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 September 30, 2009, our fleet comprised 756,000 twenty-foot equivalent units (TEUs) of containers. The following table shows the composition of our fleet as of September 30, 2009 and 2008 and our average fleet utilization for the three and nine months ended September 30, 2009 and 2008:

                                           As of           As of
                                       September 30,   September 30,
                                           2009            2008
                                                (unaudited)
               Managed fleet in TEUs         511,753         533,888
               Owned fleet in TEUs           244,416         268,495

               Total                         756,169         802,383

                                                     Three Months Ended             Nine months Ended
                                                       September 30,                  September 30,
                                                   2009             2008           2009            2008
                                                        (unaudited)

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.

Our fleet as of September 30, 2009 has declined from last year's level as we sold more containers than we purchased. We have slowed down the pace of acquisition for new containers in view of declining utilization and weak capital markets environment. We plan to increase both the number of owned containers as well as the number of managed containers in our fleet when there is increased demand from customers. 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 September 30, 2009 Compared to Three Months Ended
September 30, 2008

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



                                 Three Months Ended
                                   September 30,          Increase (Decrease)
                                  2009         2008       Amount        Percent
                                    (unaudited)
          Total revenue        $    15,709   $ 22,124   $   (6,415 )      (29.0 )%
          Operating expenses        10,761     10,657          104          1.0 %
          Net income                 3,194      5,889       (2,695 )      (45.8 )%

Total revenue of $15.7 million for the three months ended September 30, 2009 was down $6.4 million, or 29.0%, from the three months ended September 30, 2008, as revenues declined in all categories for both container leasing and management segments of our business. Operating expenses for the quarter ended September 30, 2009 increased from the same three-month period in 2008, mainly as a result of increased storage, handling and repair expenses that resulted from lower utilization of our owned containers, partially offset by the gain on foreign exchange (compared to a loss on foreign exchange during the same quarter in 2008) and decreases in nearly all other operating expense categories. Our net income decreased $2.7 million, or 45.8%, to $3.2 million for the three months ended September 30, 2009, from $5.9 million for the comparable period in 2008. The decrease in net income resulted from lower revenue, and slightly higher operating expenses, partially offset by lower interest expense and income tax expense compared to the three months ended September 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 September 30, 2009 as compared to the three months ended September 30, 2008.

Container Rental Revenue. Container rental revenue decreased $2.9 million, or 18.0%, to $13.4 million for the three months ended September 30, 2009 from $16.3 million for the three months ended September 30, 2008. The decrease in container rental revenue was principally due to the 9% decrease in owned TEUs, decrease in utilization of our owned containers, and lower per diem rates for short and long-term term leases.

Management Fee Revenue. Management fee revenue for the three months ended September 30, 2009 was $1.8 million, a decline of $1.2 million, or 39.3%, from $3.0 million for the same period in 2008. The lower utilization of managed containers and increased expenses from depot storage and recovery costs resulted in lower profitability in most of our investors' portfolios. The lower profitability of most of our investor portfolios resulted in a lower management fee income.

During the quarter ended September 30, 2009, the Company did not meet certain performance criteria in several of its container management contracts. The Company has experienced nonperformance due to the reduced income resulting from the decline in world trade and global recession and its impact on equipment utilization. Total revenue for the three months ended September 30, 2009 would have been approximately 6.6% lower if the contracts where the Company is not meeting the performance levels set forth therein had been terminated at the beginning of such period.

Gain on Sale of Container Portfolios. No gain on sale of container portfolios was recognized for the three months ended September 30, 2009 as no containers were sold to investors, compared to gain on sale of $2.2 million recorded for the quarter ended September 30, 2008. With lower investment in new containers and the current unfavorable market environment during the period, we have not been able to market new container programs.

Finance Lease Income. Finance lease income decreased $134,000, or 21.5%, to $488,000 for the three months ended September 30, 2009 from $622,000 for the three months ended September 30, 2008. This decrease was primarily due a lower average principal balance of existing direct finance leases during the three months ended September 30, 2009 compared to the same period last year.

