Domestic       Computer
                                                      Container      Intermodal      Leasing
 Three Months Ended March 31, 2003: (Restated)         Leasing       Equipment       Equipment        Totals
 ---------------------------------------------         -------       ----------      ---------        -------

Revenues                                                 $41,181        $48,598           $186        $89,965

Lease operating, administrative and other expenses        10,185         17,792             82         28,059

Depreciation and amortization                             14,543          7,833             --         22,376

Impairment of leasing equipment                              556          1,668             --          2,224

Other (income)/expense, net and minority interest         (1,097)           305            (27)          (819)

Loss for investments under equity method                      --             52             --             52

Interest income                                             (737)          (292)            --         (1,029)

Interest expense                                           7,311         18,076              1         25,388

Income before taxes                                       10,420          3,164            130         13,714

Net investment in DFL's                                  304,277        104,348             52        408,677

Leasing equipment, net                                   680,672        877,421             --      1,558,093

Equipment purchases                                       57,048         40,360             --         97,408

Total segment assets                                  $1,130,981     $1,138,595         $1,770     $2,271,346

          The Company’s shipping line customers utilize international containers in world trade over many varied and changing trade routes. In addition, most large shipping lines have many offices in various countries involved in container operations. The Company’s revenue from international containers is earned while the containers are used in service carrying cargo around the world, while certain other equipment is utilized in the United States. Accordingly, the international information presented below represents our international container leasing operation conducted through Interpool Limited, a Barbados corporation, while the United States information presented below represents our domestic intermodal equipment leasing segment, as well as those revenues and assets relative to our 50% owned consolidated subsidiary, Container Applications International, Inc. (“CAI”) which is headquartered in the United States of America. Such presentation is consistent with industry practice.

Geographic Information
- ----------------------
                               Three Months Ended March 31,
                               ----------------------------
                                 2004               2003
                                 ----               ----
                                                  (Restated)
REVENUES:                                         ----------
United States                  $60,427               $57,126
International                   34,976                32,839
                                ------                ------
                               $95,403               $89,965
                               =======               =======
ASSETS:
United States               $1,321,292            $1,304,211
International                1,007,784               967,135
                            ----------            ----------
                            $2,329,076            $2,271,346
                            ==========            ==========

Note 5 - Derivative Instruments

          The Company’s assets are primarily fixed rate in nature while its debt instruments are primarily floating rate. The Company employs derivative financial instruments (interest rate swap agreements) to effectively convert certain floating rate debt instruments into fixed rate instruments and thereby manage its exposure to fluctuations in interest rates.

          As of March 31, 2004 and December 31, 2003, included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets is a liability of $39,719 and $34,026, respectively, representing the market value of the Company’s interest rate swap contracts.

          The unrealized pre-tax loss on cash flow hedges for the three months ended March 31, 2004 of $5,916 and the related income tax benefit of $2,013 have been recorded by the Company as a component of accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets.

          The unrealized pre-tax income on cash flow hedges for the year ended December 31, 2003 of $15,270 and the related income tax provision of $4,700 have been recorded by the Company as a component of accumulated other comprehensive loss on the Condensed Consolidated Balance Sheets.

           Amounts recorded in accumulated other comprehensive income would be reclassified into earnings upon termination of these interest rate swap agreements and related debt instruments prior to their contractual maturity. The Company may at its discretion terminate or redesignate any such interest rate swap agreements prior to maturity. At that time any gains or losses on termination would continue to amortize into income to correspond to the recognition of interest on the hedged debt. If such debt instrument was also terminated the gain or loss associated with the terminated derivative included in accumulated other comprehensive loss at the time of termination of the debt would be recognized in the Condensed Consolidated Income Statement at that time.

           Pre-tax income of $222 for the three month period ended March 31, 2004 resulting from the change in fair value of interest rate swap agreements held which do not qualify as cash flow hedges under SFAS 133, has been recorded in the Condensed Consolidated Statements of Income as fair value adjustment for derivative instruments. This compares to pre-tax income of $154 for the three-month period ended March 31, 2003. Interest rate swap agreements, which qualify as perfect cash flow hedges, have no ineffectiveness and therefore are not reflected in the Condensed Consolidated Statements of Income. Pre-tax losses of $36 for the three month period ended March 31, 2004 resulting from interest rate swap agreements which qualify as cash flow hedges but are not perfectly correlated have associated ineffectiveness and have been recorded in the Condensed Consolidated Statements of Income as fair value adjustment for derivative instruments. This compares to $4 of pre-tax losses for the three-month period ended March 31, 2003.

          As of March 31, 2004, the Company held 13-interest rate swap agreements with various financial institutions. The aggregate notional balance of the swaps was $517,171 as of March 31, 2004.

Note 6 - Contingencies and Commitments

          At March 31, 2004 commitments for capital expenditures totaled approximately $126,248 with approximately $63,239 committed for 2004. Approximately $21,003 per year is committed for years 2005, 2006 and 2007, respectively.

          The Company is engaged in various legal proceedings from time to time incidental to the conduct of its business. Such proceedings may relate to claims arising out of chassis accidents that occur from time to time which involve death and injury to persons and damage to property. Accordingly, the Company requires all of its lessees to indemnify the Company against any losses arising out of such accidents while the chassis are on-hire to the lessees. In addition lessees are generally required to maintain a minimum of $2,000 in general liability insurance coverage, which is standard in the industry. In addition, the Company maintains a back-up general liability policy of $200,000, in the event that the above lessee coverage is insufficient. While the Company believes that such coverage should be adequate to cover current claims, there can be no guarantee that future claims will never exceed such amounts. Nevertheless, the Company believes that no current or potential claims of which it is aware will have a material adverse effect on its financial condition or results of operations and that the Company is adequately insured against such claims.

          In February and March 2004, several lawsuits were filed in the United States District Court for the District of New Jersey, by purchasers of the Company’s common stock naming the Company and certain of its present and former executive officers and directors as defendants. The complaints alleged violations of the federal securities laws relating to the Company’s reported Consolidated Financial Statements for the years ended December 31, 2000 and 2001 and the nine months ended September 30, 2002, which the Company announced in March 2003 would require restatement. Each of the complaints purported to be a class action brought on behalf of persons who purchased the Company’s securities during a specified period. On September 7, 2004, the lawsuits, which seek unspecified amounts of compensatory damages and costs and expenses, including legal fees, were consolidated into a single action with lead plaintiffs and lead counsel having been appointed. The Company intends to vigorously defend this lawsuit but is unable at this time to ascertain the impact this litigation may have on our financial position or results of operations.

          At March 31, 2004, the following guarantees were issued and outstanding:

Indemnifications

          In the ordinary course of business, the Company executes contracts involving indemnifications standard in the industry and indemnifications specific to a transaction such as an assignment and assumption agreement. These indemnifications might include claims related to any of the following: tax matters and governmental regulations, and contractual relationships. Performance under these indemnities would generally be triggered by a breach of terms of the contract or by a third party claim. The Company regularly evaluates the probability of having to incur costs associated with these indemnifications and have accrued for any expected losses that are probable. The types of indemnifications for which payment are possible are as follows:

           Taxes

          In the ordinary course of business, the Company provides various tax-related indemnifications as part of transactions. The indemnified party typically is protected from certain events that result in a tax treatment different from that originally anticipated. The Company’s liability typically is fixed when a final determination of the indemnified party’s tax liability is made. In some cases, a payment under a tax indemnification may be offset in whole or in part by refunds from the applicable governmental taxing authority. The Company is party to numerous tax indemnifications and many of these indemnities do not limit potential payment; therefore, it is unable to estimate a maximum amount of potential future payments that could result from claims made under these indemnities.

           Contractual Relationships

          The Company entered into a number of operating leases as lessee during 2000 and 2002 in which it guaranteed a portion of the residual value of the leased equipment to the lessor. These leases have terms that expire between 7 and 10 years. If at the end of the lease term the fair market value of the equipment is below the guaranteed residual value in the agreement, the Company is liable for a percentage of the deficiency. The total of these guarantees is $12,405 of which $8,011 could be due in 4 to 5 years, with the remaining $4,394 potentially due in greater than 5 years. As of March 31, 2004 and December 31, 2003, included in accounts payable and accrued expenses in the accompanying Condensed Consolidated Balance Sheets are liabilities of $154 and $144, respectively, representing the accrual for the estimated exposure under these guarantees.

