##### 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 September 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 September 30, 2009 and December 31, 2008
    
    
    4Consolidated Statements of Operations for the three and nine months ended September 30, 2009 and
September  30, 2008
    
    
    5Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and
September 30, 2008
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4.
    
    Controls and Procedures
    
    
    34Part II  Other Information
    
    
    35Item 1.
    
    Legal Proceedings
    
    
    35Item 1A.
    
    Risk Factors
    
    
    35Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 6.
    
    Exhibits
    
    
    35Signature
    
    
    
    
    36EX-31.1EX-31.2EX-32.1EX-32.2
  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)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETS:Leasing equipment, net of accumulated depreciation and allowances of $403,067 and $352,089
    
    $
    1,387,498
    
    
    $
    1,535,483Net investment in finance leases, net of allowances of $1,626 and $1,420
    
    
    202,644
    
    
    
    196,490Equipment held for sale
    
    
    43,570
    
    
    
    32,549Revenue earning assets
    
    
    1,633,712
    
    
    
    1,764,522Cash and cash equivalents (including restricted cash of $14,171 and $16,160)
    
    
    61,243
    
    
    
    56,958Accounts receivable, net of allowances of $715 and $807
    
    
    33,330
    
    
    
    42,335Leasehold improvements and other fixed assets, net of accumulated depreciation and
amortization of $5,007 and $4,181
    
    
    1,068
    
    
    
    1,832Goodwill
    
    
    71,898
    
    
    
    71,898Deferred financing costs
    
    
    7,652
    
    
    
    8,462Other assets
    
    
    7,204
    
    
    
    8,540Fair value of derivative instruments
    
    
    1,542
    
    
    
    951Total assets
    
    $
    1,817,649
    
    
    $
    1,955,498LIABILITIES AND STOCKHOLDERS EQUITY:Equipment purchases payable
    
    $
    2,212
    
    
    $
    27,224Fair value of derivative instruments
    
    
    73,141
    
    
    
    95,224Accounts payable and other accrued expenses
    
    
    38,350
    
    
    
    43,978Deferred income tax liability
    
    
    104,144
    
    
    
    73,565Debt
    
    
    1,195,542
    
    
    
    1,351,036Total liabilities
    
    
    1,413,389
    
    
    
    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, 33,592,066 and 33,485,816
shares issued respectively
    
    
    33
    
    
    
    33Treasury stock, at cost, 2,905,381 and 1,055,479 shares, respectively
    
    
    (36,233
    )
    
    
    (20,126
    )Additional paid-in capital
    
    
    397,639
    
    
    
    396,478Accumulated earnings (deficit)
    
    
    42,542
    
    
    
    (12,090
    )Accumulated other comprehensive income
    
    
    279
    
    
    
    176Total stockholders equity
    
    
    404,260
    
    
    
    364,471Total liabilities and stockholders equity
    
    $
    1,817,649
    
    
    $
    1,955,498
  4




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TAL INTERNATIONAL GROUP, INC.
 Consolidated Statements of Operations
(Dollars and shares in thousands, except per share data)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    

    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)Revenues:Leasing revenues:Operating leases
    
    $
    69,088
    
    
    $
    74,967
    
    
    $
    221,112
    
    
    $
    220,201Finance leases
    
    
    5,096
    
    
    
    5,412
    
    
    
    15,524
    
    
    
    15,460Total leasing revenues
    
    
    74,184
    
    
    
    80,379
    
    
    
    236,636
    
    
    
    235,661Equipment trading revenue
    
    
    7,869
    
    
    
    26,098
    
    
    
    33,704
    
    
    
    72,802Management fee income
    
    
    675
    
    
    
    855
    
    
    
    2,013
    
    
    
    2,362Other revenues
    
    
    188
    
    
    
    355
    
    
    
    777
    
    
    
    1,118Total revenues
    
    
    82,916
    
    
    
    107,687
    
    
    
    273,130
    
    
    
    311,943Operating expenses (income):Equipment trading expenses
    
    
    7,578
    
    
    
    22,972
    
    
    
    31,935
    
    
    
    64,284Direct operating expenses
    
    
    9,134
    
    
    
    6,207
    
    
    
    28,600
    
    
    
    20,614Administrative expenses
    
    
    9,192
    
    
    
    12,434
    
    
    
    30,577
    
    
    
    34,066Depreciation and amortization
    
    
    29,380
    
    
    
    28,149
    
    
    
    87,843
    
    
    
    82,322(Reversal) provision for doubtful accounts
    
    
    (15
    )
    
    
    1,859
    
    
    
    383
    
    
    
    2,062Net (gain) on sale of leasing equipment
    
    
    (1,058
    )
    
    
    (7,563
    )
    
    
    (7,102
    )
    
    
    (18,059
    )Net (gain) on sale of container portfolios
    
    
    (185
    )
    
    
    (2,789
    )
    
    
    (185
    )
    
    
    (2,789
    )Total operating expenses
    
    
    54,026
    
    
    
    61,269
    
    
    
    172,051
    
    
    
    182,500Operating income
    
    
    28,890
    
    
    
    46,418
    
    
    
    101,079
    
    
    
    129,443Other expenses (income):Interest and debt expense
    
    
    17,024
    
    
    
    16,528
    
    
    
    51,505
    
    
    
    47,058(Gain) on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (14,130
    )
    
    
    Unrealized loss (gain) on interest rate swaps
    
    
    6,935
    
    
    
    7,371
    
    
    
    (22,583
    )
    
    
    3,273Total other expenses
    
    
    23,959
    
    
    
    23,899
    
    
    
    14,792
    
    
    
    50,331Income before income taxes
    
    
    4,931
    
    
    
    22,519
    
    
    
    86,287
    
    
    
    79,112Income tax expense
    
    
    1,755
    
    
    
    7,985
    
    
    
    30,718
    
    
    
    28,053Net income
    
    $
    3,176
    
    
    $
    14,534
    
    
    $
    55,569
    
    
    $
    51,059Net income per common share  Basic
    
    $
    0.10
    
    
    $
    0.45
    
    
    $
    1.78
    
    
    $
    1.57Net income per common share  Diluted
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    1.78
    
    
    $
    1.56Weighted average number of common shares outstanding  Basic
    
    
    30,621
    
    
    
    32,580
    
    
    
    31,226
    
    
    
    32,599Weighted average number of common shares outstanding  Diluted
    
    
    30,700
    
    
    
    32,763
    
    
    
    31,263
    
    
    
    32,769Cash dividends paid per common share
    
    $
    0.01
    
    
    $
    0.4125
    
    
    $
    0.03
    
    
    $
    1.20
  5




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TAL INTERNATIONAL GROUP, INC.
 Consolidated Statements of Cash Flows
(Dollars in thousands)
 Nine months endedSeptember 30,2009
    
