retention Bonus Plan. The Plan became effective on the closing date of the Merger and in accordance with the terms, bonus amounts were paid to all Plan participants on the earlier of their termination date or June 2017.

The Company established a bonus plan in 2015 to award bonuses to certain TAL employees for continued service (the “TAL Retention Bonus Plan”). In accordance with the terms of the TAL Retention Bonus Plan agreement, the Company paid the specified bonus amounts to all participants on the earlier of their termination date or July 2017.

The following table summarizes ~~changes to~~ the ~~Company’s total retention bonus liability balance~~geographic allocation of equipment trading revenues for the three months ended March 31, 2021 and 2020 based on the location of the sale (in thousands):


	Three Months Ended March 31,
	2021		2020
Total equipment trading revenues:
Asia	$	7,459	$	1,532
Europe	7,122		4,952
Americas	8,541		6,595
Bermuda	0		0
Other International	2,823		2,301
Total	$	25,945	$	15,380

Total
Balance at December 31, 2016 $ 25,175
Accrual 2,853
Payments (28,028 )
Balance at September 30, 2017 $ —

~~Severance Plan~~

TCIL and TAL, established severance plans in order to provide severance benefits to eligible employees who are voluntarily terminated for reasons other than cause, or who resign for “good reason”. Employees eligible for benefits under the severance plans would receive a severance award and other benefits based upon their tenure with either TCIL or TAL.

TRITON INTERNATIONAL LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8—10—Commitments ~~(continued)~~and Contingencies

Container Equipment Purchase Commitments

At March 31, 2021, the Company had commitments to purchase equipment in the amount of $1,398.6 million payable in 2021.

Contingencies

The ~~following table summarizes changes~~Company is party to various pending or threatened legal or regulatory proceedings arising in the ~~Company’s total severance balance (in thousands):~~ordinary course of its business. Based upon information presently available, the Company does not expect any liabilities arising from these matters to have a material effect on the consolidated financial position, results of operations or cash flows of the Company.

Total
Balance at December 31, 2016 $ 20,718
Accrual 88
Payments (16,581 )
Balance at September 30, 2017 $ 4,225

Note 9—11—Income Taxes

The Company's effective tax rates were ~~15.7%~~7.7% and ~~13.6%~~6.7% for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, respectively, and 17.1% and 15.0% for the nine months ended September 30, 2017 and 2016,~~2020, respectively. The Company has computed the provision for income taxes based on the estimated annual effective tax rate and the application of discrete items, if any, in the applicable period. The increase in the effective tax rate isin 2021 compared to the same period of 2020 was primarily ~~due to~~the result of an ~~increase in the~~increased proportion of ~~pretax~~the Company's income ~~(loss)~~ generated in higher tax jurisdictions.

Note ~~10—~~12—Related Party Transactions

The Company holds a 50% interest in TriStar Container Services (Asia) Private Limited ~~(“TriStar”~~("TriStar"), which is primarily engaged in the selling and leasing of container equipment in the domestic and short sea markets in India. The ~~Company has an~~Company's equity investment in TriStar ~~which~~ is included in ~~other~~Other assets on the consolidated balance sheet. The ~~following table summarizes~~Company received payments on finance leases with TriStar of $0.5 million for both of the three months ended March 31, 2021 and March 31, 2020. The Company has a direct finance lease ~~and a loan payable balances~~balance with TriStar ~~(in thousands):~~of $10.0 million and $10.3 million as of March 31, 2021 and December 31, 2020, respectively.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Payments received from TriStar on direct finance leases $ 477
$ 419
$ 1,373
$ 1,246
Payments received from TriStar on loan payable $ —
$ 43
$ 86
$ 85

September 30,
2017 December 31,
2016
Direct finance lease balance $ 10,964
$ 10,636
Loan payable balance $ 42
$ 126

Note ~~11—~~13—Subsequent Events

~~Quarterly Dividend~~

On ~~November 7, 2017,~~April 15, 2021, the Company completed a $600.0 million senior secured investment grade bond offering. The bond offering has a contractual interest rate of 2.05% and expected maturity date of April 15, 2026.

On April 27, 2021, the Company's Board of Directors approved and declared a ~~$0.45 per share~~ quarterly cash dividend of $0.57 per share on its issued and outstanding common shares, payable on ~~December 22, 2017~~June 24, 2021 to ~~shareholders~~holders of record at the close of business on ~~December 1, 2017.~~June 10, 2021.

On April 27, 2021, the Company's Board of Directors also approved and declared a cash dividend on its issued and outstanding preferred shares, payable on June 15, 2021 to holders of record at the close of business on June 8, 2021 as follows:


Preferred Share Offering	Dividend Rate	Dividend Per Share
Series A	8.500%	$0.5312500
Series B	8.000%	$0.5000000
Series C	7.375%	$0.4609375
Series D	6.875%	$0.4296875

~~Table of contents~~19

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

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" as discussed in our Annual Report on Form 10-K filed for the fiscal year ended December 31, ~~2016~~2020 with the SEC on ~~March 17, 2017, as amended~~February 16, 2021 (the "Form 10-K")., in this Report on Form 10-Q and in any other Form 10-Q filed or to be filed by us, and in other documents we file with the SEC from time to time. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Our Company

On July 12, 2016, Triton Container International Limited (“TCIL”) and TAL International Group, Inc. (“TAL”) combined in an all-stock merger (the "Merger"). Under the terms of the transaction agreement, TCIL and TAL combined under a newly formed company,

Triton International Limited ~~(“Triton”~~("Triton", "we", "our" or the ~~“Company”~~"Company"). TCIL has been treated as the acquirer in the Merger for accounting purposes, and therefore, the results of operations for Triton, included herein, for the periods prior to the Merger on July 12, 2016 are for TCIL operations alone. However, certain operating statistics included in this section reflect the combined statistics for TCIL and TAL prior to the Merger in order to show overall operating trends more clearly.

~~Triton~~ is the world's largest lessor of intermodal containers. ~~Triton also leases chassis.~~ Intermodal containers are large, standardized steel boxes used to transport freight by ship, rail or truck. ~~Intermodal~~Because of the handling efficiencies they provide, intermodal containers are the primary means by which many goods and materials are shipped internationally. ~~Chassis~~We also lease chassis, which are used for the transportation of containers.

We operate our business in one industry, intermodal transportation equipment, and have two ~~operating~~business segments, which also represent our reporting segments:

•Equipment leasing - we own, lease and ultimately dispose of containers and chassis from our lease ~~fleet, as well as manage containers owned by third parties.~~fleet.

•Equipment trading - we purchase containers from shipping line customers, and other sellers of containers, and resell these containers to container retailers and users of containers for storage or one-way shipment.

Operations

Our consolidated operations include the acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis. As of ~~September 30, 2017,~~March 31, 2021, our ~~equipment~~total fleet consisted of ~~3.3~~3.8 million ~~units,~~containers and chassis, representing ~~5.5~~6.5 million twenty-foot equivalent units ("TEU") or 7.3 million cost equivalent units ("CEU"). We have an extensive global presence, offering leasing services through 2419 offices and 3 independent agencies located in 1516 countries and ~~463 third party container~~411 third-party owned and operated depot facilities in 4746 countries as of ~~September 30, 2017.~~March 31, 2021. Our primary customers ~~are among~~include the world's largest container shipping ~~lines in the world.~~lines. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, our twenty largest customers accounted for ~~83%~~86% of our lease billings, our five largest customers accounted for ~~55%~~60% of our lease billings, and our ~~two~~three largest customers ~~CMA CGM and Mediterranean Shipping Company,~~ accounted for ~~19%~~21%, 14%, and ~~14%~~10% of our lease ~~billings, respectively.~~billings.

The most important driver of profitability in our business is the extent to which leasing revenues, which are driven by our owned equipment fleet size, utilization and average lease rates, exceed our ownership and operating costs. Our profitability is also driven by the gains or losses we realize on the sale of used containers in the ordinary course of our business.

We lease five types of equipment: (1) dry containers, which are used for general cargo such as ~~consumer staples,~~ manufactured component parts, consumer staples, electronics and apparel, (2) refrigerated containers, which are used for perishable items such as fresh and frozen foods, (3) special containers, which are used for heavy and over-sized cargo such as marble slabs, building products and machinery, (4) tank containers, which are used to transport bulk liquid products such as chemicals, and (5) chassis, which are used for the transportation of ~~containers.~~containers on land. Our in-house equipment sales group manages the sale process for our used containers and chassis from our equipment leasing fleet and buys and sells used and new containers and chassis acquired from third parties.

~~Table of contents~~

The following tables ~~summarizes~~summarize our equipment fleet as of ~~September 30, 2017,~~March 31, 2021, December 31, ~~2016,~~2020 and ~~September 30, 2016~~March 31, 2020 indicated in units, TEU and ~~cost equivalent units, or "CEU".~~

Equipment Fleet in Units Equipment Fleet in TEU
September 30, 2017 December 31, 2016 September 30, 2016 September 30, 2017 December 31, 2016 September 30, 2016
Dry 2,997,356
2,737,982
2,672,386
4,873,026
4,424,905
4,296,420
Refrigerated 217,121
217,243
213,417
417,138
416,992
409,657
Special 89,219
92,957
93,580
159,243
164,977
165,852
Tank 11,948
11,961
11,962
11,948
11,961
11,962
Chassis 22,522
22,128
22,158
41,062
40,233
40,279
Equipment leasing fleet 3,338,166
3,082,271
3,013,503
5,502,417
5,059,068
4,924,170
Equipment trading fleet 10,998
15,927
15,680
17,993
26,276
26,214
Total 3,349,164
3,098,198
3,029,183
5,520,410
5,085,344
4,950,384
CEU. CEU and TEU are standard industry measures of fleet size and are used to measure the quantity of containers that make up our revenue earning assets:


					Equipment Fleet in Units			Equipment Fleet in TEU
	Equipment Fleet in CEU(1)				March 31, 2021	December 31, 2020	March 31, 2020	March 31, 2021	December 31, 2020	March 31, 2020
	September 30, 2017	December 31, 2016	September 30, 2016
Operating leases	6,544,960	6,126,320	5,975,852
Finance leases	334,121	368,468	375,109
Dry				Dry	3,417,293	3,295,908	3,239,306	5,711,032	5,466,421	5,324,756
Refrigerated				Refrigerated	232,550	227,519	225,026	450,087	439,956	434,263
Special				Special	94,266	93,885	93,743	171,781	170,792	170,225
Tank				Tank	11,339	11,312	12,469	11,339	11,312	12,469
Chassis				Chassis	24,078	24,781	24,319	43,858	45,188	44,828
Equipment leasing fleet				Equipment leasing fleet	3,779,526	3,653,405	3,594,863	6,388,097	6,133,669	5,986,541
Equipment trading fleet	55,483	72,646	76,417	Equipment trading fleet	60,242	64,243	17,549	93,514	98,991	26,185
Total	6,934,564	6,567,434	6,427,378	Total	3,839,768	3,717,648	3,612,412	6,481,611	6,232,660	6,012,726


	Equipment Fleet in CEU (1)
	March 31, 2021	December 31, 2020	March 31, 2020
Operating leases	6,892,129	6,649,350	6,474,701
Finance leases	297,168	295,784	338,242
Equipment trading fleet	92,570	98,420	35,632
Total	7,281,867	7,043,554	6,848,575

~~(1)~~

In the equipment fleet tables above, we have included total fleet count information based on CEU. CEU is a ratio used to convert the actual number of containers in our fleet to a figure based on the relative purchase prices of our various equipment types to that of a 20 foot dry container. For example, the CEU ratio for a 40 foot high cube dry container is 1.68, and a 40 foot high cube refrigerated container is 10.0. The CEU ratios used in this calculation may differ slightly from current actual cost ratios and CEU ratios used by others in the industry.