           During the second quarter of 2003, the Company arranged a leasing transaction between one of its major customers and a financial institution for up to 3,000 containers. As part of this transaction, the Company agreed to provide certain guarantees related to the fair value of the equipment if the lessee terminated the lease or if the lessee was unable to meet its obligations under the terms of the lease. In addition, if the lessee agreed to extend the lease, the Company agreed to purchase the equipment from the financial institution at a stated value and lease it to the lessee for this additional period at a stated lease rate. The Company further agreed to provide the lessee with a purchase option at the end of the extended lease period that would be less than the fair market value of the equipment at the date the lessee could exercise its option (the “Bargain Purchase Option”).

          In return for the arrangement of the transaction on behalf of the financial institution and the guarantees discussed above, the Company was paid an arrangement fee and a portion of the initial rent for each container included in the lease. During the year ended December 31, 2003, 2,076 containers were delivered to the lessee and the Company received payments amounting to $1,240. The remaining 924 containers were purchased by the Company and leased to the customer under the terms of a direct financing lease.

          The estimated fair value of these containers at the end of the lease term guaranteed by the Company amounts to approximately $4,360. The Company has estimated that its potential liability related to these guarantees is less than the estimated potential liability related to the Bargain Purchase Option granted to the lessee. As such, the Company has accrued for the estimated value of its liability for this Bargain Purchase Option amounting to $1,017 that could be due in greater than 5 years. All fees collected from the lessor have been deferred by the Company and included in accounts payable and accrued liabilities on the accompanying Consolidated Balance Sheets. The fees received from the lessor, net of the estimated liability for the Bargain Purchase Option, are being recognized by the Company over the term of the residual guarantee.

           Standby Letters of Credit

          As of March 31, 2004, CAI, a consolidated subsidiary, had two outstanding letters of credit totaling $6,000, which guarantee its obligations under certain operating lease agreements. These letters of credit expire in May, 2005.

           Guarantee of Unconsolidated Affiliate Debt

           Since 2000, the Company has guaranteed PCR debts due to third parties totaling $5,000. At December 31, 2002, with PCR in liquidation, a determination was made that it was probable that the Company would incur costs related to this guarantee. As a result, the Company has recorded a liability for $4,429 representing its guarantee of PCR debts net of amounts collected related to PCR’s liquidation. This amount is included in accounts payable and accrued expenses in the March 31, 2004 and December 31, 2003 Consolidated Balance Sheets. The $5,000 guarantee was subsequently paid off through a secured financing arrangement completed by the Company in July 2004. For information regarding the satisfaction of this guarantee in July 2004, see Note 7 (Subsequent Events – Financing Activities) to the Condensed Consolidated Financial Statements.

Note 7 - Subsequent Events

Settled Insurance Litigation

          In connection with an insurance claim related to the default of a South Korean customer and a subsequent lawsuit filed by the insurance carriers against the Company, on June 17, 2004 the Company signed an agreement settling the lawsuit and our claims under the policy. Under the terms of the settlement agreement, the insurance carriers agreed to pay the Company a total of $26,400 which was received in June and July 2004. As of March 31, 2004, the outstanding receivable recorded from the insurance carriers was $20,535 and is included in other receivables, net on the Condensed Consolidated Balance Sheets.

July 2004 Protocol to the United States and Barbados Tax Treaty

           Interpool Limited currently claims treaty benefits under the United States and Barbados income tax treaty (“Treaty”). The Treaty contains a limitation on benefits provision which denies treaty benefits under certain circumstances. However, Interpool Limited currently does not fall within the Treaty’s limitation on benefits provision.

          On July 14, 2004, the United States and Barbados signed a protocol to the Treaty (“Protocol”) that contains a more restrictive limitation on benefits provision than the current Treaty does. If ratified, the Protocol might result in Interpool Limited losing its ability to rely on the Treaty to eliminate current U.S. income tax on its container rental and container sales income. This Protocol will not take effect until it is ratified by the United States Senate and the government of Barbados. It is currently uncertain whether the Senate will take action before it adjourns later in 2004. The Protocol is generally effective for taxable years commencing on or after the first of January in the year following the year the Protocol is ratified.

           Under the Protocol, Interpool Limited would only be eligible for Treaty benefits with respect to its container rental and sales income if, among other things, Interpool, Inc. is listed on a “recognized stock exchange” (generally, the NASDAQ system or an SEC registered exchange such as the New York Stock Exchange), and Interpool, Inc.’s stock is “primarily” and “regularly” traded on such exchange.

          As described elsewhere in this report, our common stock is currently not listed on a “recognized stock exchange” within the meaning of the Protocol. Management anticipates that Interpool, Inc. will examine all of its options with regard to listing on a “recognized stock exchange” and anticipates applying for a listing as soon as it is current with its periodic report filings with the SEC. We can give no assurance that such application will be accepted. However, even if Interpool, Inc. is listed on a “recognized stock exchange” as of the date the Protocol comes into effect, it is not clear whether Interpool, Inc. would satisfy the “primarily” and “regularly” traded requirement as defined within the Protocol. If Interpool, Inc. does not believe that it can satisfy this requirement, it will investigate alternatives to Interpool Limited being a resident in Barbados that will still entitle Interpool Limited to treaty benefits under another tax treaty with the U.S. Any such alternative would likely result in Interpool Limited being subject to a higher non-U.S. tax than the approximate 3% tax rate it currently enjoys in Barbados.

Financing Activities

          The Company funds a significant portion of the purchase price for new containers and chassis through borrowings under its revolving credit agreement and other lines of credit or through secured financings with financial institutions. The Company successfully completed secured financings of approximately $14,600 during May 2004 and $15,000 during July of 2004 with installments payable in varying amounts through 2008 and various interest rates ranging from 3.9% to 7.5%. A portion of the proceeds was used to satisfy a note payable from PCR to an unrelated financial institution, which was guaranteed by the Company for PCR, to pay amounts due to equipment manufacturers and for general corporate purposes.

           During August 2004, the Company entered into a lease arrangement with a Japanese lessor involving $21,093 of the equipment previously financed with a financial institution during December 2003 and May 2004. The lease “advance rate” against this equipment was approximately 107% ($22,510 total advance), increasing the cash proceeds received by the Company by $5,807 from the level of the previous financings. The lease expires in December 2008, and the Company has a fixed purchase option at that time for $14,631 that it expects to exercise. The aggregate fixed interest rate is 7.44%.

           Additionally, on September 14, 2004, the Company entered into a Securities Purchase Agreement pursuant to which it sold $150,000 total principal amount of a new series of 6% notes due 2014 (the “Notes”) in a private transaction with four investors. In connection with the sale of the Notes, the Company also issued to the investors two series of Warrants exercisable for a total of 8,333,333 shares of the Company’s common stock at an exercise price of $18.00 per share (the “Warrants”). The first series of Warrants is exercisable at any time for a total of 5,475,768 shares. The second series will become exercisable at any time for a total of 2,857,565 shares, following stockholder approval of such exercise at the next meeting of the Company’s stockholders. The Company also entered into agreements with the investors to file registration statements with the Securities and Exchange Commission, for the benefit of the investors, with respect to the Notes and the Warrants. The Warrants provide that the exercise price will be paid solely in cash, except that after the Company has filed a registration statement with the Securities and Exchange Commission relating to the Warrants and underlying common stock, in the event such registration statement has not become effective or is otherwise not available to the Warrant holders, if the exercise of the Warrants for cash would not be permitted under the federal securities laws, the exercise price may be paid by tendering a principal amount of 6% Notes equal to the exercise price of the Warrants then being exercised. The sale of the Notes and Warrants pursuant to the Securities Purchase Agreement was made in reliance on the exemption from the registration requirements of the Securities Act of 1933 (the “Act”), pursuant to Section 4(2) of the Act. The value assigned to the Warrants will result in an offset recorded as a discount on the Notes which will be amortized as interest expense using the effective interest method over the ten-year life of the Notes. The Warrant value will be reviewed during each accounting period, and adjusted if required.

