BUSINESS

General

          We are the largest lessor of intermodal chassis in the United States and one of the world’s leading lessors of intermodal dry freight standard containers. At September 30, 2002, our chassis fleet totaled approximately 202,000 chassis and our container fleet totaled approximately 764,000 TEUs. From 1996 to 2001, we increased the size of our chassis fleet at a compound annual rate of 29% and our container fleet at a compound annual rate of 18%.

          We concentrate on leasing equipment to our customers on a long-term basis. Substantially all of our new equipment is initially leased for terms of five to eight years and approximately 75% of our total fleet of chassis and 85% of our total fleet of containers are currently on long-term lease. We believe our focus on long-term leasing has enabled us to:

           Approximately 25% of our chassis are currently leased on a short-term basis to satisfy customers’ peak or seasonal requirements, generally at higher rates than under long-term leases. For customers who require daily or weekly chassis rentals, we operate chassis pools at major domestic shipping ports and terminals. These chassis pools consist of our chassis as well as those of our customers.

           Approximately 15% of our containers are currently leased on a short-term basis Our 50%-owned affiliate, CAI, markets and manages our containers available for short-term leasing as part of its fleet, facilitating redeployment of our containers at the end of long-term leases. Containers managed by CAI are considered to be on hire for utilization purposes, although, revenues from these containers depend on the overall utilization of CAI’s fleet. Our relationship with CAI maximizes utilization of our container fleet and increases our leverage in the marketplace by giving us the world’s third largest container lessor fleet on a combined basis.

           We lease our chassis and containers to over 400 shipping and transportation customers throughout the world, including all of the world’s 20 largest international container shipping lines and major North American railroads. We provide customer service and market to our customers through a worldwide network of offices, agents and marketing representatives. We believe one of the key factors in our ability to compete effectively has been the long-standing relationships that our management and marketing representatives have established with most of the world’s large shipping lines and major North American railroads. As a result of these relationships, 7 of our top 10 customers have been customers for at least 10 years.

Industry Overview

           The fundamental components of intermodal transportation are the chassis and the container. When a container vessel arrives in port, each marine container is loaded onto a chassis or rail car. A chassis is a rectangular, wheeled steel frame, generally 20 or 40 feet in length, built specifically for the purpose of transporting a container. Once mounted, the chassis and container are the functional equivalent of a trailer. When mounted on a chassis, the container may be trucked either to its final destination or to a railroad terminal for loading onto a rail car. Similarly, a container shipped by rail may be transferred to a chassis to travel over-the-road to its final destination. As the use of containers has become a predominant factor in the intermodal movement of cargo, the chassis has become a prerequisite for the domestic segment of the journey. A chassis seldom travels permanently with a single container, but instead serves as a transport vehicle for containers that are loaded or unloaded at ports or railroad terminals. Because of differing international road regulations and the lack of international standards for chassis, chassis used in the United States are seldom used in other countries.

           Containers provide a secure and cost-effective method of transporting finished goods and component parts because they are generally freely interchangeable between different modes of transport, making it possible to move cargo from a point of origin to a final destination without the repeated unpacking and repacking of the goods required by traditional shipping methods. The same container may be carried successively on a ship, rail car and truck and across international borders with minimal customs formalities. Containerization is more efficient, more economical and safer in the transportation of cargo than “break bulk transport” in which the goods are unpacked and repacked at various intermediate points en route to their final destination. By eliminating manual repacking operations when differing modes of transportation are used, containerization reduces freight and labor costs. In addition, automated handling of containers permits faster loading and unloading and more efficient utilization of transportation equipment, thereby reducing transit time. The protection provided by sealed containers also reduces damage to goods and loss and theft of goods during shipment. Containers may also be picked up, dropped off, stored and repaired at independent common user depots located throughout the world.

           The adoption of uniform standards for containers in 1968 by the International Standards Organization (ISO) precipitated a rapid growth of the container industry, as shipping companies recognized the advantages of containerization over traditional break bulk transportation of cargo. This growth resulted in substantial investments in containers, container ships, port facilities, chassis, specialized rail cars and handling equipment.

           Most containers are constructed of steel in accordance with recommendations of the International Standards Organization. The basic container type is the general-purpose dry freight standard container (accounting for approximately 87% of the world’s container fleet), which measures 20 or 40 feet long, 8 feet wide and 8 1/2 or 9 1/2 feet high. In general, 20-foot containers are used to carry heavy, dense cargo loads (such as industrial parts and certain food products) and in areas where transport facilities are less developed, while 40-foot containers are used for lighter weight finished goods (such as apparel, electronic appliances and other consumer goods) in areas with better developed transport facilities.

           Worldwide container traffic at the world’s major ports has grown at a compound annual rate of 9% since 1990 and 14% since 1970, significantly outpacing world GDP over these periods.

           The demand for containers is influenced primarily by the volume of international and domestic trade. In recent years, however, the rate of growth in the container industry has exceeded that of world trade as a whole due to several factors, including:

          In recent years domestic railroads and trucking lines have begun actively marketing intermodal services for the domestic transportation of freight. Management believes that this trend should serve to accelerate the growth of intermodal transportation, and hence result in increased chassis and container demand.

The Leasing Market

           Leasing companies own approximately half of the domestic chassis and half of the world’s container fleet with the balance owned predominantly by shipping lines and railroads. Leasing companies have maintained this market position because container shipping lines and railroads receive both financial and operational benefits by leasing a portion of their equipment. The principal benefits of leasing are the following:

           Because of these benefits, container shipping lines and railroads generally obtain a significant portion of their container fleets from leasing companies, either on short-term or long-term leases. Short-term leases provide considerable operational flexibility in allowing a customer to pick up and drop off containers at various worldwide locations at any time. However, customers pay for this flexibility in the form of substantially higher lease rates for short-term leases and drop-off charges for the privilege of returning equipment to certain locations. Most short-term leases are “master leases,” under which a customer reserves the right to lease a certain number of containers, as needed under a general agreement between the lessor and the lessee. Long-term leases provide the lessee with advantageous pricing structures, but usually contain an early termination provision allowing the lessee to return equipment prior to expiration of the lease only upon payment of an early termination fee or a retroactive increase in lease payments.

Business Strategy

          Our objective is to continue to expand on our market position as a leading long-term lessor of intermodal transportation equipment. To achieve this objective, we intend to continue to:

Operations

           Lease Terms. Approximately 75% of our chassis and 85% of our containers are leased on a long-term basis as of September 30, 2002. Our long-term leases generally have five to eight year initial terms.

           We offer our customers both operating leases and “direct finance” leases. Under a direct finance lease, the customer owns the container at the expiration of the lease term. Although customers pay a higher per diem rate under a direct finance lease than under a long-term operating lease, a direct finance lease enables us to provide customers with access to financing on terms generally comparable to those available from financial institutions, which provide this type of financing.

           Lease rentals are typically calculated on a per diem basis, regardless of the term of the lease. Our leases generally provide for monthly or quarterly billing and require payment by the lessee within 30 to 60 days after presentation of an invoice. Generally, the lessee is responsible for payment of all taxes and other charges arising out of use of the equipment and must carry specified amounts of insurance to cover physical damage to and loss of equipment, as well as bodily injury and property damage to third parties. In addition, our leases usually require lessees to repair any damage to the chassis and containers. Lessees are also required to indemnify us against our losses arising from accidents or similar occurrences involving the leased equipment. Our leases generally provide for pick-up, drop-off and other charges and set forth a list of locations where lessees may pick-up or return equipment.

           Long-term leases provide the lessee with advantageous pricing structures, but usually contain an early termination provision allowing the lessee to return equipment prior to expiration of the lease only upon payment of an early termination fee or a retroactive increase in lease payments. Since 1991, we have experienced minimal early returns under our long-term leases, primarily because of the penalties involved and because customers must return all containers covered by the particular long-term lease being terminated, generally totaling several hundred units, and bear substantial costs related to their repositioning and repair.

           Frequently, a lessee will desire to retain long-term leased equipment well beyond the initial lease term. In these cases, long-term leases will be renewed at the then prevailing market rate, either for one or more additional one-year periods or as part of a short-term agreement. In some cases, the customer has the right to purchase the equipment at the end of a long-term lease.

           Equipment Tracking and Billing. We use a real time, internet accessible proprietary computer software system to enable sophisticated equipment tracking and billing and to provide a central operating database that coordinates our chassis leasing activities. The system processes information received electronically from our regional offices. The system records the movement and status of each chassis and links that information with the complex data comprising the specific lease terms in order to generate billings to lessees. More than 83,000 movement transactions per month are processed through the system, which is capable of tracking revenue on the basis of individual chassis. The system also generates a wide range of management reports containing information on all aspects of our leasing activities. The equipment acquired from Transamerica was integrated into our billing system on July 1, 2001.

           Chassis Pools. For customers who require daily or weekly chassis rentals, we operate “chassis pools” at most of the major port authorities and terminal operations on the Eastern seaboard and the Gulf coast. These chassis pools consist of our chassis and those of our customers. The principal ports in the United States where we operate chassis pools are Baltimore, Boston, Charleston, Houston, New Orleans, Norfolk and Savannah. We also operate chassis pools at railroad locations within the United States.

           Depots. We and our affiliate CAI operate in over 90 locations in all major transportation markets throughout the world. Depots are facilities owned by third parties at which containers and other items of transportation equipment are stored, maintained and repaired. We retain independent agents at these depots to handle and inspect equipment delivered to or returned by lessees, to store equipment that is not leased and to handle maintenance and repairs of chassis and containers. Some agents are paid a fixed monthly retainer to defray recurring operating expenses and some are guaranteed a minimum level of commission income. In addition, we generally reimburse our agents for incidental expenses.

           Logistic Support. Our worldwide network of offices and relationships and our industry experience enables us to provide logistic services in order to facilitate the movement of chassis and containers to meet our customers' needs.

           Repositioning and Related Expenses. If lessees return large numbers of equipment to a location which has a larger supply than demand, we may incur expenses in repositioning the equipment to a better location. Repositioning expenses generally range between $50 and $500 per item of equipment, depending on geographic location, distance and other factors, and may not be fully covered by the drop-off charge collected from the lessee. In connection with necessary repositioning, we may also incur storage costs, which generally range between $0.20 and $2.50 per TEU per day. In addition, we bear certain operating expenses associated with our chassis and containers, such as:

           Maintenance, Repairs and Refurbishment. As chassis and containers age, the need for maintenance increases, and they may eventually require extensive maintenance. With the exception of chassis pool customers, our customers are responsible for maintenance and repairs of equipment other than normal wear and tear. When normal wear and tear of equipment is extensive, the equipment may have to be refurbished or remanufactured. Refurbishing and remanufacturing involve substantial cost, although chassis can be remanufactured for substantially less than the cost of purchasing a new chassis. Alternatively, we may elect to sell equipment requiring refurbishment.

           Disposition of Chassis and Containers and Residual Values. On an ongoing basis, we sell equipment that was previously leased. The decision whether to sell depends on the equipment’s condition, remaining useful life and suitability for continued leasing or for other uses, as well as prevailing local market resale prices and an assessment of the economic benefits of repairing and continuing to lease the equipment compared to the benefits of selling. Pursuant to our relationship with CAI, containers that have come off long-term lease and have been designated for short-term leasing (not including renewals with existing lessees) are provided to CAI for deployment in CAI’s short-term fleet. For each of our containers in its fleet, CAI pays us its average total fleet per diem rate less a management fee. Containers tendered for short-term leasing under our agreement with CAI are accounted for by us as fully utilized. Containers are also sold to shipping or transportation companies for continued use in the intermodal transportation industry or to secondary market buyers, such as wholesalers, depot operators, mini storage operators, construction companies and others, for use as storage sheds and similar structures. Because old chassis are more easily remanufactured than old containers, chassis are less likely to be sold than containers.

           At the time of sale, the residual value of a container or chassis will depend, among other factors, upon mechanical or economic obsolescence, the current newly manufactured equipment price, as well as its physical condition. While there have been no major technological advances in the short history of containerization that have made active equipment obsolete, several changes in standards have decreased the demand for older equipment, such as the increase in the standard height of containers from 8 feet to 8 1/2 feet in the early 1970‘s.

           Sources of Supply. Most chassis used in the United States are manufactured domestically due to the high cost of transportation to the United States of chassis manufactured abroad. Manufacturers of chassis frequently produce over-the-road trailers as well, and can convert some production capability to chassis as needed. Because of the rising demand for containers and the availability of relatively inexpensive labor in the Pacific Rim, approximately 80% of world container production now occurs in China. Containers are also produced in other countries, such as South Korea, India, Indonesia, Malaysia, Taiwan, Turkey, South Africa, and, to a lesser extent, other parts of the world.

           Upon completion of manufacture, new chassis and containers are inspected to insure that they conform to applicable standards of the International Standards Organization and other international self-regulatory bodies, as well as our internal standards.

PoolStat Chassis Pool Management

           We have developed a proprietary internet-based real-time chassis management system which we call PoolStat. PoolStat has enabled us to operate, on a cooperative basis, pools of chassis which are owned by us and by shipping lines. Under this program, shipping lines can “pool” their chassis at common locations such as marine terminals and railroad depots. The billing and tracking features of PoolStat enable us to operate chassis pools. Our PoolStat software compiles data from each location and reports on levels of chassis contribution as compared to levels of chassis usage by each shipping line in the cooperative pool. In addition, centralized maintenance and repair improves service levels to customers and the trucking community and we receive a management fee.

           PoolStat provides several benefits to customers, including allowing customers to:

           By providing the PoolStat service, we are able to forge closer relationships with our customers for both short-term and long-term leasing opportunities. PoolStat now has approximately 240,000 chassis under its management and is actively looking to increase its level of business. We believe that PoolStat is the leading provider of chassis management tools in the United States.

Marketing and Customers

           We lease our chassis and containers to over 400 shipping and transportation companies throughout the world, including all of the world’s 20 largest international container shipping lines and major North American railroads. The customers for our chassis are a large number of domestic companies, many of which are domestic subsidiaries or branches of international shipping lines to which we also lease containers. With a network of offices and agents covering major ports in the United States, Europe and the Far East, we have been able to supply containers in nearly all locations requested by our customers. Our customer base is diverse. As of December 31, 2001, our top 25 customers represented approximately 69% of our consolidated revenues, with no single customer accounting for more than 6%.

           We perform detailed credit risk analysis on our customers. Our credit policy sets different maximum exposure limits depending on our relationship and previous experience with each customer. Credit criteria may include, but are not limited to, customer trade route, country, social and political climate, assessments of net worth, asset ownership, bank and trade credit references, credit bureau reports, and operational history.

           In the past we have sought to reduce our credit risk by maintaining insurance coverage against lessee defaults. Our insurance policy covering such credit risks expired on January 31, 2002. We do not currently anticipate replacement coverage can be obtained upon terms acceptable to the Company. Even if replacement coverage is obtainable we expect that premium rates and deductibles will increase as a result of general rate increases for this type of insurance as well as our historical claim experience and that of our competitors in the industry.

Competition

           There are many companies leasing intermodal transportation equipment with which we compete. Some of our competitors have greater financial resources than we do, or are subsidiaries or divisions of much larger companies. Over the last several years, there has been consolidation in the container leasing business resulting from several acquisitions. The result of the consolidation has been fewer lessors, a more rationalized industry and a stabilizing pricing environment.

           In addition, the containerized shipping industry, which we service, competes with providers of alternative methods of transporting goods, such as by air, truck and rail. We believe that in most instances these alternative methods are not as cost-effective as shipping of containerized cargo.

           Because rental rates for chassis and containers are not subject to regulation by any government authority but are determined principally by the demand for and supply of equipment in each geographical area, price is one of the principal methods by which we compete. In times of low demand and excess supply, leasing companies tend to grant price concessions, such as free days or pick-up credits, in order to keep their equipment on lease and to avoid storage charges. We attempt to design lease packages tailored to the requirements of individual customers and consider our long-term relationships with customers to be important to our ability to compete effectively. We also compete on the basis of our ability to deliver equipment in a timely manner in accordance with customer requirements.

Other Business Operations

           In addition to our chassis and container leasing operations we also receive revenues from other activities. We lease approximately 500 freight rail cars to railroad companies through our Chicago based Railpool division. In December 2001, we sold our investment in Personal Computer Rentals (PCR) and have initiated a plan to liquidate the operations of Microtech Leasing Corporation. Both companies are involved in the computer rental business. They have been accounted for as discontinued operations in the consolidated financial statements.

Employees

           As of September 30, 2002, we had approximately 192 employees, approximately 167 of whom are based in the United States, excluding CAI’s 54 employees and discontinued operations. None of our employees is covered by a collective bargaining agreement. We believe our relations with our employees are good.

