SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

|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
|__| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-11862

INTERPOOL, INC.

(Exact name of registrant as specified in the charter)

|DELAWARE
(State or other jurisdiction of
Incorporation or organization) | 13-3467669
(I.R.S. Employer
Identification Number)
|----------------------------------------------------------------------- | --------------------------------------------------

211 COLLEGE ROAD EAST, PRINCETON, NEW JERSEY 08540
(Address of principal executive office) (Zip Code)

(609) 452-8900
(Registrant's telephone number including area code)

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|Title of Each ClassCOMMON STOCK, PAR VALUE $.001
9.25% CONVERTIBLE REDEEMABLE
SUBORDINATED DEBENTURES | Name on Each Exchangeon which RegisteredNEW YORK STOCK EXCHANGE
NEW YORK STOCK EXCHANGE
|----------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE

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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |_|

Indicate by check mark whether the registrant is an
accelerated filer (as defined in the Exchange Act Rule 12b-2). Yes |X| No
|_|

The aggregate market value of the 10,647,743
shares of the registrant's voting stock held by non-affiliates of the registrant
was $245,962,863, based upon the closing price of $23.10 per common share, as
quoted on the New York Stock Exchange on March 1, 2005.

At March 1, 2005, there were 27,637,804 shares of the
registrant's Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
None

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INTERPOOL, INC.
FORM 10-K
TABLE OF CONTENTS

|Item |  | Page
|---- |  | ----

PART I

|ITEM 1.ITEM 2.ITEM 3.ITEM 4. | BUSINESSPROPERTIESLEGAL PROCEEDINGSSUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 3222324
|---------------------------- | -------------------------------------------------------------------------------------- | -------

PART II

|ITEM 5.ITEM 6.ITEM 7.ITEM 7A.ITEM 8.ITEM 9.ITEM 9A. | MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERSSELECTED FINANCIAL DATAMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKFINANCIAL STATEMENTS AND SUPPLEMENTARY DATACHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURECONTROLS AND PROCEDURES | 25
 26
 28
 69
 72131131
|--------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------

PART III

|ITEM 10.ITEM 11.ITEM 12.ITEM 13.ITEM 14. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTEXECUTIVE COMPENSATIONSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSPRINCIPAL ACCOUNTANT FEES AND SERVICES | 139144159162166
|---------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------

PART IV

|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 167
|-------- | ------------------------------------------ | ---

|SIGNATURES | 178
|---------- | ---

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PART I

ITEM 1. BUSINESS

General

All fleet statistics including the size of the fleet,
utilization of the leasing equipment or the rental rates per day that are set
forth in this Annual Report on Form 10-K include our equipment, including that
portion of our equipment managed by Container Applications, Inc. ("CAI"). To the
extent that our equipment is managed by CAI, the equipment is considered fully
utilized since it is not available for us to put on hire regardless of whether
all of the units are generating income. All equipment owned by CAI or managed by
CAI (with the exception of equipment owned by us and managed by CAI) is excluded
from all statistics, unless otherwise indicated. In addition, all of our chassis
assigned to chassis pools are considered fully utilized. This exclusion of
information relative to CAI, unless indicated otherwise, provides a focus on the
drivers which are critical to our core business. The market share, ranking and
other data contained in this Annual Report on Form 10-K are based either on our
management's own estimates, independent industry publications, reports by market
research firms or other published independent sources and, in each case, are
believed by management to be reasonable estimates. However, market share data is
subject to change and cannot always be verified with certainty due to limits on
the availability and reliability of raw data, the voluntary nature of the data
gathering process and other limitations and uncertainties inherent in any
statistical survey of market shares. As a result, you should be aware that
market share, ranking and other similar data set forth herein, and estimates and
beliefs based on such data, might not be reliable.

We believe we are the largest lessor of intermodal chassis in
North America and one of the world's leading lessors of intermodal dry freight
standard containers. At December 31, 2004, our chassis fleet totaled
approximately 208,000 chassis and our container fleet totaled approximately
808,000 twenty-foot equivalent units ("TEU"). From 1998 to 2003, we increased
the size of our chassis fleet at a compound annual rate of 22%, primarily as the
result of the chassis fleet acquired during 2000 from the North American
Intermodal Division of Transamerica Leasing, Inc. ("TA"), and the purchase and
leaseback of approximately 20,000 chassis with a shipping line customer during
2001 and 2002. During the period from 1998 to 2003, we increased our container
fleet at a compound annual rate of 12%. During 2004, our chassis fleet remained
flat and our total container fleet declined by 7%, primarily due to the
contractual runoff of the container direct financing lease portfolio and the
fact that we entered into only a limited number of new lease transactions due to
the reduced availability of new financings during the first three quarters of
2004. This reduction in availability was due to the delay in filing our Annual
Report on Form 10-K for 2002, our Quarterly and Annual Reports on Forms 10-Q and
10-K for 2003 and our Quarterly Reports on Form 10-Q for 2004.

We concentrate on leasing equipment to our customers on a
long-term basis (leases for a term greater than one year). Substantially all of
our new equipment is initially leased for terms of five to eight years and
approximately 78% of our total fleet of chassis and 81% of our total fleet of
containers are currently on long-term lease. We believe our focus on long-term
leasing has enabled us to:

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| |  | Maintain high utilization rates of our equipment fleet, consisting
of both operating and direct financing leases, which over the last five years
averaged 99% for containers and 95% for chassis;
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| |  | Achieve more stable and predictable earnings; and
| | - | -------------------------------------------------

| |  | Concentrate on the expansion of our asset base through the purchase and lease of
new equipment to fulfill specific orders for new long-term leases.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

Approximately 22% of our chassis are currently leased on a
short-term basis to satisfy customers' peak or seasonal requirements and to
provide operational flexibility, generally at higher rates than under long-term
leases. For customers who require daily or weekly chassis rentals, we operate
chassis pools at major domestic shipping ports and terminals. These chassis
pools consist of our chassis as well as those of our customers.

Approximately 19% of our
containers are currently leased on a short-term basis. Our 50%-owned
consolidated subsidiary, CAI, markets our containers available for short-term
leasing as part of its fleet, facilitating redeployment of our containers at the
end of long-term leases. Our relationship with CAI maximizes utilization of our
container fleet and increases our influence in the marketplace by giving us one
of the world's largest container lessor fleets on a combined basis. At
December 31, 2004, CAI had a container fleet of approximately 588,000 TEU.
Approximately 172,000 TEU were owned by CAI with the remaining 416,000 TEU
managed for others. CAI's managed equipment included approximately 154,000
TEU that were managed for us.

We and our predecessors
have been involved in the business of leasing transportation equipment since
1968. We lease our chassis and containers to a diversified customer base of over
600 shipping and transportation companies throughout the world, including nearly
all of the world's 25 largest international container shipping lines and
major North American railroads. We provide customer service and market to our
customers through a worldwide network of offices and agents. We believe one of
the key factors in our ability to compete effectively has been the long-standing
relationships that we have established with most of the world's large
shipping lines and major North American railroads. As a result of these
relationships, 22 of our top 25 customers have been customers for at least 10
years.

Industry Overview

The fundamental components
of intermodal transportation are the chassis and the container. When a container
ship arrives in port, each marine container is removed from the ship and loaded
onto a chassis or rail car. Most containers are constructed of steel in
accordance with recommendations of the International Standards Organization
("ISO"). The basic container type is the general-purpose dry freight
standard container which measures 20 or 40 feet long, 8 feet wide and 8 1/2 or 9
1/2 feet high. In general, 20-foot containers are used to carry heavy, dense
cargo loads (such as industrial parts and certain food products) and can also
operate in areas where transportation facilities are less developed, while
40-foot containers are used for lighter weight finished goods (such as apparel,
electronic appliances and other consumer goods) in areas with better developed
transportation facilities. A chassis is a rectangular, wheeled steel frame,
generally 23 1/2 or 40 feet in length, built specifically for the purpose of
transporting a container. Longer sized chassis, designed solely to accommodate
domestic containers, can be up to 53 feet in length. Once mounted, the chassis
and container are the functional equivalent of a trailer. When mounted on a
chassis, the container may be trucked either to its final destination or to a
railroad terminal for loading onto a rail car. Similarly, a container shipped by
rail may be transferred to a chassis to travel over-the-road to its final
destination. As the use of containers has become a predominant factor in the
intermodal movement of cargo, the chassis has become a prerequisite for the
domestic segment of the journey. A chassis seldom travels permanently with a
single container, but instead serves as a transport vehicle for containers that
are loaded or unloaded at ports or railroad terminals. Because of differing
international road regulations and non-uniformity of international standards for
chassis, chassis used in the United States are seldom used in other countries.