          Of the $150,000 in proceeds from the sale of the Notes and Warrants, the Company repurchased, at face value, a portion of its outstanding 7.35% notes due 2007 ($31,605) and 7.20% notes due 2007 ($17,490) which were held by the investors. The remaining proceeds will be used for general corporate purposes, including, but not limited to, the purchase of equipment, retirement of debt, potential acquisitions and/or working capital.

          The Notes mature on September 1, 2014, with interest payable semi-annually at a rate of 6% per annum. The Company has the right to redeem the Notes at any time after September 1, 2009 with a declining premium. The maturity of the Notes can be accelerated upon the occurrence of an “Event of Default” as such term is defined in the indenture governing the Notes (the “Indenture”). The Indenture also contains various restrictive covenants, including limitations on the payment of dividends and other restricted payments, limitations on incurrence of indebtedness, and limitations on asset sales, the violation of which by the Company would result in an Event of Default.

          The Warrants expire on September 1, 2014, although the Company has the right under certain conditions to require that they be exercised at any time after its common stock trades at $30.00 per share or more for five consecutive trading days.

          The Company intends to hold an Annual Meeting of the Stockholders in the fourth quarter of 2004 or the first quarter of 2005 and at that meeting will seek stockholder approval for the exercise of the second series of Warrants. In connection with the sale of the Notes and Warrants, certain of the Company’s significant stockholders, whose combined interest in the Company represents more than 50% of the issued and outstanding shares of the Company’s Common Stock, entered into a voting agreement pursuant to which they have agreed to vote to approve the exercise of the second series of Warrants by the investors. In addition, Martin Tuchman, the Company’s Chairman and Chief Executive Officer, Warren Serenbetz, a member of the Company’s Board of Directors, and an entity controlled by members of Mr. Serenbetz’s family agreed to certain restrictions on their ability to transfer shares of the Company’s common stock in private transactions.

           Copies of the Securities Purchase Agreement, the Indenture, the Warrant Agreement, the Notes Registration Rights Agreement and the Investor Rights Agreement were filed as exhibits to the Company’s report on Form 8-K issued September 15, 2004.

Rating Agency Downgrades

          On January 27, 2004, Moody’s downgraded the Company’s debt securities citing continued uncertainty associated with the delayed release of the Company’s financial information for 2003. The Company was advised that Moody’s also reduced the “shadow rating” of the Company’s chassis securitization. The Company was advised by the provider of the insurance "wrap" portion of the chassis securitization that, as a result of the downgrade of the shadow rating, it is liable to indemnify such provider for certain of the provider's increased capital charge costs. The Company disputed whether any such indemnification obligation exists under the terms of its agreement with the "wrap" provider. During October 2004, the Company reached an agreement with such provider, pursuant to which the Company will pay approximately $195 per month in additional premium, declining as the loan is paid down. Such additional premium will be further adjusted downward after eighteen months if the shadow rating improves, potentially going away entirely. In addition, as part of this agreement. the Company will receive permanent waivers from the wrap provider for issues that were previously waived on a periodic basis. The other participants in the chassis securitization have waived any early amortization event or default associated with the downgrade of the "shadow rating" through April 1, 2005. Such downgrades may also have a negative effect on the Company’s ability to access the capital markets in the future, as well as on the Company’s interest cost. During July 2004, Fitch Ratings affirmed the Company’s ratings, removed the Company from rating watch negative status, and changed their rating outlook for the Company to positive. Fitch Ratings reaffirmed their positive outlook in a press release that followed the Company's $150,000 issuance of notes during September 2004. (See Ongoing Debt Waivers section below for further discussion.)

Delisting by the New York Stock Exchange

          On December 29, 2003, the New York Stock Exchange (the “Exchange”) suspended trading in the Company’s common stock and other listed securities and the staff of the Exchange informed the Company that they had recommended that delisting procedures be commenced. The Exchange stated that this action was taken because of the overall uncertainty surrounding the Company’s previously announced restatement of its 2001 and 2000 results and the continued delay in the completion of its current financial statement filing requirements. The Company’s 2002 Form 10-K, which reflected the restated results, was subsequently filed on January 9, 2004. The Company appealed the decision and recommendation of the staff of the Exchange, and a hearing before a Committee of the Board of Directors of the Exchange was held March 10, 2004. Following this hearing, the Committee determined to affirm the staff’s recommendation and to delist the Company’s common stock and other listed securities. The delisting became effective during early April 2004. The Company intends to examine all of its options with regard to re-listing its securities, and anticipates re-applying for a listing on the Exchange once it is current with its SEC filings. Since the suspension of trading on the Exchange took effect on December 29, 2003, the Company’s common stock has been traded on the over-the-counter market under the symbol IPLI.

Ongoing Debt Waivers

          As described in the Rating Agency Downgrades sections above, the Company may be required to obtain additional waivers in the future from certain of its financial institutions. In the event that (i) any such required waiver could not be obtained before the applicable deadline; or (ii) any of the Company’s existing waivers ceased to be effective in accordance with their terms based upon future developments, the Company might be in violation of the terms of its indebtedness, and the lenders could exercise their right to declare the Company in default, accelerate the indebtedness owed to such lenders, and take other action against the Company. Moreover, the taking of such action, or the possibility that such action could be taken, could cause one or more of the Company’s other financial institutions to take action against the Company, such as declaring the Company in default, accelerating the indebtedness owed to such lender, and/or attempting to exercise rights as a secured creditor with respect to any collateral.

Employment Agreements

          As described in the Company’s 2003 Form 10K, in July 2004, the Company entered into Employment Agreements with certain executive officers with various expiration dates up to 28 months. Under the terms of the Employment Agreements, each Executive is paid a base salary, a target bonus, participates in fringe benefit programs and may receive additional bonuses at the sole discretion of the Compensation Committee. The minimum obligation related to these agreements is approximately $2,606. In addition, the Employment Agreements obligate the Company to pay severance payments in the event of termination or change of control and include non-compete clauses.

          In connection with these employment agreements, because the Company’s stock option plan had expired, the Company instead agreed to grant common stock appreciation rights that provide for the grantees to receive cash payments measured by any appreciation in the market price of the common stock over a specified base price. The Company granted such stock appreciation rights with respect to a total of 275,000 share units at a base price of $14.05. The $14.05 base price reflected the price on the over-the-counter market on February 20, 2004, the business day before the date on which the terms of the stock appreciation rights were fixed. The grant of stock appreciation rights was subsequently ratified by the Board of Directors on March 30, 2004, by which time the closing price of the Company’s common stock had increased to $15.00. At July 1, 2004, the date the employment agreements became effective, the most recent closing stock price of the Company’s common stock was $16.55. Under the terms of the employment agreements, a total of 260,000 of these stock appreciation rights will vest in 2005 (or earlier upon a change in control) with the remaining 15,000 rights vesting in three equal installments on December 31, 2006, 2007 and 2008. Upon vesting, these stock appreciation rights may be exercisable at any time prior to the expiration of the earlier of 10 days following the termination of the employee or June 30, 2014. The Company has reserved the right to substitute common stock options under the same terms and conditions of the stock appreciation rights upon approval by the Company’s stockholders of a Stock Option Plan for executive officers of the Company.

Agreement with CAI

          In April 2004, the Company reached an agreement with CAI resolving differences in interpretation of certain agreements with CAI including provisions governing payment of appropriate remedial compensation when an age disparity develops between the Company’s containers managed by CAI and the balance of CAI’s managed fleet. Pursuant to its agreement with CAI, the Company agreed to pay CAI $2,000 for resolution of all disputes through February 29, 2004. The impact of this agreement, recorded by the Company during the three months ended March 31, 2004, was a reduction in consolidated pre-tax income of $1,000 ($600 net of tax). The Company anticipates that the earnings related to certain of its containers managed by CAI will be reduced to the extent the average age of such containers exceeds the average age of all other containers in CAI’s fleet.

Termination of Deferred Bonus Plan

          In September 2004, the Board of Directors terminated the Deferred Bonus Plan. All stock previously issued under this Plan will continue to be subject to the terms of the Plan. However, future bonuses will not be subject to the terms of the Deferred Bonus Plan.

