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

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

Overview

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

The following tables show the composition of our fleet as of September 30, 2020
and 2019, and our average utilization for the three and nine months ended
September 30, 2020 and 2019:

                                         As of September 30,
                                          2020         2019
Owned container fleet in TEUs            1,622,102   1,623,588
Managed container fleet in TEUs             60,085      72,462
Total container fleet in TEUs            1,682,187   1,696,050

Owned container fleet in CEUs            1,657,067   1,649,465
Managed container fleet in CEUs             75,480      88,493
Total container fleet in CEUs            1,732,547   1,737,958

Owned railcar fleet in units                 5,039       5,504


                                         Three Months Ended         Nine Months Ended
                                            September 30,             September 30,
                                          2020         2019         2020         2019
Average container fleet utilization
in CEUs                                     98.4%        98.4%        98.2%        98.7%
Average owned container fleet
utilization in CEUs                         98.4%        98.6%        98.3%        98.7%
Average railcar fleet utilization           87.8%        85.3%        87.5% 

88.1%




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

Utilization of containers is computed by dividing the average total units on
lease during the period in CEUs, by the average total CEUs in our container
fleet during the period. Utilization of railcars is computed by dividing the
average number of railcars on lease during the period by the average total
number of railcars in our fleet during the period. In both cases, the total
fleet excludes new units not yet leased and off-hire units designated for sale.
If new units not yet leased are included in the total fleet, utilization would
be 97.3% and 96.4% for both the total and owned container fleet, and 85.1% and
84.6% for the railcar fleet, for the three and nine months ended September 30,
2020, respectively.

COVID-19 Pandemic

The COVID-19 pandemic continues to have a meaningful impact on global trade and
our business. The pandemic and related work, travel, and social restrictions
resulted in a sharp decrease in global economic and trade activity during the
first half of the year, resulting in weak container leasing demand. We have seen
increased leasing demand during the third quarter as COVID-related restrictions
have eased in Europe and the United States, but it is too early to tell whether
this rebound in leasing demand will be sustained.

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We have been concerned that the sharp decrease in global container volumes this
year would increase the financial challenges facing our customers and lead to
increased credit risk. While we are not yet through the pandemic, container
freight rates and the financial performance of our customers have generally held
up better than anticipated. All the major shipping lines have taken aggressive
actions to reduce their deployed vessel capacity, decreasing their network
expenses and mitigating rate pressure from reduced freight volumes. The large
decrease in bunker fuel prices has also been very helpful to their financial
performance. However, there is no certainty that our customers will continue to
be able to manage through the challenges of the COVID-19 environment. We
continue to closely monitor our customers' payment performance and expect our
customer credit risk will remain elevated as long as economic and trade
disruptions persist.

For additional information regarding the risk and uncertainties that we could
encounter as a result of the COVID-19 pandemic and related global conditions,
see "The continued spread of the COVID-19 pandemic may have a material adverse
impact on our business, financial condition and results of operations" in Item
1A. "Risk Factors" in this Quarterly Report on Form 10-Q.

Discontinued Operations



On August 14, 2020, we sold substantially all the assets of our logistics
business to NFI, a North American logistics provider, on a debt free, cash free
basis. As a result, the operating results of the logistics business have been
reclassified as discontinued operations in the unaudited consolidated financial
statements in this Quarterly Report on Form 10-Q. All prior periods presented in
the unaudited consolidated financial statements have been restated to reflect
the reclassification of the logistics business as discontinued operations and
the assets and liabilities as held for sale. See Note 2 - Discontinued
Operations to the consolidated financial statements in this Quarterly Report on
Form 10-Q for more information.

Results of Operations - Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

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



                                        Three Months Ended September
                                                    30,                         Change
                                             2020             2019        Amount      Percent
Total revenue                          $          79,052   $   81,406   $  (2,354)       (3) %
Operating expenses                                40,773       67,897     (27,124)      (40) %
Total other expenses                              19,965       23,482      (3,517)      (15) %
Net income (loss) attributable to
CAI common stockholders                           13,236      (7,986)       

21,222 266 %




The decrease in total revenue for the three months ended September 30, 2020
compared to the three months ended September 30, 2019, was attributable to a
$1.6 million, or 2%, decrease in container lease revenue and a $0.7 million, or
12%, decrease in rail lease revenue. The decrease in operating expenses for the
three months ended September 30, 2020 compared to the three months ended
September 30, 2019, was the result of a $25.6 million, or 100%, decrease in
impairment charges related to our rail assets, a $2.9 million, or 31%, decrease
in administrative expenses, and a $1.4 million, or 18%, decrease in storage,
handling and other expenses, partially offset by a $2.4 million, or 9%, increase
in depreciation expense and a $0.4 million, or 14%, decrease in gain on sale of
rental equipment.