Expenses. Details of our operating expenses for the three-month periods ended September 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 September 30, 2009 as compared to the three months ended September 30, 2008:

Depreciation of Container Rental Equipment. Depreciation of container rental equipment decreased by $228,000, or 5.1%, to $4.3 million for the three months ended September 30, 2009, from $4.5 million for the three months ended September 30, 2008, due primarily to the reduction in our owned fleet.

Storage, Handling and Other Expenses. Storage, handling and other expenses increased by $1.2 million, or 126.7%, to $2.2 million for the three months ended September 30, 2009, from $984,000 for the three months ended September 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 September 30, 2009 as compared to the same period in 2008.

Marketing, General and Administrative Expenses. Marketing, general and administrative expenses decreased by $137,000, or 2.7%, to $5.0 million for the three months ended September 30, 2009 from $5.1 million for the three months ended September 30, 2008. The decrease in marketing, general and administrative expenses was driven primarily by a reduction in legal, accounting and employee compensation expenses.

Gain on foreign exchange. We recognized a gain of $150,000 on foreign exchange transactions for the three months ended September 30, 2009 compared to a loss of $544,000 during the three months ended September 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 of the Euro and British Pound Sterling relative to the U.S. dollar increased over the course of the quarter ended September 30, 2009 compared to the same period last year.

Net Interest Expense. Net interest expense of $1.0 million for the three months ended September 30, 2009 decreased $1.4 million, or 58.7%, from $2.4 million incurred during the three months ended September 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 September 30, 2009 was $763,000, a $2.4 million, or 76.0%, decrease from $3.2 million for the three months ended September 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 September 30, 2009 was 19.3% compared to 35.1% for the same quarter in 2008. The lower effective tax rate for the three months ended September 30, 2009 as compared to the three months ended September 30, 2008 is due primarily to higher proportion of pretax income coming from foreign operations where statutory rates are lower than the U.S. income tax rates. In addition, there was a $285,000 one-time tax benefit resulting from the finalization of our tax return for 2008. Without this adjustment for 2008, our effective tax rate for the quarter ended September 30, 2009 would have been 26.5%.

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

                                           Three Months Ended September 30,          Increase (Decrease)
                                             2009                    2008            Amount         Percent
                                                    (in thousands)
                                                      (unaudited)
Container Leasing
Total revenue                           $        13,894         $        16,975    $   (3,081 )       (18.2 )%
Operating expenses                                7,803                   7,550           253           3.4
Interest expense                                    992                   2,435        (1,443 )       (59.3 )

Income before taxes attributable to
segment                                 $         5,099         $         6,990    $   (1,891 )       (27.1 )

Container Management
Total revenue                           $         1,815         $         5,149    $   (3,334 )       (64.8 )%
Operating expenses                                2,958                   3,107          (149 )        (4.8 )

Income (loss) before taxes
attributable to segment                 $        (1,143 )       $         2,042    $   (3,185 )      (156.0 )

Container Leasing. Total revenue from our container leasing segment during the quarter ended September 30, 2009 decreased from last year due primarily to a $2.9 million decrease in container rental revenue resulting from lower utilization rates and lower TEUs in our owned container equipment. Finance lease income also decreased due to the lower average principal balance of existing direct finance leases during the three months ended September 30, 2009 compared to the same period in 2008.

Total operating expenses for the container leasing segment increased $253,000, or 3.4%, to $7.8 million for the three months ended September 30, 2009 from $7.6 million for the three months ended September 30, 2008. The increase was primarily due to higher container depot storage, handling and repairs expenses, partly offset by gain on foreign exchange (compared to a loss on foreign exchange during the same quarter in 2008), lower marketing, general and administrative expenses and reduction in all other expense categories.

Interest expense for the quarter ended September 30, 2009 decreased $1.4 million, or 59.3%, to $1.0 million compared to $2.4 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 debts.

Container Management. Total revenue of $1.8 million from our container management segment for the three months ended September 30, 2009 was $3.3 million, or 64.8%, lower than last year's revenue of $5.1 million for the same period in 2008. This decrease in revenue was primarily due to a $2.2 million, or 100%, decrease in gain on sale of container portfolios, and to a $1.2 million, or 39.3%, decline in management fee income compared to the three months ended September 30, 2008. No sale of containers to investors occurred during the third quarter of 2009. With lower investment in new containers and the unfavorable market environment, we have not been able to market new container programs. The decline in our management fee revenue from the same three months period in 2008 was attributable to the lower profitability of most of our investor portfolios resulting from the lower utilization of managed containers and increased expenses from depot storage and recovery costs.

