##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For The Quarterly Period Ended June 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from                      to
 Commission file number- 001-32638
 TAL International Group, Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    20-1796526
(I.R.S. Employer
Identification Number)100 Manhattanville Road, 
Purchase, New York
(Address of principal executive office)
    
    10577-2135
(Zip Code)
 (914) 251-9000
 þ o
 o o
  Large Accelerated Filer o
Accelerated Filer þ
Non-Accelerated Filer o(Do not check if a smaller reporting company)
Smaller Reporting Company o o þ




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##### 



TAL INTERNATIONAL GROUP, INC.
INDEX
 Page No.Part I  Financial Information
    
    
    3Item 1.
    
    Financial Statements (unaudited)
    
    
    3Consolidated Balance Sheets at June 30, 2009 and December 31, 2008
    
    
    4Consolidated Statements of Operations for the three months and six months ended June 30, 2009 and June 30, 2008
    
    
    5Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and June 30, 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 4.
    
    Controls and Procedures
    
    
    39Part II  Other Information
    
    
    40Item 1.
    
    Legal Proceedings
    
    
    40Item 1A.
    
    Risk Factors
    
    
    40Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 4.
    
    Submission of Matters to a Vote of Security Holders.
    
    
    40Item 6.
    
    Exhibits
    
    
    41Signature
    
    
    42EX-31.1EX-31.2EX-32.1EX-32.2




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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  3




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TAL INTERNATIONAL GROUP, INC.
 Consolidated Balance Sheets
(Dollars in thousands, except share data)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETS:Leasing equipment, net of accumulated depreciation and allowances of
$383,581 and $352,089
    
    $
    1,443,000
    
    
    $
    1,535,483Net investment in finance leases, net of allowances of $1,609 and $1,420
    
    
    210,817
    
    
    
    196,490Equipment held for sale
    
    
    45,174
    
    
    
    32,549Revenue earning assets
    
    
    1,698,991
    
    
    
    1,764,522Cash and cash equivalents (including restricted cash of $14,655 and
$16,160)
    
    
    56,906
    
    
    
    56,958Accounts receivable, net of allowances of $762 and $807
    
    
    31,843
    
    
    
    42,335Leasehold improvements and other fixed assets, net of accumulated
depreciation and amortization of $4,734 and $4,181
    
    
    1,332
    
    
    
    1,832Goodwill
    
    
    71,898
    
    
    
    71,898Deferred financing costs
    
    
    7,664
    
    
    
    8,462Other assets
    
    
    6,537
    
    
    
    8,540Fair value of derivative instruments
    
    
    661
    
    
    
    951Total assets
    
    $
    1,875,832
    
    
    $
    1,955,498LIABILITIES AND STOCKHOLDERS EQUITY:Equipment purchases payable
    
    $
    2,394
    
    
    $
    27,224Fair value of derivative instruments
    
    
    64,769
    
    
    
    95,224Accounts payable and other accrued expenses
    
    
    42,918
    
    
    
    43,978Deferred income tax liability
    
    
    102,466
    
    
    
    73,565Debt
    
    
    1,257,235
    
    
    
    1,351,036Total liabilities
    
    
    1,469,782
    
    
    
    1,591,027Stockholders equity:Preferred stock, $.001 par value, 500,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $.001 par value, 100,000,000 shares authorized,
33,593,816 and 33,485,816 shares issued respectively
    
    
    33
    
    
    
    33Treasury stock, at cost, 2,433,312 and 1,055,479 shares, respectively
    
    
    (31,417
    )
    
    
    (20,126
    )Additional paid-in capital
    
    
    397,317
    
    
    
    396,478Accumulated earnings (deficit)
    
    
    39,669
    
    
    
    (12,090
    )Accumulated other comprehensive income
    
    
    448
    
    
    
    176Total stockholders equity
    
    
    406,050
    
    
    
    364,471Total liabilities and stockholders equity
    
    $
    1,875,832
    
    
    $
    1,955,498
  4




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TAL INTERNATIONAL GROUP, INC.
 Consolidated Statements of Operations
(Dollars and shares in thousands, except earnings per share)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)Revenues:Leasing revenues:Operating leases
    
    $
    73,977
    
    
    $
    72,802
    
    
    $
    152,024
    
    
    $
    145,234Finance leases
    
    
    5,373
    
    
    
    5,092
    
    
    
    10,428
    
    
    
    10,048Total leasing revenues
    
    
    79,350
    
    
    
    77,894
    
    
    
    162,452
    
    
    
    155,282Equipment trading revenue
    
    
    9,747
    
    
    
    24,050
    
    
    
    25,835
    
    
    
    46,704Management fee income
    
    
    669
    
    
    
    782
    
    
    
    1,338
    
    
    
    1,507Other revenues
    
    
    293
    
    
    
    432
    
    
    
    589
    
    
    
    763Total revenues
    
    
    90,059
    
    
    
    103,158
    
    
    
    190,214
    
    
    
    204,256Expenses:Equipment trading expenses
    
    
    9,582
    
    
    
    20,249
    
    
    
    24,357
    
    
    
    41,312Direct operating expenses
    
    
    9,641
    
    
    
    7,331
    
    
    
    19,466
    
    
    
    14,408Administrative expenses
    
    
    9,763
    
    
    
    11,845
    
    
    
    21,385
    
    
    
    21,632Depreciation and amortization
    
    
    29,354
    
    
    
    27,345
    
    
    
    58,463
    
    
    
    54,173Provision for doubtful accounts
    
    
    77
    
    
    
    155
    
    
    
    398
    
    
    
    202Net (gain) on sale of leasing equipment
    
    
    (2,448
    )
    
    
    (6,196
    )
    
    
    (6,044
    )
    
    
    (10,496
    )Interest and debt expense
    
    
    17,120
    
    
    
    15,801
    
    
    
    34,481
    
    
    
    30,530(Gain) on debt extinguishment
    
    
    (14,130
    )
    
    
    
    
    
    
    (14,130
    )
    
    
    Unrealized (gain) on interest rate swaps
    
    
    (24,455
    )
    
    
    (35,843
    )
    
    
    (29,518
    )
    
    
    (4,098
    )Total expenses
    
    
    34,504
    
    
    
    40,687
    
    
    
    108,858
    
    
    
    147,663Income before income taxes
    
    
    55,555
    
    
    
    62,471
    
    
    
    81,356
    
    
    
    56,593Income tax expense
    
    
    19,778
    
    
    
    22,153
    
    
    
    28,963
    
    
    
    20,068Net income
    
    $
    35,777
    
    
    $
    40,318
    
    
    $
    52,393
    
    
    $
    36,525Net income per common share  Basic
    
    $
    1.15
    
    
    $
    1.24
    
    
    $
    1.66
    
    
    $
    1.12Net income per common share  Diluted
    
    $
    1.15
    
    
    $
    1.23
    
    
    $
    1.66
    
    
    $
    1.11Weighted average number of common shares outstanding  Basic
    
    
    31,102
    
    
    
    32,579
    
    
    
    31,534
    
    
    
    32,608Weighted average number of common shares outstanding  Diluted
    
    
    31,132
    
    
    
    32,773
    
    
    
    31,555
    
    
    