Total other expenses for the three months ended September 30, 2020 decreased
compared with the three months ended September 30, 2019, primarily due to a
$6.5 million, or 28%, decrease in net interest expense, partially offset by a
$3.6 million, or 100%, increase in write-off of debt issuance costs. Total
dividends of $2.2 million on our preferred stock were recorded in both the three
months ended September 30, 2020 and 2019.

The decrease in operating expenses and total other expense, partially offset by
the decrease in revenue and the net loss from discontinued operations resulted
in an increase in net income attributable to CAI common stockholders for the
three months ended September 30, 2020 compared to the three months ended
September 30, 2019, of $21.2 million.

Container lease revenue

                                          Three Months Ended
                                             September 30,                 Change
($ in thousand)                            2020          2019        Amount      Percent
Container lease revenue                $     73,890   $   75,535   $  (1,645)       (2) %


The decrease in container lease revenue for the three months ended September 30,
2020 compared to the three months ended September 30, 2019 was mainly
attributable to a $1.4 million decrease in rental revenue resulting from a 2%
reduction in average owned container per diem rental rates and a $0.9 million
decrease in rental revenue arising from a change to cash-based revenue
recognition for a certain customer due to collectability issues, partially
offset by a $0.6 million increase in rental revenue resulting from a 1% increase
in the average number of CEUs of on-lease owned containers.


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Rail lease revenue

                           Three Months Ended September 30,               Change
($ in thousand)            2020                              2019    Amount   Percent
Rail lease revenue  $            5,162                      $ 5,871  $ (709)    (12) %


The decrease in rail lease revenue for the three months ended September 30, 2020
compared to the three months ended September 30, 2019 was mainly attributable to
a 7% decrease in the average number of on-lease railcars.

Depreciation of rental equipment



                          Three Months Ended September 30,              Change
($ in thousand)           2020                             2019    Amount   Percent
Container leasing  $           28,267                    $ 28,030  $   237       1 %
Rail leasing                    2,161                           -    2,161     100 %
                   $           30,428                    $ 28,030  $ 2,398       9 %


Container leasing

Depreciation expense for the three months ended September 30, 2020 remained relatively consistent with the three months ended September 30, 2019.

Rail leasing



The increase in depreciation expense for the three months ended September 30,
2020 compared to the three months ended September 30, 2019 was primarily
attributable to differences in the timing of railcar assets being held for sale,
during which time no depreciation was charged. Railcar assets were classified as
held for sale for the three months ended September 30, 2019, while they were
classified as held for use for the three months ended September 30, 2020.

Impairment of rental equipment



                      Three Months Ended September 30,              Change
($ in thousand)    2020                              2019      Amount    Percent
Rail leasing     $       -                         $ 25,632  $ (25,632)   (100) %


An impairment charge of $25.6 million was recognized during the three months
ended September 30, 2019 to reduce the book value of the railcar portfolio, on
an individual basis, to the lower of its net book value or its estimated fair
value at the date when the decision was made to sell the assets of the railcar
business.

Storage, handling and other expenses



                          Three Months Ended September 30,                Change
($ in thousand)           2020                              2019     Amount    Percent
Container leasing  $            4,713                      $ 4,672  $      41       1 %
Rail leasing                    1,973                        3,453    (1,480)    (43) %
                   $            6,686                      $ 8,125  $ (1,439)    (18) %


Container leasing

Storage, handling and other expenses for the three months ended September 30,
2020 remained relatively consistent with the three months ended September 30,
2019.

Rail leasing

The decrease in storage, handling and other expenses for the three months ended
September 30, 2020 compared to the three months ended September 30, 2019 was
primarily attributable to a $1.8 million decrease in repair and maintenance
costs, partially offset by a $0.4 million increase in positioning fees.


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Gain on sale of rental equipment



                          Three Months Ended September 30,               Change
($ in thousand)           2020                              2019    Amount   Percent
Container leasing  $            2,419                      $ 2,411  $     8       -
Rail leasing                      310                          757    (447)    (59) %
                   $            2,729                      $ 3,168  $ (439)    (14) %


Container leasing

Gain on sale of rental equipment for the three months ended September 30, 2020 remained relatively consistent with the three months ended September 30, 2019.