    
    2008(Unaudited)Cash flows from operating activities:Net income
    
    $
    55,569
    
    
    $
    51,059Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    87,843
    
    
    
    82,322Amortization of deferred financing costs
    
    
    851
    
    
    
    748Net (gain) on sale of leasing equipment
    
    
    (7,102
    )
    
    
    (18,059
    )Net (gain) on sale of container portfolios
    
    
    (185
    )
    
    
    (2,789
    )Unrealized (gain) loss on interest rate swaps
    
    
    (22,583
    )
    
    
    3,273(Gain) on debt extinguishment
    
    
    (14,130
    )
    
    
    Deferred income taxes
    
    
    30,957
    
    
    
    27,691Stock compensation charge
    
    
    1,162
    
    
    
    887Equipment purchased for resale
    
    
    2,674
    
    
    
    1,028Changes in operating assets and liabilities
    
    
    (505
    )
    
    
    (6,665
    )Net cash provided by operating activities
    
    
    134,551
    
    
    
    139,495Cash flows from investing activities:Purchases of leasing equipment
    
    
    (28,002
    )
    
    
    (316,345
    )Investments in finance leases
    
    
    (27,098
    )
    
    
    (38,008
    )Proceeds from sale of equipment leasing fleet, net of selling costs
    
    
    53,750
    
    
    
    63,944Proceeds from the sale of container portfolios
    
    
    8,532
    
    
    
    40,539Cash collections on finance lease receivables, net of income earned
    
    
    22,931
    
    
    
    19,938Other
    
    
    (77
    )
    
    
    330Net cash provided by (used in) investing activities
    
    
    30,036
    
    
    
    (229,602
    )Cash flows from financing activities:Dividends paid
    
    
    (953
    )
    
    
    (39,094
    )Purchase of treasury stock
    
    
    (16,107
    )
    
    
    (7,955
    )Borrowings under debt facilities
    
    
    19,125
    
    
    
    335,383Payments under debt facilities
    
    
    (142,627
    )
    
    
    (234,916
    )Payment to extinguish debt
    
    
    (20,650
    )
    
    
    Proceeds received from capital leases
    
    
    10,000
    
    
    
    33,919Payments under capital lease obligations
    
    
    (7,329
    )
    
    
    (5,516
    )Other
    
    
    (1,761
    )
    
    
    (2,997
    )Decrease in restricted cash
    
    
    1,989
    
    
    
    352Net cash (used in) provided by financing activities
    
    
    (158,313
    )
    
    
    79,176Net increase (decrease) in cash and cash equivalents
    
    
    6,274
    
    
    
    (10,931
    )Unrestricted cash and cash equivalents, beginning of period
    
    
    40,798
    
    
    
    52,636Unrestricted cash and cash equivalents, end of period
    
    $
    47,072
    
    
    $
    41,705Supplemental non-cash investing activities:Accrued and unpaid purchases of equipment
    
    $
    2,212
    
    
    $
    63,830Purchases of leasing equipment financed through capital lease obligations
    
    $
    
    
    
    $
    9,375
  6




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##### Table of Contents



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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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
    
    
    
    3.1Quarter ended September 30, 2009
    
    
    472,069
    
    
    
    4.8Total
    
    
    1,849,902
    
    
    $
    16.1Quarter ended March 31 2008
    
    
    362,100
    
    
    $
    8.0Quarter ended June 30, 2008
    
    
    
    
    
    
    Quarter ended September 30, 2008
    
    
    
    
    
    
    Total
    
    
    362,100
    
    
    $
    8.0
 Dividends
  Record Date
    
    Payment Date
    
    Aggregate Payment
    
    Per Share PaymentSeptember 3, 2009
    
    September 24, 2009
    
    $  0.3 million
    
    $
    
    0.01June 2, 2009
    
    June 23, 2009
    
    $  0.3 million
    
    $
    
    0.01March 12, 2009
    
    March 26, 2009
    
    $  0.3 million
    
    $
    
    0.01August 21, 2008
    
    September 12, 2008
    
    $13.5 million
    
    $
    
    0.4125May 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
   8




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock options
    
    $
    5
    
    
    $
    5
    
    
    $
    119
    
    
    $
    16Restricted stock
    
    
    317
    
    
    
    274
    
    
    
    1,043
    
    
    
    871$
    322
    
    
    $
    279
    
    
    $
    1,162
    
    
    $
    887
   Note 5  Debt
  September 30,
    
    
    December 31,2009
    
    
    2008Asset backed securitization (ABS)Term notes  Series 2006-1
    
    $
    371,958
    
    
    $
    451,000Term notes  Series 2005-1
    
    
    354,167
    
    
    
    389,583Asset backed credit facility
    
    
    225,000
    
    
    
    225,000Revolving credit facility
    
    
    50,000
    
    
    
    100,000Finance lease facility
    
    
    40,601
    
    
    
    47,4062007 Term loan facility
    
    
    28,838
    
    
    
    33,658Port equipment facility
    
    
    11,254
    
    
    
    12,326Other debt
    
    
    19,089
    
    
    
    Capital lease obligations
    
    
    94,635
    
    
    
    92,063Total
    
    $
    1,195,542
    
    
    $
    1,351,036
 Debt
Repurchase
  Other
Debt
   Note 6  Derivative Instruments
 Interest Rate Swaps
  9




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##### Table of Contents



Total NotionalAmount at
    
    Weighted Average Fixed Leg
    
    Weighted AverageSeptember 30, 2009
    
    Interest Rate at September 30, 2009
    
    Remaining Term$1,172 million
    
    4.2%
    
    3.6 years
   Foreign Currency Rate Swaps
   Location of Derivative Instruments in Financial Statements
 
 Asset Derivatives
    
    
    Liability DerivativesSeptember 30, 2009
    
    
    December 31, 2008
    
    
    September 30, 2009
    
    
    December 31, 2008Derivative
    
    Balance Sheet
    
    
    
    
    
    Balance Sheet
    
    
    
    
    
    Balance Sheet
    
    
    
    
    
    Balance SheetInstrument
    
    Location
    
    Fair Value
    
    
    Location
    
    Fair Value
    
    
    Location
    
    Fair Value
    
    
    Location
    
    Fair ValueInterest rate contracts
    
    Fair value of derivative instruments
    
    $
    1.2
    
    
    Fair value of derivative instruments
    
    $
    
    
    
    Fair value of derivative instruments
    
    $
    73.1
    
    
    Fair value of derivative instruments
    
    $
    95.2Foreign exchange contracts
    
    Fair value of derivative instruments
    
    $
    0.3
    
    
    Fair value of derivative instruments
    
    $
    1.0
    
    
    Fair value of derivative instruments
    
    $
    
    
    