    32,771Cash dividends paid per common share
    
    $
    0.01
    
    
    $
    0.7875
    
    
    $
    0.02
    
    
    $
    0.7875
  5




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TAL INTERNATIONAL GROUP, INC.
 Consolidated Statements of Cash Flows
(Dollars in thousands)
 Six months endedJune 30,2009
    
    
    2008(Unaudited)Cash flows from operating activities:Net income
    
    $
    52,393
    
    
    $
    36,525Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    58,463
    
    
    
    54,173Amortization of deferred financing costs
    
    
    568
    
    
    
    479Net (gain) on sale of leasing equipment
    
    
    (6,044
    )
    
    
    (10,496
    )Unrealized (gain) on interest rate swaps
    
    
    (29,518
    )
    
    
    (4,098
    )(Gain) on debt extinguishment
    
    
    (14,130
    )
    
    
    Deferred income taxes
    
    
    29,167
    
    
    
    19,851Stock compensation charge
    
    
    840
    
    
    
    609Equipment purchased for resale
    
    
    3,993
    
    
    
    (4,978
    )Changes in operating assets and liabilities
    
    
    2,718
    
    
    
    (2,194
    )Net cash provided by operating activities
    
    
    98,450
    
    
    
    89,871Cash flows from investing activities:Purchases of leasing equipment
    
    
    (27,184
    )
    
    
    (146,100
    )Investments in finance leases
    
    
    (26,713
    )
    
    
    (28,237
    )Proceeds from sale of equipment leasing fleet, net of selling costs
    
    
    33,063
    
    
    
    38,469Cash collections on finance lease receivables, net of income earned
    
    
    15,156
    
    
    
    12,832Other
    
    
    (32
    )
    
    
    (86
    )Net cash used in investing activities
    
    
    (5,710
    )
    
    
    (123,122
    )Cash flows from financing activities:Dividends paid
    
    
    (631
    )
    
    
    (25,656
    )Purchase of treasury stock
    
    
    (11,291
    )
    
    
    (7,955
    )Borrowings under debt facilities
    
    
    
    
    
    
    190,957Payments under debt facilities
    
    
    (62,247
    )
    
    
    (119,342
    )Payment to extinguish debt
    
    
    (20,650
    )
    
    
    Proceeds received from capital leases
    
    
    10,000
    
    
    
    Payments under capital lease obligations
    
    
    (6,483
    )
    
    
    (3,322
    )Other
    
    
    (1,490
    )
    
    
    (2,022
    )Decrease (increase) in restricted cash
    
    
    1,505
    
    
    
    (140
    )Net cash (used in) provided by financing activities
    
    
    (91,287
    )
    
    
    32,520Net increase (decrease) in cash and cash equivalents
    
    
    1,453
    
    
    
    (731
    )Unrestricted cash and cash equivalents, beginning of period
    
    
    40,798
    
    
    
    52,636Unrestricted cash and cash equivalents, end of period
    
    $
    42,251
    
    
    $
    51,905Supplemental non-cash investing activities:Accrued and unpaid purchases of equipment
    
    $
    2,394
    
    
    $
    80,662Purchases of leasing equipment financed through capital lease obligations
    
    $
    
    
    
    $
    9,375
  6




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TAL INTERNATIONAL GROUP, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Description of the Business, Basis of Presentation, Recently Issued Accounting
Pronouncements
 A. Description of the Business
   B. Basis of Presentation
   C. Recently Issued Accounting Pronouncements
 Accounting for Transfers of Financial Assets Amendments to FASB Interpretation
No. 46(R). Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities, Consolidation of Variable Interest Entities,
  7




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Subsequent Events.
  Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No.
133.
 Note 2  Fair Value of Financial Instruments
   Note 3  Treasury Stock and Dividends
 Share Repurchase Program
  Treasury Stock
  Shares
    
    $ in MillionsQuarter ended March 31, 2009
    
    
    1,021,918
    
    
    $
    8.2Quarter ended June 30, 2009
    
    
    355,915
    
    
    
    3.1Total
    
    
    1,377,833
    
    
    $
    11.3Quarter ended March 31 2008
    
    
    362,100
    
    
    $
    8.0Quarter ended June 30, 2008
    
    
    
    
    
    
    Total
    
    
    362,100
    
    
    $
    8.0
 8




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##### Table of Contents



Dividends
  Record Date
    
    Payment Date
    
    Aggregate Payment
    
    Per Share PaymentJune 2, 2009
    
    June 23, 2009
    
    $0.3 million
    
    $
    0.01March 12, 2009
    
    March 26, 2009
    
    $0.3 million
    
    $
0.01May 22, 2008
    
    June 12, 2008
    
    $13.4 million
    
    $
0.4125March 20, 2008
    
    April 10, 2008
    
    $12.2 million
    
    $
0.375
 Note 4  Stock-Based Compensation Plans
 Share-Based Payment (
  Three Months Ended June 30,
    
    Six Months Ended June 30,2009
    
    2008
    
    2009
    
    2008Stock options
    
    $
    109
    
    
    $
    5
    
    
    $
    114
    
    
    $
    11Restricted stock
    
    
    444
    
    
    
    324
    
    
    
    726
    
    
    
    598$
    553
    
    
    $
    329
    
    
    $
    840
    
    
    $
    609
   Note 5  Debt
  June 30,
    
    
    December 31,2009
    
    
    2008Asset backed securitization (ABS)Term notes  Series 2006-1
    
    $
    386,083
    
    
    $
    451,000Term notes  Series 2005-1
    
    
    365,972
    
    
    
    389,583Asset backed credit facility
    
    
    225,000
    
    
    
    225,000Revolving credit facility
    
    
    100,000
    
    
    
    100,000Finance lease facility
    
    
    42,869
    
    
    
    47,4062007 Term loan facility
    
    
    30,458
    
    
    
    33,658Port equipment facility
    
    
    11,372
    
    
    
    12,326Capital lease obligations
    
    
    95,481
    
    
    
    92,063Total
    
    $
    1,257,235
    
    
    $
    1,351,036
 9




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##### Table of Contents



Debt Repurchase
  Note 6 Derivative Instruments
 Interest Rate Swaps
   Total NotionalAmount at
    
    Weighted Average Fixed Leg
    
    Weighted AverageJune 30, 2009
    
    Interest Rate at June 30, 2009
    
    Remaining Term$1,198 million
    
    
    4.20
    %
    
    3.8 years
  Fair Value
Measurements
 10




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##### Table of Contents



Foreign Currency Rate Swaps
   Location of Derivative Instruments in Financial Statements
 
 Asset Derivatives
    
    
    
    Liability DerivativesJune 30, 2009
    
    
    
    December 31, 2008
    
    
    
    June 30, 2009
    
    
    
    December 31, 2008Derivative
    
    Balance Sheet
    
    
    
    
    
    
    
    Balance
    
    
    
    
    
    
    
    Balance Sheet
    
    
    
    
    
    
    
    Balance SheetInstrument
    
    Location
    
    
    Fair Value
    
    
    
    Sheet Location
    
    
    Fair Value
    
    
    
    Location
    
    
    Fair Value
    
    
    
    Location
    
    
    Fair ValueInterest rate
    
    Fair value of
    
    
    