Rail leasing



The decrease in gain on sale of rental equipment for the three months ended
September 30, 2020 compared to the three months ended September 30, 2019 was
mainly attributable to a 97% decrease in the average sale price per unit as
sales made in the three months ended September 30, 2020 were for scrap,
partially offset by a 121% increase in the number of units sold, between the two
periods.

Administrative expenses

                          Three Months Ended September 30,                Change
($ in thousand)           2020                              2019     Amount    Percent
Container leasing  $            5,389                      $ 8,658  $ (3,269)    (38) %
Rail leasing                      999                          620        379      61 %
                   $            6,388                      $ 9,278  $ (2,890)    (31) %


Container leasing

The decrease in administrative expenses for the three months ended September 30,
2020 compared to the three months ended September 30, 2019 was primarily
attributable to a $3.5 million decrease in bad debt expense, mainly due to cash
receipts from a previously reserved customer, partially offset by a $0.2 million
increase in payroll-related costs.

Rail leasing



The increase in administrative expenses for the three months ended September 30,
2020 compared to the three months ended September 30, 2019 was primarily
attributable to a $0.2 million increase in allocated overhead costs and a $0.1
million increase in bad debt expense.

Other expense

                                          Three Months Ended
                                             September 30,                 Change
($ in thousand)                            2020          2019        Amount      Percent
Net interest expense                   $     16,630   $   23,102   $  (6,472)      (28) %
Write-off of debt issuance costs              3,641            -        3,641       100 %
Other (income) expense                        (306)          380        (686)       181 %
                                       $     19,965   $   23,482   $  (3,517)      (15) %


Net interest expense

The decrease in net interest expense for the three months ended September 30,
2020 compared to the three months ended September 30, 2019 was due primarily to
a decrease in the average interest rate on our outstanding debt from
approximately 3.7% as of September 30, 2019 to 2.5% as of September 30, 2020,
caused primarily by a decrease in LIBOR, as well as a decrease in our average
loan principal balance between the two periods, as we decreased acquisition
activity for rental equipment.

Write-off of debt issuance costs



The $3.6 million write-off of debt issuance costs during the three months ended
September 30, 2020 was due to the early repayment of debt associated with our
Series 2017-1 and Series 2018-1 asset-backed notes.

Other (income) expense



Other income, representing a gain on foreign exchange of $0.3 million for the
three months ended September 30, 2020, increased from a loss of $0.4 million for
the three months ended September 30, 2019, primarily as a result of movements in
the U.S. Dollar exchange rate against the Euro.


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Income tax expense (benefit)

                                       Three Months Ended September
                                                    30,                        Change
($ in thousand)                              2020            2019        Amount      Percent
Income tax expense (benefit)           $          1,349   $  (4,830)   $    6,179       128 %


The increase in income tax expense for the three months ended September 30, 2020
compared to three months ended September 30, 2019 was mainly attributable to a
tax benefit resulting from the impairment of railcar assets of $25.6 million
during the three months ended September 30, 2019, as well as an increase in the
estimated effective tax rate. The full-year estimated effective tax rate was
8.1% at September 30, 2020, compared to an effective tax rate of 6.1% at
September 30, 2019. The increase in the estimated full-year effective tax rate
was primarily due to an increase in the amount of interest income generated by
foreign finance leases subject to both foreign and U.S. income tax.

Preferred stock dividends

                                          Three Months Ended
                                             September 30,                   Change
($ in thousand)                            2020          2019         Amount        Percent
Preferred stock dividends              $      2,207   $    2,207   $          -         - %

Preferred stock dividends for the three months ended September 30, 2020 remained consistent with the three months ended September 30, 2019.

Loss from discontinued operations



                                           Three Months Ended
                                              September 30,                 Change
                                            2020          2019        Amount      Percent
Logistics revenue                       $     13,550   $   30,270   $ (16,720)      (55) %
Operating expenses                            15,525       31,082     (15,557)      (50) %
Interest income                                    1            4         

(3) (75) % Net loss from discontinued operations (1,522) (636) (886) 139 %




The decrease in logistics revenue and transportation costs for the three months
ended September 30, 2020 compared to the three months ended September 30, 2019,
was primarily attributable to the sale of the logistics business during the
three months ended September 30, 2020. The increase in the net loss from
discontinued operations for the three months ended September 30, 2020 compared
to the three months ended September 30, 2019, was primarily due to certain sale
related costs including severance and bonus payments.

