##### Table of Contents





















|                                                 |  |                                                                                                              
|------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------
|(Mark One)                                       |  |                                                                                                              
|x                                                |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE             
    SECURITIES EXCHANGE ACT OF 1934    
|For the fiscal year ended: December 31, 2004    
|OR                                              
|o                                                |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE             
    SECURITIES EXCHANGE ACT OF 1934
|For the transition period
    from:           to



THE CRONOS GROUP


(Exact name of Registrant as specified in its charter)


|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|LUXEMBOURG                                                         |  | NOT APPLICABLE                      
|(State or other Jurisdiction of incorporation or
    organization) |  | (I.R.S. Employer Identification No.)

16, ALLÉE MARCONI, BOÎTE POSTALE 260, L-2120
LUXEMBOURG


(Address of principal executive offices) (zip code)


Registrants telephone number, including area codes:


(352) 453145





Securities registered pursuant to Section 12(b) of the
Act.


|                             |  |                                                             
|---------------------------- |  | ------------------------------------------------------------
|Title of each class
    None |  | Name of each exchange on which registered
    Not applicable

Securities registered pursuant to Section 12(g) of the
Act.


Common Shares, $2 par value per share




x o


o


o x






|       |  |                             
|------ |  | ----------------------------
|Class  |  | Number of Shares Outstanding
|       |  |                             
|Common |  | 7,286,602                   



|                                                      |  |                           
|----------------------------------------------------- |  | --------------------------
|Document                                              |  | Form 10-K Parts           
|                                                      |  |                           
|Proxy Statement for Annual Meeting to be held in 2005 |  | Part II  Item 5, Part III









---










TABLE OF CONTENTS


The Cronos Group


|                  |                                                                                                                                   |      |    |    | 
|----------------- | --------------------------------------------------------------------------------------------------------------------------------- | ---- | -- | -- | 
|                  |                                                                                                                                   | Page |   
|                  |                                                                                                                                   |      |   
|Introductory Note |                                                                                                                                   |      | ii |   
|PART I            |                                                                                                                                   |      | 1  |   
|                  | Item 1  Business                                                                                                                 |      |    | 1  | 
|                  | Item 2  Properties                                                                                                               |      |    | 11 | 
|                  | Item 3  Legal
    Proceedings                                                                                                    |      |    | 12 | 
|                  | Item 4  Submission of
    Matters to a Vote of Security Holders                                                                  |      |    | 14 | 
|PART II           |                                                                                                                                   |      | 14 |   
|                  | Item 5  Market for the
    Companys Common Equity and Related Stockholder Matters and
    Issuer Purchases of Equity Securities |      |    | 14 | 
|                  | Item 6  Selected Financial
    Data                                                                                              |      |    | 17 | 
|                  | Item 7  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations                            |      |    | 18 | 
|                  | Item 7A  Quantitative and
    Qualitative Disclosures about Market Risk                                                          |      |    | 37 | 
|                  | Item 8  Financial
    Statements and Supplementary Data                                                                          |      |    | 38 | 
|                  | Item 9  Changes In and
    Disagreements with Accountants on Accounting and Financial
    Disclosure                             |      |    | 38 | 
|                  | Item 9A  Controls and
    Procedures                                                                                             |      |    | 38 | 
|                  | Item 9B  Other
    Information                                                                                                   |      |    | 38 | 
|PART III          |                                                                                                                                   |      | 38 |   
|                  | Item 10  Directors and
    Executive Officers of the Group                                                                       |      |    | 38 | 
|                  | Item 11  Executive
    Compensation                                                                                              |      |    | 40 | 
|                  | Item 12  Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters                  |      |    | 40 | 
|                  | Item 13  Certain
    Relationships and Related Transactions                                                                      |      |    | 40 | 
|                  | Item 14  Principal
    Accountant Fees and Services                                                                              |      |    | 40 | 
|PART IV           |                                                                                                                                   |      | 42 |   
|                  | Item 15  Exhibits and
    Financial Statement Schedules                                                                          |      |    | 42 | 
|EXHIBIT 21.1     
|EXHIBIT 23.1     
|EXHIBIT 31.1     
|EXHIBIT 31.2     
|EXHIBIT 32.1     



i



---



##### Table of Contents






INTRODUCTORY NOTE








ii



---



##### Table of Contents






PART I







|         |         
|-------- | --------
|Item 1  | Business

Introduction


(société
anonyme holding)






Industry
Background












1



---



##### Table of Contents



Benefits
of Leasing for Shipping Lines






| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Leasing allows the shipping lines to utilize the equipment they
    need without having to make large capital expenditures;                                                          
|
| | Leasing offers a shipping line an alternative source of
    financing in a traditionally capital-intensive industry;                                                                 
|
| | Leasing enables shipping lines to expand their trade routes and
    market shares at a relatively low cost without making a
    permanent commitment to support their new structure; 
|
| | Leasing allows shipping lines to respond to changing seasonal
    and trade route demands, thereby optimizing their capital
    investment and minimizing storage costs;             
|
| | Leasing provides shipping lines with the flexibility to respond
    to rapidly changing market opportunities as they arise without
    relying exclusively on their owned containers;
|
| | Leasing allows shipping lines to benefit from the relationship
    between container manufacturers and leasing companies.                                                            

Types
of Leases Available to Shipping Lines


Master leases


Term leases


Direct financing leases






2



---



##### Table of Contents



Company
Strategy




Lease
Profile




|                 |                 |                                                           |     |             |              |  |     |      |      |  |          |     |      |             |     |     |      |  |     |     |      | 
|---------------- | --------------- | --------------------------------------------------------- | --- | ----------- | ------------ |  | --- | ---- | ---- |  | -------- | --- | ---- | ----------- | --- | --- | ---- |  | --- | --- | ---- | 
|                 |                 | Percentage of Fleet by Lease Type as of December 31, 2004 |    
|                 |                 |                                                           |    
|                 |                 | Product Type                                              |    
|                 |                 |                                                           |    
|                 |                 |                                                           |     | Dry Freight |              |  |    
|Type of Lease    |                 | Dry Cargo                                                 |     |             | Refrigerated |  |     | Tank |      |  | Specials |     |      | Total Fleet |    
|                 |                 |                                                           |     |             |              |  |     |      |      |  |          |     |      |             |    
|Master           |                 |                                                           | 49% |             |              |  | 37% |      |      |  | 61%      |     |      |             | 44% |     |      |  | 49% |    
|Term             |                 |                                                           |     |             |              |  |     |      |      |  |          |     |      |             |     |     |      |  |     |    
|                 | - short-term(1) |                                                           |     | 22%         |              |  |     | 14%  |      |  |          | 11% |      |             |     | 9%  |      |  |     | 21% |     
|                 | - long-term(2)  |                                                           |     | 25%         |              |  |     | 46%  |      |  |          | 25% |      |             |     | 30% |      |  |     | 25% |     
|Direct Financing |                 |                                                           | 4%  |             |              |  | 3%  |      |      |  | 3%       |     |      |             | 17% |     |      |  | 5%  |    
|                 |                 |                                                           |     |             |              |  |     |      |      |  |          |     |      |             |    
|                 |                 | Total                                                     |     |             | 100%         |  |     |      | 100% |  |          |     | 100% |             |     |     | 100% |  |     |     | 100% | 
|                 |                 |                                                           |     |             |              |  |     |      |      |  |          |     |      |             |    




|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|(1) | Short-term leases represent term leases that are either
    scheduled for renegotiation or that may expire in 2005.
|   
|(2) | Long-term leases represent term leases, the majority of which
    will expire between 2006 and 2011.               



Customers








Fleet
Profile




3



---



##### Table of Contents







|                        |  |      |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|----------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|(in thousands)          |  | 2004 |         |  | 2003 |   |         | 2002 |  |   | 2001    |  |  | 2000 |        
|                        |  |      |         |  |      |   |         |      |  |   |         |  |  |      |        
|Dry cargo containers    |  | $    | 91,511  |  |      | $ | 80,773  |      |  | $ | 78,760  |  |  | $    | 84,921  |  |  | $ | 99,853  | 
|Refrigerated containers |  |      | 20,613  |  |      |   | 20,829  |      |  |   | 21,293  |  |  |      | 22,422  |  |  |   | 24,899  | 
|Tank containers         |  |      | 8,295   |  |      |   | 6,713   |      |  |   | 6,123   |  |  |      | 5,908   |  |  |   | 6,481   | 
|Dry freight specials    |  |      | 11,677  |  |      |   | 9,186   |      |  |   | 7,467   |  |  |      | 7,094   |  |  |   | 6,372   | 
|                        |  |      |         |  |      |   |         |      |  |   |         |  |  |      |        
|Total                   |  | $    | 132,096 |  |      | $ | 117,501 |      |  | $ | 113,643 |  |  | $    | 120,345 |  |  | $ | 137,605 | 
|                        |  |      |         |  |      |   |         |      |  |   |         |  |  |      |        

i.e.,








4



---



##### Table of Contents





|                        |                            |                                    |       |      |      |  |       |      |  |  |       |     |  |      |       |     |  |  |       |     | 
|----------------------- | -------------------------- | ---------------------------------- | ----- | ---- | ---- |  | ----- | ---- |  |  | ----- | --- |  | ---- | ----- | --- |  |  | ----- | --- | 
|                        |                            | Cronos Fleet (in TEU thousands) at |      
|                        |                            | December 31,                       |      
|                        |                            |                                    |      
|                        |                            | 2004                               |       |      | 2003 |  |       | 2002 |  |  | 2001  |     |  | 2000 |      
|                        |                            |                                    |       |      |      |  |       |      |  |  |       |     |  |      |      
|Dry cargo containers    |                            |                                    | 399.1 |      |      |  | 370.5 |      |  |  | 364.5 |     |  |      | 368.4 |     |  |  | 375.9 |    
|Refrigerated containers |                            |                                    | 11.5  |      |      |  | 12.3  |      |  |  | 13.3  |     |  |      | 13.9  |     |  |  | 12.5  |    
|Tank containers         |                            |                                    | 3.5   |      |      |  | 2.7   |      |  |  | 2.4   |     |  |      | 2.3   |     |  |  | 2.0   |    
|Dry freight specials:   |                            |                                    |       |      |      |  |       |      |  |  |       |     |  |      |       |     |  |  |       |    
|                        | CPCs                       |                                    |       | 15.5 |      |  |       | 13.1 |  |  |       | 8.3 |  |      |       | 5.4 |  |  |       | 3.3 | 
|                        | Rolltrailers               |                                    |       | 3.3  |      |  |       | 2.8  |  |  |       | 2.7 |  |      |       | 2.5 |  |  |       | 2.5 | 
|                        | Other dry freight specials |                                    |       | 6.4  |      |  |       | 4.4  |  |  |       | 3.8 |  |      |       | 3.4 |  |  |       | 3.0 | 
|                        |                            |                                    |       |      |      |  |       |      |  |  |       |     |  |      |      
|Total fleet             |                            |                                    | 439.3 |      |      |  | 405.8 |      |  |  | 395.0 |     |  |      | 395.9 |     |  |  | 399.2 |    
|                        |                            |                                    |       |      |      |  |       |      |  |  |       |     |  |      |      

Operating
Segments














Lease agreements with US Limited Partnership Programs, the
Joint Venture Program and Private Container Programs.






|                                |       |      |     |      |      |  |     |      |  |  |      |      |  |      |     |      |  |  |     |      | 
|------------------------------- | ----- | ---- | --- | ---- | ---- |  | --- | ---- |  |  | ---- | ---- |  | ---- | --- | ---- |  |  | --- | ---- | 
|                                |       | 2004 |     |      | 2003 |  |     | 2002 |  |  | 2001 |      |  | 2000 |    
|                                |       |      |     |      |      |  |     |      |  |  |      |      |  |      |    
|US Limited Partnership Programs |       |      | 22% |      |      |  | 25% |      |  |  | 27%  |      |  |      | 29% |      |  |  | 31% |     
|Joint Venture Program           |       |      | 14% |      |      |  | 8%  |      |  |  | 4%   |      |  |      |    |      |  |  |    |     
|Private Container Programs      |       |      | 32% |      |      |  | 36% |      |  |  | 39%  |      |  |      | 40% |      |  |  | 40% |     
|Owned Containers                |       |      | 32% |      |      |  | 31% |      |  |  | 30%  |      |  |      | 31% |      |  |  | 29% |     
|                                |       |      |     |      |      |  |     |      |  |  |      |      |  |      |    
|                                | Total |      |     | 100% |      |  |     | 100% |  |  |      | 100% |  |      |     | 100% |  |  |     | 100% | 
|                                |       |      |     |      |      |  |     |      |  |  |      |      |  |      |    

5



---



##### Table of Contents









US
Limited Partnership Programs








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Acquisition feesequal to between 1.5% and 5% (depending
    on the program) of the original cost of equipment acquired by
    the partnerships. Such fees are paid on or about the date of the
    equipment purchase and are recognized as income for accounting
    purposes by Cronos, in its statement of operations, on a
    straight-line basis over the period of the agreement to which
    they relate;
|
| |  | Management feesequal to 7% of gross lease revenue;                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Incentive feesequal to 15% of distributable cash after
    the limited partners have received a return of their adjusted
    capital contributions and distributions in an amount equal to a
    cumulative compounded rate of between 8% to 10% per annum
    (depending on the program);                                                                                                                       
|
| |  | Reimbursed administrative expensesfor certain overhead
    and operating expenses;                                                                                                                                                                                                                                                                                                                               
|
| |  | General partners shareequal to 5% of distributable
    cash generated by the partnerships operating activities
    and 1% of distributions from sales proceeds.                                                                                                                                                                                                                                                



Joint
Venture Program








| |   |                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Acquisition feesequal to 1.25% of the original cost of
    equipment acquired by the Joint Venture Program. Such fees are
    paid on or about the date of the equipment purchase and are
    recognized as income for accounting purposes by Cronos, in its
    statement of operations, on a straight-line basis over the
    period of the agreement to which they relate;
|
| |  | Management feesequal to 8% of net lease revenue (gross
    lease revenue less direct operating expenses);                                                                                                                                                                                                                                                                    

6



---



##### Table of Contents





| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | Disposition feesequal to 5% of the excess of the
    disposal proceeds over the net book value of the container
    disposed.



Private
Container Programs








Owned
Containers






Employees




Acquisition
Policy






7



---



##### Table of Contents





Repair
and Maintenance






Disposition
of Used Containers






Operations










8



---



##### Table of Contents









| |            
| | -----------
| | Competition













| |          
| | ---------
| | Insurance







| |                                             
| | --------------------------------------------
| | Financial Information about Geographic Areas





9



---



##### Table of Contents







| |             
| | ------------
| | Risk Factors



Market for Common Shares.


Requirement for third party Capital.


Business & Economic Risks.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Economic conditions in the shipping industry;                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | The supply and pricing of new and used containers;                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Fluctuations in world trade:- Demand for leased containers is
    dependent upon levels of world trade and the supply of
    containers relative to demand. Future fluctuations in world
    trade could negatively affect the Groups container leasing
    operations;                                                                                                                                          
|
| |  | Fluctuations in supply and demand for containers resulting from,
    among other things, obsolescence, changes in the methods or
    economics of a particular mode of transportation or changes in
    governmental regulations or safety standards;                                                                                                                                                             
|
| |  | Fluctuations in shipping lines fleet mix:- Demand for
    leased containers is largely dependent on the decision of
    shipping lines to lease containers rather than purchase
    containers to supplement their own operating fleets. Any
    significant changes in the composition of the shipping
    lines leased and owned container fleets could adversely
    affect the demand for leased containers;
|
| |  | Fluctuations in inflation, interest rates and foreign exchange
    rates;                                                                                                                                                                                                                                                                                                                                         
|
| |  | Increases in maintenance expenses, taxes, insurance costs, third
    party fees and other expenses attributable to the operation and
    the maintenance of the containers that cannot be offset by
    increased lease revenues from the containers;                                                                                                                                                             
|
| |  | The risk of uninsured losses with respect to the containers or
    insured losses for which insurance proceeds are inadequate;                                                                                                                                                                                                                                                                                    
|
| |  | The effects of strikes, labor disputes and foreign political
    unrest; and,                                                                                                                                                                                                                                                                                                                                     
|
| |  | The risk of terrorist attack involving containers.                                                                                                                                                                                                                                                                                                                                                                

Competition.


Defaults by Lessees.


10



---



##### Table of Contents



Residual Value of Containers.


Special Purpose Containers.


Environmental.











|         |           
|-------- | ----------
|Item 2  | Properties



11



---



##### Table of Contents





|                             |  |            |         |         |           |  |         |       |  |  |         | 
|---------------------------- |  | ---------- | ------- | ------- | --------- |  | ------- | ----- |  |  | ------- | 
|                             |  |            |         | Managed |           |  |        
|                             |  | Owned      |         |         | Container |  |         | Total | 
|                             |  | Containers |         |         | Programs  |  |         | Fleet | 
|                             |  |            |         |         |           |  |         |       | 
|Dry cargo containers         |  |            | 99,161  |         |           |  | 299,919 |       |  |  | 399,080 | 
|Refrigerated containers      |  |            | 5,563   |         |           |  | 5,934   |       |  |  | 11,497  | 
|Tank containers              |  |            | 1,266   |         |           |  | 2,204   |       |  |  | 3,470   | 
|CPC                          |  |            | 11,858  |         |           |  | 3,643   |       |  |  | 15,501  | 
|Rolltrailers                 |  |            | 2,522   |         |           |  | 816     |       |  |  | 3,338   | 
|Other specialized containers |  |            | 3,203   |         |           |  | 3,194   |       |  |  | 6,397   | 
|                             |  |            |         |         |           |  |         |       | 
|Total                        |  |            | 123,573 |         |           |  | 315,710 |       |  |  | 439,283 | 
|                             |  |            |         |         |           |  |         |       | 





|                        |                            |  |     |     | 
|----------------------- | -------------------------- |  | --- | --- | 
|Dry cargo containers    |                            |  | 95% |    
|Refrigerated containers |                            |  | 90% |    
|Tank containers         |                            |  | 88% |    
|Dry freight specials:   |                            |  |     |    
|                        | CPCs                       |  |     | 95% | 
|                        | Rolltrailers               |  |     | 99% | 
|                        | Other dry freight specials |  |     | 86% | 






|         |                  
|-------- | -----------------
|Item 3  | Legal Proceedings



| |                       
| | ----------------------
| | The Contrin Settlement









12



---



##### Table of Contents















| |                 
| | ----------------
| | TOEMT Litigation









13



---



##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The transfer on or about November 25, 1991 to TOEMT
    (UK) of 5,500,000 ordinary shares of the Group in
    consideration of the contribution of assets by TOEMT (UK)
    to the Group worth approximately $16 million, which
    5,500,000 ordinary shares were then redeemed and/or
    transferred to Palatin and/or his nominee for no or no proper
    consideration;                                     
|
| |  | The transfer on or about December 31, 1991 to
    TOEMT (UK) of 90,000 preference shares (worth approximately
    $9 million) which were then transferred to Barton Holding
    Limited (a company allegedly controlled by Palatin) for no or no
    proper consideration, and a loan which the liquidator alleges
    not to have been repaid;                                                                  
|
| |  | The making of various payments (amounting to in excess of
    $0.9 million) between approximately June 1993 and February
    1996 by CNV to third parties, including Palatin or entities in
    which he was interested and/or his associates, which payments
    were made otherwise than for any legitimate commercial purpose
    or any other purpose of the TOEMTs businesses or interests;                
|
| |  | The making of improper cash withdrawals (amounting to in excess
    of $2 million), between approximately December 1991 and
    June 1999 from TOEMT (UK)s bank accounts, with the
    assistance of CNV, which withdrawals were allegedly for the
    benefit of Palatin and/or his wife rather than for any
    legitimate commercial purpose or other purpose of the
    TOEMTs businesses or interests; and
|
| |  | The diversion between 1991 and 1993 (with the assistance of CNV)
    of TOEMT (UK)s container business to TOEMT (Isle of Man),
    for no or for no proper consideration.                                                                                                                                                                                                                                       












|         |                                                    
|-------- | ---------------------------------------------------
|Item 4  | Submission of Matters to a Vote of Security Holders






PART II







|         |                                                                                                                      
|-------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5  | Market for the Companys Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities





14



---



##### Table of Contents





|                   |                |             |   |        |     |  |   |       | 
|------------------ | -------------- | ----------- | - | ------ | --- |  | - | ----- | 
|                   |                | Price Range |  
|                   |                |             |  
|                   |                | High        |   |        | Low | 
|                   |                |             |   |        |     | 
|Calendar Year 2003 |                |             |   |        |     |  |   |      
|                   | First Quarter  |             | $ | 4.000  |     |  | $ | 2.700 | 
|                   | Second Quarter |             | $ | 4.240  |     |  | $ | 2.700 | 
|                   | Third Quarter  |             | $ | 4.660  |     |  | $ | 3.700 | 
|                   | Fourth Quarter |             | $ | 5.810  |     |  | $ | 3.991 | 
|Calendar Year 2004 |                |             |   |        |     |  |   |      
|                   | First Quarter  |             | $ | 7.200  |     |  | $ | 5.000 | 
|                   | Second Quarter |             | $ | 6.980  |     |  | $ | 5.810 | 
|                   | Third Quarter  |             | $ | 9.600  |     |  | $ | 6.310 | 
|                   | Fourth Quarter |             | $ | 10.320 |     |  | $ | 7.850 | 

