(1)In the equipment fleet tables above, we have included total fleet count information based on CEU. CEU is a ratio used to convert the actual number of containers in our fleet to a figure based on the relative purchase prices of our various equipment types to that of a 20-foot dry container. For example, the CEU ratio for a 40-foot high cube dry container is 1.70, and a 40-foot high cube refrigerated container is 7.50. These factors may differ slightly from CEU ratios used by others in the industry.

The following table summarizes the percentage of our equipment fleet in terms of units and CEU as of ~~September 30, 2017:~~

March 31, 2021:


Equipment Fleet	Percentage of total fleet in units		Percentage of total fleet in CEU
Equipment Type					Equipment Type	Percentage of total fleet in units		Percentage of total fleet in CEU
Dry	89.5	%	61.3	%	Dry	88.9	%	68.8	%
Refrigerated	6.5		30.7		Refrigerated	6.1		23.7
Special	2.7		3.0		Special	2.5		3.3
Tank	0.4		2.8		Tank	0.3		1.2
Chassis	0.6		1.4		Chassis	0.6		1.7
Equipment leasing fleet	99.7		99.2		Equipment leasing fleet	98.4		98.7
Equipment trading fleet	0.3		0.8		Equipment trading fleet	1.6		1.3
Total	100.0	%	100.0	%	Total	100.0	%	100.0	%

We generally lease our equipment on a per diem basis to our customers under three types of leases: ~~long-term~~

•Long-term leases ~~finance leases and service leases. Long-term leases~~typically have initial contractual terms ranging from three to eight or more years and provide us with stable cash flow and low transaction costs by requiring customers to maintain specific units on-hire for the duration of the ~~lease.~~ lease term. Some of our containers, primarily used containers, are placed on lifecycle leases which keep the containers on-hire until the end of their useful life.

•Finance leases are typically structured as full payout leases and provide for a predictable recurring revenue stream with the lowest cost to the customer as customers are generally required to retain the equipment for the duration of its useful life.

•Service leases command a premium per diem rate in exchange for providing customers with a greater ~~level of~~ operational flexibility by allowing ~~the~~non-scheduled pick-up and drop-off of units during the lease term.

We also have expired long-term leases whose fixed terms have ended ~~however,~~but for which the related units remain on-hire and for which we continue to receive ~~lease~~rental payments pursuant to the terms of the initial contract.

Some leases have contractual terms that have features reflective of both long-term and service leases and we classify such leases as either long-term or service leases, depending upon which features we believe are predominant.

~~Table of contents~~

The following table summarizes ~~the percentage of~~ our lease portfolio by lease type, based on CEU on-hire as of ~~September 30, 2017,~~March 31, 2021, December 31, ~~2016,~~2020 and ~~September 30, 2016:~~

March 31, 2020:


Lease Portfolio	September 30, 2017		December 31, 2016		September 30, 2016		Lease Portfolio	March 31, 2021		December 31, 2020		March 31, 2020
Long-term leases	70.7	%	69.7	%	68.2	%	Long-term leases	74.7	%	73.8	%	71.1	%
Finance leases	5.1		6.3		6.7		Finance leases	4.2		4.4		5.5
Service leases	14.7		18.5		19.1		Service leases	6.4		7.2		7.7
Expired long-term leases (units on-hire)	9.5		5.5		6.0		Expired long-term leases (units on-hire)	14.7		14.6		15.7
Total	100.0	%	100.0	%	100.0	%	Total	100.0	%	100.0	%	100.0	%

As of ~~September 30, 2017,~~March 31, 2021, December 31, ~~2016~~2020 and ~~September 30, 2016,~~March 31, 2020, our long-term and finance leases combined had an average remaining ~~contract terms~~contractual term of approximately 4051 months, 3949 months, and 3648 months, respectively, assuming no leases are renewed.

~~Operating Performance~~Market Overview and COVID-19

The ~~following discussion of market conditions~~COVID-19 pandemic continues to have a meaningful impact on global trade and our business. The outbreak of COVID-19 and the initial global economic and social lockdowns caused a sharp decrease in trade volume and pressured our operating and financial performance ~~refers~~in the first half of 2020. However, the easing of the lockdowns during the second quarter of 2020 and a shift in consumer spending from services and experiences to goods drove a ~~variety~~sharp rebound in global containerized trade volumes and container demand beginning in the second half of 2020. The increase in trade volumes coupled with logistical challenges that have slowed the global movement of containers has resulted in a worldwide shortage of containers that has continued into the first quarter of this year. This shortage has driven our ~~business metrics~~fleet to near full utilization, and ~~trends including fleet size, utilization, average per diem~~led to significant increases in new container prices, market leasing rates and used container ~~sale prices~~disposal prices. We have also significantly increased our procurement of new containers. All of these factors have contributed to a sharp increase in our profitability over the prior year period.

Operating Performance

Our operating and ~~volumes. In this section,~~financial performance in the first quarter of 2021 benefited from the very favorable market conditions that are being driven by strong global trade activity coupled with a limited availability of containers.

Fleet size. As of March 31, 2021, our revenue earning assets had a net book value of $9.5 billion, an increase of 8.4% from March 31, 2020 and 6.1% from December 31, 2020. This increase was primarily due to increased purchases of containers that began in the second half of 2020 and accelerated into 2021 in response to a surge in global containerized trade volumes and lease demand. Through April 23, 2021, we have purchased approximately $2.6 billion of new containers for delivery in 2021, of which $702.6 million were accepted in the first quarter. The vast majority of these containers have already been committed to leases. We expect our existing orders will translate to asset growth of close to 20% in 2021.

Utilization. Our average utilization was 99.1% for the ~~periods prior~~quarter ended March 31, 2021, an increase of 3.7% compared to the ~~Merger,~~first quarter of 2020 and an increase of 1.0% from the relevant performance measures for TCIL and TAL have been combined on a pro forma basis for comparative purposes. We believe these combined business metrics for the periods prior to the Merger are relevant when evaluating operating performance and analyzing historical trends. These combined operating metrics do not necessarily reflect what the result would have been if the transaction occurred prior to July 12, 2016.

~~Market conditions remained favorable during~~fourth quarter of 2020. Our utilization has increased steadily since the third quarter of ~~2017, especially for our dry~~2020 due to a very high volume of container ~~product line. The supply / demand balance for containers has been strong, driven by stronger than expected global containerized trade growth,~~pick-ups and limited new container production volumes during 2016, reduced new container purchases by a number of our competitors and shipping line customers, and new container production disruptions in 2017. We have been able to capitalize on these market conditions to produce solid improvements in our operating metrics and financial performance.

~~Fleet size.~~drop-off activity. As of September 30, 2017, our fleet included 6,934,564 CEU, an increase of 5.6% as compared to December 31, 2016, and an increase of 7.9% as compared to September 30, 2016. The increase in our fleet size was due to significant investments in new containers and sale-leaseback transactions in the last quarter of 2016 and during 2017.

Trade growth in 2017 has been stronger than expected, and most forecasters are currently projecting global containerized trade growth in the range of six percent. In addition, in 2017 we benefited from an increase in the share of new containers purchased by leasing companies and an increase in our share of new leasing transactions. Our shipping line customers have been facing difficult market conditions for several years, including excess vessel capacity and weak freight rates, and many have been reluctant to place sizable orders for new containers. Additionally, several of our container leasing competitors experienced financial challenges and have reduced their levels of new container investments. As of November 8, 2017, Triton has ordered approximately 790,000 CEU valued at approximately $1.6 billion in new and sale-leaseback containers for delivery in 2017. Approximately 122,000 CEU of these orders have not yet been delivered, and we expect our fleet size to increase further in the fourth quarter.

~~Utilization.~~ ~~Our average utilization was 97.6% during the third quarter of 2017 an increase from 96.5% in the second quarter of 2017 and an increase from 92.4% in the third quarter of 2016. As of November 8, 2017,~~April 23, 2021, our utilization was ~~98.2%~~99.4%. In 2017, the strong supply / demand balance for containers and our increased leasing share has led to very strong container pick up activity and limited container drop off volumes. We expect the supply / demand balance for containers to remain favorable in 2018, but our utilization is near maximum levels, especially for dry containers, limiting the potential for further improvements.

~~Table of contents~~

The following ~~tables~~table summarizes ~~the~~our equipment fleet utilization⁽¹⁾ for the periods indicated below. Utilization is computed by dividing our total units on lease (in CEU) by the total units in our fleet (in CEU) excluding new units not yet leased and off-hire units designated for sale:


	Quarter Ended
	March 31, 2021		December 31, 2020		September 30, 2020		June 30, 2020		March 31, 2020
Average Utilization	99.1	%	98.1	%	96.1	%	95.0	%	95.4	%
Ending Utilization	99.3	%	98.9	%	97.4	%	94.8	%	95.3	%

Quarter Ended
September 30,
2017 June 30,
2017 March 31,
2017 December 31,
2016 September 30,
2016
Average Utilization⁽²⁾
97.6 % 96.5 % 95.3 % 93.6 % 92.4 %

September 30,
2017 June 30,
2017 March 31,
2017 December 31,
2016 September 30,
2016
Ending Utilization 98.0 % 97.1 % 95.8 % 94.8 % 92.6 %


~~(1)~~	~~Utilization is computed by dividing our total units on lease (in CEU) by the total units in our fleet (in CEU) excluding new units not yet leased and off-hire units designated for sale.~~


~~(2)~~	~~The average utilization for the quarter ending September 30, 2016 includes the combination of TCIL and TAL for the first 12 days of July 2016 which were prior to the Merger.~~

Average lease rates.Average ~~portfolio~~ lease rates for our dry container product line increased by 1.0% in the ~~third~~first quarter of ~~2017 by 2.8%~~2021 compared to the ~~second~~first quarter of ~~2017~~2020, and ~~decreased~~increased by ~~0.5% compared to the third quarter of 2016. After being historically low for much of 2015 and 2016, market lease rates increased strongly during~~1.9% from the fourth quarter of ~~2016 and continued to~~2020. The increase ~~throughout 2017~~in our average dry container lease rates was primarily driven by ~~a rebound~~the sharp increase in new container prices and ~~an increase in leasing demand. Market~~market lease rates in the fourth quarter of 2020 and the first quarter of 2021. Container manufacturers are currently quoting over $3,500 for 20' dry containers and market lease rates for new dry containers are currently significantly above the average ~~rate of our~~ dry container lease ~~portfolio, and we~~rates in our portfolio. We expect our average dry container lease rates will continue to increase ~~further~~ if ~~new~~ container prices ~~remain in their current range~~ and ~~market conditions remain favorable.~~

We have a large number of dry container leases expiring in 2017 and 2018. We expect the impact of these dry container lease expirations will be relatively limited if the current market lease rate level is sustained. However, we would likely face a substantial negative impact on our average dry container lease rates and financial performance if dry container market lease rates ~~fell back toward the levels we faced in 2015 and 2016.~~remain at their current levels.

Average lease rates for our refrigerated container product line decreased by 4.8% in the ~~third~~first quarter of ~~2017 by 1.9%~~2021 compared to the ~~second~~first quarter of ~~2017 and decreased by 8.2%~~2020. We have been experiencing larger differences in lease rates for older refrigerated containers compared to ~~the third quarter of 2016. The cost of refrigerated containers has trended down over the last few years, which has led to lower market lease rates. Market~~rates on new equipment, and we expect our average lease rates for refrigerated containers increased in 2017 due to less aggressive investment by leasing companies. However, market lease rates remain below the average refrigerated container lease rates in our lease portfolio and we expect them towill continue to gradually trend down.

The average lease rates for special containers remained flat in the ~~third~~first quarter of ~~2017~~2021 compared to the ~~second~~first quarter of ~~2017 and decreased by 2.3% compared to~~2020.