Results of Operations - Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019 (dollars in thousands):



                                          Nine Months Ended
                                            September 30,                 Change
                                          2020          2019        Amount      Percent
Total revenue                          $   229,693   $  245,546   $ (15,853)       (6) %
Operating expenses                         139,944      155,264     (15,320)      (10) %
Total other expenses                        58,088       70,702     (12,614)      (18) %
Net income attributable to CAI
common stockholders                          6,866       11,668      

(4,802) (41) %




The decrease in total revenue for the nine months ended September 30, 2020
compared to the nine months ended September 30, 2019, was attributable to a
$12.9 million, or 6%, decrease in container lease revenue and a $3.0 million, or
15%, decrease in rail lease revenue. The decrease in operating expenses for the
nine months ended September 30, 2020 compared to the nine months ended September
30, 2019, was the result of a $13.2 million, or 40%, decrease in impairment
charges related to our rail assets, a $5.1 million, or 19%, decrease in
administrative expenses and a $3.3 million, or 4%, decrease in depreciation
expense, partially offset by a $5.8 million, or 47% decrease in gain on sale of
rental equipment, and a $0.5 million, or 3% increase in storage, handling and
other expenses.

Total other expenses for the nine months ended September 30, 2020 decreased
compared with the nine months ended September 30, 2019, primarily due to a
$15.6 million, or 22%, decrease in net interest expense and a $0.7 million, or
129%, increase in other income, partially offset by a $3.6 million, or 100%,
increase in write-off of debt issuance costs. Total dividends of $6.6 million on
our preferred stock were recorded in both the nine months ended September 30,
2020 and 2019.

The decrease in revenue and net loss from discontinued operations, partially
offset by the decrease in operating expenses and total other expenses resulted
in a decrease in net income attributable to CAI common stockholders for the nine
months ended September 30, 2020 compared to the nine months ended September 30,
2019, of $4.8 million.

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Container lease revenue

                               Nine Months Ended September 30,               Change
($ in thousand)                2020                          2019       Amount    Percent
Container lease revenue  $         212,446                 $ 225,332  $ (12,886)     (6) %


The decrease in container lease revenue for the nine months ended September 30,
2020 compared to the nine months ended September 30, 2019 was mainly
attributable to an $11.0 million decrease in rental revenue resulting from a 6%
reduction in average owned container per diem rental rates and a $7.5 million
decrease in rental revenue arising from a change to cash-based revenue
recognition for a certain customer due to collectability issues, partially
offset by a $5.4 million increase in rental revenue resulting from a 3% increase
in the average number of CEUs of on-lease owned containers.

Rail lease revenue

                           Nine Months Ended September 30,               Change
($ in thousand)            2020                            2019     Amount    Percent
Rail lease revenue  $           17,247                   $ 20,214  $ (2,967)    (15) %


The decrease in rail lease revenue for the nine months ended September 30, 2020
compared to the nine months ended September 30, 2019 was mainly attributable to
a 12% decrease in the average size of the on-lease railcar fleet, caused
primarily by the sale of railcars.

Depreciation of rental equipment



                          Nine Months Ended September 30,               Change
($ in thousand)           2020                            2019     Amount    Percent
Container leasing  $           82,065                   $ 84,381  $ (2,316)     (3) %
Rail leasing                    4,257                      5,248      (991)    (19) %
                   $           86,322                   $ 89,629  $ (3,307)     (4) %


Container leasing

The decrease in depreciation expense for the nine months ended September 30,
2020 compared to the nine months ended September 30, 2019 was mainly
attributable to a 1% decrease in the average size of our owned container fleet
during the last twelve months and 6% of containers purchased during the same
period being used, which depreciate at a lower rate or are already fully
depreciated.

Rail leasing



The decrease in depreciation expense for the nine months ended September 30,
2020 compared to the nine months ended September 30, 2019 was primarily
attributable to differences in the timing of railcar assets being held for sale,
during which time no depreciation was charged. Railcar assets were classified as
held for sale for three months during the nine months ended September 30, 2020,
compared to four months during the nine months ended September 30, 2019. There
was also a 12% decrease in the average size of the railcar fleet during the last
twelve months.

