CAI International Inc. (CAP) 2020年年度報告「NYSE」.pdf

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1、CAI International,Inc.2020 Annual ReportClear Vision,Clear ValueCAI International,Inc.2020 Annual ReportCAI(NYSE:CAI)is a global transportation finance company offering intermodal container leasing and sales.Established in 1989 and headquartered in San Francisco,CAI has grown into a leading provider

2、 of intermodal containers for use by shipping companies in international trade.With offices around the world and a broad network of agents and depots,CAI serves hundreds of the worlds leading shipping lines,container operators,and logistics providers with tailored solutions.Clear vision,clear value.

3、2020 was a challenging year for people and businesses across the world.The container business was no exception,but CAI reacted quickly to global lockdowns,focusing first on our employees safety by rapidly and seamlessly adapting to a world of remote operations.Then,as it became apparent that global

4、supply chains had been disrupted,we seized the moment.We executed on our commitment to focus all of our energies on our container leasing business.Our clear and determined vision enabled us to meet the worlds container leasing needs more efficiently than ever and enhanced our position as an essentia

5、l link in the global supply chain.Through sound strategy,fiscal discipline,and dedication to our core business,we successfully navigated the years demands and positioned ourselves for long-term growth,profitability,and investor value.CAI International 2020 Annual Report|1This Years Highlights The ye

6、ar started with the global marine shipping business focused on trade policy and tariffs,but the focus quickly shifted as the world sank into the depths of the global pandemic.Our first priority became the safety of our employees,and we successfully transitioned our business to a remote working envir

7、onment.Nevertheless,serious concerns remained about how deeply the slowdown in the global economy would impact our customers,our financial partners,and our business.Those concerns turned out to be unfounded.Pandemic-related disruptions to the global supply chain created massive inefficiencies,and sh

8、ipping container availability became critically important to the worlds economies.Because CAI prides itself on its ability to anticipate and react,we shifted into high gear,working tirelessly with our customers to provide them access to additional containers and putting in place a dramatic level of

9、new leases in the second half of 2020.The result is that we now enjoy an exceptional level of long-term committed contractual cash flow.Our container fleet is virtually 100%utilized,with over 90%of our leases long-term in nature.At the same time,having taken advantage of the worlds credit market res

10、et in reaction to the pandemic,we have locked in historically low long-term financing costs.All of which has led to the strongest liquidity position in our history and an exceptional return on equity(ROE).As we conclude 2020,we are proud of what we accomplished.We managed through the uncertainties o

11、f the pandemic by staying true to our core strengths:a focus on customers and the ability to quickly anticipate,assess,and adapt to changing market conditions.We made significant investments and increased our revenue-earning 2|CAI International 2020 Annual Report2020 was truly an astonishing year on

12、 many levels.In retrospect,it is ironic that the market disruptions created by a global pandemic resulted in the most dynamic and ultimately positive year in history for the container leasing industry and for CAI.Letter to Our Fellow Shareholdersassets while substantially reducing our long-term fund

13、ing costs.We delivered on our commitment to focus solely on our container business by selling our logistics and rail businesses.We initiated a regular quarterly dividend and reinstituted a share repurchase program.Most important for our shareholders,2020 resulted in significant value creation and se

14、t the stage for continued strong returns on shareholder equity.Strategic Outlook Given 2020s developments,we are optimistic about 2021,especially as the world begins to recover from the pandemic.We enter the new year with strong cash flows supported by long-term leases;virtually no off-lease equipme

15、nt;and low,long-term,fixed-rate financing costs.As a result of these favorable factors,and our forward order book,we expect strong bottom-line results and ROE during the coming quarters.Perhaps most striking,we have accomplished all of this with approximately the same number of employees as a decade

16、 ago while having grown our assets fivefold over the same time frame.We expect we can continue to grow with a negligible increase to overhead by continuing to leverage the systems we have built and the extraordinary expertise and talent of our team.This,of course,includes you,our shareholders,to who

17、m we remain grateful for your continuing confidence and support.Sincerely,CAI International 2020 Annual Report|3David G.RemingtonChairman of the BoardTimothy PageInterim President and Chief Executive OfficerThe intermodal container is a deceptively simple product,a steel box of standard dimensions t

18、hat has become a cornerstone of global commerce.Today the container sustains global trade by carrying clothing,computers,construction materials,and many other items to all corners of the world.More Than A BoxAt CAI,the intermodal container has always been at the center of what we do.It is why,in 202

19、0,we made the strategic decision to dedicate all our attention to our intermodal container business,with a focus on maximizing value through disciplined asset investment,long term leases,and proactive management of the container lifecycle.This strategy put us in a strong position to profit as the gl

20、obal economy began its recovery.4|CAI International 2020 Annual Report12.52.2521.30.30Book Value CAGRQ2 2007-Q4 2020Average Cash Funding RateROE in the Fourth QuarterShare Dividend%$Q4 Shareholder Value CreationCAI International 2020 Annual Report|56|CAI International 2020 Annual ReportThe past year

21、 underlined just how important a smooth-flowing supply chain is for a sustained economic recovery.With this in mind,the CAI executive team and board of directors acted decisively,using the years crises to rethink our business.A series of sure-footed moves,including disciplined investments in our con

22、tainer operations and opportunistic financial restructuring,made the company leaner and more agile.Leaderships Bold Actions Deliver Financial Results We significantly improved our debt profile and cash flow,leaning on strong long-term leases and low-interest debt.Our improved cash flow enabled us to

23、 fund investment in containers at attractive returns,and to initiate a dividend for the first time.When container returns are less attractive,opportunistic share repurchases provide support for CAIs book value per share.Our company has never been stronger.CAI International 2020 Annual Report|781.657

24、.246.799.6Container Lease RevenueContainer Operating Income MarginContainer Lease Operating IncomeCEU Utilization Quarter EndM$%MQ4 2020 Financial Highlights 17235.463.4268.5171718284.981.7325.3181819298.955.3322.7191920294.080.4342.52020Adjusted EBITDA*dollars in millionsTotal Revenue dollars in mi

25、llions*Adjusted EBITDA defined as EBITDA plus principal payments on finance leases,less stock compensation expense.Net Income dollars in millionsTotal RevenueOperating IncomeNet IncomeAdjusted EBITDA Net Income Margin2020$294.0149.380.4342.527.4%2019$298.9139.655.3322.718.5%2018$284.9150.181.7325.32

26、8.7%2017$235.4101.163.4268.526.9%8|CAI International 2020 Annual ReportFinancial HighlightsContainer LeasingCAI International,Inc.2020 Annual ReportForm 10-KUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCH

27、ANGE ACT OF 1934For the Fiscal Year Ended December 31,2020orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period fromtoCommission file number:001-33388CAI International,Inc.(Exact name of registrant as specified in its charter)Delaware94-31

28、09229(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification Number)Steuart Tower,1 Market Plaza,Suite 2400 San Francisco,California94105(Address of principal executive office)(Zip Code)(415)788-0100(Registrants telephone number including area code)Securities regis

29、tered pursuant to Section 12(b)of the Act:Title of each classTrading symbolsName of each exchange on which registeredCommon Stock,par value$0.0001 per shareCAINew York Stock Exchange8.50%Series A Fixed-to-Floating Rate CumulativeRedeemable Perpetual Preferred Stock,par value$0.0001 per shareCAI-PANe

30、w York Stock Exchange8.50%Series B Fixed-to-Floating Rate CumulativeRedeemable Perpetual Preferred Stock,par value$0.0001 per shareCAI-PBNew York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as de

31、fined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Sec

32、urities Exchange Act of 1934during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filingrequirement for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every I

33、nteractive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit suchfiles).Yes No Indicate by check mark whether the registrant is a large accelerated file

34、r,an accelerated filer,a non-accelerated filer,a smaller reporting company,oremerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”inRule 12b-2 of the Exchange ActLarge accelerated filer Accelerated filer N

35、on-accelerated filer Smaller reporting company Emerging growth company If emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of th

36、e Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internalcontrol over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm

37、 that prepared orissued its audit report.Indicate by check mark whether the registrant is a shell company(as defined in the Rule 12b-2 of the Act).Yes No As of June 30,2020,the last trading day of the registrants most recently completed second fiscal quarter,the aggregate market value of common stoc

38、kheld by non-affiliates of the registrant(based upon the closing sale price of such shares on the New York Stock Exchange on June 30,2020)was approximately$259.6 million.Shares of registrants common stock held by each executive officer,director and beneficial holders of 10%or more of the registrants

39、 commonstock have been excluded in that such persons may be deemed to be affiliates of the registrant.This determination of affiliate status is not necessarily aconclusive determination for other purposes.Indicate the number of shares outstanding of each of the issuers classes of common stock,as of

40、the latest practicable date.Common StockFebruary 25,2021Common Stock,$0.0001 par value per share17,284,656 sharesDOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants definitive proxy statement relating to the registrants 2021 Annual Meeting of Stockholders,which will be filed no later than

41、120 days after the close of the registrants fiscal year ended December 31,2020,are incorporated by reference into Part III hereof.TABLE OF CONTENTSAnnual Report on Form 10-K for the year ended December 31,2020PART IItem 1.Business.1Item 1A.Risk Factors.10Item 1B.Unresolved Staff Comments.28Item 2.Pr

42、operties.28Item 3.Legal Proceedings.28Item 4.Mine Safety Disclosures.28PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and IssuerPurchases of Equity Securities.29Item 6.Selected Financial Data.30Item 7.Managements Discussion and Analysis of Financial Condition and Resu

43、lts ofOperations.31Item 7A.Quantitative and Qualitative Disclosures About Market Risk.44Item 8.Financial Statements and Supplementary Data.45Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure.45Item 9A.Controls and Procedures.45Item 9B.Other Information.48PART