15



---



##### Table of Contents







Equity
Compensation Plan Information






16



---



##### Table of Contents








|         |                        
|-------- | -----------------------
|Item 6  | Selected Financial Data



|                                                                                            |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |         |       |  |   |         |       | 
|------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------------------- | ------- | ----- | ------- | - | ------- | ------ |  | - | --------- | ----- |  | ------- | ------- | ----- |  | - | ------- | ----- | 
|                                                                                            |                                             | Years Ended December 31,              |        
|                                                                                            |                                             |                                       |        
|                                                                                            |                                             |                                       |         | 2002  |         |   | 2001    |        |  |  
|                                                                                            |                                             | 2004(1)                               |         |       | 2003(2) |   |         | (3)(4) |  |   | (4)(5)(6) |       |  | 2000(4) |        
|                                                                                            |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |        
|                                                                                            |                                             | (in thousands, except per share data) |        
|Statements of Income Data:                                                                  |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |         |       |  |   |         |      
|Gross lease revenue                                                                         |                                             | $                                     | 132,096 |       |         | $ | 117,501 |        |  | $ | 113,643   |       |  | $       | 120,345 |       |  | $ | 137,605 |      
|Total revenues                                                                              |                                             |                                       | 140,508 |       |         |   | 126,263 |        |  |   | 119,323   |       |  |         | 131,688 |       |  |   | 147,206 |      
|Income before cumulative effect of change in accounting principle                           |                                             |                                       | 8,865   |       |         |   | 4,190   |        |  |   | 2,309     |       |  |         | 3,401   |       |  |   | 3,605   |      
|Basic net income per share before cumulative effect of change in
    accounting principle   |                                             | $                                     | 1.22    |       |         | $ | 0.57    |        |  | $ | 0.31      |       |  | $       | 0.43    |       |  | $ | 0.39    |      
|                                                                                            |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |        
|Diluted net income per share before cumulative effect of change
    in accounting principle |                                             | $                                     | 1.14    |       |         | $ | 0.55    |        |  | $ | 0.31      |       |  | $       | 0.42    |       |  | $ | 0.39    |      
|                                                                                            |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |        
|Shares used in:                                                                             |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |         |       |  |   |         |      
|                                                                                            | - basic net income per share calculations   |                                       |         | 7,261 |         |   |         | 7,322  |  |   |           | 7,365 |  |         |         | 8,001 |  |   |         | 9,158 | 
|                                                                                            | - diluted net income per share calculations |                                       |         | 7,749 |         |   |         | 7,602  |  |   |           | 7,425 |  |         |         | 8,052 |  |   |         | 9,214 | 
|Cash dividends declared per common share                                                    |                                             | $                                     | 0.17    |       |         | $ | 0.08    |        |  | $ | 0.04      |       |  |         |        |       |  |   |        |      
|Balance Sheet Data (at end of period):                                                      |                                             |                                       |         |       |         |   |         |        |  |   |           |       |  |         |         |       |  |   |         |      
|Cash and cash equivalents                                                                   |                                             | $                                     | 17,579  |       |         | $ | 8,432   |        |  | $ | 5,626     |       |  | $       | 5,794   |       |  | $ | 7,947   |      
|Total assets                                                                                |                                             |                                       | 271,749 |       |         |   | 238,037 |        |  |   | 236,303   |       |  |         | 251,402 |       |  |   | 258,774 |      
|Long-term debt and capital lease obligations                                                |                                             |                                       | 114,122 |       |         |   | 106,434 |        |  |   | 114,864   |       |  |         | 124,686 |       |  |   | 112,853 |      
|Total debt and capital lease obligations                                                    |                                             |                                       | 127,953 |       |         |   | 119,205 |        |  |   | 128,950   |       |  |         | 138,385 |       |  |   | 132,350 |      
|Shareholders equity                                                                        |                                             |                                       | 70,359  |       |         |   | 62,033  |        |  |   | 59,082    |       |  |         | 57,104  |       |  |   | 60,147  |      






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In 2004, the Group reversed a $1.3 million provision that
    had originally been provided against a related party loan note
    in 1997. In December 2004, the Group concluded that the
    loan note was recoverable and would be repaid in full from the
    proceeds of the sale of the Amersham Estate, see
    Item 3  Legal Proceedings herein.
    The loan note was repaid on February 2, 2005.                                                                                                                                                                                    
|   
|(2) | In 2003, the Group recorded a tax benefit of $2.7 million
    following the transfer of assets to an affiliate resident in a
    different jurisdiction. Under the prevailing tax legislation,
    the Group was able to complete the transaction without
    generating a recapture of tax depreciation. As a result, the
    deferred tax associated with these assets was credited to
    income. In addition, the Group incurred $0.5 million of
    breakage costs in connection with the refinancing of the assets.                                                                      
|   
|(3) | In 2002, the Group recorded a tax benefit of $2.5 million
    as a result of a settlement with an overseas tax authority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) | In December 2003, the Group adopted Interpretation
    No. 46 Revised (FIN 46R),
    Consolidation of Variable Interest Entities. The
    Group applied FIN 46R to all entities that were subject to
    FIN 46R as of December 31, 2003, and determined that
    it was the primary beneficiary of a variable interest entity.
    Accordingly, Cronos applied FIN 46R by restating previously
    issued financial statements as of December 31, 2002, and
    for the year ended December 31, 2002, with a cumulative
    effect adjustment in the beginning of the first year restated.

17



---



##### Table of Contents





|    |                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | In 2001, the Group recorded $2 million of accounting
    charges relating to the impairment of certain long-lived assets.                                                                                                        
|   
|(6) | In 2001, the Group recorded $6 million in income from
    recovery of related party loans representing the partial
    recovery of interest and principal under two promissory notes
    between the Group and a former chairman.






|         |                                                                                          
|-------- | -----------------------------------------------------------------------------------------
|Item 7  | Managements Discussion and Analysis of Financial
    Condition and Results of Operations







Gross lease revenue


Equipment trading revenue and expenses




Commissions, fees and other operating income


18



---



##### Table of Contents





Direct operating expenses




| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Activity-related expenses include agents costs and depot
    costs, such as repairs, maintenance and handling;                                                                                                                                    
|
| |  | Inventory-related expenses relate to off-hire containers
    and comprise storage and repositioning costs. These costs are
    sensitive to the quantity of off-hire containers as well as the
    frequency at which containers are re-delivered;
|
| |  | Legal and other expenses include legal costs related to
    the recovery of containers, insurance and provisions for
    doubtful accounts.                                                                                                       

Payments to Managed Container Programs


Selling, general and administrative expenses


Segment profit or loss


Market
Overview






|                                    |  |      |    |   |      |  |    |      |  |  |    |  
|----------------------------------- |  | ---- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                                    |  | 2004 |    |   | 2003 |  |    | 2002 | 
|                                    |  |      |    |   |      |  |    |      | 
|Utilization at December 31          |  |      | 94 | % |      |  | 89 | %    |  |  | 85 | %
|Average utilization during the year |  |      | 92 | % |      |  | 86 | %    |  |  | 80 | %







19



---



##### Table of Contents















Funding






Owned Containers:




20



---



##### Table of Contents













Joint Venture Program:


Private Container Programs:


US Limited Partnership Programs:


21



---



##### Table of Contents



Review of Cronos Operations


Container Fleet


|                                |  |                                 |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       | 
|------------------------------- |  | ------------------------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  |  |  | ----- | 
|                                |  | Cronos Fleet (in TEU thousands) |      
|                                |  | at December 31,                 |      
|                                |  |                                 |      
|                                |  | 2004                            |       |  | 2003 |  |       | 2002 |  |  | 2001  |  |  | 2000 |      
|                                |  |                                 |       |  |      |  |       |      |  |  |       |  |  |      |      
|US Limited Partnership Programs |  |                                 | 86.4  |  |      |  | 93.8  |      |  |  | 100.9 |  |  |      | 112.8 |  |  |  | 119.2 | 
|Joint Venture Program           |  |                                 | 68.2  |  |      |  | 37.4  |      |  |  | 9.9   |  |  |      |      |  |  |  |      | 
|Private Container Programs      |  |                                 | 161.1 |  |      |  | 163.3 |      |  |  | 180.2 |  |  |      | 187.1 |  |  |  | 184.0 | 
|Owned Containers                |  |                                 | 123.6 |  |      |  | 111.3 |      |  |  | 104.0 |  |  |      | 96.0  |  |  |  | 96.0  | 
|                                |  |                                 |       |  |      |  |       |      |  |  |       |  |  |      |      
|Total Fleet                     |  |                                 | 439.3 |  |      |  | 405.8 |      |  |  | 395.0 |  |  |      | 395.9 |  |  |  | 399.2 | 
|                                |  |                                 |       |  |      |  |       |      |  |  |       |  |  |      |      











|                        |                            |             |    |   |         |   |    |           |     |   |            |   |     |       |    |   |     |   |    |   |     |  
|----------------------- | -------------------------- | ----------- | -- | - | ------- | - | -- | --------- | --- | - | ---------- | - | --- | ----- | -- | - | --- | - | -- | - | --- | -
|                        |                            | US          |    |   |         |   |    |           |     |   |           
|                        |                            | Limited     |    |   | Joint   |   |    | Private   |     |   |            |   |    
|                        |                            | Partnership |    |   | Venture |   |    | Container |     |   | Owned      |   |     | Total |   
|                        |                            | Programs    |    |   | Program |   |    | Programs  |     |   | Containers |   |     | Fleet |   
|                        |                            |             |    |   |         |   |    |           |     |   |            |   |     |       |   
|Dry cargo containers    |                            |             | 82 | % |         |   | 62 | %         |     |   | 85         | % |     |       | 55 | % |     |   | 72 | %
|Refrigerated containers |                            |             | 15 | % |         |   | 18 | %         |     |   | 3          | % |     |       | 22 | % |     |   | 14 | %
|Tank containers         |                            |             | 3  | % |         |   | 14 | %         |     |   | 8          | % |     |       | 7  | % |     |   | 7  | %
|Dry freight specials:   |                            |             |    |   |         |   |    |           |     |   |            |   |     |       |    |   |     |   |    |  
|                        | CPCs                       |             |    |  |         |   |    | 5         | %   |   |            |  |     |       |    | 8 | %   |   |    | 3 | %  
|                        | Rolltrailers               |             |    |  |         |   |    |          |     |   |            | 1 | %   |       |    | 5 | %   |   |    | 2 | %  
|                        | Other dry freight specials |             |    |  |         |   |    | 1         | %   |   |            | 3 | %   |       |    | 3 | %   |   |    | 2 | %  
|                        |                            |             |    |   |         |   |    |           |     |   |            |   |     |       |   
|                        |                            | Total       |    |   | 100     | % |    |           | 100 | % |            |   | 100 | %     |    |   | 100 | % |    |   | 100 | %
|                        |                            |             |    |   |         |   |    |           |     |   |            |   |     |       |   

22



---



##### Table of Contents



Per
Diem Rental Rates








| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Per diem rental rates decreased in line with the reduction in
    container prices and interest rates;                                                                                                                               
|
| |  | Cronos converted lease agreements with several shipping lines
    from master to long-term leases. These conversions provided
    greater revenue stability but at lower lease rates than those
    payable under master leases; and,
|
| |  | Cronos initiated new term leases for older equipment, which,
    while resulting in lower per diem rates, significantly lowered
    inventory levels.                                                                                





| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The improvement in utilization that can result from lower per
    diem rates may have a significant favorable effect on direct
    operating expenses due to the reduction in storage and other
    inventory-related costs; and,
|
| |  | The global economic pressures that cause a change in interest
    rates may also contribute, to some extent, to a change in lease
    rates.                                                                                     

Year
Ended December 31, 2004 Compared to Year Ended
December 31, 2003


Overview






| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Growth in global container trade;                                                                                                                                       
|
| |  | Increased availability of funding for investment in new
    container production and, in particular, the growth and
    profitability of the Joint Venture Program; and,
|
| |  | Income recognized on the recovery of a related party loan note.                                                                                                         

Analysis & Discussion


Gross lease revenue (GLR)


Direct operating expenses




| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | Storage expenses declined by $2.4 million due to the
    reduction in off-hire container inventories;
|
| |  | Repositioning expense declined by $2.5 million (see
    discussion in Market Overview above).        

23



---



##### Table of Contents



Operating segment information


|                             |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        |         |   |   |        |         |  
|---------------------------- | ---------------------------------------- | ----------- | ----- | ------- | ------- | - | ----- | --------- | - | - | ---------- | ------- | - | ----- | ------ | ------- | - | - | ------ | ------- | -
|                             |                                          | US          |       |         |         |   |       |           |   |   |           
|                             |                                          | Limited     |       |         | Joint   |   |       | Private   |   |   |            |         |  
|                             |                                          | Partnership |       |         | Venture |   |       | Container |   |   | Owned      |         |   |      
|(in thousands)               |                                          | Programs    |       |         | Program |   |       | Programs  |   |   | Containers |         |   | Total |       
|                             |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |       
|Year ended December 31, 2004 |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        |         |   |   |        |        
|                             | - gross lease revenue                    |             | $     | 26,671  |         |   | $     | 16,349    |   |   | $          | 47,442  |   |       | $      | 41,634  |   |   | $      | 132,096 |  
|                             | - direct operating expenses              |             |       | (5,012  | )       |   |       | (1,058    | ) |   |            | (8,359  | ) |       |        | (6,134  | ) |   |        | (20,563 | )
|                             |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |       
|                             | - net lease revenue                      |             |       | 21,659  |         |   |       | 15,291    |   |   |            | 39,083  |   |       |        | 35,500  |   |   |        | 111,533 |  
|                             | - direct financing lease income          |             |       |        |         |   |       |          |   |   |            |        |   |       |        | 1,547   |   |   |        | 1,547   |  
|                             | - payments to Managed Container Programs |             |       | (17,675 | )       |   |       | (13,963   | ) |   |            | (36,323 | ) |       |        |        |   |   |        | (67,961 | )
|                             | - container depreciation                 |             |       |        |         |   |       |          |   |   |            |        |   |       |        | (17,716 | ) |   |        | (17,716 | )
|                             | - container interest expense             |             |       |        |         |   |       |          |   |   |            |        |   |       |        | (5,076  | ) |   |        | (5,076  | )
|                             |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |       
|Segment profit               |                                          | $           | 3,984 |         |         | $ | 1,328 |           |   | $ | 2,760      |         |   | $     | 14,255 |         |   | $ | 22,327 |        
|                             |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |       

US Limited Partnership Programs:




| |   |                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net lease revenuefor this segment increased by
    $2.3 million over the prior year. The improvement in fleet
    utilization resulted in increased GLR and lower
    inventory-related direct operating expenses. This more than
    offset the effect of the disposal of containers at the end of
    their useful economic life.
|
| |  | Payments to US Limited Partnership Programsincreased by
    $1.7 million, which is in line with the increase in net
    lease revenue for this segment.                                                                                                                                                                            

Joint Venture Program:




| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net lease revenuefor this segment almost doubled to
    $15.3 million in 2004 reflecting the significant investment
    in additional equipment for the program.
|
| |  | Payments to the Joint Venture Programincreased by
    $6.8 million, which is in line with the increase in net
    lease revenue for this segment.               

Private Container Programs:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net lease revenueincreased by $4.9 million when
    compared to 2003. The improvement in fleet utilization resulted
    in a $2.5 million increase in GLR and a $2.4 million
    reduction in inventory-related direct operating expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Payments to Private Container Programsincreased by
    $3.8 million over the prior year. The ratio of segment
    profit to net lease revenue increased to 7% in 2004 from 5% in
    2003. The level of payments to Private Container Programs with
    variable payment terms increased in line with net lease revenue.
    Under the variable payment basis, the amount payable to the
    Managed Container Program is based on the rentals to the ocean
    carriers after deducting direct operating expenses and the
    compensation earned by Cronos for managing the equipment. The
    level of payments to Private Container Programs with fixed
    payment terms declined as the Group amended the terms of a fixed
    payment agreement with a container owner in November 2004. The
    amended agreement which was effective from October 2004, is now
    accounted for as a capital lease obligation. Accordingly, the
    Group recorded an adjustment to container equipment and capital
    lease of approximately $3.2 million in the fourth quarter
    of 2004.

Segment profit on Owned Containers




| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GLRincreased by $4.2 million reflecting the effect
    of the increased fleet size and the combined effect of the
    increase in utilization and per diem rates.

24



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Container depreciationof $17.7 million in 2004 was
    $0.4 higher than in 2003 as the increase in depreciation
    attributable to new container additions more than offset the
    effect of the disposal of equipment at the end of its economic
    life.
|
| |  | Container interest expenseof $5.1 million in 2004,
    was $0.6 million, or 10%, lower than in 2003. The main
    changes in interest expense were attributable to:                                                                                          



| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | An increase of $0.3 million due to higher interest rates
    during 2004;                                                                                                            
|
| | - | A saving of $0.4 million resulting from the refinancing of
    approximately $9 million
    of                     fixed
    rate debt with variable rate debt in December 2003; and,
|
| | - | In December 2003, $0.5 million of breakage costs were
    incurred as a result of the refinancing of approximately
    $9 million of fixed rate debt.                                

Equipment trading revenue


Commissions, fees and other operating income




| |   |                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A $0.7 million decline in unrealized exchange gains. In
    2003, the Group recorded $0.5 million of foreign exchange
    gains that were recognized primarily on Euro direct financing
    lease receivables;                                                               
|
| |  | An increase of $0.5 million on the gain recorded on the
    disposal of fixed assets. This was due in part to the increased
    disposal proceeds realised on the sale of equipment at the end
    of its economic life (see discussion in Market
    Overview above); and,
|
| |  | A $0.2 million increase in fees earned on the disposal of
    containers owned by Managed Container Programs that again
    reflected the strong market for used containers.                                                                                                 

Selling, general and administrative expenses




| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A $1.1 million increase in the expense recognized for a
    stock appreciation rights plan reflecting a larger increase in
    the Group share price in 2004 than in the prior year;                                    
|
| |  | A $0.3 million increase in professional services costs
    reflecting an increase in the level of corporate governance and
    compliance work undertaken; and,                                                         
|
| |  | A $0.6 million increase in manpower costs due in part to
    the recruitment of additional employees to support both the
    growth in the business and the additional corporate governance
    and compliance workload.

Recovery of related party loan note


25



---



##### Table of Contents









Equity in earnings of affiliate


Income Taxes


Year
Ended December 31, 2003 Compared to Year Ended
December 31, 2002


Overview






| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Growth in global container trade;                                                                                                                                                 
|
| |  | Increased availability of funding for investment in new
    container production and, in particular, the growth and
    profitability of the Joint Venture Program;               
|
| |  | Lower costs of financing. However, interest expense for 2003
    included $0.5 million of breakage costs that were incurred
    in connection with a refinancing transaction; and,
|
| |  | An increase in income earned for the management of equipment in
    the Private Container Programs due to the conversion of an
    agreement from a fixed to variable basis.      