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

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

Between 1990 and 2003,
worldwide container traffic at the world's major ports has grown at a
compound annual rate of 10.4%, calculated using the Containerisation
International Yearbook of 1992 and 2005.

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

| |  | The existence of geographical trade imbalances;
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| |  | The trend in outsourcing manufacturing to lower labor rate areas;
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| |  | The expansion of shipping lines;
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| |  | The growing reliance by manufacturers on "just-in-time" delivery methods; and
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| |  | Increased exports by technologically advanced countries of component parts for
assembly in other countries and the subsequent re-importation of finished
products.
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In recent years, domestic
railroads and trucking lines have begun actively marketing intermodal services
for the domestic transportation of freight. We believe that this trend should
serve to accelerate the growth of intermodal transportation resulting in
increased chassis and container demand.

The Leasing Market

Leasing companies own a
significant portion of North America's chassis and of the world's
container fleet and we believe the balance is owned predominantly by shipping
lines and railroads. Leasing companies have maintained this market position
because container shipping lines and railroads receive both financial and
operational benefits by leasing a portion of their equipment. The principal
benefits of leasing are the following:

| |  | To provide shipping lines and railroads with an alternative source of financing
in a traditionally capital-intensive industry;
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| |  | To enable shipping lines and railroads to expand their routes and market shares
at a relatively inexpensive cost without making a permanent commitment to
support their new structure;
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| |  | To enable shipping lines and railroads to benefit from leasing companies'
relationships with equipment manufacturers;
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| |  | To enable shipping lines and railroads to accommodate seasonal use and/or
geographic concentration, thereby limiting their capital investment and storage
costs; and
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| |  | To enable shipping lines and railroads to maintain an optimal mix of equipment
types in their fleets.
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Because of these benefits, container
shipping lines and railroads generally obtain a significant portion of their
container and chassis fleets from leasing companies, either on short-term or
long-term leases. Short-term leases provide considerable operational flexibility
in allowing a customer to pick up and drop off equipment at various locations at
any time. However, customers pay for this flexibility in the form of
substantially higher lease rates for short-term leases and drop-off charges for
the privilege of returning equipment to certain locations. Many short-term
leases are "master leases," under which a customer reserves the right
to lease a certain number of containers or chassis as needed under a general
agreement between the lessor and the lessee. Long-term leases provide the lessee
with advantageous pricing structures, but often contain an early termination
provision allowing the lessee to return equipment prior to expiration of the
lease upon payment of an early termination fee or a retroactive increase in
lease payments.

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Business Strategy

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

| |  | Focus on our core business of North American chassis and international marine
container leasing. Our strong market positions in the chassis and container
leasing businesses provide us with economies of scale that benefit our
customers. Our equipment and operations are located worldwide to meet our
domestic and international customers' needs in a timely manner. In
addition, we are able to focus our management and financial resources to compete
effectively for equipment leasing requirements of all quantities.
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| |  | Concentrate on long-term leasing to achieve high utilization rates and to
minimize the impact of economic cycles on earnings. We concentrate on
long-term leases in order to minimize the impact of economic cycles on our
equipment leasing revenues and to achieve high utilization and more stable and
predictable earnings. The lower rate of turnover provided by long-term leases
enables us to concentrate on the expansion of our asset base through the
purchase and lease of new equipment, rather than on the repeated re-marketing of
our existing fleet.
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| |  | Re-marketing of equipment when returned by lessees.When long-term leases
reach their termination date, we make every effort to extend the lease with the
customer that originally leased the equipment, or in lieu of that, to lease the
equipment to another customer for an extended term. Containers may also be made
available to our 50%-owned consolidated subsidiary, CAI, which manages our
containers in the short-term marketplace. This allows us to maintain our focus
on long-term leasing while CAI expands its fleet of equipment that it manages
for us and for others, providing CAI with further economies of scale.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Make strategic acquisitions of complementary businesses and asset portfolios
on an opportunistic and financially disciplined basis. We intend to
continue to review acquisition opportunities whenever asset prices and market
conditions are favorable.
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Historically, we have
regularly entered into new long-term lease transactions with shipping lines and
other customers as market conditions warranted. During the second half of 2003
and the first nine months of 2004, however, notwithstanding strong conditions in
the leasing markets, we entered into a limited number of new lease transactions,
due to the reduced availability of new financings during the first three
quarters of 2004. This reduction in availability was due to the delay in filing
our Annual Report on Form 10-K for 2002, our Quarterly and Annual Reports on
Forms 10-Q and 10-K for 2003 and our Quarterly Reports on Form 10-Q for 2004. We
successfully completed a number of financings and commitments totaling $747.0
million from January 1, 2004 through December 31, 2004, of which $563.0 million
was utilized and $184.0 million remained available for future use as of December
31, 2004. The proceeds of these financings were used to pay for equipment
previously placed on lease, to purchase new equipment for lease, to repay debt
and for working capital. During the first quarter of 2005, we received an
additional $223.0 million in net financing commitments, none of which has been
utilized as of the date this report was filed with the SEC, and completed a
draw-down under a lease arrangement with a Japanese lessor for which we received
additional cash proceeds of approximately $4.2 million. In addition, we
regularly evaluate financing proposals which, when coupled with available cash
balances and the funds available under commitments mentioned above, could be
used for growth, for re-financing existing facilities and for working capital.

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Operations

We offer our customers both
operating leases and direct financing leases to satisfy customer preference and
demand. In most cases, a direct financing lease provides the customer the
opportunity to acquire ownership of the equipment.

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

Long-term leases provide
the lessee with advantageous pricing structures, but often contain an early
termination provision allowing the lessee to return equipment prior to
expiration of the lease upon payment of an early termination fee or a
retroactively applied increase in lease payments. We experience minimal early
returns of our equipment under our long-term leases, primarily because of the
penalties involved. Additionally, customers may bear substantial costs related
to repositioning and repair upon return of the equipment.

Frequently, a lessee will
desire to retain long-term leased equipment well beyond the initial lease term.
In these cases, long-term leases will be renewed at the then prevailing market
rate, for one to five-year periods, as part of a short-term agreement or as a
direct financing lease.

Trac Lease Chassis Pools. For customers who require daily
or weekly chassis rentals, we operate Trac Lease chassis pools at most of the
major ports and terminal operations throughout the United States. These chassis
pools consist of our chassis placed at facilities for use by approved shipping
lines, railroads and truckers. Chassis are rented from these pools in a manner
similar to the way rental cars are offered on an as needed basis. Customers pay
a higher than normal daily rate for use of these chassis, but in return are
generally not responsible for repair charges. Additionally, they experience an
easy access and an easy return process, and have no ongoing carrying and
administrative responsibilities for the chassis. The principal ports in the
United States where we operate chassis pools are Baltimore, Boston, Charleston,
Houston, New York, Newark, Norfolk, and Savannah. We also operate chassis pools
at over 40 inland railroad locations within the United States.

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Depots. We and our 50% owned consolidated
subsidiary, CAI, operate in all major containerized transportation markets in
North America and throughout the world. Depots are facilities owned by third
parties at which containers, chassis and other items of transportation equipment
are stored, maintained and repaired. For containers, we utilize independent
agents/depots to handle and inspect equipment delivered to, or returned by
lessees, as well as to store containers that are not leased and to perform
maintenance and repairs. Some agents are paid a fixed monthly retainer to defray
recurring operating expenses and some are paid a minimum level of commission
income. In addition, we generally reimburse our agents for incidental expenses.
For chassis, we have our own field staff which oversees the functions performed
by depots.

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

Repositioning and Other
Operating Expenses. If lessees return large numbers of equipment to a
location with a larger supply than demand, we may incur expenses in
repositioning the equipment to a more favorable location. Repositioning expenses
generally range between $75 and $1,000 per unit, depending on geographic
location, distance and other factors, and may not be fully covered by any
drop-off charge collected from the lessee. We also incur storage costs, which
generally range between $.20 and $3.18 per unit per day depending on location
and equipment type. In addition, we bear other operating expenses associated
with our chassis and containers, such as costs of maintenance and repairs not
required to be made by lessees, agent fees, depot expenses for handling,
inspection and storage, and any insurance coverage in excess of that maintained
by the lessee.

Maintenance, Repairs and
Refurbishment. As chassis and containers age, the need for maintenance
increases, and they may eventually require extensive maintenance. Our customers
are generally responsible for maintenance and repairs of equipment other than
normal wear and tear. When normal wear and tear of equipment is extensive, the
equipment may have to undergo a major repair including a refurbishment or
remanufacture. Refurbishing and remanufacturing of chassis involves substantial
cost, but remanufacture or refurbishment costs are substantially less than the
cost of purchasing a new chassis. In the past we also refurbished containers,
but in recent years it has not been cost effective to do so.