Impairment of rental equipment



                        Nine Months Ended September 30,                Change
($ in thousand)         2020                            2019      Amount    Percent
Rail leasing     $           19,724                   $ 32,955  $ (13,231)    (40) %


A charge of $33.0 million was recognized during the nine months ended September
30, 2019 to reflect the loss on classification of the railcar portfolio as held
for sale, and its subsequent impairment. The impairment charge for the nine
months ended September 30, 2020 included a charge of $19.2 million that was
recognized during the three months ended March 31, 2020, when the held for sale
criteria for the railcar assets were no longer met. The impairment reduced the
book value of the railcar portfolio, on an individual basis, to the lower of its
net book value had the assets not been classified as held for sale, or its
estimated fair value at the date when the held for sale criteria were no longer
met. For additional information on the impairment, see Note 4 to our
consolidated financial statements in this Quarterly Report on Form 10-Q.


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Storage, handling and other expenses



                          Nine Months Ended September 30,               Change
($ in thousand)           2020                            2019     Amount    Percent
Container leasing  $           14,305                   $ 12,631  $   1,674      13 %
Rail leasing                    4,603                      5,813    (1,210)    (21) %
                   $           18,908                   $ 18,444  $     464       3 %


Container leasing

The increase in storage, handling and other expenses for the nine months ended
September 30, 2020 compared to the nine months ended September 30, 2019 was
primarily attributable to a $1.7 million increase in storage and repair expenses
due to an increase in the average size of the off-lease fleet.

Rail leasing

The decrease in storage, handling and other expenses for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily attributable to a $1.7 million decrease in repair and maintenance costs, partially offset by a $0.7 million increase in positioning fees.

Gain on sale of rental equipment



                         Nine Months Ended September 30,               Change
($ in thousand)          2020                            2019     Amount    Percent
Container leasing  $          5,854                    $  2,847  $   3,007     106 %
Rail leasing                    597                       9,418    (8,821)    (94) %
                   $          6,451                    $ 12,265  $ (5,814)    (47) %


Container leasing

The increase in gain on sale of rental equipment for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was mainly attributable to a $2.6 million net selling loss recognized at the commencement of a finance lease during the quarter ended June 30, 2019.

Rail leasing



The decrease in gain on sale of rental equipment for the nine months ended
September 30, 2020 compared to the nine months ended September 30, 2019 was
mainly attributable to an 80% decrease in the number of railcars sold between
the two periods, primarily due to the sale of 1,946 railcars on February 26,
2019, resulting in a gain on sale of $7.0 million.

Administrative expenses

                          Nine Months Ended September 30,               Change
($ in thousand)           2020                            2019     Amount    Percent
Container leasing  $           18,830                   $ 23,524  $ (4,694)    (20) %
Rail leasing                    2,611                      2,977      (366)    (12) %
                   $           21,441                   $ 26,501  $ (5,060)    (19) %


Container leasing

The decrease in administrative expenses for the nine months ended September 30,
2020 compared to the nine months ended September 30, 2019 was primarily
attributable to a $7.3 million decrease in bad debt expense, mainly due to cash
receipts from a previously reserved customer, partially offset by a $1.7 million
increase in severance costs mainly associated with the change in our Chief
Executive Officer and an increase of $1.3 million in professional fees due to
the strategic review process.

Rail leasing

The decrease in administrative expenses for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily attributable to a $0.4 million decrease in bad debt expense due to improved collection efforts.




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Other expense

                                           Nine Months Ended
                                             September 30,                 Change
($ in thousand)                            2020          2019        Amount      Percent
Net interest expense                   $     54,604   $   70,165   $ (15,561)      (22) %
Write-off of debt issuance costs              3,641            -        3,641       100 %
Other (income) expense                        (157)          537        (694)     (129) %
                                       $     58,088   $   70,702   $ (12,614)      (18) %


Net interest expense

The decrease in net interest expense for the nine months ended September 30,
2020 compared to the nine months ended September 30, 2019 was due primarily to a
decrease in the average interest rate on our outstanding debt from approximately
3.7% as of September 30, 2019 to 2.5% as of September 30, 2020, caused primarily
by a decrease in LIBOR, as well as a decrease in our average loan principal
balance between the two periods, as we decreased acquisition activity for rental
equipment.

Write-off of debt issuance costs



The $3.6 million write-off of debt issuance costs during the nine months ended
September 30, 2020 is due to the early repayment of debt associated with our
Series 2017-1 and Series 2018-1 asset-backed notes.

Other (income) expense



Other income, representing a gain on foreign exchange of $0.2 million for the
nine months ended September 30, 2020, increased from a loss of $0.5 million for
the nine months ended September 30, 2019, primarily as a result of movements in
the U.S. Dollar exchange rate against the Euro.