Equipment disposals. Disposal gains were very high in the ~~third~~first quarter of ~~2016. Current market lease rates for special containers are comparable to the~~2021, reflecting exceptionally high used container selling prices. Our average ~~lease rates in our lease portfolio.~~

~~Equipment disposals.~~ ~~Used~~used dry container ~~disposal prices increased strongly~~sale price in the ~~third~~first quarter ~~due to~~of 2021 increased 90.2% from the first quarter of 2020, and increased 52.1% from the fourth quarter of 2020. This increase in sale prices reflects the current worldwide shortage of containers and the large increase in new container ~~prices and a decrease~~prices. The benefit of the large increase in ~~the number of containers being designated for sale due to the strong supply / demand balance for leasing containers. Average~~ used dry container sale prices was partially offset by a substantial decrease in disposal volumes. Container drop-off volumes have been very low due to the ~~third quarter increased 8% from~~strong demand and limited global availability of containers, and our used dry container sales volumes decreased by 47.2% compared to the ~~second~~first quarter of ~~2017~~2020 and ~~51% from the third quarter of 2016. We expect average dry container selling prices~~by 54.6% compared to ~~increase further in~~ the fourth quarter of ~~2017.~~

Disposal volumes of used containers decreased significantly in the third quarter of 2017 as compared to the second quarter of 2017 and the third quarter of 2016 as strong lease demand has contributed to a significant reduction in the volume of containers being redelivered and designated for sale.

~~Credit Risk.~~ Our credit risk is currently elevated due to the ongoing financial pressure faced by our shipping line customers. The container shipping industry has faced several years of excess vessel capacity, weak freight rates and poor financial results due to the combination of low trade growth and aggressive ordering of mega container vessels. Most of our customers generated financial losses in 2016 and many are burdened with high levels of debt.2020. We ~~anticipate the high volume of new vessels entering service over the next several years will complicate our customers’ efforts to increase freight rates, and we~~ expect our ~~customers’ financial performance will remain under pressure for some time.~~

~~Table of contents~~

On August 31, 2016, Hanjin Shipping Co. ("Hanjin"), a lessee of the Company, filed for bankruptcy court protection and immediately began a liquidation process. At the time, Hanjin had approximately 87,000 of our containers on lease with a net book value of $243.3 million. The Company recorded a charge of $29.7 million during the third quarter ended September 30, 2016 comprised of bad debt expense and a charge for costs not expected to be recovered due to deductibles in our credit insurance policies. As of September 30, 2017, we have gained control or negotiated the release of over 93% of our containers previously on-hire to Hanjin of which approximately 82% are now back on-hire to other customers or have been sold.

We maintained credit insurance to cover the value of containers that are unrecoverable, costs incurred to recover containers and up to six months of lost lease revenue (limited up to six months or until a container is recovered, repaired, and available for re-lease), subject to our deductibles. The insurance policies did not cover our pre-default receivables. We have collected an advance partial payment from our insurance providers of $45 million. The Company currently believes that any further losses will be recoverable under the insurance policies, subject to deductible limits.

We expect it will become more difficult for us to mitigate our exposure to credit risks in the future through the purchase of credit insurance as a result of the Hanjin bankruptcy. We let our insurance policies lapse at expiration since underwriters offered significantly reduced coverage and required a meaningful increase in insurance premiums. We continue to monitor the availability and pricing of credit insurancedisposal volumes and related ~~products.~~

~~Dividends~~

~~We paid the following quarterly dividends during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~on our issued and outstanding common shares:~~



~~Record Date~~	~~Payment~~ ~~Date~~	~~Aggregate~~ ~~Payment~~	~~Per Share~~ ~~Payment~~
~~March 20, 2017~~	~~March 30, 2017~~	~~$33.2 Million~~	~~$0.45~~
~~June 1, 2017~~	~~June 22, 2017~~	~~$33.2 Million~~	~~$0.45~~
~~September 1, 2017~~	~~September 22, 2017~~	~~$33.2 Million~~	~~$0.45~~

~~Shareholders' Equity~~

On September 12, 2017, the Company completed a common share offering in which it sold 5,350,000 common shares at a public offering price of $32.75 per share. On September 22, 2017, the Company sold an additional 802,500 common shares at a public offering price of $32.75 per share pursuant to the full exercise of an option granted to the underwriters in connection with the offering. The aggregate net proceeds received by the Company from the offering, including the exercise of the option, amounted to $192.9 million after deducting underwriting discounts and commissions, before deducting total expenses incurred in connection with the offering of approximately $1.5 million. The net proceedsgains will ~~be used for general corporate purposes, including the purchase of containers.~~

~~Table of contents~~

~~Results of Operations~~

The following table summarizes our results of operations for the periods indicated. The results for the three and nine months ended September 30, 2017 and 2016 are impacted by the Merger on a comparative basis. TCIL has been treated as the acquirer in the Merger for accounting purposes, and therefore, the results of our operations, included herein, for the periods prior to the Merger on July 12, 2016, are for TCIL operations alone (in thousands).

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Leasing revenues:
Operating leases $ 296,669
$ 242,899
$ 832,414
$ 560,262
Finance leases 5,451
4,890
17,247
8,886
Total leasing revenues 302,120
247,789
849,661
569,148

Equipment trading revenues 11,974
9,820
30,213
9,820
Equipment trading expenses (10,605 ) (9,588 ) (27,124 ) (9,588 )
Trading margin 1,369
232
3,089
232

Net gain (loss) on sale of leasing equipment 10,263
(12,319 ) 25,063
(16,086 )

Operating expenses:
Depreciation and amortization 128,581
112,309
370,552
272,585
Direct operating expenses 13,833
27,815
51,396
54,298
Administrative expenses 21,233
17,456
66,268
45,136
Transaction and other costs 32
59,570
3,340
66,517
Provision for doubtful accounts 783
22,372
1,244
22,201
Total operating expenses 164,462
239,522
492,800
460,737
Operating income (loss) 149,290
(3,820 ) 385,013
92,557
Other expenses:
Interest and debt expense 73,795
55,437
208,076
122,626
Realized loss on derivative instruments, net 20
864
902
2,268
Unrealized loss (gain) on derivative instruments, net 629
(3,487 ) (80 ) 5,243
Write-off of deferred financing costs 4,073
—
4,116
141
Other expense (income), net 164
214
(1,552 ) (775 )
Total other expenses 78,681
53,028
211,462
129,503
Income (loss) before income taxes 70,609
(56,848 ) 173,551
(36,946 )
Income tax expense (benefit) 11,063
(7,719 ) 29,688
(5,536 )
Net income (loss) $ 59,546
$ (49,129 ) $ 143,863
$ (31,410 )
Less: income attributable to noncontrolling interest 2,390
2,082
6,425
4,886
Net income (loss) attributable to shareholders $ 57,156
$ (51,211 ) $ 137,438
$ (36,296 )

~~Table of contents~~

~~Comparison of~~ ~~Three Months Ended September 30, 2017~~ ~~and~~ ~~2016~~.

~~The following table summarizes our comparative results for the periods indicated (in thousands):~~

Three Months Ended September 30,
2017 2016 Variance
Leasing revenues:
Operating leases $ 296,669
$ 242,899
$ 53,770
Finance leases 5,451
4,890
561
Total leasing revenues 302,120
247,789
54,331

Equipment trading revenues 11,974
9,820
2,154
Equipment trading expenses (10,605 ) (9,588 ) (1,017 )
Trading margin 1,369
232
1,137

Net gain (loss) on sale of leasing equipment 10,263
(12,319 ) 22,582

Operating expenses:
Depreciation and amortization 128,581
112,309
16,272
Direct operating expenses 13,833
27,815
(13,982 )
Administrative expenses 21,233
17,456
3,777
Transaction and other costs 32
59,570
(59,538 )
Provision for doubtful accounts 783
22,372
(21,589 )
Total operating expenses 164,462
239,522
(75,060 )
Operating income (loss) 149,290
(3,820 ) 153,110
Other expenses:
Interest and debt expense 73,795
55,437
18,358
Realized loss on derivative instruments, net 20
864
(844 )
Unrealized loss (gains) on derivative instruments, net 629
(3,487 ) 4,116
Write-off of deferred financing costs 4,073
—
4,073
Other expense (income), net 164
214
(50 )
Total other expenses 78,681
53,028
25,653
Income (loss) before income taxes 70,609
(56,848 ) 127,457
Income tax expense (benefit) 11,063
(7,719 ) 18,782
Net income (loss) $ 59,546
$ (49,129 ) $ 108,675
Less: income attributable to noncontrolling interest 2,390
2,082
308
Net income (loss) attributable to shareholders $ 57,156
$ (51,211 ) $ 108,367

The Company's operating performance and revenues were significantly impacted by the Merger on July 12, 2016 and the subsequent inclusion of TAL's results of operations and equipment fleet in Triton's financial results and operating metrics. TCIL has been treated as the acquirer in the Merger for accounting purposes, and therefore, the results of operations for Triton, included herein, for the periods prior to the date of the Merger are for TCIL operations alone. Included in the three months ended September 30, 2017 is an additional twelve days of activity related to TAL as compared to the three months ended September 30, 2016.

~~Leasing revenues.~~ The principal components of our leasing revenues are summarized in the following table. Per diem revenues is daily usage revenue generated from operating lease contracts; fee and ancillary lease revenues represent fees billed for the pick-up and drop-off of containers in certain geographic locations and billings of reimbursable operating costs such as repair and handling expense; and finance lease revenues is interest income generated from finance lease contracts.

~~Table of contents~~

Three Months Ended September 30,
2017 2016 Variance
(in thousands)
Leasing revenues:
Operating lease revenues:
Per diem revenues $ 287,357
$ 224,243
$ 63,114
Fee and ancillary lease revenues 9,312
18,656
(9,344 )
Total operating lease revenues 296,669
242,899
53,770
Finance lease revenues 5,451
4,890
561
Total leasing revenues $ 302,120
$ 247,789
$ 54,331

~~Total leasing revenues were $302.1 million for the three months ended September 30, 2017, compared to $247.8 million in the same period in 2016, an increase of $54.3 million.~~

Per diem revenues were $287.4 million in the three months ended September 30, 2017 compared to $224.2 million in the same period in 2016, an increase of $63.1 million. The primary reasons for the increase are as follows:


•	~~$14.8 million increase due to the inclusion of TAL's per diem revenues for the full quarter in 2017 while TAL's per diem revenues were included only after July 12~~^th~~in the third quarter of 2016;~~

~~$51.5 million increase due to an additional 1,029,221 CEU in the average number of containers on-hire under operating leases; partially offset by a~~

~~$4.8 million~~ decrease due to ~~a decrease in average CEU per diem rates.~~limited container drop-offs.

Fee and ancillary lease revenues were $9.3 million in the three months ended September 30, 2017 compared to $18.7 million in the same period in 2016, a decrease of $9.4 million. The primary reason for the decrease is due to a decrease in redelivery fees due to a decrease in the volume of container re-deliveries as a result of strong demand.

Finance lease revenues were $5.5 million in the three months ended September 30, 2017 compared to $4.9 million in the same period in 2016, an increase of $0.6 million. This increase was primarily due to the inclusion of a finance lease contract that commenced in September 2016 for a full quarter in 2017 as compared to one month in 2016.

~~Trading Margin.~~ Trading margin was $1.4 million for the three months ended September 30, 2017 compared to $0.2 million in the same period in 2016, an increase of $1.2 million reflecting an increase in both trading volume and margins.

~~Net gain (loss) on sale of leasing equipment.~~ Gain on sale of equipment was $10.3 million for the three months ended September 30, 2017 compared to a loss on sale of equipment of $12.3 million in the same period in 2016, an increase of $22.6 million. The primary reason for the increase is due to a 51% increase in our average used container selling prices.