Disposition of
Containers and Chassis. On an ongoing basis, we sell containers that were
previously leased. The decision to sell depends on the equipment's
condition, remaining useful life and suitability for continued leasing or for
other uses, as well as prevailing local market resale prices and an assessment
of the economic benefits of repairing and continuing to lease the equipment
compared to the benefits of selling. Pursuant to our relationship with CAI,
containers that have come off long-term lease and have been designated for
short-term leasing (not including renewals with existing lessees) are generally
provided to CAI for deployment in CAI's fleet. For such containers, CAI
pays us its average total fleet per diem rate (net of operating expenses) less a
management fee. This payment may be subject to reduction to the extent the
average age of the Interpool containers exceeds the average age of the CAI
containers. Containers made available for short-term leasing under our agreement
with CAI are reported by us as fully utilized. Containers are also sold to
shipping or transportation companies for continued use in the intermodal
transportation industry or to secondary market buyers, such as wholesalers,
depot operators, mini storage operators, construction companies and others, for
use as storage sheds and similar structures. Because older chassis can be
economically remanufactured, chassis are rarely sold.

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

Sources of Supply.
Over 90% of the world's container production occurs in China. Historically,
most chassis used in the United States have been manufactured domestically;
however, China began producing ISO standard chassis for the U.S. market in 2003
and accounted for a substantial portion of chassis production for the domestic
market in 2004.

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

"PoolStat" Chassis Management Services

Our chassis customers are turning to outside service companies
to help them manage chassis that they own and lease. We offer management
services under the trademarked name "PoolStat". "PoolStat"
aggregates chassis activity data from over 400 locations around the country and
reports on this activity, processing more than two million transactions monthly.
Customers contract with us to track their chassis nationally and determine usage
patterns, ongoing requirements, and overall fleet efficiencies. Reports are
provided using a "PoolStat" proprietary Internet based report generator.
"PoolStat" services also include the use of field staff under contract
where field management of chassis operations is involved.

A major service requested by our customers and provided by
"PoolStat" is assistance in the formation and running of "cooperative
chassis pools." Cooperative chassis pools consist of chassis contributed for
common use by the shipping lines (chassis owned and/or leased and under their
control) to be pooled at marine terminals and railroad depots. These chassis
pools are different from our chassis pools in that the shipping lines supply the
chassis rather than us supplying the chassis on a rental basis. Our
"PoolStat" software compiles data from each location and reports on levels
of chassis contribution as compared to the levels of chassis usage by each
shipping line in the cooperative pool. Each participating line is required to
supply a fair share of equipment relative to its usage. The management services
we provide for cooperative chassis pools often involves field staff assisting in
the repositioning of chassis as well as overseeing the maintenance and repair
process. Benefits to the participants of this program include:

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| |  | More efficient use of chassis leading to lower overall inventory requirements at
each location;
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| |  | Decreased maintenance, repair and other operating expenses;
| | - | -----------------------------------------------------------

| |  | Improved equipment control capabilities;
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| |  | Reduced customer administrative time and expense of managing a chassis fleet;
and
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| |  | The ability to participate in cooperative pool net revenues
| | - | -----------------------------------------------------------

By providing the "PoolStat" service, we are able to forge
closer relationships with our customers for both short-term and long-term
leasing opportunities. There are now approximately 231,000 chassis under
"PoolStat" management and we are continuing to seek opportunities to
increase its level of business. We believe that "PoolStat" is the leading
provider of chassis management services in the United States.

Marketing and Customers

We lease our chassis and
containers to over 600 shipping and transportation companies throughout the
world, including nearly all of the world's 25 largest international
container shipping lines and major North American railroads. The customers for
our chassis include a large number of domestic lessees, many of which are
domestic subsidiaries or branches of international shipping lines to which we
also lease containers. With a network of offices and agents covering major ports
in the United States, Europe and the Far East, we have been able to supply
containers in nearly all locations requested by our customers. In 2004, our top
25 customers represented approximately 75% of our consolidated net billing, with
no single customer accounting for more than 7.9%.

Credit Process

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

We have sought to reduce
credit risk by maintaining insurance coverage against customer insolvency and
related equipment losses. We maintain contingent physical damage, recovery and
loss of revenue insurance, which provides coverage in the event of a
customer's insolvency, bankruptcy or default giving rise to our demand for
return of all of our equipment. The policy covers the cost of recovering our
equipment from the customer, including repositioning cost, repair of damage to
the equipment and the value of equipment which could not be located or was
uneconomical to recover. It also covers a portion of the equipment leasing
revenues that we might lose as a result of the customer's default (i.e., up
to 180 days of lease payments following an occurrence under the policy). Our
current policy, which will expire on April 30, 2005, includes coverage of $9.0
million with a $3.0 million deductible, per occurrence. While we believe we will
be able to renew this coverage on comparable or more favorable terms, for an
additional twelve month period, there can be no assurance that this or similar
coverage will be available in the future or that such insurance will cover the
entirety of any loss

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Competition

There are many companies
leasing intermodal transportation equipment with which we compete. Some of our
competitors have greater financial resources than we do, or are affiliates of
much larger companies. Historically, there has been consolidation in the
container leasing business resulting from several acquisitions. Several chassis
lessors have recently sold their fleets. This has resulted in an environment at
the end of 2004, where only two major chassis lessors remain; Interpool and
Flexi-Van Leasing, Inc.

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

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

Relationship with CAI

We own a 50% common equity
interest in CAI, which we acquired in April 1998. CAI owns and leases-in its own
fleet of containers and also manages, for a fee, containers owned by us and by
third parties. We entered into our operating relationship with CAI primarily to
facilitate the leasing in the short-term market of containers coming off
long-term operating lease, to gain access to new companies looking to lease
containers on a long-term basis and to realize cost efficiencies from the
operation of a coordinated container lease marketing group. For containers
managed by CAI for us in the short-term market, we earn the net operating income
and pay CAI a fee for managing our equipment and leasing it on our behalf. The
calculation is based on the average daily net operating income of CAI's
fleet of owned, leased-in and managed containers (including the portion of
CAI's fleet that consists of our equipment) for each day such managed
containers are part of the CAI fleet. The marketing group, which is organized as
a wholly-owned subsidiary of Interpool, is responsible for soliciting container
lease business for both Interpool and CAI, including long-term operating and
direct financing lease business and short-term lease business on master lease
agreements. We have a right to purchase all long-term operating and direct
financing lease business generated by the marketing group, subject to offering
to CAI, at cost, 10% of this long-term operating and direct financing lease
business. By mutual agreement, CAI has purchased for its own account long-term
operating and direct financing lease business the marketing group has generated
in excess of such amount. In addition, on occasion, we have entered into
transactions with CAI pursuant to which we have acquired equipment, and the
related leases, from CAI on terms that resulted in a profit for CAI. Such
equipment, as well as certain other containers purchased from time to time, are
currently managed for us by CAI for a fee based upon the actual net operating
income earned by such containers.

12

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The 50% equity interest in
CAI not held by us is owned by CAI's chief executive officer. Under the
terms of a Shareholder Agreement we entered into in 1998 with CAI's chief
executive officer, because an initial public offering for the registration and
sale of CAI's common stock was not initiated before April 2003, CAI's
chief executive officer has the right to request an independent valuation of
CAI. Such independent valuation of CAI has not been requested. If such an
independent valuation of CAI were to be requested, we would have the right,
following the completion of such valuation, to make a written offer to acquire
the chief executive officer's 50% equity interest in CAI for an amount
equal to 50% of the fair value of CAI as indicated in the appraisal. If we do
not elect to make such an offer, CAI's chief executive officer would have a
right to require CAI to take the necessary steps to effect an initial public
offering to sell his equity. All costs associated with any such initial public
offering of CAI would be borne by CAI.

In connection with the acquisition of our 50% equity interest in
CAI in 1998, we loaned CAI $33.7 million under a subordinated note agreement,
which is collateralized by all containers owned by CAI as of April 30, 1998 or
thereafter acquired, subject to the priority security interest lien of CAI's
senior credit facility, except for certain excluded collateral. Interest on this
subordinated note is at an annual fixed rate of 10.5% and is payable quarterly.
The original repayment terms required mandatory quarterly principal payments of
$1.7 million beginning July 30, 2003 and ending on April 30, 2008. The
subordinated note was subject to certain financial covenants and was
cross-collateralized with CAI's senior credit facility, subject to the terms of
a subordination agreement.