    Fair value of derivative instruments
    
    $
    Total Derivatives
    
    
    
    $
    1.5
    
    
    
    
    $
    1.0
    
    
    
    
    $
    73.1
    
    
    
    
    $
    95.2
 10




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Location of Loss / (Gain)
    
    Amount of Loss / (Gain) Recognized in Income on DerivativesDerivative
    
    Recognized in
    
    Three months ended Sept 30,
    
    
    Nine months ended Sept 30,Instrument
    
    Income on Derivatives
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Interest rate contracts
    
    Unrealized loss (gain) on interest rate swaps
    
    $
    6.9
    
    
    $
    7.4
    
    
    $
    (22.6
    )
    
    $
    3.3Foreign exchange contracts
    
    Administrative Expense
    
    
    0.3
    
    
    
    (0.9
    )
    
    
    0.6
    
    
    
    (0.9
    )Total
    
    
    
    $
    7.2
    
    
    $
    6.5
    
    
    $
    (22.0
    )
    
    $
    2.4
 Note 7  Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net income applicable to common stockholders for basic and
diluted earnings per share
    
    $
    3,176
    
    
    $
    14,534
    
    
    $
    55,569
    
    
    $
    51,059Denominator:Weighted average shares outstanding for basic earnings per share
    
    
    30,621
    
    
    
    32,580
    
    
    
    31,226
    
    
    
    32,599Dilutive stock options
    
    
    79
    
    
    
    183
    
    
    
    37
    
    
    
    170Weighted average shares for diluted earnings per share
    
    
    30,700
    
    
    
    32,763
    
    
    
    31,263
    
    
    
    32,769Earnings per share:Basic
    
    $
    0.10
    
    
    $
    0.45
    
    
    $
    1.78
    
    
    $
    1.57Diluted
    
    $
    0.10
    
    
    $
    0.44
    
    
    $
    1.78
    
    
    $
    1.56
  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 containers owned by third parties.
 11




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##### Table of Contents




    
    Equipment trading  the Company purchases containers from its 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 EndedSeptember 30, 2009
    
    September 30, 2008Equipment
    
    Equipment
    
    
    
    
    
    Equipment
    
    EquipmentLeasing
    
    Trading
    
    Totals
    
    Leasing
    
    Trading
    
    TotalsTotal revenues
    
    $
    74,747
    
    
    $
    8,169
    
    
    $
    82,916
    
    
    $
    81,453
    
    
    $
    26,234
    
    
    $
    107,687Equipment trading expenses
    
    
    
    
    
    
    7,578
    
    
    
    7,578
    
    
    
    
    
    
    
    22,972
    
    
    
    22,972Depreciation and amortization
    
    
    29,308
    
    
    
    72
    
    
    
    29,380
    
    
    
    28,144
    
    
    
    5
    
    
    
    28,149Net (gain) on sale of leasing equipment
    
    
    (1,058
    )
    
    
    
    
    
    
    (1,058
    )
    
    
    (7,563
    )
    
    
    
    
    
    
    (7,563
    )Interest and debt expense
    
    
    16,830
    
    
    
    194
    
    
    
    17,024
    
    
    
    16,215
    
    
    
    313
    
    
    
    16,528Pre-tax income (loss) (1)
    
    
    11,725
    
    
    
    141
    
    
    
    11,866
    
    
    
    27,488
    
    
    
    2,402
    
    
    
    29,890
 
 (1)
    
    Segment income before taxes excludes unrealized losses on interest rate swaps of $6,935 for
the three months ended September 30, 2009 and $7,371 for the three months ended September 30,
2008. Nine Months Ended
    
    Nine Months EndedSeptember 30, 2009
    
    September 30, 2008Equipment
    
    Equipment
    
    
    
    
    
    Equipment
    
    EquipmentLeasing
    
    Trading
    
    Totals
    
    Leasing
    
    Trading
    
    TotalsTotal revenues
    
    $
    238,803
    
    
    $
    34,327
    
    
    $
    273,130
    
    
    $
    238,750
    
    
    $
    73,193
    
    
    $
    311,943Equipment trading expenses
    
    
    
    
    
    
    31,935
    
    
    
    31,935
    
    
    
    
    
    
    
    64,284
    
    
    
    64,284Depreciation and amortization
    
    
    87,693
    
    
    
    150
    
    
    
    87,843
    
    
    
    82,308
    
    
    
    14
    
    
    
    82,322Net (gain) on sale of leasing equipment
    
    
    (7,102
    )
    
    
    
    
    
    
    (7,102
    )
    
    
    (18,059
    )
    
    
    
    
    
    
    (18,059
    )Interest and debt expense
    
    
    50,928
    
    
    
    577
    
    
    
    51,505
    
    
    
    46,104
    
    
    
    954
    
    
    
    47,058Pre-tax income (2)
    
    
    48,904
    
    
    
    670
    
    
    
    49,574
    
    
    
    75,941
    
    
    
    6,444
    
    
    
    82,385Goodwill at September 30
    
    
    70,898
    
    
    
    1,000
    
    
    
    71,898
    
    
    
    70,898
    
    
    
    1,000
    
    
    
    71,898Total assets at September 30
    
    
    1,803,858
    
    
    
    13,791
    
    
    
    1,817,649
    
    
    
    1,897,331
    
    
    
    20,796
    
    
    
    1,918,127Purchases of leasing equipment(3)
    
    
    28,002
    
    
    
    
    
    
    
    28,002
    
    
    
    316,345
    
    
    
    
    
    
    
    316,345Investments in finance leases(3)
    
    
    27,098
    
    
    
    
    
    
    
    27,098
    
    
    
    38,008
    
    
    
    
    
    
    
    38,008
 
 (2)
    
    Segment income before taxes excludes unrealized (gains) losses on interest rate swaps of
$(22,583) for the nine months ended September 30, 2009 and $3,273 for the nine months ended
September 30, 2008, and excludes (gain) on debt extinguishment of $(14,130) for the nine
months ended September 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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Total revenues:Domestic
    
    $
    7,348
    
    
    $
    11,401
    
    
    $
    26,342
    
    
    $
    33,986Asia
    
    
    33,900
    
    
    
    49,716
    
    
    
    109,880
    
    
    
    143,338Europe
    
    
    36,444
    
    
    
    38,291
    
    
    
    117,636
    
    
    
    107,620Other International
    
    
    5,224
    
    
    
    8,279
    
    
    
    19,272
    
    
    