Total operating expenses of $3.0 million for the container management segment for the three months ended September 30, 2009 decreased $149,000, or 4.8%, from $3.1 million for the three months ended September 30, 2008, primarily as a result of a decrease in marketing, general and administrative expenses. These expenses are mostly allocated based on the average percentage of managed TEU's to total TEUs after direct allocation of bad debt expense and expenses relating to Consent to the container leasing segment.

The container management segment incurred a loss of $1.1 million during the three months ended September 30, 2009 as compared to income before taxes of $2.0 million during the same period in 2008. The loss during the third quarter of 2009 was primarily attributable to the 64.8% decline in revenue from gain on sale of container portfolios and management fee, partly offset by a 4.8% decrease in operating expenses.

Nine months Ended September 30, 2009 Compared to Nine months Ended September 30, 2008

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

                                        Nine
                             months Ended September 30,        Increase (Decrease)
                               2009              2008          Amount        Percent
                                    (unaudited)
     Total revenue        $       49,946    $       60,417   $  (10,471 )      (17.3 )%
     Operating expenses           32,647            27,763        4,884         17.6 %
     Net income                   10,482            17,442       (6,960 )      (39.9 )%

Total revenue of $49.9 million for the nine months ended September 30, 2009 declined $10.5 million, or 17.3% from the nine months ended September 30, 2008, due primarily to significant decreases in gain on sale of container portfolios and management fee revenue. Our container rental revenue was essentially unchanged from the same nine-month period in 2008. Operating expenses for the nine months ended September 30, 2009 increased $4.9 million, or 17.6%, from the same nine-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 gain on foreign exchange (compared to a loss on foreign exchange during the same period in 2008), lower marketing, general and administrative expense and lower impairment of container rental equipment. Our net income decreased $7.0 million, or 39.9%, to $10.5 million for the nine months ended September 30, 2009, from $17.4 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 nine months ended September 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 nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008:

Container Rental Revenue. Container rental revenue decreased $639,000, or 1.5%, to $41.0 million for the nine months ended September 30, 2009 from $41.6 million for the nine months ended September 30, 2008. The decrease in container rental revenue was principally due to the lower TEUs and utilization rate of our owned containers and lower average per diem rate for short term leases. This was partly offset by higher average per diem rate for long-term leases.

Management Fee Revenue. Management fee revenue for the nine months ended September 30, 2009 was $6.4 million, a decline of $2.5 million, or 28.2%, from $8.9 million for the same period in 2008. The lower utilization and increased expenses from storage costs resulted in lower profitability in most of our container investors' portfolios. The lower profitability of most of our investor portfolios resulted in lower management fee income.

During the quarter ended September 30, 2009, the Company did not meet certain performance criteria in several of its container management contracts. The Company has experienced nonperformance due to the reduced income resulting from the decline in world trade and global recession and its impact on equipment utilization. Total revenue for the nine months ended September 30, 2009 would have been approximately 3.4% lower if the contracts where the Company is not meeting the performance levels set forth therein had been terminated at the beginning of 2009.

Gain on Sale of Container Portfolios. Gain on sale of container portfolios of $753,000 for the nine months ended September 30, 2009 was $7.6 million, or 91.0 %, less than the $8.4 million gain recognized for the nine months ended September 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 nine months ended September 30, 2009 as compared to the same nine-month period in 2008.

Finance Lease Income. Finance lease income increased $312,000, or 20.9%, to $1.8 million for the nine months ended September 30, 2009 from $1.5 million for the nine months ended September 30, 2008. This increase was primarily due to a higher average principal balance of our existing direct finance leases during the nine months ended September 30, 2009 compared to the same period last year.