Sale of Specialized Assets

           Effective September 30, 2004, the Company agreed to sell the assets of CTC Container Trading (U.K.) Limited, a wholly-owned subsidiary which leased specialized containers and other equipment for use by companies operating in the North Sea. Under the terms of the agreement, the Company sold 1,474 cargo carrying units for approximately $2,965 (1,666 British Pounds) which will result in a pre-tax profit of approximately $950 before expenses.

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

          The following discussion of our historical financial condition and results of operations should be read in conjunction with the historical consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this report. (Unless otherwise indicated, all fleet statistics including the size of the fleet, utilization of the leasing equipment or the rental rates per day that are set forth in this Quarterly Report on Form 10-Q exclude the information of our 50%-owned consolidated subsidiary CAI. This exclusion of information relative to CAI, unless indicated otherwise, provides a focus on the drivers which are critical to our core business.)

          The information in this Quarterly Report on Form 10-Q contains certain “forward-looking statements” within the meaning of the securities laws. These forward-looking statements reflect the current view of the Company with respect to future events and financial performance and are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical facts included in this report, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “will,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

          All forward-looking statements speak only as of the date of this report. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict.

          We suggest that this quarterly report be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2003 Form 10-K.

Restatement of Prior Condensed Consolidated Financial Statements

           During its 2003 year-end closing procedures, the Company identified a number of deficiencies in the internal controls over accounting and reporting for certain transactions. As a result, the Company has restated the Condensed Consolidated Financial Statements for the unaudited interim periods for the first three quarters in 2003. The Company has determined that the effect of these deficiencies in internal controls on years ended prior to January 1, 2003 was not material. The restated financial statements for the quarter ended March 31, 2003 are included in these Condensed Consolidated Financial Statements.

          The nature of the errors and the restatement adjustments that we have made to our Condensed Consolidated Financial Statements for the three months ended March 31, 2003 are set forth in Note 2-Restatement of Previously Issued Financial Statements.

          For additional information regarding this restatement see Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2003 Form 10-K.

General

           Interpool is one of the world’s leading suppliers of equipment and services to the intermodal transportation industry. We believe we are the world’s largest lessor of intermodal container chassis and a world-leading lessor of international dry freight standard containers used in international trade.

          Our primary sources of revenues are rental income derived from operating leases and income earned on direct financing leases. We generate revenues through leasing transportation equipment, primarily intermodal container chassis and intermodal dry freight standard containers. Operating lease equipment (operating leases) and direct financing leases are the two major asset types that generate this revenue. In the case of operating lease equipment, we retain the substantive risks and rewards of equipment ownership. In the case of direct financing leases, the lessee generally has the substantive risks and rewards of equipment ownership and the right to purchase the equipment at the end of the lease term. This revenue is supplemented by other sources of revenue such as fee income earned under equipment management agreements. Revenue derived from an operating lease generally consists of the monthly lease payments from the customer. For direct financing leases, the lessee’s payment is segregated into principal and interest components much like a loan. The interest component, calculated using the effective interest method over the term of the lease, is recognized by us as revenue. The principal component of the direct financing lease payment is reflected as a reduction to the net investment in the direct financing lease.

          Our mix of operating and direct financing leases is a function of customer preference and demand and our success in meeting those customer requirements. An operating lease, during its initial lease term, will generally be more profitable than a direct financing lease, primarily due to the return of principal inherent in a direct financing lease. However, after the initial term (and any renewal) of an operating lease expires, the operating lease will have redeployment costs and related risks that are avoided under a direct financing lease. In evaluating the revenue performance of our operating lease portfolio, the primary factors considered are utilization and daily rental rates.

           During the first quarter of 2004, as compared with the first quarter of 2003, our revenues increased due to strong demand for equipment, resulting in a favorable increase in utilization rates for our chassis and continued high utilization rates for our containers. Our increased fleet size for containers contributed favorably to revenue while our chassis fleet held at essentially the same level as the year earlier period. We have continued to experience high utilization of equipment, both in our chassis and container business segments, during the first half of 2004. Utilization of our container fleet was 99% at both March 31, 2004 and June 30, 2004, and chassis utilization was at 96% at March 31, 2004 and 97% at June 30, 2004.

           Although daily rental rates for new long term leases in our operating lease container fleet remained relatively flat during 2003, container daily lease rates on new equipment have been rising during the first half of 2004 due to the increased demand for equipment as well as the impact of recent steel shortages. The steel shortage in the first half of 2004 has driven the cost of new containers higher than in 2003, with corresponding increases in daily lease rates for newly manufactured containers. In some cases the steel shortages have become so acute that production was slowed. The backlogged demand and higher manufacturing costs have propelled leasing of used containers.

           Chassis lease rates have been driven more by the cost of new chassis than by recent increases in demand. There are both positive and negative factors influencing production costs. A recent shift in the manufacturing base, toward more production in China, which has lower labor and overhead costs, but higher delivery costs, has lowered chassis prices. At the same time, the steel shortage has created upward pressure on chassis prices. Overall, production costs have decreased slightly, with a similar decrease in new equipment lease rates. However we are currently experiencing an increase in the cost of new chassis during the fourth quarter of 2004 as a result of the steel shortage. Used chassis lease rates have been heavily competitive during early 2004.

          We anticipate that industry demand for chassis and containers will continue to be strong well into 2005. This projection is supported by the fact that all major shipyards are reporting full order books through the end of 2006. Even after an allowance of 1% for scrapping, the world container ship fleet is expected to increase by 10.8% in 2004, 11.3% in 2005 and 11.6% in 2006 as reported in the May 2004 edition of Containerisation International. In April 2004 alone, 48 new container ships were ordered with a capacity of 218,000 twenty-foot equivalent units (“TEU”). As of May 1, 2004, the total order book exceeded 800 ships with a total capacity of 3.2 million TEU, or approximately 47% of the current world fleet.

          We believe a number of factors have contributed to the strong demand for equipment in the industry. From 2001 to 2002, according to the Container International Yearbook 2004, global containerized traffic increased by over 9%, from 243.8 million TEU in 2001 to 266.3 million TEU in 2002, fueling demand for transportation equipment generally. In addition, as mentioned above, several major shipping lines have announced plans to bring new, very large 8,000-9,000 TEU ships to the West Coast of the United States in the fall of 2004. When ships of this size are unloaded, they require the use of a large number of chassis to move the containers to local railroad terminals or their final destinations. These chassis, once loaded, may not be able to return to the port before the next ship rotation arrives, thus requiring additional concentrations of chassis at major ports. These larger vessels will also require additional containers and chassis to support them. Demand for chassis has also been affected by the inability of large, fully loaded ships to pass through the Panama Canal. These ships typically discharge their cargo on the West Coast of the United States, with the cargo being moved by “land bridges”, by truck and rail inland and across the country, using chassis at various stages during this process. At the same time, the demand for chassis, along with increased congestion at many of the rail and marine facilities around the country, have fueled an increase in the sharing of chassis (chassis pooling) among shipping lines. Our PoolStat™ chassis management service has experienced an increased interest in chassis sharing among shipping lines, as well as use of our own Trac Lease chassis pools at railroads and marine terminals. As of June 30, 2004, our chassis pools operating at railroad terminals were at record utilization levels.