    26,999Total
    
    $
    82,916
    
    
    $
    107,687
    
    
    $
    273,130
    
    
    $
    311,943
 12




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##### Table of Contents



Note 9  Commitments and Contingencies
 Residual Value Guarantees
  Purchase Commitments
  Note 10  Income Taxes
  Note 11  Comprehensive Income and Other
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    3,176
    
    
    $
    14,534
    
    
    $
    55,569
    
    
    $
    51,059Other comprehensive income:Foreign currency translation adjustments
    
    
    (12
    )
    
    
    (716
    )
    
    
    548
    
    
    
    (632
    )Amortization of net unrealized gains on
derivative instruments previously
designated as cash flow hedges (net of
tax expense of $(87), $(113), $(248)
and $(354), respectively)
    
    
    (157
    )
    
    
    (204
    )
    
    
    (446
    )
    
    
    (641
    )Total comprehensive income
    
    $
    3,007
    
    
    $
    13,614
    
    
    $
    55,671
    
    
    $
    49,786
   Three Months Ended September 30,
    
    Nine Months Ended September 30,2009
    
    2008
    
    2009
    
    2008$
    0.2
    
    
    $
    1.4
    
    
    $
    0.1
    
    
    $
    0.6
  Note 12  Subsequent Events
  13




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##### Table of Contents



Quarterly Dividend
  2009 Asset Backed Credit Facility
  14




---



##### 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 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
    Equipment Fleet in UnitsSeptember 30, 2009
    
    December 31, 2008
    
    September 30, 2008Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    TotalDry
    
    
    570,320
    
    
    
    28,624
    
    
    
    598,944
    
    
    
    610,759
    
    
    
    30,079
    
    
    
    640,838
    
    
    
    584,481
    
    
    
    29,415
    
    
    
    613,896Refrigerated
    
    
    36,795
    
    
    
    491
    
    
    
    37,286
    
    
    
    37,119
    
    
    
    621
    
    
    
    37,740
    
    
    
    37,600
    
    
    
    635
    
    
    
    38,235Special
    
    
    45,940
    
    
    
    2,659
    
    
    
    48,599
    
    
    
    48,054
    
    
    
    2,839
    
    
    
    50,893
    
    
    
    48,132
    
    
    
    2,785
    
    
    
    50,917Tank
    
    
    1,350
    
    
    
    
    
    
    
    1,350
    
    
    
    1,319
    
    
    
    
    
    
    
    1,319
    
    
    
    1,101
    
    
    
    
    
    
    
    1,101Chassis
    
    
    8,782
    
    
    
    
    
    
    
    8,782
    
    
    
    8,796
    
    
    
    
    
    
    
    8,796
    
    
    
    8,802
    
    
    
    
    
    
    
    8,802Equipment leasing fleet
    
    
    663,187
    
    
    
    31,774
    
    
    
    694,961
    
    
    
    706,047
    
    
    
    33,539
    
    
    
    739,586
    
    
    
    680,116
    
    
    
    32,835
    
    
    
    712,951Equipment trading fleet
    
    
    9,878
    
    
    
    
    
    
    
    9,878
    
    
    
    16,735
    
    
    
    
    
    
    
    16,735
    
    
    
    16,567
    
    
    
    
    
    
    
    16,567Total
    
    
    673,065
    
    
    
    31,774
    
    
    
    704,839
    
    
    
    722,782
    
    
    
    33,539
    
    
    
    756,321
    
    
    
    696,683
    
    
    
    32,835
    
    
    
    729,518Percentage
    
    
    95.5
    %
    
    
    4.5
    %
    
    
    100.0
    %
    
    
    95.6
    %
    
    
    4.4
    %
    
    
    100.0
    %
    
    
    95.5
    %
    
    
    4.5
    %%
    
    
    100.0
    %
 15




---



##### Table of Contents



Equipment Fleet in TEUsSeptember 30, 2009
    
    December 31, 2008
    
    September 30, 2008Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    Total
    
    Owned
    
    Managed
    
    TotalDry
    
    
    908,768
    
    
    
    51,352
    
    
    
    960,120
    
    
    
    968,772
    
    
    
    53,692
    
    
    
    1,022,464
    
    
    
    933,683
    
    
    
    52,733
    
    
    
    986,416Refrigerated
    
    
    67,856
    
    
    
    812
    
    
    
    68,668
    
    
    
    68,270
    
    
    
    1,022
    
    
    
    69,292
    
    
    
    69,020
    
    
    
    1,047
    
    
    
    70,067Special
    
    
    78,743
    
    
    
    4,321
    
    
    
    83,064
    
    
    
    82,322
    
    
    
    4,624
    
    
    
    86,946
    
    
    
    82,088
    
    
    
    4,559
    
    
    
    86,647Tank
    
    
    1,400
    
    
    
    
    
    
    
    1,400
    
    
    
    1,369
    
    
    
    
    
    
    
    1,369
    
    
    
    1,101
    
    
    
    
    
    
    
    1,101Chassis
    
    
    15,619
    
    
    
    
    
    
    
    15,619
    
    
    
    15,645
    
    
    
    
    
    
    
    15,645
    
    
    
    15,657
    
    
    
    
    
    
    
    15,657Equipment leasing fleet
    
    
    1,072,386
    
    
    
    56,485
    
    
    
    1,128,871
    
    
    
    1,136,378
    
    
    
    59,338
    
    
    
    1,195,716
    
    
    
    1,101,549
    
    
    
    58,339
    
    
    
    1,159,888Equipment trading fleet
    
    
    16,590
    
    
    
    
    
    
    
    16,590
    
    
    
    28,736
    
    
    
    
    
    
    
    28,736
    
    
    
    27,492
    
    
    
    
    
    
    
    27,492Total
    
    
    1,088,976
    
    
    
    56,485
    
    
    
    1,145,461
    
    
    
    1,165,114
    
    
    
    59,338
    
    
    
    1,224,452
    
    
    
    1,129,041
    
    
    
    58,339
    
    
    
    1,187,380Percentage
    
    
    95.1
    %
    
    
    4.9
    %
    
    
    100.0
    %
    
    
    95.2
    %
    
    
    4.8
    %
    
    
    100.0
    %
    
    
    95.1
    %
    
    
    4.9
    %
    
    
    100.0
    %
    September 30,
    
    December 31,
    
    September 30,Lease Portfolio
    
    2009
    
    2008
    
    2008Long-term leases
    
    
    60.1
    %
    
    
    54.3
    %
    
    
    50.7
    %Finance leases
    
    
    10.0
    
    
    
    8.9
    
    
    
    10.4Service leases
    
    
    11.5
    
    
    
    18.3
    
    
    
    20.7Expired long-term leases (units on hire)
    
    
    4.7
    
    
    
    8.5
    
    
    