Analysis & Discussion


Gross lease revenue (GLR)


26



---



##### Table of Contents





Direct operating expenses




| |   |                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A reduction of $2.2 million in inventory-related costs
    reflecting a $3 million decline in storage due to the
    reduction in off-hire container inventories, partially offset by
    an increase of $0.8 million in repositioning expense
    reflecting the cost of moving off-hire equipment from low demand
    to high demand locations;
|
| |  | A $0.8 million increase in the amount of legal and other
    costs as the provision for doubtful accounts was increased to
    reflect the deterioration in the credit position of a Far East
    based shipping line.                                                                                                                           

Operating segment information


|                                       |                                          |             |       |         |         |   |     |           |   |   |            |         |   |       |       |         |   |   |        |         |  
|-------------------------------------- | ---------------------------------------- | ----------- | ----- | ------- | ------- | - | --- | --------- | - | - | ---------- | ------- | - | ----- | ----- | ------- | - | - | ------ | ------- | -
|                                       |                                          | US          |       |         |         |   |     |           |   |   |           
|                                       |                                          | Limited     |       |         | Joint   |   |     | Private   |   |   |            |         |  
|                                       |                                          | Partnership |       |         | Venture |   |     | Container |   |   | Owned      |         |   |      
|(in thousands)                         |                                          | Programs    |       |         | Program |   |     | Programs  |   |   | Containers |         |   | Total |      
|                                       |                                          |             |       |         |         |   |     |           |   |   |            |         |   |       |      
|Year ended December 31, 2003, restated |                                          |             |       |         |         |   |     |           |   |   |            |         |   |       |       |         |   |   |        |        
|                                       | - gross lease revenue                    |             | $     | 26,558  |         |   | $   | 8,630     |   |   | $          | 44,901  |   |       | $     | 37,412  |   |   | $      | 117,501 |  
|                                       | - direct operating expenses              |             |       | (7,162  | )       |   |     | (753      | ) |   |            | (10,704 | ) |       |       | (6,889  | ) |   |        | (25,508 | )
|                                       |                                          |             |       |         |         |   |     |           |   |   |            |         |   |       |      
|                                       | - net lease revenue                      |             |       | 19,396  |         |   |     | 7,877     |   |   |            | 34,197  |   |       |       | 30,523  |   |   |        | 91,993  |  
|                                       | - direct financing lease income          |             |       |         |         |   |     |          |   |   |            |        |   |       |       | 1,510   |   |   |        | 1,510   |  
|                                       | - payments to Managed Container Programs |             |       | (15,969 | )       |   |     | (7,190    | ) |   |            | (32,571 | ) |       |       |        |   |   |        | (55,730 | )
|                                       | - container depreciation                 |             |       |        |         |   |     |          |   |   |            |        |   |       |       | (17,282 | ) |   |        | (17,282 | )
|                                       | - container interest expense             |             |       |        |         |   |     |          |   |   |            |        |   |       |       | (5,665  | ) |   |        | (5,665  | )
|                                       |                                          |             |       |         |         |   |     |           |   |   |            |         |   |       |      
|Segment profit                         |                                          | $           | 3,427 |         |         | $ | 687 |           |   | $ | 1,626      |         |   | $     | 9,086 |         |   | $ | 14,826 |        
|                                       |                                          |             |       |         |         |   |     |           |   |   |            |         |   |       |      

US Limited Partnership Programs:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net lease revenuefor this segment declined by
    $0.6 million. The $1.5 million reduction in GLR was
    caused primarily by the decline in fleet size due to the
    disposal of older equipment at the end of its useful economic
    life. Direct operating expenses decreased by $0.8 million
    as inventory-related costs declined in line with the reduction
    in the level of off-hire containers.
|
| |  | Payments to US Limited Partnership Programsdecreased by
    $0.6 million, which is in line with the decline in net
    lease revenue for this segment.                                                                                                                                                                                                                                                        

Joint Venture Program:




| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net lease revenuefor this segment increased by
    $6.1 million over the prior year reflecting the additional
    investment in new equipment.   
|
| |  | Payments to the Joint Venture Programincreased by
    $5.6 million, which is in line with the increase in net
    lease revenue for this segment.

Private Container Programs:




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net lease revenueincreased by $0.6 million when
    compared to 2002. GLR for this segment declined as the effect of
    the disposal of older equipment more than offset the impact of
    improved utilization. However, this was more than offset by a
    $1.2 million reduction in direct operating expenses.                                                                                                              
|
| |  | Payments to Private Container Programsdecreased as the
    payments attributable to the increase in net lease revenue were
    more than offset by a $1.3 million reduction in the
    payments to one owner of a Private Container Program where the
    payment terms for a number of agreements changed from a fixed to
    a variable payment basis. Under the variable payment basis, the
    amount payable to the Managed

27



---



##### Table of Contents



| |  |                                                                                                                                                                              
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Container Program is based on the rentals to the ocean carriers
    after deducting direct operating expenses and the income earned
    by Cronos for managing the equipment.

Segment profit on Owned Containers




| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GLRdeclined by $0.8 million due primarily to the
    sale of equipment to the Joint Venture Program in the second
    half of 2002 and in the first half of 2003.                                                                                                                                                                      
|
| |  | Container depreciationof $17.3 million in 2003
    declined by $1.1 million from 2002 as the increase in
    depreciation attributable to new container additions was more
    than offset by the disposal of refrigerated equipment at the end
    of its economic life and by the sale of equipment to the Joint
    Venture Program.
|
| |  | Container interest expenseof $5.7 million in 2003,
    was $1.5 million, or 21%, lower than in 2002. The main
    changes in interest expense were attributable to:                                                                                                                                                                    



| |   |                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | A reduction of the total level of debt and capital lease
    obligations in 2003 when compared to 2002. This is primarily as
    a result of the reduction of $11.3 million of indebtedness
    in September 2002 related to the sale of $18.8 million of
    equipment to the Joint Venture Program;
|
| | - | Lower interest rates;                                                                                                                                                                                                                                                                                
|
| | - | $0.5 million of breakage costs in December 2003 as a result
    of the refinancing of approximately $9 million of fixed
    rate debt.                                                                                                                                                               

Equipment trading revenue


Commissions, fees and other operating income




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A total reduction of $0.6 million in CPC licence fee income
    and consultancy and design fee income due to lower third party
    demand for new CPC and other container acquisitions during 2003;                                                                                                                                                                                                                                                          
|
| |  | A reduction of $0.4 million in fees earned on the disposal
    of containers owned by Managed Container Programs. This was due
    in part to the fact that greater quantities of equipment had
    reached the end of their economic life and were therefore sold
    in earlier years and in part to the fact that the off-hire
    inventories, from which disposals may be made, declined in line
    with increased market demand for leased containers;
|
| |  | A reduction of $0.2 million in amortized acquisition fee
    income reflecting a maturing portfolio of Managed Container
    Programs;                                                                                                                                                                                                                                                                                                                       
|
| |  | A reduction of $0.2 million in income earned on the
    sublease of two properties as a result of office relocations in
    the US and in the UK;                                                                                                                                                                                                                                                                                                            
|
| |  | An increase of $0.3 million in direct financing lease
    income reflecting the addition of a number of new direct
    financing leases; and,                                                                                                                                                                                                                                                                                                                
|
| |  | An increase of $0.4 million in unrealized exchange gains
    recognized primarily on Euro direct financing lease receivables.                                                                                                                                                                                                                                                                                                                                

Interest income


Amortization of intangible assets


28



---



##### Table of Contents



Selling, general and administrative expenses




| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An increase of $0.5 million in manpower costs as a result
    of changes in salary levels in line with inflation and other pay
    awards;                                          
|
| |  | A $0.2 million increase in the expense recognized for a
    stock appreciation rights plan reflecting a larger increase in
    the Group share price in 2003 than in the prior year;
|
| |  | An increase of $0.2 million in legal costs for the Contrin
    and Palatin legal actions; and,                                                                                      
|
| |  | A reduction of $0.3 million in occupancy costs due to
    office relocations in the UK and the US.                                                                                  

Income Taxes.


Equity in earnings of affiliate


Liquidity and Capital Resources












29



---



##### Table of Contents









Cash
Flow Statements for the years ended December 31, 2004, 2003
and 2002


Cash from Operating Activities.




| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increased cash collections from lessees of $22.6 million,
    or 17% over 2003. This was due to the combined effect of the
    increase in the amounts billed for gross lease revenue and
    container sales together with a reduction in the number of days
    that accounts receivable balances were outstanding;
|
| |  | A $3.5 million reduction in direct operating costs payments
    in 2004 due to the decline in inventory-related costs; and,                                                                                                                                                                                          
|
| |  | Increased receipts of $1.5 million in 2004 for equipment
    trading transactions.                                                                                                                                                                                                                                   





| |   |                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increased distributions to Managed Container Programs of
    approximately $19.5 million in 2004, reflecting the
    increase in both GLR and container disposal proceeds and the
    reduction in direct operating expenses for these programs; and,
|
| |  | A $1.5 million increase in payments for selling, general
    and administrative costs.                                                                                                                                                               





Cash from Investing Activities.




| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Group paid $29.7 million for new container and other
    equipment of which $5 million was sold to a Managed
    Container Program in the first quarter of 2004;                                                                              
|
| |  | The Group realized a further $11.7 million on the disposal
    of equipment at the end of its useful life, the proceeds of
    which were utilized primarily to repay related outstanding
    balances on debt and capital lease obligations; and,
|
| |  | The Group invested $3.6 million in the Joint Venture
    Program in order to provide its share of equity funding for
    additional equipment acquisitions by the program.                                                                        

30



---



##### Table of Contents







| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The acquisition of $16.9 million of new container and other
    equipment;                                                                                                                             
|
| |  | $2.6 million of equity contributions to the Joint Venture
    Program; and,                                                                                                                            
|
| |  | These payments were partially offset by $9.6 million of
    proceeds from the sale of container equipment, including
    $4.6 million of proceeds generated by a sale to the Joint
    Venture Program.



Cash from Financing Activities.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Group utilized $21.6 million of debt and capital leases
    to fund the acquisition of container and other equipment;                                                                                                                                                                                                                                                                                        
|
| |  | Repayments of $25.4 million to financial institutions,
    including a paydown of approximately $5 million from funds
    received on the equipment sale to the Managed Container Program
    in the first quarter of 2004, $10 million of scheduled
    payments and $9.5 million of further payments, including
    short term pre-payments of debt using surplus cash balances to
    reduce interest expense;
|
| |  | Dividend payments of $0.8 million; and,                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | $0.5 million of payments to restricted cash accounts in
    accordance with the terms of a number of financing facilities.                                                                                                                                                                                                                                                                                       





| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Group utilized $35.6 million of revolving credit and
    term loan facilities to fund equipment acquisitions and to
    refinance $16.9 million of existing debt and capital lease
    obligations;    
|
| |  | The Group made additional repayments of $28 million of debt
    and capital lease obligations including a $4.6 million
    repayment in connection with an equipment sale to the Joint
    Venture Program;
|
| |  | Dividend payments of $0.6 million; and,                                                                                                                                                                    
|
| |  | The Group repurchased $0.3 million of its common shares.                                                                                                                                                   



Capital
Resources


Capital
Expenditures and Commitments






31



---



##### Table of Contents











Material
Off-Balance Sheet Arrangements, Transactions and Obligations


Joint Venture Program.










US Limited Partnership Programs  General Partner.




32



---



##### Table of Contents







Fixed Operating Leases Obligations.


Legal Settlement.




Primary Beneficiary.






Agreements with Other Private Container Programs 
early termination options.


33



---



##### Table of Contents



Agreements with Other Private Container Programs 
change of control provisions.




Contractual Obligations




|                                                                |  |                                      |        |                        |        |   |        |       |  |     |        |  |           |         |        |  |  |   |        | 
|--------------------------------------------------------------- |  | ------------------------------------ | ------ | ---------------------- | ------ | - | ------ | ----- |  | --- | ------ |  | --------- | ------- | ------ |  |  | - | ------ | 
|                                                                |  |                                      |        | Payments Due by Period |       
|                                                                |  |                                      |        |                        |       
|                                                                |  |                                      |        | Less than              |        |   | 1-3    |       |  | 3-5 |        |  | More than |        
|                                                                |  | Total                                |        |                        | 1 Year |   |        | Years |  |     | Years  |  |           | 5 Years |       
|                                                                |  |                                      |        |                        |        |   |        |       |  |     |        |  |           |         |       
|                                                                |  | (US dollar equivalent, in thousands) |       
|Long-term debt obligations                                      |  | $                                    | 97,883 |                        |        | $ | 8,086  |       |  | $   | 31,555 |  |           | $       | 38,406 |  |  | $ | 19,836 | 
|Capital lease obligations                                       |  | $                                    | 30,070 |                        |        | $ | 5,745  |       |  | $   | 11,551 |  |           | $       | 7,218  |  |  | $ | 5,556  | 
|Fixed operating lease obligations to Managed Container Programs |  | $                                    | 27,871 |                        |        | $ | 5,062  |       |  | $   | 7,750  |  |           | $       | 5,114  |  |  | $ | 9,945  | 
|Term lease rental obligations to Managed Container Programs     |  | $                                    | 79,199 |                        |        | $ | 25,416 |       |  | $   | 37,097 |  |           | $       | 16,279 |  |  | $ | 407    | 
|Amounts payable to container manufacturers                      |  | $                                    | 27,838 |                        |        | $ | 27,838 |       |  |     |       |  |           |         |       |  |  |   |       | 
|Container purchase commitments                                  |  | $                                    | 20,651 |                        |        | $ | 20,651 |       |  |     |       |  |           |         |       |  |  |   |       | 
|Legal settlement                                                |  | $                                    | 2,950  |                        |        | $ | 2,100  |       |  | $   | 850    |  |           |         |       |  |  |   |       | 

Long-term debt obligations and capital lease obligations.


Amounts payable to container manufacturers.


Container purchase commitments.


Term lease rental obligations to Managed Container
Programs.


Critical Accounting Policies and Estimates


Container equipment  depreciable lives.


34



---



##### Table of Contents





Container equipment  valuation.


Deferred Taxation.




Allowance for doubtful accounts.


Goodwill.


Gross lease revenue  Managed Container
Programs.


US Limited Partnership Programs  FIN 46R.


35



---



##### Table of Contents





New Accounting Pronouncements










Inflation




36



---



##### Table of Contents








|          |                                                               
|--------- | --------------------------------------------------------------
|Item 7A  | Quantitative and Qualitative Disclosures about Market
    Risk



|                                              |                                    |                                      |   |                                                              |      |          |   |        |  |  |      |        |  |      |   |        |      |  |   |            |  |  |   |        |  |  |   |        | 
|--------------------------------------------- | ---------------------------------- | ------------------------------------ | - | ------------------------------------------------------------ | ---- | -------- | - | ------ |  |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ---------- |  |  | - | ------ |  |  | - | ------ | 
|                                              |                                    |                                      |   | Expected Maturity Date of Debt and Capital Lease Obligations |     
|                                              |                                    |                                      |   |                                                              |     
|                                              |                                    |                                      |   |                                                              |      | 2010 and |  
|                                              |                                    | Total                                |   |                                                              | 2005 |          |   | 2006   |  |  | 2007 |        |  | 2008 |   |        | 2009 |  |   | thereafter | 
|                                              |                                    |                                      |   |                                                              |      |          |   |        |  |  |      |        |  |      |   |        |      |  |   |            | 
|                                              |                                    | (US dollar equivalent, in thousands) |  
|Long-term debt and capital lease obligations: |                                    |                                      |   |                                                              |      |          |   |        |  |  |      |        |  |      |   |        |      |  |   |            |  |  |   |        |  |  |   |       
|                                              | Variable rate US dollar facilities |                                      | $ | 121,955                                                      |      |          | $ | 12,311 |  |  | $    | 16,980 |  |      | $ | 23,080 |      |  | $ | 21,589     |  |  | $ | 23,255 |  |  | $ | 24,740 | 
|                                              | Average interest rate %            |                                      |   |                                                              |      |          |   | 4.7    |  |  |      | 4.7    |  |      |   | 4.7    |      |  |   | 4.7        |  |  |   | 4.7    |  |  |   | 4.6    | 
|                                              | Variable rate Euro facilities      |                                      | $ | 2,058                                                        |      |          | $ | 396    |  |  | $    | 638    |  |      | $ | 124    |      |  | $ | 124        |  |  | $ | 124    |  |  | $ | 652    | 
|                                              | Average interest rate %            |                                      |   |                                                              |      |          |   | 4.1    |  |  |      | 4.1    |  |      |   | 4.2    |      |  |   | 4.2        |  |  |   | 4.2    |  |  |   | 4.2    | 
|                                              | Fixed rate US dollar facilities    |                                      | $ | 3,940                                                        |      |          | $ | 1,124  |  |  | $    | 1,194  |  |      | $ | 1,090  |      |  | $ | 532        |  |  |   |       |  |  |   |       | 
|                                              | Average interest rate %            |                                      |   |                                                              |      |          |   | 6.2    |  |  |      | 6.2    |  |      |   | 6.3    |      |  |   | 6.4        |  |  |   |       |  |  |   |       | 

Interest rate risk:


Exchange rate risk:






|                                 |                         |                                      |   |          |      |  |   |       |      |  |      |     |  |      |   |     |            |  |   |       |  |  |       |     |  |  |   |       |  |  |   |       | 
|-------------------------------- | ----------------------- | ------------------------------------ | - | -------- | ---- |  | - | ----- | ---- |  | ---- | --- |  | ---- | - | --- | ---------- |  | - | ----- |  |  | ----- | --- |  |  | - | ----- |  |  | - | ----- | 
|                                 |                         | Expected Maturity Date               |   |          |      |  |  
|                                 |                         |                                      |   |          |      |  |  
|                                 |                         |                                      |   | 2010 and |      |  |   |       | Fair | 
|                                 |                         | 2005                                 |   |          | 2006 |  |   | 2007  |      |  | 2008 |     |  | 2009 |   |     | thereafter |  |   | Total |  |  | Value |    
|                                 |                         |                                      |   |          |      |  |   |       |      |  |      |     |  |      |   |     |            |  |   |       |  |  |       |    
|                                 |                         | (US dollar equivalent, in thousands) |  
|Direct financing leases (EUR):   |                         |                                      |   |          |      |  |   |       |      |  |      |     |  |      |   |     |            |  |   |       |  |  |       |     |  |  |   |       |  |  |   |      
|                                 | - net lease receivables |                                      | $ | 870      |      |  | $ | 1,186 |      |  | $    | 188 |  |      | $ | 133 |            |  | $ |      |  |  |       |    |  |  | $ | 2,377 |  |  | $ | 2,377 | 
|Capital lease obligations (EUR): |                         |                                      |   |          |      |  |   |       |      |  |      |     |  |      |   |     |            |  |   |       |  |  |       |     |  |  |   |       |  |  |   |      
|                                 | variable rate (EUR)     |                                      | $ | 396      |      |  | $ | 638   |      |  | $    | 124 |  |      | $ | 124 |            |  | $ | 124   |  |  | $     | 652 |  |  | $ | 2,058 |  |  | $ | 2,058 | 
|                                 | average interest rate % |                                      |   | 4.1      |      |  |   | 4.1   |      |  |      | 4.2 |  |      |   | 4.2 |            |  |   | 4.2   |  |  |       | 4.2 |  |  |   | 4.2   |  |  |   |       | 

37



---



##### Table of Contents








|         |                                            
|-------- | -------------------------------------------
|Item 8  | Financial Statements and Supplementary Data





| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | The financial statements listed in this Item 8 are set
    forth herein beginning on page F1:





| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Income for the Years Ended
    December 31, 2004, 2003 and 2002              
|
| | Consolidated Statements of Shareholders Equity for the
    Years Ended December 31, 2004, 2003 and 2002
|
| | Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2004, 2003 and 2002          








|         |                                                                                         
|-------- | ----------------------------------------------------------------------------------------
|Item 9  | Changes In and Disagreements with Accountants on
    Accounting and Financial Disclosure








|          |                        
|--------- | -----------------------
|Item 9A  | Controls and Procedures










|          |                  
|--------- | -----------------
|Item 9B  | Other Information






PART III







|          |                                              
|--------- | ---------------------------------------------
|Item 10  | Directors and Executive Officers of the Group



38



---



##### Table of Contents





Dennis J. Tietz; age 52; Chairman and Chief Executive
Officer






Peter J. Younger; age 48; Chief Operating and Financial
Officer






John M. Foy; age 59; Senior Vice President






Nico Sciacovelli; age 55; Senior Vice President




John C. Kirby; age 51; Senior Vice President




39



---



##### Table of Contents





Section 16(a) Beneficial Ownership Reporting
Compliance




Code of Ethics.


www.cronos.com.

















|          |                       
|--------- | ----------------------
|Item 11  | Executive Compensation








|          |                                                                                                   
|--------- | --------------------------------------------------------------------------------------------------
|Item 12  | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters










|          |                                               
|--------- | ----------------------------------------------
|Item 13  | Certain Relationships and Related Transactions








|          |                                       
|--------- | --------------------------------------
|Item 14  | Principal Accountant Fees and Services






40



---



##### Table of Contents





41



---



##### Table of Contents






PART IV







|          |                                           
|--------- | ------------------------------------------
|Item 15  | Exhibits and Financial Statement Schedules







| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Consolidated Balance Sheets  At December 31,
    2004 and 2003                                         
|
| | Consolidated Statements of Income for the Years Ended
    December 31, 2004, 2003 and 2002              
|
| | Consolidated Statements of Shareholders Equity for the
    Years Ended December 31, 2004, 2003 and 2002
|
| | Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2004, 2003 and 2002          







| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The financial statements of CF Leasing Limited have been filed
    in accordance with Regulation S-X as a 50% entity accounted
    for by the equity method by the Group.





| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following exhibits are filed herewith or are incorporated by
    reference to exhibits previously filed with the Commission. The
    Company shall furnish copies of exhibits for a reasonable fee
    (covering the expense of furnishing copies) upon request.
|
| | Previously filed material contracts that are no longer in force
    or effect and that were entered into more than two years prior
    to the date of the filing of this report are not listed in this
    index.                                                   

|       |      |  |                     |                                                                                                                                                                                                                                                                                                                                                           
|------ | ---- |  | ------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |      |  | Exhibit Description
|       |      |  |                    
|       | 2.1  |  |                     | Purchase Agreement by and between Cronos Equipment (Bermuda)
    Limited (CEB) and CF Leasing Limited, dated as of
    September 18, 2002 (incorporated by reference to
    Exhibit 2.1 to the Companys Current Report on
    Form 8-K, dated September 18, 2002).                                                                                     
|       | 3.1  |  |                     | Co-ordinated Articles of Incorporation (incorporated by
    reference to Exhibit 1.1 to the Companys Annual
    Report on Form 20-F for the year ended December 31,
    1997 (File No. 0-24464)).                                                                                                                                                        
|       | 3.2  |  |                     | Policies and procedures with respect to the indemnification of
    directors and officers of the Company, as adopted by the Board
    of Directors on August 4, 1999 (incorporated by reference
    to Exhibit 3.2 to the Companys Registration Statement
    on Form S-3, dated November 24, 1999).                                                     
|       | 10.1 |  |                     | Guarantee, dated as of July 19, 2001, by and between the
    Group and Fortis Bank N.V. (Fortis), as agent and on
    behalf of itself (incorporated by reference to
    Exhibit 10.20 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2001).                                                                         
|       | 10.2 |  |                     | Amendment No. 1 to the Guarantee, dated as of July 19,
    2001, by and between the Group and Fortis, as agent and on
    behalf of itself (incorporated by reference to Exhibit 10.4
    to the Companys Quarterly Report on Form 10-Q for the
    quarter ended September 30, 2003).                                                                   
|       | 10.3 |  |                     | Loan Agreement, dated as of July 19, 2001, by and between
    Cronos Finance (Bermuda) Limited (CFBL) as issuer,
    and Fortis as agent on behalf of the noteholder, and itself, as
    the initial noteholder (incorporated by reference to
    Exhibit 10.21 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2001).
|       | 10.4 |  |                     | Amendment No. 1 to the Amended and Restated Loan Agreement
    dated as of August 6, 2001, by and between CFBL and Fortis
    (incorporated by reference to Exhibit 10.4 to the
    Companys Annual Report on Form 10-K for the year
    ended December 31, 2001).                                                                                       

42



---



##### Table of Contents



|       |       |  |                     |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | ----- |  | ------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |       |  | Exhibit Description
|       |       |  |                    
|       | 10.5  |  |                     | Amendment No. 2 to the Amended and Restated Loan Agreement
    dated as of November 20, 2001, by and between CFBL and
    Fortis (incorporated by reference to Exhibit 10.5 to the
    Companys Annual Report on Form 10-K for the year
    ended December 31, 2001).                                                                                                                                                              
|       | 10.6  |  |                     | Amendment No. 3, dated as of September 18, 2002, to
    the Amended and Restated Loan Agreement, dated as of
    July 19, 2001, by and between CFBL and Fortis,
    (incorporated by reference to Exhibit 10.22 to the
    Companys Current Report on Form 8-K, dated
    September 18, 2002).                                                                                                                                     
|       | 10.7  |  |                     | Amendment No. 4, dated as of March 7, 2003, to the
    Amended and Restated Loan Agreement, dated as of July 19,
    2001, by and between CFBL and Fortis, (incorporated by reference
    to Exhibit 10.7 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2002).                                                                                                                                    
|       | 10.8  |  |                     | Amendment No. 5, dated as of September 23, 2003, to
    the Amended and Restated Loan Agreement, dated as of
    July 19, 2001, by and between CFBL and Fortis (incorporated
    by reference to Exhibit 10.1 to the Companys
    Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2003).                                                                                                                     
|       | 10.9  |  |                     | Management Agreement by and between CF Leasing Limited and
    Cronos Containers (Cayman) Limited, dated as of
    September 18, 2002 (incorporated by reference
    Exhibit 10.23 to the Companys Current Report on
    Form 8-K, dated September 18, 2002).                                                                                                                                                                      
|       | 10.10 |  |                     | Amendment No. 1, dated as of March 7, 2003 to the
    Management Agreement, dated as of September 18, 2002, by
    and between the CF Leasing Limited and Cronos Containers
    (Cayman) Limited, (incorporated by reference to
    Exhibit 10.9 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2002).                                                                                             
|       | 10.11 |  |                     | Amendment No. 2, dated as of October 15, 2003 to the
    Management Agreement, dated as of September 18, 2002, by
    and between the CF Leasing Limited and Cronos Containers
    (Cayman) Limited Fortis (incorporated by reference to
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2003).                                                                             
|       | 10.12 |  |                     | Collateral Agreement dated as of November 16, 2001, by and
    between CEB, CFBL and Fortis (incorporated by reference to
    Exhibit 10.6 to the Companys Annual Report on
    Form 10-K for the year ended December 31, 2001).                                                                                                                                                                                                   
|       | 10.13 |  |                     | Amendment No. 1 to the Collateral Agreement dated as of
    November 16, 2001, by and between CEB, CFBL and Fortis
    (incorporated by reference to Exhibit 10.3 to
    Companys Quarterly Report on Form 10-Q for the
    quarter ended September 30, 2003).                                                                                                                                                                     
|       | 10.14 |  |                     | Grant of Security Interest (Patents) dated as of
    November 19, 2001, by and between CEB, CFBL and Fortis
    (incorporated by reference to Exhibit 10.7 to the
    Companys Annual Report on Form 10-K for the year
    ended December 31, 2001).                                                                                                                                                                               
|       | 10.15 |  |                     | Amended and restated Management Agreement, dated as of
    June 15, 2004, by and between the CF Leasing Limited and
    Cronos Containers (Cayman) Limited. (incorporated by reference
    to Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended June 30, 2004).                                                                                                                                 
|       | 10.16 |  |                     | Amendment No. 1, dated as of September 23, 2004, to
    the Second Amended and Restated Loan Agreement, dated as of
    September 23, 2003, by and between Cronos Finance (Bermuda)
    Limited, Fortis Bank (Nederland) N.V., Hollandsche Bank-Unie
    N.V. and NIB Capital Bank N.V. (incorporated by reference to
    Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q for the quarter ended September 30, 2004).
|       | 10.17 |  |                     | Amended and restated Master Loan Agreement, dated
    August 15, 1997, as amended and restated as of
    February 4, 2005, by and between Cronos Funding (Bermuda)
    Limited (CFB), as Issuer, and Fortis Bank
    (Nederland) N.V. (Fortis), as Agent (incorporated by
    reference to Exhibit 10.42 to the Companys Current
    Report on Form 8-K, dated February, 2005).                                                
|       | 10.18 |  |                     | CFB Secured Note, Class A, in the principal amount of
    $14,672,474, dated February 4, 2005 (incorporated by
    reference to Exhibit 10.43 to the Companys Current
    Report on Form 8-K, dated February, 2005).                                                                                                                                                                                                               

43



---



##### Table of Contents



|                                              |       |  |                     |                                                                                                                                                                                                                                                                                 
|--------------------------------------------- | ----- |  | ------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number                                        |       |  | Exhibit Description
|                                              |       |  |                    
|                                              | 10.19 |  |                     | CFB Secured Note, Class B, in the principal amount of
    $4,000,000 dated February 4, 2005. (incorporated by
    reference to Exhibit 10.44 to the Companys Current
    Report on Form 8-K, dated February, 2005).                                                            
|                                              | 10.20 |  |                     | CFB Secured Note, Class C, in the principal amount of
    $7,305,000 dated February 4, 2005 (incorporated by
    reference to Exhibit 10.45 to the Companys Current
    Report on Form 8-K, dated February, 2005).                                                             
|                                              | 10.21 |  |                     | Guarantee, dated as of February 4, 2005, by and between The
    Cronos Group and Fortis, as Agent (incorporated by reference to
    Exhibit 10.46 to the Companys Current Report on
    Form 8-K, dated February, 2005).                                                       
|Executive Compensation Plans and Arrangements
|                                              | 10.22 |  |                     | Stock Appreciation Rights Agreement by and between the Company
    and Peter J. Younger, dated as of October 13, 1999
    (incorporated by reference to Exhibit 10.1 to the
    Companys Registration Statement on Form S-3, dated
    November 24, 1999).                     
|                                              | 10.23 |  |                     | 1999 Stock Option Plan (incorporated by reference to
    Exhibit 4.1 to the Companys Registration Statement on
    Form S-8, dated February 25, 2000).                                                                                                                         
|                                              | 10.24 |  |                     | Employment Agreement by and between Cronos Containers Inc. and
    John M. Foy, dated April 1, 1999, as amended on
    December 1, 1999 (incorporated by reference to
    Exhibit 10.25 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 1999).
|                                              | 10.25 |  |                     | Amendment, dated November 4, 2003, to the Employment
    Agreement between Cronos Containers Inc. and John M. Foy, dated
    April 1, 1999, as amended on December 1, 1999,
    December 1, 2000, December 1, 2001, October 15,
    2002 and November 5, 2002.                  
|                                              | 10.26 |  |                     | Service Agreement by and between Cronos Containers Limited and
    John C. Kirby, dated February 29, 2000 (incorporated by
    reference to Exhibit 10.18 to the Companys Annual
    Report on Form 10-K, for the year ended December 31,
    2002).                           
|                                              | 10.27 |  |                     | Amendment, dated November 4, 2003, to the Service Agreement
    by and between Cronos Containers Limited and John Kirby, dated
    February 29, 2000.                                                                                                                           
|                                              | 10.28 |  |                     | Employment Agreement by and between Cronos Containers S.R.L. and
    Nico Sciacovelli, dated December 1, 1999 (incorporated by
    reference to Exhibit 10.1 to the Companys Quarterly
    Report on Form 10-Q for the period ended March 31,
    2000).                       
|                                              | 10.29 |  |                     | Amendment, dated November 4, 2003, to the Employment
    Agreement between Cronos Containers S.R.L. and Nico Sciacovelli,
    dated December 1, 1999, as amended December 1, 2000,
    December 18, 2001 and November 5, 2002.                                                  
|                                              | 10.30 |  |                     | Amendment to the 1999 Stock Option Plan, dated June 1, 2001
    (incorporated by reference to Exhibit 10.16 to the
    Companys Annual Report on Form 10-K for the period
    ended December 31, 2001).                                                                        
|                                              | 10.31 |  |                     | Amended and Restated Employment Agreement between Cronos and
    Dennis J. Tietz, dated November 8, 2001 (incorporated by
    reference to Exhibit 10.17 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2001).                           
|                                              | 10.32 |  |                     | Amended and Restated Employment Agreement between Cronos and
    Peter J. Younger, dated December 1, 2001 (incorporated by
    reference to Exhibit 10.18 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2001).                          
|                                              | 10.33 |  |                     | Amended and Restated Employment Agreement between Cronos and
    Peter J. Younger, dated October 1, 2003.                                                                                                                                                                       
|                                              | 10.34 |  |                     | Amended and Restated Indemnification Agreement between Cronos
    and Charles Tharp, dated November 6, 2002 (incorporated by
    reference to Exhibit 10.27 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002).                        
|                                              | 10.35 |  |                     | Amended and Restated Indemnification Agreement between Cronos
    and Maurice Taylor, dated November 6, 2002 (incorporated by
    reference to Exhibit 10.28 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002).                       

44



---



##### Table of Contents



|       |       |  |                     |                                                                                                                                                                                                                                                            
|------ | ----- |  | ------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |       |  | Exhibit Description
|       |       |  |                    
|       | 10.36 |  |                     | Amended and Restated Indemnification Agreement between Cronos
    and Dennis J. Tietz, dated November 6, 2002 (incorporated
    by reference to Exhibit 10.29 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002). 
|       | 10.37 |  |                     | Amended and Restated Indemnification Agreement between Cronos
    and Peter J. Younger, dated November 6, 2002 (incorporated
    by reference to Exhibit 10.30 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002).
|       | 10.38 |  |                     | Indemnification Agreement between Cronos and S. Nicholas Walker,
    dated November 6, 2002 (incorporated by reference to
    Exhibit 10.31 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 2002).                       
|       | 10.39 |  |                     | Indemnification Agreement between Cronos and Robert M. Melzer,
    dated November 6, 2002 (incorporated by reference to
    Exhibit 10.32 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 2002).                         
|       | 10.40 |  |                     | Indemnification Agreement between Cronos Containers Limited and
    John C. Kirby, dated November 22, 2002 (incorporated by
    reference to Exhibit 10.33 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002).    
|       | 10.41 |  |                     | Indemnification Agreement between Cronos Containers Inc. and
    John M. Foy, dated November 1, 2002 (incorporated by
    reference to Exhibit 10.34 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002).          
|       | 10.42 |  |                     | Indemnification Agreement between Cronos Containers S.R.L. and
    Nico Sciacovelli, dated November 22, 2002 (incorporated by
    reference to Exhibit 10.35 to the Companys Annual
    Report on Form 10-K for the period ended December 31,
    2002).  
|       | 10.43 |  |                     | Stock Option Agreement between Cronos and Charles Tharp, dated
    January 10, 2003 (incorporated by reference to
    Exhibit 10.36 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 2002).                               
|       | 10.44 |  |                     | Stock Option Agreement between Cronos and Maurice Taylor, dated
    January 10, 2003 (incorporated by reference to
    Exhibit 10.37 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 2002).                              
|       | 10.45 |  |                     | Stock Option Agreement between Cronos and S. Nicholas Walker,
    dated January 10, 2003 (incorporated by reference to
    Exhibit 10.38 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 2002).                          
|       | 10.46 |  |                     | Stock Option Agreement between Cronos and Robert M. Melzer,
    dated January 10, 2003 (incorporated by reference to
    Exhibit 10.39 to the Companys Annual Report on
    Form 10-K for the period ended December 31, 2002).                            

|               |      |      |  |                                                                                                                          |  |  |    | 
|-------------- | ---- | ---- |  | ------------------------------------------------------------------------------------------------------------------------ |  |  | -- | 
|               |      | Page | 
|Other Exhibits |      |     
|               | 21.1 |      |  | List of principal wholly-owned subsidiaries at December 31,
    2004                                                     |  |  | E1 | 
|               | 23.1 |      |  | Consent of Independent Registered Public Accounting Firm dated
    March 14, 2005                                        |  |  | E2 | 
|               | 31.1 |      |  | Rule 13a-14 Certification                                                                                                |  |  | E3 | 
|               | 31.2 |      |  | Rule 13a-14 Certification                                                                                                |  |  | E4 | 
|               | 32.1 |      |  | Certification pursuant to 18 U.S.C. § 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002 |  |  | E5 | 

45



---



##### Table of Contents



SIGNATURES






| |                 
| | ----------------
| | The Cronos Group



| |     |                    
| | --- | -------------------
| | By: | /s/ Dennis J. Tietz

| |                                              
| | ---------------------------------------------
| | _____________________________________________
| | Dennis J. Tietz                              
| | Chairman of the Board and                    
| | Chief Executive Officer                      



|                                                              |  |                                                                                                                                                   |  |               
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Signature                                                     |  | Title                                                                                                                                             |  | Date          
|                                                              |  |                                                                                                                                                   |  |               
|By /s/ Dennis J.
    TietzDennis
    J. Tietz                 |  | Chairman of the Board and
    Chief Executive Officer
    (Principal Executive Officer)                                                           |  | March 14, 2005
|By /s/ Peter J.
    YoungerPeter
    J. Younger               |  | Director, Chief Operating Officer, Chief Financial Officer,
    and
    Chief Accounting Officer
    (Principal Financial and Accounting Officer) |  | March 14, 2005
|By /s/ Maurice
    TaylorMaurice
    Taylor                   |  | Director                                                                                                                                          |  | March 14, 2005
|By /s/ Charles
    TharpCharles
    Tharp                     |  | Director                                                                                                                                          |  | March 14, 2005
|By /s/ Stephen
    Nicholas WalkerStephen
    Nicholas Walker |  | Director                                                                                                                                          |  | March 14, 2005
|By /s/ Robert M.
    MelzerRobert
    M. Melzer               |  | Director                                                                                                                                          |  | March 14, 2005

46



---



##### Table of Contents



FINANCIAL STATEMENTS  Item 15 (a)(1) and
(a)(2)


|       |  |                                                                                                                                                                              |  |      |      | 
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | 
|       |  |                                                                                                                                                                              |  | Page |     
|       |  |                                                                                                                                                                              |  |      |     
|(a)(1) |  | The Cronos Group                                                                                                                                                             |  |      |      | 
|       |  | Report of Independent Registered Public
    Accounting Firm                                                                                                                  |  |      | F-2  | 
|       |  | Consolidated Statements of Income for the
    Years Ended December 31, 2004, 2003 and 2002                                                                                   |  |      | F-3  | 
|       |  | Consolidated Balance Sheets  At
    December 31, 2004 and 2003                                                                                                              |  |      | F-4  | 
|       |  | Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2004, 2003 and 2002                                                                               |  |      | F-6  | 
|       |  | Consolidated Statements of
    Shareholders Equity for the Years Ended December 31,
    2004, 2003 and 2002                                                                 |  |      | F-8  | 
|       |  | Notes to Consolidated Financial
    Statements                                                                                                                               |  |      | F-9  | 
|(a)(2) |  | Financial Statement Schedules                                                                                                                                                |  |      |      | 
|       |  | The financial statements of CF Leasing
    Limited have been filed in accordance with Regulation S-X
    as a 50% entity accounted for by the equity method by the
    Group |  |      | F-39 | 



---



##### Table of Contents



THE CRONOS GROUP


Consolidated financial statements as of December 31,
2004 and 2003


and for the years ended December 31, 2004, 2003 and
2002


and Report of Independent Registered Public Accounting
Firm


F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















F-2



---



##### Table of Contents



THE CRONOS GROUP


CONSOLIDATED STATEMENTS OF INCOME


For the years ended December 31, 2004, 2003 and 2002


(US dollar amounts in thousands, except per share amounts)


|                                                                          |                                                         |      |         |        |      |   |         |        |   |   |         |        | 
|------------------------------------------------------------------------- | ------------------------------------------------------- | ---- | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | 
|                                                                          |                                                         | 2004 |         |        | 2003 |   |         | 2002   |  
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Gross lease revenue                                                       |                                                         | $    | 132,096 |        |      | $ | 117,501 |        |   | $ | 113,643 |       
|Equipment trading revenue                                                 |                                                         |      | 4,698   |        |      |   | 4,991   |        |   |   | 1,045   |       
|Commissions, fees and other operating income:                             |                                                         |      |         |        |      |   |         |        |   |   |         |       
|                                                                          | - Related parties                                       |      |         | 953    |      |   |         | 1,116  |   |   |         | 1,240  | 
|                                                                          | - Unrelated parties                                     |      |         | 2,641  |      |   |         | 2,525  |   |   |         | 3,071  | 
|Interest income                                                           |                                                         |      | 120     |        |      |   | 130     |        |   |   | 324     |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Total revenues                                                            |                                                         |      | 140,508 |        |      |   | 126,263 |        |   |   | 119,323 |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Direct operating expenses                                                 |                                                         |      | 20,563  |        |      |   | 25,508  |        |   |   | 26,793  |       
|Payments to Managed Container Programs:                                   |                                                         |      |         |        |      |   |         |        |   |   |         |       
|                                                                          | - Related parties                                       |      |         | 31,638 |      |   |         | 23,159 |   |   |         | 18,214 | 
|                                                                          | - Unrelated parties                                     |      |         | 36,323 |      |   |         | 32,571 |   |   |         | 33,158 | 
|Equipment trading expenses                                                |                                                         |      | 4,018   |        |      |   | 4,600   |        |   |   | 969     |       
|Amortization of intangible assets                                         |                                                         |      | 188     |        |      |   | 188     |        |   |   | 188     |       
|Depreciation                                                              |                                                         |      | 17,993  |        |      |   | 17,495  |        |   |   | 18,537  |       
|Selling, general and administrative expenses                              |                                                         |      | 18,834  |        |      |   | 15,791  |        |   |   | 14,285  |       
|Interest expense                                                          |                                                         |      | 5,178   |        |      |   | 5,754   |        |   |   | 7,334   |       
|Recovery of related party loan note                                       |                                                         |      | (1,280  | )      |      |   |        |        |   |   |        |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Total expenses                                                            |                                                         |      | 133,455 |        |      |   | 125,066 |        |   |   | 119,478 |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Income (loss) before income taxes and equity in earnings of
    affiliate |                                                         |      | 7,053   |        |      |   | 1,197   |        |   |   | (155    | )     
|Income taxes (provision) benefit                                          |                                                         |      | (1,071  | )      |      |   | 1,494   |        |   |   | 2,158   |       
|Equity in earnings of unconsolidated affiliate                            |                                                         |      | 2,883   |        |      |   | 1,499   |        |   |   | 306     |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Net income                                                                |                                                         |      | 8,865   |        |      |   | 4,190   |        |   |   | 2,309   |       
|Other comprehensive income (loss):                                        |                                                         |      |         |        |      |   |         |        |   |   |         |       
|                                                                          | - change in fair value of forward exchange contracts    |      |         | 325    |      |   |         | (325   | ) |   |         |       | 
|                                                                          | - change in fair value of derivatives held by affiliate |      |         | 311    |      |   |         | (81    | ) |   |         |       | 
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Comprehensive income                                                      |                                                         | $    | 9,501   |        |      | $ | 3,784   |        |   | $ | 2,309   |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Basic net income per common share                                         |                                                         | $    | 1.22    |        |      | $ | 0.57    |        |   | $ | 0.31    |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  
|Diluted net income per common share                                       |                                                         | $    | 1.14    |        |      | $ | 0.55    |        |   | $ | 0.31    |       
|                                                                          |                                                         |      |         |        |      |   |         |        |  