44、 IIIItem 10.Directors,Executive Officers and Corporate Governance.49Item 11.Executive Compensation.49Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters.49Item 13.Certain Relationships and Related Transactions,and Director Independence.49Item 14.Prin

45、cipal Accountant Fees and Services.49PART IVItem 15.Exhibits,Financial Statement Schedules.50Item 16.Form 10-K Summary.50SIGNATURES.97iSPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTSThis Annual Report on Form 10-K contains certain forward-looking statements,including,withoutlimitation,statements c

46、oncerning the conditions in our industry,our operations,our economic performanceand financial condition,including,in particular,statements relating to our business,operations,and growthstrategy and service development efforts.The Private Securities Litigation Reform Act of 1995 provides a“safe harbo

47、r”for certain forward-looking statements so long as such information is identified asforward-looking and is accompanied by meaningful cautionary statements identifying important factorsthat could cause actual results to differ materially from those projected in the information.When used inthis Annua

48、l Report on Form 10-K,the words“may,”“might,”“should,”“estimate,”“project,”“plan,”“anticipate,”“expect,”“intend,”“outlook,”“believe”and other similar expressions are intended to identifyforward-looking statements and information.You are cautioned not to place undue reliance on theseforward-looking s

49、tatements,which speak only as of their dates.These forward-looking statements are basedon estimates and assumptions by our management that,although we believe to be reasonable,are inherentlyuncertain and subject to a number of risks and uncertainties.These risks and uncertainties include,withoutlimi

50、tation,those identified under the caption Item 1A.“Risk Factors”in this Annual Report on Form 10-Kand our other reports filed with the Securities and Exchange Commission(SEC).We undertake noobligation to publicly update or revise any forward-looking statement as a result of new information,futureeve

51、nts or otherwise,except as otherwise required by law.Reference is also made to such risks anduncertainties detailed from time to time in our filings with the SEC.Unless the context requires otherwise,references to“CAI,”the“Company,”“we,”“us”or“our”in thisAnnual Report on Form 10-K refer to CAI Inter

52、national,Inc.and its subsidiaries.iiPART IITEM 1:BUSINESSOur CompanyWe are one of the worlds leading transportation finance companies.We lease equipment,primarilyintermodal shipping containers,to our customers.We also manage equipment for third-party investors.Inoperating our fleet,we lease,re-lease

53、 and dispose of equipment and contract for the repair,repositioningand storage of equipment.The following tables show the composition of our fleet as of December 31,2020 and 2019,and ouraverage utilization for the years ended December 31,2020 and 2019:As of December 31,20202019Owned container fleet

54、in TEUs.1,688,3511,611,527Managed container fleet in TEUs.56,29869,650Total container fleet in TEUs.1,744,6491,681,177Owned container fleet in CEUs.1,727,2021,642,118Managed container fleet in CEUs.71,31885,698Total container fleet in CEUs.1,798,5201,727,816Year Ended December 31,20202019Average con

55、tainer fleet utilization in CEUs.98.5%98.6%Average owned container fleet utilization in CEUs.98.5%98.7%The intermodal marine container industry-standard measurement unit is the 20-foot equivalent unit(TEU),which compares the size of a container to a standard 20-foot container.For example,a 20-footco

56、ntainer is equivalent to one TEU and a 40-foot container is equivalent to two TEUs.Containers can alsobe measured in cost equivalent units(CEUs),whereby the cost of each type of container is expressed as aratio relative to the cost of a standard 20-foot dry van container.For example,the CEU ratio fo

57、r a standard40-foot dry van container is 1.6,and a 40-foot high cube container is 1.7.Utilization of containers is computed by dividing the average total units on lease during the period inCEUs,by the average total CEUs in our container fleet during the period.The total fleet excludes new unitsnot y

58、et leased and off-hire units designated for sale.If new units not yet leased are included in the totalfleet,utilization would be 97.1%for both total and owned container fleet for the year ended December 31,2020.Our revenue from continuing operations consists of container lease revenue from our owned

59、 containerfleet and management fee revenue for managing containers for third-party investors.Substantially all of ourrevenue is denominated in U.S.dollars.For the year ended December 31,2020,we recorded revenue fromcontinuing operations of$294.0 million and net income attributable to CAI common stoc

60、kholders of$18.9 million.A comparison of our 2020 financial results with those of the prior year can be found inItem 7.“Managements Discussion and Analysis of Financial Condition and Results of Operations”of thisAnnual Report on Form 10-K.We earn container lease revenue from intermodal containers,wh

61、ich are deployed by our customers in awide variety of global trade routes.Virtually all of our containers are used internationally,and no containeris domiciled in one particular place for a prolonged period of time.As such,substantially all of ourcontainer assets are considered to be international w

62、ith no single country of use.1Disposal of Logistics and Rail BusinessesOn August 14,2020,we sold substantially all of the assets and liabilities of our logistics business toNFI,a North American logistics provider,for cash proceeds of$6.2 million.On December 29,2020,wesold our remaining railcar fleet

63、 to affiliates of Infinity Transportation for cash proceeds of$228.1 million.As a result,the operating results of the logistics and rail leasing businesses have been classified asdiscontinued operations in the accompanying consolidated statements of income and cash flows.All priorperiods presented i

64、n the consolidated financial statements in this Annual Report on Form 10-K have beenrestated to reflect the classification of the logistics and rail leasing businesses as discontinued operationsand certain assets and liabilities as held for sale.See Note 3 Discontinued Operations in Item 8.“Financia

65、l Statements and Supplementary Data”for more information.HistoryWe were founded in 1989,as a traditional container leasing company that leased containers owned byus to container shipping lines.We were originally incorporated under the name Container ApplicationsInternational,Inc.in the State of Neva

66、da in August 1989.In February 2007,we were reincorporated underour present name in the State of Delaware.Corporate InformationOur corporate headquarters and principal executive offices are located at Steuart Tower,1 MarketPlaza,Suite 2400,San Francisco,California 94105.Our telephone number is(415)78

67、8-0100 and ourwebsite address is .The information found on,or otherwise accessible through,our websiteis not incorporated by reference into,nor does it form a part of,this Annual Report on Form 10-K,or anyother document that we file with the SEC.Segment InformationWe operate under one reportable seg

68、ment,container leasing,which is aggregated with equipmentmanagement and derives its revenue from the ownership and leasing of containers and fees earned formanaging container portfolios on behalf of third-party investors.We sold substantially all of the assets and liabilities of our logistics busine

69、ss and our remaining railcarfleet during the year ended December 31,2020.The operations of the logistics and rail leasing businesseshave been reclassified as discontinued operations in the accompanying consolidated statements of income.As a result,we no longer report Logistics or Rail Leasing as seg

70、ments.Industry OverviewContainer LeasingWe operate in the worldwide intermodal freight container leasing industry.Intermodal freightcontainers,or containers,are large,standardized steel boxes used to transport cargo by a number of means,including ship,truck and rail.Container shipping lines use cont

71、ainers as the primary means for packagingand transporting freight internationally,principally from export-oriented economies in Asia to other Asiancountries,North America and Western Europe.Containers are built in accordance with standard dimensions and weight specifications established bythe Intern

72、ational Standards Organization(ISO).Standard dry van containers are eight feet wide,either 20or 40 feet long and are either 8 feet 6 inches or 9 feet 6 inches tall.The three principal categories of containers are as follows:Dry van containers.A dry van container is constructed of steel sides,roof an

73、d end panel with aset of doors on the other end,a wooden floor and a steel undercarriage.Dry van containers arethe least expensive and most commonly used type of container.They are used to carry generalcargo,such as manufactured component parts,consumer staples,electronics and apparel.2Refrigerated

74、containers.A refrigerated container has an integrated refrigeration unit on one end,which plugs into a generator set or other outside power source and is used to transport perishablegoods.Specialized equipment.Specialized equipment includes open-top,flat-rack,palletwide andswapbody containers,roll t

75、railers,and generator sets.An open-top container is similar inconstruction to a dry van container except that the roof is replaced with a tarpaulin supported byremovable roof bows.A flat-rack container is a heavily reinforced steel platform with a wood deckand steel end panels.Open-top and flat-rack

76、 containers are generally used to move heavy oroversized cargo,such as marble slabs,building products or machinery.Palletwide containers are atype of dry-van container externally similar to ISO standard containers,but internally about twoinches wider so as to accommodate two European-sized pallets s

77、ide-by-side.Swapbody containersare a type of dry van container designed to be easily transferred between rail,truck,and bargeand are equipped with legs under their frames.Roll trailers are a type of flat-bed trailer equippedwith rubber wheels underneath for terminal haulage and stowage on board roll

78、-on/roll-off vessels.Generator sets are units that are attached to refrigerated containers to provide the container withcooling.Containers provide a secure and cost-effective method of transportation because they can be used inmultiple modes of transportation,making it possible to move cargo from a

79、point of origin to a finaldestination without repeated unpacking and repacking.As a result,containers reduce transit time andfreight and labor costs as they permit faster loading and unloading of shipping vessels and more efficientutilization of transportation containers than traditional bulk shippi

80、ng methods.The protection provided bycontainers also reduces damage,loss and theft of cargo during shipment.While the life of containers variesbased upon the damage and normal wear and tear suffered by a container,we estimate that the averageuseful life of a dry van container used in our fleet is 13

81、.0 years,and 12.0 years for a refrigerated container.Container shipping lines own and lease containers for their use.The Container Census&Leasing,Survey and Forecast of Global Container Units(2020/2021 Annual Report),published by Drewry MaritimeResearch,estimates that as of the end of 2019,transport