Facilities/Properties

           In connection with our acquisition of Transamerica’s North American Intermodal Division in October 2000, we purchased real property located in Chicago, Illinois and Atlanta, Georgia. The purchase price for these two properties was included in the acquisition’s aggregate purchase price. The Atlanta site was sold on July 31, 2001. The Chicago site was sold in April 2002.

           In July 1998, we purchased approximately 18,000 square feet of condominium office space located on the 27th floor at 633 Third Avenue, New York, NY 10017 which serves as our New York office. All our other commercial office space, aggregating approximately 42,438 square feet, is leased. Our executive offices are located at 211 College Road East, Princeton, New Jersey. We also lease office facilities in Chicago, Atlanta, Jacksonville, Barbados, Aberdeen, Antwerp, Basel, Hong Kong and Singapore.

           On January 28, 2002 we executed a Purchase and Sale Agreement, pursuant to which, on May 1, 2002, we acquired the building in Princeton, New Jersey which houses our chief executive offices. The fair market value purchase price of the approximately 39,000 square feet building was $6,250,000 as determined by an independent property appraisal firm and approved by our Board of Directors. See “Certain Relationships and Related Party Transactions.”

Legal Proceedings

           We are engaged in various legal proceedings from time to time incidental to the conduct of our business. In the opinion of management, we are adequately insured against the claims relating to these proceedings, and any ultimate liability arising out of these proceedings will not have a material adverse effect on our financial condition or results of operations.

MANAGEMENT

Directors and Executive Officers

           Our directors and executive officers are as follows:

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           Our Board of Directors is divided into three classes, as nearly equal in number as possible. Each class serves three years, with the terms of office of the respective classes expiring in successive years.

           Martin Tuchman has served as our Chairman of the Board of Directors and Chief Executive Officer since February 1988. He is also Chairman of the Board of Directors, Chief Executive Officer and a director of Interpool Limited, which he co-founded in 1968. He also has served as a director of Trac Lease since June 1987, President of Trac Lease from June 1987 through January 1994 and currently serves as its Chairman and Chief Executive Officer. He is Chairman of the Board of Directors of Princeton International Properties, Inc., a family-owned real estate company, which owns and has interests in properties located in Princeton, New Jersey. Mr. Tuchman was previously a member of the Society of Automotive Engineers as well as the American National Standards Institute. Currently, Mr. Tuchman is a member of the United Nations Business Council, comprised of leading international executives organized to promote understanding and cooperation between business and government, and a member of the Board of Trustees of the New Jersey Institute of Technology. In 1995, Mr. Tuchman was honored as Entrepreneur Of The Year in an awards program sponsored by Ernst & Young LLP and in 1996 was named Alumnus of the Year by the New Jersey Institute of Technology. Mr. Tuchman is a member of the Board of Trustees of The Parkinson’s Alliance and a director of the Parkinson’s Disease Foundation of Columbia Presbyterian Hospital. In 2000, Mr. Tuchman was honored by The Smithsonian Institution for his extensive case study of Interpool for the 2000 Computerworld Smithsonian Collection and Interpool was nominated for the World Smithsonian Award. Interpool’s material is now part of the Permanent Research Collection on Information Technology at The Smithsonian’s National Museum of American History. Mr. Tuchman was elected to the Yardville National Bank’s Board of Directors and serves on its Executive Committee. Mr. Tuchman holds a bachelor’s degree in mechanical engineering from the New Jersey Institute of Technology (Newark College of Engineering) and a master’s degree in business administration from Seton Hall University.

           Raoul J. Witteveen has served as our President, Chief Operating Officer and a Director since March 1993, also having served as Chief Financial Officer from 1993 to 2000. Mr. Witteveen has been President, Chief Financial Officer and a director of Interpool Limited, since 1988, also having served as Chief Financial Officer from 1988 to 2000. He is a co-founder of Trac Lease and has been Chief Financial Officer, Vice President and a Director of Trac Lease since June 1987. From 1982 to 1986, Mr. Witteveen served in a variety of management capacities at Thyssen-Bornemisza N.V., the former parent of Interpool Limited. Mr. Witteveen holds a bachelor’s degree in economics and business administration and a master’s degree in economics from the Erasmus University in Rotterdam, The Netherlands.

           Mitchell I. Gordon has served as our Chief Financial Officer and Executive Vice President since October 2000 and as a member of our Board of Directors since 1998. From February 1998 to October 2000, Mr. Gordon was President of Atlas Capital Partners, LLC, a private equity investment and consulting firm which provided investment banking consultation services to us. Prior to February 1998, he was Managing Director of Salomon Smith Barney Inc. and co-head of its Transportation Investment Banking Group from July 1993 to January 1998. From 1988 to 1993, Mr. Gordon was Senior Vice President of Furman Selz Inc., where he ran the firm’s Transportation and Automotive Investment Banking groups. From 1984 to 1988, he was a Vice President of Needham & Company Inc. From 1981 to 1984, he held various positions at American Broadcasting Companies, Inc., including Manager of Strategic Planning. Mr. Gordon holds a bachelor’s degree in business administration from Washington University and a master’s degree in business administration from Harvard Business School.

           Arthur L. Burns has served as our General Counsel, Secretary and a Director since January 1990 and Secretary of Interpool Limited since 1986. Mr. Burns was Senior Vice President of Law and Administration of Interpool Limited from 1980 until June 1996. Prior to joining Interpool Limited, Mr. Burns served as Assistant General Counsel to GATX Leasing Corp. between 1975 and 1980, and as an associate attorney at the law firm of Cahill, Gordon & Reindel from 1969 to 1975. Mr. Burns holds a bachelor's degree in economics from Holy Cross College and a law degree from Fordham University School of Law.

           Herbert Mertz has served as our Director of Information Systems since December 1988. In September 2000, he was appointed our Chief Administrative Officer, and Chief Operating Officer of Interpool Limited and Trac Lease. Prior to joining us, Mr. Mertz was an independent consultant in the computer industry. From 1980 to 1983, Mr. Mertz was President of Princeton Energy Partners, an international franchise company in the field of energy conservation. Mr. Mertz holds a bachelor’s degree in engineering from Princeton University. He is an associate member of Sigma Xi, the North American Research Society.

           Ernst Baenziger has served as an employee of Interpool since 1977, serving as Senior Vice President and as a Director of Interpool Limited since 1991. Mr. Baenziger is responsible for operations in Europe, Far East, Australia and New Zealand. He also serves as Managing Director of Interpool Limited's Basel, Switzerland branch, handling sales and operations, and as Managing Director of CTC Equipment A.G. Mr. Baenziger holds a bachelor's degree in economics and business administration from Handelshochschule, St. Gallen.

           William Geoghan has served as Senior Vice President of each of Interpool, Interpool Limited and Trac Lease since 1998. Previously, Mr. Geoghan served as Controller of Interpool from 1992 to 1998 and Vice President and Controller of Interpool Limited from 1989 to 1998. Mr. Geoghan joined Interpool Limited in 1981 and served as Assistant Controller for Interpool Limited from 1985 to 1989. Mr. Geoghan is a Certified Public Accountant and holds a bachelor's degree in commerce from Rider University.

           Peter D. Halstead has served as a member of our Board of Directors since June 1994. Mr. Halstead is a retired Executive Vice President of Summit Bancorp where he worked in various capacities since 1971. He is now the Principal of P.D. Halstead Associates LLC, a firm consulting in corporate administration and finance. Mr. Halstead serves as a Trustee for numerous associations including McCarter Theatre and as Treasurer of the National Kidney Foundation of the Delaware Valley. Mr. Halstead holds a bachelor's degree from Colgate University and a master's degree in business administration from Fairleigh Dickinson University.

           Clifton H. W. Maloney has served as a member of our Board of Directors since February 2000. He has been President of C.H.W. Maloney & Co., Incorporated, a private investment firm, since 1981. He was a Vice President in investment banking at Goldman, Sachs & Co. from 1974 to 1981. Mr. Maloney is a Director of Chromium Industries, Inc., Liberty-Pittsburgh Systems Inc., and The Wall Street Fund. Mr. Maloney holds a bachelor's degree in Engineering from Princeton University and a master's degree in business administration from Harvard Business School.

Warren L. Serenbetz has served as a member of our Board of Directors since February 1988 and served as Executive Consultant from February 1988 through January 1995. He has also been a Director of Trac Lease since its founding in November 1986. After co-founding Interpool Limited in 1968, Mr. Serenbetz served as Interpool Limited’s President and Chief Executive Officer and as a Director until 1975, after which he was Director, Chairman of the Executive Committee and Chief Executive Officer until his retirement in 1986. Mr. Serenbetz rejoined the Board of Directors of Interpool Limited in 1988. Mr. Serenbetz is currently President of Radcliff Group, Inc. He has been active in industry affairs, serving as an officer, director and member of various world trade and shipping associations. Mr. Serenbetz holds a bachelor’s degree in engineering from Columbia University and a master’s degree in industrial engineering from Columbia University.

           Joseph J. Whalen has served as a member of our Board of Directors since April 1996. He originally joined the accounting firm of Arthur Andersen LLP in 1957 and served as an audit partner in Andersen's New York and New Jersey offices for more than ten years prior to his retirement in 1994. Mr. Whalen is a member of the American Institute of Certified Public Accountants and the New Jersey State Society of Certified Public Accountants. Mr. Whalen also serves on the Board of Directors of Griffon Corporation. Mr. Whalen is a Certified Public Accountant in New Jersey and New York and holds a bachelor's degree from St. Peter's College.

Board Compensation

           Each member of the Board of Directors who is not an officer or executive consultant currently receives an annual service fee of $10,000 for serving on the Board plus $1,000 and reimbursement of expenses for each Board of Directors’ or committee meeting attended. As of January 1, 2003, each member of the Board of Directors who is not an officer or executive consultant will receive an annual service fee of $20,000 for serving on the Board plus $1,000 and reimbursement of expenses for each Board of Directors’ or committee meeting attended.

Board Committees

           The Board of Directors has three standing committees: an audit committee, a compensation committee and a stock option committee. The audit committee’s function is to review management’s maintenance of systems of internal control, financial reporting and application of generally accepted accounting principles. In addition, the audit committee reviews the scope of the services of our independent auditors and may recommend the independent auditors for appointment by the Board of Directors subject to stockholder approval. The compensation committee’s functions are to review our general compensation strategy, establish salaries, review benefit programs and approve certain employment contracts. The stock option committee’s functions are to administer our stock option plans. Our Board of Directors may establish other committees from time to time to facilitate the management of our business and affairs. We intend to comply with recent corporate governance initiatives.

Executive Compensation

           The following table sets forth information for the calendar years ended December 31, 2001, 2000 and 1999 concerning the annual compensation paid or accrued by us to our chief executive officer and our four other most highly compensated executive officers:

                                                                                                         Long Term
                                                              Annual Compensation                      Compensation
                                            -----------------------------------------------------     ---------------
                                                                                        Other           # of Stock
Name and Principal Position                   Year       Salary         Bonus        Compensation         Options
----------------------------                 ------     --------       -------      --------------     --------------
Martin Tuchman                                2001      $814,447       $651,784        $62,742 (1)                0
   Chairman of the Board of Directors,        2000       775,664      1,221,100         28,990 (1)                0
   Chief Executive Officer and Director       1999       738,727      1,095,100         27,091 (1)                0

Raoul J. Witteveen                            2001       573,991        651,784         22,542 (1)                0
   President, Chief Operating Officer         2000       546,658      1,002,650         50,381 (1)                0
   and Director                               1999       520,627      1,095,100          7,717 (1)                0

Ernst Baenziger                               2001       183,901              0        776,045 (2)                0
   Sr. Vice President, Interpool              2000       190,074              0      1,306,278 (2)                0
   Limited                                    1999       198,033         15,000      1,294,820 (2)                0

Mitchell I. Gordon                            2001       240,000              0        550,000 (5)                0
   Executive Vice President,                  2000        39,692 (3)          0        750,000 (4)(5)        50,000
   Chief Financial Officer                    1999             0              0        807,500 (4)                0

Herbert Mertz                                 2001       240,000        150,000          7,046                    0
   Chief Administrative Officer,              2000        74,042 (3)    115,000        243,135 (4)           50,000
   Chief Operating Officer, Trac              1999             0              0        279,307 (4)                0
   Lease, Inc. and Interpool Limited

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Stock Option Activity During Fiscal Year 2001

           No stock options were granted or exercised during fiscal year 2001.

1993 Stock Option Plan

           Our 1993 Stock Option Plan for Executive Officers and Directors was adopted by our Board of Directors and approved by the stockholders in March 1993. A total of 6 million shares of common stock have been reserved for issuance under the Stock Option Plan. Options may be granted under the Stock Option Plan to executive officers and Directors of Interpool or a subsidiary (including any executive consultant of Interpool and its subsidiaries), whether or not they are employees. As of October 31, 2002, 4,494,001 options were issued and outstanding, of which 4,344,001 are exercisable. Options under the Stock Option Plan have been granted to 18 persons.

           The Stock Option Plan is administered by a committee of the Board of Directors consisting of at least two Directors. The Stock Option Plan does not require that the members of the Stock Option Committee be “disinterested persons” within the meaning of Rule 16b-3, as from time to time amended, under the Securities Exchange Act of 1934. The Stock Option Committee consists of Mr. Tuchman and Mr. Halstead. The Stock Option Committee has the authority, within limitations as set forth in the Stock Option Plan, to establish rules and regulations concerning the Stock Option Plan, and to determine the persons to whom options may be granted, the number of shares of common stock to be covered by each option and the terms and provisions of the option to be granted. The Stock Option Committee has the right to cancel any outstanding options and to issue new options on the terms and upon the conditions as may be consented to by the optionee affected. In addition, the Stock Option Committee has the authority, subject to the terms of the Stock Option Plan, to determine the appropriate adjustments in the terms of each outstanding option in the event of a change in the common stock or our capital structure.

           Options granted under the Stock Option Plan may be either incentive stock options (“ISO’s”) within the meaning of Section 422 of the Code, or non-qualified stock options (“NQSO’s”), as the Stock Option Committee may determine. No option intended to qualify as an ISO may be granted to any individual who, at the time of grant, is not an employee of Interpool or a subsidiary. The exercise price of an option will be fixed by the Stock Option Committee on the date of grant, except that (1) the exercise price of an ISO granted to any individual who owns (directly or by attribution) shares of common stock possessing more than 10% of the total combined voting power of all our classes of outstanding stock must be at least equal to 110% of the fair market value of the common stock on the date of grant and (2) the exercise price of an ISO granted to any individual other than a 10% owner must be at least equal to the fair market value of the common stock on the date of the grant. Any options granted must expire within ten years from the date of grant (five years in the case of an ISO granted to a 10% owner). Shares subject to options granted under the Stock Option Plan which expire, terminate or are canceled without having been exercised in full become available again for option grants. No options shall be granted under the Stock Option Plan more than ten years after the adoption of the Stock Option Plan.

           Options are exercisable by the holder subject to terms fixed by the Stock Option Committee. No option can be exercised until at least six months after the date of grant. However, an option will be exercisable immediately upon the occurrence of any of the following (but in no event during the six-month period following the date of grant or subsequent to the expiration of the term of an option):

           Under the Stock Option Plan, a holder may pay the exercise price in cash, by check, by delivery to us of shares of common stock already owned by the holder, or, with respect to NQSO’s and subject to approval by the Stock Option Committee, in shares issuable in connection with the option, or by such other method as the Stock Option Committee may permit from time to time.

           Options granted under the Stock Option Plan will be non-transferable and non-assignable; provided, however, that the estate of a deceased holder may exercise any options held by the decedent. If an option holder terminates employment with us and all subsidiaries or service as a director of Interpool or a subsidiary while holding an unexercised option, the option will terminate immediately, but the option holder will have until the end of the tenth business day following his termination of employment or service to exercise the option. However, all options held by an option holder will terminate immediately if the termination is for cause, including but not limited to a result of a violation of the holder’s duties. If cessation of employment or service is due to retirement on or after attainment of age 65, disability or death, the option holder or the holder’s successor-in-interest, as the case may be, is permitted to exercise any option within three months of retirement or disability or within six months of death.

           The Stock Option Plan may be terminated and may be modified or amended by the Stock Option Committee or the Board of Directors at any time; provided, however, that (1) no modification or amendment increasing the aggregate number of shares which may be issued under options, increasing materially the benefits accruing to participants under the Stock Option Plan, or materially modifying the requirements as to eligibility to receive options will be effective without stockholder approval within one year of the adoption of the amendment and (2) no such termination, modification or amendment of the Stock Option Plan will alter or affect the terms of any then outstanding options without the consent of the holders thereof. The Stock Option Committee may cancel or terminate an outstanding option with the consent of the holder and grant an option for the same number of shares to the individual based on the then fair market value of the common stock, which may be higher or lower than the exercise price of the canceled option.