~~Depreciation and amortization.~~ Depreciation and amortization was $128.6 million in the three months ended September 30, 2017 compared to $112.3 million in the same period in 2016, an increase of $16.3 million. The primary reasons for the increase are as follows:


•	~~$5.9 million increase due to the inclusion of TAL's depreciation and amortization for the full quarter in 2017 while TAL's depreciation and amortization were included only after July 12~~^th~~in the third quarter of 2016;~~

~~$13.2 million increase due to a net increase in the size of our depreciable fleet; partially offset by a~~

~~$2.8 million decrease due to equipment becoming fully depreciated.~~

~~Direct operating expenses.~~ Direct operating expenses primarily consists of our costs to repair equipment returned off lease, to store the equipment when it is not on lease and to reposition equipment that has been returned to locations with weak leasing demand. Direct operating expenses were $13.8 million for the three months ended September 30, 2017 compared to $27.8 million in the same period in 2016, a decrease of $14.0 million. The primary reasons for the decrease are due to a decrease in storage and equipment repair expenses resulting from a decrease in the number of idle containers and a reduction in redelivery volumes due to strong lease demand.

~~Table of contents~~

~~Administrative expenses.~~ Administrative expenses were $21.2 million for the three months ended September 30, 2017 compared to $17.5 million in the same period in 2016, an increase of $3.8 million. The primary reasons for the increase are as follows:


•	~~$1.4 million increase due to the inclusion of TAL's administrative expenses for the full quarter in 2017 while TAL's administrative expenses were included only after July 12~~^th~~in the third quarter of 2016;~~

~~$2.4 million increase due to an increase in bonus expense as a result of improved financial performance;~~

~~$3.5 million increase due to a benefit in 2016 due to a reclassification of accrued bonus expense from administrative expense to transaction and other costs that did not re-occur in 2017;~~

~~$1.1 million increase due to an increase in our professional fees; partially offset by a~~

~~$4.5 million in employee compensation and benefit expense as a result of synergies gained from the Merger in addition to $2.6 million of savings recognized in the third quarter of last year.~~

~~Transaction and other costs.~~Transaction and other costs include severance and employee compensation costs, legal costs and other professional fees. Transaction and other costs related to the Merger were immaterial for the three months ended September 30, 2017 compared to $59.6 million in the same period in 2016. We accrued significant legal fees, professional fees and employee severance expenses related to the Merger due to the closing of the Merger in the third quarter of 2016.

Transaction and other costs also include retention and stock compensation costs pursuant to the plans established in 2011. Transaction and other costs unrelated to the Merger resulted in $3.4 million in costs for the three months ended September 30, 2016. There were no transaction and other costs unrelated to the Merger for the three months ended September 30, 2017.

~~Provision for doubtful accounts.~~ We had a provision for doubtful accounts of $0.8 million in the three months ended September 30, 2017 compared to $22.4 million in the same period in 2016. In the third quarter of 2016, we recorded a provision for doubtful accounts related to the lease default by Hanjin.

~~Interest and debt expense.~~ Interest and debt expense was $73.8 million in the three months ended September 30, 2017 compared to $55.4 million in the same period in 2016, an increase of $18.4 million. The primary reasons for this increase are as follows:


•	~~$4.3 million increase due to the inclusion of TAL's interest and debt expense for the full quarter in 2017 while TAL’s interest and debt expenses were included only after July 12~~^th ~~in the third quarter of 2016;~~

~~$10.3 million increase due to a higher average debt balance in the three months ended September 30, 2017 compared to the same period in 2016; and~~

~~$3.8 million increase due to an increase in the average effective interest rate to 4.21% in the three months ended September 30, 2017 compared to 3.75% in the same period in 2016.~~

~~Realized loss on derivative instruments, net.~~ Realized loss on derivative instruments, net was minimal in the three months ended September 30, 2017 compared to $0.9 million in the same period in 2016, a decrease of 0.8 million. The decrease in the realized loss on derivative instruments, net, is a combination of the increased average one-month LIBOR rate in the three months ended September 30, 2017 compared to the same period in 2016 and the reduction of the underlying swap notional amounts due to amortization.

~~Unrealized loss (gain) on derivative instruments.~~ Unrealized loss on derivative instruments, net was $0.6 million in the three months ended September 30, 2017 compared to an unrealized gain on derivative instruments, net of $3.5 million in the same period in 2016, a decrease of $4.1 million. This decrease was primarily due to a slight decrease in long term interest rates in the three months ended September 30, 2017 compared to an increase in long term interest rates for the three months ended September 30, 2016.

~~Income taxes.~~ ~~Income tax expense~~ ~~was~~ ~~$11.1 million in~~ ~~the three months ended September 30, 2017~~ ~~compared to an income tax benefit of $7.7 million~~ in the same period in 2016, an increase in income tax expense of $18.8 million. The income tax benefit in 2016 resulted from losses primarily due to transaction costs related to the Merger and an increase in the provision for doubtful accounts.

~~Income attributable to non-controlling interests.~~ ~~Income attributable to non-controlling interests was $2.4 million in~~ ~~the three months ended September 30, 2017~~ ~~compared to $2.1 million~~ ~~in the same period in 2016, an increase of $0.3 million.~~

~~Table of contents~~

~~The increase was a result of higher income from gains on the disposition of container rental equipment attributable to the non-controlling interests.~~

~~Comparison of~~ ~~Nine Months Ended September 30, 2017~~ to ~~Nine Months Ended September 30, 2016~~

~~The following table summarizes our comparative results for the periods indicated (in thousands):~~

Nine Months Ended September 30,
2017 2016 Variance
Leasing revenues:
Operating leases $ 832,414
$ 560,262
$ 272,152
Finance leases 17,247
8,886
8,361
Total leasing revenues 849,661
569,148
280,513

Equipment trading revenues 30,213
9,820
20,393
Equipment trading expenses (27,124 ) (9,588 ) (17,536 )
Trading margin 3,089
232
2,857

Net gain (loss) on sale of leasing equipment 25,063
(16,086 ) 41,149

Operating expenses:
Depreciation and amortization 370,552
272,585
97,967
Direct operating expenses 51,396
54,298
(2,902 )
Administrative expenses 66,268
45,136
21,132
Transaction and other costs 3,340
66,517
(63,177 )
Provision (benefit) for doubtful accounts 1,244
22,201
(20,957 )
Total operating expenses 492,800
460,737
32,063
Operating income (loss) 385,013
92,557
292,456
Other expenses:
Interest and debt expense 208,076
122,626
85,450
Realized loss on derivative instruments, net 902
2,268
(1,366 )
Unrealized (gain) loss on derivative instruments, net (80 ) 5,243
(5,323 )
Write-off of deferred financing costs 4,116
141
3,975
Other expense (income), net (1,552 ) (775 ) (777 )
Total other expenses 211,462
129,503
81,959
Income (loss) before income taxes 173,551
(36,946 ) 210,497
Income tax expense (benefit) 29,688
(5,536 ) 35,224
Net income (loss) $ 143,863
$ (31,410 ) $ 175,273
Less: income attributable to noncontrolling interest 6,425
4,886
1,539
Net income (loss) attributable to shareholders $ 137,438
$ (36,296 ) $ 173,734

The Company's operating performance and revenues were significantly impacted by the Merger on July 12, 2016 and the subsequent inclusion of TAL's results of operations and equipment fleet in Triton's financial results and operating metrics. TCIL has been treated as the acquirer in the Merger for accounting purposes, and therefore, the results of operations for Triton, included herein, for the periods prior to the date of the Merger are for TCIL operations alone. Included in the nine months ended September 30, 2017 is approximately an additional six months of activity related to TAL as compared to the nine months ended September 30, 2016.

~~Leasing revenues.~~ The principal components of our leasing revenues are summarized in the following table. Per diem revenues is daily usage revenue generated from operating lease contracts; fee and ancillary lease revenues represent fees billed for the pick-up and drop-off of containers in certain geographic locations and billings of reimbursable operating costs such as repair and handling expense; and finance lease revenue is interest income generated from finance lease contracts.

~~Table of contents~~

Nine Months Ended September 30,
2017 2016 Variance
(in thousands)
Leasing revenues:
Operating lease revenues:
Per diem revenues $ 800,932
$ 522,814
$ 278,118
Fee and ancillary lease revenues 31,482
37,448
(5,966 )
Total operating lease revenues 832,414
560,262
272,152
Finance lease revenues 17,247
8,886
8,361
Total leasing revenues $ 849,661
$ 569,148
$ 280,513

~~Total leasing revenues were $849.7 million for the nine months ended September 30, 2017, compared to $569.1 million in the same period in 2016, an increase of $280.5 million.~~

Per diem revenues were $800.9 million for the nine months ended September 30, 2017 compared to $522.8 million in the same period in 2016, an increase of $278.1 million. The primary reasons for this increase are as follows:


•	~~$223.6 million increase due to the inclusion of TAL's per diem revenues for the full year-to-date period in 2017 while TAL’s per diem revenues were included only after July 12~~^th ~~of 2016;~~

~~$80.6 million increase due to an increase of 817,630 CEU in the average number of containers on-hire under operating leases; partially offset by a~~

~~$27.6 million decrease due to a decrease in average CEU per diem rates.~~

Fee and ancillary lease revenues were $31.5 million for the nine months ended September 30, 2017 compared to $37.4 million in the same period in 2016, a decrease of $6.0 million. The primary reasons for this decrease are as follows:

~~$16.1 million decrease in redelivery fees due to a decrease in the volume of customer redeliveries due to strong lease demand; partially offset by a~~


•	$10.2 million increase due to the inclusion of TAL's fees and ancillary revenues for the full year-to-date period in 2017 while TAL’s fee and ancillary lease revenues were included only after July 12^th ~~of 2016.~~

Finance lease revenues were $17.2 million for the nine months ended September 30, 2017 compared to $8.9 million in the same period in 2016, an increase of $8.4 million. The primary reasons for this increase are as follows:


•	~~$3.9 million increase due to the inclusion of TAL's finance lease revenues for the full year-to-date period in 2017 while TAL’s finance lease revenues were included only after July 12~~^th ~~of 2016; and~~

~~$4.9 million increase due to the inclusion of a finance lease contract that commenced in September 2016 for a full nine months in 2017 as compared to one month in 2016.~~

~~Trading Margin.~~ Prior to the Merger, Triton did not have a trading business. Trading margin was $3.1 million for the nine months ended September 30, 2017 compared to $0.2 million in the same period in 2016, an increase of $2.9 million reflecting an increase in both trading volume and margins.