           Although our container fleet (including units on hire as direct financing leases) increased in size by 6% from the first quarter of 2003 to the first quarter of 2004 and, while our chassis fleet held at essentially the same level, we were not able to take full advantage of the strong customer demand for containers and chassis during the latter part of 2003 and 2004. This was the result of the restatement of our financial statements for the years ended December 31, 2000 and 2001 and the first three quarters of 2002 and the related investigations by our audit committee and the SEC, and the resulting delays in completion of our financial statements and SEC filings, adversely affected our ability to obtain the financing necessary for us to purchase equipment for lease to customers. In addition, the requirement to maintain certain levels of unrestricted cash until our delayed financial filings are completed has continued to limit the amount of new business we have written with our customers. While we have successfully completed $267.0 million of new financings from January to September 2004, $117.0 million was used to satisfy past due payments to equipment manufacturers, to finance previously unencumbered assets, and to re-finance existing secured debt. The remaining $150.0 million was completed during September 2004, with $49.1 million of the proceeds concurrently used to reduce existing unsecured debt. (For further discussion of this transaction see our report on Form 8-K filed with the SEC on September 15, 2004 and Note 7 to the Condensed Consolidated Financial Statements – Subsequent Events – Financing Activities.) In addition, our cost of new financing during 2004 has been higher than we experienced in 2003, due to higher interest rates in general and increased borrowing costs resulting from the lowering of our credit ratings over the past year. The increase in interest expense during the first quarter of 2004 has been the result of increased interest rates, higher loan balances as compared to the first quarter of 2003, and bank fees related to obtaining waivers related to our delayed filings. We are currently in negotiations with several potential lenders with regard to additional financings to support business growth and to refinance certain existing debt facilities, with completion expected during the fourth quarter of 2004.

          As of March 31, 2004, our commitments for future capital expenditures totaled approximately $126.2 million with approximately $63.2 million committed for 2004. Our available liquidity at March 31, 2004, including $19.5 million available under CAI’s revolving credit facility, was $77.5 million after adjusting for $22.4 million of cash held within the chassis securitization and $60.5 million required to be maintained as a result of obtaining waivers. Required debt repayments and capital lease payments for the next 12 months totaled $237.2 million. Based on our existing cash balances, financings closed, and our financial projections of operating cash flow for the future, we believe that we will have sufficient liquidity to grow our portfolio while meeting our obligations and commitments as they become due.

           Other than interest expense, our primary expenses are lease operating and administrative expenses, which include operating costs such as maintenance and repair expense, as well as other ownership costs such as storage and positioning expense. Our lessees are generally responsible for lease operating expenses during the term of their lease. Our administrative expenses are primarily employee related costs such as salary expense, costs of employee benefits and travel and entertainment costs, as well as expenses incurred for outside services such as legal, consulting and audit related fees. During the first quarter of 2004, lease operating and administrative expenses as a percentage of revenues were 30.2%, up from 29.4% during the same quarter in 2003. The additional personnel and systems enhancements we are adding to improve our internal controls, as well as additional procedures being implemented to comply with Sarbanes-Oxley requirements, have added incremental administrative expenses. In addition to lease operating and administrative expenses, we also incur depreciation expense on our operating lease equipment.

           During the last nine months of 2003 and for the first six months in 2004, we incurred significant costs related to the investigations by our audit committee and the SEC, separation agreements with our former Chief Financial Officer and our former President, legal representation for the Company as well as our officers, directors and employees, the payment of fees in order to obtain necessary waivers from our financial institutions and, during 2004, the proceedings before The New York Stock Exchange to delist our securities. We will continue to incur additional costs in the remainder of 2004 relating to the formal investigation by the SEC and additional legal representation for the Company and our officers, directors and employees.

           Non-performing receivables totaled $13.3 million at March 31, 2004 compared with $12.8 million at December 31, 2003. Reserves of $12.4 million and $11.9 million, respectively, have been established against these non-performing receivables. During the first quarter of 2004, receivable write-offs net of recoveries totaled $0.2 million as compared with $0.3 million for the same period in 2003.

          Our net income per share on a fully diluted basis for the three months ended March 31, 2004 and 2003 was $0.38 and $0.41, respectively. Annualized return on average stockholders’ equity was 11.5% at both March 31, 2004 and December 31, 2003.

          We conduct business with shipping line customers throughout the world and are therefore subject to the risks of operating in disparate political and economic conditions including those associated with increasing oil prices. Offsetting this risk is the worldwide nature of the shipping business and the ability of our shipping line customers to shift their operations from areas of unfavorable political and/or economic conditions to more promising areas. Approximately 98% of our revenues are billed and paid in U.S. dollars. We believe these factors substantially mitigate foreign currency rate risks.

          Our container leasing operations are conducted through our subsidiary, Interpool Limited, a Barbados corporation. Our effective tax rate benefits substantially from the application of an income tax convention, pursuant to which the profits of Interpool Limited from international container leasing operations are exempt from federal taxation in the United States. As discussed below, these profits are subject to Barbados tax at rates that are significantly lower than the applicable rates in the United States. For further information regarding the United States and Barbados Tax Treaty and the July 2004 Protocol to this Treaty, see Note 7 to the Condensed Consolidated Financial Statements.

          The sections that follow analyze our results of operations by financial statement caption and provide a more detailed discussion of our performance for the three months ended March 31, 2004 as compared to the prior year period.

Results of Operations

Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003

           Revenues. Our revenues increased to $95.4 million for the three months ended March 31, 2004, from $90.0 million in the three months ended March 31, 2003, an increase of $5.4 million or 6%. The increase was primarily attributable to incremental container and chassis operating lease revenues of $5.7 million, partially offset by a decrease in finance lease revenues of $0.1 million and reduced operating lease revenues of $0.1 million contributed by Microtech (which has been liquidated) as compared to the prior year period. The incremental container and chassis operating lease revenues, as compared to the prior year period, are primarily due to the increase in the size of our container and chassis operating lease fleets which grew by 19% and 1% respectively, and an increase in the utilization rates for our containers and chassis. In addition, the daily rental rates for chassis were higher as compared to the prior year period, while the daily rental rates for the overall container fleet were lower. Utilization rates of our container fleet have historically been calculated assuming containers managed by CAI were 100% utilized since they were not available to us to put on hire. Under this method, utilization rates of our container and domestic intermodal chassis operating lease fleets at March 31, 2004 were 98% and 96%, respectively, as compared to 99% and 94%, respectively, at March 31, 2003. The utilization rates of our container fleet, considering CAI's actual utilization rates for our containers managed by CAI, were 94% and 93% at March 31, 2004 and 2003, respectively.

           Lease Operating and Administrative Expenses. Our lease operating and administrative expenses increased to $28.8 million for the three months ended March 31, 2004, from $26.4 million in the three months ended March 31, 2003, an increase of $2.4 million or 9%.

The increase was primarily due to:

During the last nine months of 2003 and for the first six months of 2004, we incurred significant costs related to the investigations by our audit committee and the SEC, separation agreements with our former Chief Financial Officer and our former President, legal representation for the Company as well as our officers, directors and employees, the payment of fees in order to obtain necessary waivers from our financial institutions and, during 2004, the proceedings before The New York Stock Exchange to delist our securities. We will continue to incur additional costs in the remainder of 2004 relating to the formal investigation by the SEC and additional legal representation for the Company and our officers, directors and employees. The costs incurred during 2003, the first quarter of 2004 and the estimated costs incurred in the second quarter of 2004 are as follows:

                                 Three Months Ended      Three Months Ended     Year Ended
                                     March 31,                June 30,          December 31,
(Dollars in millions):                  2004                    2004               2003
- ---------------------            ------------------      ------------------    ------------
Audit fees for the reaudits
   and restatements                      $0.5                  $---                $3.6
Cost of investigations                    0.1                   ---                 5.9
Legal and consulting fees                 1.6                   0.5                 3.2
Separation agreements                     ---                   ---                 5.9
Bank waiver fees                          2.1                   0.3                 1.6
                                          ---                   ---                 ---
Amounts before tax                       $4.3                  $0.8               $20.2
                                         ====                  ====               =====

Amounts net of tax                       $3.0                  $0.5               $12.9
                                         ====                  ====               =====

           Provision for Doubtful Accounts. Our provision for doubtful accounts decreased to $0.6 million for the three months ended March 31, 2004 from $1.8 million for the three months ended March 31, 2003. During the three months ended March 31, 2004, our non-performing receivables increased $0.5 million ($13.3 million at March 31, 2004 and $12.8 million at December 31, 2003). As of March 31, 2004 and December 31, 2003, our non-performing receivables, net of applicable reserves, were 1.54% and 1.27%, respectively, of accounts receivable, net. Our provision for doubtful accounts is provided based upon a quarterly review of the receivables. This review is based on the risk profile of the receivables, credit quality indicators such as the level of past-due amounts and economic conditions, as well as the value of underlying collateral in the case of direct financing lease receivables.