82、ation companies(including container shippinglines and freight forwarders)and container leasing companies owned approximately 49%and 51%,respectively,of the total worldwide container fleet,measured in TEUs.Given the uncertainty and variabilityof export volumes and the fact that container shipping lin

83、es have difficulty in accurately forecasting theircontainer requirements at different ports,the availability of containers for lease significantly reduces acontainer shipping lines need to purchase and maintain excess container inventory.In addition,containerleases allow the container shipping lines

84、 to adjust their container fleets both seasonally and over time andhelp to balance trade flows.The flexibility offered by container leasing helps container shipping linesimprove their overall fleet management and provides the container shipping lines with an alternative sourceof financing.Fleet Over

85、view.The table below summarizes the composition of our container fleet as ofDecember 31,2020 by type of equipment:Dry VanContainersPercent ofTotal FleetRefrigeratedContainersPercent ofTotal FleetSpecializedEquipmentPercent ofTotal FleetTotalPercent ofTotal FleetOwned containerfleet in TEUs.1,539,801

86、88%61,8014%86,7495%1,688,35197%Managed containerfleet in TEUs.50,5213%3285,44956,2983%Total container fleetin TEUs.1,590,32291%62,1294%92,1985%1,744,649100%3Dry VanContainersPercent ofTotal FleetRefrigeratedContainersPercent ofTotal FleetSpecializedEquipmentPercent ofTotal FleetTotalPercent ofTotal

87、FleetOwned containerfleet in CEUs.1,363,32776%222,60712%141,2688%1,727,20296%Managed containerfleet in CEUs.44,8392%1,14825,3312%71,3184%Total container fleetin CEUs.1,408,16678%223,75512%166,59910%1,798,520100%Marketing and Operations Overview.Our marketing and operations personnel are responsible

88、fordeveloping and maintaining relationships with our lessees,facilitating lease contracts and maintaining theday-to-day coordination of operational issues.This coordination allows us to negotiate lease contracts thatsatisfy both our financial return requirements and our lessees operating needs.It al

89、so facilitates ourawareness of lessees potential equipment shortages and their awareness of our available equipmentinventories.We have marketing and operations employees in ten countries,supported by independent agentsin a further seven countries.Leases Overview.To meet the needs of our lessees and

90、achieve a favorable utilization rate,we leasecontainers under three main types of leases:Long-Term Leases.Our long-term leases have terms of one year or more and specify the numberof containers to be leased,the pick-up and drop-off locations,the applicable per diem rate and thecontract term.We typic

91、ally enter into long-term leases for a fixed term ranging from three toeight years,with five-year leases being most common,although recently we have seen a trendtowards longer term leases.Our long-term leases generally require our lessees to maintain all unitson lease for the duration of the lease,w

92、hich provides us with scheduled lease payments andpredictable,recurring revenue.A small percentage of our long-term leases contain earlytermination options and afford the lessee interchangeability of containers,and the ability toredeliver containers if the lessees fleet requirements change.Generally

93、,leases with an earlytermination provision impose various economic penalties on the customer if the customer elects toexercise the early termination provision.Short-Term Leases.Short-term leases include both master interchange leases and customizedshort-term leases.Master interchange leases provide

94、a master framework pursuant to whichlessees can lease containers on an as-needed basis,and thus command a higher per diem rate thanlong-term leases.The terms of master interchange leases are typically negotiated on an annualbasis.Under our master interchange leases,lessees know in advance their per

95、diem rates anddrop-off locations,subject to monthly port limits.We also enter into other short-term leases thattypically have a term of less than one year and are generally used for one-way leasing,typically forsmall quantities of containers.The terms of short-term leases are customized for the spec

96、ificrequirements of the lessee.Short-term leases are sometimes used to reposition containers tohigh-demand locations and accordingly may contain terms that provide incentives to lessees.Finance Leases.Finance leases provide our lessees with an alternative method to finance theircontainer acquisition

97、s.Finance leases are long-term in nature and require relatively little customerservice attention.They ordinarily require fixed payments over a defined period and generallyprovide lessees with a right to purchase the leased containers for a nominal amount at the end ofthe lease term.Per diem rates un

98、der finance leases include an element of repayment of capitaland,therefore,typically are higher than per diem rates charged under long-term leases.Financeleases require the container lessee to keep the container on lease for the entire term of the lease.4The following table provides a summary of our

99、 container fleet by lease type as of December 31,2020:As of December 31,2020TEUsCEUsLong-term leases.68%68%Short-term leases.8%8%Finance leases.24%24%Total.100%100%Our lease agreements contain general terms and conditions detailing standard rights and obligations,including requirements that lessees

100、pay a per diem rate,depot charges,taxes and other charges when due,maintain equipment in good condition,return equipment in good condition in accordance with returnconditions set forth in the lease agreement,use equipment in compliance with all applicable laws,and pay usfor the value of the equipmen

101、t as determined by the lease agreement if the equipment is lost or destroyed.A default clause in our lease agreements gives us certain legal remedies in the event that an equipment lesseeis in breach of lease terms.Our lease agreements contain an exclusion of warranties clause and require lessees to

102、 defend andindemnify us in most instances from third-party claims arising out of the lessees use,operation,possessionor lease of the equipment.Lessees are required to maintain physical damage and comprehensive generalliability insurance,or be adequately self-insured,and to indemnify us against loss

103、with respect to theequipment.We also maintain our own contingent physical damage and third-party liability insurance thatcovers our equipment during both on-lease and off-lease periods.All of our insurance coverage is subject toannual deductible provisions and per occurrence and aggregate limits.Man

104、agement Services Overview.We manage containers for third-party investors under managementagreements that cover portfolios of containers.We lease,re-lease and dispose of the containers and contractfor their repair,repositioning and storage.Our management agreements have multiple year terms andprovide

105、 that we receive a management fee based upon the net operating income for each container,which isequal to the rental revenue for a container less the operating expenses directly attributable to that container.Management fees are collected monthly or quarterly,depending upon the agreement,and general

106、ly are notpaid if net operating revenue is zero dollars or less for a particular period.If operating expenses exceedrevenue,third-party investors are required to pay the excess,or we may deduct the excess,including ourmanagement fee,from future net operating revenue.Under these agreements,we also re

107、ceive a commissionfor selling or otherwise disposing of containers for the third-party investor.Sales of containers typicallyhave to be approved by the third-party investor.Our management agreements generally require us to indemnify the third-party investor for liabilities orlosses arising out of a

108、breach of our obligations.In return,the third-party investor typically indemnifies usin our capacity as the manager of the container against a breach by the third-party investor,sales taxes oncommencement of the arrangement,withholding taxes on payments to the third-party investor under themanagemen

109、t agreement and any other taxes,other than our income taxes,incurred with respect to thecontainers that are not otherwise included as operating expenses deductible from revenue.Re-leasing,Logistics Management and Depot Management.We believe that managing the period afterlease termination,in particul

110、ar after our containers first lease,is one of the most important aspects of ourbusiness.Successful management of this period requires disciplined re-leasing capabilities,logisticsmanagement and depot management.5Re-leasing.Since our leases generally allow our lessees to return their containers,we ty

111、picallylease a container several times during its useful life.New containers can usually be leased with alimited marketing and customer service infrastructure because initial leases for new containerstypically cover large volumes of units and are fairly standardized transactions.Used containers,on t

112、he other hand,are typically leased in smaller transactions that are structured to accommodatepick-ups and returns in a variety of locations.Our utilization rates depend on our re-leasingabilities.Factors that affect our ability to re-lease used containers include the size of our lesseebase,ability t

113、o anticipate lessee needs,our presence in relevant geographic locations and the levelof service we provide our lessees.We believe that our global presence and long-standingrelationships with approximately 360 container lessees as of December 31,2020 provide us anadvantage over our smaller competitor

114、s in re-leasing our used containers.Logistics Management.The shipping industry is characterized by large regional tradeimbalances,with loaded containers generally flowing from export-oriented economies in Asia toother Asian countries,North America and Western Europe.Because of these trade imbalances

115、,container shipping lines have an incentive to return leased containers in relatively low export areasto reduce the cost of shipping empty containers.We have managed this structural imbalance ofinventories with the following approach:Limiting or prohibiting container returns to low-demand areas.In o

116、rder to minimize ourrepositioning costs,our leases typically include a list of the specific locations to which containersmay be returned,limitations on the number of containers that may be returned to low-demandlocations,high drop-off charges for returning containers to low-demand locations or acomb

117、ination of these provisions;Taking advantage of the secondary resale market.In order to maintain a younger fleet age profile,we have aggressively sold older containers when they are returned to low demand areas;Developing country-specific leasing markets to utilize older containers in the portable s

118、toragemarket.In North America and Western Europe,we lease older containers on a limited basis foruse as portable storage;Seeking one-way lease opportunities to move containers from lower demand locations to higherdemand locations.One-way leases may include incentives,such as free days,credits and da

119、magewaivers.The cost of offering these incentives is considerably less than the cost we would incur ifwe paid to reposition the empty containers;andPaying to reposition our containers to higher demand locations.At locations where our inventoriesremain high,despite the efforts described above,we will

120、 selectively choose to ship excesscontainers to locations with higher demand.Depot Management.As of December 31,2020,we managed our equipment fleet throughapproximately 180 independent equipment depot facilities located in 39 countries.Depot facilitiesare generally responsible for repairing containe

121、rs when they are returned by lessees and for storingthe containers while they are off-hire.Our operations group is responsible for managing our depotcontracts and periodically visiting depot facilities to conduct inventory and repair audits.We alsosupplement our internal operations group with the us

122、e of independent inspection agents.As ofDecember 31,2020,a majority of our off-lease inventory was located at depots that are able toreport notices of container activity and damage detail via electronic data interchange.Most of our depot agency agreements follow a standard form and generally provide

