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, 2008 filed with the SEC on March 16, 2009. 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.

Overview

We are one of the world's leading container leasing and management companies. We purchase containers, lease them to container shipping lines and either retain them as part of our owned fleet or sell them to container investors for whom we then provide management services. In operating our fleet, we lease, re-lease and dispose of containers and contract for the repair, repositioning and storage of containers. As of June 30, 2009, our fleet comprised 769,000 twenty-foot equivalent units (TEUs) of containers. The following table shows the composition of our fleet as of June 30, 2009 and 2008 and our average fleet utilization for the three and six months ended June 30, 2009 and 2008:

                                                         As of         As of
                                                        June 30,      June 30,
                                                          2009          2008
                                                             (unaudited)
    Managed fleet in TEUs                                533,145       530,945
    Owned fleet in TEUs                                  235,548       260,519

    Total                                                768,693       791,464


    Percentage of on-lease fleet on long-term leases        76.9 %        69.6 %
    Percentage of on-lease fleet on short-term leases       20.0          27.9
    Percentage of on-lease fleet on finance leases           3.1           2.5

    Total                                                  100.0 %       100.0 %

                                                  Three Months            Six Months
                                                 Ended June 30,         Ended June 30,

Average fleet utilization reflects the average number of TEUs in our fleet on lease as a percentage of total TEUs available for lease. In calculating TEUs available for lease, we exclude units held for sale and units we have purchased that are held at the manufacturer. The utilization rate for a period is calculated by averaging the utilization rates at the end of each calendar month during the period.

We plan to increase both the number of owned containers as well as the number of managed containers in our fleet. During the three and six months ended June 30, 2009, we purchased approximately $4.4 million and $11.4 million, respectively, of new containers. We have slowed down the pace of acquisition for new containers in view of declining utilization and weak capital markets environment. We believe it is important to maintain a balance between the size of our owned fleet and our managed fleet in order to have multiple sources of revenue.

Results of Operations

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008

The following table summarizes our operating results for the three-month periods
ended June 30, 2009 and 2008 (dollars in thousands):



                            Three Months Ended June 30,        Increase (Decrease)
                               2009              2008          Amount        Percent
                                    (unaudited)
     Total revenue        $       16,661    $       20,642   $   (3,981 )      (19.3 )%
     Operating expenses           11,156             9,211        1,945         21.1 %
     Net income                    3,333             6,264       (2,931 )      (46.8 )%

Total revenue of $16.7 million for the three months ended June 30, 2009 was down $4.0 million, or 19.3%, from the three months ended June 30, 2008, due primarily to a lower gain on container sales to investors and the decline in our container equipment utilization. Operating expenses for the quarter ended June 30, 2009 increased $1.9 million, or 21.1%, from the same three-month period in 2008, mainly as a result of higher storage, handling and repairs expenses, increase in depreciation expense and lower gain on disposition of used container equipment, partly offset by lower marketing, general and administrative expenses. Our net income decreased $2.9 million, or 46.8%, to $3.3 million for the three months ended June 30, 2009, from $6.3 million for the comparable period in 2008. The decrease in net income resulted from lower revenue and higher operating expenses, partly offset by lower interest expense and income tax expense compared to the three months ended June 30, 2008.

Revenue. The composition of our revenue is shown on our unaudited financial statements included in this filing. The following discussion explains the significant changes in the composition of our total revenue for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008:

Container Rental Revenue. Container rental revenue decreased $365,000, or 2.6%, to $13.5 million for the three months ended June 30, 2009 from $13.8 million for the three months ended June 30, 2008. The decrease in container rental revenue was principally due to the 9.6 % decrease in owned TEUs, decrease in utilization of our owned containers, and lower per diem rate for short term leases, partly offset by the impact of a full quarter of revenue for Consent (compared to only two months revenue for the same period in 2008) and the impact of higher average per diem rate for long-term leases.

Management Fee Revenue. Management fee revenue for the three months ended June 30, 2009 was $2.1 million, a decline of $929,000, or 30.7%, from $3.0 million for the same period in 2008. The lower utilization and increased expenses from depot storage and recovery costs resulted in lower profitability in some of our investors' portfolios. The lower profitability of most of our investor portfolios resulted in a lower management fee income.