    
    
    
    Fair value of
    
    
    
    
    
    
    Fair value of
    
    
    
    
    
    
    Fair value ofcontracts
    
    derivative
    
    
    
    
    
    
    derivative
    
    
    
    
    
    
    derivative
    
    
    
    
    
    
    derivativeinstruments
    
    $
    
    
    
    
    instruments
    
    $
    
    
    
    
    instruments
    
    $
    64.8
    
    
    
    instruments
    
    $
    95.2Foreign exchange
    
    Fair value of
    
    
    
    
    
    
    Fair value of
    
    
    
    
    
    
    Fair value of
    
    
    
    
    
    
    Fair value ofcontracts
    
    derivative
    
    
    
    
    
    
    derivative
    
    
    
    
    
    
    derivative
    
    
    
    
    
    
    derivativeinstruments
    
    $
    0.7
    
    
    
    instruments
    
    $
    1.0
    
    
    
    instruments
    
    $
    
    
    
    
    instruments
    
    $
    Total Derivatives
    
    
    
    
    
    $
    0.7
    
    
    
    
    
    
    
    $
    1.0
    
    
    
    
    
    
    
    $
    64.8
    
    
    
    
    
    
    
    $
    95.2
 11




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Location of(Gain)/LossRecognized in
    
    

Amount
of (Gain)/Loss Recognized in Income on DerivativesDerivative
    
    Income on
    
    
    Three months ended June 30,
    
    
    Six months ended June 30,Instrument
    
    Derivatives
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest
rate contracts
    
    Unrealized (gain) of interest rate swaps
    
    $
    (24.5
    )
    
    $
    (35.8
    )
    
    $
    (29.5
    )
    
    $
    (4.1
    )Foreign
exchange contracts
    
    Administrative Expense
    
    $
    0.5
    
    
    $
    0.1
    
    
    $
    0.3
    
    
    $
    0.1Total
    
    
    
    
    
    $
    (24.0
    )
    
    $
    (35.7
    )
    
    $
    (29.2
    )
    
    $
    (4.0
    )
 Note 7  Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net income applicable
to common
stockholders for
basic and diluted
earnings per share
    
    $
    35,777
    
    
    $
    40,318
    
    
    $
    52,393
    
    
    $
    36,525Denominator:Weighted average
shares outstanding
for basic earnings
per share
    
    
    31,102
    
    
    
    32,579
    
    
    
    31,534
    
    
    
    32,608Dilutive stock options
    
    
    30
    
    
    
    194
    
    
    
    21
    
    
    
    163Weighted average
shares for diluted
earnings per share
    
    
    31,132
    
    
    
    32,773
    
    
    
    31,555
    
    
    
    32,771Earnings per share:Basic
    
    $
    1.15
    
    
    $
    1.24
    
    
    $
    1.66
    
    
    $
    1.12Diluted
    
    $
    1.15
    
    
    $
    1.23
    
    
    $
    1.66
    
    
    $
    1.11
  12




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Note 8  Segment and Geographic Information
 Industry Segment Information
  
    
    Equipment leasing  the Company owns, leases and ultimately disposes of containers
and chassis from its lease fleet, as well as manages leasing activities for containers
owned by third parties.
    
    Equipment trading  the Company purchases containers from shipping line customers,
and other sellers of containers, and resells these containers to container traders and
users of containers for storage or one-way shipment.
  Three Months Ended
    
    Three Months EndedJune 30, 2009
    
    June 30, 2008Equipment
    
    Equipment
    
    
    
    
    
    Equipment
    
    EquipmentLeasing
    
    Trading
    
    Totals
    
    Leasing
    
    Trading
    
    TotalsTotal revenues
    
    $
    80,115
    
    
    $
    9,944
    
    
    $
    90,059
    
    
    $
    78,942
    
    
    $
    24,216
    
    
    $
    103,158Equipment trading expenses
    
    
    
    
    
    
    9,582
    
    
    
    9,582
    
    
    
    
    
    
    
    20,249
    
    
    
    20,249Depreciation and amortization
    
    
    29,310
    
    
    
    44
    
    
    
    29,354
    
    
    
    27,341
    
    
    
    4
    
    
    
    27,345Net (gain) on sale of
leasing equipment
    
    
    (2,448
    )
    
    
    
    
    
    
    (2,448
    )
    
    
    (6,196
    )
    
    
    
    
    
    
    (6,196
    )Interest and debt expense
    
    
    16,918
    
    
    
    202
    
    
    
    17,120
    
    
    
    15,409
    
    
    
    392
    
    
    
    15,801Pre-tax income (loss) (1)
    
    
    17,068
    
    
    
    (98
    )
    
    
    16,970
    
    
    
    23,585
    
    
    
    3,043
    
    
    
    26,628
 
 (1)
    
    Segment income before taxes excludes unrealized (gains) on interest rate swaps of
$(24,455) for the three months ended June 30, 2009 and $(35,843) for the three months ended
June 30, 2008, and excludes (gain) on debt extinguishment of $(14,130) for the three months
ended June 30, 2009. Six Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008Equipment
    
    
    Equipment
    
    
    
    
    
    
    Equipment
    
    
    EquipmentLeasing
    
    
    Trading
    
    
    Totals
    
    
    Leasing
    
    
    Trading
    
    
    TotalsTotal revenues
    
    $
    164,056
    
    
    $
    26,158
    
    
    $
    190,214
    
    
    $
    157,297
    
    
    $
    46,959
    
    
    $
    204,256Equipment trading expenses
    
    
    
    
    
    
    24,357
    
    
    
    24,357
    
    
    
    
    
    
    
    41,312
    
    
    
    41,312Depreciation and amortization
    
    
    58,385
    
    
    
    78
    
    
    
    58,463
    
    
    
    54,164
    
    
    
    9
    
    
    
    54,173Net (gain) on sale of
leasing equipment
    
    
    (6,044
    )
    
    
    
    
    
    
    (6,044
    )
    
    
    (10,496
    )
    
    
    
    
    
    
    (10,496
    )Interest and debt expense
    
    
    34,098
    
    
    
    383
    
    
    
    34,481
    
    
    
    29,889
    
    
    
    641
    
    
    
    30,530Pre-tax income (2)
    
    
    37,179
    
    
    
    529
    
    
    
    37,708
    
    
    
    48,453
    
    
    
    4,042
    
    
    
    52,495Goodwill at June 30
    
    
    70,898
    
    
    
    1,000
    
    
    
    71,898
    
    
    
    70,898
    
    
    
    1,000
    
    
    
    71,898Total assets at June 30
    
    
    1,860,878
    
    
    
    14,954
    
    
    
    1,875,832
    
    
    
    1,836,976
    
    
    
    29,055
    
    
    
    1,866,031Purchases of leasing
equipment(3)
    
    
    27,184
    
    
    
    
    
    
    
    27,184
    
    
    
    146,100
    
    
    
    
    
    
    
    146,100Investments in finance
leases(3)
    
    
    26,713
    
    
    
    
    
    
    
    26,713
    
    
    
    28,237
    
    
    
    
    
    
    
    28,237
 13




---



##### Table of Contents



(2)
    