123、 that the depot willbe liable for loss or damage of containers and,in the event of loss or damage,will pay us the previouslyagreed loss value of the applicable containers.The agreements require the depots to maintain insuranceagainst container loss or damage and we carry insurance to cover the risk

124、that a depots insurance provesinsufficient.6Our container repair standards and processes are generally managed in accordance with standards andprocedures specified by the Institute of International Container Lessors,or the IICL.The IICL establishesand documents the acceptable interchange condition f

125、or containers and the repair procedures required toreturn damaged containers to acceptable interchange condition.When containers are returned by lessees,the depot arranges an inspection of the containers to assess the repairs required to return the containers toacceptable IICL condition.As part of t

126、he inspection process,damages are categorized either as lesseedamage or normal wear and tear.Items typically designated as lessee damage include dents in the container,while items such as rust are typically designated as normal wear and tear.In general,lessees are responsiblefor the lessee damage po

127、rtion of repair costs and we are responsible for normal wear and tear.Customer Concentration.Billings from our ten largest container lessees represented 62.5%of totalbillings for the year ended December 31,2020,with billings from our two largest lessees,MSCMediterranean Shipping Company S.A.and CMA

128、CGM,accounting for 17.1%and 10.2%,respectively,oftotal billings,or$69.8 million and$41.6 million,respectively.Proprietary Real-time Information Technology System.Our proprietary real-time informationtechnology system tracks all of our containers individually by container number,provides designspecif

129、ications for the containers,tracks on-lease and off-lease transactions,matches each on-lease unit to alease contract and each off-lease unit to a depot contract,maintains the major terms for each leasecontract,tracks accumulated depreciation,calculates the monthly bill for each container lessee and

130、tracksand bills for container repairs.Most of our depot activity is reported electronically,which enables us toprepare container lessee bills and calculate financial reporting information more efficiently.In addition,our system allows our lessees to conduct business with us through the Internet.This

131、 allowsour lessees to review our container inventories,monitor their on-lease information,view designspecifications and receive information on maintenance and repair.Many of our lessees receive billing andon-and off-lease information from us electronically.Our Suppliers.We purchase most of our conta

132、iners in China from manufacturers that have met ourqualification requirements.We are currently not dependent on any single manufacturer.We havelong-standing relationships with all of our major container suppliers.Our technical services personnelreview the designs for our containers and periodically

133、audit the production facilities of our suppliers.Inaddition,we contract with independent third-party inspectors to monitor production at factories while ourcontainers are being produced.This provides an additional layer of quality control and helps ensure thatour containers are produced in accordanc

134、e with our specifications.Our Competition.We compete primarily with other global container leasing companies,includingboth larger and smaller lessors.We also compete with bank leasing companies who offer long-termoperating leases and finance leases,and container shipping lines,which sometimes lease

135、their excesscontainer inventory.Other participants in the shipping industry,such as container manufacturers,may alsodecide to enter the container leasing business.It is common for container shipping lines to utilize severalleasing companies to meet their container needs and to minimize reliance on a

136、ny one individual leasingcompany.Our competitors compete with us in many ways,including pricing,lease flexibility,supply reliability,customer service and the quality and location of containers.Some of our competitors have greater financialresources,better access to capital,lower cost of capital,bett

137、er credit ratings,more containers,broadermarket presence,longer standing relationships with lessees,longer operating histories,stronger brandrecognition and greater marketing resources than us,or are affiliates of larger companies.We emphasize thequality of our fleet,supply reliability and high leve

138、l of customer service to our container lessees.We focuson ensuring adequate container availability in high-demand locations,dedicate large portions of ourorganization to building relationships with lessees,maintain close day-to-day coordination with lessees andhave developed a proprietary informatio

139、n technology system that allows our lessees to access real-timeinformation about their containers.7Seasonality.We have historically experienced increased seasonal demand for containers in the secondand third quarters of the year.However,equipment rental revenue may fluctuate significantly in futurep

140、eriods based upon the level of demand by container shipping lines for leased containers,our ability tomaintain a high utilization rate of containers in our total fleet,and changes in per diem rates for leases.Credit ControlWe provide services for container shipping lines,freight forwarders,and other

141、 companies that meet ourcredit criteria.Our credit policy sets different maximum exposure limits depending on our relationship andprevious experience with each customer.Credit criteria may include,but are not limited to,trade route,country,business climate,social and political climate,assessments of

142、 net worth,asset ownership,bank andtrade credit references,credit bureau reports(including those produced specifically for the maritime sectorby Dynamar),operational history and financial strength.We monitor our customers performance on anongoing basis.Our credit control processes are aided by the l

143、ong payment experience we have with most ofour customers,our broad network of relationships that provide current information about our customersmarket reputations and our focus on collections.Environmental MattersWe are subject to federal,state,local and foreign laws and regulations relating to the

144、protection of theenvironment,including those governing the discharge of pollutants to air and water,the management anddisposal of hazardous substances and wastes and the cleanup of contaminated sites.We could incursubstantial costs,including cleanup costs,fines and third-party claims for property or

145、 natural resourcedamage and personal injury,as a result of violations of environmental laws and regulations in connectionwith our or our lessees current or historical operations.Under some environmental laws in the UnitedStates and certain other countries,the owner or operator of equipment may be li

146、able for environmentaldamage,cleanup or other costs in the event of a spill or discharge of material from the equipment withoutregard to the fault of the owner or operator.While we typically maintain liability insurance coverage andtypically require our lessees to provide us with indemnity against c

147、ertain losses,the insurance coverage issubject to large deductibles,limits on maximum coverage and significant exclusions and may not besufficient or available to protect against any or all liabilities and such indemnities may not cover or besufficient to protect us against losses arising from envir

148、onmental damage.RegulationOur container operations are subject to regulations promulgated in various countries,including theUnited States,seeking to protect the integrity of international commerce and prevent the use of equipmentfor international terrorism or other illicit activities.For example,the

149、 Container Security Initiative,theCustoms-Trade Partnership Against Terrorism and Operation Safe Commerce are among the programsadministered by the U.S.Department of Homeland Security(DHS)that are designed to enhance securityfor cargo moving throughout the international transportation system by iden

150、tifying existing vulnerabilitiesin the supply chain and developing improved methods for ensuring the security of containerized cargoentering and leaving the United States.Moreover,the International Convention for Safe Containers,1972,as amended(CSC),adopted by the International Maritime Organization

151、,applies to new and existingcontainers and seeks to maintain a high-level of safety of human life in the transport and handling ofcontainers by providing uniform international safety regulations.As these regulations develop and change,we may incur increased compliance costs due to the acquisition of

152、 new,compliant equipment and/or theadaptation of existing equipment to meet new requirements imposed by such regulations.In addition,violations of these rules and regulations can result in substantial fines and penalties,including potentiallimitations on operations or forfeitures of assets.Human Cap

153、ital ManagementWe seek to attract,retain,and develop the best talent available in order to drive our continued successand achieve our business goals.Our container leasing workforce as of December 31,2020 was comprised of99 employees worldwide,48%of which are located outside the U.S.We are not a part

154、y to any collectivebargaining agreements.Our workforce decreased 51%in 2020 compared to 2019,mainly due to the sale ofthe logistics business.Excluding Logistics and Rail employees,voluntary workforce turnover for the yearwas 3%.8The success of our employees drives the success of the business,and sup

155、ports our goal of long-termvalue creation for our stockholders.We strive for an inclusive and respectful work environment whereemployees are empowered at all levels to implement new ideas to better serve our global customer base andcontinuously improve our processes and operations.We believe that we

156、 offer competitive benefits andtraining programs to develop employees expertise and skillsets,use training,communication,appropriateinvestments and clear corporate policies to strive to provide a safe,harassment-free work environmentguided by principles of fair and equal treatment,and prioritize emp

157、loyee engagement.As a result,webelieve our employees are committed to building strong,innovative and long-term relationships with eachother and with our local communities and customer base.We are committed to diversity and inclusion across our Company,and one of our goals is to increasediverse talen

158、t across our leadership.As of December 31,2020,our global workforce self-identified as 31%male and 69%female.In the U.S.,48%of our workforce was comprised of racial and ethnic minorities.Asof February 28,2021,our board of directors consisted of 33%directors identifying as either female or aminority.