On June 27, 2002, CAI entered into an amended $110.0 million
senior revolving credit agreement with a group of financial institutions. To
facilitate the closing of this new credit facility, we agreed to extend the
repayment terms of our subordinated note so as to require mandatory quarterly
principal payments of $1.7 million beginning July 30, 2006 and ending on April
30, 2011. We also agreed to modify certain financial covenants in the
subordinated note. Interest on the subordinated note continues to accrue at an
annual fixed rate of 10.5%, payable quarterly. The subordinated note continues
to be cross-collateralized with CAI's senior credit agreement, subject to the terms
of an amended and restated subordination agreement. In connection with these
modifications, CAI's chief executive officer agreed that we would have the right
to designate a majority of the members of CAI's board of directors. As a result
of these transactions and gaining a majority position on CAI's board, our
financial statements include CAI as a consolidated subsidiary commencing June
27, 2002. The senior credit facility was amended in May 2003 to increase the
letter of credit commitment by the lenders' administrative agent.

13

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For additional information about CAI's indebtedness, see Note 11
to the Consolidated Financial Statements.

Other Business Operations

In addition to our chassis
and container leasing operations we also receive revenues from the leasing of
approximately 305 freight rail cars to railroad companies through our Illinois
based Railpool division. Also, our former computer leasing segment consisted of
two majority owned subsidiaries, Microtech Leasing Corporation
("Microtech") and Personal Computer Rental Corporation
("PCR"). During the third quarter of 2001, we adopted a plan to exit
this segment. We liquidated the assets of Microtech as of March 31, 2004. PCR
ceased active operations and began to liquidate in the first quarter of 2003. At
March 31, 2004, all of the assets of PCR were liquidated.

Employees

As of December 31, 2004, we
had 230 employees, excluding CAI's 61 employees, 209 of whom were based in
the United States. None of our employees are covered by a collective bargaining
agreement. We believe our employee relations are good.

Risk Factors

Investors in Interpool
should consider the following risk factors as well as the other information
contained herein.

We are subject to the cyclicality of world trade which may
impair demand for our chassis and containers.

The demand for our chassis
and containers primarily depends upon levels of world trade of finished goods
and component parts. Recessionary business cycles, political conditions, the
status of trade agreements and international conflicts may have an impact on our
operating results. The demand for leased chassis also depends upon domestic
economic conditions and volumes of exports to the United States which are likely
to be adversely affected if the value of the United States dollar declines. When
the volume of world trade decreases, our business of leasing chassis and
containers may be adversely affected as the demand for chassis and containers is
reduced. A substantial decline in world trade may also adversely affect our
customers, leading to possible defaults and the return of equipment prior to the
end of a lease term.

We operate in a highly competitive industry, which may
adversely affect our results of operations or ability to expand our
business.

The transportation
equipment leasing industry is highly competitive. We compete with many domestic
and foreign leasing companies, some of which have greater financial resources
and access to capital than we do. From time to time, the industry may have large
under-utilized inventories of chassis and containers, which could lead to
significant downward pressure on pricing and margins. In addition, if the
available supply of intermodal transportation equipment were to increase
significantly as a result of, among other factors, new companies entering the
business of leasing and selling intermodal transportation equipment, our
competitive position could be adversely affected.

14

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Potential customers may
decide to buy rather than lease chassis and containers.

We, like other suppliers of
leased chassis and containers, are dependent upon decisions by shipping lines
and other transportation companies to lease rather than buy their equipment. In
addition, our ability to achieve our strategy of expanding our business in
response to customer demand for long-term leasing would be adversely affected if
our customers shifted to more short-term leasing over long-term leasing. Most of
the factors affecting the decisions of our customers are outside our control.
Operating costs such as storage and repair and maintenance costs also increase
as utilization decreases.

Pending governmental investigations may adversely affect us.

Following our announcement
in July 2003 that our Audit Committee had commissioned an internal investigation
by special counsel into our accounting, we were notified that the SEC had opened
an informal investigation of Interpool. As we anticipated, this investigation
was subsequently converted to a formal investigation and remains pending as of
the date of this report. We are fully cooperating with this investigation. The
New York office of the SEC has received a copy of the written report of the
internal investigation and has received documents and information from us, our
Audit Committee and certain other parties pursuant to SEC subpoenas. In late
2003, we were also advised that the United States Attorney's office for the
District of New Jersey received a copy of the written report of the internal
investigation and opened a parallel investigation focusing on certain matters
described in the report by the Audit Committee's special counsel. We were
informed that Interpool is neither a subject nor a target of the investigation
by the U.S. Attorney's office. We cannot predict the final outcome of these
investigations and accordingly cannot be assured that they will not result in
the taking of actions adverse to us.

Stockholder litigation may adversely affect us.

In February and March 2004,
several lawsuits were filed in the United States District Court for the District
of New Jersey, by purchasers of our common stock naming us and certain of our
present and former executive officers and directors as defendants. The
complaints alleged violations of the federal securities laws relating to the our
reported Consolidated Financial Statements for the years ended December 31, 2000
and 2001 and the nine months ended September 30, 2002, which we announced in
March 2003 would require restatement. Each of the complaints purported to be a
class action brought on behalf of persons who purchased our securities during a
specified period. In April 2004, the lawsuits, which seek unspecified amounts of
compensatory damages and costs and expenses, including legal fees, were
consolidated into a single action with lead plaintiffs and lead counsel having
been appointed. The plaintiffs filed a consolidated amended complaint in
September 2004, which includes allegations of purported misstatements and
omissions in our public disclosures throughout an expanded purported class
period from March 31, 1999 through December 26, 2003. In November 2004, we filed
a motion to dismiss the amended complaint, which is currently pending. In the
event our motion to dismiss is denied, we would expect to incur additional
defense costs typical of this type of class action litigation. We intend to
vigorously defend this lawsuit but are unable at this time to ascertain the
impact this litigation may have on our financial position or results of
operations.

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Our internal controls and procedures may require further
improvements.

As we disclosed in our 2002 and 2003 Form 10-K reports, and in
our Form 10-Q reports for the years 2003 and 2004, we have previously concluded
that certain internal control deficiencies identified by our external auditors
and by management, as well as through the investigation by the Audit Committee
of the Board of Directors, constituted "material weaknesses" or "significant
deficiencies" as defined by the Public Company Accounting Oversight Board
(United States). In addition, as described in detail in Item 9A of this
document, our review of internal controls over financial reporting, using the
framework defined by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), confirmed that most of the previously disclosed deficiencies
still existed as of December 31, 2004. Accordingly, management, including our
Chief Executive Officer and Chief Financial Officer, concluded that our controls
over financial reporting, as required under the Sarbanes-Oxley Act, were not
effective as of December 31, 2004.

As of the date of this filing, we are satisfied that actions
implemented to date and those we expect to implement in 2005, 2006 and beyond
will correct the material weaknesses in our internal controls and information
systems and that our processes and systems of internal controls will be
effective. However, we cannot give any assurances that all material weaknesses
and significant deficiencies have been entirely corrected or that internal
control weaknesses will not be identified from time to time in the future. Any
material internal control weakness could materially affect our financial
results.

Our insurance coverage, which reduces our exposure to credit
risk, expires April 30, 2005. Failure to replace such coverage could increase
our costs in the event a customer defaults.

We have in the past sought
to reduce our credit risk by maintaining insurance coverage against lessee
defaults. Our current insurance policy covering such credit risks will expire on
April 30, 2005. While we believe we will be able to renew this coverage on
comparable or more favorable terms, for an additional twelve month period, there
can be no assurance that this or similar coverage will be available in the
future or that such insurance will cover the entirety of any loss. If such
insurance coverage is not obtained, it could adversely affect our business by
increasing our risks and our costs in the event a customer defaults.

Sustained Asian economic instability could reduce demand for
leasing.

A number of the shipping
lines to which we lease containers are entities domiciled in several Asian
countries. In addition, many of our customers are substantially dependent upon
shipments of goods exported from Asia. From time to time, there have been
economic disruptions, financial turmoil and political instability in this
region. If similar events were to occur in the future, they could adversely
affect these customers and lead to a reduced demand for leasing of our
containers or otherwise adversely affect us.

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Defaults by our customers could adversely affect our business
by decreasing revenues and increasing storage, collection and recovery
expenses.

We are dependent upon our lessees continuing to make lease
payments for our equipment. A default by a lessee may cause us to lose revenues
for past services and incur expenses for storage, collection and recovery.
Repossession from defaulting lessees may be difficult and more expensive in
jurisdictions whose laws do not confer the same security interests and rights to
creditors and lessors as those in the United States and in jurisdictions where
recovery of equipment from the defaulting lessees is more cumbersome.

If a lessee defaults, we
may be unable to re-lease recovered equipment for comparable rates or terms. Our
reserves for anticipated losses may increase over historical levels or not be
sufficient to cover actual losses, or our earnings may be adversely affected by
customer defaults.

Changes in market price, availability or transportation costs
of containers manufactured in China could adversely affect our ability to
maintain our supply of containers.