    10.9Total leased
    
    
    86.3
    
    
    
    90.0
    
    
    
    92.7Used units available for lease
    
    
    7.6
    
    
    
    4.3
    
    
    
    2.0New units not yet leased
    
    
    1.5
    
    
    
    2.5
    
    
    
    3.2Available for sale
    
    
    4.6
    
    
    
    3.2
    
    
    
    2.1Total fleet
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Operating Performance
  16




---



##### Table of Contents



September 30,
    
    June 30,
    
    March 31,
    
    December 31,
    
    September 30,2009
    
    2009
    
    2009
    
    2008
    
    20083 months
    
    3 months
    
    3 months
    
    3 months
    
    3 monthsAverage Utilization(1)
    
    
    84.6
    %
    
    
    85.1
    %
    
    
    88.1
    %
    
    
    91.6
    %
    
    
    92.0
    %
 
 (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). 17




---



##### Table of Contents



September 30,
    
    June 30,
    
    March 31,
    
    December 31,
    
    September 30,2009
    
    2009
    
    2009
    
    2008
    
    2008Ending Utilization
    
    
    86.3
    %
    
    
    84.0
    %
    
    
    86.5
    %
    
    
    90.0
    %
    
    
    92.7
    %
 September 30,
    
    June 30,
    
    March 31,
    
    December 31,
    
    September 30,2009
    
    2009
    
    2009
    
    2008
    
    2008Ending Utilization (excluding new units not yet leased)
    
    
    87.6
    %
    
    
    85.9
    %
    
    
    88.5
    %
    
    
    92.4
    %
    
    
    95.8
    %
       18




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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
    
    
    
    3.1Quarter ended September 30, 2009
    
    
    472,069
    
    
    
    4.8Total
    
    
    1,849,902
    
    
    $
    16.1Quarter ended March 31 2008
    
    
    362,100
    
    
    $
    8.0Quarter ended June 30, 2008
    
    
    
    
    
    
    Quarter ended September 30, 2008
    
    
    
    
    
    
    Total
    
    
    362,100
    
    
    $
    8.0
 19




---



##### Table of Contents



Dividends
  Record Date
    
    Payment Date
    
    Aggregate Payment
    
    Per Share PaymentSeptember 3, 2009
    
    September 24, 2009
    
    $  0.3 million
    
    $
    
    0.01June 2, 2009
    
    June 23, 2009
    
    $  0.3 million
    
    $
    
    0.01March 12, 2009
    
    March 26, 2009
    
    $  0.3 million
    
    $
    
    0.01August 21, 2008
    
    September 12, 2008
    
    $13.5 million
    
    $
    
    0.4125May 22, 2008
    
    June 12, 2008
    
    $13.4 million
    
    $
    
    0.4125March 20, 2008
    
    April 10, 2008
    
    $12.2 million
    
    $
    
    0.375
 20




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##### Table of Contents



Results of Operations
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    Percent
    
    
    Dollars
    
    
    PercentLeasing revenues
    
    $
    74,184
    
    
    
    89.5
    %
    
    $
    80,379
    
    
    
    74.7
    %
    
    $
    236,636
    
    
    
    86.7
    %
    
    $
    235,661
    
    
    
    75.5
    %Equipment trading revenue
    
    
    7,869
    
    
    
    9.5
    
    
    
    26,098
    
    
    
    24.2
    
    
    
    33,704
    
    
    
    12.3
    
    
    
    72,802
    
    
    
    23.3Management fee income
    
    
    675
    
    
    
    0.8
    
    
    
    855
    
    
    
    0.8
    
    
    
    2,013
    
    
    
    0.7
    
    
    
    2,362
    
    
    
    0.8Other revenues
    
    
    188
    
    
    
    0.2
    
    
    
    355
    
    
    
    0.3
    
    
    
    777
    
    
    
    0.3
    
    
    
    1,118
    
    
    
    0.4Total revenues
    
    
    82,916
    
    
    
    100.0
    
    
    
    107,687
    
    
    
    100.0
    
    
    
    273,130
    
    
    
    100.0
    
    
    
    311,943
    
    
    
    100.0Operating expenses (income):Equipment trading expenses
    
    
    7,578
    
    
    
    9.2
    
    
    
    22,972
    
    
    
    21.3
    
    
    
    31,935
    
    
    
    11.7
    
    
    
    64,284
    
    
    
    20.6Direct operating expenses
    
    
    9,134
    
    
    
    11.0
    
    
    
    6,207
    
    
    
    5.8
    
    
    
    28,600
    
    
    
    10.5
    
    
    
    20,614
    
    
    
    6.6Administrative expenses
    
    
    9,192
    
    
    
    11.1
    
    
    
    12,434
    
    
    
    11.6
    
    
    
    30,577
    
    
    
    11.2
    
    
    
    34,066
    
    
    
    10.9Depreciation and amortization
    
    
    29,380
    
    
    
    35.4
    
    
    
    28,149
    
    
    
    26.1
    
    
    
    87,843
    
    
    
    32.2
    
    
    
    82,322
    
    
    
    26.4(Reversal) provision for doubtful
accounts
    
    
    (15
    )
    
    
    
    
    
    
    1,859
    
    
    
    1.7
    
    
    
    383
    
    
    
    0.1
    
    
    
    2,062
    
    
    
    0.7Net (gain) on sale of leasing equipment
    
    
    (1,058
    )
    
    
    (1.3
    )
    
    
    (7,563
    )
    
    
    (7.0
    )
    
    
    (7,102
    )
    
    
    (2.6
    )
    
    
    (18,059
    )
    
    
    (5.8
    )Net (gain) on sale of container
portfolios
    
    
    (185
    )
    
    
    (0.2
    )
    
    
    (2,789
    )
    
    
    (2.6
    )
    
    
    (185
    )
    
    
    (0.1
    )
    
    
    (2,789
    )
    
    
    (0.9
    )Total operating expenses
    
    
    54,026
    
    
    
    65.2
    
    
    
    61,269
    
    
    
    56.9
    
    
    
    172,051
    
    
    
    63.0
    
    
    
    182,500
    
    
    
    58.5Operating income
    
    
    28,890
    
    
    
    34.8
    
    
    
    46,418
    
    
    
    43.1
    
    
    
    101,079
    
    
    
    37.0
    
    
    
    129,443
    
    
    
    41.5Other expenses (income):Interest and debt expense
    
    
    17,024
    
    
    
    20.5
    
    
    
    16,528
    
    
    
    15.4
    
    
    
    51,505
    
    
    
    18.9
    
    
    
    47,058
    
    
    
    15.1(Gain) on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,130
    )
    
    
    (5.2
    )
    
    
    
    
    