~~Net gain (loss) on sale of leasing equipment.~~ Gain on sale of equipment was $25.1 million for the nine months ended September 30, 2017 compared to a loss on sale of equipment of $16.1 million in the same period in 2016, an increase of $41.1 million. The primary reasons for the increase are as follows:


•	$8.9 million increase due to the inclusion of TAL's gains on sale of leasing equipment for the full year-to-date period in 2017 while TAL's gains on sale of leasing equipment were included only after July 12^th ~~in 2016; and a~~

~~$32.2 million increase due to a 43% increase in our average used container selling prices.~~

~~Depreciation and amortization.~~ Depreciation and amortization was $370.6 million for the nine months ended September 30, 2017 compared to $272.6 million in the same period in 2016, an increase of $98.0 million. The primary reasons for the increase are as follows:

~~Table of contents~~


•	~~$95.8 million increase due to the inclusion of TAL's depreciation and amortization for the full year-to-date period in 2017 while TAL's depreciation and amortization was included only after July 12~~^th ~~in 2016;~~

~~$18.9 million increase due to a net increase in the size of our depreciable fleet, partially offset by a~~

$13.1 million decrease due to an impairment charge recorded as depreciation expense for the nine months ended September 30, 2016. There was no impairment charge recorded as depreciation expense for the nine months ended September 30, 2017; and

~~$2.8 million decrease due to equipment becoming fully depreciated.~~

~~Direct operating expenses.~~ Direct operating expenses primarily consists of our costs to repair equipment returned off lease, to store the equipment when it is not on lease and to reposition equipment that has been returned to locations with weak leasing demand. Direct operating expenses were $51.4 million for the nine months ended September 30, 2017 compared to $54.3 million in the same period in 2016, a decrease of $2.9 million. The primary reasons for the decrease are as follows:

~~$23.1 million decrease due to a decrease in storage and equipment repair expenses resulting from decreases in the number of idle units and off hire volumes; partially offset by a~~


•	~~$20.2 million increase due to the inclusion of TAL's direct operating expenses for the full year-to-date period in 2017 while TAL’s direct operating expenses were included only after July 12~~^th ~~in 2016.~~

~~Administrative expenses.~~ Administrative expenses were $66.3 million for the nine months ended September 30, 2017 compared to $45.1 million in the same period in 2016, an increase of $21.1 million. The primary reasons for the increase are as follows:


•	~~$23.5 million increase due to the inclusion of TAL administrative expenses for the full year-to-date period in 2017 while TAL’s administrative expenses were included only after July 12~~^th ~~in 2016;~~

~~$1.2 million increase due to an increase in bonus expense as a result of improved financial performance;~~

~~$3.5 million increase due to a benefit in 2016 due to a reclassification of accrued bonus expense from administrative expense to transaction and other costs that did not re-occur in 2017;~~

~~$3.1 million increase due to an increase in our professional fees and directors' share-based compensation expense, partially offset by a~~

$12.1 million in lower employee compensation and benefit expense as a result of synergies gained from the Merger in addition to the $2.6 million in savings recognized in the third quarter of 2016. The $23.5 million increase in administrative expenses due to the inclusion of TAL administrative expenses for the full year-to-date period in 2017, includes a benefit of $3.3 million related to employee compensation and benefit savings as a result of synergies gained from the Merger.

~~Transaction and other costs.~~Transaction and other costs include severance and employee compensation costs, legal costs and other professional fees. Transaction and other costs related to the Merger were $3.3 million for the nine months ended September 30, 2017 compared to $66.5 million in the same period in 2016. We accrued significant legal fees, professional fees and employee severance expenses related to the Merger in the third quarter of 2016 and the periods leading up to the Merger.

Transaction and other costs also include retention and stock compensation costs pursuant to the plans established in 2011. Transaction and other costs unrelated to the Merger were $0.5 million for the nine months ended September 30, 2017 and $5.5 million in the same period in 2016. The decrease in transaction and other costs unrelated to the Merger was mainly due to a reduction in stock compensation accruals on incentive stock initially granted in 2011.

~~Provision for doubtful accounts.~~ We had a provision for doubtful accounts of $1.2 million for the nine months ended September 30, 2017 compared to a provision for doubtful accounts of $22.2 million in the nine months ended September 30, 2016. In 2016, we recorded a provision for doubtful accounts related to the bankruptcy filing and lease default by Hanjin.

~~Table of contents~~

~~Interest and debt expense.~~ Interest and debt expense was $208.1 million for the nine months ended September 30, 2017, compared to $122.6 million in the same period in 2016, an increase of $85.5 million. The primary reasons for this increase are as follows:


•	~~$65.2 million increase due to the inclusion of TAL's interest and debt expense for the full year-to-date period in 2017 while TAL’s interest and debt expense was included only after July 12~~^th ~~in 2016;~~

~~$15.5 million increase due to a higher average debt balance for the nine months ended September 30, 2017 compared to the same period in 2016; and~~

~~$4.8 million increase due to an increase in the average effective interest rate to 4.17% for the nine months ended September 30, 2017 compared to 4.04% in the same period in 2016.~~

~~Realized loss on derivative instruments, net.~~ Realized loss on derivative instruments, net was $0.9 million for the nine months ended September 30, 2017, compared to $2.3 million in the same period in 2016, a decrease of $1.4 million. The decrease in the realized loss on derivative instruments, net is mainly due to the reduction of the underlying swap notional amounts due to amortization and an increase in the average one-month LIBOR rate in the nine months ended September 30, 2017 compared to the same period in 2016. TAL's inclusion for the full year-to-date period in 2017 compared to partial inclusion in 2016 increased the realized loss on derivative instruments by $0.4 million in the nine months ended September 30, 2017.

~~Unrealized (gain) loss on derivative instruments.~~ Unrealized gain on derivative instruments, net was $0.1 million for the nine months ended September 30, 2017 compared to an unrealized loss on derivative instruments, net of $5.2 million in the same period in 2016, an increase of $5.3 million. This increase was the result of long term interest rates being relatively flat in the nine months ended September 30, 2017 compared to a decrease in long term interest rates in the same period in 2016.

~~Income taxes.~~ ~~Income tax expense~~ ~~was~~ ~~$29.7 million~~ ~~for the nine months ended September 30, 2017~~ ~~compared to an i~~ncome tax benefit of $5.5 million in the same period in 2016, an increase in income tax expense of $35.2 million. The income tax benefit in 2016 resulted from losses primarily due to transaction costs related to the Merger and an increase in the provision for doubtful accounts.

~~Income attributable to non-controlling interests.~~ ~~Income attributable to non-controlling interests was $6.4 million~~ ~~for the nine months ended September 30, 2017~~ ~~compared to $4.9 million~~ ~~in the same period in 2016, an increase of $1.5 million. The increase was a result of higher income from gains on the disposition of container rental equipment attributable to the non-controlling interests.~~

~~Business Segments~~

~~We acquired the equipment trading segment as part of the Merger with TAL on July 12, 2016 and had no such reporting segment prior to that time.~~

~~We operate our business in~~ ~~one~~ ~~industry, intermodal transportation equipment, and in~~ ~~two~~ ~~business segments, Equipment leasing and Equipment trading.~~

~~Equipment leasing~~

We own, lease and ultimately dispose of containers and chassis from our leasing fleet, as well as manage containers owned by third parties. Equipment leasing segment revenues represent leasing revenues from operating and finance leases, fees earned on managed container leasing activities, as well as other revenues. Expenses related to equipment leasing include direct operating expenses, administrative expenses, depreciation and amortization and interest and debt expense. The Equipment leasing segment also includes gains and losses on the sale of owned leasing equipment.

~~Equipment trading~~

We purchase containers from shipping line customers and other sellers of containers, and resell these containers to container retailers and users of containers for storage or one-way shipment. Equipment trading segment revenues represent the proceeds on the sale of containers purchased for resale. Expenses related to equipment trading include the cost of containers purchased for resale that were sold and related selling costs, direct operating expenses, administrative expenses and interest and debt expense.

~~Table of contents~~

~~Segment income before income taxes~~

~~The following table lists the income before income taxes for the equipment leasing and equipment trading segments for the periods indicated (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Income before income taxes(1)
Equipment leasing segment $ 73,232
$ (56,356 ) $ 173,330
$ (27,583 )
Equipment trading segment $ 2,079
$ (3,979 ) $ 4,257
$ (3,979 )

~~(1)~~

Segment income before income taxes excludes unrealized gains or losses on interest rate swaps and the write-off of deferred financing costs. Unrealized losses on interest rate swaps were $0.6 million and unrealized gains on interest rate swaps were $3.5 million for the three months ended September 30, 2017 and 2016, respectively. Write-offs of deferred financings costs were $4.1 million for the three months ended September 30, 2017. There were no write-offs of deferred financing costs for the three months ended September 30, 2016. Unrealized gains on interest rate swaps were $0.1 million and unrealized losses on interest rate swaps were $5.2 million for the nine months ended September 30, 2017 and 2016, respectively. There were $4.1 million and $0.1 million write-offs of deferred financing costs for the nine months ended September 30, 2017 and 2016, respectively.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows ~~generated from~~provided by operating activities, proceeds from the sale of our leasing equipment, ~~principal payments on finance lease receivables,~~and borrowings under our credit ~~facilities and proceeds from share issuances.~~facilities. Our principal uses of cash ~~have been funding our operations,~~include capital expenditures, debt service, ~~requirements~~dividends, and ~~paying dividends.~~share repurchases.

In addition to the proceeds from our operating activities, on September 12, 2017, the Company completed a common share offering in which it sold 5,350,000 common shares at a public offering price of $32.75 per share. On September 22, 2017, the Company sold an additional 802,500 common shares at a public offering price of $32.75 per share pursuant to the full exercise of an option granted to the underwriters in connection with the offering. The aggregate net proceeds received by the Company from the offering, including the exercise of the option, amounted to $192.9 million after deducting underwriting discounts and commissions, and before deducting total expenses incurred in connection with the offering of approximately $1.5 million. The net proceeds will be used for general corporate purposes, including the purchase of containers.

For the trailing twelve months ended ~~September 30, 2017~~,March 31, 2021, cash ~~generated from~~provided by operating activities, together with the proceeds from the sale of our leasing equipment, ~~and principal payments on our finance leases,~~ was ~~$962.8~~$1,305.9 million. In addition, as of ~~September 30, 2017,~~March 31, 2021, we had ~~$146.3~~$233.1 million of cash and cash equivalents and ~~$1.7 billion~~$2,238.6 million of ~~additional~~maximum borrowing capacity under our current credit facilities.

As of ~~September 30, 2017,~~March 31, 2021, our cash commitments in the next 12twelve months include ~~$704.8~~$771.4 million of scheduled principal payments on our existing debt facilities and ~~$357.3~~$1,741.0 million of committed but unpaid capital ~~expenditures.~~expenditures, primarily for the purchase of equipment.

We believe that cash ~~generated from~~provided by operating activities, existing cash, ~~balances,~~ proceeds from the sale of our leasing equipment, ~~principal payments on our finance lease receivables~~ and availability under our ~~borrowing~~credit facilities will be sufficient to meet our obligations over the next 12twelve months.

Asset-backed Securitization ("ABS") Note Issuances

During the three months ended March 31, 2021, the Company issued $1.2 billion in ABS notes at a weighted average interest rate of 1.8%. The proceeds from these issuances were used to facilitate additional capital expenditures and investment in our fleet.

Share Repurchase Program

The Company did not repurchase any shares in the first quarter of 2021. Since the inception of the Company's share repurchase program in August 2018, we have purchased over 13.9 million shares, or 17.2% of our common shares.

Dividends

During the three months ended March 31, 2021 and 2020, the Company paid dividends on preferred shares of $10.5 million and $9.4 million, respectively, and paid dividends on common shares of $38.2 million and $37.1 million, respectively.

~~Table of contents~~

For additional information on the Share Repurchase Program and Dividends, please refer to Note 5 - “Other Equity Matters” in the Notes to the Unaudited Consolidated Financial Statements.