Changes in the political,
economic or financial condition of China, which would increase the market price,
availability or transportation costs of containers or chassis, could adversely
affect our ability to maintain our supply of equipment. China is currently the
largest container producing nation in the world and a significant supplier of
chassis. We currently purchase substantially all of our containers and a
significant portion of our chassis from manufacturers in China. In the event
that it were to become more expensive for us to procure containers and chassis
in China or to transport these containers or chassis at a low cost from China to
the locations where they are needed, because of a shift in U.S. trade policy
toward China, increased tariffs imposed by the United States or other
governments, a significant downturn in the political, economic or financial
condition of China, or for any other reason, we would have to seek alternative
sources of supply. We may not be able to make alternative arrangements quickly
enough to meet our equipment needs, and the alternative arrangements may
increase our costs.

We are controlled by a limited number of stockholders; this
concentrated ownership could discourage acquisition bids for us that are not
supported by our majority stockholders or limit the price investors will be
willing to pay in the future for shares of our common stock.

As of March 1, 2005, approximately 66.5% of our common stock is
beneficially owned, directly or indirectly, in the aggregate by Martin Tuchman,
Warren L. Serenbetz, Jr., Raoul J. Witteveen and Arthur L. Burns, together with
certain members of their immediate families and certain related entities. Each
of Messrs. Tuchman, Serenbetz and Burns is a member of our Board of Directors
and Mr. Tuchman and Mr. Burns are executive officers. Mr. Witteveen is a former
director and executive officer. These individuals, either directly or
indirectly, have the ability to elect all of the members of our Board of
Directors and to control the outcome of all matters submitted to a vote of our
stockholders. Our concentrated ownership may discourage acquisition bids for us
that are not supported by our majority stockholders. This concentration of
ownership could limit the price that investors might be willing to pay in the
future for shares of our common stock.

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We have relationships with and have entered into transactions
with members of our management and affiliated entities that may involve inherent
conflicts of interest.

Various relationships exist
and various transactions have been entered into between or among us, on the one
hand, and members of our management and affiliated entities, on the other hand.
Some of these relationships and transactions may involve inherent conflicts of
interest. (See Item 13, "Certain Relationships and Related
Transactions" and Note 10 to the Consolidated Financial Statements for
more information.)

We are dependent on the knowledge and experience of members
of our senior management; loss of these members could adversely affect our
ability to formulate and achieve our strategy and pursue new business
initiatives.

Our growth and continued
profitability are dependent upon, among other factors, the abilities, experience
and continued service of certain members of our senior management, including
Martin Tuchman, our Chairman and Chief Executive Officer. Mr. Tuchman holds,
either directly or indirectly, a substantial equity interest in Interpool and
also is a director of Interpool. Additionally, other members of our senior
management possess knowledge of, and extensive experience in, the intermodal
transportation industry. We rely on this knowledge and experience in our
strategic planning and in our day-to-day business operations. If one or more
members of our senior management were to resign or otherwise be unavailable to
serve us, the loss could adversely affect our ability to formulate and achieve
our strategy and pursue new business initiatives. In addition, we do not
currently have employment agreements with all of our executive officers.

The volatility of the residual value of chassis and
containers upon expiration of their leases could adversely affect our operating
results.

Although our operating
results primarily depend upon equipment leasing, our profitability is also
affected by the residual values (either for sale or continued operation) of our
chassis and containers upon expiration of their leases. These values, which can
vary substantially, depend upon, among other factors,

| |  | The maintenance standards observed by lessees;
| | - | ----------------------------------------------

| |  | The need for refurbishment;
| | - | ---------------------------

| |  | Our ability to remarket equipment profitably;
| | - | ---------------------------------------------

| |  | The cost of comparable new equipment;
| | - | -------------------------------------

| |  | The cost to remanufacture chassis;
| | - | ----------------------------------

| |  | The availability of used equipment;
| | - | -----------------------------------

| |  | Rates of inflation;
| | - | -------------------

| |  | Market conditions;
| | - | ------------------

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| |  | The costs of materials and labor; and
| | - | -------------------------------------

| |  | The obsolescence of certain types of equipment in our fleet.
| | - | ------------------------------------------------------------

Most of these factors are
outside of our control. Operating leases, which represent the predominant form
of lease in our portfolio, are subject to greater residual risk than direct
financing leases.

Loss of our eligibility for tax benefits under the
U.S.-Barbados tax treaty could increase our tax liability.

Through December 31, 2004,
we claimed tax benefits under an income tax convention between the United States
and Barbados ("pre-2005 Treaty"), the jurisdiction in which our
subsidiary Interpool Limited, which operates our container business, is
incorporated. Specifically, under that income tax convention, any profits of
Interpool Limited from leasing of containers used in international trade
generally are taxable only in Barbados and not in the United States.

Interpool Limited has been
entitled to the benefits of the Tax Convention for each year by satisfying the
two-pronged test to the "limitation of benefits" provision: (1) more
than 50% of the shares of Interpool Limited were owned, directly or indirectly,
by any combination of individual United States residents or citizens (the
"51% U.S. ownership test"), and (2) its income was not used in
substantial part, directly or indirectly, to meet liabilities to persons who
were not residents or citizens of the United States (the "base erosion
test"). We believe Interpool Limited passed both of these tests through
December 31, 2004.

On July 14, 2004, the
United States and Barbados signed a protocol to the pre-2005 Treaty
("post-2004 Treaty") that contains a more restrictive limitation on
benefits provision than the pre-2005 Treaty. The post-2004 Treaty took effect on
January 1, 2005 following its ratification by the United States Senate and the
government of Barbados on December 20, 2004. Under the post-2004 Treaty, in
addition to having to satisfy the 51% U.S. ownership and base erosion tests
described above, Interpool Limited is only eligible for Treaty benefits with
respect to its container rental and sales income if Interpool, Inc. is listed on
a "recognized stock exchange" and Interpool, Inc.'s stock is
"primarily" and "regularly" traded on such exchange.

During April 2004 Interpool, Inc. was de-listed by the New York
Stock Exchange. However, on January 13, 2005 Interpool, Inc. was again listed,
and began trading, on the New York Stock Exchange. Interpool believes this
listing and its current trading volume satisfies the "primarily" and "regularly"
traded requirements of the post-2004 Treaty, and that Interpool Limited
qualified for benefits under the post-2004 Treaty on January 13, 2005. We have
estimated there should be no U.S. current tax expense for the period from
January 1, 2005 to January 12, 2005.

There is no assurance we
will continue to satisfy the "regularly" traded, 51% U.S. ownership or
base erosion tests of the post-2004 Treaty.In addition, at some future
date the tax convention could be further modified in a manner adverse to us or
repealed in its entirety, or we might not continue to be eligible for these tax
benefits.

As a company resident in
Barbados, Interpool Limited is required to file tax returns in Barbados and pay
any tax liability to Barbados. However, no Barbados tax returns have been
prepared or filed for Interpool Limited for any period subsequent to its 1997
tax year. We believe the failure to file these returns has not resulted in any
material underpayment of taxes, interest or penalties (other than a nominal late
filing penalty), because we believe no material Barbados taxes would have been
due for the years for which returns have not been filed. We further believe
Interpool Limited's failure to file these returns would not present any
other material risk to Interpool. The preparation of these tax returns is
currently in process and we intend to submit these returns as promptly as
practicable. However, we cannot be assured our failure to file these returns
would not adversely affect us.

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A substantial portion of our future cash flows will be needed
to service our indebtedness. Since our debt was downgraded beginning in 2003,
our cost of borrowing has increased.

Historically, we have made,
and continue to make, use of indebtedness to finance our equipment leasing
activities and for other general corporate purposes. As of December 31, 2004,
our total outstanding indebtedness was approximately $1.7 billion. We anticipate
that we will incur additional indebtedness in the future. We are required to
dedicate a substantial portion of our cash flow to payments on our indebtedness,
thereby reducing the amount of cash flow available to fund working capital,
capital expenditures, including fleet growth, and other corporate requirements.
Should our cash flow be insufficient to service our debt obligations, we would
be required to seek additional funds to meet our obligations. Additional funds,
if needed, might not be available to us or, if available, might not be made
available on terms acceptable to us.

Our business is highly
dependent upon the availability of capital. In particular, the growth and
replacement of our fleet through new equipment purchases or acquisitions, as
well as the refinancing of our existing debt, will require further debt or
equity financings. There is no assurance that interest rates and advance rates
on any future financings will be as attractive as those experienced in the past.
If we raise additional funds by issuing equity securities, further dilution to
the existing stockholders may result.