    Segment income before taxes excludes unrealized (gains) on interest rate swaps of
$(29,518) for the six months ended June 30, 2009 and $(4,098) for the six months
ended June 30, 2008, and excludes (gain) on debt extinguishment of $(14,130) for the six
months ended June 30, 2009.(3)
    
    Represents cash disbursements for purchases of leasing equipment as reflected in the
consolidated statements of cash flows for the period indicated.  Geographic Segment Information
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Total revenues:Domestic
    
    $
    8,006
    
    
    $
    12,715
    
    
    $
    18,998
    
    
    $
    22,495Asia
    
    
    37,480
    
    
    
    46,029
    
    
    
    75,957
    
    
    
    94,266Europe
    
    
    37,911
    
    
    
    35,385
    
    
    
    81,152
    
    
    
    69,935Other International
    
    
    6,662
    
    
    
    9,029
    
    
    
    14,107
    
    
    
    17,560Total
    
    $
    90,059
    
    
    $
    103,158
    
    
    $
    190,214
    
    
    $
    204,256
  Note 9  Commitments and Contingencies
 Residual Value Guarantees
  Purchase Commitments
  14




---



##### Table of Contents



Note 10  Income Taxes
  Note 11  Comprehensive Income and Other
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    35,777
    
    
    $
    40,318
    
    
    $
    52,393
    
    
    $
    36,525Other comprehensive income:Foreign currency translation adjustments
    
    
    659
    
    
    
    30
    
    
    
    560
    
    
    
    84Amortization of net unrealized gains on
derivative instruments previously designated
as cash flow hedges (net of tax expense of
$(81), $(114), $(161) and $(241), respectively)
    
    
    (145
    )
    
    
    (208
    )
    
    
    (289
    )
    
    
    (437
    )Total comprehensive income
    
    $
    36,291
    
    
    $
    40,140
    
    
    $
    52,664
    
    
    $
    36,172
   Note 12  Subsequent Events
  Quarterly Dividend
  15




---



##### Table of Contents



ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of the consolidated financial condition and results of
operations of TAL International Group, Inc. and its subsidiaries should be read in conjunction with
related consolidated financial data and our annual audited consolidated financial statements and
related notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 3,
2009. The statements in this discussion regarding industry outlook, our expectations regarding our
future performance, liquidity and capital resources and other non-historical statements are subject
to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties
described under ''Risk Factors and ''Forward-Looking Statements in our Form 10-K. Our actual
results may differ materially from those contained in or implied by any forward-looking statements
 Our Company
   
    
    Equipment leasing  we own, lease and ultimately dispose of containers and chassis
from our lease fleet, as well as manage leasing activities for containers owned by third
parties.
    
    Equipment trading  we purchase containers from shipping line customers, and other
sellers of containers, and  resell these containers to container traders and users of
containers for storage or  one-way shipment.
 Operations
    16




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##### Table of Contents



Equipment Fleet in UnitsJune 30, 2009
    
    December 31, 2008
    
    June 30, 2008Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    TotalDry
    
    
    588,718
    
    
    
    29,212
    
    
    
    617,930
    
    
    
    610,759
    
    
    
    30,079
    
    
    
    640,838
    
    
    
    567,884
    
    
    
    24,834
    
    
    
    592,718Refrigerated
    
    
    37,526
    
    
    
    525
    
    
    
    38,051
    
    
    
    37,119
    
    
    
    621
    
    
    
    37,740
    
    
    
    37,804
    
    
    
    722
    
    
    
    38,526Special
    
    
    46,757
    
    
    
    2,756
    
    
    
    49,513
    
    
    
    48,054
    
    
    
    2,839
    
    
    
    50,893
    
    
    
    45,345
    
    
    
    2,864
    
    
    
    48,209Tank
    
    
    1,350
    
    
    
    
    
    
    
    1,350
    
    
    
    1,319
    
    
    
    
    
    
    
    1,319
    
    
    
    799
    
    
    
    
    
    
    
    799Chassis
    
    
    8,787
    
    
    
    
    
    
    
    8,787
    
    
    
    8,796
    
    
    
    
    
    
    
    8,796
    
    
    
    8,852
    
    
    
    
    
    
    
    8,852Equipment
leasing fleet
    
    
    683,138
    
    
    
    32,493
    
    
    
    715,631
    
    
    
    706,047
    
    
    
    33,539
    
    
    
    739,586
    
    
    
    660,684
    
    
    
    28,420
    
    
    
    689,104Equipment trading
fleet
    
    
    11,105
    
    
    
    
    
    
    
    11,105
    
    
    
    16,735
    
    
    
    
    
    
    
    16,735
    
    
    
    22,115
    
    
    
    
    
    
    
    22,115Total
    
    
    694,243
    
    
    
    32,493
    
    
    
    726,736
    
    
    
    722,782
    
    
    
    33,539
    
    
    
    756,321
    
    
    
    682,799
    
    
    
    28,420
    
    
    
    711,219Percentage
    
    
    95.5
    %
    
    
    4.5
    %
    
    
    100.0
    %
    
    
    95.6
    %
    
    
    4.4
    %
    
    
    100.0
    %
    
    
    96.0
    %
    
    
    4.0
    %
    
    
    100.0
    %
 Equipment Fleet in TEUsJune 30, 2009
    
    December 31, 2008
    
    June 30, 2008Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    TotalDry
    
    
    936,082
    
    
    
    52,298
    
    
    
    988,380
    
    
    
    968,772
    
    
    
    53,692
    
    
    
    1,022,464
    
    
    
    917,347
    
    
    
    43,527
    
    
    
    960,874Refrigerated
    
    
    69,158
    
    
    
    863
    
    
    
    70,021
    
    
    
    68,270
    
    
    
    1,022
    
    
    
    69,292
    
    
    
    69,293
    
    
    
    1,188
    
    
    
    70,481Special
    
    
    80,113
    
    
    
    4,485
    
    
    
    84,598
    
    
    
    82,322
    
    
    
    4,624
    
    
    
    86,946
    
    
    
    76,297
    
    
    
    4,655
    
    
    
    80,952Tank
    
    
    1,400
    
    
    
    
    
    
    
    1,400
    
    
    
    1,369
    
    
    
    
    
    
    
    1,369
    
    
    
    799
    
    
    
    
    
    
    
    799Chassis
    
    
    15,628
    
    
    
    
    
    
    
    15,628
    
    
    
    15,645
    
    
    
    
    
    
    
    15,645
    
    
    
    15,718
    
    
    
    
    
    
    
    15,718Equipment
leasing fleet
    
    
    1,102,381
    
    
    
    57,646
    
    
    
    1,160,027
    
    
    
    1,136,378
    
    
    
    59,338
    
    
    
    1,195,716
    
    
    
    1,079,454
    
    
    
    49,370
    
    
    
    1,128,824Equipment trading
fleet
    
    
    18,799
    
    
    
    
    
    
    
    18,799
    
    
    
    28,736
    
    
    
    
    
    
    
    28,736
    
    
    
    36,564
    
    
    
    
    
    
    
    36,564Total
    
    
    1,121,180
    
    
    
    57,646
    
    
    
    1,178,826
    
    
    
    1,165,114
    
    
    
    59,338
    
    
    
    1,224,452
    
    
    
    1,116,018
    
    
    