F-3



---



##### Table of Contents



THE CRONOS GROUP


CONSOLIDATED BALANCE SHEETS


December 31, 2004 and 2003


(US dollar amounts in thousands, except per share amounts)


|                                                                                                                                          |  |      |         |  |      |   |         | 
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                                                                                                                                          |  | 2004 |         |  | 2003 |  
|                                                                                                                                          |  |      |         |  |      |  
|Assets                                                                                                                                   
|Cash and cash equivalents                                                                                                                 |  | $    | 17,579  |  |      | $ | 8,432   | 
|Restricted cash                                                                                                                           |  |      | 1,489   |  |      |   | 1,033   | 
|Amounts due from lessees, net                                                                                                             |  |      | 25,136  |  |      |   | 22,766  | 
|Amounts receivable from Managed Container Programs, including
    amounts due from related parties of $3,358 and $3,377,
    respectively |  |      | 3,386   |  |      |   | 3,399   | 
|New container equipment for resale                                                                                                        |  |      | 17,116  |  |      |   | 10,816  | 
|Net investment in direct financing leases, including amounts due
    within twelve months of $2,434 and $2,164, respectively              |  |      | 7,382   |  |      |   | 8,376   | 
|Investment in unconsolidated affiliates                                                                                                   |  |      | 15,364  |  |      |   | 8,570   | 
|Container equipment, net of accumulated depreciation of $127,991
    and $115,466, respectively                                           |  |      | 166,584 |  |      |   | 155,504 | 
|Other equipment, net of accumulated depreciation of $10,418 and
    $10,162, respectively                                                 |  |      | 963     |  |      |   | 604     | 
|Goodwill, net                                                                                                                             |  |      | 11,038  |  |      |   | 11,038  | 
|Other intangible assets, net                                                                                                              |  |      | 533     |  |      |   | 721     | 
|Related party loan receivable                                                                                                             |  |      | 1,280   |  |      |   |        | 
|Other assets                                                                                                                              |  |      | 3,899   |  |      |   | 6,778   | 
|                                                                                                                                          |  |      |         |  |      |  
|Total assets                                                                                                                              |  | $    | 271,749 |  |      | $ | 238,037 | 
|                                                                                                                                          |  |      |         |  |      |  



F-4



---



##### Table of Contents



THE CRONOS GROUP


CONSOLIDATED BALANCE SHEETS


December 31, 2004 and 2003


(US dollar amounts in thousands, except per share amounts)


|                                                                                                                                                    |  |      |         |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                    |  | 2004 |         |   | 2003 |  
|                                                                                                                                                    |  |      |         |   |      |  
|Liabilities and shareholders equity                                                                                                                |  |      |         |   |      |   |         |  
|Amounts payable to Managed Container Programs, including amounts
    payable to related parties of $11,742 and $9,341, respectively                 |  | $    | 22,034  |   |      | $ | 17,643  |  
|Amounts payable to container manufacturers                                                                                                          |  |      | 27,838  |   |      |   | 17,312  |  
|Direct operating expense payables and accruals                                                                                                      |  |      | 5,592   |   |      |   | 5,269   |  
|Other amounts payable and accrued expenses                                                                                                          |  |      | 8,810   |   |      |   | 8,489   |  
|Debt and capital lease obligations, including amounts due within
    twelve months of $13,831 and $12,771, respectively                             |  |      | 127,953 |   |      |   | 119,205 |  
|Income taxes                                                                                                                                        |  |      | 155     |   |      |   | 267     |  
|Deferred income taxes                                                                                                                               |  |      | 3,083   |   |      |   | 2,714   |  
|Deferred income and deferred acquisition fees                                                                                                       |  |      | 5,925   |   |      |   | 5,105   |  
|                                                                                                                                                    |  |      |         |   |      |  
|Total liabilities                                                                                                                                   |  |      | 201,390 |   |      |   | 176,004 |  
|                                                                                                                                                    |  |      |         |   |      |  
|                                                                                                                                                   
|Commitments and contingencies                                                                                                                       |  |      |         |   |      |   |         |  
|                                                                                                                                                   
|Shareholders equity                                                                                                                                |  |      |         |   |      |   |         |  
|Common shares, par value $2 per share
    (25,000,000 shares authorized; shares issued and
    outstanding; 2004  7,381,349; 2003 
    7,372,080) |  |      | 14,763  |   |      |   | 14,744  |  
|Additional paid-in capital                                                                                                                          |  |      | 45,358  |   |      |   | 46,552  |  
|Common shares held in treasury (112,000)                                                                                                            |  |      | (297    | ) |      |   | (297    | )
|Accumulated other comprehensive income (loss)                                                                                                       |  |      | 230     |   |      |   | (406    | )
|Restricted retained earnings                                                                                                                        |  |      | 1,832   |   |      |   | 1,832   |  
|Unrestricted retained earnings (accumulated deficit)                                                                                                |  |      | 8,473   |   |      |   | (392    | )
|                                                                                                                                                    |  |      |         |   |      |  
|Total shareholders equity                                                                                                                          |  |      | 70,359  |   |      |   | 62,033  |  
|                                                                                                                                                    |  |      |         |   |      |  
|Total liabilities and shareholders equity                                                                                                          |  | $    | 271,749 |   |      | $ | 238,037 |  
|                                                                                                                                                    |  |      |         |   |      |  



F-5



---



##### Table of Contents



THE CRONOS GROUP


CONSOLIDATED STATEMENTS OF CASH FLOWS





For the years ended December 31, 2004, 2003 and 2002


(US dollar amounts in thousands, except per share amounts)


|                                                                                      |                                                                    |                     |         |        |       |   |         |        |        |   |         |        |       |  
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------- | ------- | ------ | ----- | - | ------- | ------ | ------ | - | ------- | ------ | ----- | -
|                                                                                      |                                                                    | 2004                |         |        | 2003  |   |         | 2002   |       
|                                                                                      |                                                                    |                     |         |        |       |   |         |        |       
|Cash flows from operating activities                                                  |                                                                    |                     |         |        |       |   |         |        |        |   |         |       
|Net income                                                                            |                                                                    | $                   | 8,865   |        |       | $ | 4,190   |        |        | $ | 2,309   |       
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                    |                     |         |        |       |   |         |        |        |   |         |       
|                                                                                      | - depreciation and amortization                                    |                     |         | 18,181 |       |   |         | 17,683 |        |   |         | 18,725 |      
|                                                                                      | - increase (decrease) in unamortized acquisition fees              |                     |         | 218    |       |   |         | (640   | )      |   |         | (1,403 | )    
|                                                                                      | - provision for losses on accounts receivable                      |                     |         | 1,251  |       |   |         | 1,077  |        |   |         | 440    |      
|                                                                                      | - recovery of related party loan note                              |                     |         | (1,280 | )     |   |         |       |        |   |         |       |      
|                                                                                      | - (gain) loss on disposal of fixed assets                          |                     |         | (211   | )     |   |         | 270    |        |   |         | 224    |      
|                                                                                      | - undistributed equity in earnings of affiliate                    |                     |         | (2,883 | )     |   |         | (1,499 | )      |   |         | (306   | )    
|                                                                                      | - increase (decrease) in current and deferred income taxes         |                     |         | 257    |       |   |         | (2,555 | )      |   |         | (1,376 | )    
|                                                                                      | - increase in new container equipment for resale                   |                     |         | (6,300 | )     |   |         | (8,246 | )      |   |         | (1,107 | )    
|                                                                                      | - decrease in amounts receivable:                                  |                     |         |        |       |   |         |        |        |   |         |        |      
|                                                                                      |                                                                    | - related parties   |         |        | 19    |   |         |        | 23     |   |         |        | 933   |  
|                                                                                      |                                                                    | - unrelated parties |         |        | 1,089 |   |         |        | 989    |   |         |        | 3,517 |  
|                                                                                      | - increase (decrease) in amounts payable and accrued
    expenses: |                     |         |        |       |   |         |        |        |   |         |        |      
|                                                                                      |                                                                    | - related parties   |         |        | 2,401 |   |         |        | 1,098  |   |         |        | 277   |  
|                                                                                      |                                                                    | - unrelated parties |         |        | 9,267 |   |         |        | 10,320 |   |         |        | (796  | )
|                                                                                      |                                                                    |                     |         |        |       |   |         |        |       
|Net cash provided by operating activities                                             |                                                                    |                     | 30,874  |        |       |   | 22,710  |        |        |   | 21,437  |       
|                                                                                      |                                                                    |                     |         |        |       |   |         |        |       
|Cash flows from investing activities                                                  |                                                                    |                     |         |        |       |   |         |        |        |   |         |       
|Purchase of container equipment                                                       |                                                                    |                     | (29,050 | )      |       |   | (16,545 | )      |        |   | (15,511 | )     
|Purchase of other equipment                                                           |                                                                    |                     | (628    | )      |       |   | (324    | )      |        |   | (269    | )     
|Investment in direct financing leases                                                 |                                                                    |                     | (57     | )      |       |   | (29     | )      |        |   | (1,372  | )     
|Investments in related parties                                                        |                                                                    |                     | (3,600  | )      |       |   | (2,550  | )      |        |   |        |       
|Proceeds from sales of container and other equipment                                  |                                                                    |                     | 16,698  |        |       |   | 9,632   |        |        |   | 12,481  |       
|Dividends received from Joint Venture Program                                         |                                                                    |                     |        |        |       |   |        |        |        |   | 1,375   |       
|                                                                                      |                                                                    |                     |         |        |       |   |         |        |       
|Net cash used in investing activities                                                 |                                                                    |                     | (16,637 | )      |       |   | (9,816  | )      |        |   | (3,296  | )     
|                                                                                      |                                                                    |                     |         |        |       |   |         |        |       



F-6



---



##### Table of Contents



THE CRONOS GROUP


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended December 31, 2004, 2003 and 2002


(US dollar amounts in thousands, except per share amounts)


|                                                      |                                                                      |      |         |        |      |   |         |       |  |   |         |       | 
|----------------------------------------------------- | -------------------------------------------------------------------- | ---- | ------- | ------ | ---- | - | ------- | ----- |  | - | ------- | ----- | 
|                                                      |                                                                      | 2004 |         |        | 2003 |   |         | 2002  | 
|                                                      |                                                                      |      |         |        |      |   |         |       | 
|Cash flows from financing activities                  |                                                                      |      |         |        |      |   |         |       |  |   |         |      
|Proceeds from issuance of term debt                   |                                                                      | $    | 21,556  |        |      | $ | 35,649  |       |  | $ | 17,919  |      
|Repayments of term debt and capital lease obligations |                                                                      |      | (25,391 | )      |      |   | (44,854 | )     |  |   | (36,201 | )    
|Dividends paid                                        |                                                                      |      | (799    | )      |      |   | (583    | )     |  |   |        |      
|Shares repurchased                                    |                                                                      |      |        |        |      |   | (260    | )     |  |   | (37     | )    
|(Increase) decrease in restricted cash                |                                                                      |      | (456    | )      |      |   | (40     | )     |  |   | 10      |      
|                                                      |                                                                      |      |         |        |      |   |         |       | 
|Net cash used in financing activities                 |                                                                      |      | (5,090  | )      |      |   | (10,088 | )     |  |   | (18,309 | )    
|                                                      |                                                                      |      |         |        |      |   |         |       | 
|Net increase (decrease) in cash and cash equivalents  |                                                                      |      | 9,147   |        |      |   | 2,806   |       |  |   | (168    | )    
|Cash and cash equivalents at beginning of year        |                                                                      |      | 8,432   |        |      |   | 5,626   |       |  |   | 5,794   |      
|                                                      |                                                                      |      |         |        |      |   |         |       | 
|Cash and cash equivalents at end of year              |                                                                      | $    | 17,579  |        |      | $ | 8,432   |       |  | $ | 5,626   |      
|                                                      |                                                                      |      |         |        |      |   |         |       | 
|Supplementary disclosure of cash flow information:    |                                                                      |      |         |        |      |   |         |       |  |   |         |      
|Cash paid during the year for:                        |                                                                      |      |         |        |      |   |         |       |  |   |         |      
|                                                      | - interest                                                           |      | $       | 4,478  |      |   | $       | 4,765 |  |   | $       | 6,656 | 
|                                                      | - income taxes                                                       |      |         | 1,126  |      |   |         | 1,189 |  |   |         | 568   | 
|Cash received during the year for:                    |                                                                      |      |         |        |      |   |         |       |  |   |         |      
|                                                      | - dividends                                                          |      |         |       |      |   |         |      |  |   |         | 1,375 | 
|                                                      | - interest                                                           |      |         | 241    |      |   |         | 269   |  |   |         | 274   | 
|                                                      | - income taxes                                                       |      |         | 312    |      |   |         | 45    |  |   |         | 1,198 | 
|Retention deposit utilized to repay capital lease     |                                                                      |      |        |        |      |   | 2,743   |       |  |   |        |      
|Non-cash items:                                       |                                                                      |      |         |        |      |   |         |       |  |   |         |      
|                                                      | - container equipment contributed to the Joint Venture
    Program   |      |         |       |      |   |         | 999   |  |   |         | 4,672 | 
|                                                      | - container equipment acquired under capital leases                  |      |         | 12,583 |      |   |         | 1,812 |  |   |         | 7,612 | 
|                                                      | - container equipment transferred to direct financing leases         |      |         | 1,097  |      |   |         | 1,268 |  |   |         |      | 
|                                                      | - direct financing lease equipment acquired under capital
    leases |      |         |       |      |   |         | 391   |  |   |         | 1,235 | 
|                                                      | - transfer to long-term ownership of container equipment             |      |         |       |      |   |         |      |  |   |         | 225   | 



F-7



---



##### Table of Contents



THE CRONOS GROUP


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY





For the years ended December 31, 2004, 2003 and 2002


(US dollar amounts in thousands, except per share amounts)


|                                                    |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   |        |  
|--------------------------------------------------- |  | ------ | ------ | ---------- | ------- | - | ------ | ----------- |  | ----- | ------------- | - | ------------ | -------- | ---- | -------- | --------- | - | ----- | ------------- |  | - | ------ | - |  | - | ------ | -
|                                                    |  |        |        |            |         |   |        | Accumulated |  |       |               |   | Unrestricted |          |      |         
|                                                    |  |        |        | Additional |         |   | Common |             |  | other |               |   | Restricted   |          |      | retained |           |   | Total |              
|                                                    |  | Common |        |            | paid-in |   |        | shares held |  |       | comprehensive |   |              | retained |      |          | earnings  |   |       | shareholders | 
|                                                    |  | shares |        |            | capital |   |        | in treasury |  |       | (loss) income |   |              | earnings |      |          | (deficit) |   |       | equity        | 
|                                                    |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               | 
|Balance, December 31, 2001                          |  | $      | 18,317 |            |         | $ | 49,846 |             |  | $     | (6,000        | ) |              | $        |     |          |           | $ | 1,832 |               |  | $ | (6,891 | ) |  | $ | 57,104 |  
|Net income                                          |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   | 2,309  |   |  |   | 2,309  |  
|Cancellation of treasury shares                     |  |        | (3,588 | )          |         |   | (2,412 | )           |  |       | 6,000         |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   |       |  
|Employee share grant                                |  |        | 15     |            |         |   | (15    | )           |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   |       |  
|Declaration of dividends                            |  |        |        |            |         |   | (294   | )           |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | (294   | )
|Purchase of treasury shares                         |  |        |        |            |         |   |        |             |  |       | (37           | ) |              |          |      |          |           |   |       |               |  |   |        |   |  |   | (37    | )
|                                                    |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               | 
|Balance, December 31, 2002                          |  |        | 14,744 |            |         |   | 47,125 |             |  |       | (37           | ) |              |          |     |          |           |   | 1,832 |               |  |   | (4,582 | ) |  |   | 59,082 |  
|Net income                                          |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   | 4,190  |   |  |   | 4,190  |  
|Retirement and cancellation of employee share grant |  |        |        |            |         |   | 10     |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | 10     |  
|Declaration of dividends                            |  |        |        |            |         |   | (583   | )           |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | (583   | )
|Purchase of treasury shares                         |  |        |        |            |         |   |        |             |  |       | (260          | ) |              |          |      |          |           |   |       |               |  |   |        |   |  |   | (260   | )
|Other comprehensive loss for year                   |  |        |        |            |         |   |        |             |  |       |               |   |              |          | (406 | )        |           |   |       |               |  |   |        |   |  |   | (406   | )
|                                                    |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               | 
|Balance, December 31, 2003                          |  |        | 14,744 |            |         |   | 46,552 |             |  |       | (297          | ) |              |          | (406 | )        |           |   | 1,832 |               |  |   | (392   | ) |  |   | 62,033 |  
|Net income                                          |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   | 8,865  |   |  |   | 8,865  |  
|Employee share grant                                |  |        |        |            |         |   | 10     |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | 10     |  
|Declaration of dividends                            |  |        |        |            |         |   | (1,235 | )           |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | (1,235 | )
|Issue of common shares                              |  |        | 20     |            |         |   | 32     |             |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | 52     |  
|Retirement of common shares                         |  |        | (1     | )          |         |   | (1     | )           |  |       |               |   |              |          |      |          |           |   |       |               |  |   |        |   |  |   | (2     | )
|Other comprehensive income for year                 |  |        |        |            |         |   |        |             |  |       |               |   |              |          | 636  |          |           |   |       |               |  |   |        |   |  |   | 636    |  
|                                                    |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               | 
|Balance, December 31, 2004                          |  | $      | 14,763 |            |         | $ | 45,358 |             |  | $     | (297          | ) |              | $        | 230  |          |           | $ | 1,832 |               |  | $ | 8,473  |   |  | $ | 70,359 |  
|                                                    |  |        |        |            |         |   |        |             |  |       |               |   |              |          |      |          |           |   |       |               | 



F-8



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(US dollar amounts in thousands, except per share amounts)





1   Nature of operations and summary of
significant accounting policies


a)  Nature of operations


















b)  Basis of accounting and consolidation








F-9



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)






c)  Leases


i.   Group as lessor




Operating leases with customers.






Direct financing leases with customers.






| |                     
| | --------------------
| | ii.  Group as lessee

Operating leases.