During October and November
2003, the ratings on our debt securities were downgraded by three major rating
agencies, Standard & Poor's, Fitch, and Moody's, citing the
resignation of our former President, continued delay in issuing audited restated
financial statements for 2000 and 2001 and our audited financial statements for
2002 to be included in our 2002 Annual Report on Form 10-K, and the need to
obtain waivers from our lenders to avoid technical defaults under our loan
agreements associated with the financial statement delays. Our debt securities
were again downgraded by all three rating agencies following our press release
on December 29, 2003, that indicated that release of our 2000, 2001 and
2002 financial statements and the filing of our 2002 Annual Report on Form 10-K
would again be delayed. Our Annual Report was subsequently filed on
January 9, 2004. On January 27, 2004, Moody's again downgraded
our debt securities citing continued uncertainty associated with the delayed
release of our financial information for 2003. We were subsequently advised that
Moody's also reduced the "shadow rating" of our chassis
securitization. We were advised by the provider of the insurance
"wrap" portion of the chassis securitization that, as a result of the
downgrade of the shadow rating, we are liable to indemnify such provider for
certain of the provider's increased capital charge costs. During October
2004, we reached an agreement with such provider, pursuant to which we will pay
approximately $0.2 million per month in additional premium, declining as the
loan is paid down. Such additional premium will be further adjusted downward
after eighteen months if the shadow rating improves, potentially going away
entirely. In addition, as part of this agreement the wrap provider and the other
participants in the chassis securitization have permanently waived any early
amortization event or default associated with the downgrade of the shadow
rating. Such downgrades may also have a negative effect on our interest cost,
although two recent financings totaling approximately $650.0 million have
interest rates that reduce should our credit ratings improve. Although the
credit ratings of our debt securities were upgraded by Moody's on March 4,
2005, there can be no assurance that we will not be downgraded again in the
future.

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Increases in interest rates may increase our debt service
obligations and adversely affect our liquidity.

A substantial portion of
our borrowings are at variable rates of interest and expose us to interest rate
risk. As interest rates rise, our debt service obligations increase. A
significant rise in interest rates could have a material adverse effect on
results of operations in future periods. For further discussion on interest rate
risk see Item 7A.

The price of our common stock may fluctuate.

The market price for our common stock has fluctuated in the
past, and several factors could cause the price to fluctuate substantially in
the future. These factors include:

| |  | Announcements of developments related to our business;
| | - | ------------------------------------------------------

| |  | Fluctuations in our quarterly results of operations;
| | - | ----------------------------------------------------

| |  | Sales of substantial amounts of our shares into the marketplace;
| | - | ----------------------------------------------------------------

| |  | General conditions in our industry or the worldwide economy;
| | - | ------------------------------------------------------------

| |  | A shortfall in revenues or earnings compared to securities analysts'
expectations;
| | - | ----------------------------------------------------------------------------------

| |  | Changes in analysts' recommendations or projections;
| | - | ----------------------------------------------------

| |  | Announcements of new acquisitions; and
| | - | --------------------------------------

| |  | An outbreak of war or hostilities.
| | - | ----------------------------------

The current market price of our common stock may not be
indicative of future market prices.

Future changes to the fair market value of our common stock
purchase warrants will cause volatility in our earnings.

On September 14, 2004, we issued two series of warrants in
connection with a financing pursuant to which we sold $150.0 million of
long-term notes. The warrants are exercisable for a total of 8,333,333 shares of
our common stock at an exercise price of $18.00 per share. The warrants are
currently classified as a liability on our Consolidated Balance Sheets.
Generally accepted accounting principles require that, as long as the warrants
are classified as a liability rather than equity, the liability should be stated
at fair market value. Changes in the fair market value of the warrants from one
quarter to the next quarter are recorded as a non-cash expense or income in the
Consolidated Statements of Income. The fair market value of these warrants
increased from $22.5 million at September 30, 2004 to $71.7 million at December
31, 2004, resulting in a non-cash expense in the fourth quarter of 2004 of $49.2
million that adversely affected our net income for that quarter and the year.
The increase in fair market value resulted primarily from the increase in the
market price of our common stock during the quarter. For the period of time that
these warrants continue to be classified as a liability, any further increase in
the fair market value of the warrants will result in an additional non-cash
expense to our Consolidated Statements of Income. If the fair market value of the
warrants decreases in the future, we will record non-cash income in our
Consolidated Statements of Income. Accordingly, future changes to the fair
market value of these warrants will cause volatility in our future financial
results.

21

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Our charter documents and Delaware law may inhibit a takeover
and limit our growth opportunities, which could cause the market price of our
shares to decline.

Our Restated Certificate of
Incorporation and Amended and Restated By-laws, as well as Delaware corporate
law, contain provisions that could delay or prevent a change of control or
changes in our management that a stockholder might consider favorable. These
provisions apply even if the change may be considered beneficial by some
stockholders. If a change of control or change in management is delayed or
prevented, the market price of our shares could decline. In addition, our
Restated Certificate of Incorporation and Amended and Restated By-laws contain
provisions that may discourage acquisition bids for Interpool.

Website Access

Our website address is
www.interpool.com. You may obtain free electronic copies of our Annual Reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
all amendments to those reports under the heading "Financial
Information." These reports are available on our website as soon as
reasonably practicable after we electronically file them with the SEC. You can
also go to our website to obtain copies of our corporate governance guidelines,
Code of Business Conduct and Ethics and charters for our Audit, Compensation and
Corporate Governance Committees. Copies of all of these documents can also be
obtained, free of charge, upon written request to the Secretary, Interpool,
Inc., 211 College Road East, Princeton, NJ 08540.

ITEM 2. PROPERTIES

We purchased our main
office building located at 211 College Road East, Princeton, NJ in 2002. We use
approximately 77% of this 39,000 square foot building. The remainder is leased
to third parties. We also own approximately 18,000 square feet of condominium
office space located on the 27th floor at 633 Third Avenue, New York, NY that
serves as our New York office. We use approximately 49% of this 18,000 square
foot condominium. The remainder is leased to third parties. All of our other
commercial office space is leased.

22

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ITEM 3. LEGAL PROCEEDINGS

Following our announcement
in July 2003 that our Audit Committee had commissioned an internal investigation
by special counsel into our accounting, we were notified that the SEC had opened
an informal investigation of Interpool. As we anticipated, this investigation
was subsequently converted to a formal investigation and remains pending as of
the date this Form 10-K was filed with the SEC. We are fully cooperating with
this investigation. The New York office of the SEC received a copy of the
written report of the internal investigation and has received documents and
information from us, our Audit Committee and certain other parties pursuant to
SEC subpoenas. In late 2003, we were also advised that the United States
Attorney's office for the District of New Jersey received a copy of the
written report of the internal investigation and opened a parallel investigation
focusing on certain matters described in the report by the Audit
Committee's special counsel. We were informed that Interpool is neither a
subject nor a target of the investigation by the U.S. Attorney's office. We
cannot predict the final outcome of these investigations and accordingly cannot
be assured that they will not result in the taking of actions adverse to us.

In February and March 2004,
several lawsuits were filed in the United States District Court for the District
of New Jersey, by purchasers of our common stock naming us and certain of our
present and former executive officers and directors as defendants. The
complaints alleged violations of the federal securities laws relating to our
reported Consolidated Financial Statements for the years ended December 31, 2000
and 2001 and the nine months ended September 30, 2002, which we announced in
March 2003 would require restatement. Each of the complaints purported to be a
class action brought on behalf of persons who purchased our securities during a
specified period. In April 2004, the lawsuits, which seek unspecified amounts of
compensatory damages and costs and expenses, including legal fees, were
consolidated into a single action with lead plaintiffs and lead counsel having
been appointed. The plaintiffs filed a consolidated amended complaint in
September 2004, which includes allegations of purported misstatements and
omissions in our public disclosures throughout an expanded purported class
period from March 31, 1999 through December 26, 2003. In November 2004, we filed
a motion to dismiss the amended complaint, which is currently pending. In the
event our motion to dismiss is denied, we would expect to incur additional
defense costs typical of this type of class action litigation. We intend to
vigorously defend this lawsuit but are unable at this time to ascertain the
impact this litigation may have on our financial position or results of
operations.

We are engaged in various
other legal proceedings from time to time incidental to the conduct of our
business. Such proceedings may relate to claims arising out of equipment
accidents that occur from time to time which involve death and injury to persons
and damage to property. Accordingly, we require all of our lessees to indemnify
us against any losses arising out of such accidents and other occurrences while
the chassis are on-hire to the lessees. In addition, lessees are generally
required to maintain a minimum of $2.0 million in general liability insurance
coverage which is standard in the industry. In addition, we maintain a general
liability policy of $255.0 million, in the event that the above lessee coverage
is insufficient. While we believe that such coverage should be adequate to cover
current claims, there can be no guarantee that future claims will not exceed
such amounts. Nevertheless, we believe that no such current asserted or
unasserted claims of which we are aware will have a material adverse effect on
our financial condition or results of operations and that we are adequately
insured against such claims.