    49,370
    
    
    
    1,165,388Percentage
    
    
    95.1
    %
    
    
    4.9
    %
    
    
    100.0
    %
    
    
    95.2
    %
    
    
    4.8
    %
    
    
    100.0
    %
    
    
    95.8
    %
    
    
    4.2
    %
    
    
    100.0
    %
    17




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##### Table of Contents



June 30,
    
    December 31,
    
    June 30,Lease Portfolio
    
    2009
    
    2008
    
    2008Long-term leases
    
    
    55.8
    %
    
    
    54.3
    %
    
    
    48.7
    %Finance leases
    
    
    9.7
    
    
    
    8.9
    
    
    
    10.2Service leases
    
    
    11.0
    
    
    
    18.3
    
    
    
    21.6Expired long-term leases
(units on hire)
    
    
    7.5
    
    
    
    8.5
    
    
    
    11.2Total leased
    
    
    84.0
    
    
    
    90.0
    
    
    
    91.7Used units available for lease
    
    
    8.6
    
    
    
    4.3
    
    
    
    2.1New units not yet leased
    
    
    2.2
    
    
    
    2.5
    
    
    
    3.9Available for sale
    
    
    5.2
    
    
    
    3.2
    
    
    
    2.3Total fleet
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Operating Performance
       18




---



##### Table of Contents



June 30,
    
    March 31,
    
    December 31,
    
    September 30,
    
    June 30,2009
    
    2009
    
    2008
    
    2008
    
    20083 months
    
    3 months
    
    3 months
    
    3 months
    
    3 monthsAverage Utilization(1)
    
    
    85.1
    %
    
    
    88.1
    %
    
    
    91.6
    %
    
    
    92.0
    %
    
    
    90.7
    %
 
 (1)
    
    Utilization is computed by dividing our total units on lease by the total units in our fleet
(which includes leased units, new and used units available for lease and units available for
sale).  June 30,
    
    March 31,
    
    December 31,
    
    September 30,
    
    June 30,2009
    
    2009
    
    2008
    
    2008
    
    2008Ending Utilization
    
    
    84.0
    %
    
    
    86.5
    %
    
    
    90.0
    %
    
    
    92.7
    %
    
    
    91.7
    %
 June 30,
    
    March 31,
    
    December 31,
    
    September 30,
    
    June 30,2009
    
    2009
    
    2008
    
    2008
    
    2008Ending Utilization
(excluding new
units not yet
leased)
    
    
    85.9
    %
    
    
    88.5
    %
    
    
    92.4
    %
    
    
    95.8
    %
    
    
    95.4
    %
   19




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##### Table of Contents



20




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##### Table of Contents



Treasury Stock
  Shares
    
    $ in MillionsQuarter ended March 31, 2009
    
    
    1,021,918
    
    
    $
    8.2Quarter ended June 30, 2009
    
    
    355,915
    
    
    
    3.1Total
    
    
    1,377,833
    
    
    $
    11.3Quarter ended March 31 2008
    
    
    362,100
    
    
    $
    8.0Quarter ended June 30, 2008
    
    
    
    
    
    
    Total
    
    
    362,100
    
    
    $
    8.0
 Dividends
  Record Date
    
    Payment Date
    
    Aggregate Payment
    
    Per Share PaymentJune 2, 2009
    
    June 23, 2009
    
    $0.3 million
    
    $
0.01March 12, 2009
    
    March 26, 2009
    
    $0.3 million
    
    $
0.01May 22, 2008
    
    June 12, 2008
    
    $13.4 million
    
    $
0.4125March 20, 2008
    
    April 10, 2008
    
    $12.2 million
    
    $
0.375
 21




---



##### Table of Contents



Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    PercentLeasing revenues
    
    $
    79,350
    
    
    
    88.1
    %
    
    $
    77,894
    
    
    
    75.5
    %
    
    $
    162,452
    
    
    
    85.4
    %
    
    $
    155,282
    
    
    
    76.0
    %Equipment trading revenue
    
    
    9,747
    
    
    
    10.8
    
    
    
    24,050
    
    
    
    23.3
    
    
    
    25,835
    
    
    
    13.6
    
    
    
    46,704
    
    
    
    22.9Management fee income
    
    
    669
    
    
    
    0.8
    
    
    
    782
    
    
    
    0.8
    
    
    
    1,338
    
    
    
    0.7
    
    
    
    1,507
    
    
    
    0.7Other revenues
    
    
    293
    
    
    
    0.3
    
    
    
    432
    
    
    
    0.4
    
    
    
    589
    
    
    
    0.3
    
    
    
    763
    
    
    
    0.4Total revenues
    
    
    90,059
    
    
    
    100.0
    
    
    
    103,158
    
    
    
    100.0
    
    
    
    190,214
    
    
    
    100.0
    
    
    
    204,256
    
    
    
    100.0Equipment trading expenses
    
    
    9,582
    
    
    
    10.6
    
    
    
    20,249
    
    
    
    19.6
    
    
    
    24,357
    
    
    
    12.8
    
    
    
    41,312
    
    
    
    20.2Direct operating expenses
    
    
    9,641
    
    
    
    10.7
    
    
    
    7,331
    
    
    
    7.1
    
    
    
    19,466
    
    
    
    10.2
    
    
    
    14,408
    
    
    
    7.1Administrative expenses
    
    
    9,763
    
    
    
    10.8
    
    
    
    11,845
    
    
    
    11.5
    
    
    
    21,385
    
    
    
    11.2
    
    
    
    21,632
    
    
    
    10.6Depreciation and amortization
    
    
    29,354
    
    
    
    32.6
    
    
    
    27,345
    
    
    
    26.5
    
    
    
    58,463
    
    
    
    30.8
    
    
    
    54,173
    
    
    
    26.5Provision for doubtful
accounts
    
    
    77
    
    
    
    0.1
    
    
    
    155
    
    
    
    0.2
    
    
    
    398
    
    
    
    0.2
    
    
    
    202
    
    
    
    0.1Net (gain) on sale of
leasing equipment
    
    
    (2,448
    )
    
    
    (2.7
    )
    
    
    (6,196
    )
    
    
    (6.0
    )
    
    
    (6,044
    )
    
    
    (3.2
    )
    
    
    (10,496
    )
    
    
    (5.1
    )Interest and debt expense
    
    
    17,120
    
    
    
    19.0
    
    
    
    15,801
    
    
    
    15.3
    
    
    
    34,481
    
    
    
    18.1
    
    
    
    30,530
    
    
    
    14.9(Gain) on debt
extinguishment
    
    
    (14,130
    )
    
    
    (15.7
    )
    
    
    
    
    
    
    
    
    
    
    (14,130
    )
    
    
    (7.4
    )
    
    
    
    
    
    
    Unrealized (gain) on
interest rate swaps
    
    
    (24,455
    )
    
    
    (27.2
    )
    
    
    (35,843
    )
    
    
    (34.8
    )
    
    
    (29,518
    )
    
    
    (15.5
    )
    
    
    (4,098
    )
    
    
    (2.0
    )Total expenses
    
    
    34,504
    
    
    
    38.3
    
    
    
    40,687
    
    
    
    39.4
    
    
    
    108,858
    
    
    