159、Our commitment to diversity recruiting includes partnering with external organizations to developa diverse talent pipeline,applying a diverse slate approach to increase diversity within our executivemanagement team and developing policies and initiatives aimed at further promoting diversity andinclu

160、sion in our organization.To attract diversity in our applicant pools,we post our openings to a widevariety of job boards and deploy appropriate language in our postings.In 2020,the COVID-19 pandemic had a significant impact on our human capital management.Amajority of our workforce worked remotely b

161、eginning in the first quarter of 2020 and continuing into 2021without significant impacts to productivity,and we instituted reduced office capacity,upgraded cleaningpractices,social distancing requirements and other safety measures and procedures for those employees whoworked at our office locations

162、 during this time.We have put into place other health and safety measuresglobally to enable our operations to continue without significant impact.We did not furlough or conductany employee layoffs due to the pandemic during the year.Available InformationOur Internet website address is .Our Annual Re

163、ports on Form 10-K,QuarterlyReports on Form 10-Q,Current Reports on Form 8-K,and amendments to those reports filed or furnishedpursuant to Section 13(a)or 15(d)of the Securities Exchange Act of 1934,as amended(Exchange Act),areavailable free of charge through the SECs website at www.sec.gov and on o

164、ur website as soon as reasonablypracticable after they are electronically filed with,or furnished to,the SEC.Also,copies of our filings withthe SEC will be made available,free of charge,upon written request to the Company.The informationfound on,or otherwise accessible through,our website is not inc

165、orporated by reference into,nor does itform a part of,this Annual Report on Form 10-K,or any other document that we file with the SEC.9ITEM 1A:RISK FACTORSIn addition to the other information contained in this Annual Report on Form 10-K,we have identified thefollowing risks and uncertainties that ma

166、y have a material adverse effect on our business,financial condition,results of operations and cash flows.Investors should carefully consider the risks described below beforemaking an investment decision.The risks described below are not the only ones we face.Additional risks notpresently known to u

167、s or that we currently believe are immaterial may also impair our business operations.Ourbusiness could be harmed by any of these risks.The trading price of our securities could decline due to any ofthese risks and investors may lose all or part of their investment.This section should be read in con

168、junctionwith our audited consolidated financial statements and related notes thereto,and Item 7,“ManagementsDiscussion and Analysis of Financial Condition and Results of Operations”contained in this Annual Report onForm 10-K.Business RisksContainer leasing demand can be negatively affected by numero

169、us market factors as well as external politicaland economic events that are beyond our control.Decreasing leasing demand could have a material adverseeffect on our business,financial condition,results of operations and cash flows.Demand for containers depends largely on the rate of world trade and e

170、conomic growth.Demand forleased containers is also driven by our customers“lease vs.buy”decisions.Cyclical recessions cannegatively affect the operating results of container lessors,such as us,because during economic downturnsor periods of reduced trade,shipping lines tend to lease fewer containers,

171、or lease containers only atreduced rates,and tend to rely more on their own fleets to satisfy a greater percentage of their requirements.As a result,during periods of weak global economic activity,container lessors like ourselves typicallyexperience decreased leasing demand,decreased equipment utili

172、zation,lower average rental rates,decreasedleasing revenue,decreased used container resale prices and significantly decreased profitability.These effectscan be severe.For example,our key operating metrics and profitability in 2019 and the first half of 2020 werenegatively impacted by reduced trade a

173、nd economic growth,both of which were affected by increased tradetariffs due to trade dispute between the U.S.and China and the onset of the COVID-19 pandemic andrelated lockdowns.As a result,our utilization,average leasing rates and used container prices decreasedsteadily throughout 2019 and the fi

174、rst half of 2020,and our profitability decreased as well.We have alsoexperienced a number of other periods of weak performance due to adverse global economic conditions,including in 2009 due to the global financial crisis,and during 2015 and 2016 due to a global manufacturingrecession.During both of

175、 these periods,our profitability and growth rate were significantly impacted byweak container demand.Other general factors affecting demand for leased containers,container utilization and per diem rentalrates include:available supply and prices of new and used containers;changes in the operating eff

176、iciency of our customers;economic conditions and competitive pressures in the shipping industry;shifting trends and patterns of cargo traffic,including a reduction in exports from Asian nationsor increased trade imbalances;the availability and terms of container financing;fluctuations in interest ra

177、tes and foreign currency values;overcapacity or undercapacity of the container manufacturers;the lead times required to purchase containers;the number of containers purchased by competitors and container lessees;container ship fleet overcapacity or undercapacity;10increased repositioning by containe

178、r shipping lines of their own empty containers tohigher-demand locations in lieu of leasing containers from us;consolidation or withdrawal of individual container lessees in the container shipping industry;import/export tariffs and restrictions;customs procedures,foreign exchange controls and other

179、governmental regulations;natural disasters that are severe enough to affect local and global economies,including pandemicssuch as COVID-19;political and economic factors,including any changes in international trade agreements;andfuture regulations which could restrict our current business practices

180、and increase our cost ofdoing business.All of these factors are inherently unpredictable and beyond our control.These factors will vary overtime,often quickly and unpredictably,and any change in one or more of these factors may have a materialadverse effect on our business,financial condition,result

181、s of operations and cash flows.Many of thesefactors also influence decisions by our customers to lease or buy containers.Should one or more of thesefactors influence our customers to buy a larger percentage of the containers they operate,our utilizationrate would decrease,resulting in decreased reve

182、nue and increased storage and repositioning costs.The demand for leased containers is particularly tied to international trade.If international trade were todecrease,as a result of increased tariffs or other actions impeding trade,it could reduce demand for containerleasing,which would materially ad

183、versely affect our business,financial condition and results of operations.A substantial portion of our containers are used in trade involving goods being shipped fromexporting countries(e.g.,China and other export-oriented Asian countries)to importing countries(e.g.,other Asian countries,North Ameri

184、ca and Western Europe).The willingness and ability of internationalconsumers to purchase foreign goods is dependent upon political support for an absence ofgovernment-imposed barriers to international trade in goods and services.For example,internationalconsumer demand for foreign goods is related t

185、o price.Therefore,if the price differential between foreigngoods and domestically-produced goods were to decrease due to increased tariffs on the import of foreigngoods,strengthening in the applicable foreign currencies relative to domestic currencies,rising foreignwages,increasing input or energy c

186、osts or other factors,then demand for foreign goods could decrease.Thisin turn could result in reduced demand for container leasing.A similar reduction in demand for containerleasing could result from an increased use of quotas or other technical barriers to restrict trade.The currentregime of relat

187、ively free trade may not continue,which would materially adversely affect our business,financial condition and results of operations.The international nature of the container industry exposes us to risks relating to the imposition ofimport and export duties,quotas,domestic and foreign customs and ta

188、riffs,and other impediments totrade.These risks increased in recent years due to trade actions taken by the United States and China thatled to increased tariffs on goods traded between these two countries.Given the importance of the UnitedStates and China in the global economy,these increased tariff

189、s could significantly reduce the volume ofgoods traded internationally and reduce the rate of global economic growth,leading to decreased demandfor leased containers,lower new container prices(which would indirectly reduce the value of the Companysinventory of containers held for lease)and decreased

190、 market leasing rates.These impacts could have amaterial adverse effect on our business,financial condition and results of operations.Lessee defaults may adversely affect our business,results of operations and financial condition by decreasingrevenue and increasing storage,repositioning,collection a

191、nd recovery expenses.Our rental equipment is leased to numerous lessees.Lessees are required to pay rent and indemnify usfor damage to or loss of equipment.Lessees may default in paying rent and performing other obligationsunder their leases.A delay or diminution in amounts received under the leases

192、,or a default in theperformance of maintenance or other lessee obligations under the leases could adversely affect our business,financial condition,results of operations and cash flows and our ability to make payments on our debt.11Our cash flows from rental equipment,principally rental revenue,are

193、affected significantly by theability to collect payments under leases and the ability to replace cash flows from terminating leases byre-leasing or selling equipment on favorable terms.All of these factors are subject to external economicconditions and the performance by lessees and service provider

194、s that are not within our control.In addition,when lessees default,we may fail to recover all of our equipment,and the equipment wedo recover may be returned in damaged condition or to locations where we will not be able to efficientlyre-lease or sell the equipment.As a result,we may have to repair

195、and reposition the equipment to otherplaces where we can re-lease or sell it,and we may lose revenue and incur additional operating expenses inrepossessing,repositioning and storing the equipment.We also often incur extra costs when repossessing containers from a defaulting lessee.These coststypical

196、ly arise when our lessee has also defaulted on payments owed to container terminals or depotfacilities where the repossessed containers are located.In such cases,the terminal or depot facility willsometimes seek to have us repay a portion of the unpaid bills as a condition before releasing the conta

197、inersback to us.Although the container shipping industry is currently enjoying strong demand and significant increasesin freight rates,it has been suffering for several years from excess vessel capacity and low freight rates.Anumber of our customers generated financial losses over the last several y

198、ears and many are burdened byhigh levels of debt.In addition,the implementation in 2020 of the IMO 2020 global sulfur cap regulationsis likely to increase the financial pressures on shipping lines.These regulations require our customers toeither purchase more expensive,low sulfur fuel or invest larg

199、e amounts to install sulfur scrubbers for theirexisting ships.We maintain insurance to reimburse us and third-party investors for customer defaults.The insuranceagreements are subject to deductibles of$3.5 million per occurrence,depending on the customers creditrating,and have significant exclusions

200、.Our level of insurance coverage in 2021 is limited to$27.0 millionper occurrence and in aggregate,depending on the customers credit rating,and may not be sufficient toprevent us from suffering material losses.Additional insurance claims made by the Company may result insuch insurance not being avai

201、lable to us in the future on commercially reasonable terms,or at all.The continued spread of the COVID-19 pandemic may have a material adverse impact on our business,financial condition and results of operations.The ongoing COVID-19 pandemic has resulted in a significant impact to businesses and sup

202、ply chainsglobally.The imposition of work and travel restrictions,as well as other actions by government authoritiesto contain the outbreak,led to a significant decline in the global economy in the first half of 2020,including extended shutdowns of certain businesses,lower factory production,reduced

203、 volumes of globalimports and exports and disruptions in global shipping.This led to reduced container demand,whichpressured container lease rates in the first half of 2020,and increased the credit risk profile of our shippingline customers.Following the easing of measures to contain the spread of t

204、he pandemic and the initialreopening of businesses,trade volumes and container demand recovered strongly in the third quarter of2020.However,many countries are seeing a resurgence in COVID-19 cases,including our main demandlocations in China,and there continues to be a high degree of risk and uncert

205、ainty with respect to theoutlook for global economic conditions,global trade and container demand.Further,in response to thepandemic,many businesses,including ourselves,have implemented remote working arrangements for theiremployees that may continue,in whole or in part,for an extended period.Risks

206、associated with theCOVID-19 pandemic on our business include,but are not limited to:increased credit concerns relating to our shipping line customers as they face operationaldisruptions and increased costs relating to the pandemic,including the risk of bankruptcy orsignificant payment defaults or de