23

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

On December 15, 2004, we
held our Annual Meeting of Stockholders. The following matters were voted upon
by shareholders:

| | 1. | The following individuals were elected to our board of directors as Class I
directors to hold office for a term of two years and until their respective
successors are duly elected and qualified.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Nominee | Vote For | Vote Withheld
| | ------- | -------- | -------------

| | Warren L. Serenbetz, Jr.
Joseph J. Whalen | 20,062,199 
19,999,717 | 2,444,199
2,506,681
| | ----------------------------------------- | ---------------------- | -------------------

| | 2. | The following individuals were elected to our board of directors as Class II
directors to hold office for a term of three years and until their respective
successors are duly elected and qualified.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Nominee | Vote For | Vote Withheld
| | ------- | -------- | -------------

| | Clifton H.W. Maloney 
Michael S. Mathews   
William J. Shea, Jr. | 20,422,799
20,422,901
20,482,701 | 2,083,599
2,083,497
2,023,697
| | ---------------------------------------------------------------- | -------------------------------- | -----------------------------

The Company's other three directors', Messrs. Tuchman, Burns and
Halstead, terms of office continue until 2005.

| | 3. | Our shareholders approved two new stock option plans: the 2004 Stock Option Plan
for Key Employees and Directors of Interpool, Inc. and the Interpool, Inc. 2004
Nonqualified Stock Option Plan for Non-Employee, Non-Officer Directors. For
descriptions of these plans, see Item 11 below and Note 14 to the Consolidated
Financial Statements.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2004 Stock Option Plan for Key Employees and  
      Directors of Interpool, Inc. | Vote For
17,371,197 | Vote Against
5,131,673 | Abstained
3,528
| | --------------------------------------------------------------------------------- | ------------------- | ---------------------- | ---------------

| | Interpool, Inc. 2004 Non-Qualified Stock Option 
      Plan for Non-Employee, Non-Officer Directors | Vote For
19,871,541 | Vote Against
 2,624,529 | Abstained
10,328
| | --------------------------------------------------------------------------------------------------- | ------------------- | ----------------------- | ----------------

| | 4. | Our shareholders also ratified the appointment of KPMG, LLP as our independent
certified public accountants for the fiscal year ending December 31, 2004.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | Vote For | Vote Against | Abstained
| | -------- | ------------ | ---------

| | 22,156,535 | 349,822 | 41
| | ---------- | ------- | --

24

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Our common stock was listed on the New York Stock Exchange from
1993 to December 2003. Effective December 29, 2003, due to the delay in filing
our 2002 Annual Report on Form 10-K with the Securities and Exchange Commission,
our common stock and other listed securities were suspended from trading on the
New York Stock Exchange, and delisting proceedings were commenced. Although we
filed our 2002 Form 10-K on January 9, 2004 and appealed the suspension, our
listed securities were delisted in April 2004. During the period the suspension
and delisting were in effect, our common stock was traded on the
over-the-counter market under the symbol IPLI. In December 2004, after making
all delinquent SEC filings, we applied for relisting on the New York Stock
Exchange and on January 13, 2005, our common stock and other listed securities
were relisted on the New York Stock Exchange. Our common stock is traded on the
New York Stock Exchange under the symbol "IPX". The following table sets forth
for the periods indicated commencing on January 1, 2003, the high and low
closing sale prices for our common stock. All share and per share data have been
rounded to the nearest cent.

`HIGH        LOW
        Fiscal Year 2003                                 ----        ----
          First Quarter.............................     $16.83      $13.14
          Second Quarter............................      18.60       13.88
          Third Quarter.............................      18.55       15.50
          Fourth Quarter............................      19.40       12.00*
        Fiscal Year 2004*
          First Quarter.............................     $16.50      $14.00
          Second Quarter............................      17.50       15.50
          Third Quarter.............................      19.10       16.50
          Fourth Quarter............................      24.00       17.25

       *   The low closing price for the fourth quarter of 2003 and all closing
           prices for 2004 were obtained from the over-the-counter market.`

As of March 1, 2005 there
were approximately 769 stockholders of record of our common stock. On March 1,
2005, the last reported sale price of our common stock on the New York Stock
Exchange was $23.10 per share.

We paid a quarterly
dividend of $0.0625 per share on our common stock in January, April, July and
October of 2004 and 2003. We paid a quarterly dividend of $0.055 per share on
our common stock in January, April, July and October of 2002 and a quarterly
dividend in the amount of $0.05 per share on our common stock in July and
October 2001. Prior to July 1, 2001, we had paid a quarterly dividend of $0.0375
per share on our common stock for the prior 17 quarters.

25

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In connection with our
delayed SEC filings and the receipt of waivers from our lenders necessitated by
the delayed filings, beginning in January 2004, the members of our Board of
Directors and certain of their affiliates who own shares of our common stock
agreed to defer their receipt of any dividend payments until we were in
compliance with all SEC filing requirements. As of December 27, 2004, we were no
longer delinquent with regard to our SEC filings and the deferred dividends
described above were paid prior to December 31, 2004.

The Board of Directors has
instituted a dividend reinvestment plan, which went into effect at the end of
2001. The plan is non-dilutive; shares required for the plan are acquired on the
open market by an independent third party plan administrator and not through the
issuance of additional shares by us.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets
forth our selected historical consolidated financial data, for the periods and
at the dates indicated. This information should be read in conjunction with our
historical consolidated financial statements included in this Annual Report on
Form 10-K and the notes thereto.

SELECTED FINANACIAL DATA(in thousands, except per share amounts)

`YEAR ENDED DECEMBER 31
                                           2004           2003(1)(2)    2002(1)(2)(3)   2001(1)(2)(4)    2000(1)(2)(4)(5)
                                           ----           ----------    ------------    ------------     ----------------
 INCOME STATEMENT DATA:
 Equipment leasing revenue                $388,183         $374,287        $325,080        $338,718          $287,553

 Depreciation and amortization of
 leasing equipment                         $89,458          $87,498         $88,707         $79,678           $66,075

 Interest expense                         $112,013         $106,688        $108,344         $48,270           $87,804

 Income before cumulative effect of
 change in accounting principle             $8,429          $41,190          $4,389         $28,104           $44,040

 Income per share:
 Basic                                       $0.31            $1.51           $0.16           $1.03             $1.61
                                             =====            =====           =====           =====             =====
 Diluted                                     $0.29            $1.42           $0.15           $0.97             $1.61
                                             =====            =====           =====           =====             =====
 Weighted average shares
 outstanding:

 Basic                                      27,380           27,365          27,360          27,417            27,421

 Diluted                                    28,960           30,396          29,202          28,973            27,426
 Cash dividends declared per common
 share                                       $0.25            $0.25         $0.2275         $0.1925             $0.15

                                           2004              2003            2002            2001             2000
 BALANCE SHEET DATA:                       ----              ----            ----            ----             ----

 Cash and cash equivalents                $309,458         $141,019        $170,613        $103,760          $157,224

26

 Net investment in direct financing       $363,445         $426,815        $334,129        $275,372          $213,180
 leases

 Leasing equipment, net                 $1,579,196       $1,636,716      $1,557,689      $1,335,610        $1,231,037

 Total assets                           $2,404,086       $2,373,036      $2,241,944      $1,923,052        $2,204,590

 Debt and capital lease obligations     $1,718,198       $1,715,687      $1,672,211      $1,429,680        $1,706,985

 Stockholders' equity                     $394,186         $383,640        $336,996        $352,072          $341,322`

|(1) | As disclosed in our Quarterly Report on Form 10-Q for the nine months ended
September 30, 2004, the Company uncovered an immaterial error related to
financial statements not part of any current filing, which has been reported as
an adjustment to opening retained earnings. For further information regarding
this adjustment, see Note 1 to the Consolidated Financial Statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Certain reclassifications have been made to the 2003, 2002, 2001 and 2000
amounts in order to conform to the 2004 presentation.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(3) | Effective June 27, 2002, our financial statements include CAI as a consolidated
subsidiary. (See Note 11 to the Consolidated Financial Statements.)
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | As a result of adopting Statement of Financial Accounting Standards No. 145
("SFAS 145") extraordinary gains related to the retirement of debt during the
years ended December 31, 2001 and 2002, respectively, have been reclassified
into operating income on a pretax basis. Income before cumulative effect of
change in accounting principle include net of tax amounts of $558 and $840 for
years ended December 31, 2001 and 2000, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The 2000 income statement data excludes $660 resulting from the cumulative
effect of change in accounting principle. The 2000 results include earnings from
the assets acquired from Transamerica ("TA"), which we acquired on October 24, 2000, with an
effective date of October 1, 2000. The 2000 results include only the chassis
acquired from TA as the rail trailers and domestic containers were identified as
assets held for sale at the time of purchase.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27

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ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
          
     RESULTS OF OPERATIONS

The following discussion of
our historical financial condition and results of operations should be read in
conjunction with the historical consolidated financial statements and the notes
thereto and the other financial information appearing elsewhere in this report.
(All fleet statistics including the size of the fleet, utilization of the
leasing equipment or the rental rates per day that are set forth in this Annual
Report on Form 10-K include our equipment, including that portion of our
equipment managed by CAI. To the extent that our equipment is managed by CAI,
the equipment is considered fully utilized since it is not available for us to
put on hire regardless of whether all of the units are generating equipment
leasing revenue. All equipment owned by CAI or managed by CAI (with the
exception of equipment owned by us and managed by CAI), is excluded from all
statistics, unless otherwise indicated. In addition, all of our chassis assigned
to chassis pools are considered fully utilized. This exclusion of information
relative to CAI, unless indicated otherwise, provides a focus on the drivers
which are critical to our core business.)