    57.2
    
    
    
    147,663
    
    
    
    72.3Income before income taxes
    
    
    55,555
    
    
    
    61.7
    
    
    
    62,471
    
    
    
    60.6
    
    
    
    81,356
    
    
    
    42.8
    
    
    
    56,593
    
    
    
    27.7Income tax expense
    
    
    19,778
    
    
    
    22.0
    
    
    
    22,153
    
    
    
    21.5
    
    
    
    28,963
    
    
    
    15.3
    
    
    
    20,068
    
    
    
    9.8Net income
    
    $
    35,777
    
    
    
    39.7
    %
    
    $
    40,318
    
    
    
    39.1
    %
    
    $
    52,393
    
    
    
    27.5
    %
    
    $
    36,525
    
    
    
    17.9
    %
 Comparison of Three Months Ended June 30, 2009 to Three Months Ended June 30, 2008.
 Leasing revenues.
 Three Months Ended June 30,2009
    
    
    2008(in thousands)Leasing revenues:Operating lease revenues:Per diem revenue
    
    $
    65,817
    
    
    $
    65,144Fee and ancillary lease revenue
    
    
    8,160
    
    
    
    7,658Total operating lease revenue
    
    
    73,977
    
    
    
    72,802Finance lease revenue
    
    
    5,373
    
    
    
    5,092Total leasing revenues
    
    $
    79,350
    
    
    $
    77,894
  22




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##### Table of Contents




    
    $3.5 million increase due to the recognition of fee revenue for the early termination of
certain lease contracts held with one customer. In the first quarter of 2009, we negotiated
the early termination of several contracts with one customer for a fee of approximately
$11.0 million. As of June 30, 2009, approximately $6.3 million of this fee remains
categorized as deferred revenue and will be recognized as units are redelivered.
    
    $1.8 million increase due to an increase in fleet size, reflecting a larger number of dry
and special containers, and tanks in our fleet;
    
    $2.7 million decrease due to overall lower utilization;
    
    $2.2 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time.
   Equipment Trading Activities.
 Three Months Ended June 30,2009
    
    
    2008(in thousands)Equipment trading revenues
    
    $
    9,747
    
    
    $
    24,050Equipment trading expenses
    
    
    (9,582
    )
    
    
    (20,249
    )Equipment trading margin
    
    $
    165
    
    
    $
    3,801
  Direct operating expenses.
 23




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##### Table of Contents




    
    $2.9 million increase in storage costs due to an increase in units off-hire;
    
    $0.7 million increase in repair costs due to a higher repair volume;
    
    $0.4 million decrease in positioning and handling costs due to lower on hire activity;
and
    
    $0.3 million decrease in surveying costs due to a decrease in new equipment purchases.
 Administrative expenses.
 Depreciation and amortization.
 Net (gain) on sale of leasing equipment.
 Interest and debt expense.
 (Gain) on debt extinguishment.
 Unrealized (gain) on interest rate swaps.
 Income tax expense.
  24




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##### Table of Contents



Comparison of Six Months Ended June 30, 2009 to Six Months Ended June 30, 2008.
 Leasing revenues.
 Six Months Ended June 30,2009
    
    
    2008(in thousands)Leasing revenues:Operating lease revenues:Per diem revenue
    
    $
    134,033
    
    
    $
    129,211Fee and ancillary lease revenue
    
    
    17,991
    
    
    
    16,023Total operating lease revenue
    
    
    152,024
    
    
    
    145,234Finance lease revenue
    
    
    10,428
    
    
    
    10,048Total leasing revenues
    
    $
    162,452
    
    
    $
    155,282
   
    
    $5.7 million increase due to an increase in fleet size, reflecting a larger number of dry
and special containers, chassis and tanks in our fleet;
    
    $4.6 million increase due to the recognition of fee revenue for the early termination of
certain lease contracts with one customer. In 2009, we negotiated the early termination of
several contracts with one customer for a fee of approximately $11.0 million. As of
June 30, 2009, approximately $6.3 million of this fee remains categorized as deferred
revenue and will be recognized as units are redelivered.
    
    $0.9 million increase in one time fees charged for the early drop off of equipment from
other customers;
    
    $2.9 million decrease due to overall lower utilization;
    
    $3.4 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time.
   25




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##### Table of Contents



Equipment Trading Activities.
 Six Months Ended June 30,2009
    
    
    2008(in thousands)Equipment trading revenues
    
    $
    25,835
    
    
    $
    46,704Equipment trading expenses
    
    
    (24,357
    )
    
    
    (41,312
    )Equipment trading margin
    
    $
    1,478
    
    
    $
    5,392
  Direct operating expenses.
  
    
    $4.3 million increase in storage costs due to an increase in units off-hire;
    
    $1.9 million increase in repair costs due to a higher repair volume, primarily for our
dry and refrigerated containers;
    
    $0.7 million decrease in surveying costs due to a decrease in new equipment purchases;
and
    
    $0.4 million decrease in other operating costs due to lower equipment reserve charges in
2009.
 Administrative expenses.
 Depreciation and amortization.
 Net (gain) on sale of leasing equipment.
 26




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##### Table of Contents



Interest and debt expense.
 (Gain) on debt extinguishment.
 Unrealized (gain) on interest rate swaps.
 Income tax expense.
  Business Segments
  Equipment leasing
   Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(in thousands)Equipment leasing segment:Total revenue
    
    $
    80,115
    
    
    $
    78,942
    
    
    $
    164,056
    
    
    $
    157,297Depreciation
and amortization expense
    
    
    29,310
    
    
    
    27,341
    
    
    
    58,385
    
    
    
    54,164Interest and
debt expense
    
    
    16,918
    
    
    
    15,409
    
    
    
    34,098
    
    
    
    29,889Net (gain) on sale of leasing equipment
    
    
    (2,448
    )
    
    
    (6,196
    )
    
    
    (6,044
    )
    
    
    (10,496
    )
 27




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(in thousands)Pre-tax income(1)
    
    
    17,068
    
    
    
    23,585
    
    
    
    37,179
    
    
    
    48,453
 
 (1)
    
    Pre-tax income excludes unrealized (gains) on interest rate swaps of
$(24,455) and $(35,843) for the three months ended June 30, 2009 and
2008, respectively, and $(29,518) and $(4,098) for the six months
ended June 30, 2009 and 2008, respectively. Pre-tax income also
excludes (gain) on debt extinguishment of $(14,130) for the three and
six months ended June 30, 2009. Segment
Comparison of Three Months Ended June 30, 2009 to Three Months Ended June 30, 2008
 Equipment leasing revenue.
 
    
    $3.5 million increase due to the recognition of fee revenue for the early termination of
certain lease contracts with one customer.
    
    $1.8 million increase due to an increase in fleet size, reflecting a larger number of dry
and special containers, and tanks in our fleet compared to the prior year;
    
    $2.7 million decrease due to overall lower utilization;
    
    $2.2 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time.
   Equipment leasing pretax income.
 