Gain on Sale of Container Portfolios. Gain on sale of container portfolios of $497,000 for the three months ended June 30, 2009 was $2.8 million, or 84.9 %, lower than the gain recognized for the three months ended June 30, 2008. The decrease was due primarily to the fewer number of TEUs of containers sold during the three months ended June 30, 2009 as compared to the same three-month period in 2008.

Finance Lease Income. Finance lease income increased $111,000, or 22.4%, to $606,000 for the three months ended June 30, 2009 from $495,000 for the three months ended June 30, 2008. This increase was primarily due a higher average principal balance of existing direct finance leases during the three months ended June 30, 2009 compared to the same period last year.

Expenses. Details of our operating expenses for the three-month periods ended June 30, 2009 and 2008 are shown on our unaudited statements of income included in this filing. The following discussion explains the significant changes in expenses for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008:

Depreciation of Container Rental Equipment. Depreciation of container rental equipment increased by $502,000, or 13.5%, to $4.2 million for the three months ended June 30, 2009, from $3.7 million for the three months ended June 30, 2008. This increase was primarily due to our acquisition of Consent in April 2008 and to the greater percentage of newer containers in our owned fleet.

Impairment of Container Rental Equipment. Impairment of container rental equipment decreased $82,000, or 76.6%, to $25,000 for the three months ended June 30, 2009 from $107,000 during same period in 2008. The decrease was due primarily to the fewer number of containers that were deemed impaired during the three months ended June 30, 2009 as compared to the same three-month period ended in 2008.

Gain on Disposition of Used Container Equipment. Gain on disposition of used container equipment decreased by $861,000, or 58.5%, to $611,000 for the three months ended June 30, 2009 from $1.5 million for the three months ended June 30, 2008. The lower margin on the sale of used containers more than offset the impact of higher volume of used containers sold during the quarter ended June 30, 2009 as compared to the same quarter in 2008.

Storage, Handling and Other Expenses. Storage, handling and other expenses increased by $1.1 million, or 79.7%, to $2.4 million for the three months ended June 30, 2009, from $1.4 million for the three months ended June 30, 2008. The decrease in utilization rate of our owned containers has resulted in higher storage and handling costs due to the increased volume of units in storage during the three months ended June 30, 2009 as compared to the same period in 2008.

Marketing, General and Administrative Expenses. Marketing, general and administrative expenses decreased by $391,000, or 7.6%, to $4.8 million for the three months ended June 30, 2009 from $5.2 million for the three months ended June 30, 2008. The decrease in marketing, general and administrative expenses was driven primarily by a reduction in legal, accounting and travel expenses.

Gain on foreign exchange. We recorded a gain of $83,000 on foreign exchange transactions for the three months ended June 30, 2009 compared to a gain of $51,000 during the three months ended June 30, 2008. Gains on foreign currency occurred when Consent and our U.K. subsidiary settled contracts denominated in U.S. dollars and remeasured liabilities denominated in U.S. dollars. The average exchange rates for the Euros and British Pound Sterling to U.S. dollar increased over the course of the quarter ended June 30, 2009 compared to the same period last year.

Net Interest Expense. Net interest expense of $1.0 million for the three months ended June 30, 2009 decreased $910,000, or 46.5%, from $2.0 million incurred during the three months ended June 30, 2008. The decrease in interest expense was due primarily to the lower interest rate and lower average balance of our debt under our senior secured credit facility.

Income Tax Expense. Income tax expense for the three months ended June 30, 2009 was $1.1 million, a $2.1 million, or 65.0%, decrease from $3.2 million for the three months ended June 30, 2008. The decrease was due primarily to a lower pretax income and lower effective tax rate. Our effective tax rate for the quarter ended June 30, 2009 was 25.2% compared to 33.9% for the same quarter in 2008. The lower effective tax rate for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008 is due primarily to higher pretax income from foreign operations where statutory rates are lower than the U.S. income tax rates. In addition, we recorded prior period adjustments relating to 2008 and the first quarter of 2009 which reduced income tax expense by $316,000 for the quarter ended June 30, 2009. Without these one-time adjustments, our effective tax rate for the three months ended June 30, 2009 would have been 32.3%.