Debt Agreements

At ~~September 30, 2017~~,March 31, 2021 our outstanding indebtedness was comprised of the following (amounts in millions):


	Current Amount Outstanding			Current Maximum Borrowing Level			March 31, 2021		Maximum Borrowing Level
Institutional notes	$	2,388.9		$	2,388.9	Institutional notes	$	1,611.4	$	1,611.4
Asset backed securitization (ABS) notes	2,450.2			2,450.2
Term loan facilities	1,752.4			1,752.4
Asset backed warehouse facility	45.0			800.0
Asset-backed securitization term notes						Asset-backed securitization term notes	4,076.1		4,076.1
Term loan facility						Term loan facility	820.0		820.0
Asset-backed securitization warehouse						Asset-backed securitization warehouse	20.0		1,125.0
Revolving credit facilities	115.0			1,075.0		Revolving credit facilities	426.4		1,560.0
Capital lease obligations	113.3			113.3
Finance lease obligations						Finance lease obligations	16.7		16.7
Total debt outstanding	6,864.8			8,579.8		Total debt outstanding	$	6,970.6	$	9,209.2
Deferred financing costs	(42.7		)	—
Unamortized debt costs						Unamortized debt costs	(53.5)		—
Unamortized debt premiums & discounts						Unamortized debt premiums & discounts	(1.9)		—
Unamortized fair value debt adjustment	(32.0		)	—		Unamortized fair value debt adjustment	1.5		—
Total debt outstanding	$	6,790.1		$	8,579.8
Debt, net of unamortized costs						Debt, net of unamortized costs	$	6,916.7	$	9,209.2

The maximum borrowing levels depicted in the table above ~~table~~ may not reflect the actual availability under all of the credit ~~facilities as certain~~facilities. Certain of these facilities are governed by borrowing bases that limit borrowing capacity to an established percentage of relevant ~~eligible~~ assets. As of March 31, 2021, the availability under these credit facilities without adding additional container assets to the borrowing base was approximately $828.8 million.

As of ~~September 30, 2017,~~March 31, 2021, we had ~~$4,354.2~~a combined $6,755.1 million of total debt outstanding on facilities with fixed interest rates. These fixed rate facilities are scheduled to mature between 2017 and 2029 and had a contractual weighted average interest rate of 4.27% as of September 30, 2017.

As of September 30, 2017, we had $2,510.6 million of total debt outstanding on facilities with interest rates based on floating rate indices (primarily LIBOR). These floating rate facilities are scheduled to mature between 2018 and 2024 and had a weighted average effective interest rate of 3.25% as of September 30, 2017. Including the impact of our interest rate swaps, the contractual weighted average interest rate on our floating rate facilities was 3.58% as of September 30, 2017.

We economically hedge the risks associated with fluctuations in interest rates on a portion of our floating rate borrowings by entering into interest rate swap agreements that convert a portion of our floating rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. As of September 30, 2017, we had interest rate swaps in place with a net notional amount of $1,760.6 million to fix the floating interest rates on a portion of our floating rate debt obligations, with a contractual weighted average fixed leg interest rate of 1.70% and a weighted average remaining term of 3.5 years.

~~As of September 30, 2017, we had a combined $6,114.8 million of total debt on facilities~~ with fixed interest rates or floating interest rates that have been synthetically fixed through interest rate swap ~~contracts. This~~contracts, which accounts for ~~89.1%~~97% of total debt. ~~The fixed facilities and fixed interest rate swap contracts had a weighted average remaining term~~

Pursuant to the terms of ~~4.2 years.~~

~~Overall,~~certain debt agreements, we ~~had a contractual weighted average interest rate of 4.02% as of September 30, 2017, including the impact of the swap contracts.~~

~~Institutional Notes~~

In accordance with the institutional note agreements, interest payments on the Company's institutional notes are due semi-annually. Institutional note maturities typically range from 7 - 12 years, with level principal payments due annually following an interest-only period. The Company's institutional notes are pre-payable (in whole or in part) at the Company's option at any time, subject to certain provisions in the note agreements, including the payment of a make-whole premium in respect to such prepayment. Advance rates under the institutional notes generally range from 83% to 85%.

~~Asset-Backed Securitization Term Notes~~

~~Under our ABS facilities, our indirect wholly-owned subsidiaries issue asset-backed notes. The issuance of asset backed notes is the primary business objective of those subsidiaries.~~

~~Table of contents~~

Our borrowings under the ABS facilities amortize in monthly installments, typically in level payments over ten years. The borrowing capacity under the ABS facilities is determined by applying an advance rate against the sum of the net book values of designated eligible containers plus 100% of restricted cash and in certain cases other amounts. Advance rates under the ABS facilities range generally from 77% to 87%. We are required to maintain certain amounts in restricted cash ~~balances in designated bank accounts equal to three to nine months of interest expense depending on the type of facility.~~

~~Term Loan Facilities~~

These facilities generally provide for an advance rate against eligible equipment defined by the terms of their respective agreements. The term loan facilities amortize in monthly or quarterly installments.

~~Revolving Credit Facilities~~

We have two revolving credit facilities which have a maximum borrowing capacity of $1,025 million and $50 million and maturity dates of June 16, 2022 and May 2, 2020, respectively. These facilities generally provide for an advance rate against eligible assets defined by the terms of their respective agreements.

~~Asset-Backed Securitization Warehouse Facilities~~

We have two asset-backed warehouse facilities with a combined borrowing capacity of $800 million as of September 30, 2017. One facility has a maximum borrowing capacity of $400 million that is available on a revolving basis until September 28, 2020, after which any borrowings will convert to term notes with a maturity date of September 20, 2024. The second facility has a maximum borrowing capacity of $400 million. The first $200 million of borrowing capacity under this facility is available on a revolving basis until March 10, 2019, after which any borrowings will convert to term notes with a maturity dateaccounts. As of March 10, 2022. Incremental borrowing capacity under this facility above $200 million is available on a revolving basis until March 10, 2018, after which any borrowings will covert to term notes with a maturity date of September 20, 2019.

The borrowing capacity under the asset-backed warehouse facilities is determined by applying an advance rate against eligible equipment defined by the terms of their respective agreements. The advance rates on these facilities are 78% and 81%. The Company is required to maintain31, 2021, we had restricted cash ~~balances~~of $153.3 million.

For additional information on our debt, please refer to Note 7 - "Debt" in ~~a designated bank account equal~~the Notes to ~~three to five months of interest expense.~~the Unaudited Consolidated Financial Statements.

~~Capital Lease Obligations~~

We have entered into a series of lease transactions with various financial institutions to finance chassis and containers. Each lease is accounted for as a capital lease, with interest expense recognized on a level yield basis over the period preceding early purchase options, if any, which is generally 3-10 years from the transaction date.

Debt Covenants

We are subject to certain financial covenants ~~under~~related to leverage, interest coverage and net worth as defined in our debt agreements. The debt agreements are the obligations of ~~the respective~~our subsidiaries and all related debt covenants are calculated at the subsidiary level. Covenant compliance is tested at TCIL and TAL in their capacity as borrowers. Additionally, covenant compliance is tested at TCIL in its capacity as the Company’s manager. As of September 30, 2017, we were in compliance with all such covenants. Below are the primary financial covenants to which we are subject:

~~TCIL Facilities:~~

~~Ratio of Consolidated Net Income Available for Fixed Charges to Fixed Charges ("Fixed Charge Coverage Ratio");~~

~~Minimum Consolidated Tangible Net Worth ("CTNW"); and~~

~~Funded Debt Ratio.~~

~~TAL Facilities:~~

~~Ratio of Earnings Before Interest and Taxes ("Covenant EBIT") to Cash Interest Expense;~~

~~Minimum Tangible Net Worth ("TNW"); and~~

~~Indebtedness to TNW Ratio.~~

~~Table of contents~~

~~Pursuant to the terms of certain debt agreements, we are also required to maintain certain restricted cash accounts. As of September 30, 2017, we had restricted cash of $84.2 million.~~

Failure to comply with these covenants could result in a default under the related credit agreements ~~and/or could result in~~and the acceleration of our outstanding debt if we were unable to obtain a waiver from the creditors.

~~Non-GAAP Measures~~

~~We primarily rely on our results measured~~ As of March 31, 2021, we were in ~~accordance~~compliance with generally accepted accounting principles ("GAAP") in evaluating our business. Fixed Charge Coverage Ratio, CTNW, Funded Debt Ratio, Covenant EBIT, Cash Interest Expense, TNW, and Indebtedness are non-GAAP financial measures defined inall such covenants. The table below reflects the key debt covenants for the Company that cover the majority of our debt agreements that are used to determine our compliance with certain covenants contained in our debt agreements and should not be used as a substitute for analysis of our results as reported under GAAP. However, we believe that the inclusion of this non-GAAP information provides additional information to investors regarding our debt covenant compliance.agreements:

TCIL

TAL

Financial Covenant

Covenant

Actual

Covenant

Actual

Fixed charge coverage ratio

Shall not be less than 1.25:1

2.99:1

Shall not be less than 1.10:1

2.41:1

Minimum net worth

Shall not be less than $855 million

$2,144.6 million

Shall not be less than $500 million

$987.8 million

Leverage ratio

Shall not exceed 4.0:1

2.19:1

Shall not exceed 4.75:1

1.68:1

~~TCIL - Fixed Charge Coverage Ratio~~

The Fixed Charge Coverage Ratio is a six-quarter average of the ratio of consolidated net income of the TCIL subsidiary of Triton available for fixed charges to fixed charges. Consolidated net income for fixed charges is the sum of consolidated net income for such period, plus cash distributions received from unrestricted subsidiaries, plus all fixed charges. Consolidated net income excludes any non-cash gains and/or losses resulting from derivatives, and Merger costs ranging from $45.0 million for TCIL Institutional Notes to $65.0 million for TCIL Bank Facilities. Fixed charges are the sum of interest expense, imputed interest expense on capitalized leases, operating rental obligations other than those related to container equipment and operating rental expense on operating leases of container equipment. Interest expense is adjusted to exclude interest income and the amortization of deferred financing costs.

Entity/Issuer Minimum Fixed Charge Coverage Ratio Actual Fixed Charge Coverage Ratio
TCIL Bank Facilities and Institutional Notes 1.25 1.68

~~TCIL - Minimum CTNW~~

Consolidated Tangible Net Worth ("CTNW") of the TCIL subsidiary of Triton is defined as the equity of TCIL and its restricted subsidiaries, excluding any non-cash gains and/or losses from derivatives, less the sum of all intangible assets and restricted investments of TCIL and its subsidiaries. CTNW is to be no less than $855.0 million. For the purpose of calculating Minimum CTNW, TCIL's investments in unrestricted subsidiaries are included in equity. As of September 30, 2017, the actual CTNW was $1.5 billion.

~~TCIL - Funded Debt Ratio~~

~~Funded Debt Ratio is the ratio of total debt of the TCIL subsidiary of Triton to CTNW plus deferred income related to the sales of container equipment to subsidiaries.~~

Entity/Issuer Maximum Funded Debt Ratio Actual Funded Debt Ratio
TCIL 4.00 2.54

~~TAL - Ratio of Covenant EBIT to Cash Interest Expense~~

For the purpose of this covenant, Covenant EBIT is calculated based on the cumulative sum of earnings before interest expense and income taxes for the last four quarters, net gain or losses on interest rate swaps, certain non-cash charges, and Merger costs up to $40.0 million on all entities. Cash Interest Expense is calculated based on cumulative interest expense over the last four quarters adjusted to exclude interest income, amortization of deferred financing costs, and the difference between current and prior period interest expense accruals.

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The ratio of Covenant EBIT to Cash Interest Expense is calculated on a consolidated basis for our TAL subsidiary of Triton and for certain of our wholly-owned special purpose entities ("SPEs"), whose primary activity is to issue TAL asset-backed notes. Covenant EBIT for each of our SPEs is calculated based on the net earnings generated by the assets pledged as collateral for the underlying debt issued. The actual Covenant EBIT to Cash Interest Expense ratio for each SPE may differ depending on the specific net earnings associated with those pledged assets.

Entity/Issuer Minimum
Covenant EBIT to
Cash Interest
Expense Ratio Actual
Covenant EBIT to
Cash Interest
Expense Ratio
TAL - borrower level test 1.10 1.94
TAL asset backed warehouse 1.30 1.85
TAL asset backed securitization term notes 1.10 1.93*

* Reflects the weighted average for all series of notes issued by TAL Advantage V, LLC. Each series of notes must comply separately with this covenant, and as of September 30, 2017, each series is in compliance.