    
    Unrealized
loss (gain) on interest rate swaps
    
    
    6,935
    
    
    
    8.4
    
    
    
    7,371
    
    
    
    6.8
    
    
    
    (22,583
    )
    
    
    (8.3
    )
    
    
    3,273
    
    
    
    1.0Total other expenses
    
    
    23,959
    
    
    
    28.9
    
    
    
    23,899
    
    
    
    22.2
    
    
    
    14,792
    
    
    
    5.4
    
    
    
    50,331
    
    
    
    16.1Income before income taxes
    
    
    4,931
    
    
    
    5.9
    
    
    
    22,519
    
    
    
    20.9
    
    
    
    86,287
    
    
    
    31.6
    
    
    
    79,112
    
    
    
    25.4Income tax expense
    
    
    1,755
    
    
    
    2.0
    
    
    
    7,985
    
    
    
    7.4
    
    
    
    30,718
    
    
    
    11.3
    
    
    
    28,053
    
    
    
    9.0Net income
    
    $
    3,176
    
    
    
    3.9
    %
    
    $
    14,534
    
    
    
    13.5
    %
    
    $
    55,569
    
    
    
    20.3
    %
    
    $
    51,059
    
    
    
    16.4
    %
 Comparison of Three Months Ended September 30, 2009 to Three Months Ended September 30, 2008.
 Leasing revenues.
 Three Months Ended September 30,2009
    
    
    2008(in thousands)Leasing revenues:Operating lease revenues:Per diem revenue
    
    $
    61,427
    
    
    $
    67,683Fee and ancillary lease revenue
    
    
    7,661
    
    
    
    7,284Total operating lease revenue
    
    
    69,088
    
    
    
    74,967Finance lease revenue
    
    
    5,096
    
    
    
    5,412Total leasing revenues
    
    $
    74,184
    
    
    $
    80,379
   
    
    $3.7 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time;
 21




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##### Table of Contents




    
    $4.4 million decrease due to overall lower utilization and decreased average fleet size;
and
    
    $2.2 million increase due to recognition of fee revenue for the early termination of
certain lease contracts. In  2009, we negotiated the early termination
of several contracts for fees of approximately $11.0 million. As of September 30, 2009,
approximately $4.1 million of these fees remain categorized as deferred revenue and will be
recognized as units are redelivered.
   Equipment Trading Activities.
 Three Months Ended September 30,2009
    
    
    2008(in thousands)Equipment trading revenues
    
    $
    7,869
    
    
    $
    26,098Equipment trading expenses
    
    
    (7,578
    )
    
    
    (22,972
    )Equipment trading margin
    
    $
    291
    
    
    $
    3,126
  Direct operating expenses.
  Administrative expenses.
 Depreciation and amortization.
 Net (gain) on sale of leasing equipment.
 Interest and debt expense.
 22




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##### Table of Contents



Net (gain) on sale of container portfolios.
 Unrealized loss on interest rate swaps.
 Income tax expense.
  Comparison of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2008.
 Leasing revenues.
 Nine Months Ended      September 30,2009
    
    
    2008(in thousands)Leasing revenues:Operating lease revenues:Per diem revenue
    
    $
    195,460
    
    
    $
    196,894Fee and ancillary lease revenue
    
    
    25,652
    
    
    
    23,307Total operating lease revenue
    
    
    221,112
    
    
    
    220,201Finance lease revenue
    
    
    15,524
    
    
    
    15,460Total leasing revenues
    
    $
    236,636
    
    
    $
    235,661
   
    
    $6.4 million decrease due to overall lower utilization;
    
    $6.8 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time;
    
    $4.3 million increase due to an increase in average fleet size, reflecting a larger
number of dry and special containers, chassis and tanks in our fleet;
    
    $6.8 million increase due to the recognition of fee revenue for the early termination of
certain lease contracts. In 2009, we negotiated the early termination of several contracts
for fees of approximately $11.0 million. As of September 30, 2009, approximately $4.1
million of these fees remain categorized as deferred revenue and will be recognized as units
are redelivered;
    
    $1.0 million increase in one time fees charged for the early drop off of equipment from
other customers.
 23




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##### Table of Contents



Equipment Trading Activities.
 Nine Months Ended September 30,2009
    
    
    2008(in thousands)Equipment trading revenues
    
    $
    33,704
    
    
    $
    72,802Equipment trading expenses
    
    
    (31,935
    )
    
    
    (64,284
    )Equipment trading margin
    
    $
    1,769
    
    
    $
    8,518
  Direct operating expenses.
  
    
    $8.1 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;
    
    $1.2 million decrease in surveying costs due to a decrease in new equipment purchases; and
    
    $0.5 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.
 24




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##### Table of Contents



Interest and debt expense.
 Net (gain) on sale of container portfolios.
 (Gain) on debt extinguishment.
 Unrealized (gain) loss on interest rate swaps.
 Income tax expense.
  Business Segments
  Equipment leasing
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Equipment leasing segment:Total revenue
    
    $
    74,747
    
    
    $
    81,453
    
    
    $
    238,803
    
    
    $
    238,750Depreciation and amortization expense
    
    
    29,308
    
    
    
    28,144
    
    
    
    87,693
    
    
    
    82,308Interest and debt expense
    
    
    16,830
    
    
    
    16,215
    
    
    
    50,928
    
    
    
    46,104Net (gain) on sale of leasing equipment
    
    
    (1,058
    )
    
    
    (7,563
    )
    
    
    (7,102
    )
    
    
    (18,059
    )Pre-tax income(1)
    
    
    11,725
    
    
    
    27,488
    
    
    
    48,904
    
    
    
    75,941
 
 (1)
    
    Pre-tax income excludes unrealized losses (gains) on interest rate swaps of $6,935 and $7,371
for the three months ended September 30, 2009 and 2008, respectively, and $(22,583) and $3,273
for the nine months ended September 30, 2009 and 2008,
respectively. Pre-tax income also excludes (gain) on debt extinguishment of $(14,130) for the
nine months ended September 30, 2009. 25




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##### Table of Contents



Segment Comparison of Three Months Ended September 30, 2009 to Three Months Ended September 30, 2008
 Equipment leasing revenue.
 
    
    $3.7 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time;
    
    $4.4 million decrease due to overall lower utilization and decrease in average fleet
size; and
    
    $2.2 million increase due to recognition of fee revenue for the early termination of
certain lease contracts.
   Equipment leasing pretax income.
 
    
    $6.8 million decrease in Equipment leasing revenue in 2009;
    
    $2.9 million increase in direct operating expenses, primarily related to increased
storage costs associated with increased drop off activity;
    
    $6.5 million decrease in gain on the sale of leasing equipment, primarily due to lower
selling prices in 2009 compared to 2008.
 Segment Comparison of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2008
 Equipment leasing revenue.
 