F-10



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)








Capital leases.


d)  Equipment trading revenue and
expenses




e)  Commissions, fees and other operating
income






f)  Income taxes




F-11



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




g)  Net income per common share








|                                             |                                       |      |           |         |      |   |           |         |  |   |           |        | 
|-------------------------------------------- | ------------------------------------- | ---- | --------- | ------- | ---- | - | --------- | ------- |  | - | --------- | ------ | 
|                                             |                                       | 2004 |           |         | 2003 |   |           | 2002    | 
|                                             |                                       |      |           |         |      |   |           |         | 
|Net income available for common shareholders |                                       | $    | 8,865     |         |      | $ | 4,190     |         |  | $ | 2,309     |       
|                                             |                                       |      |           |         |      |   |           |         | 
|Average outstanding shares of common stock   |                                       |      | 7,260,852 |         |      |   | 7,321,908 |         |  |   | 7,364,850 |       
|Dilutive effect of:                          |                                       |      |           |         |      |   |           |         |  |   |           |       
|                                             | - 1998 stock option                   |      |           | 113,627 |      |   |           | 75,000  |  |   |           | 17     | 
|                                             | - warrants                            |      |           | 74,757  |      |   |           | 50,000  |  |   |           |       | 
|                                             | - 1999 stock option plan              |      |           | 137,105 |      |   |           |        |  |   |           |       | 
|                                             | - non employee directors equity plan |      |           | 163,365 |      |   |           | 154,746 |  |   |           | 60,517 | 
|                                             |                                       |      |           |         |      |   |           |         | 
|Common shares and common share equivalents   |                                       |      | 7,749,706 |         |      |   | 7,601,654 |         |  |   | 7,425,384 |       
|                                             |                                       |      |           |         |      |   |           |         | 
|Basic net income per share                   |                                       | $    | 1.22      |         |      | $ | 0.57      |         |  | $ | 0.31      |       
|                                             |                                       |      |           |         |      |   |           |         | 
|Diluted net income per share                 |                                       | $    | 1.14      |         |      | $ | 0.55      |         |  | $ | 0.31      |       
|                                             |                                       |      |           |         |      |   |           |         | 



h)  Cash equivalents




i)  Allowance for doubtful accounts




F-12



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


j)  New container equipment for resale






k)  Investments








l)   Consolidation of variable interest
entities




m) Container equipment






n)  Other equipment




F-13



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


o)  Restricted cash




p)  Goodwill and other intangible assets






q)  Translation of foreign currencies






r)  Stock-based compensation






F-14



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




|                              |                                                                                                                |      |   |       |      |  |   |       |   |  |   |       |  
|----------------------------- | -------------------------------------------------------------------------------------------------------------- | ---- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                              |                                                                                                                | 2004 |   |       | 2003 |  |   | 2002  |  
|                              |                                                                                                                |      |   |       |      |  |   |       |  
|Net income:                   |                                                                                                                |      |   |       |      |  |   |       |   |  |   |      
|                              | - as reported                                                                                                  |      | $ | 8,865 |      |  | $ | 4,190 |   |  | $ | 2,309 |  
|                              | - add stock-based employee compensation included in
    reported net income, net of related tax effects        |      |   | 3     |      |  |   | 12    |   |  |   | 29    |  
|                              | - deduct stock-based compensation expense computed in
    accordance with SFAS 123, net of related tax effects |      |   | (21   | )    |  |   | (106  | ) |  |   | (234  | )
|                              |                                                                                                                |      |   |       |      |  |   |       |  
|                              | - pro forma                                                                                                    |      | $ | 8,847 |      |  | $ | 4,096 |   |  | $ | 2,104 |  
|                              |                                                                                                                |      |   |       |      |  |   |       |  
|Basic net income per share:   |                                                                                                                |      |   |       |      |  |   |       |   |  |   |      
|                              | - as reported                                                                                                  |      | $ | 1.22  |      |  | $ | 0.57  |   |  | $ | 0.31  |  
|                              | - pro forma                                                                                                    |      | $ | 1.22  |      |  | $ | 0.56  |   |  | $ | 0.29  |  
|Diluted net income per share: |                                                                                                                |      |   |       |      |  |   |       |   |  |   |      
|                              | - as reported                                                                                                  |      | $ | 1.14  |      |  | $ | 0.55  |   |  | $ | 0.31  |  
|                              | - pro forma                                                                                                    |      | $ | 1.14  |      |  | $ | 0.54  |   |  | $ | 0.28  |  

s)  Accounting for warrants




t)  Asset impairment




u)  Derivative financial instruments




F-15



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




.


v)  New pronouncements












|  |                       
|- | ----------------------
|2 | Operating segment data





F-16



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)








|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |         |         |   |   |         |         |  
|---------------------------------------- | ---------------------------------------- | ----------- | ----- | ------- | ------- | - | ------ | --------- | - | - | ---------- | ------- | - | ----- | ------- | ------- | - | - | ------- | ------- | -
|                                         |                                          | US          |       |         |         |   |        |           |   |   |           
|                                         |                                          | Limited     |       |         | Joint   |   |        | Private   |   |   |            |         |  
|                                         |                                          | Partnership |       |         | Venture |   |        | Container |   |   | Owned      |         |   |      
|                                         |                                          | Programs    |       |         | Program |   |        | Programs  |   |   | Containers |         |   | Total |        
|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |        
|Year ended December 31, 2004             |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |         |         |   |   |         |        
|Items directly attributable to segments: |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |         |         |   |   |         |        
|                                         | - gross lease revenue                    |             | $     | 26,671  |         |   | $      | 16,349    |   |   | $          | 47,442  |   |       | $       | 41,634  |   |   | $       | 132,096 |  
|                                         | - direct operating expenses              |             |       | (5,012  | )       |   |        | (1,058    | ) |   |            | (8,359  | ) |       |         | (6,134  | ) |   |         | (20,563 | )
|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |        
|                                         | net lease revenue                        |             |       | 21,659  |         |   |        | 15,291    |   |   |            | 39,083  |   |       |         | 35,500  |   |   |         | 111,533 |  
|                                         | - direct financing lease income          |             |       |        |         |   |        |          |   |   |            |        |   |       |         | 1,547   |   |   |         | 1,547   |  
|                                         | - payments to Managed Container Programs |             |       | (17,675 | )       |   |        | (13,963   | ) |   |            | (36,323 | ) |       |         |        |   |   |         | (67,961 | )
|                                         | - container depreciation                 |             |       |        |         |   |        |          |   |   |            |        |   |       |         | (17,716 | ) |   |         | (17,716 | )
|                                         | - container interest expense             |             |       |        |         |   |        |          |   |   |            |        |   |       |         | (5,076  | ) |   |         | (5,076  | )
|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |        
|Segment profit                           |                                          | $           | 3,984 |         |         | $ | 1,328  |           |   | $ | 2,760      |         |   | $     | 14,255  |         |   | $ | 22,327  |        
|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |        
|Total assets                             |                                          | $           | 8,542 |         |         | $ | 21,117 |           |   | $ | 11,519     |         |   | $     | 230,571 |         |   | $ | 271,749 |        
|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |        
|Expenditure for segment assets           |                                          | $           | 120   |         |         | $ | 3,686  |           |   | $ | 219        |         |   | $     | 46,648  |         |   | $ | 50,673  |        
|                                         |                                          |             |       |         |         |   |        |           |   |   |            |         |   |       |        

F-17



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |         |         |   |   |         |         |  
|---------------------------------------- | ---------------------------------------- | ------------ | ----- | ------- | ------- | - | ------ | --------- | - | - | ---------- | ------- | - | ----- | ------- | ------- | - | - | ------- | ------- | -
|                                         |                                          | US           |       |         |         |   |        |           |   |   |           
|                                         |                                          | Limited      |       |         | Joint   |   |        | Private   |   |   |            |         |  
|                                         |                                          | Partnerships |       |         | Venture |   |        | Container |   |   | Owned      |         |   |      
|                                         |                                          | Programs     |       |         | Program |   |        | Programs  |   |   | Containers |         |   | Total |        
|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |        
|Year ended December 31, 2003, restated   |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |         |         |   |   |         |        
|Items directly attributable to segments: |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |         |         |   |   |         |        
|                                         | - gross lease revenue                    |              | $     | 26,558  |         |   | $      | 8,630     |   |   | $          | 44,901  |   |       | $       | 37,412  |   |   | $       | 117,501 |  
|                                         | - direct operating expenses              |              |       | (7,162  | )       |   |        | (753      | ) |   |            | (10,704 | ) |       |         | (6,889  | ) |   |         | (25,508 | )
|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |        
|                                         | net lease revenue                        |              |       | 19,396  |         |   |        | 7,877     |   |   |            | 34,197  |   |       |         | 30,523  |   |   |         | 91,993  |  
|                                         | - direct financing lease income          |              |       |        |         |   |        |          |   |   |            |        |   |       |         | 1,510   |   |   |         | 1,510   |  
|                                         | - payments to Managed Container Programs |              |       | (15,969 | )       |   |        | (7,190    | ) |   |            | (32,571 | ) |       |         |        |   |   |         | (55,730 | )
|                                         | - container depreciation                 |              |       |        |         |   |        |          |   |   |            |        |   |       |         | (17,282 | ) |   |         | (17,282 | )
|                                         | - container interest expense             |              |       |        |         |   |        |          |   |   |            |        |   |       |         | (5,665  | ) |   |         | (5,665  | )
|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |        
|Segment profit                           |                                          | $            | 3,427 |         |         | $ | 687    |           |   | $ | 1,626      |         |   | $     | 9,086   |         |   | $ | 14,826  |        
|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |        
|Total assets                             |                                          | $            | 8,838 |         |         | $ | 12,830 |           |   | $ | 11,096     |         |   | $     | 205,273 |         |   | $ | 238,037 |        
|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |        
|Expenditure for segment assets           |                                          | $            | 73    |         |         | $ | 3,573  |           |   | $ | 124        |         |   | $     | 18,880  |         |   | $ | 22,650  |        
|                                         |                                          |              |       |         |         |   |        |           |   |   |            |         |   |       |        

|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |         |         |   |   |         |         |  
|---------------------------------------- | ---------------------------------------- | ----------- | ----- | ------- | ------- | - | ----- | --------- | - | - | ---------- | ------- | - | ----- | ------- | ------- | - | - | ------- | ------- | -
|                                         |                                          | US          |       |         |         |   |       |           |   |   |           
|                                         |                                          | Limited     |       |         | Joint   |   |       | Private   |   |   |            |         |  
|                                         |                                          | Partnership |       |         | Venture |   |       | Container |   |   | Owned      |         |   |      
|                                         |                                          | Programs    |       |         | Program |   |       | Programs  |   |   | Containers |         |   | Total |        
|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        
|Year ended December 31, 2002, restated   |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |         |         |   |   |         |        
|Items directly attributable to segments: |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |         |         |   |   |         |        
|                                         | - gross lease revenue                    |             | $     | 28,038  |         |   | $     | 1,887     |   |   | $          | 45,466  |   |       | $       | 38,252  |   |   | $       | 113,643 |  
|                                         | - direct operating expenses              |             |       | (8,003  | )       |   |       | (127      | ) |   |            | (11,906 | ) |       |         | (6,757  | ) |   |         | (26,793 | )
|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        
|                                         | net lease revenue                        |             |       | 20,035  |         |   |       | 1,760     |   |   |            | 33,560  |   |       |         | 31,495  |   |   |         | 86,850  |  
|                                         | - direct financing lease income          |             |       |        |         |   |       |          |   |   |            |        |   |       |         | 1,194   |   |   |         | 1,194   |  
|                                         | - payments to Managed Container Programs |             |       | (16,595 | )       |   |       | (1,619    | ) |   |            | (33,158 | ) |       |         |        |   |   |         | (51,372 | )
|                                         | - container depreciation                 |             |       |        |         |   |       |          |   |   |            |        |   |       |         | (18,407 | ) |   |         | (18,407 | )
|                                         | - container interest expense             |             |       |        |         |   |       |          |   |   |            |        |   |       |         | (7,209  | ) |   |         | (7,209  | )
|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        
|Segment profit                           |                                          | $           | 3,440 |         |         | $ | 141   |           |   | $ | 402        |         |   | $     | 7,073   |         |   | $ | 11,056  |        
|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        
|Total assets                             |                                          | $           | 9,403 |         |         | $ | 6,080 |           |   | $ | 13,115     |         |   | $     | 207,705 |         |   | $ | 236,303 |        
|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        
|Expenditure for segment assets           |                                          | $           | 66    |         |         | $ | 4,677 |           |   | $ | 120        |         |   | $     | 21,408  |         |   | $ | 26,271  |        
|                                         |                                          |             |       |         |         |   |       |           |   |   |            |         |   |       |        

F-18



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




|                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                          |  | 2004 |         |   | 2003 |   |         | 2002 | 
|                                                                          |  |      |         |   |      |   |         |      | 
|Segment profit                                                            |  | $    | 22,327  |   |      | $ | 14,826  |      |  | $ | 11,056  |  
|Equipment trading revenue                                                 |  |      | 4,698   |   |      |   | 4,991   |      |  |   | 1,045   |  
|Unallocated commissions, fees and other operating income                  |  |      | 2,047   |   |      |   | 2,131   |      |  |   | 3,117   |  
|Interest income                                                           |  |      | 120     |   |      |   | 130     |      |  |   | 324     |  
|Equipment trading expenses                                                |  |      | (4,018  | ) |      |   | (4,600  | )    |  |   | (969    | )
|Amortization of intangible assets                                         |  |      | (188    | ) |      |   | (188    | )    |  |   | (188    | )
|Non container depreciation                                                |  |      | (277    | ) |      |   | (213    | )    |  |   | (130    | )
|Selling, general and administrative expenses                              |  |      | (18,834 | ) |      |   | (15,791 | )    |  |   | (14,285 | )
|Recovery of related party loan note                                       |  |      | 1,280   |   |      |   |        |      |  |   |        |  
|Non container interest expense                                            |  |      | (102    | ) |      |   | (89     | )    |  |   | (125    | )
|                                                                          |  |      |         |   |      |   |         |      | 
|Income (loss) before income taxes and equity in earnings of
    affiliate |  | $    | 7,053   |   |      | $ | 1,197   |      |  | $ | (155    | )
|                                                                          |  |      |         |   |      |   |         |      | 



|                                            |                                                            |      |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------------- | ---------------------------------------------------------- | ---- | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                            |                                                            | 2004 |         |         | 2003 |   |         | 2002    | 
|                                            |                                                            |      |         |         |      |   |         |         | 
|Revenues directly attributable to segments: |                                                            |      |         |         |      |   |         |         |  |   |         |        
|                                            | - gross lease revenue                                      |      | $       | 132,096 |      |   | $       | 117,501 |  |   | $       | 113,643 | 
|                                            | - direct financing lease income                            |      |         | 1,547   |      |   |         | 1,510   |  |   |         | 1,194   | 
|                                            |                                                            |      |         |         |      |   |         |         | 
|                                            |                                                            |      | 133,643 |         |      |   | 119,011 |         |  |   | 114,837 |        
|Other revenues:                             |                                                            |      |         |         |      |   |         |         |  |   |         |        
|                                            | - equipment trading revenue                                |      |         | 4,698   |      |   |         | 4,991   |  |   |         | 1,045   | 
|                                            | - unallocated commissions, fees and other operating income |      |         | 2,047   |      |   |         | 2,131   |  |   |         | 3,117   | 
|                                            | - interest income                                          |      |         | 120     |      |   |         | 130     |  |   |         | 324     | 
|                                            |                                                            |      |         |         |      |   |         |         | 
|Total revenues                              |                                                            | $    | 140,508 |         |      | $ | 126,263 |         |  | $ | 119,323 |        
|                                            |                                                            |      |         |         |      |   |         |         | 





|                        |  |      |         |  |      |   |         |      |  |   |         | 
|----------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                        |  | 2004 |         |  | 2003 |   |         | 2002 | 
|                        |  |      |         |  |      |   |         |      | 
|Dry cargo containers    |  | $    | 91,511  |  |      | $ | 80,773  |      |  | $ | 78,760  | 
|Refrigerated containers |  |      | 20,613  |  |      |   | 20,829  |      |  |   | 21,293  | 
|Tank containers         |  |      | 8,295   |  |      |   | 6,713   |      |  |   | 6,123   | 
|Dry freight specials    |  |      | 11,677  |  |      |   | 9,186   |      |  |   | 7,467   | 
|                        |  |      |         |  |      |   |         |      | 
|Gross lease revenue     |  | $    | 132,096 |  |      | $ | 117,501 |      |  | $ | 113,643 | 
|                        |  |      |         |  |      |   |         |      | 

F-19



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




|            |  |      |     |   |      |  |     |      |  |  |     |  
|----------- |  | ---- | --- | - | ---- |  | --- | ---- |  |  | --- | -
|            |  | 2004 |     |   | 2003 |  |     | 2002 | 
|            |  |      |     |   |      |  |     |      | 
|Europe      |  |      | 44  | % |      |  | 43  | %    |  |  | 44  | %
|Australasia |  |      | 33  | % |      |  | 36  | %    |  |  | 35  | %
|Other       |  |      | 23  | % |      |  | 21  | %    |  |  | 21  | %
|            |  |      |     |   |      |  |     |      | 
|Total       |  |      | 100 | % |      |  | 100 | %    |  |  | 100 | %
|            |  |      |     |   |      |  |     |      | 



3   Income taxes




|                                           |            |      |       |     |      |   |        |        |   |   |        |        |  
|------------------------------------------ | ---------- | ---- | ----- | --- | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                                           |            | 2004 |       |     | 2003 |   |        | 2002   |  
|                                           |            |      |       |     |      |   |        |        |  
|Current taxes:                             |            |      |       |     |      |   |        |        |   |   |        |       
|                                           | US Federal |      | $     | 11  |      |   | $      | (5     | ) |   | $      | (611   | )
|                                           | US State   |      |       | (15 | )    |   |        | 93     |   |   |        |       |  
|                                           | Non US     |      |       | 706 |      |   |        | 760    |   |   |        | (1,690 | )
|                                           |            |      |       |     |      |   |        |        |  
|                                           |            |      | 702   |     |      |   | 848    |        |   |   | (2,301 | )     
|                                           |            |      |       |     |      |   |        |        |  
|Deferred taxes:                            |            |      |       |     |      |   |        |        |   |   |        |       
|                                           | US Federal |      |       | (25 | )    |   |        | 46     |   |   |        | (425   | )
|                                           | US State   |      |       | 51  |      |   |        | (41    | ) |   |        | 142    |  
|                                           | Non US     |      |       | 343 |      |   |        | (2,347 | ) |   |        | 426    |  
|                                           |            |      |       |     |      |   |        |        |  
|                                           |            |      | 369   |     |      |   | (2,342 | )      |   |   | 143    |       
|                                           |            |      |       |     |      |   |        |        |  
|Total provision (benefit) for income taxes |            | $    | 1,071 |     |      | $ | (1,494 | )      |   | $ | (2,158 | )     
|                                           |            |      |       |     |      |   |        |        |  



|                                                |  |      |        |   |      |   |        |      |  |   |        |  
|----------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                |  | 2004 |        |   | 2003 |   |        | 2002 | 
|                                                |  |      |        |   |      |   |        |      | 
|US federal provision                            |  | $    | 2,398  |   |      | $ | 406    |      |  | $ | (53    | )
|Non US income not subject to US corporate taxes |  |      | (2,887 | ) |      |   | (1,227 | )    |  |   | (1,586 | )
|US state taxes (net of federal tax benefit)     |  |      | 37     |   |      |   | 52     |      |  |   | (145   | )
|Non US corporate taxes                          |  |      | 1,049  |   |      |   | (1,587 | )    |  |   | (1,299 | )
|Valuation allowance                             |  |      | 547    |   |      |   | 983    |      |  |   | 1,358  |  
|Other                                           |  |      | (73    | ) |      |   | (121   | )    |  |   | (433   | )
|                                                |  |      |        |   |      |   |        |      | 
|Actual tax provision (benefit)                  |  | $    | 1,071  |   |      | $ | (1,494 | )    |  | $ | (2,158 | )
|                                                |  |      |        |   |      |   |        |      | 

F-20



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




|       |  |      |        |   |      |   |        |      |  |   |        |  
|------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|       |  | 2004 |        |   | 2003 |   |        | 2002 | 
|       |  |      |        |   |      |   |        |      | 
|US     |  | $    | (1,437 | ) |      | $ | (2,416 | )    |  | $ | (4,822 | )
|Non US |  |      | 8,490  |   |      |   | 3,613  |      |  |   | 4,667  |  
|       |  |      |        |   |      |   |        |      | 
|       |  | $    | 7,053  |   |      | $ | 1,197  |      |  | $ | (155   | )
|       |  |      |        |   |      |   |        |      | 



|                                                                              |  |      |        |   |      |   |        |  
|----------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                              |  | 2004 |        |   | 2003 |  
|                                                                              |  |      |        |   |      |  
|Assets                                                                        |  |      |        |   |      |   |        |  
|Acquisition fees                                                              |  | $    | 591    |   |      | $ | 730    |  
|Losses carried forward                                                        |  |      | 1,661  |   |      |   | 1,561  |  
|Partnership income taxable in different periods for book and tax
    purposes |  |      | 789    |   |      |   | 482    |  
|Disallowed interest expense carried forward                                   |  |      | 1,230  |   |      |   | 1,238  |  
|Alternative minimum tax credit                                                |  |      | 5      |   |      |   |       |  
|Other                                                                         |  |      | 343    |   |      |   | 367    |  
|Valuation allowance                                                           |  |      | (4,026 | ) |      |   | (3,484 | )
|                                                                              |  |      |        |   |      |  
|Total deferred income tax assets                                              |  |      | 593    |   |      |   | 894    |  
|                                                                              |  |      |        |   |      |  
|Liabilities                                                                   |  |      |        |   |      |   |        |  
|Depreciation                                                                  |  |      | 3,254  |   |      |   | 3,186  |  
|Unremitted retained earnings of subsidiaries                                  |  |      | 422    |   |      |   | 422    |  
|                                                                              |  |      |        |   |      |  
|Total deferred income tax liabilities                                         |  |      | 3,676  |   |      |   | 3,608  |  
|                                                                              |  |      |        |   |      |  
|Net deferred income tax liabilities                                           |  | $    | 3,083  |   |      | $ | 2,714  |  
|                                                                              |  |      |        |   |      |  



|                    |  |   |       | 
|------------------- |  | - | ----- | 
|2005                |  | $ | 41    | 
|2006                |  |   | 80    | 
|2007                |  |   | 35    | 
|2008                |  |   | 22    | 
|2009                |  |   | 18    | 
|2010 and thereafter |  |   | 1,465 | 
|                    |  |   |      
|Total               |  | $ | 1,661 | 
|                    |  |   |      