Segment Information. The following table summarizes our results of operations for each of our business segments for the three-month periods ended June 30, 2009 and 2008:

                                                  Three Months Ended June 30,         Increase (Decrease)
                                                  2009                  2008          Amount        Percent
                                                        (in thousands)
                                                          (unaudited)
Container Leasing
Total revenue                                 $      14,063         $      14,317   $     (254 )       (1.8 ) %
Operating expenses                                    8,116                 5,936        2,180         36.7
Interest expense                                      1,050                 2,080       (1,030 )      (49.5 )

Income before taxes attributable to segment   $       4,897         $       6,301   $   (1,404 )      (22.3 )

Container Management
Total revenue                                 $       2,598         $       6,325   $   (3,727 )      (58.9 ) %
Operating expenses                                    3,040                 3,275         (235 )       (7.2 )

Income before taxes attributable to segment   $        (442 )       $       3,050   $   (3,492 )     (114.5 )

Container Leasing. Total revenue from our container leasing segment during the quarter ended June 30, 2009 decreased slightly from last year due primarily to lower container rental revenue resulting from lower utilization rates of our owned container equipment, partly offset by higher finance lease income.

Total operating expenses for the container leasing segment increased $2.2 million, or 36.7%, to $8.1 million for the three months ended June 30, 2009 from $5.9 million for the three months ended June 30, 2008. The increase was primarily due to higher container depot storage, handling and repairs expenses, increase in depreciation expense and lower gain on disposition of used container equipment, partly offset by lower marketing, general and administrative expenses.

Interest expense for the quarter ended June 30, 2009 decreased $1.0 million or 49.5%, to $1.1 million compared to $2.1 million for the same quarter last year. The decrease in interest expense was due primarily to lower interest rates and lower average balance of our debt under our senior secured credit facility.

Container Management. Total revenue of $2.6 million from our container management segment for the three months ended June 30, 2009 was $3.7 million, or 58.9%, lower than last year's revenue of $6.3 million revenue from our container management segment for the three months ended June 30, 2008. This decrease in revenue was primarily due to a $2.8 million, or 84.9%, decrease in gain on sale of container portfolios, and the $929,000, or 30.7%, decline in management fee revenue compared to the three months ended June 30, 2008. The decrease in gain on sale of container portfolios was due to the fewer number of TEUs of containers sold during the second quarter of 2009 as compared to the same quarter in 2008.

Total operating expenses of $3.0 million for the container management segment for the three months ended June 30, 2009 decreased $235,000, or 7.2%, from $3.3 million for the three months ended June 30, 2008, primarily as a result of lower marketing, general and administrative expenses.

The container management segment incurred a loss of $442,000 during the three months ended June 30, 2009 as compared to income before taxes of $3.1 million during the same period in 2008. The loss during the second quarter of 2009 was primarily attributable to the fewer number of containers sold to investors resulting in a $2.8 million decline in the gain on sale of container portfolios. Additionally, the lower average utilization of our managed containers has reduced the profitability of some of our investor portfolios resulting in a $929,000 decline in management fee revenue during the three months ended June 30, 2009 as compared to the three months ended June 30, 2008.

Six months Ended June 30, 2009 Compared to Six months Ended June 30, 2008

The following table summarizes our operating results for the six-month periods ended June 30, 2009 and 2008 (dollars in thousands):

                             Six months Ended June 30,        Increase (Decrease)
                               2009             2008          Amount        Percent
                                    (unaudited)
      Total revenue        $      34,237    $      38,293   $   (4,056 )      (10.6 )%
      Operating expenses          21,886           17,106        4,780         27.9 %
      Net income                   7,288           11,553       (4,265 )      (36.9 )%

Total revenue of $34.2 million for the six months ended June 30, 2009 declined $4.1 million, or 10.6% from the six months ended June 30, 2008, due primarily to a lower gain on sale of container portfolios and the significant decline in our owned container equipment utilization. Operating expenses for the six months ended June 30, 2009 increased $4.8 million, or 27.9%, from the same six-month period in 2008, mainly as a result of higher storage, handling and repairs expenses, increase in depreciation expense and lower gain on disposition of used container equipment, partly offset by lower impairment of container rental equipment. Our net income decreased $4.3 million, or 36.9%, to $7.3 million for the six months ended June 30, 2009, from $11.6 million for the comparable period in 2008. The decrease in net income resulted primarily from lower revenue and higher operating expenses, partly offset by lower interest expense and income tax expense compared to the six months ended June 30, 2008.