Income tax benefit

                           Nine Months Ended September 30,               Change
($ in thousand)          2020                              2019     Amount    Percent
Income tax benefit  $           594                       $ 2,098  $ (1,504)    (72) %


The decrease in income tax benefit for the nine months ended September 30, 2020
compared to nine months ended September 30, 2019 was mainly attributable to a
decrease in the discrete tax benefit arising from the impairment of railcars,
and an increase in the estimated full-year effective tax rate to 8.1% at
September 30, 2020, compared to an effective tax rate of 6.1% at September 30,
2019. The increase in the estimated full-year effective tax rate before discrete
items was primarily due to an increase in income before tax and the amount of
interest income generated by foreign finance leases subject to both foreign and
U.S. income tax.

Preferred stock dividends

                                        Nine Months Ended September
                                                    30,                           Change
($ in thousand)                              2020             2019         Amount        Percent
Preferred stock dividends              $           6,621   $    6,621   $          -         - %

Preferred stock dividends for the nine months ended September 30, 2020 remained consistent with the nine months ended September 30, 2019.

Loss from discontinued operations



                                           Nine Months Ended
                                             September 30,                 Change
                                           2020          2019        Amount      Percent
Logistics revenue                       $    66,304   $   87,788   $ (21,484)      (24) %
Operating expenses                           88,619       92,233      (3,614)       (4) %
Interest income                                   7           12         

(5) (42) % Net loss from discontinued operations (18,768) (3,389) (15,379) 454 %




The decrease in logistics revenue and transportation costs for the nine months
ended September 30, 2020 compared to the nine months ended September 30, 2019,
was primarily attributable to the sale of the logistics business during the
three months ended September 30, 2020. The increase in the net loss from
discontinued operations for the nine months ended September 30, 2020 compared to
the nine months ended September 30, 2019, was a result of the $18.5 million loss
on classification as held for sale recorded during the three months ended June
30, 2020, primarily due to the write down of goodwill and intangible assets, and
certain sale related costs including severance and bonus payments.


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Liquidity and Capital Resources



As of September 30, 2020, we had cash and cash equivalents of $382.4 million,
including $340.1 million of restricted cash, and $26.8 million of cash held by
variable interest entities (VIEs). The restrictions on $316.9 million of the
restricted cash at September 30, 2020 were lifted on October 26, 2020, when the
cash was used to repay in full the amount outstanding under the Series 2020-2
asset-backed notes, with the balance being returned to the Company.

Our principal sources of liquidity are cash in-flows provided by operating activities, proceeds from the sale of rental equipment, borrowings from financial institutions, and equity and debt offerings. Our cash in-flows are used to finance capital expenditures and meet debt service requirements.

As of September 30, 2020, our outstanding indebtedness and current maximum borrowing level was as follows (in thousands):



                                         Current          Current
                                          Amount          Maximum
                                       Outstanding    Borrowing Level
Revolving credit facilities            $   815,013   $      1,279,315
Term loans                                 236,924            236,924
Senior secured notes                        46,665             46,665
Asset-backed notes                       1,017,500          1,017,500
Collateralized financing obligations        75,931             75,931
Term loans held by VIE                      32,570             32,570
                                         2,224,603          2,688,905
Debt discount and debt issuance costs      (16,420)                  -
Total                                  $ 2,208,183   $      2,688,905

As of September 30, 2020, we had $464.2 million in availability under our revolving credit facilities (net of $0.1 million in letters of credit), subject to our ability to meet the collateral requirements under the agreements governing the facilities. Based on the borrowing base and collateral requirements at September 30, 2020, the borrowing availability under our revolving credit facilities was $164.1 million, assuming no additional contributions of assets.



As of September 30, 2020, we had a total of $1,813.4 million of debt in
facilities with fixed interest rates or floating interest rates that have been
synthetically fixed through interest rate swap agreements. This accounts for 82%
of our total outstanding debt.

For further information on our debt instruments, see Note 6 to the consolidated
financial statements in this Quarterly Report on Form 10-Q and Note 10 to the
consolidated financial statements in our Annual Report on Form 10-K for the year
ended December 31, 2019, filed with the SEC on March 5, 2020.

We continue to monitor the COVID-19 outbreak and its impact on our overall
liquidity position and outlook. The ultimate impact that COVID-19 may have on
our operational and financial performance over the next 12 months is currently
uncertain and will depend on certain developments, including, among others, the
impact of COVID-19 on our customers and the magnitude and duration of the
pandemic. Assuming that our customers meet their contractual commitments, we
currently believe that cash provided by operating activities and existing cash,
proceeds from the sale of rental equipment, and borrowing availability under our
debt facilities are sufficient to meet our liquidity needs for at least the next
twelve months.