Directors Plan

           Our Non-Qualified Stock Option Plan for Non-Employee, Non-Consultant Directors was adopted by our Board of Directors and approved by the stockholders in March 1993. The Directors’ Plan provides for the automatic grant of non-qualified options to non-employee, non-consultant directors at the time the director first joins the Board. The Directors’ Plan authorizes grants of options up to an aggregate of 150,000 shares of common stock. The exercise price per share is the fair market value of our common stock on the date the person becomes a director. The options granted pursuant to the Directors’ Plan may be exercised at the rate of one-third of the shares on the first anniversary of the options’ grant date, one-third of the shares on the second anniversary of the options’ grant date and one-third of the shares on the third anniversary of the options’ grant date, subject to applicable holding periods required under rules of the Securities and Exchange Commission. Options granted pursuant to the Directors’ Plan expire ten years from their grant date except that in the event of the death of a director, the option must be exercised within six months of the date of death or, in the event of resignation of a director, the option must be exercised within ten days of the date of resignation. The Directors’ Plan is administered by the Stock Option Committee of the Board of Directors. Pursuant to the Directors’ Plan, an option to purchase 15,000 shares of common stock was granted to each of Peter D. Halstead in June 1994, Joseph J. Whalen in April 1996 and Clifton H.W. Maloney in February 2000. In addition, our directors may be granted options under the 1993 Stock Option Plan for Executive Officers and Directors as adopted by the Board of Directors and approved by the stockholders in March 1993. On September 16, 1998, pursuant to an option repricing program, 15,000 options held by each of Messrs. Halstead and Whalen were cancelled and replaced with newly issued options with an exercise price equal to the closing market price on September 16, 1998, the grant date, which vested six months from the grant date and expire ten years from the grant date. All other terms and conditions of the newly issued options are the same as those of the cancelled options. As of October 31, 2002, 45,000 options were issued and outstanding, of which 40,000 are exercisable.

401(k) Plan

           We have adopted a deferred savings plan which is intended to qualify under Section 401(k) of the Code. All our employees who complete three months of service are eligible to participate in the 401(k) Plan. Each participant may elect to defer the receipt of up to 15% of such participant’s compensation on a pre-tax basis and have us contribute the deferred compensation to the 401(k) Plan on the participant’s behalf, up to the annual statutory limitation in effect at the time of the contribution. Such salary deferral contributions are 100% vested at all times. Amounts credited to a participant’s account are distributed to the participant at the earliest of (1) the termination of his or her employment with us, (2) a requested withdrawal after age 59 1/2 or upon evidence of disability or (3) a requested withdrawal due to financial hardship. The 401(k) Plan administrator may authorize loans from the 401(k) Plan to participants in a manner which is uniform and nondiscriminatory. Under the Code, salary deferral contributions are not taxable to the employee until the amounts are distributed to the employee, and all contributions are tax deductible to us. The 401(k) Plan provides for the making by us of any matching or profit sharing contributions to the 401(k) Plan, in the form of shares of common stock of Interpool.

Compensation Committee Interlocks and Insider Participation

           During fiscal year 2001, Mr. Tuchman participated in deliberations of our Board of Directors concerning executive officer compensation. Mr. Tuchman did not participate in discussions regarding his own compensation.

Employment Agreements With Named Executive Officers

           We have employment agreements with Martin Tuchman and Raoul J. Witteveen. Each employment agreement currently expires on December 31, 2008, except that on each January 1, the expiration date of each employment agreement is automatically extended for an additional year unless we or the employee party to the employment agreement has given written notice of an election not to extend beyond the end of the then current seven-year term. Notice of any election not to extend the expiration date must be delivered not less than six months prior to the next occurring January 1.

           As compensation for the services to be rendered under their employment agreements, Mr. Tuchman is currently paid an annual base salary of $855,169, Mr. Witteveen is currently paid an annual base salary of $602,691. The base salary under each employment agreement increases by a minimum of 5% each year. In addition, each of Messrs. Tuchman and Witteveen is entitled to receive an annual bonus equal to 2%, in the case of Mr. Tuchman, or 1%, in the case of Mr. Witteveen, of the amount of any increase in our net income during the year from its net income during the preceding year. Mr. Tuchman and Mr. Witteveen may each be entitled to receive discretionary additional bonuses as determined by our Compensation Committee. Each employment agreement (1) includes a non-competition provision; (2) provides that, in the event of the employee’s death, the employee’s base salary will continue to be paid to his beneficiary for two additional years and, in the event of termination of the employee without cause, the employee will continue to receive his base salary for the entire remaining term then in effect under the employment agreement; and (3) provides for reimbursement to the employee, for both the employee and his spouse, of all health related costs and expenses that are not advanced or reimbursed to the employee pursuant to our medical and dental insurance plans, which additional reimbursement continues for a period of five years after expiration of the employment agreement. Mr. Tuchman and Mr. Witteveen may each be entitled to receive incentive bonuses as determined by our Compensation Committee.

           We have also entered into an employment agreement with Mitchell I. Gordon, our Chief Financial Officer and Executive Vice President. Under the terms of Mr. Gordon’s employment agreement, Mr. Gordon is paid an annual base salary and may be entitled to receive a discretionary bonus as determined by the Compensation Committee. In addition, Mr. Gordon will receive additional performance bonuses for achieving certain specified performance objectives, including, among other things, the completion of this rights offering. We have also entered into an employment agreement with Herbert Mertz, the Chief Administrative Officer and Chief Operating Officer of Interpool Limited and Trac Lease. Under the terms of the Mr. Mertz’s Employment Agreement, Mr. Mertz is paid an annual base salary and may be entitled to receive a discretionary bonus as determined by the Compensation Committee. Each of Mr. Gordon’s employment agreement and Mr. Mertz’s employment agreement (i) include a non-competition provision; (ii) provide that, in the event of the employee’s death, the employee’s base salary will continue to be paid to his beneficiary for the remainder of the term and, (iii) provide for participation in all Interpool medical and dental insurance plans.

Deferred Bonus Plan

           In November 2002, our Board of Directors approved a Deferred Bonus Plan under which employees of Interpool and our affiliates who receive discretionary year-end bonuses of greater than $50,000 would receive such bonuses partly in cash and partly in the form of an award of Interpool common stock. Bonus stock awards under this plan would vest in equal installments over a five-year period, unless the recipient elected to have the award vest over a ten-year period or the Board of Directors specified another period. The unvested portion of any bonus stock award will vest immediately if a change in control of Interpool occurs, if the employee is terminated without cause, if the employee resigns for a good reason, if the employee dies or becomes permanently disabled, or in any other circumstance deemed appropriate by the Board of Directors. If a recipient resigns voluntarily without a good reason or is terminated for cause, the employee would forfeit any unvested portion of any bonus stock award. The number of shares covered by any bonus stock award would be determined based upon a 10% discount from the market price of Interpool common stock at year-end, except that the discount will be 30% for any bonus stock awards that vest over ten years. Under the Plan, each employee granted a bonus stock award will have the right to require us to purchase from the employee a total number of shares equal to the number covered by the bonus stock award.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Stockholders' Agreement

           Martin Tuchman, Raoul J. Witteveen, Arthur L. Burns, Hickory Enterprises L.P., Warren L. Serenbetz Revocable Trust, Warren L. Serenbetz, Jr., Stuart W. Serenbetz, Paul H. Serenbetz, Clay R. Serenbetz, and Chartres Limited Partnership, will collectively own directly or indirectly approximately 70.3% of our common stock, and are parties to an Amended and Restated Stockholders’ Agreement dated May 3, 1994 pursuant to which they have agreed not to sell or transfer any shares of common stock beneficially owned by them to any person other than us or the other parties to the Stockholders’ Agreement without the consent of the other parties to the Stockholders’ Agreement, unless (1) the shares are first offered to us for purchase at a per share price equal to the price offered by any third party making a bona fide offer to buy the shares for cash, cash equivalents or marketable securities (or if no such bona fide offer has been received, at a price equal to the average closing price of a share of common stock on the New York Stock Exchange over a period of twenty prior trading days) and we do not elect to purchase the shares and (2) the shares are then offered to the other parties to the Stockholders’ Agreement for purchase by them at the same per share price described in clause (1) and the other stockholders do not elect to purchase the shares. Notwithstanding the foregoing, the parties to the Stockholders’ Agreement may transfer shares of common stock to one or more of certain members of their immediate families (or trusts for the benefit of such family members) so long as each transferee agrees to be bound by the terms of the Stockholders’ Agreement. The Stockholders’ Agreement further provides that if Interpool (which is not a party to the Stockholders’ Agreement) elects to purchase any shares offered to it by a party to the Stockholders’ Agreement and the shares offered represent greater than 10% of the shares held by the offeror, we shall have the right to pay the purchase price of the shares by delivery of a promissory note, payable in equal monthly installments (with interest at the prime rate) over the following year. Pursuant to the Stockholders’ Agreement, each of the parties thereto has agreed to vote for the re-election of Messrs. Tuchman, Serenbetz, Witteveen and Burns as our directors. The Stockholders’ Agreement continues in effect until May 4, 2003 and may be extended by the parties. Shared voting power with the other parties to the Stockholders’ Agreement is acknowledged but the existence of a group or beneficial ownership of shares owned by other parties to the Stockholders’ Agreement is disclaimed.

The Ivy Group Transactions

           The Ivy Group, a New Jersey general partnership composed directly or indirectly of Mr. Tuchman, Radcliff Group, Inc. (which is owned directly or indirectly by Warren L. Serenbetz and certain members of his family), Mr. Witteveen, Thomas P. Birnie and Graham K. Owen, has previously leased chassis to Trac Lease. As of December 31, 2000, pursuant to various equipment lease agreements, Trac Lease leased 6,047 chassis from The Ivy Group and its principals for an aggregate annual lease payment of approximately $2.9 million. On January 1, 2001, the various leases for the 6,047 units were combined into a single lease pursuant to which The Ivy Group and its principals were paid an aggregate lease payment of approximately $2.6 million through June 30, 2001. Effective as of July 1, 2001, we restructured our relationship with The Ivy Group and its principals to provide us with managerial control over these 6,047 chassis. As a result of the restructuring, the partners of The Ivy Group contributed these 6,047 chassis and certain other assets and liabilities to our newly formed subsidiary, Chassis Holdings I LLC, in exchange for $26.0 million face value of preferred membership units and 10% of the common membership units, and Trac Lease contributed 902 chassis and $2,407 in cash to Chassis Holdings in exchange for $3.0 million face value of preferred membership units and 90% of the common membership units. The preferred membership units are entitled to receive a preferred return prior to the receipt of any distributions by the holders of the common membership units. The value of the contributed chassis was determined by taking the arithmetic average of the results of independent appraisals performed by three nationally recognized appraisal firms that were engaged by us in connection with our establishment of a chassis securitization facility in July 2000. As the managing member of Chassis Holdings, Trac Lease exercises sole managerial control over the entity’s operations. Chassis Holdings leases all of its chassis to Trac Lease at a rental rate equal to the then current Trac Lease fleet average per diem. Chassis Holdings and the holders of the preferred membership units are party to a Put/Call Agreement which provides that the holders of preferred units may put such units to Chassis Holdings under certain circumstances and Chassis Holdings may redeem such units under certain circumstances. Chassis Holdings will be required to make certain option payments to the holders of the preferred membership units in order to preserve its right to redeem such units. For the nine months ended September 30, 2002, dividends paid on the common units and distributions on the preferred units owned by The Ivy Group, totaling $2.3 million, are included in lease operating and administrative expenses in the accompanying condensed consolidated statement of income.

           The terms of all arrangements between Chassis Holdings and Trac Lease, including rental rates, are, in the opinion of our management, comparable to terms that we would have obtained in arms’ length transactions with unrelated third parties. The Ivy Group has entered into an agreement with us pursuant to which it has agreed not to engage in any business activities that are competitive with the business activities of Interpool or its subsidiaries without our prior written consent.

           Trac Lease previously leased an additional 983 chassis from The Ivy Group under a lease with buyout provisions expiring in 2000. In 2000 Trac Lease paid The Ivy Group lease payments of $252,000 under this agreement. Trac Lease exercised its buyout right under the lease during 2000 and purchased the chassis for $2,212,000.

           During 1992 through 1996, The Ivy Group borrowed $13.4 million from us. The aggregate loan balance of $13.4 million bears interest at LIBOR plus 1.75% repayable on an interest only basis, subject to maintenance of fixed loan to collateral value ratios, and will mature in 2013. In connection therewith, The Ivy Group executed a Chattel Mortgage Security Agreement and Assignment under which we were granted a security interest in 4,364 chassis owned by The Ivy Group and we were granted an assignment of all rights to receive rental payments and proceeds related to the lease of these chassis. This Ivy Group collateral was contributed, subject to this debt to us, to Chassis Holdings as part of our July 1, 2001 restructuring with The Ivy Group.

Eurochassis L.P. Transactions

           Eurochassis L.P., a New Jersey limited partnership in which Raoul J. Witteveen is one of the limited partners and the general partner, leases 100 chassis to Trac Lease for an annual lease payment of approximately $91,000. The annual lease term renews automatically unless canceled by either party prior to the first day of the renewal period. The terms of the lease agreement, in the opinion of our management, are comparable to terms that Trac Lease would have obtained in an arms’ length transaction with an unrelated third party.

The Radcliff Consultation Services Agreement

           We entered into a Consultation Services Agreement with Radcliff Group, Inc. (which is owned directly or indirectly by Warren L. Serenbetz and certain members of his family) dated as of January 1, 1992, as amended and restated in February 1993, pursuant to which Radcliff Group appointed Warren L. Serenbetz, a stockholder and Director of Interpool, as Executive Consultant. The Consultation Services Agreement was terminated as of January 1, 1995. In accordance with the terms of the Consultation Services Agreement, Radcliff Group is entitled to receive its full annual consultation services fee in the amount of $492,000 through December 31, 2002 and reimbursement to both the designated Executive Consultant and his spouse, of all health related costs and expenses that are not advanced or reimbursed to the Executive Consultant pursuant to our medical and dental insurance plans.

The Atlas Consulting Agreement

           In February 1998, we entered into a non-exclusive Consulting Agreement with Atlas Capital Partners, LLC pursuant to which Mitchell I. Gordon, a Director of Interpool since 1998 and Chief Financial Officer and Executive Vice President since October 2000, provided investment banking consultation services to us. Under the terms of the Consulting Agreement, Atlas was to have been paid $240,000 (plus reimbursement of reasonable expenses), additional compensation of $560,000 and a twenty percent carried interest in investments made with funds provided by Interpool. In addition, Atlas was contractually entitled to an annual bonus in an amount that is usual and customary in the investment banking business for investment opportunities actually completed by us subject to set-off of the $560,000 additional compensation. In 2000, other compensation in the amount of $1,650,000, to be paid over three years, was earned by Atlas in connection with the acquisition by us of the North American Intermodal Division of Transamerica. As of October 2000, Mitchell Gordon was named our Chief Financial Officer and Executive Vice President and the Consulting Agreement was terminated.

Executive Office Lease

           During 2001, we leased approximately 28,500 square feet of commercial space for our executive offices in Princeton, New Jersey from 211 College Road Associates, a New Jersey general partnership. Martin Tuchman, a Director and the Chief Executive Officer of the Company, holds a direct or indirect equity interest of 42.76% and Radcliff Group holds a direct or indirect equity interest of 42.17% in 211 College Road Associates. The 2001 annual base rental for this property was approximately $557,000 under a triple net lease expiring in 2010. In the opinion of our management, rent being paid under this lease does not exceed rent that we would have paid in an arms’ length transaction with an unrelated third party. On January 28, 2002, we executed a Purchase and Sale Agreement, pursuant to which, on May 1, 2002, we acquired the building which houses our corporate offices. The fair market value purchase price of the approximately 39,000 square feet building was $6,250,000 as determined by an independent property appraisal firm and approved by our Board of Directors.

PRINCIPAL STOCKHOLDERS

           The following table sets forth certain information with respect to the beneficial ownership of our common stock as of October 31, 2002 by certain beneficial owners, each of our directors, certain executive officers and all executive officers and directors as a group.