           Fair Value Adjustment for Derivative Instruments. Our non-cash fair value adjustment for derivative instruments income amounted to $0.2 million for the three months ended March 31, 2004 and for the three months ended March 31, 2003. The income for the three months ended March 31, 2004, as well as the prior year period, is primarily due to the change in fair value of interest rate swap agreements held which do not qualify as cash flow hedges.

           Depreciation and Amortization of Leasing Equipment. Our depreciation and amortization expenses increased to $22.9 million for the three months ended March 31, 2004, from $22.4 million for the three months ended March 31, 2003, an increase of $0.5 million or 2%. This increase was primarily due to additions to our operating lease fleet.

           Impairment of Leasing Equipment. Our impairment of leasing equipment expense decreased to $2.0 million for the three months ended March 31, 2004, from $2.2 million for the three months ended March 31, 2003, a decrease of $0.2 million. This decrease was based on a current evaluation of the carrying value of our long-lived assets which indicated that there was no impairment to the fleet with the exception of specific units that were idle, some of which were badly damaged, and other specific units with design flaws. All units identified were written down, if required, to estimated net realizable value.

           (Income)/Loss for Investments Accounted for Under the Equity Method. The increase in (income)/loss for investments accounted for under the equity method of $0.2 million during the three months ended March 31, 2004 as compared to the prior year period resulted primarily from increased equity method income for certain investments.

           Other Income, Net. We had other income of $0.7 million during the three months ended March 31, 2004 compared to $1.2 million of other income for the three months ended March 31, 2003. The change of $0.5 million was primarily due to a reduction in gains on equipment sales of $0.4 million as compared to the prior year period.

           Interest Expense. Our interest expense increased to $28.4 million in the three months ended March 31, 2004 from $25.4 million in the three months ended March 31, 2003, an increase of $3.0 million or 12%. The increase in interest expense was primarily attributable to $2.1 million of bank fees in order to obtain waivers related to our delayed filings, increased interest rates resulting in increased interest expense of $0.5 million and increased borrowings to fund capital expenditures, resulting in incremental interest expense of $0.3 million.

           Interest Income. Our interest income decreased to $0.7 million in the three months ended March 31, 2004 from $1.0 million in the three months ended March 31, 2003, a decrease of $0.3 million or 30%. The decrease in interest income was primarily due to reduced earnings on invested cash balances due to lower interest rates, as well as a decline in invested cash balances.

           Minority Interest Expense, Net. The change in minority interest expense, net of $0.5 million for the three months ended March 31, 2004 as compared to the prior year period was primarily due to:

Provision for Income Taxes. We recorded an income tax provision of $2.5 million for the three months ended March 31, 2004 as compared to $1.9 million for the three months ended March 31, 2003. This increase was caused by a larger proportion of pre-tax income generated from United States sources as compared to lower-taxed international source income.

Interpool Limited’s pre-tax income (international source income) is taxed at a low rate (approximately 3%) due to the income tax convention between the United States and Barbados. The domestic intermodal division, including corporate activities, is taxed at the higher United States tax rates. During the three months ended March 31, 2004, 38% of our pre-tax income was generated from United States sources as compared to 23% in the prior year period, thus contributing to the increase in the provision for income taxes.

           Net Income. As a result of the factors described above, our net income decreased to $11.1 million in the three months ended March 31, 2004 from $11.8 million in the three months ended March 31, 2003.

Liquidity and Capital Resources

           Historically, we have used funds from various sources to meet our corporate obligations and to finance the acquisition of equipment for lease to customers. The primary funding sources have been cash provided by operations, borrowings (generally from banks), securitization of lease receivables, the issuance of capital lease obligations and the sale of our securities. In addition, we have generated cash from the sale of equipment being retired from our fleet. In general, we have sought to meet debt service requirements from the leasing revenue generated by our equipment.

          We have usually funded a significant portion of the purchase price for new containers and chassis through borrowings under our revolving credit facility and other lines of credit, or through secured financings with financial institutions. However, our ability to borrow funds on terms as favorable as those available previously has been limited during the first half of 2004 because of the restatement to our historical financial statements and the related Audit Committee and SEC investigations, and the delays in completing our annual and quarterly SEC financial filings for 2002 and 2003. While we have successfully completed $267.0 million of new financings from January to September 2004, $117.0 million was used to satisfy past due payments to equipment manufacturers, to finance previously unencumbered assets, and to re-finance existing secured debt. The remaining $150.0 million was completed during September 2004, with $49.1 million of the proceeds concurrently used to reduce existing unsecured debt. (For further discussion of this transaction see our report on Form 8-K filed with the SEC on September 15, 2004 and Note 7 to the Condensed Consolidated Financial Statements – Subsequent Events – Financing Activities.) These factors, coupled with the requirement to maintain certain levels of unrestricted cash until the delayed financial filings are completed, have affected the amount of business we have written with our customers for the first half of 2004. We are currently in negotiations with several potential lenders with regard to additional financings to support business growth and to refinance certain existing debt facilities, with completion expected during the fourth quarter of 2004.

          In connection with waivers previously received from our lenders, we agreed to complete our 2004 periodic Form 10-Q filings with the SEC on or before December 31, 2004.

          In connection with our delayed SEC filings and the receipt of waivers from our lenders necessitated by the delayed filings, beginning in January 2004, the members of our Board of Directors and certain of their affiliates who own shares of our common stock have agreed to defer their receipt of any dividend payments, including those we may declare in the future, until we are in compliance with all SEC filing requirements. As of September 15, 2004, recorded dividend payments in the amount of $3.5 million have been deferred and are included in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheet.

           Over the years, we have explored from time to time the possibility of raising capital or reducing our leverage through the issuance and sale of our equity securities. Other than the $150.0 million financing consummated in September 2004, there is no assurance that any such transaction will occur or if a transaction occurs, what the terms thereof would be. For further discussion of this transaction see our report on Form 8-K filed with the SEC on September 15, 2004 and Note 7 to the Condensed Consolidated Financial Statements – Subsequent Events – Financing Activities.

Cash Flow

          Net cash provided by operating activities amounted to $34.7 million for the three months ended March 31, 2004 compared to $24.9 million for the same period last year. The increase in net cash provided by these activities in 2004 as compared to 2003 was primarily due to a decrease in accounts receivable ($11.6 million) and other assets ($5.8 million), partially offset by a decrease in accounts payable and accrued expenses ($5.1 million).

          Net cash used for investing activities amounted to $42.6 million for the three months ended March 31, 2004 compared to $71.9 million for the same period in 2003. The decrease in net cash used in these activities in 2004 as compared to 2003 was primarily due to a decrease in the investment in direct financing leases ($32.2 million) and an increase in cash collections on direct financing leases ($5.0 million), partially offset by an increase in the acquisition of leasing equipment ($7.0 million).

          Net cash provided by financing activities amounted to $7.7 million for the three months ended March 31, 2004 compared to $2.2 million for the same period in 2003. The increase in net cash provided by these activities in 2004 as compared to 2003 was primarily due to an increase in proceeds from the issuance of debt and borrowings under revolving credit facilities ($30.0 million), partially offset by an increase in repayment of the Company’s debt obligations ($23.9 million).