    
    $6.4 million decrease due to overall lower utilization;
    
    $6.8 million decrease due to lower per diem rates primarily related to certain lease
concessions that were given in return for extended on hire time;
    
    $4.3 million increase due to an increase in average fleet size, reflecting a larger
number of dry and special containers, chassis and tanks in our fleet;
    
    $6.8 million increase due to the recognition of fee revenue for the early termination of
certain lease contracts.
    
    $1.0 million increase in one time fees charged for the early drop off of equipment from
other customers.
   26




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##### Table of Contents



Equipment leasing pretax income.
 
    
    $5.4 million increase in depreciation expense, primarily due to an increase in the
depreciable fleet;
    
    $4.4 million increase in interest expense, primarily due to an increase in the average
effective rate;
    
    $8.0 million increase in direct operating expenses, primarily related to increased
storage costs associated with increased drop off activity;
    
    $11.0 million decrease in gain on the sale of leasing equipment, primarily due to lower
selling prices in 2009.
 Equipment trading
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands)Equipment trading segment:Equipment trading revenue
    
    $
    7,869
    
    
    $
    26,098
    
    
    $
    33,704
    
    
    $
    72,802Equipment trading expense
    
    
    (7,578
    )
    
    
    (22,972
    )
    
    
    (31,935
    )
    
    
    (64,284
    )Equipment trading margin
    
    
    291
    
    
    
    3,126
    
    
    
    1,769
    
    
    
    8,518Interest and debt expense
    
    
    194
    
    
    
    313
    
    
    
    577
    
    
    
    954Pre-tax (loss) income(1)
    
    
    141
    
    
    
    2,402
    
    
    
    670
    
    
    
    6,444
 
 (1)
    
    Pre-tax (loss) income excludes unrealized losses (gains) on interest rate swaps of $6,935 and
$7,371 for the three months ended September 30, 2009 and 2008, respectively, and $(22,583) and
$3,273 for the nine months ended September 30, 2009 and 2008, respectively. Pre-tax (loss)
income also excludes (gain) on debt extinguishment of $(14,130) for the nine months ended
September 30, 2009. Segment Comparison of Three Months Ended September 30, 2009 to Three Months Ended September 30, 2008
 Equipment trading margin.
 Equipment trading pretax income.
 Segment Comparison of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2008
 Equipment trading margin.
 27




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##### Table of Contents



Equipment trading pretax income.
 Liquidity and Capital Resources
      CurrentCurrent
    
    
    MaximumAmount
    
    
    BorrowingOutstanding
    
    
    LevelAsset backed securitization (ABS)Term notes  Series 2006-1
    
    $
    372.0
    
    
    $
    372.0Term notes  Series 2005-1
    
    
    354.2
    
    
    
    354.2Asset backed credit facility
    
    
    225.0
    
    
    
    225.0Revolving credit facility
    
    
    50.0
    
    
    
    100.0Finance lease facility
    
    
    40.6
    
    
    
    40.62007 Term loan facility
    
    
    28.8
    
    
    
    28.8Port equipment facility
    
    
    11.2
    
    
    
    11.2Other debt
    
    
    19.1
    
    
    
    32.4Capital lease obligations
    
    
    94.6
    
    
    
    94.6Total Debt
    
    $
    1,195.5
    
    
    $
    1,258.8
  Debt Covenants
  
    
    Minimum Earnings Before Interest and Taxes (EBIT) to Cash Interest Expense;
    
    Minimum Tangible Net Worth (TNW); and
    
    Maximum Indebtedness to TNW.
 28




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##### Table of Contents



Non-GAAP Measures
  Minimum EBIT to Cash Interest Expense
    EBIT to Cash Interest Expense:
    
    Consolidated(1)
    
    
    TAL Adv I
    
    
    TAL Adv IINet income (loss)
    
    $
    40,306
    
    
    $
    13,223
    
    
    $
    (4,044
    )Plus: Income tax expense (benefit)
    
    
    21,732
    
    
    
    8,520
    
    
    
    (2,014
    )Interest expense including write-off of deferred financing costs
    
    
    69,680
    
    
    
    40,691
    
    
    
    13,210Unrealized losses on interest rate swaps
    
    
    50,191
    
    
    
    27,257
    
    
    
    9,994All non-cash expenses attributable to incentive arrangements
    
    
    1,478
    
    
    
    
    
    
    
    (11
    )EBIT
    
    $
    183,387
    
    
    $
    89,691
    
    
    $
    17,135Interest expense (excluding interest income of $519, $285, and $18 respectively)
    
    $
    70,199
    
    
    $
    40,975
    
    
    $
    13,228Amortization and write-off of deferred financing costs
    
    
    (1,149
    )
    
    
    (627
    )
    
    
    (291
    )Accrued interest (represents 2009 interest expense not paid)
    
    
    (3,050
    )
    
    
    (1,014
    )
    
    
    (374
    )Cash payments of prior period accrued interest
    
    
    2,332
    
    
    
    1,149
    
    
    
    197Cash Interest Expense
    
    $
    68,332
    
    
    $
    40,483
    
    
    $
    12,760EBIT to Cash Interest Expense Ratio
    
    
    2.68
    
    
    
    2.22
    
    
    
    1.34Required 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
    29




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##### Table of Contents



Other Facilities*
    
    
    ABS
    
    
    Asset Backed Credit FacilityMinimum TNW:Tangible AssetsTotal Assets
    
    $
    1,817,649
    
    
    $
    1,817,649
    
    
    $
    1,817,649Deferred Financing Costs
    
    
    (7,652
    )
    
    
    (7,652
    )
    
    
    (7,652
    )Goodwill
    
    
    (71,898
    )
    
    
    (71,898
    )
    
    
    (71,898
    )Intangibles
    
    
    (2,239
    )
    
    
    (2,239
    )
    
    
    (2,239
    )Fair value of derivative instruments (asset)
    
    
    (1,542
    )
    
    
    (1,542
    )
    
    
    (1,542
    )Total Tangible Assets
    
    $
    1,734,318
    
    
    $
    1,734,318
    
    
    $
    1,734,318All indebtedness:Total debt
    
    $
    1,195,542
    
    
    $
    1,195,542
    
    
    $
    1,195,542Accrued interest
    
    
    3,050
    
    
    
    3,050
    
    
    
    3,050Fair value of derivative instruments (liability)
    
    
    73,141
    
    
    
    N/A
    
    
    
    N/AEquipment purchases payable
    
    
    2,212
    
    
    
    2,212
    
    
    