207、lays;reduced demand for rental equipment and increased pressure on lease rates;reduced demand for sale of rental equipment and increased pressure on sale rates;operational issues that could prevent our rental equipment from being discharged or picked up inaffected areas or in other locations after h

208、aving visited affected areas for a prolonged period oftime;12business community risks associated with the transition to remote working arrangements,including increased cybersecurity risks,internet capacity constraints or other systems problems,and unanticipated difficulties or delays in our financia

209、l reporting processes;liquidity risks,including that disruptions in financial markets as a result of the pandemic mayincrease the cost and availability of capital,and the risk of non-compliance with financialcovenants in debt agreements;potential impacts on key management,including health impacts an

210、d distractions caused by thepandemic response;andpotential impacts on business relationships due to restrictions on travel.Although the impact on our business of the COVID-19 pandemic has not been significant to date,ifthe pandemic continues to cause business disruption and negatively impact the glo

211、bal economy,then itsimpact could have a material adverse effect on our business,financial condition,results of operations andcash flows.Fluctuations in global trade cause our business to experience cyclicality.Market conditions in our industry have historically experienced high level of cyclicality,

212、with periods ofstrong growth in global trade and high demand for containers followed by periods of weak conditions.Market conditions were exceptionally strong during the second half of 2020 after being weak for much of2019 and the first half of 2020,but the current outlook for the global economy,glo

213、bal trade and thecontainer leasing market are highly uncertain due to the ongoing COVID-19 pandemic.New container prices have also experienced a high level of volatility and are currently at record highs.A decrease in new container prices typically negatively impacts our profitability by reducing le

214、ase rates andthe sale prices we receive for our equipment.These impacts can be severe when new container prices are lowfor an extended period of time.Lease rates may decrease due to a decrease in new container prices,weak leasing demand,increasedcompetition or other factors,resulting in reduced reve

215、nues,lower margins,and reduced profitability and cashflows.Market lease rates are typically a function of,among other things,new equipment prices(which areheavily influenced by steel prices),interest rates,the type and length of the lease,the equipment supply anddemand balance at a particular time a

216、nd location,and other factors more fully described below.A decreasein lease rates can have a materially adverse effect on our leasing revenues,profitability and cash flow.A decrease in market lease rates negatively impacts the lease rates on both new container investmentsand existing containers in o

217、ur fleet.Most of our existing containers are on operating leases,which meansthat the lease term is shorter than the expected life of the container,so the lease rate we receive for thecontainer is subject to change at the expiration of the current lease.A decrease in new container prices fromtheir cu

218、rrent record highs,widespread availability of attractively priced financing,and aggressivecompetition for new leasing transactions could put pressure on market lease rates.As a result,duringperiods of low market lease rates,the average lease rate received for our containers is negatively impacted by

219、both the addition of new containers at low lease rates as well as,and more significantly,by the turnover ofexisting containers from leases with higher lease rates to leases with lower lease rates.We may incur significant costs to reposition containers.When lessees return containers to locations wher

220、e supply exceeds demand,we may make a decision toreposition containers to higher demand areas rather than sell the container and realize a loss on sale.Repositioning expenses vary depending on geographic location,distance,freight rates and other factors.Weseek to limit the number of units that can b

221、e returned and in some cases,impose surcharges on containersreturned to areas where demand for such containers is not expected to be strong.However,marketconditions may not enable us to continue such practices.In addition,we may not accurately anticipatewhich port locations will be characterized by

222、high or low demand in the future,and our current contractswill not protect us from repositioning costs if ports that we expect to be high-demand ports turn out to below-demand ports at the time leases expire.13We may incur asset impairment charges and additional depreciation expense.Asset impairment

223、 charges may result from the occurrence of unexpected adverse events ormanagement decisions that impact our estimates of expected cash flows generated from our long-livedassets.We review our long-lived assets for impairment when events or changes in circumstances indicate thecarrying value of an ass

224、et may not be recoverable.We may be required to recognize asset impairmentcharges in the future as a result of prolonged reductions in demand for specific container types,an extendedweak economic environment,persistent challenging market conditions,events related to particularcustomers or asset type

225、,or as a result of asset or portfolio sale decisions by management.If an asset,orgroup of assets,is considered to be impaired,it may also indicate that the residual value of the associatedequipment type needs to be reduced.For example,we reduced the residual value for 40-foot high cube dryvan contai

226、ners from$1,650 to$1,400 per container,effective July 1,2016.If residual values of our rentalequipment are lowered further,then our depreciation expense will increase,which would have an adverseimpact on our business,financial condition and results of operations.Consolidation and concentration in th

227、e container shipping industry could decrease the demand for leasedcontainers.We primarily lease containers to container shipping lines.The container shipping lines have historicallyrelied on a large number of leased containers to satisfy their needs.Consolidation of major containershipping lines,suc

228、h as between Maersk and Hamburg Sd in 2017,or the creation of operating alliancesbetween shipping lines,such as the formation of ONE,a joint venture between NYK,Mitsui OSK and KLine,in 2018,could create efficiencies for the shipping lines and decrease demand for leased containers,because they may be

229、 able to fulfill a larger portion of their needs through their owned container fleets.Itwould also create increased concentration of credit risk if the number of our container lessees decreases dueto consolidation.Additionally,large container shipping lines with significant resources could choose to

230、purchase their own containers directly,which would decrease their demand for leased containers and couldhave an adverse impact on our business,financial condition,results of operations and cash flows.Finally,decreased demand from shipping companies for leased containers could also occur due to conso

231、lidationcaused by the financial failure of container shipping companies,such as the bankruptcy of Hanjin during2016.We derive a substantial portion of our revenue from a limited number of container lessees.The loss of,orreduction in business by,any of these container lessees,or a default from any la

232、rge container lessee,couldresult in a significant loss of revenue and cash flow.We have derived,and believe that we will continue to derive,a significant portion of our revenue andcash flow from a limited number of container lessees.Billings from our ten largest container lesseesrepresented 62.5%of

233、total billings for the year ended December 31,2020,with billings from our two largestcontainer lessees accounting for 17.1%and 10.2%,respectively,of total billing,or$69.8 million and$41.6 million,respectively.As our business grows,and as consolidation continues among our shipping linecustomers,we ex

234、pect the proportion of revenue generated by our larger customers to continue to increase.The loss of a recently-consolidated customer such as those noted above would have a material adverseimpact on our business,financial condition,results of operations and cash flows.In addition,a default byany of

235、our largest lessees would result in a major reduction in our leasing revenue,large repossessionexpenses,potentially large lost equipment charges and a material adverse impact on our performance andfinancial condition.Although we maintain insurance against customer defaults,our insurance is limitedan

236、d may not be sufficient to cover such a default.14Changes in market price or availability of containers in China could adversely affect our ability to maintainour supply of containers.The vast majority of intermodal containers are currently manufactured in China,and we currentlypurchase almost all o

237、f our containers from manufacturers based there.In addition,the containermanufacturing industry in China is highly concentrated.In 2019,Dong Fang International Containerpurchased several of the manufacturing facilities of Singamas Container Holdings Limited,furtherconsolidating the container manufac

238、turing industry.If it became more expensive for us to procurecontainers in China because of further consolidation among container suppliers,a dispute with one of ourmanufacturers,increased tariffs imposed by the United States or other governments or for any other reason,we may have to seek alternati

239、ve sources of supply.We may not be able to make alternative arrangementsquickly enough to meet our equipment needs,and the alternative arrangements may increase our costs.It may become more expensive for us to store our off-hire containers.We are dependent on third-party depot operators to repair an

240、d store our equipment in port areasthroughout the world.In many of these locations the land occupied by these depots is increasingly beingconsidered as prime real estate.Accordingly,local communities are considering increasing restrictions ondepot operations which may increase their costs of operati

241、on and in some cases force depots to relocate tosites further from port areas.Additionally,depots in prime locations may become filled to capacity basedon market conditions and may refuse additional containers due to space constraints.This could require usto enter into higher-cost storage agreements

242、 with third-party depot operators in order to accommodate ourcustomers turn-in requirements and could result in increased costs and expenses for us.If these changesaffect a large number of our depots,it could significantly increase the cost of maintaining and storing ouroff-hire containers.Fluctuati

243、ons in the price of new containers could harm our business,results of operations and financialcondition.New container prices,which dropped to record lows in the first quarter of 2016,have recentlyincreased to record highs.It is uncertain for how long the current container prices will continue.If new

244、container prices decrease,the per diem lease rates for new leases of older,off-lease containers would also beexpected to decrease and the prices obtained for containers sold at the end of their useful life would also beexpected to decrease.Although new and used container prices are currently at reco

245、rd highs,if the price ofnew containers declines such that market per diem lease rates or resale values for containers are reduced,our revenue and income could decline.A continuation of these factors could harm our business,financialcondition,results of operations and cash flows,even if a sustained r

246、eduction in price would allow us topurchase new containers at a lower cost.Used container sale prices may decrease,leading to losses on the sale of used rental equipment.Although our revenues primarily depend upon equipment leasing,our profitability is also affected bythe gains or losses we realize

247、on the sale of used containers because,in the ordinary course of our business,we sell certain containers when they are returned to us.The volatility of the selling prices and gains or lossesfrom the disposal of such equipment may be significant.Used container selling prices,which can varysubstantial

248、ly,depend upon,among other factors,the cost of new containers,the global supply and demandbalance for containers,the location of the containers,the supply and demand balance for used containers ata particular location,the repair condition of the container,refurbishment needs,materials and labor cost

249、sand equipment obsolescence.Most of these factors are outside of our control.Containers are typically sold if it is in our best interest to do so,after taking into considerationearnings prospects,book value,remaining useful life,condition and repair costs,storage costs,suitability forleasing or othe