Debt and Capital Lease Obligations:

          The following table summarizes our debt and capital lease obligations as of March 31, 2004 and December 31, 2003:

                                                                                    (Dollars in Millions)

                                                                            March 31, 2004       December 31, 2003
                                                                            --------------       -----------------
Capital lease obligations payable in varying amounts through 2018                $300.7                $325.2

Chassis Securitization Facility, interest at 5.49% and 5.59% at March
  31, 2004 and December 31, 2003, respectively
      Warehouse facility                                                           25.5                  25.5
      Debt obligation                                                              78.0                  86.4
      Capital lease obligation                                                    403.2                 404.7

Revolving credit facility, interest rate at 3.09% at March 31, 2004
  and December 31, 2003                                                           186.5                 193.5

Revolving credit facility CAI, interest rate at 3.35% and 3.37% at
  March 31, 2004 and December 31, 2003, respectively                               84.5                  87.0

Container securitization facility, interest at 6.13% and 6.5% at March
  31, 2004 and December 31, 2003, respectively                                     63.6                  76.6

7.35% Notes due 2007 (unsecured)                                                  147.0                 147.0

7.20% Notes due 2007 (unsecured)                                                   62.8                  62.8

9.25% Convertible redeemable subordinated debentures, mandatory
  redemption 2022 (unsecured)                                                      37.2                  37.2

9.875% Preferred capital securities due 2027 (unsecured)                           75.0                  75.0

Notes and loans payable with various rates ranging from 3.13% to 7.90%
  and maturities from 2004 to 2010                                                261.5                 194.8
                                                                                  -----                 -----

Total Debt and Capital Lease Obligations                                        1,725.5               1,715.7
                                                                                -------               -------
   Less Current Maturities                                                        237.2                 219.2

Total Non-Current Debt and Capital Lease Obligations                           $1,488.3              $1,496.5
                                                                               ========              ========

          Our debt consists of notes and loans and capital lease obligations with installments payable in varying amounts through 2027, with a weighted average interest rate of 6.0% for the three months ended March 31, 2004, as well as for the year ended December 31, 2003. The principal amount of debt and capital lease obligations payable under fixed rate contracts is $563.0 million at March 31, 2004. Remaining debt and capital lease obligations of $1,162.5 million are payable under floating rate arrangements, of which $480.6 million has been converted to fixed rate debt through the use of interest rate swap agreements. At March 31, 2004 and December 31, 2003, most of our debt and capital lease obligations are secured by a substantial portion of our leasing equipment, direct financing leases, and accounts receivable. Approximately $322.0 million of debt is unsecured at both March 31, 2004 and December 31, 2003. For further information on the accounting treatment for interest rate swap contracts see Note 5 to the Condensed Consolidated Financial Statements.

           Debt Modifications: In January and February 2004, in connection with obtaining necessary amendments under the revolving credit facility due to the late filing of our periodic reports with the SEC and the restatement of our past financial statements, we agreed, among other things, to reduce advance rates under this revolving facility, to add several events of default, to increase the interest rate margin, and to maintain specified levels of unrestricted cash and cash equivalents until delinquent SEC filings are made. Subsequent to January 9, 2004 (the date we filed our 2002 Form 10-K), we were obligated to maintain unrestricted cash and cash equivalents of at least $60.0 million at all times and at least $67.5 million as of the last business day of the month until completion and filing of all delayed financial statements for 2003 and 2004. This minimum cash requirement was also adopted in the waivers of the container securitization and one other loan agreement. In conjunction with the waiver received during February 2004, we replaced our annual amortization payment with monthly amortization payments under our revolving credit facility beginning in March 2004. The related minimum cash requirement was subsequently reduced dollar-for-dollar with the amortization payments and, at September 30, 2004, amounts to $41.9 million. The minimum cash balance requirement will be eliminated once we are current with our delayed financial filings. We also agreed to restrictions on dispositions of collateral and on encumbrances of assets as well as a limitation on concessions that could be made to our other financial institutions in connection with obtaining waivers.

           On January 27, 2004, Moody's downgraded our debt securities citing continued uncertainty associated with the delayed release of our financial information for 2003. We were advised that Moody's also reduced the "shadow rating" of our chassis securitization. We were advised by the provider of the insurance "wrap" portion of the chassis securitization that, as a result of the downgrade of the shadow rating, it is liable to indemnify such provider for certain of the provider's increased capital charge costs. We disputed whether any such indemnification obligation exists under the terms of its agreement with the "wrap" provider. During October 2004, we reached an agreement with such provider, pursuant to which we will pay approximately $0.2 million per month in additional premium, declining as the loan is paid down. Such additional premium will be further adjusted downward after eighteen months if the shadow rating improves, potentially going away entirely. In addition, as part of this agreement, we will receive permanent waivers from the wrap provider for issues that were previously waived on a periodic basis. The other participants in the chassis securitization have waived any early amortization event or default associated with the downgrade of the "shadow rating" through April 1, 2005.

          As a result of adopting SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, we are required in 2004 to classify the outstanding Preferred Capital Securities issued in 1997 within the debt section on the face of the Condensed Consolidated Balance Sheet. Previously, these instruments were classified separately with the caption “Company-Obligated Mandatorily Redeemable Preferred Securities in Subsidiary Grantor Trusts.” There was no modification of the terms of the Preferred Capital Securities and no impact on net income upon adoption. In connection with this change, we are negotiating amendments to our debt agreements that would allow these securities to be treated as they have been in the past for purposes of calculating compliance with loan covenants. At the date of this report, we have received all necessary amendments to be in full compliance with our loan covenants.

           New Financings: During the three months ended March 31, 2004, we entered into new financing arrangements totaling $81.6 million. The new debt entered into during the three months ended March 31, 2004 consisted of notes and loans with installments payable in varying amounts through 2008 and various interest rates ranging from 3.6% to 6.6%.

           Covenants: Under our revolving credit facility and most of our other debt instruments, in effect at March 31, 2004 we are required to maintain covenants (as defined) for tangible net worth (a maximum of $250.0 million), a fixed charge coverage ratio of 1.5 to 1 and a funded debt to net worth ratio (as defined in the agreement, which is stockholders’ equity plus preferred capital securities, less goodwill) of 4.0 to 1. A financing facility entered into in March 2004 includes a requirement that we maintain a tangible net worth of at least $300.0 million. At March 31, 2004 we were in compliance with these covenants as amended.

           Other: As of March 31, 2004, our commitments for future capital expenditures totaled approximately $126.2 million with approximately $63.2 million committed for 2004. Our available liquidity at March 31, 2004, including $19.5 million available under CAI’s revolving credit facility was $77.5 million after adjusting for $22.4 million of cash held within the chassis securitization and $60.5 million required to be maintained as a result of obtaining waivers. Required debt repayments and capital lease payments for the next twelve months totaled $237.2 million as of March 31, 2004 which we anticipate making through our unrestricted cash balances and cash flow from operations.

          In the past, cash on hand, cash flow from operations, borrowings under credit facilities and the net proceeds of the issuance of debt and equity securities has been sufficient to meet our working capital needs, capital expenditures and required debt repayments. We also expect to continue to rely in substantial part on long-term financing for the purchase of equipment or strategic acquisitions to expand our business in the future. We cannot assure that long-term financing will be available for these purposes on acceptable terms or at all. In addition, from time to time, we may explore new sources of capital both at the parent and subsidiary levels. We have successfully completed $267.0 million of new financings from January to September 2004, $117.0 million of which was used to satisfy past due payments to equipment manufacturers, and to finance previously unencumbered assets and re-finance existing secured debt. The remaining $150.0 million was completed during September 2004, with $49.1 million of the proceeds concurrently used to reduce existing unsecured debt. (For further discussion of this transaction see our report on Form 8-K filed with the SEC on September 15, 2004 and Note 7 to the Condensed Consolidated Financial Statements – Subsequent Events – Financing Activities.) We are currently evaluating several additional financing proposals.

Sale of Specialized Assets

           Effective September 30, 2004, we agreed to sell the assets of CTC Container Trading (U.K.) Limited, a wholly-owned subsidiary which leased specialized containers and other equipment for use by companies operating in the North Sea. Under the terms of the agreement, we sold 1,474 cargo carrying units for approximately $3.0 million (1.7 million British Pounds) which will result in a pre-tax profit of approximately $1.0 million before expenses.

Agreement with CAI

          In April 2004, we reached an agreement with CAI resolving differences in interpretation of certain agreements with CAI including provisions governing payment of appropriate remedial compensation when an age disparity develops between our containers managed by CAI and the balance of CAI’s managed fleet. Pursuant to our agreement with CAI, we agreed to pay CAI $2.0 million for resolution of all disputes through February 29, 2004. The impact of this agreement, recorded by us during the three months ended March 31, 2004, was a reduction in consolidated pre-tax income of $1.0 million ($0.6 million net of tax). We anticipate that the earnings related to certain of our containers managed by CAI will be reduced to the extent the average age of such containers exceeds the average age of all other containers in CAI’s fleet.