Revenue. The composition of our revenue is shown on our unaudited financial statements included in this filing. The following discussion explains the significant changes in the composition of our total revenue for the six months ended June 30, 2009 as compared to the six months ended June 30, 2008:

Container Rental Revenue. Container rental revenue increased $2.3 million, or 9.1%, to $27.6 million for the six months ended June 30, 2009 from $25.3 million for the six months ended June 30, 2008. The increase in container rental revenue was principally due to our acquisition of Consent in April 2008. Without Consent, container rental revenue would have been lower compared to the same period in 2008 as the impact of higher average per diem rate for long-term leases was more than offset by the lower utilization of our containers.

Management Fee Revenue. Management fee revenue for the six months ended June 30, 2009 was $4.6 million, a decline of $1.3 million, or 22.7%, from $5.9 million for the same period in 2008. The lower utilization and increased expenses from storage costs resulted in lower profitability in some of our container investors' portfolios. The lower profitability of some of our investor portfolios resulted in lower management fee income.

Gain on Sale of Container Portfolios. Gain on sale of container portfolios of $753,000 for the six months ended June 30, 2009 was $5.5 million, or 87.9 %, lower than the gain recognized for the six months ended June 30, 2008. The decrease was due primarily to the decline in the number of TEUs of containers sold at a lower average margin per TEU during the six months ended June 30, 2009 as compared to the same six-month period in 2008.

Finance Lease Income. Finance lease income increased $446,000, or 51.4%, to $1.3 million for the six months ended June 30, 2009 from $868,000 for the six months ended June 30, 2008. This increase was primarily due to a higher average principal balance of our existing direct finance leases during the six months ended June 30, 2009 compared to the same period last year.

Expenses. Details of our operating expenses for the six-month periods ended June 30, 2009 and 2008 are shown on our unaudited statements of income included in this filing. The following discussion explains the significant changes in expenses for the six months ended June 30, 2009 as compared to the six months ended June 30, 2008:

Depreciation of Container Rental Equipment. Depreciation of container rental equipment increased by $1.9 million, or 27.6%, to $8.6 million for the six months ended June 30, 2009, from $6.7 million for the six months ended June 30, 2008. This increase was primarily due to our acquisition of Consent, purchases of new containers and to the greater percentage of newer containers in our owned fleet.

Amortization of Intangible Assets. Amortization expense relating to intangible assets for the six months ended June 30, 2009 increased $107,000, or 15.3%, to $808,000 from $701,000 during the same period last year. The increase resulted primarily from the added amortization expense attributable to intangible assets recorded in connection with the acquisition of Consent on April 30, 2008.

Impairment of Container Rental Equipment. Impairment of container rental equipment decreased $141,000, or 69.8%, to $61,000 for the six months ended June 30, 2009 from $202,000 during same period in 2008. The decrease was due primarily to the fewer number of containers that were deemed impaired during the six months ended June 30, 2009 as compared to the same six-month period ended in 2008.

Gain on Disposition of Used Container Equipment. Gain on disposition of used container equipment decreased by $893,000, or 38.9%, to $1.4 million for the six months ended June 30, 2009, from $2.3 million for the six months ended June 30, 2008. The decrease primarily resulted from the lower margin on the sale of used containers which more than offset the impact of higher volume of used containers sold during the six ended June 30, 2009 as compared to the same period in 2008.

Storage, Handling and Other Expenses. Storage, handling and other expenses increased by $1.9 million, or 86.0%, to $4.1 million for the six months ended June 30, 2009, from $2.2 million for the six months ended June 30, 2008. The decrease in utilization rate of our owned containers has resulted in higher storage and handling costs due to the increased volume of units in storage during the six months ended June 30, 2009 as compared to the same period in 2008.