                                                 NUMBER OF SHARES
                                                   AND OPTIONS            OPTIONS
                                               EXERCISABLE WITHIN       EXERCISABLE         PERCENTAGE
             NAME OF BENEFICIAL OWNER(1)            60 DAYS(2)        WITHIN 60 DAYS        OF CLASS(2)
            ----------------------------      ---------------------  ----------------    ---------------

        Martin Tuchman (3)(4)............          9,519,110            2,280,000              32.12%
        Raoul J. Witteveen (3)(5)........          4,712,429            1,140,000              16.54%
        Warren L. Serenbetz (3)(6)(7)....          1,667,127              668,438               5.95%
        Arthur L. Burns .................            210,408               96,563                   *
        Mitchell I. Gordon...............             15,000                    0                   *
        Peter D. Halstead................             67,500               60,000                   *
        Clifton H. W. Maloney............             10,000               10,000                   *
        Joseph J. Whalen.................             37,500               37,500                   *
        Ernst Baenziger..................              7,250                    0                   *
        William Geoghan..................              9,300                7,500                   *
        Herbert Mertz....................              9,250                7,500                   *
        Executive officers and directors
           as a group (eleven persons)...         16,264,874            4,307,501              51.37%

        Other Stockholders:
        Hickory Enterprises, L.P. (8)
           165 Signal Hill North Wilton,
           Connecticut 06897-1933........          4,856,911                    0              17.76%
        Warren L. Serenbetz Jr. (9)(10)
           c/o American National Can Co.
           101 Merritt 7, 3rd Floor
           Norwalk, CT 06856.............            283,646                    0               1.04%
        Paul H. Serenbetz (9)(10) c/o
           The Morgan School Route 81
           Clinton, CT 06413.............            283,646                    0               1.04%
        Stuart W. Serenbetz (9)(10) c/o
           Turner Development Corp. 375
           Hudson Street, 6th Floor New
           York, NY 10014................            283,646                    0               1.04%
        Clay R. Serenbetz (9)(10) c/o
           Radcliff Group, Inc. 695 West
           Street Harrison, NY 10528.....            283,646                    0               1.04%
        The Chartres Limited
        Partnership(11)
           c/o Interpool, Inc. 633
           Third Avenue New York, NY                  90,000                    0                   *
           10017.........................

_______________

DESCRIPTION OF DEBENTURES

           The Debentures are to be issued under an Indenture, as supplemented from time to time (as so supplemented, the “Indenture”), between Interpool and The Bank of New York, as trustee. The Indenture will be qualified under the Trust Indenture Act of 1939, as amended, and the Indenture will be subject to and governed by the Trust Indenture Act. The following description is a summary of the material provisions of the Indenture. It does not include all of the provisions of the Indenture nor does it restate the Indenture in its entirety. We urge you to read the Indenture because it defines your rights. The terms of the Debentures will include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. A copy of the Indenture is available as indicated below under “Available Information.”

Interest

           The Debentures will bear interest from the date of initial issuance at the annual rate of 9.25% of the principal amount thereof, payable monthly in arrears on the day of each calendar month corresponding to the date of consummation of the subscription offering (each, an “Interest Payment Date”), commencing with the month following consummation of the subscription rights offering, to the person in whose name each Debenture is registered, subject to certain exceptions, at the close of business on the record date that is on or about fifteen days before each Interest Payment Date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). Accrued interest that is not paid on the applicable Interest Payment Date will bear interest on the amount thereof (to the extent permitted by law) at the rate per annum of 9.25% thereof, compounded monthly. The term “interest,” as used herein, shall include monthly interest payments and interest on monthly interest payments not paid on the applicable Interest Payment Date. A “Business Day” shall mean any day other than a Saturday or a Sunday, or a day on which banking institutions in New York, New York are authorized or required by law or executive order to remain closed.

           The Debentures will be issued in denominations of $25 and integral multiples thereof. The Debentures will mature on the twentieth anniversary of their issuance (the “Stated Maturity Date”).

           The Debentures will be unsecured and subordinate and rank junior in right of payment, to the extent and in the manner set forth in the Indenture, to all Senior Indebtedness. See “– Subordination.”

           We are a legal entity separate and distinct from our subsidiaries. Our subsidiaries include, among others, Interpool Limited and Trac Lease. Our right to participate in any distribution of assets of any subsidiary upon such subsidiary’s liquidation or reorganization or otherwise is subject to the prior claims of creditors of the subsidiary, except to the extent we may be recognized as a creditor of that subsidiary. Accordingly, the Debentures will be effectively subordinated to all existing and future liabilities of our subsidiaries. The Indenture does not limit our ability to incur or issue other secured or unsecured debt, including Senior Indebtedness, or the incurrence of liabilities by our subsidiaries. See “– Subordination.”

Payment and Paying Agents

           Payment of principal of and premium, if any, and any interest on the Debentures will be made at the office of the trustee in New York, New York or at the office of such paying agent or paying agents as we may designate from time to time, except that at our option payment of any interest may be made, by check mailed to the address of the person entitled thereto as such address shall appear in the register for the Debentures at the close of business on the record date for such interest, except in the case of defaulted interest. We may at any time designate additional paying agents or rescind the designation of any paying agent; however, we will at all times be required to maintain a paying agent in each place of payment for the Debentures.

           Any monies deposited with the trustee or any paying agent, or then held by us in trust, for the payment of the principal or interest on any Debenture and remaining unclaimed for two years after such principal or interest has become due and payable shall, at our request, be repaid to us and the holder of such Debenture shall thereafter look, as a general unsecured creditor, only to us for payment thereof.

Conversion of the Debentures

           Principal and accrued interest on the Debentures will be convertible into our common stock at the option of the holders of the Debentures at any time prior to 5:00 P.M., New York City time, on the Business Day immediately preceding the date of repayment of such Debentures, whether at maturity or upon redemption, at the option of each holder thereof and in the manner described below, into shares of our common stock at a per share conversion price equal to the greater of (a) $25.00 or (b) 135% of the average closing price of our common stock for the five consecutive trading days ending on the Expiration Date, subject to adjustment as described under “—Conversion Price Adjustments” below. Upon surrender of a Debenture for conversion, the Trustee, as conversion agent, will convert such Debentures to common stock on behalf of such holder. Our delivery to the holders of the Debentures of the fixed number of shares of common stock into which the Debentures are convertible (together with the cash payment if any, in lieu of fractional shares) will be deemed to satisfy our obligation to pay the principal amount of the Debentures so converted, and the accrued and unpaid interest thereon attributable to the period from the last date to which interest has been paid or duly provided for; provided, however, that if any Debenture is converted after a record date for payment of interest, the interest payable on the related interest payment date with respect to such Debenture shall be paid to the holder of such Debentures on the record date despite such conversion. See “— Optional Redemption,” “— Conversion Rights” and “— Mandatory Redemption.”

           Shares of common stock of Interpool issued upon conversion of Debentures will be validly issued, fully paid and nonassessable. No fractional shares of common stock will be issued as a result of conversion, but in lieu thereof such fractional interest will be paid by Interpool in cash based on the last reported sale price of our common stock on the date such Debentures are surrendered for conversion.

           Conversion Price Adjustments — General. The conversion price is subject to adjustment in certain events, including: (1) the issuance of shares of common stock as a dividend or a distribution with respect to common stock, (2) subdivisions, combinations and reclassification of common stock, (3) the issuance to all holders of common stock of rights or warrants entitling them to subscribe for shares of common stock at less than the then Current Market Price (as defined below) of the common stock, (4) the distribution to holders of common stock of evidences of indebtedness of Interpool, securities or capital stock, cash or assets (including securities, but excluding those rights, warrants, dividends and distributions referred to above and dividends and distributions paid exclusively in cash). “Current Market Price” means the average of the daily closing prices for the ten consecutive trading days selected by us commencing not more than 20 trading days before, and ending not later than, the earlier of the day in question or, if applicable, the day before the record date with respect to the issuance or distribution in question.

           We from time to time may reduce the conversion price of the Debentures by any amount selected by us for any period of at least 20 days, in which case we will give at least 15 days’ notice of such reduction. We may, at our option, make such reductions in the conversion price, in addition to those set forth above, as our Board of Directors deem advisable to avoid or diminish any income tax to holders of common stock of Interpool resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. See “Certain Federal Income Tax Consequences — Adjustment of Conversion Price.” While we are not aware of any event which would under current law be treated for income tax purposes in a manner similar to a dividend or distribution of common stock other than those already covered in the previous paragraph, we have included this provision in the event that a change in the law or interpretation of the law may occur.

           No adjustment of the conversion price will be made upon the issuance of any shares of common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of Interpool and the investment of additional optional amounts in shares of common stock under any such plan. No adjustment in the conversion price will be required unless adjustment would require a change of at least 1% in the price then in effect; provided, however, that any adjustment that would not be required to be made shall be carried forward and taken into account in any subsequent adjustment. If any event would required adjustment of the conversion price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value to the holder of the Debentures.

           Conversion Price Adjustments — Merger, Consolidation or Sale of Assets of the Company. In the event that Interpool shall be a party to any transaction, including, without limitation, and with certain exceptions,

then the holders of Debentures then outstanding shall have the right to convert the Debentures into the kind and amount of securities, cash or other property receivable upon the consummation of such Transaction by a holder of the number of shares of common stock issuable upon conversion of such Debentures immediately prior to such Transaction. This change could substantially lessen or eliminate the value of the conversion privilege associated with the Debentures in the future. For example, if Interpool were acquired in a cash merger, each Debenture would become convertible solely into cash and would no longer be convertible into securities whose value would vary depending on the future prospects of Interpool and other factors.

           Conversion price adjustments or omissions in making such adjustments may, under certain circumstances, be deemed to be distributions that could be taxable as dividends to holders of Debentures or to the holders of common stock of Interpool. See “Certain Federal Income Tax Consequences — Adjustment of Conversion Price.”

Optional Redemption

           The Debentures will be redeemable, in whole or in part, at our option on or any time after the third anniversary of the date of issuance of the Debentures, for cash at a redemption price equal to 100% of the outstanding principal amount of the Debentures, plus accrued interest thereon to the date of prepayment.

Special Redemption

           We may, between the fourth anniversary and the fifth anniversary of the issuance of the Debentures, redeem the Debentures (in whole but not in part) by issuing shares of our common stock having an aggregate value (determined as provided in the next sentence) equal to 100% of the principal amount of the outstanding Debentures, plus accrued but unpaid interest thereon to the date of redemption, if the average closing price of our common stock for any period of 5 consecutive trading days is equal to or greater than the greater of (a) $25.50 per share or (b) 140% of the average closing price of our common stock for the five consecutive trading days ending on the Expiration Date (the “Special Redemption Price”). The Special Redemption Price will be subject to adjustment in a manner similar to the Conversion Price. Common stock issued in a special redemption will be deemed to have a value equal to the Special Redemption Price per share. We will give notice of a special redemption to holders of the Debentures within 5 business days following the end of such a 5 consecutive trading day period and the special redemption shall take effect not less than fifteen (15) days but not more than sixty (60) days thereafter. Holders of the Debentures will be able to exercise their conversion rights until 5:00 p.m., New York City time, on the day before a special redemption takes effect. We may amend the Indenture, at any time, without the consent of any holders of the Debentures, to delete our ability to call a special redemption of the Debentures.

Mandatory Redemption

           We will redeem all Debentures not previously redeemed by us or converted into common stock by their holders upon the maturity date of the Debentures on the twentieth anniversary of the issuance of the Debentures or, if earlier, upon the happening of a certain occurrence constituting a change of control. An event will be deemed to have triggered a change of control if: (i) any person or group within the meaning of Section 13(d)(3) of the Exchange Act together with any affiliates and associates of any thereof, other than our existing management group immediately prior to the event, shall beneficially own (within the meaning of Rule 13d-3 under the Exchange Act) at least a majority of the total voting power of all classes of capital stock of Interpool entitled to vote generally in the election of directors of Interpool, or (ii) Interpool is liquidated or dissolved or the stockholders of Interpool adopt a plan for the liquidation or dissolution of Interpool.

           Upon the occurrence of a change of control Interpool shall repurchase all of the Debentures outstanding within 60 days after such change of control at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, on the repurchase date.

           In the case of a mandatory redemption the redemption amount will be paid in cash. Any mandatory redemption will comply with the procedures described below in “Description of Debenture — Procedures.”

           Notice of any optional redemption or mandatory redemption will be mailed at least fifteen (15) days but not more than 60 days before the redemption date to each holder of the Debentures to be prepaid at its registered address. Unless we default in payment of the redemption price, on and after the redemption date interest ceases to accrue on such Debentures called for redemption.

Certain Covenants

           We will also covenant that we will not,

           other than:

Debenture Events of Default

           The Indenture provides that any one or more of the following described events with respect to the Debentures constitutes a “Debenture Event of Default” (whatever the reason for such Debenture Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

           The holders of a majority in aggregate outstanding principal amount of the Debentures have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee. The trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Debentures may declare the principal due and payable immediately upon a Debenture Event of Default. The holders of a majority in aggregate outstanding principal amount of the Debentures may annul such declaration and waive the default if the default (other than the nonpayment of the principal of the Debentures which has become due solely by such acceleration) has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the trustee.

           The holders of a majority in aggregate outstanding principal amount of the Debentures affected thereby may, on behalf of the holders of all the Debentures, waive any past default except a default in the payment of principal of or premium, if any, on or interest (unless such default has been cured and a sum sufficient to pay all matured installments of interest and premium, if any, and principal due otherwise than by acceleration has been deposited with the trustee) or a default in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Debenture.

           The Indenture requires that we file annually with the trustee a certificate as to the absence of certain defaults under the Indenture.

Consolidation, Merger, Sale of Assets and Other Transactions

           The Indenture provides that we shall not consolidate with or merge into any other Person or convey, transfer or lease our properties and assets as an entirety or substantially as an entirety to any Person, and no Person shall consolidate with or merge into us or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to us, unless:

           The general provisions of the Indenture do not afford holders of the Debentures protection in the event of a highly leveraged transaction or other transaction involving us that may adversely affect holders of the Debentures.

Modification of the Indenture

           From time to time we and the trustee may, without the consent of the holders of the Debentures, amend, waive or supplement the Indenture for specified purposes, including, among other things, deleting our right to call a Special Redemption of the Debentures, curing ambiguities, defects or inconsistencies (provided that any such action does not materially adversely affect the interests of the holders of Debentures), making any other change that does not adversely affect the rights of any holder of Debentures and qualifying, or maintaining the qualification of, the Indenture under the Trust Indenture Act. The Indenture contains provisions permitting us and the trustee, with the consent of the holders of a majority in principal amount of the Debentures, to modify the Indenture in a manner affecting the rights of the holders of the Debentures; provided that no such modification may, without the consent of the holders of each outstanding Debenture so affected, (i) change the Stated Maturity or reduce the principal amount of the Debentures or reduce the rate or extend the time of payment of interest thereon or reduce any amount payable upon redemption thereof or change any date on which the Debentures may be redeemed or (ii) reduce the percentage of principal amount of Debentures, the holders of which are required to consent to any such modification of the Indenture.

Satisfaction and Discharge

           The Indenture provides that when, among other things, all the Debentures not previously delivered to the trustee for cancellation (i) have become due and payable or (ii) will become due and payable at maturity within one year, and we deposit or cause to be deposited with the trustee funds, in trust, for the purpose and in an amount sufficient to pay and discharge the entire indebtedness on the Debentures not previously delivered to the trustee for cancellation, for the principal and premium, if any, and interest to the date of the deposit or to the Stated Maturity Date, as the case may be, then the Indenture will cease to be of further effect (except as to our obligations to pay all other sums due pursuant to the Indenture and to provide the officers’ certificates and opinions of counsel described therein), and we will be deemed to have satisfied and discharged the Indenture.

Subordination

           The Indenture provides that the Debentures issued thereunder will be subordinate and junior in right of payment to all Senior Indebtedness to the extent provided in the Indenture. No payments on account of principal or premium, if any, or interest, if any, in respect of the Debentures may be made if there shall have occurred and be continuing a default in any payment with respect to Senior Indebtedness, or an event of default with respect to any Senior Indebtedness resulting in the acceleration of the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default.

           Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt restructuring or similar proceedings in connection with any insolvency or bankruptcy proceeding of the Company, the holders of Senior Indebtedness will first be entitled to receive payment in full before the holders of the Debentures will be entitled to receive or retain any payment in respect thereof.

           In the event of the acceleration of the maturity of the Debentures, the holders of all Senior Indebtedness outstanding at the time of such acceleration will first be entitled to receive payment in full before the holders of the Debentures will be entitled to receive or retain any payment in respect of the Debentures.