~~TAL - Minimum Tangible Net Worth~~

Minimum Tangible Net Worth ("TNW") is calculated as total tangible assets less total indebtedness which excludes the fair value of derivative instruments liability. The Minimum TNW requirement in relation to our TAL subsidiary of Triton ranges from $300.0 million to $750.0 million. As of September 30, 2017, the actual TNW was $908.4 million.

~~TAL - Indebtedness to TNW~~

~~Indebtedness to TNW ratio is calculated as the ratio of Indebtedness to TNW for our TAL subsidiary.~~

Entity/Issuer Maximum
Indebtedness
to TNW Ratio Actual
Indebtedness
to TNW Ratio
TAL 4.75 3.67

Cash Flow

The following table sets forth certain cash flow information ~~presented~~ for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, respectively~~2020 (in thousands):

Nine Months Ended September 30,
2017 2016
Net cash provided by operating activities $ 574,790
$ 337,482
Net cash (used in) investing activities $ (1,003,621 ) $ (210,065 )
Net cash provided by (used in) financing activities $ 461,895
$ (54,983 )


	Three Months Ended March 31,
	2021		2020
Net cash provided by (used in) operating activities	$	300,988	$	197,960
Net cash provided by (used in) investing activities	$	(525,684)	$	(13,124)
Net cash provided by (used in) financing activities	$	459,036	$	166,774

Operating Activities

Net cash provided by operating activities increased by ~~$237.3~~$103.0 million to ~~$574.8~~$301.0 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 compared to ~~$337.5~~$198.0 million in the same period in 2016. Operating cash flows increased by $115.4 million due to the inclusion of TAL’s cash flows for the full year to date period in 2017 while TAL’s operating cash flows were included only after July 12^th ~~in 2016.~~2020. The ~~remaining~~significant increase was ~~mainly~~primarily due to an ~~increased level of profitability as a result of the~~ increase in ~~demand and on hire activity.~~profitability due to strong market conditions. Additionally, changes in working capital accounts were positive compared to the same period last year.

Investing Activities

Net cash used in investing activities increased by ~~$793.5~~$512.6 million to ~~$1,003.6~~$525.7 million in the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021 compared to ~~$210.1~~$13.1 million in the same period in ~~2016.~~2020. The change was primarily due to a $516.8 million increase in leasing equipment purchases to support the strong container demand.

Financing Activities

Net cash provided by financing activities increased by $292.2 million to $459.0 million in the three months ended March 31, 2021, compared to $166.8 million in the same period in 2020. The increase was primarily due to a $420.7 million increase in net borrowings to finance substantial purchases of leasing equipment in 2021.

Results of Operations

The following table summarizes our comparative results of operations for the three months ended March 31, 2021 and March 31, 2020 (in thousands).


	Three Months Ended March 31,				Variance
	2021		2020
Leasing revenues:
Operating leases	$	339,794	$	312,804	$	26,990
Finance leases	6,949		8,664		(1,715)

Total leasing revenues	346,743		321,468		25,275

Equipment trading revenues	25,945		15,380		10,565
Equipment trading expenses	(17,804)		(13,447)		(4,357)
Trading margin	8,141		1,933		6,208

Net gain on sale of leasing equipment	21,967		4,077		17,890


Operating expenses:
Depreciation and amortization	143,307		132,695		10,612
Direct operating expenses	9,370		23,248		(13,878)
Administrative expenses	20,921		19,225		1,696

Provision (reversal) for doubtful accounts	(2,464)		4,279		(6,743)

Total operating expenses	171,134		179,447		(8,313)
Operating income (loss)	205,717		148,031		57,686
Other expenses:
Interest and debt expense	54,623		69,002		(14,379)


Debt termination expense	—		31		(31)
Other (income) expense, net	(481)		(3,584)		3,103
Total other expenses	54,142		65,449		(11,307)
Income (loss) before income taxes	151,575		82,582		68,993
Income tax expense (benefit)	11,737		5,546		6,191
Net income (loss)	$	139,838	$	77,036	$	62,802

Less: dividend on preferred shares	10,513		9,825		688
Net income (loss) attributable to common shareholders	$	129,325	$	67,211	$	62,114

Comparison of the three months ended March 31, 2021 and 2020

Leasing revenues. Per diem revenue represents revenue earned under operating lease contracts. Fee and ancillary lease revenue represents fees billed for the pick-up and drop-off of containers in certain geographic locations and billings of certain reimbursable operating costs such as repair and handling expenses. Finance lease revenue represents interest income earned under finance lease contracts. The following table summarizes our leasing revenue for the periods indicated below (in thousands):


	Three Months Ended March 31,				Variance
	2021		2020
Leasing revenues:
Operating leases
Per diem revenues	$	331,252	$	298,486	$	32,766
Fee and ancillary revenues	8,542		14,318		(5,776)
Total operating lease revenues	339,794		312,804		26,990
Finance leases	6,949		8,664		(1,715)

Total leasing revenues	$	346,743	$	321,468	$	25,275

Total leasing revenues were $346.7 million for the three months ended March 31, 2021, compared to $321.5 million in the same period in 2020, an increase of $25.2 million.

Per diem revenues were $331.3 million for the three months ended March 31, 2021 compared to $298.5 million in the same period in 2020, an increase of $32.8 million. The primary reasons for this increase are as follows:

•$32.9 million increase due to an increase in average units on-hire; and

•$1.6 million increase due to a decrease in lease intangible amortization; partially offset by

•$1.7 million decrease primarily due to a decrease in average per diem rates for our refrigerated containers.

Fee and ancillary lease revenues were $8.5 million for the three months ended March 31, 2021 compared to $14.3 million in the same period in 2020, a decrease of $5.8 million, primarily due to lower drop-off activity.

Finance lease revenues were $6.9 million for the three months ended March 31, 2021 compared to $8.7 million in the same period in 2020, a decrease of $1.8 million, primarily due to the runoff of the existing portfolio.

Trading margin. Trading margin was $8.1 million for the three months ended March 31, 2021 compared to $1.9 million in the same period in 2020, an increase of $6.2 million. The increase was due to increased per container selling margins due to a significant increase in used container selling prices.

Net gain on sale of leasing equipment. Gain on sale of equipment was $22.0 million for the three months ended March 31, 2021 compared to $4.1 million in the same period in 2020, an increase of $17.9 million. The increase was primarily due to a 90.2% increase in the average sale price of our used dry containers. This increase was partially offset by a 47.2% decrease in ~~cash used~~sales volume due to the limited global availability of containers.

Depreciation and amortization. Depreciation and amortization was $143.3 million for the three months ended March 31, 2021 compared to $132.7 million in ~~investing activities~~the same period in 2020, an increase of $10.6 million. The primary reasons for the increase are as follows:

•$19.1 million increase due to the increased size of our container fleet; partially offset by

•$7.5 million decrease due to an increase in containers that have become fully depreciated.

Direct operating expenses. Direct operating expenses primarily consist of our costs to repair equipment returned off lease, store equipment when it is not on lease and reposition equipment from locations with weak leasing demand. Direct operating expenses were $9.4 million for the three months ended March 31, 2021 compared to $23.2 million in the same period in 2020, a decrease of $13.8 million. The primary reasons for the decrease are as follows:

•$10.1 million decrease in storage expense resulting from a decrease in the number of idle units; and

•$4.0 million decrease in repair and handling expense primarily due to lower drop-off activity.

Administrative expenses. Administrative expenses were $20.9 million for the three months ended March 31, 2021 compared to $19.2 million in the same period in 2020, an increase of $1.7 million. The primary reason for the increase is higher employee compensation costs, partially offset by a decrease in travel expense due to travel restrictions caused by the COVID-19 pandemic.

Provision (reversal) for doubtful accounts. There was ~~primarily~~a reversal for doubtful accounts of $2.5 million for the three months ended March 31, 2021, compared to a provision of $4.3 million in the same period in 2020. We reversed reserves in the first quarter of 2021 which were recorded last year against a mid-sized customer receivable.

Interest and debt expense. Interest and debt expense was $54.6 million for the three months ended March 31, 2021, compared to $69.0 million in the same period in 2020, a decrease of $14.4 million. The primary reasons for the decrease are as follows:

•$14.7 million decrease due to a decrease in the average effective interest rate to 3.30% from 4.19%; partially offset by

•$1.1 million increase due to an increase in the ~~purchases~~average debt balance of ~~leasing equipment of $800.7~~$105.8 million. ~~Cash provided by proceeds from~~

Income taxes. Income tax expense was $11.7 million for the ~~sale of equipment and principal payments on finance leases increased by $57.1 million which was largely offset by $50.3 million of cash acquired in the Merger in 2016 that did not re-occur in 2017.~~

~~Table of contents~~

~~Financing Activities~~

~~In the nine~~three months ended ~~September 30, 2017, cash flows provided by financing activities increased by $516.9 million to $461.9 million,~~March 31, 2021 compared to ~~cash flows used in financing activities of $55.0~~$5.5 million in the same period in 2016. Cash flows provided by financing activities increased by $419.4 million due to net borrowings, inclusive of debt issuance costs, under debt facilities of $415.7 million in the nine months ended September 30, 2017 compared to net payments, inclusive of debt issuance costs, under debt facilities of $3.7 million in the same period in 2016. In addition, proceeds from issuances of common shares, net of any redemptions increased by $196.5 million. These increases in cash provided by financing activities were partially offset by2020, an increase in ~~dividend payments~~income tax expense of ~~$48.0 million~~$6.2 million. The increase in income tax expense was the result of an increase in pre-tax income and an increase in ~~restricted cash balances~~the portion of ~~$57.7 million~~income generated in ~~2017 as compared to the same period in 2016.~~higher tax jurisdictions.

Contractual Obligations

We are party to various operating and ~~capital~~finance leases and are obligated to make payments related to our borrowings. We are also obligated under various commercial commitments, including obligations to our equipment manufacturers. Our equipment manufacturer obligations are in the form of conventional accounts payable, and are satisfied by cash flows from operations and financing activities.

The following table summarizes our contractual obligations and commercial commitments as of ~~September 30, 2017:~~March 31, 2021 and the effect such obligations are expected to have on our liquidity and cash flows in future periods:


	Contractual Obligations by Period													Contractual Obligations by Period
Contractual Obligations:	Total		Remaining 2017		2018		2019		2020		2021 and thereafter		Contractual Obligations:	Total		Remaining 2021		2022		2023		2024		2025		2026 and thereafter
	(dollars in millions)													(dollars in millions)
Principal debt obligations	$	6,758.3	$	131.8	$	730.4	$	1,156.6	$	996.5	$	3,743.0	Principal debt obligations	$	6,953.9	$	617.5	$	816.7	$	1,634.4	$	1,129.0	$	474.9	$	2,281.4
Interest on debt obligations(1)	1,135.2		69.7		260.5		222.0		180.7		402.3
Capital lease obligations(2)	129.4		11.3		32.0		11.2		10.8		64.1
Interest on debt obligations(1)													Interest on debt obligations(1)	834.6		153.5		182.0		152.2		104.3		78.2		164.4
Finance lease obligations(2)													Finance lease obligations(2)	18.3		2.3		3.1		3.1		9.8		—		—
Operating leases (mainly facilities)	8.9		0.7		4.1		2.0		1.2		0.9		Operating leases (mainly facilities)	6.7		2.4		2.6		1.6		0.1		—		—
Purchase obligations:													Purchase obligations:
Equipment purchases payable	94.1		94.1		—		—		—		—		Equipment purchases payable	342.4		342.4		—		—		—		—		—
Equipment purchase commitments	263.2		263.2		—		—		—		—		Equipment purchase commitments	1,398.6		1,398.6		—		—		—		—		—
Severance benefit commitment	4.2		4.2		—		—		—		—

Total contractual obligations	$	8,393.3	$	575.0	$	1,027.0	$	1,391.8	$	1,189.2	$	4,210.3	Total contractual obligations	$	9,554.5	$	2,516.7	$	1,004.4	$	1,791.3	$	1,243.2	$	553.1	$	2,445.8

(1)Amounts include actual interest for fixed debt, estimated interest for floating-rate debt and interest rate swaps which are in a payable position based on March 31, 2021 rates.