In addition to customary events of default, the agreements governing our
indebtedness contain restrictive covenants, including limitations on certain
liens, indebtedness and investments. In addition, the agreements governing our
indebtedness contain various restrictive financial and other covenants. The
financial covenants in the agreements governing our indebtedness require us to
maintain: (1) in the case of our debt facilities, a consolidated funded debt to
consolidated tangible net worth ratio of no more than 3.75:1.00, and in the case
of our asset-backed notes, of no more than 4.50:1.00; and (2) in the case of our
debt facilities, a fixed charge coverage ratio of at least 1.20:1.00, and in the
case of our asset-backed notes, of at least 1.10:1.00. As of September 30, 2020,
we were in compliance with all of our financial and other covenants and we
expect to remain in compliance for at least the next twelve months.


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Cash Flows

The following table sets forth certain cash flow information for the nine months ended September 30, 2020 and September 30, 2019 (in thousands):



                                                            Nine Months Ended September
                                                                        30,
                                                                 2020            2019
Net income                                                 $         13,487

$ 18,289 Net income from continuing operations adjusted for non-cash items

                                                      129,216 

134,681


Changes in working capital                                           66,105 

54,944

Net cash provided by operating activities of continuing operations

                                                          195,321 

189,625

Net cash provided by (used in) investing activities of continuing operations

                                                10,990 

(113,577)

Net cash provided by (used in) financing activities of continuing operations

                                                94,415 

(73,399)


Net cash provided by (used in) discontinued operations                8,497 

(1,728)


Effect on cash of foreign currency translation                         (15) 

(874)


Net increase in cash and restricted cash                            309,208            47
Cash and restricted cash at beginning of period                      73,239 

75,983


Cash and restricted cash at end of period                  $        382,447

$ 76,030

Cash Flows from Continuing Operations

Operating Activities



Net cash provided by operating activities of continuing operations was
$195.3 million for the nine months ended September 30, 2020, an increase of
$5.7 million compared to $189.6 million for the nine months ended September 30,
2019. The increase was due to an $11.2 million increase in our net working
capital adjustments, partially offset by a $5.5 million decrease in income from
continuing operations as adjusted for depreciation, impairment and other
non-cash items. The decrease of $5.5 million in income from continuing
operations as adjusted for non-cash items was primarily due to a decrease of
$13.2 million in impairment of rental equipment, a decrease of $7.6 million in
bad debt expense due to receipt of payments from a previously reserved customer,
and a decrease of $2.7 million in depreciation expense, partially offset by a
$5.8 million decrease in gain on sale of rental equipment mainly due to a large
sale of railcars in the prior year and an increase of $3.3 million in
amortization and write-off of unamortized debt issuance costs.

Net working capital provided by operating activities of $66.1 million in the
nine months ended September 30, 2020, was due to a $54.7 million decrease in net
investment in finance leases, representing the receipt of principal payments,
and an $11.8 million decrease in accounts receivable, primarily caused by the
timing of cash receipts from customers. Net working capital provided by
operating activities of $54.9 million in the nine months ended September 30,
2019 was due to a $48.7 million decrease in net investment in finance leases,
representing the receipt of principal payments, a $4.6 million decrease in
accounts receivable, primarily caused by the timing of cash receipts from
customers, and a $3.5 million increase in accounts payable, accrued expenses and
other liabilities, primarily caused by the timing of payments, partially offset
by a $1.8 million decrease in unearned revenue.

Investing Activities



Net cash provided by investing activities of continuing operations was
$11.0 million for the nine months ended September 30, 2020, an increase of
$124.6 million compared to net cash used in investing activities of
$113.6 million for the nine months ended September 30, 2019. The increase in
cash provided was attributable to a $287.1 million decrease in purchase of
rental equipment, a $6.3 million decrease in purchase of financing receivable, a
$2.2 million increase in receipt of principal payments from financing
receivables, and a $1.0 million decrease in purchase of furniture, fixtures and
equipment, partially offset by a $172.0 million decrease in proceeds from sale
of rental equipment.