           The term "Senior Indebtedness" means:

except for (1) any such indebtedness that is by its terms subordinated to or ranks equally with the Debentures and (2) any indebtedness between or among the Company or its affiliates, including all other debt securities and guarantees in respect of those debt securities, issued to any trust, or a trustee of such trust, partnership or other entity affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of preferred securities or other securities that rank equally with, or junior to, the Debentures.

           Such Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.

           Our right to participate in any distribution of assets of any subsidiary upon such subsidiary’s liquidation or reorganization or otherwise, is subject to the prior claims of creditors of the subsidiary, except to the extent we may be recognized as a creditor of that subsidiary. Accordingly, the Debentures will be effectively subordinated to all existing and future liabilities of our subsidiaries.

           As of September 30, 2002, our Senior Indebtedness (excluding indebtedness of subsidiaries not guaranteed by Interpool, Inc.) totaled $851.5 million. At September 30, 2002, such subsidiaries had total indebtedness to third parties of $1,129.3 million ($425.0 million of which has been guaranteed by Interpool, Inc. and is included in Senior Indebtedness of Interpool, Inc.). We expect from time to time to incur additional indebtedness constituting Senior Indebtedness. The Indenture places no limitation on the amount of additional Senior Indebtedness that we may incur or the amount of liabilities our subsidiaries may incur.

Governing Law

           The Indenture and the Debentures will be governed by and construed in accordance with the laws of the State of New York.

Information Concerning the Trustee

           Following the qualification of the Indenture under the Trust Indenture Act, the trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee under the Trust Indenture Act. Subject to such provisions, the trustee is under no obligation to exercise any of the powers vested in it by the Indenture at the request of any holder of the Debentures, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The trustee is not required to expend or risk its own funds or otherwise incur personal financial liability in the performance of its duties if the trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it.

           The Bank of New York, the Trustee under the Indenture, also serves as trustee for our outstanding Senior Notes.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

           In the opinion of Stroock & Stroock & Lavan LLP, counsel to Interpool, the following is a summary of certain of the material United States federal income tax consequences of the receipt, exercise and/or lapse of the subscription rights to acquire Debentures, and of the purchase, ownership and disposition of the Debentures. Unless otherwise stated, this summary deals only with subscription rights and/or Debentures held as capital assets by holders who acquire the subscription rights in the subscription rights offering or who purchase the Debentures upon original issuance at the original offering price. It does not deal with special classes of holders such as banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax-exempt investors, foreign persons engaged in a trade or business within the United States or persons that will hold the Debentures as a position in a “straddle,” as part of a “synthetic security” or “hedge,” or as part of a “conversion transaction” or other integrated investment. This summary also does not address the tax consequences to persons that have a functional currency other than the U.S. Dollar. Further, it does not include any description of any alternative minimum tax consequences or the tax laws of any state or local government or of any foreign government that may be applicable to the Debentures. This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations thereunder and administrative and judicial interpretations thereof, as of the date hereof, all of which are subject to change possibly on a retroactive basis. No rulings will be obtained from the Internal Revenue Service (the “IRS”) with respect to any of the federal income tax consequences described herein. Thus, there can be no assurances that the IRS will not take a position contrary to the views or opinions expressed herein and that such position might not ultimately be sustained by the courts.

Classification of the Debentures and Original Issue Discount

           Interpool intends to take the position that the Debentures will be classified for United States federal income tax purposes as indebtedness of Interpool under current law. Moreover, each holder agrees to treat the Debentures as indebtedness for United States federal income tax purposes. The remainder of this discussion assumes that the Debentures will be classified as indebtedness of Interpool for United States federal income tax purposes. However, there is no assurance that an IRS challenge or a subsequent change in the tax laws would not affect such classification. It is expected and this discussion further assumes, that the Debentures will not be issued with any “original issue discount” under the Code.

Receipt, Exercise and/or Lapse of Subscription Rights to Acquire Debentures

           It is not expected that the holders of our common stock will recognize taxable income or loss upon the receipt, exercise and/or lapse of the subscription rights to acquire Debentures, although there is no specific authority governing the tax treatment of such rights issued to common stock holders. Upon the acquisition of Debentures pursuant to the exercise of such rights, a holder’s initial tax basis for the Debentures generally will be equal to the amount paid for such Debentures and the holding period for such Debentures generally will begin on the date the rights are exercised.

Disposition of the Debentures

           Upon a sale, exchange or other disposition of the Debentures (including a distribution of cash in redemption of a holder’s Debentures), a holder of Debentures will recognize gain or loss in an amount equal to the difference between the amount realized (excluding amounts attributable to accrued and unpaid interest which the holder has not yet included in income and which will be treated separately as ordinary income) and the holder’s adjusted tax basis in the Debentures disposed of. A holder’s adjusted tax basis in the Debentures generally will be the holder’s initial purchase price. Gain or loss recognized by a holder on Debentures held for more than one year will generally be taxable as long-term capital gain or loss.

           The Debentures may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to such Debentures. A holder of Debentures who disposes of such holder’s Debentures between record dates for payments of interest thereon will nevertheless be required to include accrued but unpaid interest on the Debentures through the date of disposition in income as ordinary income, and to add such amount to his adjusted tax basis in the Debentures deemed disposed of. Accordingly, such a holder will recognize a capital loss to the extent the selling price (which may not fully reflect the value of accrued but unpaid interest) is less than the holder’s adjusted tax basis (which will include accrued but unpaid interest). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes.

Conversion or Special Redemption of the Debentures

           A holder generally will not recognize income, gain or loss upon the conversion, through the conversion agent, of its Debentures into common stock, or upon the redemption of the Debentures pursuant to the Special Redemption. A holder will, however, recognize gain upon the receipt of cash in lieu of a fractional share of common stock equal to the amount of cash received less the holder’s tax basis in such fractional share and may recognize income to the extent of any common stock received in exchange for accrued and unpaid interest. A holder’s tax basis in the common stock received upon exchange and conversion should generally be equal to the holder’s tax basis in the Debentures delivered to the conversion agent for exchange less the basis allocated to any fractional share for which cash is received, and a holder’s holding period in the common stock received upon exchange and conversion should generally begin on the date the holder acquired the Debentures delivered to the conversion agent for exchange.

Ownership of Common Stock Acquired in Conversion

           Dividends, whether paid in cash or in property (other than with additional shares of common stock), that are paid out of Interpool’s current or accumulated earnings and profits (as determined for United States federal income tax purposes) generally will be included in income by a holder of common stock when received or accrued in accordance with such holder’s method of accounting. The amount of each such dividend will equal the sum of the amount of cash and the fair market value of property received by the holder. To the extent a holder receives a dividend that exceeds Interpool’s current or accumulated earnings and profits, the excess will be treated first as a non-taxable return of capital that reduces the holder’s basis in the common stock to the extent of such basis and thereafter as taxable gain from the sale or exchange of the common stock. In addition, such dividend generally will be eligible for the dividends received deduction if received by an otherwise qualifying corporate holder.

           Upon a sale, exchange or other disposition of the common stock, a holder of common stock will recognize gain or loss in an amount equal to the difference between the amount realized and such holder’s adjusted tax basis in the common stock. As described above under the caption “—Conversion or Special Redemption of the Debentures,” a holder’s tax basis in the common stock generally should be equal to the holder’s tax basis in the Debentures delivered to the conversion agent less the basis allocated to any fractional shares for which cash is received. Gain or loss recognized by a holder of common stock held for more than one year (taking into account the period during which the holder held the Debentures) will generally be taxable as long-term capital gain or loss.

Adjustment of Conversion Price

           Treasury Regulation promulgated under Section 305 of the Code would treat holders of Debentures as having received a constructive distribution from Interpool in the event the conversion ratio of the Debentures were adjusted if (i) as a result of such adjustment, the proportionate interest (measured by the quantum of common stock into or for which the Debentures are convertible or exchangeable) of the holders of the Debentures in the assets or earnings and profits of Interpool were increased, and (ii) the adjustment was not made pursuant to a bona fide, reasonable anti-dilution formula. An adjustment in the conversion ratio would not be considered made pursuant to such a formula if the adjustment was made to compensate for certain taxable distributions with respect to the common stock. Thus, under certain circumstances, a reduction in the conversion price for the holders may result in deemed dividend income to holders to the extent of the current or accumulated earnings and profits of Interpool. Holders of the Debentures would be required to include their allocable share of such deemed dividend income in gross income but would not receive any cash related thereto.

United States Alien Holders

           For purposes of this discussion, a “United States Alien Holder” is any corporation, individual, partnership, estate or trust that is not a U.S. Holder for United States federal income tax purposes (as described below).

           A “U.S. Holder” is a holder of Debentures who or which is a citizen or individual resident (or is treated as a citizen or individual resident) of the United States for federal income tax purposes, a corporation or partnership created or organized (or treated as created or organized for federal income tax purposes) in or under the laws of the United States or any political subdivision thereof, an estate the income of which is includible in its gross income for federal income tax purposes without regard to its source or a trust generally if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more United States persons have the authority to control all substantial decisions of the trust.

           Under present United States federal income tax law: (i) payments by Interpool or any of its paying agents to any holder of Debentures who or which is a United States Alien Holder will not be subject to withholding of United States federal income tax; provided that, (a) the beneficial owner of the Debentures does not actually or constructively own 10 percent or more of the total combined voting power of all classes of stock of Interpool entitled to vote, (b) the beneficial owner of the Debentures is not a controlled foreign corporation that is related to Interpool through stock ownership, and (c) either (A) the beneficial owner of the Debentures certifies to Interpool or its agent, under penalties of perjury, that it is not a U.S. Holder and provides its name and address, (B) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business (a “Financial Institution”), and holds the Debentures in such capacity, certifies to Interpool or its agent, under penalties of perjury, that such statement has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and furnishes Interpool or its agent with a copy thereof or (C) if the beneficial owner of the Debentures is neither an individual nor a corporation for United States federal income tax purposes, certain other reporting requirements are satisfied; (ii) a United States Alien Holder of Debentures or common stock will not be subject to withholding of United States federal income tax on any capital gain realized upon the sale or other disposition of such Debentures or common stock, unless, in the case of an individual, such holder is present in the United States for 183 days or more in the taxable year of the sale or other disposition; and (iii) any dividends payable to a United States Alien Holder with respect to the common stock will be subject to withholding of United States federal income tax at a rate of 30 percent. Special rules, including a reduced rate of withholding, may apply to a United States Alien Holder that is a qualified resident of a country with which the United States has an income tax treaty in effect.

Information Reporting to Holders

           Interpool will report income on the Debentures, and any gross proceeds paid on the retirement or redemption of the Debentures, annually to the holders of record of the Debentures and the IRS. Interpool currently intends to deliver such reports to holders of record prior to January 31 following each calendar year. It is anticipated that persons who hold Debentures as nominees for beneficial holders will report the required tax information to beneficial holders on Form 1099.

Backup Withholding

           Payments made on, and proceeds from the sale of, the Debentures or common stock may be subject to a “backup” withholding tax unless the holder complies with certain identification requirements. Any such backup withholding tax will be imposed at a rate of 30 percent for the 2002 and 2003 calendar year, reduced to 29 percent for the 2004 and 2005 calendar years and further reduced to 28 percent for the calendar years 2006 – 2010. For the 2011 calendar year and thereafter, the backup withholding tax rate is scheduled to increase to 31 percent. Any withheld amounts will generally be allowed as a credit against the holder’s United States federal income tax, provided the required information is timely filed with the Internal Revenue Service.

           THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER’S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE DEBENTURES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.

Certain Tax-Qualified Plan Considerations

           If the recipient of subscription rights to acquire Debentures is an employee benefit plan, Keogh plan, tax-sheltered annuity, individual retirement account or annuity, or Roth IRA, which is intended to satisfy Section 401(a), 403, 408 or 408A of the Code (each a “Benefit Plan”), then the subscription rights may be exercised, and the Debentures acquired, by and under the Benefit Plan. If, however, the subscription rights are received by a Benefit Plan, but the Debentures are acquired outside of the Benefit Plan by a participant or beneficiary thereof pursuant to an exercise of such subscription rights, then such acquisition may be deemed to be a distribution from the Benefit Plan which may violate the terms of the Benefit Plan and/or applicable provisions of the Code and may also give rise to early distribution penalty taxes and a disqualification of the tax-exempt status of the Benefit Plan. Similarly, if the subscription rights to acquire Debentures are received by a person other than a Benefit Plan, but the Debentures are acquired by the Benefit Plan pursuant to the exercise of such subscription rights, such acquisition by the Benefit Plan may be deemed to be a contribution to the Benefit Plan which may violate the terms of the Benefit Plan and/or applicable provisions of the Code and may also give rise to a disqualification of the tax-exempt status of the Benefit Plan.

           HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF EITHER AN ACQUISITION OF DEBENTURES BY A PARTICIPANT OR BENEFICIARY OUTSIDE OF A BENEFIT PLAN PURSUANT TO THE EXERCISE OF SUBSCRIPTION RIGHTS THAT ARE RECEIVED BY THE BENEFIT PLAN, OR AN ACQUISITION OF DEBENTURES BY A BENEFIT PLAN PURSUANT TO THE EXERCISE OF SUBSCRIPTION RIGHTS THAT ARE RECEIVED BY A PERSON OTHER THAN THE BENEFIT PLAN.

DESCRIPTION OF CAPITAL STOCK

General

           As of the date of this prospectus, our authorized capital stock consists of 100,000,000 shares of common stock, par value $.001 per share, and 1,000,000 shares of preferred stock, par value $.001 per share.

           The following descriptions are summaries of material terms of our Certificate of Incorporation and By-laws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part, and provisions of applicable law.

Common Stock

           As of November 22, 2002, there were 27,354,052 shares of common stock outstanding held of record by approximately 72 stockholders.

           Dividends. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to dividends when, as and if declared by the Board of Directors out of funds legally available for that purpose.

           Voting Rights. Each holder of common stock is entitled to one vote per share on each matter to be voted on by stockholders. Because there is no cumulative voting of shares, the holders of a majority of the shares voting for the election of directors can elect all of the directors if they choose to do so.

           Liquidation Rights. Upon liquidation, subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to a pro rata share in any distribution to stockholders.

           Other Terms. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable.

Preferred Stock

           Our Board of Directors is authorized, without approval of our stockholders, to cause shares of preferred stock to be issued from time to time in one or more series, and our board of directors may fix the designations, powers, privileges, preferences and rights and the qualifications, limitations and restrictions of the shares of each series.

           The specific matters that our Board of Directors may determine include the following:

           Although no shares of preferred stock are currently outstanding, and we have no current plans to issue preferred stock, the issuance of shares of preferred stock, or the issuance of rights to purchase shares of preferred stock, could be used to discourage an unsolicited acquisition proposal. For example, a business combination could be impeded by issuing a series of preferred stock containing class voting rights that would enable the holder or holders of this series to block that transaction. Alternatively, a business combination could be facilitated by issuing a series of preferred stock having sufficient voting rights to provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power and other rights of the holders of the common stock. Although our Board of Directors is required to make any determination to issue any preferred stock based on its judgment as to the best interests of our stockholders, it could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over prevailing market prices of the stock. Our Board of Directors does not presently intend to seek stockholder approval prior to any issuance of currently authorized stock unless otherwise required by law or applicable stock exchange requirements.

Delaware Anti-Takeover Laws and Certain Certificate of Incorporation and Bylaw Provisions

           Anti-Takeover Provisions. Some provisions of Delaware law and our Certificate of Incorporation and By-laws could make the following more difficult:

           Our Certificate of Incorporation or By-laws include the following restrictions:

           These provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our Board of Directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because negotiation of those proposals could result in an improvement of their terms.

           Delaware Business Combination Statute. We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless the “business combination” or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own, 15% or more of a corporation’s voting stock. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders. Because certain of our stockholders owned more than 15% of our voting stock before we became a public company, Section 203 by its terms is currently not applicable to business combinations with these stockholders even though these stockholders each own more than 15% of our outstanding stock. If any other person acquires 15% or more of our outstanding stock, that person will be subject to the provisions of Section 203.

           Limitation on Liability of Directors. Our Restated Certificate of Incorporation provides that no director shall be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except as required by law, as in effect from time to time. Currently, Delaware law requires that liability be imposed for the following:

           Our Amended and Restated By-laws provide that, to the fullest extent permitted by law, we will indemnify any person made or threatened to be made a party to any action by reason of the fact that the person is or was our director or officer, or served at our request for any other enterprise as a director or officer. We will reimburse the expenses, including attorneys’ fees, incurred by a person indemnified by this provision when we receive an undertaking to repay such amounts if it is ultimately determined that the person is not entitled to be indemnified by us. Amending this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

Transfer Agent and Registrar

           The transfer agent and registrar of our common stock is American Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

           We have outstanding 27,354,052 shares of common stock, assuming no exercise of outstanding options. 9,315,184 of these shares of common stock are freely tradable without restriction or further registration under the Securities Act. Generally, the balance of our outstanding shares of common stock are “restricted securities” under the Securities Act, subject to the limitations and restrictions that are described below.