    
    $1.2 million increase in Equipment leasing revenue in 2009;
    
    $2.0 million increase in depreciation expense, primarily due to an increase in fleet size;
    
    $1.5 million increase in interest expense, primarily due to an increase in the average debt
balance
driven by the increase in the size of our container fleet during 2008;
    
    $2.3 million increase in direct operating expenses, primarily related to increased storage
costs and
increased repair costs associated with increased drop off activity;
 28




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##### Table of Contents




    
    $1.8 million decrease in administrative expenses, primarily due to $0.9 million in lower
incentive accruals in 2009 and $0.5 million in foreign exchange gains in 2009 versus foreign
exchange losses of $0.4 million in 2008.
    
    $3.8 million decrease in gain on the sale of leasing equipment, primarily due to lower
selling prices
in 2009 compared to 2008.
 Segment Comparison of Six Months Ended June 30, 2009 to Six Months Ended June 30, 2008
 Equipment leasing revenue.
 
    
    $5.7 million increase due to an increase in fleet size, reflecting a larger number of dry
and special containers, chassis and tanks in our fleet;
    
    $4.6 million increase due to the recognition of fee revenue for the early termination of
certain lease contracts with one customer;
    
    $0.9 million increase in one time fees charged for the early drop off of equipment from
other customers;
    
    $2.9 million decrease due to overall lower utilization;
    
    $3.4 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time.
   Equipment leasing pretax income.
 
    
    $6.8 million increase in Equipment leasing revenue in 2009;
    
    $4.2 million increase in depreciation expense, primarily due to an increase in fleet size;
    
    $4.2 million increase in interest expense, primarily due to an increase in the average debt
balance driven by the increase in the size of our container fleet during 2008;
    
    $5.1 million increase in direct operating expenses, primarily related to increased storage
costs and
increased repair costs associated with increased drop off activity;
 29




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##### Table of Contents




    
    $4.5 million decrease in gain on the sale of leasing equipment, primarily due to lower
selling prices
in 2009.
 Equipment trading
   Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008(in thousands)Equipment trading segment:Equipment trading revenue
    
    $
    9,747
    
    
    $
    24,050
    
    
    $
    25,835
    
    
    $
    46,704Equipment trading expense
    
    
    (9,582
    )
    
    
    (20,249
    )
    
    
    (24,357
    )
    
    
    (41,312
    )Equipment trading margin
    
    
    165
    
    
    
    3,801
    
    
    
    1,478
    
    
    
    5,392Interest expense
    
    
    202
    
    
    
    392
    
    
    
    383
    
    
    
    641Pre-tax (loss) income(1)
    
    
    (98
    )
    
    
    3,043
    
    
    
    529
    
    
    
    4,042
 
 (1)
    
    Pre-tax (loss) income excludes unrealized (gains) on interest rate
swaps of $(24,455) and $(35,843) for the three months ended June 30,
2009 and 2008, respectively, and $(29,518) and $(4,098) for the six
months ended June 30, 2009 and 2008, respectively. Pre-tax (loss)
income also excludes (gain) on debt extinguishment of $(14,130) for
the three and six months ended June 30, 2009. Segment
Comparison of Three Months Ended June 30, 2009 to Three Months Ended June 30, 2008
 Equipment trading margin.
 Equipment trading pretax income.
 30




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##### Table of Contents



Segment Comparison of Six Months Ended June 30, 2009 to Six Months Ended June 30, 2008
 Equipment trading margin.
 Equipment trading pretax income.
 Liquidity and Capital Resources
      CurrentCurrent
    
    
    MaximumAmount
    
    
    BorrowingOutstanding
    
    
    LevelAsset backed securitization (ABS)Term notes  Series 2006-1
    
    $
    386.1
    
    
    $
    386.1Term notes  Series 2005-1
    
    
    366.0
    
    
    
    366.0Asset backed credit facility
    
    
    225.0
    
    
    
    225.0Revolving credit facility
    
    
    100.0
    
    
    
    100.0Finance lease facility
    
    
    42.9
    
    
    
    42.92007 Term loan facility
    
    
    30.5
    
    
    
    30.5Port equipment facility
    
    
    11.3
    
    
    
    11.3Capital lease obligations
    
    
    95.4
    
    
    
    95.4Total Debt
    
    $
    1,257.2
    
    
    $
    1,257.2
 31




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##### Table of Contents



Debt Covenants
  
    
    Minimum Earnings Before Interest and Taxes (EBIT) to Cash Interest Expense;
    
    Minimum Tangible Net Worth (TNW); and
    
    Maximum Indebtedness to TNW.
 Non-GAAP Measures
  Minimum EBIT to Cash Interest Expense
   32




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##### Table of Contents



EBIT to Cash Interest Expense:
    
    Consolidated(1)
    
    TAL Adv I
    
    TAL Adv IINet income (loss)
    
    $
    51,664
    
    
    $
    20,361
    
    
    $
    (3,290
    )Plus:Income tax expense (benefit)
    
    
    27,962
    
    
    
    11,877
    
    
    
    (1,595
    )Interest expense including write-off of deferred
financing costs
    
    
    69,184
    
    
    
    42,818
    
    
    
    11,243Unrealized losses on interest rate swaps
    
    
    50,627
    
    
    
    28,095
    
    
    
    6,982All non-cash expenses attributable to incentive
arrangements
    
    
    1,434
    
    
    
    
    
    
    
    52EBIT
    
    $
    200,871
    
    
    $
    103,151
    
    
    $
    13,392Interest expense (excluding interest income of $759,
$457, and $22 respectively)
    
    $
    69,944
    
    
    $
    43,275
    
    
    $
    11,295Amortization and write-off of deferred financing costs
    
    
    (1,385
    )
    
    
    (646
    )
    
    
    (509
    )Accrued interest (represents 2009 interest expense
not paid)
    
    
    (2,309
    )
    
    
    (944
    )
    
    
    (339
    )Cash payments of prior period accrued interest
    
    
    2,211
    
    
    
    1,424
    
    
    
    115Cash Interest Expense
    
    $
    68,461
    
    
    $
    43,109
    
    
    $
    10,562EBIT to Cash Interest Expense Ratio
    
    
    2.93
    
    
    
    2.39
    
    
    
    1.27Required Minimum EBIT to Cash Interest Expense Ratio
    
    
    1.10
    
    
    
    1.10
    
    
    
    1.10
 
 (1)
    
    The consolidated amounts shown above include all consolidated
subsidiaries of TAL International Group, Inc., including TAL Advantage
I, LLC and TAL Advantage II, LLC. Minimum TNW and Maximum Indebtedness to TNW Covenants
     Tangible Net Worth Covenants:
    
    ConsolidatedTangible AssetsTotal Assets
    
    $
    1,875,832Deferred Financing Costs
    
    
    (7,664
    )Goodwill
    
    
    (71,898
    )Intangibles
    
    
    (2,717
    )Fair value of derivative instruments (asset)
    
    
    (661
    )
 33




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##### Table of Contents



Tangible Net Worth Covenants:
    
    ConsolidatedTotal Tangible Assets(A)
    
    $
    1,792,892All indebtedness:Total debt
    
    $
    1,257,235Accrued interest
    
    
    2,292Fair value of derivative instruments (liability)
    
    
    64,769Equipment purchases payable
    
    
    2,394Total Indebtedness(B)
    
    $
    1,326,690Tangible Net Worth (C= A-B)
    