Settled Insurance Litigation

          In connection with an insurance claim related to the default of a South Korean customer and a subsequent lawsuit filed by the insurance carriers against us, on June 17, 2004 we signed an agreement settling the lawsuit and our claims under the policy. Under the terms of the settlement agreement, the insurance carriers agreed to pay us a total of $26.4 million which we received in June and July 2004. As of March 31, 2004, the outstanding receivable recorded from the insurance carriers was $20.5 million and is included in other receivables, net on the Condensed Consolidated Balance Sheets.

Critical Accounting Policies and Estimates

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use judgment in making estimates and assumptions that affect reported amounts of assets and liabilities, the reported amounts of income and expense during the reporting period and the disclosure of contingent assets and liabilities at the date of the financial statements. Management has identified the policies and estimates below as critical to our business operations and the understanding of our results of operations. For a detailed discussion on these and other significant accounting policies, see Note 1 to the Consolidated Financial Statements included in the Company’s December 31, 2003 Annual Report on Form 10-K. These policies and estimates are considered critical due to the existence of uncertainty at the time the estimate is made, the likelihood of changes in estimates from period to period and the potential impact that these estimates can have on our financial statements. The following accounting policies and estimates include inherent risks and uncertainties related to judgments and assumptions made by management. Management’s estimates are based on the relevant information available at the end of each period.

          The Company, in consultation with the audit committee, has reviewed and approved these significant accounting policies which are further described in the Company’s 2003 Form 10-K.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk

Risk Management

Interest Rate Risk

          The nature of our business exposes us to market risk arising from changes in interest rates. We manage interest rate risk to protect margins on existing transactions. Interest rate risk is the risk of earnings volatility attributable to changes in interest rates. Additionally, we consider interest rate swap contracts as an integral part of borrowing transactions. We seek to minimize our exposure by entering into amortizing interest rate swap contracts, which coincide with the principal and maturity of the underlying debt instruments hedged. We do not use leveraged swaps and do not use leverage in any of our investment activities that would put principal capital at risk.

The following table sets forth principal cash flows and related weighted average interest rates by expected maturity dates for debt and capital lease obligations at March 31, 2004:

                               Total                      13-24        25-36        37-48     49-60
 (Dollars in Thousands)     Obligation    0-12 months    months       months       months     months    Thereafter
 ----------------------     ----------    -----------    ------       ------       ------     ------    ----------

Variable rate facilities     $681,834     $100,545     $294,945      $68,250      $44,925     $36,169     $137,000
Average interest rate %                       3.8%         4.2%         4.4%         4.7%        4.9%         4.9%

Fixed rate facilities(1)    1,043,628      136,613      132,110       72,033      249,598      46,795      406,479
Average interest rate %                        6.7%        6.7%         6.8%         6.5%        6.6%         6.6%

Total Debt                  1,725,462      237,158      427,055      140,283      294,523      82,964      543,479
Average interest rate %                       5.6%         6.1%         6.2%         6.0%        6.2%         6.2%

(1) These fixed rate facilities include variable instruments that have been converted to fixed rate debt
through the use of interest rate swap agreements.

          The principal amount of debt and capital lease obligations payable under fixed rate contracts is $563,004 at March 31, 2004. Remaining debt and capital lease obligations of $1,162,458 are payable under floating rate arrangement, of which 480,625 has been converted to fixed rate debt through the use of interest rate swap agreements.

           Based on outstanding debt balances at March 31, 2004 of variable rate facilities, which have not been converted to fixed rate debt through the use of interest rate swaps, a 10% change in variable interest rates would have resulted in a $0.7 million change in pre-tax earnings.

Credit Risk

          We maintain detailed credit records about our customers. Our credit policy sets different maximum exposure limits for our customers. Credit criteria may include, but are not limited to, customer trade route, country, social and political climate, assessments of net worth, asset ownership, bank and trade credit references, credit bureau reports, operational history and financial strength.

          We seek to reduce credit risk by maintaining insurance coverage against customer insolvency and related equipment losses. Effective March 1, 2003, we obtained a new policy covering similar occurrences for a twelve-month period. This coverage decreased the recoverable amount per occurrence to $9.0 million as compared to $35.0 million in our previous policy and increased the deductible per occurrence from $0.4 million to $3.0 million. This coverage has since been extended to March 31, 2005. There can be no assurance that this or similar coverage will be available in the future or that such insurance will cover the entirety of any loss.

Allowance for Doubtful Accounts

          The allowance for doubtful accounts includes our estimate of allowances necessary for receivables on both operating and direct financing lease receivables. The allowance for doubtful accounts is developed based on two key components (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful and (2) reserves for estimated losses inherent in the receivables based upon historical trends. We believe our allowance for doubtful accounts is adequate to provide for credit losses inherent on our accounts receivable. The allowance for doubtful accounts is intended to provide for losses inherent in the accounts receivable, and requires the application of estimates and judgments as to the outcome of collection efforts and the realization of collateral, among other things. In addition, changes in economic conditions or other events may necessitate additions or deductions to the allowance for doubtful accounts. Direct financing leases are evaluated on a case by case basis. When evaluating our operating and direct financing lease receivables for impairment, we consider, among other things, the level of past-due amounts of the respective receivable, the borrower’s financial condition, credit quality indicators of the borrower, the value of underlying collateral and third party credit enhancements such as guarantees and insurance policies. Once a direct financing lease is determined to be non-performing, our procedures provide for the following events to take place in order to evaluate collectibility:

          The adequacy of our allowance for doubtful accounts is periodically reviewed based on the risk profile of the receivables, credit quality indicators such as the level of past-due amounts and economic conditions, as well as the value of underlying collateral in the case of direct financing lease receivables.

ITEM 4: Controls and Procedures

          The effectiveness of our or any systems of disclosure controls and procedures and internal controls is subject to certain limitations including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures and internal controls will prevent all errors or fraud or ensure that all material information will be made known to management in a timely fashion.

          As reported more fully in our 2003 Form 10-K, we learned of certain deficiencies in our internal controls that existed in 2003 and years prior to 2003. We have concluded that the following internal control deficiencies which have been identified constituted “material weaknesses” or “significant deficiencies” as defined by the Public Company Accounting Oversight Board (United States):

          In addition to the deficiencies mentioned above, we have identified other less significant deficiencies that we do not consider “material weaknesses” or “significant deficiencies” but which we nonetheless believe should be remedied.

          We are continuing to review and evaluate our internal controls and procedures and may identify additional areas where corrective measures are advisable or required.

          As reported in our 2003 Form 10-K, we have assigned the highest priority to the short and long-term correction of the internal control deficiencies that have been identified and are taking the steps necessary to strengthen our internal controls and to address their deficiencies. Among other things, we have taken and are taking the following remedial measures:

           Management has discussed its action plan with the Audit Committee and will continue to provide periodic updates on progress made. As of the date of this filing, we are satisfied that actions implemented to date and those in progress will correct the material weaknesses in our internal controls and information systems and that our processes and systems of internal controls will be adequate. We note that, like other companies, management cannot provide absolute assurance that internal control weaknesses will not be identified from time to time in the future or that any such weaknesses would not materially affect our financial results.

          We believe that these efforts have addressed the material weaknesses and significant deficiencies that have affected our internal controls in the past. We can give no assurances, however, that all material weaknesses and significant deficiencies have been entirely corrected. We continue to look for methods to improve our overall system of control.

          We carried out an evaluation, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2004 pursuant to SEC Rules 13a-15 and 15d-15 under the Exchange Act. Our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, except for the internal control deficiencies as described herein and taking into account the efforts to address those deficiencies described herein, as of the evaluation date, our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that information we must disclose in reports filed with the SEC is properly recorded, processed, and summarized, and then reported within the time periods specified in the rules and forms of the SEC.

           Other than the internal control issues and corresponding corrective actions discussed above, our Chief Executive Officer and Chief Financial Officer have each confirmed that, since the date of the evaluation to the date of the filing of this Form 10-Q, there have been no significant changes in the disclosure controls and procedures or in other factors that could significantly affect such controls or procedures, including any corrective actions with regard to significant deficiencies and material weaknesses.

          Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or internal controls will prevent all errors and all improper conduct. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, within a company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.