Rule 144

           In general, under Rule 144, a person (or persons whose shares are required to be aggregated), including an affiliate, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

           Sales under Rule 144 also are subject to manner-of-sale provisions and notice requirements and to the availability of current public information about us.

Rule 144(k)

           Under Rule 144(k), any person who is not our affiliate at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years is entitled to sell shares without complying with the manner-of-sale, public information, volume limitation or notice provisions of Rule 144. The two-year holding period includes the holding period of any prior owner who is not our affiliate.

LEGAL MATTERS

           The validity of the Debentures offered hereby will be passed on for us by Stroock & Stroock & Lavan LLP, New York, New York.

EXPERTS

           The consolidated financial statements for Interpool, Inc. as of December 31, 2000 and 2001 and for each of the three years in the period ended December 31, 2001, included in this prospectus and elsewhere in this registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto. The reports of Arthur Andersen LLP on the financial statements of Interpool have been included in this prospectus in reliance on the status of Arthur Andersen LLP as an expert in the field of accounting. Although we obtained and filed with the Securities and Exchange Commission the written consent of Arthur Andersen LLP to our naming Arthur Andersen LLP in this prospectus as having certified these consolidated financial statements for the three years ended December 31, 2001, as required by Section 7 of the Securities Act, we have not been able to obtain, after reasonable efforts, an updated written consent from Arthur Andersen LLP on or about the date of the prospectus as required by the Securities and Exchange Commission. Accordingly, it is not clear whether investors would be able to recover from Arthur Andersen LLP under Section 11 of the Securities Act of 1933 in the event any false and misleading statements and omissions were contained in the audited financial statements included in this prospectus.

CHANGE IN INDEPENDENT ACCOUNTANTS

           Arthur Andersen LLP served as our independent auditors from 1988 to 2001. On August 5, 2002, we made the determination to dismiss Arthur Andersen LLP and appointed KPMG LLP as our independent public accountants. The action was approved by the Audit Committee of our Board of Directors. KPMG LLP has not completed an audit of our consolidated financial statements for any period.

AVAILABLE INFORMATION

           We have filed with the Securities and Exchange Commission (SEC), a registration statement on Form S-1 under the Securities Act with respect to the securities to be sold in this offering. As permitted by the rules and regulations of the Commission, this prospectus omits certain information contained in the registration statement. For further information with respect to us and the securities to be sold in this offering, you should refer to the registration statement and to its exhibits and schedules. Statements contained in this prospectus regarding the contents of any agreement or other document are summaries of the material terms of the documents referenced. You should refer in each instance to the copy of the agreement filed or incorporated by reference as an exhibit to the registration statement. We are also required to file annual, quarterly and special reports, proxy statements and other information with the SEC.

           You can read the registration statement and the exhibits and schedules filed with the registration statement or any reports, statements or other information we have filed or file, at the public reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices located at 233 Broadway, New York, New York 10279 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may also obtain copies of the documents from these offices upon payment of the prescribed fees. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. You may also request copies of the documents upon payment of a duplicating fee, by writing to the SEC. In addition, the SEC maintains a web site that contains reports, proxy and information statement and other information regarding registrants (including us) that file electronically with the SEC, which you can access at www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Public Accountants

To the Stockholders of Interpool, Inc.:

We have audited the accompanying consolidated balance sheets of Interpool, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Interpool, Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.

As explained in Note 1 to the consolidated financial statements, effective January 1, 2001, the Company changed its method of accounting for derivative instruments.

New York, New York
February 26, 2002

This audit report of Arthur Andersen LLP, our former independent public accountants, is a copy of the original audit report dated February 26, 2002 rendered by Arthur Andersen LLP on our financial statements included in our Annual Report on Form 10-K filed on March 28, 2002, and has not been reissued by Arthur Andersen LLP since that date. We are including this copy of the February 26, 2002 Arthur Andersen LLP audit report pursuant to Rule 2-02(e) of Regulation S-X under the Securities Act of 1933.

INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
At December 31, 2000 and 2001
(dollars in thousands, except share and per share amounts)

                                                                                          2000              2001
ASSETS
Cash and short-term investments....................................................  $   155,553     $    102,189
Marketable securities, at fair value...............................................          136              638
Accounts and notes receivable, less allowance of $14,271 and $4,912,
    respectively...................................................................       63,470           46,106
Assets held for sale...............................................................      348,389               --
Net investment in direct financing leases..........................................      151,386          229,239
Other receivables, net, including amounts from related parties of $13,433
    and $-0-, respectively, and less allowance of $-0- and $950, respectively......       53,354           62,219
Leasing equipment, net of accumulated depreciation and amortization of
    $275,405 and $322,702, respectively............................................    1,254,935        1,372,326
Other investment securities, at fair value.........................................       30,454           15,970
Other assets.......................................................................       99,111           79,078
Assets related to discontinued operations..........................................       38,043           10,020
                                                                                     -----------      ------------
         Total Assets..............................................................  $ 2,194,831      $ 1,917,785
                                                                                     ===========      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses..............................................  $   122,673     $     80,683
Income Taxes:
    Current........................................................................        1,075              353
    Deferred.......................................................................       28,892           29,890
                                                                                          29,967           30,243
                                                                                     -----------      ------------
Deferred Income....................................................................          911              766

Debt and capital lease obligations:
    Due within one year............................................................      199,487          179,664
    Due after one year.............................................................    1,396,788        1,155,646
                                                                                     -----------      ------------
                                                                                       1,596,275        1,335,310
                                                                                     -----------      ------------
Liabilities related to discontinued operations.....................................       25,823            6,072

Company-obligated mandatorily redeemable preferred securities in subsidiary grantor
    trusts (holding solely junior Subordinated Deferrable interest debentures of the
    Company) (75,000 shares 9 7/8% Capital Securities outstanding, liquidation
    preference $75,000)............................................................       75,000           75,000

Minority interest in equity of subsidiaries........................................        1,951           27,427

Stockholders' equity:
    Preferred stock, par value $.001 per share; 1,000,000 authorized, none issued..          ---              ---
    Common stock, par value $.001 per share; 100,000,000 shares authorized,
       27,579,952 issued at December 31, 2000 and 2001.............................           28               28
    Additional paid-in capital.....................................................      124,184          124,184
    Treasury stock, at cost, 158,500 and 216,600 shares at December 31, 2000
       and 2001, respectively......................................................      (1,170)          (2,099)
    Retained earnings..............................................................      217,955          255,154
    Accumulated other comprehensive income (loss)..................................        1,234         (14,803)
                                                                                     -----------      ------------
         Total stockholders' equity................................................      342,231          362,464
                                                                                     -----------      ------------
         Total liabilities and stockholders' equity................................   $2,194,831       $1,917,785
                                                                                     ===========      ============

The accompanying notes to consolidated financial statements are an integral part of these balance sheets.

INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the Years Ended December 31, 1999, 2000 and 2001
(dollars in thousands, except share and per share amounts)

                                                                             1999          2000         2001
                                                                            ---------    ---------    ---------
Revenues                                                                     $189,788     $242,255      $305,133
Cost and expenses:
   Lease operating expenses........................................            28,391       36,865        63,870
   Administrative expenses.........................................            19,910       21,862        26,170
   Provision for doubtful accounts.................................             6,925        2,192         2,302
   Market value adjustment for derivative instruments..............               ---          ---         2,647
   Depreciation and amortization of leasing equipment..............            55,635       60,767        74,311
   Other expense, net..............................................             2,822        2,509           466
   Interest expense................................................            64,429       84,596        95,044
   Interest income.................................................           (12,049)     (16,511)       (9,400)
                                                                           -----------  -----------   ------------
                                                                              166,063      192,280       255,410
                                                                           -----------  -----------   ------------
Income from continuing operations before provision for income
   taxes, results from discontinued operations, cumulative effect
   of change in accounting principle and extraordinary gain........            23,725       49,975        49,723
   Provision for income taxes......................................             2,800        8,175         6,725
                                                                           -----------  -----------   ------------
Income from continuing operations before results from discontinued
   operations, cumulative effect of change in accounting principle and
   extraordinary gain..............................................            20,925       41,800        42,998
(Loss) income from discontinued operations, net of applicable taxes
   of $600, $450 and $29...........................................               946        1,156       (1,909)
Gain (loss)from disposal of discontinued operations.................              ---          ---           ---
Cumulative effect of change in accounting principle, net
   of applicable taxes of $440 and $44.............................               ---          660           833
Extraordinary gain of debt retirement, net of applicable
   taxes of $494, $560 and $372....................................              740            84           558
                                                                           -----------  -----------   ------------
Net income.........................................................         $  22,611    $  44,456     $  42,480
                                                                           ===========  ===========   ============
Income per share from continuing operations before results from
   discontinued operations, cumulative effect of change in accounting
   principle and extraordinary gain:
     Basic.........................................................         $    0.76    $    1.52     $    1.57
     Diluted.......................................................         $    0.74    $    1.50     $    1.48
(Loss) income from discontinued operations:
     Basic.........................................................         $    0.03    $    0.04    $    (0.07)
     Diluted.......................................................         $    0.03    $    0.04    $    (0.06)
Cumulative effect of change in accounting principle:
     Basic.........................................................                NA    $    0.02     $    0.03
     Diluted.......................................................                NA    $    0.02     $    0.03
Extraordinary gain:
     Basic.........................................................         $    0.03    $    0.03     $    0.02
     Diluted.......................................................         $    0.03    $    0.03     $    0.02
Net income per share:
     Basic.........................................................         $    0.82    $    1.62     $    1.55
     Diluted.......................................................         $    0.80    $    1.60     $    1.47
Weighted average shares outstanding (in thousands):
     Basic.........................................................            27,571       27,421        27,417
     Diluted.......................................................            28,234       27,834        28,965

The accompanying notes to consolidated financial statements are an integral part of these statements.

                                                                                                    Accum.
                                                                                                    Other
                               Preferred Stock    Common Stock       Additional                     Comp.
                                                                     Paid-in    Treasury  Retained  Income   Comp.
                               Shares  Par Value  Shares  Par Value  Capital    Stock     Earnings  (Loss)   Income
                              -------- --------- -------- ---------- ---------- --------- --------- ------- -------
BALANCE, December 31, 1998...    --   $ --      27,566     $28     $124,046   $ --     $159,138     $ 3
Net income...................    --     --       --         --        --        --       22,611      --    $ 22,611
Other comprehensive income...    --     --       --         --        --        --        --        710         710
                                                                                                           ---------
Comprehensive income.........    --     --       --         --        --        --        --         --    $ 23,321
Shares issued on exercise of     --     --       14         --        138        --       --         --
   stock option..............
Purchase of 158,500 shares of    --     --       --         --        --     (1,170)      --         --
   treasury stock............
Cash dividends declared:
   Common Stock, $0.15 per
   share.....................    --     --       --         --        --        --      (4,137)      --
                               -----  -----   -------  ---------  --------  --------- ---------- --------

BALANCE, December 31, 1999...    --     --    27,580        28     124,184   (1,170)   177,612      713
Net income...................    --     --       --         --         --        --     44,456        --   $ 44,456
Other comprehensive income...    --     --       --         --         --        --        --        521        521
                                                                                                           ---------
Comprehensive income.........    --     --       --         --         --        --        --         --   $ 44,977
Cash dividends declared:
   Common stock, $0.15 per
   share ....................    --     --       --         --        --         --     (4,137)       --
                               -----  -----   -------  ---------  --------  --------- ---------- --------

BALANCE, December 31, 2000..     --     --    27,580        28     124,184   (1,170)   217,955    1,234
Net income...................    --     --       --         --        --         --    42,480        --     $42,480
Adoption of FAS 133-             --     --       --         --        --         --       --     (7,411)     (7,411)
   Cumulative effect through
   December 31, 2000.........
Other comprehensive loss.....    --     --       --         --        --         --       --     (8,626)     (8,626)
                                                                                                           ---------
Comprehensive income.........    --     --       --         --        --         --       --         --     $26,443

Purchase of 58,100 shares of     --     --       --         --        --       (929)      --         --
    treasury stock...........
Cash dividends declared:
   Common stock, $0.1925
   per share.................    --     --       --         --        --         --     (5,281)      --
                               -----  -----   -------  ---------  --------  --------- ---------- --------

BALANCE, December 31, 2001...    --   $ --    27,580       $28    $124,184  $(2,099)  $255,154  $(14,803)
                               =====  =====   =======  =========  ========  ========= ========== ========

                                                                              1999           2000           2001
                                                                          -----------   ------------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................................          $    22,611    $   44,456      $ 42,480
Adjustments to reconcile net income to net cash provided
   by operating activities:
   Loss (Gain) from discontinued operations, net of tax.........                (946)        (1,156)        1,909
   Depreciation and amortization................................               50,954        66,694        79,044
   Loss on sale of leasing equipment............................                  470         1,520         1,659
   Gain on sale of assets held for sale.........................                  ---           ---        (1,774)
   Provision for uncollectible accounts.........................                6,925         2,192         2,302
   Gain on securitized lease receivables........................               (7,942)          ---           ---
   Gain on retirement of debt, net of tax.......................                 (740)         (840)         (558)
   Cumulative effect of change in accounting principle, net of tax                ---          (660)         (833)
   Loss on market value adjustment for derivative instruments...                  ---           ---         2,647
   Changes in assets and liabilities:
     Accounts and notes receivable..............................               (5,005)       (4,287)       (7,555)
     Other receivables..........................................                4,321          (917)       (3,513)
     Other assets...............................................               10,562       (11,002)       10,542
     Accounts payable and accrued expenses......................               (9,172)        9,061       (18,016)
     Income taxes payable.......................................                1,172         9,373         4,377
     Deferred income............................................                 (950)          330         (145)
     Minority interest in equity of subsidiaries................                  520           807        (1,030)
                                                                              --------      --------     ----------
       Net cash provided by operating activities................               72,780        115,571      111,536
                                                                              --------      --------     ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisition of leasing equipment...........................             (196,234)      (245,756)     (157,116)
     Proceeds from dispositions of leasing equipment............               22,921         84,419        30,948
     Proceeds from disposition of assets held for sale..........                  ---            ---       299,105
     Investment in direct financing leases......................             (100,092)       (47,717)     (123,728)
     Cash collections on direct financing leases, net of
       income recognized........................................               53,025         49,074        43,014
     Changes in marketable securities and other investing
       Activities...............................................                4,818            112         (512)
     Investment in and advances to subsidiary...................               (3,500)           ---           ---
     Change in accrued equipment purchases......................                2,661         48,857      (44,033)
     Changes in assets and liabilities related to discontinued
       operations...............................................                 (530)        (4,334)       6,363
     Acquisitions, net of cash acquired.........................                            (673,369)         ---
                                                                              --------      --------     ----------
       Net cash provided by (used for) investing activities.....             (216,931)      (788,714)       54,041
                                                                              --------      --------     ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of debt.............................              134,570        570,742       145,200
     Payment of long-term debt and capital lease
       Obligations..............................................              (53,749)       (96,373)     (244,930)
     Borrowings of revolving credit lines.......................               240,190       304,814       165,384
     Repayment of revolving credit lines........................             (260,974)      (153,138)     (278,867)
     Proceeds from issuance of common stock.....................                  136           ---           ---
     Proceeds from securitized lease receivables................              189,087           ---           ---
     Purchase of treasury stock.................................               (1,170)           ---         (929)
     Dividends paid.............................................               (4,136)        (4,113)      (4,799)
                                                                              --------      --------     ----------
       Net cash provided by (used for) financing activities.....              243,954        621,932      (218,941)
                                                                              --------      --------     ----------
       Net increase (decrease) in cash and short-term
         Investments............................................              $99,803       $(51,211)    $(53,364)

CASH AND SHORT-TERM INVESTMENTS, beginning of period............              106,961        206,764     155,553
                                                                              --------      --------     ----------
CASH AND SHORT-TERM INVESTMENTS, end of period..................          $   206,764      $ 155,553     $102,189
                                                                              ========      ========     ==========
Supplemental schedule of non-cash financing activities:

Assumption of debt in connection with Assets Held for Sale......
                                                                                  ---          ---       $ 52,551
                                                                              ========      ========     ==========
Increase in minority interest in consolidated subsidiary from
   contribution of equipment....................................
                                                                                  ---          ---       $ 26,326
                                                                              ========      ========     ==========
Liability on unrealized loss on swap agreements.................                  ---          ---       $ 19,798
                                                                              ========      ========     ==========

Dry freight standard containers...........   12.5 to 15 years

Chassis...................................   17.5 years

Other.....................................   3 to 25 years

                                                                         Gross Unrealized
                                                                        -------------------
                                                  Amortized          Holding          Holding           Estimated
                                                     Cost             Gains            Losses          Fair Value
                                                   ---------       ----------        ----------       ------------
2000
-----
   Other Investment Securities...........          $29,140           $1,314              $---            $30,454
   Equity and Other Securities...........              193               10              (67)                136
                                                       ---               --              ----               ----
                                                   $29,333           $1,324             $(67)            $30,590
                                                   -------          --------            -----            --------
2001
-----
   Other Investment Securities...........          $15,314             $656              $---            $15,970
   Equity and Other Securities...........              663               42              (67)                638
                                                       ---               --              ----               ----
                                                   $15,977             $698             $(67)            $16,608
                                                   =======          ========            =====            ========

                                                                   Amortized            Estimated Fair
                                                                     Cost                   Value
                                                                   ----------          ----------------
         Due in one year..................................           $7,887                $8,225
         Due after one year through five years............            7,427                 7,745

                                                              Before Tax             Tax                  Net of
Year Ended December 31, 1999                                    Amount              Effect              Tax Amount
                                                              -----------         ----------           ------------
Unrealized holding gains (losses) arising during the
period:
          Marketable securities......................            $(34)               $12                   $(22)
          Other investment securities................             771                (39)                   732
                                                                 -----              -----                  ------
                                                                  $737              $(27)                  $710
                                                                 =====              =====                  ======

Year Ended December 31, 2000
Unrealized holding gains arising during the
period:
          Marketable securities......................              $14               $(5)                     $9
          Other investment securities................              539               (27)                    512
                                                                 -----              -----                  ------
                                                                  $553              $(32)                   $521
                                                                 =====              =====                  ======
Year Ended December 31, 2001
Unrealized holding losses arising during the period:
          Marketable securities......................            $(28)                $10                  $(18)
          Other investment securities................            (658)                 33                  (625)
          Swap agreements............................          (9,911)              1,928                (7,983)
                                                               -------              ------               --------
                                                             $(10,597)             $1,971               $(8,626)
                                                             =========             =======              =========

                                                      December 31, 2000
                                                     --------------------
                                                  Carrying
                                                    Amount           Fair Value
                                                  ----------       ------------
         Interest rate swap agreements..........       $133            ($9,012)

                                                       1999     2000     2001
                                                     --------  ------- --------
         Average common shares outstanding..........   27,571   27,421   27,417

         Common shares issuable(1)..................      663      413    1,548
                                                      ------- - -------  -------
         Average common shares outstanding
             assuming dilution......................   28,234   27,834   28,965
                                                      ======== ======== ========

                                                            2000                 2001
                                                          --------              --------
         Deferred tax assets:
                Loss carry forwards..................     $75,844               $105,662
                Finance leases receivable............       3,392                  3,704
                Other, primarily operating reserves..       4,934                  8,617
                                                          -------              ---------
                   Total deferred tax assets.........      84,170                117,983
                                                          -------              ---------

         Deferred tax liabilities:
                Operating property, net..............     103,603                135,765
                Other................................       9,459                 12,108
                                                          -------              ---------
                   Total deferred tax liabilities....     113,062                147,873
                                                          -------              ---------
                   Net deferred tax liability........     $28,892                $29,890
                                                          ========              ========

                                                                     1999              2000             2001
                                                                    ------            ------            ------
   U.S.  statutory rate...................................          35.0%             35.0%            35.0%
   Difference due to operation of subsidiary in
      Barbados............................................         (25.7)            (23.1)           (23.6)
   Federal taxes on foreign income........................            1.3               0.9              1.0
   State taxes............................................            0.9               3.1              0.6
   Other..................................................            0.3               0.5              0.5

           Actual tax rate..................................        11.8%             16.4%            13.5%
                                                                   -------          --------         ---------

                                                                 1999           2000            2001
                                                                ------         ------         -------
                  U.S.................................         $2,400         $7,459          $5,981
                  Other...............................            400            716             744
                                                                 -----          -----           -----
                                                               $2,800         $8,175          $6,725
                                                               =======        =======         ========
                  Current.............................         $2,248         $2,691          $2,144
                  Deferred............................            552          5,484           4,581
                                                                 -----          -----           -----
                                                               $2,800         $8,175          $6,725
                                                               =======        =======         ========

                                                Payment               Interest               Principal
                                               ---------             ----------             ------------
           2002......................            $54,128                $15,482                 $38,646
           2003......................             69,741                 13,767                  55,974
           2004......................             60,226                 10,658                  49,568
           2005......................             67,797                  8,662                  59,135
           2006......................             40,989                  6,084                  34,905
           Thereafter................            124,988                  7,964                 117,024
                                                --------                --------               ---------
                                                $417,869                $62,617                $355,252
                                                ========               =========               =========

                    2002................................       $ 11,625
                    2003................................          9,411
                    2004................................          9,388
                    2005................................          9,397
                    2006................................          8,966
                    Thereafter..........................         44,910

                                                                 December 31, 2001
                                        ---------------------------------------------------------------------
                                              Total Lease               Unearned              Net Lease
                                              Receivable              Lease Income            Receivable
                                             -------------          ---------------         --------------
2002................................            $69,732                  $23,376               $46,356
2003................................             59,776                   18,551                41,225
2004................................             55,521                   13,699                41,822
2005................................             42,258                    9,295                32,963
2006................................             33,355                    6,213                27,142
Thereafter..........................             48,000                    8,269                39,731
                                                --------                 --------              --------
                                               $308,642                  $79,403              $229,239
                                               =========                 ========             ==========

                 2002.......................................       $70,402
                 2003.......................................        62,194
                 2004.......................................        40,689
                 2005.......................................        23,314
                 2006.......................................         6,735
                 Thereafter.................................         3,928

                                                                   1999            2000            2001
                                                                  ------          ------          ------
Balance, beginning of year..............................         $4,632         $10,260         $14,271
Provision charged to expense............................          6,925           2,192           2,302
Acquired................................................            ---           1,281             ---
Write-offs, net of recoveries...........................        (1,297)             538         (10,711)
                                                                --------        --------        ---------
Balance, end of year....................................        $10,260         $14,271          $5,862
                                                                ========        ========        =========

                      2002................................      $141,018
                      2003................................        95,561
                      2004................................        56,357
                      2005................................       219,804
                      2006................................        19,365
                      Thereafter..........................       447,953
                                                                ---------
                                                                $980,058
                                                                =========

                                                                               1999             2000
                                                                               ----             -----
               Revenues.............................................        $258,433        $298,484
               Income from continuing operations before change in
                  accounting principle and extraordinary items......          28,909          47,050
               Basic net income per share...........................           $1.05           $1.72
               Diluted net income per share.........................           $1.02           $1.69

                                                                            Securitized Lease
                                                                               Receivables
                                                                              --------------
        Carrying amount/fair value of retained interests.............            $15,970
        Weighted-average life (in years).............................                2.0
        Expected credit losses (annual rate).........................                 1.5%
        Impact on fair value of 10% adverse change...................               $129
        Impact on fair value of 20% adverse change...................               $275
        Residual cash flows discount rate (annual)...................                12.6%
        Impact on fair value of 10% adverse change...................               $310
        Impact on fair value of 20% adverse change...................               $619

                                                                    Year Ended December 31
                                                                   ------------------------
                                                                     2000               2001
                                                                    ------            -------
        Proceeds from new securitizations................            $---                $---
        Servicing fees received..........................            $611                $486
        Cash flows received on retained interest.........          $7,593             $15,585

                                                                          1999            2000             2001
                                                                         -----           -----           --------
        Revenue................................................           $958           $1,104             $496
        Lease operating expense................................         $3,030           $3,033           $4,343
        Administrative expense.................................         $1,092           $1,061           $1,379
        Interest expense.......................................           $353             $168             $---

                                                                                     Domestic
                                                                   Container        lntermodal
      1999:                                                         Leasing         Equipment              Totals
     -------                                                      -----------      -------------          --------
      Revenues from external customers.....................          $94,608           $95,180           $189,788
      Lease operating and administrative expenses..........           16,959            38,267             55,226
      Depreciation and amortization........................           32,886            22,749             55,635
      Other income/(expense), net..........................           (1,953)             (869)            (2,822)
      Interest income......................................            3,563             8,486             12,049
      Interest expense.....................................           24,635            39,794             64,429
      Income from continuing operations before
        taxes and extraordinary item.......................           21,738             1,987             23,725

                                                                                     Domestic
                                                                   Container        lntermodal
      2000:                                                         Leasing         Equipment              Totals
     -------                                                      -----------      -------------          --------
      Revenues from external customers.....................         $103,018          $139,237           $242,255
      Lease operating and administrative expenses..........           12,637            48,282             60,919
      Depreciation and amortization........................           29,911            30,856             60,767
      Other income/(expense), net..........................             (719)           (1,790)            (2,509)
      Interest income......................................            5,984            10,527             16,511
      Interest expense.....................................           32,569            52,027             84,596
      Income from continuing operations before
        taxes and extraordinary item.......................           33,166            16,809             49,975
      Net investment in DFL's..............................          125,046            26,340            151,386
      Leasing equipment, net...............................          483,925           771,010          1,254,935
      Equipment purchase...................................          163,535           129,938            293,473
      Total segment assets.................................         $795,994        $1,360,794         $2,156,788


                                                                                     Domestic
                                                                   Container        lntermodal
      2001:                                                         Leasing         Equipment              Totals
     -------                                                      -----------      -------------          --------
      Revenues from external customers.....................         $112,085          $193,048           $305,133
      Lease operating and administrative expenses..........           12,443            82,546             94,989
      Depreciation and amortization........................           36,583            37,728             74,311
      Other income/(expense), net..........................           (1,644)            1,178               (466)
      Interest income......................................            3,788             5,612              9,400
      Interest expense.....................................           27,966            67,078             95,044
      Income from continuing operations before
        taxes and extraordinary item.......................           37,237            12,486             49,723
      Net investment in DFL's..............................          168,890            60,349            229,239
      Leasing equipment, net...............................          529,867           842,459          1,372,326
      Equipment purchase...................................          168,906           111,938            280,844
      Total segment assets.................................         $822,784        $1,084,981         $1,907,765

Geographic Information:
    REVENUES:                                                          1999               2000             2001
                                                                      ------            --------          --------
    United States (a).....................................          $103,190           $139,312          $193,111
    International.........................................            86,598            102,943           112,022
                                                                    ---------          ---------         ---------
                                                                    $189,788           $242,255          $305,133
                                                                   ===========         =========         =========
    ASSETS:
    United States.........................................                           $1,360,794        $1,084,981
    International.........................................                              795,994           822,784
                                                                                        --------          --------
                                                                                     $2,156,788        $1,907,765
                                                                                     ===========       ============

                                                                       Number of              Weighted Average
                                                                        Options                Exercise Price
                                                                      -----------             -----------------
              Outstanding at January 1, 1999.............               4,393,501                      $10.25
                Granted in 1999..........................                     ---                         ---
                Exercised in 1999........................                (13,500)                       10.25
                                                                       -----------                    ---------
              Outstanding at December 31, 1999...........               4,380,001                      $10.25
                Granted in 2000..........................                 115,000                       11.21
                Exercised in 2000........................                     ---                         ---

              Outstanding at December 31, 2000...........               4,495,001                      $10.27
                Granted in 2001..........................                     ---                         ---
                Exercised in 2001........................                     ---                         ---

              Outstanding at December 31, 2001...........               4,495,001                      $10.27
                                                                       -----------                    ---------
              Exercisable at December 31, 2001...........               4,385,001                      $10.25
                                                                       -----------                    ---------

                                                                            Year Ended December 31,
                                                              -----------------------------------------------------
                                                                     1999              2000             2001
                                                                    ------            ------            ------
      Net income as reported..............................          $22,611          $44,456          $42,480
      Net income pro forma................................          $18,681          $44,423          $42,360
      Basic net income per share, as reported.............            $0.82            $1.62            $1.55
      Basic net income per share, pro forma...............            $0.68            $1.62            $1.55
      Diluted net income per share, as reported...........            $0.80            $1.60            $1.47
      Diluted net income per share, pro forma.............            $0.66            $1.60            $1.46

2000 quarterly financial data (unaudited):                1st               2nd               3rd         4th(a)
------------------------------------------               ----              -----             -----        ------
Revenues.......................................         $50,529           $54,258           $57,964      $79,504
Income from continuing operations before
   results from discontinued operations,
   cumulative effect of change in accounting
   principle and extraordinary gain............          $8,724           $10,074           $10,709      $12,293
Basic income per share.........................           $0.32             $0.37             $0.39        $0.45
Diluted income per share.......................           $0.32             $0.37             $0.38        $0.43

2001 quarterly financial data (unaudited):                1st               2nd               3rd         4th(b)
------------------------------------------               ----              -----             -----        ------
Revenues.......................................         $76,468           $77,653           $74,945      $76,067
Income from continuing operations before
   results from discontinued operations,
   cumulative effect of change in accounting
   principle and extraordinary gain............         $11,035           $12,208           $10,037       $9,718
Basic income per share.........................           $0.40             $0.45             $0.37        $0.35
Diluted income per share.......................           $0.38             $0.42             $0.34        $0.34

                                                                                    December 31,     September 30,
                                                                                       2001              2002
                                                                                   -------------    -------------
ASSETS                                                                                               (Unaudited)
Cash and short-term investments..................................................     $102,189          $166,508
Marketable securities, at fair value.............................................          638             1,673
Accounts and notes receivable, less allowance of
    $4,912 and $9,576  respectively..............................................       46,106            58,400
Net investment in direct financing leases........................................      229,239           235,770
Other receivables, net, less allowance of $950 and $950, respectively............       62,219            42,204
Leasing equipment, net of accumulated depreciation and amortization of
    $322,702 and $462,347, respectively..........................................    1,372,326         1,623,361
Other investment securities, at fair value.......................................       15,970            11,589
Other assets.....................................................................       79,078            79,996
Assets related to discontinued operations........................................       10,020             4,109
                                                                                        -------           -------
         Total assets............................................................   $1,917,785        $2,223,610
                                                                                    ===========       ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses............................................      $80,683          $164,525
Income  taxes:
    Current......................................................................          353               812
    Deferred.....................................................................       29,890            27,532
                                                                                       --------          --------
                                                                                        30,243            28,344
                                                                                       --------          --------
Deferred income..................................................................          766             1,187
Debt and capital lease obligations:
    Due within one year..........................................................      179,664           179,040
    Due after one year...........................................................    1,155,646         1,376,730
                                                                                     ----------       -----------
                                                                                     1,335,310         1,555,770
                                                                                     ----------       -----------
Liabilities related to discontinued operations...................................        6,072               786

Company-obligated mandatorily redeemable preferred securities
    in subsidiary grantor trusts (holding solely junior Subordinated
    Deferrable interest debentures of the Company) (75,000 shares 9-7/8%
    Capital Securities outstanding, liquidation preference $75,000)..............       75,000            75,000

Minority interest in equity of subsidiaries......................................       27,247            34,056

Stockholders equity:
    Preferred stock, par value $.001 per share; 1,000,000 shares
       authorized, none issued...................................................          ---               ---
    Common stock, par value $.001 per share; 100,000,000 shares authorized,
       27,579,952 issued at December 31, 2001 and September 30, 2002 ............           28                28
    Additional paid-in capital...................................................      124,184           124,184
    Treasury shares, at cost, 216,600 at December 31, 2001 and
       218,700 at September 30, 2002.............................................        (2,099)           (2,139)
    Retained earnings............................................................       255,154           271,007
    Accumulated other comprehensive loss, net of taxes...........................       (14,803)          (29,138)
                                                                                        --------          ---------
         Total stockholders' equity..............................................       362,464           363,942
                                                                                        --------          ---------
         Total liabilities and stockholders' equity..............................    $1,917,785        $2,223,610
                                                                                     ===========       =============

                                                     Three Months Ended         Nine Months Ended
                                                      September 30,               September 30,
                                                        2001          2002       2001        2002
                                                        ----          ----       ----        ----