~~(1)~~	~~Amounts include actual for fixed interest debt and estimated interest for floating rate debt based on September 30, 2017 rates and the net effect of our interest rate swaps.~~


~~(2)~~	~~Amounts include interest.~~

(2)Amounts include interest.

Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2021, we did not have any relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We are, therefore, not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Critical Accounting Policies

Our consolidated financial statements have been prepared in conformity with ~~United States generally accepted accounting principles,~~GAAP, which ~~require~~requires us to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements and accompanying notes. ~~Our~~We base our estimates ~~are based~~and judgments on historical experience and ~~currently available information. Actual~~on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results ~~could~~may differ from ~~such estimates.~~these estimates under different assumptions or conditions. Our critical accounting policies are discussed in our Form 10-K.

~~Table of contents~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss to future earnings, values or cash flows that may result from changes in the price of a financial instrument. The fair value of a financial instrument, derivative or non-derivative, might change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. We have operations internationally and we are exposed to market risks in the ordinary course of our business. These risks include interest rate and foreign currency exchange rate risks.

Interest Rate Risk

We enter into ~~interest rate swap and cap~~derivative agreements to fix the interest rates on a portion of our ~~floating rate~~floating-rate debt. We assess and manage the external and internal risk associated with these derivative instruments in accordance with our overall operating goals. External risk is defined as those risks outside of our direct control, including counterparty credit risk, liquidity risk, systemic risk and legal risk. Internal risk relates to those operational risks within the management oversight structure and includes actions taken in contravention of our ~~policy.~~policies.

The primary external risk of our ~~interest rate swap~~derivative agreements is counterparty credit exposure, which is defined as the ability of a counterparty to perform its financial obligations under ~~a derivative~~the agreement. All of our derivative agreements are with ~~highly rated~~highly-rated financial institutions. Credit exposures are measured based on the market value of outstanding derivative instruments. Both current and potential exposures are calculated for each derivative agreement to monitor counterparty credit exposure.

As of ~~September 30, 2017,~~March 31, 2021, we had ~~interest rate swap~~derivative agreements in place to fix interest rates on a portion of our borrowings under debt facilities with floating interest rates as summarized below:

Derivatives

~~Net~~ Notional Amount

Weighted Average

Fixed Leg (Pay) Interest Rate

Cap Rate

Weighted Average

Remaining Term

Interest ~~rate swaps~~Rate Swap(1)

$~~1,760.6~~1,697.6 Million

~~1.70%~~2.02%

~~3.5~~n/a

4.8 years

Interest Rate Cap

$200.0 Million

n/a

5.5%

2.7 years

~~Certain~~(1) The impact of ~~our interest rate swap~~forward starting swaps with total notional amount of $350.0 million will increase the weighted average remaining term to 5.8 years.

Our derivative agreements are designated as cash flow hedges for accounting ~~purposes, and any~~purposes. Any unrealized gains or losses related to the changes in fair value are recognized in accumulated other comprehensive income and ~~re-classed~~reclassified to interest and debt expense as they are realized. AAs of March 31, 2021, we do not have any material non-designated derivatives. Previously, a portion of our swap portfolio iswas not designated and unrealized and realized changes in the fair value of ~~non-designated interest rate swap~~these agreements ~~are~~were recognized in the consolidated statements of operations as ~~unrealized loss (gain) on~~other (income) expense, net.

Approximately 97% of our debt is either fixed or hedged using derivative instruments ~~net and reclassified to realized loss on derivative instruments, net as they are realized.~~

~~We recognized activity on our interest rate swap agreements for the three and nine months ended September 30, 2017 and 2016 (in thousands):~~

~~Approximately 70% of our floating rate debt is hedged using interest rate swaps~~ which ~~help~~helps mitigate the impact of changes in short-term interest rates. However, a 100 basis point increase in the interest rates on our ~~floating rate~~unhedged debt (primarily LIBOR) would result in an increase of approximately ~~$9.3~~$1.5 million in interest expense over the next 12 months.

~~Table of contents~~

Foreign currency exchange rate risk

Although we have significant foreign-based operations, the majority of our revenues and our operating expenses ~~for the three and nine months ended September 30, 2017 and 2016 were~~are denominated in U.S. dollars. WeHowever, we pay our non-U.S. employees in local currencies and certain operating expenses are denominated in foreign currencies. ~~This activity is primarily denominated in the euro and the British pound. During the three and nine months ended September 30, 2017 and 2016, net~~Net foreign currency exchange gains and losses ~~recorded in administration expenses in our statement of operations~~ were ~~immaterial.~~immaterial for the three months ended March 31, 2021 and 2020.

ITEM 4. CONTROLS AND PROCEDURES.

Our senior management has evaluated the effectiveness and design of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e)), as of ~~September 30, 2017.~~March 31, 2021. Based upon their evaluation of these disclosure controls and procedures, our Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded, as of ~~September 30, 2017,~~March 31, 2021, that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the ~~quarter~~three months ended ~~September 30, 2017,~~March 31, 2021, which ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

~~Table of contents~~31

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we are a party to litigation matters arising in connection with the normal course of our business. While we cannot predict the outcome of these matters, in the opinion of our management, based on information presently available to us, we believe that we have adequate legal defenses, reserves or insurance coverage and any liability arising from these matters will not have a material adverse effect on our business. Nevertheless, unexpected adverse future events, such as an unforeseen development in our existing proceedings, a significant increase in the number of new cases or changes in our current insurance arrangements could result in liabilities that have a material adverse impact on our business.

ITEM 1A. RISK FACTORS.

For a detailed discussion of our risk factors, refer to our Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Share Repurchase Program

The following table provides certain information with respect to the Company's purchases of its common shares during the three months ended March 31, 2021:


	Issuer Purchases of Common Shares
Period	Total number of shares purchased(1)	Average price paid per share		Approximate dollar value of shares that may yet be purchased under the plan (in thousands)
January 1, 2021 through January 31, 2021	—	$	—	$	102,089
February 1, 2021 through February 28, 2021	—	$	—	$	102,089
March 1, 2021 through March 31, 2021	—	$	—	$	102,089
Total	—	$	—	$	102,089

(1)This column represents the total number of shares purchased and the total number of shares purchased as part of publicly announced plans.

ITEM 6. EXHIBITS.


Exhibit Number		Exhibit Description



~~Exhibit~~ ~~Number~~10.1*		~~Exhibit Description~~Triton International Limited Amended and Restated 2016 Equity Incentive Plan
~~10.7~~10.2*		~~Ninth Restated and Amended Credit~~Form of Restricted Share Award Agreement ~~dated as of April 15, 2016, by and among~~under the Triton ~~Container~~ International Limited ~~as Borrower, various lenders,~~Amended and Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 22, 2017)Restated 2016 Equity Incentive Plan
~~10.8~~10.3*		~~First Amendment, dated as~~Form of ~~February 6, 2017, to~~Restricted Share Unit Award Agreement under the ~~Ninth Restated and Amended Credit Agreement, dated as of April 15, 2016, by and among~~ Triton ~~Container~~ International Limited ~~as the Borrower, various lenders~~Amended and Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on June 22, 2017)Restated 2016 Equity Incentive Plan
~~10.9~~31.1*		Second Amendment, dated June 16, 2017, to the Ninth Restated and Amended Credit Agreement, dated as of April 15, 2016, by and among Triton Container International Limited, as Borrower, various lenders, Bank of America, N.A., as Administrative Agent and an Issuer, and other parties thereto (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on June 22, 2017)
~~31.1~~*	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
~~31.2~~31.2**		Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
~~32.1~~32.1***		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350
~~32.2~~32.2***		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS		XBRL Instance Document - the instance document does not appear on the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		XBRL Instance Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Inline XBRL Data (formatted as Inline XBRL and contained in Exhibit 101)



*			Filed herewith.
**			Furnished herewith.

~~Table of contents~~

SIGNATURE

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


			TRITON INTERNATIONAL LIMITED

April 29, 2021			~~TRITON INTERNATIONAL LIMITED~~
By:
~~November 13, 2017~~	~~By:~~	/s/ JOHN BURNS
				John Burns
				Chief Financial Officer

4334



	Three months ended, September 30, 2016			Nine months ended September 30, 2016
Total leasing revenues	$	261,977		$	815,256
Net (loss) income attributable to shareholders	$	(2,377	)	$	9,996



	September 30, 2017		December 31, 2016
Liabilities
Total debt(1) - carrying value	$	6,864,816	$	6,415,664
Total debt(1) - fair value	$	6,919,303	$	6,316,229



	September 30, 2017			December 31, 2016
Assets
Equipment held for sale - assets at fair value(1)	$	8,383		$	41,067
Cumulative impairment charges(2)	$	(2,939	)	$	(12,063	)



	Amounts Reclassified From Accumulated Other Comprehensive Income												Affected Line Item in the Consolidated Statements of Income
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Reclassification of (gain) loss on interest rate swap agreements	$	(160	)	$	(284	)	$	1,301		$	(284	)	Interest and debt expense
Income tax (benefit) expense	56			100			(405		)	100			Income tax expense
Amounts reclassified from accumulated other comprehensive income, net of tax	$	(104	)	$	(184	)	$	896		$	(184	)	Net income



	September 30, 2017			December 31, 2016
Future minimum lease payment receivable	$	302,652		$	353,811
Estimated residual values	64,584			65,793
Gross finance lease receivables	367,236			419,604
Unearned income	(57,532		)	(72,794		)
Net investment in finance leases, net of allowances	$	309,704		$	346,810



	Asset Derivatives				Liability Derivatives
Derivative Instrument	September 30, 2017		December 31, 2016			September 30, 2017		December 31, 2016
Interest rate swap contracts, designated as cash flow hedges	$	1,143	$	526		$	8,886	$	8,728
Interest rate swap contracts, not designated	2,696		5,217			192		676
Fair value of derivative instruments	$	3,839	$	5,743		$	9,078	$	9,404



	Balance as of September 30, 2017						Balance as of December 31, 2016
	Equipment Leasing		Equipment Trading		Totals		Equipment Leasing		Equipment Trading		Totals
Equipment held for sale	$	39,666	$	12,621	$	52,287	$	81,804	$	18,059	$	99,863
Goodwill	220,864		15,801		236,665		220,864		15,801		236,665
Total assets	9,337,450		44,764		9,382,214		8,660,786		52,785		8,713,571



	Total
Balance at December 31, 2016	$	25,175
Accrual	2,853
Payments	(28,028		)
Balance at September 30, 2017	$	—



	Total
Balance at December 31, 2016	$	20,718
Accrual	88
Payments	(16,581		)
Balance at September 30, 2017	$	4,225



	Quarter Ended
	September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016
Average Utilization⁽²⁾	97.6	%	96.5	%	95.3	%	93.6	%	92.4	%



Entity/Issuer	Minimum Fixed Charge Coverage Ratio	Actual Fixed Charge Coverage Ratio
TCIL Bank Facilities and Institutional Notes	1.25	1.68



Entity/Issuer	Maximum Funded Debt Ratio	Actual Funded Debt Ratio
TCIL	4.00	2.54



Entity/Issuer	Minimum Covenant EBIT to Cash Interest Expense Ratio	Actual Covenant EBIT to Cash Interest Expense Ratio
TAL - borrower level test	1.10	1.94
TAL asset backed warehouse	1.30	1.85
TAL asset backed securitization term notes	1.10	1.93*



Entity/Issuer	Maximum Indebtedness to TNW Ratio	Actual Indebtedness to TNW Ratio
TAL	4.75	3.67