F-21



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


4   Amounts due from lessees


a)  Group as lessor








|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2005                |  | $ | 38,880  | 
|2006                |  |   | 35,043  | 
|2007                |  |   | 24,680  | 
|2008                |  |   | 17,336  | 
|2009                |  |   | 6,893   | 
|2010 and thereafter |  |   | 536     | 
|                    |  |   |        
|Total               |  | $ | 123,368 | 
|                    |  |   |        





b)  Allowance for doubtful accounts




|                                |  |      |        |   |      |   |       |      |  |   |       |  
|------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                |  | 2004 |        |   | 2003 |   |       | 2002 | 
|                                |  |      |        |   |      |   |       |      | 
|Beginning of year               |  | $    | 2,296  |   |      | $ | 2,063 |      |  | $ | 2,601 |  
|Provision for doubtful accounts |  |      | 1,251  |   |      |   | 1,077 |      |  |   | 440   |  
|Write-offs, net of recoveries   |  |      | (1,301 | ) |      |   | (844  | )    |  |   | (978  | )
|                                |  |      |        |   |      |   |       |      | 
|End of year                     |  | $    | 2,246  |   |      | $ | 2,296 |      |  | $ | 2,063 |  
|                                |  |      |        |   |      |   |       |      | 

F-22



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


5   Net investment in direct financing
leases




|                   |        |             |  |       |              |  |  |                |       |  |  |       |       | 
|------------------ | ------ | ----------- |  | ----- | ------------ |  |  | -------------- | ----- |  |  | ----- | ----- | 
|                   |        | Net lease   |  |       | Unearned     |  |  | Minimum future |      
|                   |        | receivables |  |       | lease income |  |  | lease rentals  |      
|                   |        |             |  |       |              |  |  |                |      
|December 31, 2004: |        |             |  |       |              |  |  |                |       |  |  |      
|                   | - 2005 |             |  | 2,434 |              |  |  | 1,192          |       |  |  | 3,626 |      
|                   | - 2006 |             |  | 2,593 |              |  |  | 780            |       |  |  | 3,373 |      
|                   | - 2007 |             |  | 1,233 |              |  |  | 388            |       |  |  | 1,621 |      
|                   | - 2008 |             |  | 1,051 |              |  |  | 146            |       |  |  | 1,197 |      
|                   | - 2009 |             |  | 71    |              |  |  | 1              |       |  |  | 72    |      
|                   |        |             |  |       |              |  |  |                |      
|                   |        | Total       |  | $     | 7,382        |  |  | $              | 2,507 |  |  | $     | 9,889 | 
|                   |        |             |  |       |              |  |  |                |      

6   New container equipment for resale




|                                                          |                                           |      |        |         |      |   |        |         |   |   |        |        |  
|--------------------------------------------------------- | ----------------------------------------- | ---- | ------ | ------- | ---- | - | ------ | ------- | - | - | ------ | ------ | -
|                                                          |                                           | 2004 |        |         | 2003 |   |        | 2002    |  
|                                                          |                                           |      |        |         |      |   |        |         |  
|Beginning of year                                         |                                           | $    | 10,816 |         |      | $ | 2,570  |         |   | $ | 1,463  |       
|Container purchases                                       |                                           |      | 89,618 |         |      |   | 47,054 |         |   |   | 11,920 |       
|Container disposals:                                      |                                           |      |        |         |      |   |        |         |   |   |        |       
|                                                          | - sold to US Limited Partnership Programs |      |        | (3,239  | )    |   |        |        |   |   |        |       |  
|                                                          | - sold to the Joint Venture Program       |      |        | (61,698 | )    |   |        | (37,751 | ) |   |        | (9,062 | )
|                                                          | - sold to Private Container Programs      |      |        | (14,890 | )    |   |        |        |   |   |        |       |  
|                                                          | - sold to other parties                   |      |        | (3,413  | )    |   |        | (1,057  | ) |   |        | (1,677 | )
|Transferred to long-term ownership of container equipment |                                           |      | (78    | )       |      |   |       |         |   |   | (74    | )     
|                                                          |                                           |      |        |         |      |   |        |         |  
|End of year                                               |                                           | $    | 17,116 |         |      | $ | 10,816 |         |   | $ | 2,570  |       
|                                                          |                                           |      |        |         |      |   |        |         |  



7   Consolidation of variable interest
entity






F-23



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)






8   Investments in related parties


|                                        |  |      |        |  |      |   |       | 
|--------------------------------------- |  | ---- | ------ |  | ---- | - | ----- | 
|                                        |  | 2004 |        |  | 2003 |  
|                                        |  |      |        |  |      |  
|Investment in Joint Venture Program     |  | $    | 15,339 |  |      | $ | 8,570 | 
|Other investments                       |  |      | 25     |  |      |   |      | 
|                                        |  |      |        |  |      |  
|Investment in unconsolidated affiliates |  | $    | 15,364 |  |      | $ | 8,570 | 
|                                        |  |      |        |  |      |  









F-24



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




|                                    |  |              |       |  
|----------------------------------- |  | ------------ | ----- | -
|                                    |  | % Investment |      
|US Limited Partnership Program      |  | Holding      |      
|                                    |  |              |      
|IEA Income Fund VIII                |  |              | 0.009 | %
|IEA Income Fund IX, L.P.            |  |              | 0.006 | %
|IEA Income Fund X, L.P.             |  |              | 0.005 | %
|IEA Income Fund XI, L.P.            |  |              | 0.003 | %
|IEA Income Fund XII, L.P.           |  |              | 0.001 | %
|Cronos Global Income Fund XIV, L.P. |  |              | 0.002 | %
|Cronos Global Income Fund XV, L.P.  |  |              | 0.001 | %
|Cronos Global Income Fund XVI, L.P. |  |              | 0.003 | %
|Cronos Containers Partners I, L.P.  |  |              | 0.001 | %





|                                                      |  |      |        |  |      |   |       |  
|----------------------------------------------------- |  | ---- | ------ |  | ---- | - | ----- | -
|                                                      |  | 2004 |        |  | 2003 |  
|                                                      |  |      |        |  |      |  
|Beginning of year                                     |  | $    | 8,570  |  |      | $ | 3,603 |  
|Investment in joint ventures                          |  |      | 3,600  |  |      |   | 3,549 |  
|Equity in earnings of affiliates                      |  |      | 2,883  |  |      |   | 1,499 |  
|Change in fair value of interest rate swap agreements |  |      | 311    |  |      |   | (81   | )
|                                                      |  |      |        |  |      |  
|End of year                                           |  | $    | 15,364 |  |      | $ | 8,570 |  
|                                                      |  |      |        |  |      |  

F-25



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


9       Container and
other equipment




|                                                         |  |   |         |  
|-------------------------------------------------------- |  | - | ------- | -
|Cost                                                     |  |   |         |  
|Balance, December 31, 2002                               |  | $ | 276,865 |  
|Additions                                                |  |   | 18,357  |  
|Disposals                                                |  |   | (23,253 | )
|Container equipment contributed to Joint Venture Program |  |   | (999    | )
|                                                         |  |   |        
|Balance, December 31, 2003                               |  |   | 270,970 |  
|Additions                                                |  |   | 46,388  |  
|Disposals                                                |  |   | (22,783 | )
|                                                         |  |   |        
|Balance, December 31, 2004                               |  | $ | 294,575 |  
|                                                         |  |   |        
|Accumulated depreciation                                 |  |   |         |  
|Balance, December 31, 2002                               |  | $ | 110,267 |  
|Depreciation expense                                     |  |   | 17,282  |  
|Disposals                                                |  |   | (12,083 | )
|                                                         |  |   |        
|Balance, December 31, 2003                               |  | $ | 115,466 |  
|Depreciation expense                                     |  |   | 17,716  |  
|Disposals                                                |  |   | (5,191  | )
|                                                         |  |   |        
|Balance, December 31, 2004                               |  | $ | 127,991 |  
|                                                         |  |   |        
|Book value                                               |  |   |         |  
|December 31, 2004                                        |  | $ | 166,584 |  
|                                                         |  |   |        
|December 31, 2003                                        |  | $ | 155,504 |  
|                                                         |  |   |        





F-26



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




|   |                               
|-- | ------------------------------
|10 | Goodwill and intangible assets



|                           |  |          |        |  |         |   |       |       |  |   |        | 
|-------------------------- |  | -------- | ------ |  | ------- | - | ----- | ----- |  | - | ------ | 
|                           |  | Goodwill |        |  | Patents |   |       | Total | 
|                           |  |          |        |  |         |   |       |       | 
|Cost                       |  |          |        |  |         |   |       |       |  |   |        | 
|Balance, December 31, 2002 |  | $        | 16,231 |  |         | $ | 2,096 |       |  | $ | 18,327 | 
|Additions                  |  |          |       |  |         |   |      |       |  |   |       | 
|                           |  |          |        |  |         |   |       |       | 
|Balance, December 31, 2003 |  |          | 16,231 |  |         |   | 2,096 |       |  |   | 18,327 | 
|Additions                  |  |          |       |  |         |   |      |       |  |   |       | 
|                           |  |          |        |  |         |   |       |       | 
|Balance, December 31, 2004 |  | $        | 16,231 |  |         | $ | 2,096 |       |  | $ | 18,327 | 
|                           |  |          |        |  |         |   |       |       | 
|Accumulated amortization   |  |          |        |  |         |   |       |       |  |   |        | 
|Balance, December 31, 2002 |  | $        | 5,193  |  |         | $ | 1,187 |       |  | $ | 6,380  | 
|Amortization expense       |  |          |       |  |         |   | 188   |       |  |   | 188    | 
|                           |  |          |        |  |         |   |       |       | 
|Balance, December 31, 2003 |  |          | 5,193  |  |         |   | 1,375 |       |  |   | 6,568  | 
|Amortization expense       |  |          |       |  |         |   | 188   |       |  |   | 188    | 
|                           |  |          |        |  |         |   |       |       | 
|Balance, December 31, 2004 |  | $        | 5,193  |  |         | $ | 1,563 |       |  | $ | 6,756  | 
|                           |  |          |        |  |         |   |       |       | 
|Book value                 |  |          |        |  |         |   |       |       |  |   |        | 
|December 31, 2004          |  | $        | 11,038 |  |         | $ | 533   |       |  | $ | 11,571 | 
|                           |  |          |        |  |         |   |       |       | 
|December 31, 2003          |  | $        | 11,038 |  |         | $ | 721   |       |  | $ | 11,759 | 
|                           |  |          |        |  |         |   |       |       | 



i.   Goodwill












F-27



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


ii.  Patents






|      |  |   |     | 
|----- |  | - | --- | 
|2005  |  | $ | 188 | 
|2006  |  |   | 188 | 
|2007  |  |   | 157 | 
|      |  |   |    
|Total |  | $ | 533 | 
|      |  |   |    

11  Hedging transactions and derivative financial
instruments




12  Other assets




|                                                        |  |      |       |  |      |   |       | 
|------------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                                                        |  | 2004 |       |  | 2003 |  
|                                                        |  |      |       |  |      |  
|Unamortized loan origination fees                       |  | $    | 1,480 |  |      | $ | 2,038 | 
|Prepaid expenses                                        |  |      | 827   |  |      |   | 928   | 
|Amounts receivable under equipment trading transactions |  |      | 364   |  |      |   | 1,812 | 
|Sales tax receivables                                   |  |      | 267   |  |      |   | 345   | 
|Deposits for leasehold properties and other items       |  |      | 254   |  |      |   | 506   | 
|Retention deposits                                      |  |      |      |  |      |   | 729   | 
|Other                                                   |  |      | 707   |  |      |   | 420   | 
|                                                        |  |      |       |  |      |  
|Total                                                   |  | $    | 3,899 |  |      | $ | 6,778 | 
|                                                        |  |      |       |  |      |  



F-28



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


13  Debt and lease obligation










|                                  |                 |      |         |        |      |                    |         |                    |  |  |                       |                       | 
|--------------------------------- | --------------- | ---- | ------- | ------ | ---- | ------------------ | ------- | ------------------ |  |  | --------------------- | --------------------- | 
|                                  |                 |      |         |        |      | Interest rate % at |        
|                                  |                 | 2004 |         |        | 2003 |                    |         | December 2004/2003 | 
|                                  |                 |      |         |        |      |                    |         |                    | 
|Floating rate debt                |                 | $    | 97,883  |        |      | $                  | 89,331  |                    |  |  | 3.4  5.1 / 3.2  3.4 |                      
|Obligations under capital leases: |                 |      |         |        |      |                    |         |                    |  |  |                       |                      
|                                  | - floating rate |      |         | 26,130 |      |                    |         | 29,874             |  |  |                       | 3.7  5.1 / 2.7  4.4 | 
|                                  | - fixed rate    |      |         | 3,940  |      |                    |         |                   |  |  |                       | 6.2  6.4 /          | 
|                                  |                 |      |         |        |      |                    |         |                    | 
|Total                             |                 | $    | 127,953 |        |      | $                  | 119,205 |                    |  |  |                       |                      
|                                  |                 |      |         |        |      |                    |         |                    | 

a)   Debt






F-29



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)








|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2005                |  | $ | 8,086  | 
|2006                |  |   | 13,224 | 
|2007                |  |   | 18,331 | 
|2008                |  |   | 18,566 | 
|2009                |  |   | 19,840 | 
|2010 and thereafter |  |   | 19,836 | 
|                    |  |   |       
|Total               |  | $ | 97,883 | 
|                    |  |   |       

b)  Capital lease obligations






|                    |  |           |        |  |          |   |       |       |  |   |        | 
|------------------- |  | --------- | ------ |  | -------- | - | ----- | ----- |  | - | ------ | 
|                    |  | Principal |        |  | Interest |   |       | Total | 
|                    |  |           |        |  |          |   |       |       | 
|2005                |  | $         | 5,745  |  |          | $ | 1,316 |       |  | $ | 7,061  | 
|2006                |  |           | 5,588  |  |          |   | 1,034 |       |  |   | 6,622  | 
|2007                |  |           | 5,963  |  |          |   | 747   |       |  |   | 6,710  | 
|2008                |  |           | 3,679  |  |          |   | 507   |       |  |   | 4,186  | 
|2009                |  |           | 3,539  |  |          |   | 331   |       |  |   | 3,870  | 
|2010 and thereafter |  |           | 5,556  |  |          |   | 420   |       |  |   | 5,976  | 
|                    |  |           |        |  |          |   |       |       | 
|Total               |  | $         | 30,070 |  |          | $ | 4,355 |       |  | $ | 34,425 | 
|                    |  |           |        |  |          |   |       |       | 



c)  Operating leases  Group as
lessee






F-30



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)








|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2005                |  | $ | 30,478  | 
|2006                |  |   | 25,798  | 
|2007                |  |   | 19,049  | 
|2008                |  |   | 14,324  | 
|2009                |  |   | 7,069   | 
|2010 and thereafter |  |   | 10,352  | 
|                    |  |   |        
|Total               |  | $ | 107,070 | 
|                    |  |   |        

14  Deferred income and deferred acquisition
fees




|                          |  |      |       |  |      |   |       | 
|------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                          |  | 2004 |       |  | 2003 |  
|                          |  |      |       |  |      |  
|Advance billings          |  | $    | 2,582 |  |      | $ | 1,980 | 
|Deferred acquisition fees |  |      | 3,343 |  |      |   | 3,125 | 
|                          |  |      |       |  |      |  
|                          |  | $    | 5,925 |  |      | $ | 5,105 | 
|                          |  |      |       |  |      |  



|                    |  |   |       | 
|------------------- |  | - | ----- | 
|2005                |  | $ | 797   | 
|2006                |  |   | 587   | 
|2007                |  |   | 501   | 
|2008                |  |   | 322   | 
|2009                |  |   | 249   | 
|2010 and thereafter |  |   | 887   | 
|                    |  |   |      
|Total               |  | $ | 3,343 | 
|                    |  |   |      

F-31



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


15  Commitments and contingencies


i.   Commitments




ii.  Parent Guarantee under master lease
Agreements with Private Container Programs








iii.  Agreements with Private Container
Programs  early termination options




iv.  Agreements with Private Container
Programs  change of control provisions




v.   Sale of Amersham estate




F-32



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)












vi.  Contrin Settlement








F-33



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




vii. TOEMT












16  Common shares


|                               |  |      |           |   |      |  |           |      |  |  |           |  
|------------------------------ |  | ---- | --------- | - | ---- |  | --------- | ---- |  |  | --------- | -
|                               |  | 2004 |           |   | 2003 |  |           | 2002 | 
|                               |  |      |           |   |      |  |           |      | 
|Common shares outstanding:     |  |      |           |   |      |  |           |      |  |  |           |  
|At beginning of year           |  |      | 7,260,080 |   |      |  | 7,360,080 |      |  |  | 7,364,580 |  
|New common shares issued       |  |      | 9,769     |   |      |  |          |      |  |  | 7,500     |  
|Common shares held in treasury |  |      |          |   |      |  | (100,000  | )    |  |  | (12,000   | )
|Common shares retired          |  |      | (500      | ) |      |  |          |      |  |  |          |  
|                               |  |      |           |   |      |  |           |      | 
|At end of year                 |  |      | 7,269,349 |   |      |  | 7,260,080 |      |  |  | 7,360,080 |  
|                               |  |      |           |   |      |  |           |      | 







F-34



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)














17  Stock-Based Compensation




i.   1998 Stock Option




ii.  1999 Stock Option Plan




F-35



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




iii.  The Non-Employee Directors Equity
Plan








iv.  Stock grant




v.   Stock Appreciation Rights




F-36



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)




Summary of Stock Option Activity Under All Plans


|                           |  |                                  |         |          |       |   |       |        |          |  |         |  |  |          |       |  |       |  |         |  |  |   |       | 
|-------------------------- |  | -------------------------------- | ------- | -------- | ----- | - | ----- | ------ | -------- |  | ------- |  |  | -------- | ----- |  | ----- |  | ------- |  |  | - | ----- | 
|                           |  | For the Years Ended December 31, |        
|                           |  |                                  |        
|                           |  | 2004                             |         |          | 2003  |   |       | 2002   |         
|                           |  |                                  |         |          |       |   |       |        |         
|                           |  |                                  |         | Weighted |       |   |       |        | Weighted |  |         |  |  | Weighted |      
|                           |  |                                  |         | Average  |       |   |       |        | Average  |  |         |  |  | Average  |      
|                           |  |                                  |         | Exercise |       |   |       |        | Exercise |  |         |  |  | Exercise |      
|                           |  | Shares                           |         |          | Price |   |       | Shares |          |  | Price   |  |  | Shares   |       |  | Price | 
|                           |  |                                  |         |          |       |   |       |        |          |  |         |  |  |          |       |  |       | 
|Outstanding on January 1   |  |                                  | 980,504 |          |       | $ | 4.732 |        |          |  | 980,000 |  |  | $        | 4.733 |  |       |  | 920,000 |  |  | $ | 4.755 | 
|Granted                    |  |                                  |        |          |       |   |      |        |          |  | 504     |  |  | $        | 3.577 |  |       |  | 60,000  |  |  | $ | 4.390 | 
|                           |  |                                  |         |          |       |   |       |        |          |  |         |  |  |          |       |  |       | 
|Outstanding on December 31 |  |                                  | 980,504 |          |       | $ | 4.732 |        |          |  | 980,504 |  |  | $        | 4.732 |  |       |  | 980,000 |  |  | $ | 4.733 | 
|                           |  |                                  |         |          |       |   |       |        |          |  |         |  |  |          |       |  |       | 
|Exercisable on December 31 |  |                                  | 913,918 |          |       | $ | 4.73  |        |          |  | 728,750 |  |  | $        | 4.71  |  |       |  | 543,750 |  |  | $ | 4.660 | 
|                           |  |                                  |         |          |       |   |       |        |          |  |         |  |  |          |       |  |       | 





vi.  Fair Value Disclosures






|                        |  |      |      |   |      |  |      |  
|----------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                        |  | 2003 |      |   | 2002 | 
|                        |  |      |      |   |      | 
|Expected term in years  |  |      | 10   |   |      |  | 10   |  
|Risk free interest rate |  |      | 3.8  | % |      |  | 5.0  | %
|Volatility              |  |      | 11.7 | % |      |  | 11.5 | %
|Dividends               |  |      | 0    | % |      |  | 0    | %