    $
    466,202Required Minimum Tangible Net Worth
    
    $
    300,000Debt to Tangible Net Worth Ratio (B/C)
    
    
    2.85Required Maximum Debt to Tangible Net Worth Ratio
    
    
    5.00
     Treasury Stock
  Shares
    
    $ in MillionsQuarter ended March 31, 2009
    
    
    1,021,918
    
    
    $
    8.2Quarter ended June 30, 2009
    
    
    355,915
    
    
    
    3.1Total
    
    
    1,377,833
    
    
    $
    11.3Quarter ended March 31 2008
    
    
    362,100
    
    
    $
    8.0Quarter ended June 30, 2008
    
    
    
    
    
    
    Total
    
    
    362,100
    
    
    $
    8.0
 34




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##### Table of Contents



Dividends
  Record Date
    
    Payment Date
    

    Aggregate Payment
    
    Per Share PaymentJune 2, 2009
    
    June 23, 2009
    
$
    0.3 million
    
    $
    0.01March 12, 2009
    
    March 26, 2009
    
$
    0.3 million
    
    $
    0.01May 22, 2008
    
    June 12, 2008
    
$
    13.4 million
    
    $
    0.4125March 20, 2008
    
    April 10, 2008
    
$
    12.2 million
    
    $
    0.375
 Cash Flow
  Six Months Ended June 30,2009
    
    
    2008Net cash provided by operating activities
    
    $
    98,450
    
    
    $
    89,871Net cash (used in) provided by investing activities:Purchases of leasing equipment
    
    $
    (27,184
    )
    
    $
    (146,100
    )Investment in finance leases
    
    
    (26,713
    )
    
    
    (28,237
    )Proceeds from sale of equipment leasing fleet, net of selling costs
    
    
    33,063
    
    
    
    38,469Cash collections on finance lease receivables, net of income earned
    
    
    15,156
    
    
    
    12,832Other
    
    
    (32
    )
    
    
    (86
    )Net cash (used in) investing activities
    
    $
    (5,710
    )
    
    $
    (123,122
    )Net cash (used in) provided by financing activities
    
    $
    (91,287
    )
    
    $
    32,520
 Operating Activities
  Investing Activities
  
    
    Capital expenditures were $53.9 million, including investments in finance leases of $26.7
million, in the six months ended June 30, 2009 compared to $174.3 million, including
investments in finance leases of $28.2 million, for 2008. Capital expenditures decreased by
$120.4 million in 2009 primarily due to a decrease in the number of leasing units purchased.
    
    Sales proceeds from the disposal of equipment decreased $5.4 million to $33.1 million in
the six months ended June 30, 2009 compared to $38.5 million in 2008. Proceeds from the
disposal of used containers decreased in 2009 primarily due to lower
selling prices.
 35




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##### Table of Contents




    
    Cash collections on finance leases, net of income earned, increased by $2.4 million to
$15.2 million in the six months ended June 30, 2009 compared to $12.8 million in 2008 as a
result of an increase in our finance lease portfolio.
 Financing Activities
   Contractual Obligations
   Contractual Obligations by Period(dollars in millions)Remaining
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2013 andTotal
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    thereafterContractual Obligations:Total debt obligations(1)
    
    $
    1,401.6
    
    
    $
    89.4
    
    
    $
    214.3
    
    
    $
    191.3
    
    
    $
    279.1
    
    
    $
    627.5Capital lease obligations(2)
    
    
    117.7
    
    
    
    2.8
    
    
    
    12.8
    
    
    
    13.0
    
    
    
    13.2
    
    
    
    75.9Operating leases (mainly facilities)
    
    
    6.7
    
    
    
    1.3
    
    
    
    2.6
    
    
    
    2.0
    
    
    
    0.8
    
    
    
    Purchase obligations:Equipment purchases payable
    
    
    2.4
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equipment purchase commitments
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    1,528.5
    
    
    $
    96.0
    
    
    $
    229.7
    
    
    $
    206.3
    
    
    $
    293.1
    
    
    $
    703.4
 
 (1)
    
    Amounts include actual and estimated interest for floating-rate debt based on June 30,
2009 rates and the net effect of the interest rate swaps.(2)
    
    Amounts include interest. Off-Balance Sheet Arrangements
  Critical Accounting Policies
  36




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##### Table of Contents



Recently Issued Accounting Pronouncements
 Accounting for Transfers of Financial Assets Amendments to FASB Interpretation No. 46(R). Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, Consolidation of
Variable Interest Entities,
  Subsequent Events.
  Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No.
133.
 
 ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
  37




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##### Table of Contents



Interest Rate Risk
    Weighted Average FixedTotal Notional Amount at
    
    Leg Interest Rate at
    
    Weighted AverageJune 30, 2009
    
    June 30, 2009
    
    Remaining Term$1,198 million
    
    4.2%
    
    3.8 years
   Foreign Currency Exchange Rate Risk
   38




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES.
   39




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 1A. RISK FACTORS.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
   Total Number of
    
    Maximum NumberShares Purchased
    
    of Shares that Mayas Part of Publicly
    
    Yet Be PurchasedTotal Number of
    
    Average Price Paid
    
    Announced Plans
    
    Under the PlansPeriod
    
    Shares Purchased
    
    per Share
    
    or Programs
    
    or ProgramsApril 1  30, 2009
    
    
    167,429
    
    
    
    7.28
    
    
    
    167,429
    
    
    
    1,755,174May 1  31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,755,174June 1  30, 2009
    
    
    188,486
    
    
    
    10.04
    
    
    
    188,486
    
    
    
    1,566,688
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   Number of SharesNominee
    
    For
    
    Withhold AuthorityBrian M. Sondey
    
    
    25,065,978
    
    
    
    3,127,172Malcolm P. Baker
    
    
    27,772,341
    
    
    
    420,809A. Richard Caputo Jr.
    
    
    23,780,683
    
    
    
    4,412,467Claude Germain
    
    
    27,769,045
    
    
    
    424,105Brian J. Higgins
    
    
    24,925,280
    
    
    
    3,267,870John W. Jordan II
    
    
    22,959,330
    
    
    
    5,233,820Frederic H. Lindeberg
    
    
    27,772,737
    
    
    
    420,413David W. Zalaznick
    
    
    23,942,916
    
    
    
    4,250,234Douglas J. Zych
    
    
    24,925,009
    
    
    
    3,268,141
 40




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##### Table of Contents



Number of SharesFor
    
    Against
    
    Abstain28,181,526
    
    7,556
    
    4,068
 
 ITEM 6. EXHIBITS.
 ExhibitNumber
    
    Exhibit Description31.1*
    
    Certification of the Chief Executive Officer pursuant to Rules 13a-14(a)
and 15d-14(a) of the Securities Exchange Act of 1934, as amended31.2*
    
    Certification of the Chief Financial Officer pursuant to Rules 13a-14(a)
and 15d-14(a) of the Securities Exchange Act of 1934, as amended32.1*
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 135032.2*
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350
 
 *
    
    Filed herewith. 41




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##### Table of Contents



SIGNATURE
  TAL International Group, Inc.August  6 , 2009
    /s/ John BurnsJohn BurnsSenior Vice President and
Chief Financial Officer
(Principal Accounting Officer) 42