    2,212Total Indebtedness
    
    $
    1,273,945
    
    
    $
    1,200,804
    
    
    $
    1,200,804TNW
(Total Tangible Assets less Total Indebtedness)
    
    $
    460,373
    
    
    $
    533,514
    
    
    $
    533,514Required Minimum TNW
    
    $
    300,000
    
    
    $
    407,496
    
    
    $
    407,496Maximum Indebtedness to TNW:Total Indebtedness
    
    $
    1,273,945
    
    
    $
    1,200,804
    
    
    $
    1,200,804Fair value of derivative instruments (liability)
    
    
    N/A
    
    
    
    73,141
    
    
    
    N/ATotal Indebtedness for Maximum Indebtedness to TNW
    
    $
    1,273,945
    
    
    $
    1,273,945
    
    
    $
    1,200,804TNW
    
    $
    460,373
    
    
    $
    533,514
    
    
    $
    533,514Total Indebtedness / TNW
    
    
    2.77
    
    
    
    2.39
    
    
    
    2.25Required Maximum Indebtedness to TNW
    
    
    4.75 / 5.00
    
    
    
    4.75
    
    
    
    4.75
     Treasury Stock
  Shares
    
    
    $ in MillionsQuarter ended March 31, 2009
    
    
    1,021,918
    
    
    $
    8.2Quarter ended June 30, 2009
    
    
    355,915
    
    
    
    3.1Quarter ended September 30, 2009
    
    
    472,069
    
    
    
    4.8Total
    
    
    1,849,902
    
    
    $
    16.1Quarter ended March 31 2008
    
    
    362,100
    
    
    $
    8.0Quarter ended June 30, 2008
    
    
    
    
    
    
    Quarter ended September 30, 2008
    
    
    
    
    
    
    Total
    
    
    362,100
    
    
    $
    8.0
 Dividends
  30




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##### Table of Contents



Record Date
    
    Payment Date
    
    Aggregate Payment
    
    Per Share PaymentSeptember 3, 2009
    
    September 24, 2009
    
    $0.3 million
    
    $
    
    0.01June 2, 2009
    
    June 23, 2009
    
    $0.3 million
    
    $
    
    0.01March 12, 2009
    
    March 26, 2009
    
    $0.3 million
    
    $
    
    0.01August 21, 2008
    
    September 12, 2008
    
    $13.5 million
    
    $
    
    0.4125May 22, 2008
    
    June 12, 2008
    
    $13.4 million
    
    $
    
    0.4125March 20, 2008
    
    April 10, 2008
    
    $12.2 million
    
    $
    
    0.375
 Cash Flow
  Nine Months Ended September 30,2009
    
    
    2008Net cash provided by operating activities
    
    $
    134,551
    
    
    $
    139,495Net cash
provided by (used in) investing activities:Purchases of leasing equipment
    
    $
    (28,002
    )
    
    $
    (316,345
    )Investment in finance leases
    
    
    (27,098
    )
    
    
    (38,008
    )Proceeds from sale of equipment leasing fleet, net of selling costs
    
    
    53,750
    
    
    
    63,944Proceeds from the sale of container portfolios
    
    
    8,532
    
    
    
    40,539Cash collections on finance lease receivables, net of income earned
    
    
    22,931
    
    
    
    19,938Other
    
    
    (77
    )
    
    
    330Net cash provided by (used in) investing activities
    
    $
    30,036
    
    
    $
    (229,602
    )Net cash (used in) provided by financing activities
    
    $
    (158,313
    )
    
    $
    79,176
 Operating Activities
  Investing Activities
  
    
    Capital expenditures were $55.1 million, including investments in finance leases of $27.1
million, in the nine months ended September 30, 2009 compared to $354.4 million, including
investments in finance leases of $38.0 million, for 2008. Capital expenditures decreased by
$299.3 million in 2009 primarily due to a decrease in the number of leasing units purchased.
    
    Sales proceeds from the disposal of equipment decreased $10.1 million to $53.8 million in
the nine months ended September 30, 2009 compared to $63.9 million in 2008. Proceeds from
the disposal of used containers decreased in 2009 primarily due to lower selling prices.
    
    Proceeds from the sale of container portfolios were $8.5
million in the nine months ended
September 30, 2009 compared to $40.5 million in 2008.
    
    Cash collections on finance leases, net of income earned, increased by $3.0 million to
$22.9 million in the nine months ended September 30, 2009 compared to $19.9 million in 2008
as a result of an increase in our finance lease portfolio.
 Financing Activities
   31




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##### Table of Contents



Contractual Obligations
   Contractual Obligations by Period(dollars in millions)Remaining
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2013 andTotal
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    thereafterContractual Obligations:Total debt obligations(1)
    
    $
    1,326.9
    
    
    $
    45.3
    
    
    $
    226.1
    
    
    $
    192.4
    
    
    $
    230.3
    
    
    $
    632.8Capital lease obligations(2)
    
    
    116.4
    
    
    
    1.4
    
    
    
    12.8
    
    
    
    13.0
    
    
    
    13.2
    
    
    
    76.0Operating leases (mainly facilities)
    
    
    6.3
    
    
    
    0.7
    
    
    
    2.7
    
    
    
    2.1
    
    
    
    0.8
    
    
    
    Purchase obligations:Equipment purchases payable
    
    
    2.2
    
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equipment purchase commitments
    
    
    0.6
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    1,452.4
    
    
    $
    50.2
    
    
    $
    241.6
    
    
    $
    207.5
    
    
    $
    244.3
    
    
    $
    708.8
 
 (1)
    
    Amounts include actual and estimated interest for floating-rate debt based on September 30,
2009 rates and the net effect of the interest rate swaps.(2)
    
    Amounts include interest. Off-Balance Sheet Arrangements
  Critical Accounting Policies
  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,
 32




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##### Table of Contents



Consolidation of
Variable Interest Entities,
  
 ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
    Weighted Average FixedTotal Notional Amount at
    
    Leg Interest Rate at
    
    Weighted AverageSeptember 30, 2009
    
    September 30, 2009
    
    Remaining Term$1,172 million
    
    4.2%
    
    3.6 years
   Foreign Currency Exchange Rate Risk
  33




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES.
   34




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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 ProgramsJuly 1  31, 2009
    
    
    212,755
    
    
    $
    10.25
    
    
    
    212,755
    
    
    
    1,353,933August 1  31, 2009
    
    
    259,314
    
    
    $
    10.16
    
    
    
    259,314
    
    
    
    1,094,619September 1  30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,094,619
 
 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. 35




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##### Table of Contents



SIGNATURE
  TAL International Group, Inc.November  6, 2009
    /s/ John BurnsJohn BurnsSenior Vice President and
Chief Financial Officer 36