Revenues                                            $   74,945     $  86,096     $229,066   $233,413
Cost and expenses:
  Lease operating and administrative expenses           20,554        26,570       65,645     65,406
  Provision for doubtful accounts                          497         1,288        1,852      2,935
  Market value adjustment for derivative instruments     1,250         3,757        2,084      5,809
  Depreciation and amortization of leasing equipment    18,792        23,191       55,525     60,958
  Minority interest (income)/expense, net                  553            (7)         553      1,535
  (Income)/loss for investments accounted for
    under the equity method                                (59)          (88)         105      3,648
  Other (income)/expense, net                              259           561       (1,136)    (4,673)
  Interest expense                                      23,150        29,452       71,468     81,210
  Interest income                                       (1,308)         (591)      (6,560)    (4,127)
                                                        ---------    -------      -------    -------
                                                        63,688        84,133      189,536    212,701
                                                        ---------    -------      -------    -------
Income from continuing operations before provision
    for income taxes, results from discontinued
    operations, cumulative effect of change in
    accounting principle and extraordinary gain         11,257         1,963       39,530     20,712
(Benefit) provision for income taxes                     1,220        (1,527)       6,250       (350)
Income from continuing operations before results
    from discontinued operations, cumulative
    effect of change in accounting principle
    and extraordinary gain                              10,037         3,490       33,280     21,062
Loss from discontinued operations, net of
    applicable taxes of $125, $0, $380 and $472           (876)           --       (1,694)      (710)
Cumulative effect of change in accounting principle,
    net of applicable taxes of $44                          --            --          833         --
Extraordinary gain on debt retirements, net of
    applicable taxes of $200, $0, $372 and $13             301            --          558         19
                                                        ---------    -------      -------    -------
Net income                                              $9,462        $3,490      $32,977    $20,371
                                                        ---------    -------      -------    -------
Income per share from
    continuing operations before results from
    discontinued operations, cumulative
    effect of change in accounting principle and
    extraordinary gain:
      Basic                                               $0.37        $0.13         $1.21     $0.77
                                                        ---------    -------      -------    -------
      Diluted                                             $0.34        $0.12         $1.15     $0.72
                                                        ---------    -------      -------    -------
Loss from discontinued operations:
      Basic                                              ($0.03)         N/A        ($0.06)   ($0.03)
                                                        ---------    -------      -------    -------
      Diluted                                            ($0.03)         N/A        ($0.06)   ($0.02)
                                                        ---------    -------      -------    -------
Cumulative effect of change in accounting principle:
      Basic                                                N/A           N/A         $0.03      N/A
                                                        ---------    -------      -------    -------
      Diluted                                              N/A           N/A         $0.03      N/A
                                                        ---------    -------      -------    -------
Extraordinary gain:
      Basic                                               $0.01          N/A         $0.02     $0.00
                                                        ---------    -------      -------    -------
      Diluted                                             $0.01          N/A         $0.02     $0.00
                                                        ---------    -------      -------    -------
Net income per share:
     Basic                                                $0.35        $0.13         $1.20     $0.74
                                                        ---------    -------      -------    -------
     Diluted                                              $0.32        $0.12         $1.14     $0.70
                                                        ---------    -------      -------    -------
Weighted average shares outstanding (in  thousands):
     Basic                                               27,421       27,361        27,421    27,361
                                                        ---------    -------      -------    -------
     Diluted                                             29,161       28,969        29,011    29,285
                                                        =========    =======      ========   =======

                              Preferred Stock     Common Stock                                    Accum.
                              ---------------     ------------                                    Other
                                                                Additional                         Comp.       Comp.
                                       Par              Par      Paid-in    Treasury   Retained    Income      Income
                              Shares  Value   Shares   Value     Capital     Stock     Earnings    (Loss)      (Loss)
                              ------  -----   ------   -----    ----------  -------    --------   --------    --------

BALANCE, December 31, 2000       --    $--   27,580     $28     $124,184    $(1,170)   $217,955    $1,234
Net income                       --     --       --      --           --         --      42,480        --      $42,480
Adoption of FAS 133-
  Cumulative effect through
  December 31, 2000                                                                                (7,411)      (7,411)
Other comprehensive loss         --     --       --      --           --         --          --    (8,626)      (8,626)
                                                                                                                -------
Comprehensive income             --     --       --      --           --         --          --        --      $26,443
Purchase of 58,100 shares                                                                                      --------
    of treasury stock            --     --       --      --           --       (929)         --
Cash dividends declared:
  Common stock, $0.1925 per
    share                        --     --       --      --           --         --      (5,281)      --

BALANCE, December 31, 2001       --     --   27,580      28      124,184     (2,099)    255,154  (14,803)
Net income                       --     --       --      --           --         --      20,371       --       $20,371
Other comprehensive loss         --     --       --      --           --         --          --  (14,335)      (14,335)
                                                                                                               --------
Comprehensive income             --     --       --      --           --         --          --       --        $6,036
                                                                                                               --------
Purchase of 2,100 shares of
    treasury stock               --     --       --      --           --        (40)         --       --
Cash dividends declared:
  Common stock, $0.11  pershare  --     --       --      --           --         --      (4,518)      --
                                                                                         -------
BALANCE , September 30, 2002     --    $--   27,580     $28     $124,184    $(2,139)   $271,007 $(29,138)
                                =====  ====  ======     ====    =========   ========   ======== =========

                                                                         Nine Months Ended
                                                                           September 30,
                                                                          2001         2002
                                                                         ---------   --------


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                $32,977     $20,371
Adjustments to reconcile net income to net cash
   provided by operating activities --
Loss from discontinued operations, net of tax                               1,694         710
Depreciation and amortization                                              58,890      68,504
Loss on sale of leasing equipment                                              72         494
Gain on sale of assets held for sale                                       (1,774)         --
Gain on sale of land                                                           --      (4,766)
Provision for doubtful accounts                                             1,852       2,935
Gain on retirement of debt, net of tax                                       (558)        (19)
Loss on market value adjustment for derivative instruments                  2,084       5,809
Cumulative effect of change in accounting principle, net of tax              (833)         --
Changes in assets and liabilities -
   Accounts and notes receivable                                           (3,181)      2,375
   Other receivables                                                          293      (3,464)
   Other assets                                                             8,323      (6,715)
   Accounts payable and accrued expenses                                  (19,278)        130
   Income taxes payable                                                     4,653         979
   Benefit for deferred income taxes                                           --      (2,697)
   Deferred income                                                           (116)       (122)
   Minority interest in equity of subsidiaries                             (1,370)       (889)
                                                                         ---------   --------
     Net cash provided by operating activities                             83,728      83,635
                                                                         ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of leasing equipment                                       (97,699)   (191,620)
   Proceeds from dispositions of leasing equipment                         31,815      18,830
   Proceeds from disposition of assets held for sale                      292,294          --
   Proceeds from sale of land                                                  --       7,955
   Investment in direct financing leases                                  (71,832)    (37,048)
   Cash collections on direct financing leases, net of income recognized   29,078      37,275
   Changes in marketable securities and other investing activities           (660)     (1,087)
   Change in accrued equipment purchases                                  (50,106)     34,627
   Incremental cash from consolidation of CAI as of June 27, 2002              --         880
   Changes in assets and liabilities related to discontinued operations     1,388        (977)
                                                                         ---------   --------
      Net cash (used for) provided by investing activities                134,278    (131,165)
                                                                         ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt                                82,415   1,119,589
   Payment of long-term debt and capital lease obligations               (214,975)   (940,410)
   Borrowings of revolving credit lines                                    90,384      22,000
   Repayment of revolving credit lines                                   (278,867)    (85,150)
   Purchase of treasury stock                                                  --         (40)
   Dividends paid                                                          (3,428)     (4,140)
                                                                         ---------   --------
      Net cash provided by (used for) financing activities               (324,471)    111,849
                                                                         ---------   --------
      Net increase (decrease) in cash and short-term investments         (106,465)     64,319
CASH AND SHORT-TERM INVESTMENTS, beginning of period                      155,553     102,189
                                                                         ---------   --------
CASH AND SHORT-TERM INVESTMENTS, end of period                            $49,088    $166,508
Supplemental schedule of non-cash financing activities:                  ========    =========
   Assumption of debt by purchaser in connection with Assets
      Held for Sale                                                       $52,552          --
                                                                         =========   =========

                                                                   (in thousands)
                                                      Nine Months Ended      Three Months Ended
                                                        September 30,          September 30,
                                                      2001          2002      2001       2002
                                                      ----          ----      ----       -----
Average common shares outstanding                     27,421        27,361    27,421     27,361

Common shares issuable under stock option plans        1,740         1,608     1,590      1,924
                                                      ------        ------    ------     ------
Average common shares outstanding assuming dilution   29,161        28,969    29,011     29,285
                                                      ======        ======    ======     =======

Dry freight standard containers             12.5 years
Chassis                                     17.5 to 22.5 years
Other                                       3 to 25 years

                                                       Before-Tax      Tax      Net of Tax
                                                          Amount      Effect      Amount
                                                       ----------    -------    ----------
Nine Months Ended September 30, 2001
Unrealized holding losses arising during the period:
   Marketable securities                                  $(100)       $35          $(65)
   Other investment securities                            $(658)       $33         $(625)
   Swap agreements                                      (13,867)     3,083       (10,784)
                                                       ----------    -------    ---------
                                                       $(14,625)    $3,151      $(11,474)
                                                       ----------    -------    ---------

                                                       Before-Tax      Tax      Net of Tax
                                                          Amount      Effect      Amount
                                                       ----------    -------    ---------
Nine Months Ended September 30, 2002
Unrealized holding losses arising during the period:
   Marketable securities                                   $(18)        $6          $(12)
   Cumulative foreign currency translation adjustment      $(80)       $28          $(52)
   Swap agreements                                      (22,953)     8,682       (14,271)
                                                       ----------    -------    ---------
                                                       $(23,051)    $8,716      $(14,335)
                                                       ----------    -------    ---------

                                                     December 31,     September 30,
                                                        2001               2002
                                                     ------------     --------------
Marketable securities                                  $(28)              $(40)
Other investment securities                             618                618
Cumulative foreign currency translation adjustment       --                (52)
Swap agreements                                     (15,393)           (29,664)
                                                    --------           --------
                                                   $(14,803)           $(29,138)
                                                    --------           --------

Cash and short term investments                                           $2,591
Accounts and notes receivable                                             21,558
Net investment in direct financing leases                                  2,352
Leasing equipment, net of accumulated depreciation and amortization      139,881
Other assets                                                               2,744

Accounts payable and accrued expenses                                    $26,581
Income taxes                                                               7,588
Deferred income                                                              569
Debt and capital lease obligations                                        86,300
Minority interest                                                          7,770

                                             Three Months     Nine Months Ended  Nine Months
                                                Ended              Ended            Ended
                                             September 30,    September 30,       September 30,
                                                 2001             2001               2002

Revenues                                        $3,032           $9,440           $5,608
Lease operating and administrative expenses       $760           $1,384           $1,026
Interest income                                   $903           $2,689           $1,776
Interest expense                                    --               --              $77

Twelve Months Ended
  September 30,             Payment    Interest     Principal
                           ----------   --------    ---------

     2003                   $80,102    $32,397     $47,705
     2004                   102,592     29,869      72,723
     2005                    78,337     27,018      51,319
     2006                    91,793     24,114      67,679
     2007                    79,228     21,598      57,630
     Thereafter             574,901    131,203     443,698
                         ----------   --------    ---------
                         $1,006,953   $266,199    $740,754
                         ==========   ========    =========

        Twelve Months Ended September 30,
        2003                          $19,800
        2004                           21,006
        2005                           20,543
        2006                           18,105
        2007                           16,057
        Thereafter                     41,650

                                                 September 30, 2002
                                    Total Lease    Unearned          Net Lease
Twelve Months Ended September 30,   Receivable    Lease Income       Receivable
                                    -----------   -------------      ----------
        2003                          $75,909       $24,501          $51,408
        2004                           69,497        18,230           51,267
        2005                           52,731        12,910           39,821
        2006                           42,761         8,795           33,966
        2007                           32,435         4,854           27,581
        Thereafter                     37,061         5,334           31,727
                                    -----------   -------------     -----------
                                     $310,394       $74,624         $235,770
                                    ===========   =============     ===========

           Twelve Months Ended September 30,
           2003                                    69,687
           2004                                    47,082
           2005                                    29,969
           2006                                    17,473
           2007                                    10,595
           Thereafter                               6,888

                                           2001          2002
                                          ----------   ---------
Balance beginning of year                  $14,271      $5,862
Provision charged to expense                 1,852       2,935
Increase for allowance from the
   consolidation of CAI at June 27, 2002       --        1,898
Write-offs, net of recoveries              (10,364)       (169)
                                          ----------   ---------
Balance, September 30                       $5,759     $10,526
                                          ----------   ---------

                                                                  Domestic
                                                   Container     Intermodal
     Nine Months ended 2001:                        Leasing        Equipment       Totals
     -----------------------                       ----------     -------------     -------
Revenues from external customers                     $82,692        $146,374       $229,066

Lease operating, administrative and other expenses    10,529          59,052         69,581

Depreciation and amortization                         26,835          28,690         55,525

Other income/(expense), net                             (167)            645            478

Interest income                                        3,057           3,503          6,560

Interest expense                                      21,588          49,880         71,468

Income from continuing operations before
taxes, results from discontinued
operations, extraordinary item and
change in accounting principle                        26,630          12,900         39,530

Net investment in DFL's                              147,025          43,904        190,929

Leasing equipment, net                               522,105         812,016      1,344,121

Total segment assets                                 751,420       1,035,651      1,787,071

Equipment purchases                                 $118,558         $50,973       $169,531



                                                                  Domestic
                                                   Container     Intermodal
     Nine Months ended 2001:                        Leasing        Equipment       Totals
     -----------------------                       ----------     -------------   -------

Revenues from external customers                     $94,458        $138,955       $233,413

Lease operating, administrative and other expenses    17,663          56,487         74,150

Depreciation and amortization                         34,633          26,325         60,958

Other income/(expense), net                              (25)           (485)          (510)

Interest income                                        1,646            2,481          4,127

Interest expense                                      19,662           61,548         81,210

Income from continuing operations before
taxes, results from discontinued
operations, extraordinary item and
change in accounting principle                        24,121           (3,409)        20,712

Net investment in DFL's                              173,585           62,185        235,770

Leasing equipment, net                               753,867          869,494      1,623,361

Total segment assets                               1,053,244        1,166,257      2,219,501

Equipment purchases                                 $140,861          $87,807       $228,668

                              2001               2002

REVENUES :
United States              $146,419              $149,839
International                82,647                83,574
                           --------              ---------
                           $229,066              $233,413
                           ========              =========

ASSETS:
United States            $1,035,651            $1,346,291
International               751,420               873,210
                           --------              ---------
                         $1,787,071            $2,219,501
                         ==========            ===========

                                                December 31, 2001      September 30, 2002

Carrying amount/fair value of retained interests       $15,970           $11,589
Weighted-average life (in years)                           2.0               1.8
Expected credit losses (annual rate)                       1.5%             1.5%
Impact on fair value of 10% adverse change                $129              $236
Impact on fair value of 20% adverse change                $275              $336
Residual cash flows discount rate (annual)                12.6%            12.6%
Impact on fair value of 10% adverse change                $310              $343
Impact on fair value of 20% adverse change                $619              $540

                                                     2002
                                                  ----------
Deferred tax assets:
    Loss carry forwards                            $104,818
      Finance leases receivable                       4,337
        Other, primarily operating reserves          25,421
                                                  ----------
          Total deferred tax assets                 134,576
                                                  ----------


Deferred tax liabilities:
    Operating property, net                         146,399
    Other                                            15,709
                                                  ----------
          Total deferred tax liabilities            162,108
                                                  ----------
          Net deferred tax liability                $27,532
                                                  ==========

                                                        2001     2002
                                                       ------   -------
U.S. statutory rate                                     35.0%   35.0%
Difference due to operation of subsidiary in Barbados  (22.4)  (33.2)
Federal taxes on foreign income                          1.0      2.6
State taxes                                              1.7      1.3
Tax benefit on U.S. losses                                --     (8.4)
Other                                                     .5      1.0
                                                        -----    ------

Actual tax rate                                         15.8%    (1.7)%
                                                        ======   ======

                                   2002
                                  --------
               U.S.              $(1,091)
               Other                 741
                                  --------
                                   $(350)
                                  ========

               Current            $2,347
               Deferred           (2,697)
                                  --------
                                   $(350)
                                  ========

     Twelve Months Ended September 30,
     2003                                  $131,335
     2004                                    89,372
     2005                                   319,338
     2006                                    39,005
     2007                                   227,791
     Thereafter                               8,175
                                           --------
                                           $815,016
                                           ========