Financing Activities

Net cash provided by financing activities of continuing operations was
$94.4 million for the nine months ended September 30, 2020, an increase of
$167.8 million compared to net cash used in financing activities of
$73.4 million for the nine months ended September 30, 2019. During the nine
months ended September 30, 2020, our net cash inflow from borrowings was
$110.4 million compared to net cash outflow of $32.4 million for the nine months
ended September 30, 2019. The increase in net cash inflow from borrowings and a
decrease of $34.1 million in the repurchase of common stock were partially
offset by an increase of $7.5 million in debt issuance costs and an increase of
$4.4 million in dividends paid to common stockholders.
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Cash Flows from Discontinued Operations



Net cash provided by discontinued operations was $8.5 million for the nine
months ended September 30, 2020, an increase of $10.2 million compared to net
cash used by discontinued operations of $1.7 million for the nine months ended
September 30, 2019. The increase in cash was primarily attributable to a $5.9
million increase in net cash provided by investing activities of discontinued
operations, resulting from proceeds received upon sale of the business, and a
$4.3 million increase in net cash provided by operating activities of
discontinued operations, mainly resulting from a decrease in accounts receivable
due to a decrease in the volume of sales between the two periods.

Equity Transactions

Stock Repurchase Plan



In October 2018, we announced that our Board of Directors approved the
repurchase of up to three million shares of our outstanding common stock. The
number, price, structure and timing of the repurchases, if any, will be at our
sole discretion and will be evaluated by us depending on prevailing market
conditions, corporate needs, and other factors. The stock repurchases may be
made in the open market, block trades or privately negotiated transactions. This
stock repurchase program replaces any available prior share repurchase
authorization and may be discontinued at any time. We did not repurchase any
shares under this repurchase plan during the nine months ended September 30,
2020. As of September 30, 2020, approximately 1.0 million shares remained
available for repurchase under our share repurchase program.

Contractual Obligations and Commercial Commitments

The following table sets forth our contractual obligations and commercial commitments by due date as of September 30, 2020 (in thousands):



                                                             Payments Due by Period
                                           Less than       1-2          2-3          3-4          4-5      More than
                               Total         1 year       years        years        years        years      5 years
Total debt obligations:
Revolving credit facilities $   815,013    $        -   $        -   $ 677,513    $ 137,500    $       -   $        -
Term loans                      236,924      130,774        7,800       28,350       70,000            -            -
Senior secured notes             46,665        6,110       40,555             -            -           -            -
Asset-backed notes            1,017,500      337,211       62,411       62,411       62,411      64,201      428,855
Collateralized financing
obligations                      75,931       28,474       29,973             -            -           -      17,484
Term loans held by VIE           32,570        5,425        5,660        5,906        6,157       6,426        2,996
Interest on debt and
capital lease obligations
(1)                             159,407       42,894       37,425       29,752       12,946      10,845       25,545
Rental equipment payable         89,634       89,634             -            -            -           -            -
Rent, office facilities and
equipment                         5,041        2,541        1,988          298          175          39             -
Equipment purchase
commitments - Containers        116,941      116,941             -            -            -           -            -
Total contractual
obligations                 $ 2,595,626    $ 760,004    $ 185,812    $ 804,230    $ 289,189    $ 81,511    $ 474,880


(1)Our estimate of interest expense commitment includes $15.5 million relating
to our revolving credit facilities subject to variable interest rates, $26.5
million relating to our revolving credit facilities subject to fixed interest
rates, $15.0 million relating to our term loans, $4.1 million relating to our
senior secured notes, $87.9 million relating to our asset-back notes,
$6.2 million relating to our collateralized financing obligations, and
$4.1 million relating to our term loans held by VIE. The calculation of interest
commitment related to our debt assumes the following weighted-average interest
rates as of September 30, 2020: variable-rate revolving credit facilities,
1.6%; fixed-rate revolving credit facilities, 1.9%; term loans, 3.3%; senior
secured notes, 4.9%; asset-backed notes, 2.9%; collateralized financing
obligations, 1.6%; and term loans held by VIE, 4.2%. These calculations assume
that weighted-average interest rates will remain at the same level over the next
five years. We expect that interest rates will vary over time based upon
fluctuations in the underlying indexes upon which these rates are based,
including the potential discontinuation of LIBOR after 2021.

Off-Balance Sheet Arrangements



As of September 30, 2020, we had no material off-balance sheet arrangements or
obligations that have or are reasonably likely to have a current or future
effect on our financial condition, change in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures, or capital
resources that are material to investors.

Critical Accounting Policies and Estimates



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

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Recent Accounting Pronouncements



Except for the most recently adopted accounting pronouncements described in Note
1 to our unaudited consolidated financial statements included in this Quarterly
Report on Form 10-Q, there are no other recent accounting pronouncement that are
relevant to our business.

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