250、r uses,and the prevailing local sales price for containers.Gains or losses on the disposition ofused containers will fluctuate and may be significant if we sell large quantities of used containers.15Used container selling prices and the gains or losses that we have recognized from selling usedcontai

251、ners have varied widely over recent years.During 2015 and 2016,disposal prices were close to,and inmany cases below,our residual values which resulted in losses being incurred on the sales of usedequipment.As a result of consistent losses being recorded on the sale of 40-foot high cube dry vancontai

252、ners,we reduced the residual value for these containers from$1,650 to$1,400 per container,effectiveJuly 1,2016.Sales prices for used containers recovered from the lows of 2016,resulting in gains beingrecognized on the sale of used equipment.If used container prices decline,we may incur losses on the

253、 saleof used containers,our residual values may need to be reduced,resulting in increased depreciation expense,and we may incur impairment charges on such equipment.A decline in these factors could have a materialadverse effect on our business,financial condition,results of operations and cash flows

254、.We face extensive competition in the container leasing industry.We may be unable to compete favorably in the highly competitive container leasing business.Wecompete with a number of major leasing companies,many smaller lessors,companies and financialinstitutions offering finance leases,promoters of

255、 equipment ownership and leasing as a tax-efficientinvestment,container shipping lines(which sometimes lease their excess container stocks),and suppliers ofalternative types of containers for freight transport.Some of these competitors have greater financialresources,better access to capital,lower c

256、ost of capital,better credit ratings,more containers,broadermarket presence,longer standing relationships with lessees,longer operating histories,stronger brandrecognition and greater marketing resources than us,or are affiliates of larger companies.Additionally,some of these competitors may have la

257、rge,underutilized inventories of equipment,which could lead tosignificant downward pressure on per diem rates,margins and prices of equipment.Our business requires large amounts of working capital to fund our operations.We are aware thatsome of our competitors have had ownership changes and there ha

258、s been consolidation in the industry inrecent years.As a consequence,these competitors may have greater resources available to aggressively seekto expand their market share.This could include offering lease rates with which we may not be able toeffectively compete.We may not be able to compete succe

259、ssfully against these competitors.Competition among container leasing companies depends upon many factors,including,amongothers,per diem rates;lease terms,including lease duration,drop-off restrictions and repair provisions;customer service;and the location,availability,quality and individual charac

260、teristics of equipment units.The highly competitive nature of our industry may reduce lease rates and margins and undermine ourability to maintain our current level of container utilization or achieve our growth plans.The international nature of our business exposes us to numerous risks.Our ability

261、to enforce lessees obligations will be subject to applicable law in the jurisdiction in whichenforcement is sought.As containers are predominantly located on international waterways,it is notpossible to predict,with any degree of certainty,the jurisdictions in which enforcement proceedings may becom

262、menced.For example,repossession from defaulting lessees may be difficult and more expensive injurisdictions in which laws do not confer the same security interests and rights to creditors and lessors asthose in the United States and in other jurisdictions where recovery of containers from defaulting

263、 lessees ismore cumbersome.As a result,the relative success and expedience of enforcement proceedings with respectto containers in various jurisdictions cannot be predicted.We are also subject to risks inherent in conducting business across national boundaries,any one ofwhich could adversely impact

264、our business.These risks include:regional or local economic downturns;changes in governmental policy or regulation;restrictions on the transfer of funds into or out of the countries in which we operate;consequences from changes in tax laws,including tax laws pertaining to container investors;value-a

265、dded tax and other sales-type taxes which could result in additional costs to us if they arenot properly collected or paid;16domestic and foreign customs and tariffs;international incidents,including epidemics and pandemics;public health issues;war,hostilities,terrorist attacks,piracy,or the threat

266、of any of these events;government instability;nationalization of foreign assets;government protectionism;compliance with export controls,including those of the U.S.Department of Commerce;compliance with import procedures and controls,including those of the DHS;potential liabilities relating to forei

267、gn withholding taxes;labor or other disruptions at key ports;difficulty in staffing and managing widespread operations;restrictive local employment laws;andrestrictions on our ability to own or operate subsidiaries,make investments or acquire newbusinesses in these jurisdictions.One or more of these

268、 factors could impair our current or future international operations and,as aresult,harm our overall business,financial condition,results of operations and cash flows.We may incur costs associated with new security regulations,which may adversely affect our business,financialcondition and results of

269、 operations.We may be subject to regulations promulgated in various countries,including the United States,seeking to protect the integrity of international commerce and prevent the use of equipment forinternational terrorism or other illicit activities.For example,the Container Security Initiative,t

270、heCustoms-Trade Partnership Against Terrorism and Operation Safe Commerce are among the programsadministered by the DHS that are designed to enhance security for cargo moving throughout theinternational transportation system by identifying existing vulnerabilities in the supply chain anddeveloping i

271、mproved methods for ensuring the security of containerized cargo entering and leaving theUnited States.Moreover,the CSC applies to new and existing containers and seeks to maintain a high levelof safety of human life in the transport and handling of containers by providing uniform internationalsafet

272、y regulations.As these regulations develop and change,we may incur compliance costs due to theacquisition of new,compliant equipment and/or the adaptation of existing equipment to meet newrequirements imposed by such regulations.Additionally,certain companies are currently developing or mayin the fu

273、ture develop products designed to enhance the security of equipment transported in internationalcommerce.Regardless of the existence of current or future government regulations mandating the safetystandards of intermodal shipping equipment,industry participants may adopt such products or ourequipmen

274、t lessees may insist that we adopt such products.In responding to such market pressures,we mayincur increased costs,which could have a material adverse effect on our business,financial condition,resultsof operations and cash flows.17Environmental regulations may result in equipment obsolescence or r

275、equire substantial investments to retrofitexisting equipment.Additionally,environmental concerns are leading to significant design changes for newcontainers that have not been extensively tested,which increases the likelihood that we could face technicalproblems.Many countries,including the United S

276、tates,restrict,prohibit or otherwise regulate the use of chemicalrefrigerants due to their ozone depleting and global warming effects.Our refrigerated containers currentlyuse various refrigerants.Manufacturers of cooling machines for refrigerated containers are testing unitsthat utilize alternative

277、refrigerants,as well as natural refrigerants such as carbon dioxide,that may have lessglobal warming potential than current refrigerants.If future regulations prohibit the use or servicing ofcontainers of current refrigerants,we could be forced to incur large retrofitting expenses.In addition,refrig

278、erated containers that are not retrofitted may become difficult to lease,command lower rental ratesand disposal prices,or may have to be scrapped.Historically,the foam insulation in the walls of intermodal refrigerated containers required the use of ablowing agent that contains chlorofluorocarbons(C

279、FCs).The manufacturers producing our refrigeratedcontainers have eliminated the use of this blowing agent in the manufacturing process,but a large numberof our refrigerated containers manufactured prior to 2014 contain these CFCs.The EU prohibits theimport and the placing on the market in the EU of

280、intermodal containers with insulation made with suchprocess.However,we believe international conventions governing free movement of intermodal containersallow the use of such intermodal refrigerated containers in the EU if they have been admitted into the EUcountries on temporary customs admission.W

281、e have procedures in place that we believe comply with therelevant EU and country regulations.If future international conventions or regulations prohibit the use orservicing of containers with foam insulation that utilized this blowing agent change,we could be forced toincur large retrofitting expen

282、ses and those containers that are not retrofitted may become more difficult tolease and command lower rental rates and disposal prices.An additional environmental concern affecting our operations relates to the materials and processesused to construct our dry containers.The floors of dry containers

283、are plywood,usually made from tropicalhardwoods.Due to concerns regarding de-forestation of tropical rain forests and climate change,manycountries which have been the source of these hardwoods have implemented severe restrictions on thecutting and export of these woods.Accordingly,container manufact

284、urers have switched a significantportion of production to more readily available alternatives such as birch,bamboo,and other farm-grownwood species.Container users are also evaluating alternative designs that would limit the amount ofplywood required and are also considering possible synthetic mater

285、ials to replace the plywood.These newwoods or other alternatives have not proven their durability over the typical 13-15 year life of a drycontainer,and if they cannot perform as well as the hardwoods have historically,the future repair andoperating costs for these containers could be significantly

286、higher and the useful life of the containers maybe decreased.For environmental reasons,container manufacturers have replaced solvent-based paint systems withwater-based paint systems for dry container production.Water-based paint systems require more time andcare for proper application,and there is

287、an increased risk that the paint will not adhere properly to the steelfor the expected useful life of the containers.In addition,some of our refrigerated container manufacturershave recently announced planned changes to the panel treatment and painting processes for refrigeratedcontainers,and we are

288、 concerned these changes may lead to decreased protection from the paint system.Poor paint coverage and adherence leads to premature rusting,increased maintenance cost over the life ofthe container and could result in a shorter useful life.China has implemented regulations restricting the impact of

289、solid wastes,and these regulations arelimiting the import into China of old refrigerated containers destined for material recycling.Theseregulations may limit the disposal demand for non-working refrigerated containers and could result in adecrease in refrigerated container disposal prices which cou

290、ld have a significant negative impact on ourprofitability and cash flows.18Our senior executives are critical to the success of our business and our inability to retain them or recruit newpersonnel could adversely affect our business.Most of our senior executives and other management-level employees

291、 have over 15 years of industryexperience.We rely on this knowledge and experience in our strategic planning and in our day-to-daybusiness operations.Our success depends in large part upon our ability to retain our senior management,the loss of one or more of whom could have a material adverse effec

292、t on our business,financial condition,results of operations and cash flows.Our success also depends on our ability to retain our experienced salesforce and technical personnel as well as recruiting new skilled sales,marketing and technical personnel.Competition for these individuals in our industry