Expenses. Details of our operating expenses for the nine-month periods ended September 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 nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008:

Depreciation of Container Rental Equipment. Depreciation of container rental equipment increased by $1.6 million, or 14.5%, to $12.9 million for the nine months ended September 30, 2009, from $11.2 million for the nine months ended September 30, 2008. This increase was primarily due to our acquisition of Consent and to the greater percentage of newer containers in our owned fleet.

Amortization of Intangible Assets. Amortization expense relating to intangible assets for the nine months ended September 30, 2009 increased $84,000, or 7.5%, to $1.2 million from $1.1 million 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 $161,000, or 66.8%, to $80,000 for the nine months ended September 30, 2009 from $241,000 during same period in 2008. The decrease was due primarily to the lower number of containers that were deemed impaired during the nine months ended September 30, 2009 as compared to the same nine-month period ended in 2008. The secondary sales price for most container categories has remained above the carrying value of our containers held for sale.

Gain on Disposition of Used Container Equipment. Gain on disposition of used container equipment decreased by $852,000, or 26.3%, to $2.4 million for the nine months ended September 30, 2009, from $3.2 million for the nine months ended September 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 nine months ended September 30, 2009 as compared to the same period in 2008.

Storage, Handling and Other Expenses. Storage, handling and other expenses increased by $3.2 million, or 97.2%, to $6.4 million for the nine months ended September 30, 2009, from $3.2 million for the nine months ended September 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 nine months ended September 30, 2009 as compared to the same period in 2008.

Gain on foreign exchange. We recorded a gain of $153,000 on foreign exchange transactions for the nine months ended September 30, 2009 compared to a loss of $449,000 during the nine months ended September 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 of the Euros and British Pound Sterling to U.S. dollar increased over the course of the nine months ended September 30, 2009 compared to the same period in 2008.

Net Interest Expense. Net interest expense of $3.3 million for the nine months ended September 30, 2009 decreased $3.0 million, or 47.3%, from $6.3 million incurred during the nine months ended September 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 debts. This was partly offset by a $200,000 decrease in interest income.

Income Tax Expense. Income tax expense for the nine months ended September 30, 2009 was $3.5 million, a $5.4 million, or a 60.8%, decrease from $8.9 million for the nine months ended September 30, 2008. The decrease was due primarily to a 47.0% decrease in pretax income and lower effective tax rate. Our effective tax rate for the nine months ended September 30, 2009 was 24.9% compared to 33.7% for the same period in 2008. The lower effective tax rate for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008 is due primarily to higher proportion of pretax income coming from foreign operations where statutory rates are lower than the U.S. income tax rates. During the nine months ended September 30, 2009, the Company recorded a $138,000 adjustment to income tax expense to correct a purchase accounting entry relating to the acquisition of Consent in April 2008, and a $285,000 one-time tax benefit relating to the finalization of our 2008 income tax returns. These adjustments reduced the Company's income tax expense by $423,000 during the nine months ended September 30, 2009. Without these adjustments our effective tax rate for this period would have been 28.0%.

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

                                                   Nine Months Ended
                                                     September 30,           Increase (Decrease)
                                                  2009           2008        Amount         Percent
                                                    (in thousands)
                                                      (unaudited)
Container Leasing
Total revenue                                   $ 42,784       $ 43,111    $     (327 )        (0.8 )%
Operating expenses                                23,101         18,133         4,968          27.4
Interest expense                                   3,344          6,538        (3,194 )       (48.9 )

Income before taxes attributable to segment     $ 16,339       $ 18,440    $   (2,101 )       (11.4 )

Container Management
Total revenue                                   $  7,162       $ 17,306    $  (10,144 )       (58.6 )%
Operating expenses                                 9,546          9,630           (84 )        (0.9 )

Income (loss) before taxes attributable to
segment                                         $ (2,384 )     $  7,676    $  (10,060 )      (131.1 )

Container Leasing. Total revenue from our container leasing segment for the nine months ended September 30, 2009 was lower by $327,000 than the $43.1 million during the nine months ended September 30, 2008. The decrease was primarily due to a slightly lower container rental revenue, partly offset by an increase in finance lease income.

Total operating expenses for the container leasing segment increased $5.0 million, or 27.4%, to $23.1 million for the nine months ended September 30, 2009 . . .