18  Restricted retained earnings




F-37



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


19  Related party transactions




i




ii


iii


iv


20  Quarterly financial data (unaudited)


|                                    |  |     |        |  |     |   |        |     |  |   |        |  |  |   |        | 
|----------------------------------- |  | --- | ------ |  | --- | - | ------ | --- |  | - | ------ |  |  | - | ------ | 
|                                    |  | 1st |        |  | 2nd |   |        | 3rd |  |   | 4th    | 
|                                    |  |     |        |  |     |   |        |     |  |   |        | 
|2004 quarterly financial data       |  |     |        |  |     |   |        |     |  |   |        |  |  |   |        | 
|Total revenues                      |  | $   | 34,036 |  |     | $ | 34,027 |     |  | $ | 35,348 |  |  | $ | 37,097 | 
|Net income                          |  | $   | 789    |  |     | $ | 2,070  |     |  | $ | 2,036  |  |  | $ | 3,970  | 
|Basic net income per common share   |  | $   | 0.11   |  |     | $ | 0.29   |     |  | $ | 0.28   |  |  | $ | 0.54   | 
|Diluted net income per common share |  | $   | 0.10   |  |     | $ | 0.27   |     |  | $ | 0.26   |  |  | $ | 0.51   | 

|                                    |  |     |        |  |     |   |        |     |  |   |        |  |  |   |        | 
|----------------------------------- |  | --- | ------ |  | --- | - | ------ | --- |  | - | ------ |  |  | - | ------ | 
|                                    |  | 1st |        |  | 2nd |   |        | 3rd |  |   | 4th    | 
|                                    |  |     |        |  |     |   |        |     |  |   |        | 
|2003 quarterly financial data       |  |     |        |  |     |   |        |     |  |   |        |  |  |   |        | 
|Total revenues                      |  | $   | 30,462 |  |     | $ | 30,510 |     |  | $ | 31,998 |  |  | $ | 33,293 | 
|Net income                          |  | $   | 499    |  |     | $ | 419    |     |  | $ | 908    |  |  | $ | 2,364  | 
|Basic net income per common share   |  | $   | 0.06   |  |     | $ | 0.07   |     |  | $ | 0.12   |  |  | $ | 0.32   | 
|Diluted net income per common share |  | $   | 0.06   |  |     | $ | 0.07   |     |  | $ | 0.12   |  |  | $ | 0.30   | 

F-38



---



##### Table of Contents



THE CRONOS GROUP


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands, except per share amounts)


CF LEASING LIMITED


Financial statements as of December 31, 2004 and 2003


and for the years ended December 31, 2004, 2003 and for
the period


September 18, 2002 to December 31, 2002


and Report of Independent Registered Public Accounting
Firm


F-39



---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















F-40



---



##### Table of Contents



CF LEASING LIMITED


BALANCE SHEETS


December 31, 2004 and 2003


(US dollar amounts in thousands)


|                                                                                                                            |  |      |         |  |      |   |        |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------ | -
|                                                                                                                            |  | 2004 |         |  | 2003 |  
|                                                                                                                            |  |      |         |  |      |  
|Assets                                                                                                                     
|Cash and cash equivalents                                                                                                   |  | $    | 2,015   |  |      | $ | 1,370  |  
|Restricted cash                                                                                                             |  |      | 946     |  |      |   | 421    |  
|Amounts receivable from a related party                                                                                     |  |      | 2,736   |  |      |   | 1,350  |  
|Net investment in direct financing leases, including amounts due
    within twelve months of $4,125 and $1,005 respectively |  |      | 17,641  |  |      |   | 6,466  |  
|Container equipment, net of accumulated depreciation of $9,945
    and $4,074 respectively                                  |  |      | 104,506 |  |      |   | 61,565 |  
|Other assets                                                                                                                |  |      | 2,701   |  |      |   | 1,159  |  
|                                                                                                                            |  |      |         |  |      |  
|Total assets                                                                                                                |  | $    | 130,545 |  |      | $ | 72,331 |  
|                                                                                                                            |  |      |         |  |      |  
|                                                                                                                           
|Liabilities and shareholders equity                                                                                       
|Amounts payable to a related party                                                                                          |  |      | 226     |  |      |   | 273    |  
|Other amounts payable and accrued expenses                                                                                  |  |      | 256     |  |      |   | 76     |  
|Loan notes issued to affiliate and other parties                                                                            |  |      | 99,383  |  |      |   | 54,842 |  
|                                                                                                                            |  |      |         |  |      |  
|Total liabilities                                                                                                           |  |      | 99,865  |  |      |   | 55,191 |  
|                                                                                                                            |  |      |         |  |      |  
|Shareholders equity                                                                                                        |  |      |         |  |      |   |        |  
|Common shares, par value $1 per share (24,000 shares
    authorised, issued and outstanding)                                |  |      | 24      |  |      |   | 24     |  
|Additional paid-in capital                                                                                                  |  |      | 21,319  |  |      |   | 14,169 |  
|Accumulated other comprehensive income (loss)                                                                               |  |      | 462     |  |      |   | (162   | )
|Accumulated surplus                                                                                                         |  |      | 8,875   |  |      |   | 3,109  |  
|                                                                                                                            |  |      |         |  |      |  
|Total shareholders equity                                                                                                  |  |      | 30,680  |  |      |   | 17,140 |  
|                                                                                                                            |  |      |         |  |      |  
|Total liabilities and shareholders equity                                                                                  |  | $    | 130,545 |  |      | $ | 72,331 |  
|                                                                                                                            |  |      |         |  |      |  



F-41



---



##### Table of Contents



CF LEASING LIMITED


STATEMENTS OF INCOME


For the years ended December 31, 2004 and 2003 and for
the period


September 18, 2002 to December 31, 2002


(US dollar amounts in thousands)


|                                                      |  |      |        |  |      |   |       |      |  |   |       | 
|----------------------------------------------------- |  | ---- | ------ |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                                      |  | 2004 |        |  | 2003 |   |       | 2002 | 
|                                                      |  |      |        |  |      |   |       |      | 
|Container revenue                                     |  | $    | 14,042 |  |      | $ | 7,184 |      |  | $ | 1,619 | 
|Fees and other income                                 |  |      | 1,560  |  |      |   | 894   |      |  |   | 5     | 
|                                                      |  |      |        |  |      |   |       |      | 
|Total revenues                                        |  |      | 15,602 |  |      |   | 8,078 |      |  |   | 1,624 | 
|                                                      |  |      |        |  |      |   |       |      | 
|Depreciation                                          |  |      | 5,969  |  |      |   | 3,330 |      |  |   | 779   | 
|Selling, general and administrative expenses          |  |      | 164    |  |      |   | 90    |      |  |   | 10    | 
|Interest expense                                      |  |      | 3,703  |  |      |   | 1,660 |      |  |   | 224   | 
|                                                      |  |      |        |  |      |   |       |      | 
|Total expenses                                        |  |      | 9,836  |  |      |   | 5,080 |      |  |   | 1,013 | 
|                                                      |  |      |        |  |      |   |       |      | 
|Net income                                            |  |      | 5,766  |  |      |   | 2,998 |      |  |   | 611   | 
|Other comprehensive income (loss):                    |  |      |        |  |      |   |       |      |  |   |       | 
|Change in fair value of interest rate swap agreements |  |      | 624    |  |      |   | (162  | )    |  |   |      | 
|                                                      |  |      |        |  |      |   |       |      | 
|Comprehensive income                                  |  | $    | 6,390  |  |      | $ | 2,836 |      |  | $ | 611   | 
|                                                      |  |      |        |  |      |   |       |      | 



F-42



---



##### Table of Contents



CF LEASING LIMITED


STATEMENTS OF CASH FLOWS


For the years ended December 31, 2004 and 2003 and for
the period


September 18, 2002 to December 31, 2002


(US dollar amounts in thousands)


|                                                                                      |                                                                     |      |         |        |      |   |         |        |   |   |         |       |  
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ---- | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ----- | -
|                                                                                      |                                                                     | 2004 |         |        | 2003 |   |         | 2002   |  
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Cash flows from operating activities                                                  |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|Net income                                                                            |                                                                     | $    | 5,766   |        |      | $ | 2,998   |        |   | $ | 611     |      
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|                                                                                      | - Depreciation                                                      |      |         | 5,969  |      |   |         | 3,330  |   |   |         | 779   |  
|                                                                                      | - Gain on disposal of fixed assets                                  |      |         | (185   | )    |   |         | (17    | ) |   |         | (3    | )
|                                                                                      | - (Increase) decrease in amounts receivable                         |      |         |        |      |   |         |        |   |   |         |       |  
|                                                                                      | - related parties                                                   |      |         | (1,386 | )    |   |         | (94    | ) |   |         | (294  | )
|                                                                                      | - unrelated parties                                                 |      |         | 1,020  |      |   |         | (1,055 | ) |   |         | (250  | )
|                                                                                      | - Increase (decrease) in amounts payable to unrelated
    parties   |      |         |        |      |   |         |        |   |   |         |       |  
|                                                                                      | - related parties                                                   |      |         | (47    | )    |   |         | 82     |   |   |         | 29    |  
|                                                                                      | - unrelated parties                                                 |      |         | 180    |      |   |         | 48     |   |   |         | 28    |  
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Net cash provided by operating activities                                             |                                                                     |      | 11,317  |        |      |   | 5,292   |        |   |   | 900     |      
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Cash flows from investing activities                                                  |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|Purchase of container equipment                                                       |                                                                     |      | (49,644 | )      |      |   | (38,253 | )      |   |   | (18,862 | )    
|Investment in equipment acquired for direct financing leases                          |                                                                     |      | (12,760 | )      |      |   | (5,689  | )      |   |   |        |      
|Proceeds from sales of container equipment                                            |                                                                     |      | 566     |        |      |   | 205     |        |   |   | 7       |      
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Net cash used in investing activities                                                 |                                                                     |      | (61,838 | )      |      |   | (43,737 | )      |   |   | (18,855 | )    
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Cash flows from financing activities                                                  |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|Proceeds from issuance of term debt                                                   |                                                                     |      | 44,541  |        |      |   | 32,640  |        |   |   | 22,202  |      
|Dividends paid                                                                        |                                                                     |      |        |        |      |   |        |        |   |   | (500    | )    
|Return to investors of capital contributions                                          |                                                                     |      |        |        |      |   |        |        |   |   | (2,250  | )    
|Increase in restricted cash deposits                                                  |                                                                     |      | (525    | )      |      |   | (201    | )      |   |   | (220    | )    
|Additional paid in capital                                                            |                                                                     |      | 7,150   |        |      |   | 6,099   |        |   |   |        |      
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Net cash provided by financing activities                                             |                                                                     |      | 51,166  |        |      |   | 38,538  |        |   |   | 19,232  |      
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Net increase in cash                                                                  |                                                                     |      | 645     |        |      |   | 93      |        |   |   | 1,277   |      
|Cash at beginning of year                                                             |                                                                     |      | 1,370   |        |      |   | 1,277   |        |   |   |        |      
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Cash at end of year                                                                   |                                                                     | $    | 2,015   |        |      | $ | 1,370   |        |   | $ | 1,277   |      
|                                                                                      |                                                                     |      |         |        |      |   |         |        |  
|Supplementary disclosure of cash flow information:                                    |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|Cash paid during the year for:                                                        |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|                                                                                      | - interest                                                          |      | $       | 3,380  |      |   | $       | 1,433  |   |   | $       | 188   |  
|                                                                                      | - dividends                                                         |      |         |       |      |   |         |       |   |   | $       | 2,750 |  
|Non-cash items:                                                                       |                                                                     |      |         |        |      |   |         |        |   |   |         |      
|                                                                                      | - container equipment contributed as equity                         |      |         |       |      |   | $       | 999    |   |   | $       | 7,753 |  
|                                                                                      | - net investment in direct finance leases contributed as
    equity |      |         |       |      |   |         |       |   |   | $       | 1,591 |  
|                                                                                      | - container equipment transferred to direct finance leases          |      | $       | 353    |      |   |         |       |   |   |         |      |  
|                                                                                      | - change in fair value of interest rate swap agreements             |      | $       | 624    |      |   | $       | 162    |   |   |         |      |  



F-43



---



##### Table of Contents



CF LEASING LIMITED


STATEMENTS OF SHAREHOLDERS EQUITY


For the years ended December 31, 2004 and 2003 and for
the period


September 18, 2002 to December 31, 2002


(US dollar amounts in thousands)


|                                                 |  |        |    |            |         |             |        |               |  |   |             |       |  |               |       |   |  |   |        |  
|------------------------------------------------ |  | ------ | -- | ---------- | ------- | ----------- | ------ | ------------- |  | - | ----------- | ----- |  | ------------- | ----- | - |  | - | ------ | -
|                                                 |  |        |    |            |         | Accumulated |        |               |  |   |            
|                                                 |  |        |    | Additional |         |             | other  |               |  |   |             | Total | 
|                                                 |  | Common |    |            | paid-in |             |        | comprehensive |  |   | Accumulated |       |  | shareholders |      
|                                                 |  | shares |    |            | capital |             |        | (loss) income |  |   | surplus     |       |  | equity        |      
|                                                 |  |        |    |            |         |             |        |               |  |   |             |       |  |               |      
|Balance, September 18, 2002                      |  | $      | 12 |            |         |             |        |               |  |   |             |       |  |               |       |   |  | $ | 12     |  
|Net income                                       |  |        |    |            |         |             |        |               |  |   |             |       |  |               | 611   |   |  |   | 611    |  
|Equity dividends paid                            |  |        |    |            |         |             |        |               |  |   |             |       |  |               | (500  | ) |  |   | (500   | )
|Shares issued                                    |  |        | 12 |            |         |             | 7,071  |               |  |   |             |       |  |               |       |   |  |   | 7,083  |  
|                                                 |  |        |    |            |         |             |        |               |  |   |             |       |  |               |      
|Balance, December 31, 2002                       |  | $      | 24 |            |         | $           | 7,071  |               |  |   |             |       |  | $             | 111   |   |  | $ | 7,206  |  
|Capital contributions                            |  |        |    |            |         |             | 7,098  |               |  |   |             |       |  |               |       |   |  |   | 7,098  |  
|Net income                                       |  |        |    |            |         |             |        |               |  |   |             |       |  |               | 2,998 |   |  |   | 2,998  |  
|Reduction in fair value of financial derivatives |  |        |    |            |         |             |        |               |  |   | (162        | )     |  |               |       |   |  |   | (162   | )
|                                                 |  |        |    |            |         |             |        |               |  |   |             |       |  |               |      
|Balance, December 31, 2003                       |  | $      | 24 |            |         | $           | 14,169 |               |  | $ | (162        | )     |  | $             | 3,109 |   |  | $ | 17,140 |  
|Capital contributions                            |  |        |    |            |         |             | 7,150  |               |  |   |             |       |  |               |       |   |  |   | 7,150  |  
|Net income                                       |  |        |    |            |         |             |        |               |  |   |             |       |  |               | 5,766 |   |  |   | 5,766  |  
|Increase in fair value of financial derivatives  |  |        |    |            |         |             |        |               |  |   | 624         |       |  |               |       |   |  |   | 624    |  
|                                                 |  |        |    |            |         |             |        |               |  |   |             |       |  |               |      
|Balance, December 31, 2004                       |  | $      | 24 |            |         | $           | 21,319 |               |  | $ | 462         |       |  | $             | 8,875 |   |  | $ | 30,680 |  
|                                                 |  |        |    |            |         |             |        |               |  |   |             |       |  |               |      



F-44



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS


(US dollar amounts in thousands)


1.   Summary of significant accounting
policies




a)  Nature of operations










b)  Basis of accounting






c)  Leases


Operating leases.


F-45



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands)








Direct financing leases with customers.




d)  Fees and other income




e)  Taxation




f)  Cash and cash equivalents




g)  Container equipment






F-46



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands)


h)  Asset impairment


.


i)  Fair value of financial instruments




j)  Derivative financial instruments








k)  Translation of foreign currencies






F-47



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands)




l)   Restricted cash




2.   Net investment in direct financing
leases




|                  |  |             |        |  |                |   |       |                |  |   |        | 
|----------------- |  | ----------- | ------ |  | -------------- | - | ----- | -------------- |  | - | ------ | 
|                  |  | Net Lease   |        |  | Unearned Lease |   |       | Minimum Future | 
|                  |  | Receivables |        |  | Income         |   |       | Lease Rentals  | 
|                  |  |             |        |  |                |   |       |                | 
|December 31, 2004 |  |             |        |  |                |   |       |                |  |   |        | 
|2005              |  | $           | 4,125  |  |                | $ | 1,747 |                |  | $ | 5,872  | 
|2006              |  |             | 4,653  |  |                |   | 1,252 |                |  |   | 5,905  | 
|2007              |  |             | 4,812  |  |                |   | 715   |                |  |   | 5,527  | 
|2008              |  |             | 2,773  |  |                |   | 279   |                |  |   | 3,052  | 
|2009              |  |             | 1,278  |  |                |   | 42    |                |  |   | 1,320  | 
|                  |  |             |        |  |                |   |       |                | 
|Total             |  | $           | 17,641 |  |                | $ | 4,035 |                |  | $ | 21,676 | 
|                  |  |             |        |  |                |   |       |                | 

3.   Container revenue






|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2005                |  | $ | 14,651 | 
|2006                |  |   | 13,571 | 
|2007                |  |   | 11,215 | 
|2008                |  |   | 7,806  | 
|2009                |  |   | 3,023  | 
|2010 and thereafter |  |   | 316    | 
|                    |  |   |       
|Total               |  | $ | 50,582 | 
|                    |  |   |       

F-48



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands)


4.   Container equipment


|                           |  |   |         |  
|-------------------------- |  | - | ------- | -
|Cost                       |  |   |         |  
|Balance, December 31, 2002 |  | $ | 26,610  |  
|Additions                  |  |   | 39,252  |  
|Disposals                  |  |   | (223    | )
|                           |  |   |        
|Balance, December 31, 2003 |  |   | 65,639  |  
|Additions                  |  |   | 49,644  |  
|Disposals                  |  |   | (832    | )
|                           |  |   |        
|Balance, December 31, 2004 |  | $ | 114,451 |  
|                           |  |   |        
|Accumulated depreciation   |  |   |         |  
|Balance, December 31, 2002 |  | $ | 779     |  
|Depreciation expense       |  |   | 3,330   |  
|Disposals                  |  |   | (35     | )
|                           |  |   |        
|Balance, December 31, 2003 |  |   | 4,074   |  
|Depreciation expense       |  |   | 5,969   |  
|Disposals                  |  |   | (98     | )
|                           |  |   |        
|Balance, December 31, 2004 |  | $ | 9,945   |  
|                           |  |   |        
|Book value                 |  |   |         |  
|December 31, 2004          |  | $ | 104,506 |  
|                           |  |   |        
|December 31, 2003          |  | $ | 61,565  |  
|                           |  |   |        

5.   Other assets




|                                  |  |      |       |  |      |   |       | 
|--------------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|                                  |  | 2004 |       |  | 2003 |  
|                                  |  |      |       |  |      |  
|Unamortised loan origination fees |  | $    | 2,227 |  |      | $ | 1,156 | 
|Other                             |  |      | 474   |  |      |   | 3     | 
|                                  |  |      |       |  |      |  
|Total                             |  | $    | 2,701 |  |      | $ | 1,159 | 
|                                  |  |      |       |  |      |  

6.   Debt




F-49



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands)








|                             |  |      |        |  |      |                    |        |                         |  |  |                 | 
|---------------------------- |  | ---- | ------ |  | ---- | ------------------ | ------ | ----------------------- |  |  | --------------- | 
|                             |  |      |        |  |      | Interest Rate % at |       
|                             |  | 2004 |        |  | 2003 |                    |        | December 31, 2004/ 2003 | 
|                             |  |      |        |  |      |                    |        |                         | 
|Floating rate debt           |  | $    | 22,077 |  |      | $                  | 12,697 |                         |  |  | 3.4/2.7         | 
|Fixed rate debt (see note 7) |  |      | 77,306 |  |      |                    | 42,145 |                         |  |  | 3.8-5.7/3.8-5.1 | 
|                             |  |      |        |  |      |                    |        |                         | 
|Total debt                   |  | $    | 99,383 |  |      | $                  | 54,842 |                         |  |  |                 | 
|                             |  |      |        |  |      |                    |        |                         | 



|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2005                |  | $ | 9,384  | 
|2006                |  |   | 9,557  | 
|2007                |  |   | 10,951 | 
|2008                |  |   | 11,947 | 
|2009                |  |   | 11,947 | 
|2010 and thereafter |  |   | 45,597 | 
|                    |  |   |       
|Total               |  | $ | 99,383 | 
|                    |  |   |       

7.   Derivative accounting policies










F-50



---



##### Table of Contents



CF LEASING LIMITED


NOTES TO THE FINANCIAL STATEMENTS (continued)


(US dollar amounts in thousands)




8.   Related party transactions




|                        |       |      |   |        |      |  |   |        | 
|----------------------- | ----- | ---- | - | ------ | ---- |  | - | ------ | 
|                        |       | 2004 |   |        | 2003 | 
|                        |       |      |   |        |      | 
|Container acquisitions: |       |      |   |        |      |  |   |       
|                        | - CAY |      | $ | 61,698 |      |  | $ | 39,470 | 
|                        | - CEB |      |   |       |      |  |   | 4,609  | 



|                                                                |  |      |        |  |      |   |       |      |  |   |       | 
|--------------------------------------------------------------- |  | ---- | ------ |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                                                |  | 2004 |        |  | 2003 |   |       | 2002 | 
|                                                                |  |      |        |  |      |   |       |      | 
|Container revenue earned from CAY                               |  | $    | 14,042 |  |      | $ | 7,184 |      |  | $ | 1,619 | 
|Fortis interest expense (acting as agent for the loan facility) |  |      | 3,703  |  |      |   | 1,660 |      |  |   | 224   | 

10. Amounts receivable from a related party




11. Amount payable to a related party




F-51