293、is intense and we may not be able to successfully recruit,train or retain qualified personnel.In addition,uncertainty regarding our exploration of strategicalternatives may harm our ability to retain and recruit our key personnel.If we fail to retain and recruit thenecessary personnel,our business a

294、nd our ability to obtain new equipment lessees and provide acceptablelevels of customer service could suffer.Security breaches and other disruptions could compromise our information technology systems and expose usto a liability,which could have a material adverse effect on our business,results of o

295、perations and ourreputation.In the ordinary course of business,we collect and store sensitive data on our systems and networks,including our proprietary business information and that of our customers and suppliers,and personallyidentifiable information of our customers and employees.The secure stora

296、ge,processing,maintenance andtransmission of this information is critical to our operations.Despite security measures we employ,ourinformation technology systems and networks may be vulnerable to attacks by hackers or breached due toemployee error,malfeasance or other disruptions.Hackers and data th

297、ieves are increasingly sophisticatedand operate large-scale and complex automated attacks.Any breach of our network may result in the lossof valuable business data,misappropriation of our consumers or employees personal information,cause usto breach our legal,regulatory or contractual obligations,cr

298、eate an inability to access or rely upon criticalbusiness records or cause other disruptions of our business.Despite our existing security procedures andcontrols,if our network becomes compromised,it could give rise to unwanted media attention,materiallydamage our customer relationships,harm our bus

299、iness,our reputation,and our financial results,whichcould result in fines or lawsuits,and may increase the costs we incur to protect against such informationsecurity breaches,such as increased investment in technology,the costs of compliance with consumerprotection laws,and costs resulting from cons

300、umer fraud.These breaches may result from human error,equipment failure,or fraud or malice on the part of employees or third parties.We expend significant financial resources to protect against such threats and may be required tofurther expend financial resources to alleviate problems caused by phys

301、ical,electronic,and cyber securitybreaches.As techniques used to breach security are growing in frequency and sophistication and aregenerally not recognized until launched against a target,regardless of our expenditures and protectionefforts,we may not be able to implement security measures in a tim

302、ely manner or,if and whenimplemented,these measures could be circumvented.Any breaches that may occur could expose us toincreased risk of lawsuits,loss of existing or potential future customers,harm to our reputation andincreases in our security costs,which could have a material adverse effect on ou

303、r financial performance andoperating results.In the event of a breach resulting in loss of data,such as personally identifiable information or othersuch data protected by data privacy or other laws,we may be liable for damages,fines and penalties for suchlosses under applicable regulatory frameworks

304、 despite not handling the data.Further,the regulatoryframework around data custody,data privacy and breaches varies by jurisdiction and is an evolving area oflaw.We may not be able to limit our liability or damages in the event of such a loss.19We rely on our information technology systems to conduc

305、t our business.If these systems fail to adequatelyperform their functions,or if we experience an interruption in their operation,our business,results ofoperations and financial prospects could be adversely affected.The efficient operation of our business is highly dependent on our information techno

306、logy systems.Werely on our systems to track transactions,such as repair and depot charges and changes to book value,andmovements associated with each of our owned or managed equipment units.We use the informationprovided by our systems in our day-to-day business decisions in order to effectively man

307、age our leaseportfolio and improve customer service.We also rely on them for the accurate tracking of the performanceof our managed fleet for each third-party investor,and the tracking and billing of logistics moves.Thefailure of our systems to perform as we expect could disrupt our business,adverse

308、ly affect our financialcondition,results of operations and cash flows and cause our relationships with lessees and third-partyinvestors to suffer.In addition,our information technology systems are vulnerable to damage orinterruption from circumstances beyond our control,including fire,natural disast

309、ers,power loss andcomputer systems failures,unauthorized breach and viruses.Any such interruption could have a materialadverse effect on our business,reputation,results of operations and financial prospects.Fluctuations in foreign exchange rates could reduce our profitability.Most of our revenues an

310、d costs are billed in U.S.dollars.Our operations and used equipment sales inlocations outside of the U.S.have some exposure to foreign currency fluctuations,and trade growth and thedirection of trade flows can be influenced by large changes in relative currency values.In addition,most ofour containe

311、r equipment fleet is manufactured in China.Although the purchase price is in U.S.dollars,ourmanufacturers pay labor and other costs in the local currency,the Chinese yuan.To the extent that ourmanufacturers costs increase due to changes in the valuation of the Chinese yuan,the dollar price we payfor

312、 equipment could be affected.Adverse or large exchange rate fluctuations may negatively affect ourfinancial condition,results of operations and cash flows.Actual or threatened terrorist attacks,efforts to combat terrorism,or the outbreak of war and hostilities couldnegatively impact our operations a

313、nd profitability and may expose us to liability.Terrorist attacks and the threat of such attacks have contributed to economic instability in the UnitedStates and elsewhere,and further acts or threats of terrorism,violence,war or hostilities could similarlyaffect world trade and the industries in whi

314、ch we and our customers operate.In addition,terrorist attacksor hostilities may directly impact ports,depots,our facilities or those of our suppliers or customers,andcould impact our sales and our supply chain.A severe disruption to the worldwide ports system and flow ofgoods could result in a reduc

315、tion in the level of international trade and lower demand for our equipment orservices.Any of these events could also negatively affect the economy and consumer confidence,whichcould cause a downturn in the transportation industry.The consequence of any terrorist attacks orhostilities are unpredicta

316、ble,and we may not be able to foresee events that could have an adverse effect onour operationsIt is also possible that our equipment could be involved in a terrorist attack.Although our leaseagreements require our lessees to indemnify us against all damages arising out of the use of our containers,

317、and we carry insurance to potentially offset any costs in the event that our customer indemnifications proveto be insufficient,our insurance does not cover certain types of terrorist attacks,and we may not be fullyprotected from liability of the reputational damage that could arise from a terrorist

318、attack which utilizesone of our containers.20Our operations could be affected by natural or man-made events in the locations in which we or our customersor suppliers operate.We have operations in locations subject to severe weather conditions,natural disasters,the outbreak ofcontagious disease,or ma

319、n-made incidents such as chemical explosions,any of which could disrupt ouroperations.In addition,our suppliers and customers also have operations in such locations.For example,in2015,a chemical explosion and fire in the port of Tianjin,China damaged or destroyed a small number ofour containers and

320、disrupted operations in the port.Similarly,outbreaks of pandemic or contagiousdiseases,such as the COVID-19 virus,H1N1(swine)flu and the Ebola virus,could significantly reduce thedemand for international shipping or could prevent our containers from being discharged in the affectedareas or in other

321、locations after having visited the affected areas.Any future natural or man-made disastersor health concerns in the world where we have business operations could lead to disruption of the regionaland global economies,which could result in a decrease in demand for leased containers.Certain liens may

322、arise on our equipment.Depot operators,repairmen and transporters may come into possession of our equipment from time totime and have sums due to them from lessees or sub-lessees of equipment.In the event of nonpayment ofthose charges by lessees or sub-lessees,we may be delayed in,or entirely barred

323、 from,repossessingequipment,or be required to make payments or incur expenses to discharge liens on our equipment.The lack of an international title registry for containers increases the risk of ownership disputes.There is no internationally recognized system of recordation or filing to evidence our

324、 title to containersnor is there an internationally recognized system for filing security interests in containers.Although we havenot incurred material problems with respect to this lack of an internationally recognized system,the lack ofan international title recordation system for containers could

325、 result in disputes with lessees,end-users,orthird parties who may improperly claim ownership of the containers.Indebtedness and Finance RisksOur level of indebtedness reduces our financial flexibility and could impede our ability to operate.We have a significant amount of indebtedness and we intend

326、 to borrow additional amounts under ourcredit facilities to purchase equipment and make acquisitions and other investments.We expect that we willmaintain a significant amount of indebtedness on an ongoing basis.As of December 31,2020,our totaloutstanding debt was$1,758.5 million.Interest expense on

327、such debt will be$9.3 million per quarter for2021,assuming floating interest rates remain consistent with those as of December 31,2020.There is noassurance that we will be able to generate sufficient cash flow from operations to service and repay our debt,or to refinance our outstanding indebtedness

328、 when it becomes due,or,if refinancing is available,that it canbe obtained on terms that we can afford.Some of our credit facilities require us to pay a variable rate of interest,which will increase or decreasebased on variations in certain financial indices,and increases in interest rates can signi

329、ficantly decrease ourprofits.In 2020,we entered into a five-year interest rate swap agreement to hedge against changes in futurecash flows resulting from changes in interest rates on$500.0 million of our variable-rate borrowings.The amount of our indebtedness could have important consequences for us

330、,including the following:requiring us to dedicate a substantial portion of our cash flow from operations to make paymentson our debt,thereby reducing funds available for operations,future business opportunities andother purposes;limiting our flexibility in planning for,or reacting to,changes in our

331、business and the industry inwhich we operate;21making it more difficult for us to satisfy our debt obligations,and any failure to comply with suchobligations,including financial and other restrictive covenants,could result in an event of defaultunder the agreements governing such indebtedness,which

332、could lead to,among other things,anacceleration of our indebtedness or foreclosure on the assets securing our indebtedness,whichcould have a material adverse effect on our business,financial condition,results of operations andcash flows;making it difficult for us to pay dividends on,or repurchase,ou

333、r common stock,our Series APreferred Stock or our Series B Preferred Stock;placing us at a competitive disadvantage compared to our competitors having less debt;limiting our ability to borrow additional funds,or to sell assets to raise funds,if needed,forworking capital,capital expenditures,acquisitions or other purposes;andincreasing our vulnerability to general adverse economic and industry cond