Gain on foreign exchange. We recorded a gain of $3,000 on foreign exchange transactions for the six months ended June 30, 2009 compared to a gain of $95,000 during the six months ended June 30, 2008. Gains on foreign currency occurred when Consent and our U.K. subsidiary settled contracts denominated in U.S. dollars and remeasured liabilities denominated in U.S. dollars.

Net Interest Expense. Net interest expense of $2.3 million for the six months ended June 30, 2009 decreased $1.6 million, or 40.4%, from $3.9 million incurred during the six months ended June 30, 2008. The decrease in net interest expense was due primarily to the lower interest expense resulting from lower interest rates and a lower average balance of our debt under our senior secured credit facility. This was partly offset by a $163,000 decrease in interest income.

Income Tax Expense. Income tax expense for the six months ended June 30, 2009 was $2.7 million, a $3.0 million, or a 52.3%, decrease from $5.7 million for the six months ended June 30, 2008. The decrease was due primarily to a 42.0% decrease in pretax income and lower effective tax rate. Our effective tax rate for the six months ended June 30, 2009 was 27.2% compared to 33.0% for the same period in 2008. The lower effective tax rate for the six months ended June 30, 2009 as compared to the six months ended June 30, 2008 is due primarily to higher pretax income from foreign operations where statutory rates are lower than the U.S. income tax rates. In addition, we recorded prior period adjustments relating to 2008 which reduced income tax expense by $138,000 for the six months ended June 30, 2009. Without this one-time adjustment, our effective tax rate for the six months ended June 30, 2009 would have been 28.5%.

Segment Information. The following table summarizes our results of operations for each of our business segments for the six-month periods ended June 30, 2009 and 2008:

                                                 Six Months Ended June 30,         Increase (Decrease)
                                                  2009                2008         Amount        Percent
                                                       (in thousands)
                                                        (unaudited)
Container Leasing
Total revenue                                 $     28,890        $     26,136   $    2,754         10.5 %
Operating expenses                                  15,298              10,583        4,715         44.6
Interest expense                                     2,352               4,103       (1,751 )      (42.7 )

Income before taxes attributable to segment   $     11,240        $     11,450   $     (210 )       (1.8 )


Container Management
Total revenue                                 $      5,347        $     12,157   $   (6,810 )      (56.0 )%
Operating expenses                                   6,588               6,523           65          1.0

Income before taxes attributable to segment   $     (1,241 )      $      5,634   $   (6,875 )     (122.0 )

Container Leasing. Total revenue from our container leasing segment increased $2.8 million, or 10.5%, to $28.9 million for the six months ended June 30, 2009 from $26.1 million during the six months ended June 30, 2008. The increase was primarily due to the acquisition of Consent in April 2008 and a $446,000 increase in finance lease income.

Total operating expenses for the container leasing segment increased $4.7 million, or 44.6%, to $15.3 million for the six months ended June 30, 2009 from $10.6 million for the six months ended June 30, 2008. The increase was primarily due to higher storage, handling and repairs expenses resulting from the decline in the average utilization of our owned containers, increase in depreciation expense due to the acquisition of Consent, and lower gain on disposition of used container equipment.

Interest expense for the six months ended June 30, 2009 decreased $1.8 million, or 42.7%, to $2.4 million compared to $4.1 million for the same period last year. The decrease in interest expense was due primarily to lower interest rates and a lower average balance of our debt under our senior secured credit facility.

Container Management. Total revenue from our container management segment for the six months ended June 30, 2009 was $5.3 million, a decrease of $6.8 million, or 56.0%, from $12.2 million for the six months ended June 30, 2008. This decrease in revenue was primarily attributable to a $5.5 million, or 87.9%, decrease in gain on sale of container portfolios, and the $1.3 million, or 22.7%, decline in management fee revenue compared to the six months ended June 30, 2008. The decrease in gain on sale of container portfolios was due to the fewer number of TEUs of containers sold during the first six months of 2009 as compared to the same period in 2008. The lower utilization and increased expenses from storage costs resulted in lower profitability in some of our container investors' portfolios which led to lower management fee income.

. . .