The information in this
Annual Report on Form 10-K contains certain "forward-looking statements" within
the meaning of the securities laws. These forward-looking statements reflect the
current view of the Company with respect to future events and financial
performance and are subject to a number of risks and uncertainties, many of
which are beyond our control. All statements other than statements of historical
facts included in this report, including the statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
regarding our strategy, future operations, financial position, estimated
revenues, projected costs, prospects, plans and objectives of management are
forward-looking statements. When used in this report, the words "will,"
"believe," "anticipate," "intend," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words.

All forward-looking
statements speak only as of the date of this report. We do not undertake any
obligation to update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise. Although we believe
that our plans, intentions and expectations reflected in or suggested by the
forward-looking statements we make in this report are reasonable, we can give no
assurance that these plans, intentions or expectations will be achieved. Future
economic and industry trends that could potentially impact revenues and
profitability are difficult to predict.

Our Form 10-K for the year
ended December 31, 2002 was filed in January 2004 and contained, among other
things, restated consolidated financial statements for the years ended December
31, 2001 and 2000 and the first three quarters of 2002. For additional
information regarding this restatement, see Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our 2002
Form 10-K.

In preparation for the 2003
audit, we determined that the previously reported quarterly results for the
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003 required
restatement. For additional information regarding this restatement, see Note 19
in our 2003 Form 10-K.

28

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During the preparation of
the third quarter of 2004 financial statements, we uncovered an immaterial error
related to financial statements not part of any current filing, which has been
reported as an adjustment to opening retained earnings. For further information
regarding this adjustment, see Note 1 to the Consolidated Financial Statements.
All financial information for 2004 and prior periods included in this Report on
Form 10-K gives effect to the adjustment.

During the preparation of
the December 31, 2004 consolidated financial statements, a weakness in our
documentation of certain hedging relationships was uncovered. It was determined
that the previously reported quarterly results for March 31, 2004, June 30, 2004
and September 30, 2004 required restatement. For additional information
regarding this restatement, see Note 18 to the Consolidated Financial
Statements.

Certain reclassifications have been made to the 2002 and 2003
amounts in order to conform to the 2004 presentation. In addition, we
determined it was necessary to change the classification of certain types of
revenue which had been previously reported as a reduction to lease operating
expenses. This revenue consists primarily of fees charged to lessees for
handling, repositioning and repairs which had previously reduced the related
costs for these services. This revenue is reported separately as other revenue
on the face of our Consolidated Statements of Income. These reclassifications
have no impact on net income.

General

Interpool is one of the
world's leading suppliers of equipment and services to the intermodal
transportation industry. We believe we are the world's largest lessor of
intermodal container chassis and a world-leading lessor of international dry
freight standard containers used in international trade.

Our primary sources of
equipment leasing revenue are derived from operating leases and income earned on
direct financing leases. We generate this revenue through leasing transportation
equipment, primarily intermodal container chassis and intermodal dry freight
standard containers. Operating lease equipment (operating leases) and direct
financing leases are the two major asset types that generate this revenue. In
the case of operating lease equipment, we retain the substantive risks and
rewards of equipment ownership. In the case of direct financing leases, the
lessee generally has the substantive risks and rewards of equipment ownership
and the right to purchase the equipment at the end of the lease term. This
equipment leasing revenue is supplemented by other sources of revenue such as
fees charged to the lessee for handling, delivery and repairs earned under
contractual agreement with the lease customer. Equipment leasing revenue derived
from an operating lease generally consists of the monthly lease payments from
the customer. For direct financing leases, the lessee's payment is
segregated into principal and interest components much like a loan. The interest
component, calculated using the effective interest method over the term of the
lease, is recognized by us as equipment leasing revenue. The principal component
of the direct financing lease payment is reflected as a reduction to the net
investment in the direct financing lease.

Our mix of operating and
direct financing leases is a function of customer preference and demand and our
success in meeting those customer requirements. An operating lease, during its
initial lease term, will generally be more profitable than a direct financing
lease, primarily due to the return of principal inherent in a direct financing
lease, which is usually greater than the depreciation expense associated with an
operating lease. However, after the initial term (and any renewal) of an
operating lease expires, the operating lease will have redeployment costs and
related risks that are avoided under a direct financing lease. In evaluating the
revenue performance of our operating lease portfolio, the primary factors
considered are utilization and daily rental rates.

29

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During the year ended
December 31, 2004, as compared with the year ended December 31, 2003, our
equipment leasing revenues increased due to strong demand for equipment,
resulting in a favorable increase in utilization rates for our chassis and
continued high utilization rates for our containers. During 2004, the size of
our chassis fleet was at essentially the same level as the earlier period.
However, our fleet of containers decreased from 870,000 twenty-foot equivalent
units ("TEU") to 808,000 TEU primarily due to the number of direct
financing leases maturing being greater than the investment in new direct
financing lease containers. Utilization of our container and chassis fleets
(including equipment on both operating and direct financing leases) was 99% and
97%, respectively, at December 31, 2004.

Although daily rental rates
for new long-term leases in our operating lease container fleet remained
relatively flat during 2003, container daily lease rates on new equipment rose
in 2004 and are expected to continue to increase in 2005 due to the increased
demand for equipment as well as the increases in costs of new containers.
However, daily rental rates for used containers are very competitive and
expiring operating leases for larger contracts are sometimes renewed at daily
rental rates that are lower than the rental rates in the initial lease term.

Lease rates for new chassis
were essentially flat during the first half of 2004. They rose in the last half
of 2004, and continue to rise thus far in 2005. Price increases for new chassis
are largely driven by the increase in steel costs, but have increased at a
slower rate than container costs due to the large number of sub-assemblies that
make up a chassis. Many of these sub-assemblies were in inventory prior to the
steel cost increases and only recently have started to rise in price. The effect
of higher material costs has been tempered by the recent shift in the
manufacturing base for chassis toward China, where there are significantly lower
labor and overhead costs. Lease rates for used chassis remained flat during the
first half of 2004, but have been rising since then. The increases are due
largely to the depletion of used chassis inventories and the rising price of new
and remanufactured chassis.

We anticipate that industry
demand for chassis and containers will continue to be strong well into 2006.
This projection is supported by the fact that all major shipyards are reporting
large order backlogs through 2007. The world cellular container ship fleet is
expected to increase by 13.3% in 2005, 15.2% in 2006 and 9.3% in 2007 (excluding
scrapping) as reported in the November 2004 edition of Containerisation
International. As of October 1, 2004, the total order book was for 892 ships
with a total capacity of approximately 3.3 million TEU, or approximately 50% of
the world cellular container ship fleet.

We believe a number of
factors have contributed to the strong demand for equipment in the industry.
From 2002 to 2003, according to the Containerisation International Yearbook
2005, global containerized traffic increased by 9.6%, from 276.6 million TEU
in 2002 to 303.1 million TEU in 2003, fueling demand for transportation
equipment generally. In addition, as mentioned above, several major shipping
lines started to bring new, very large 8,000-9,000 TEU ships to the West Coast
of the United States in the fall of 2004. When ships of this size are unloaded,
they require the use of a larger number of chassis to move the containers to
local railroad terminals or their final destinations. The large quantity of
vessels on order will also require additional containers to support them. Demand
for chassis has also been affected by the inability of large, fully loaded ships
to pass through the Panama Canal. These ships typically discharge their cargo on
the West Coast of the United States, with the cargo being moved by "land
bridges", by truck and rail, inland and across the country, using chassis
at various stages during this process. At the same time, the demand for chassis,
along with increased congestion at many of the rail and marine facilities around
the country, have fueled an increase in the pooling of chassis for greater
efficiencies. Correspondingly, we have experienced an increase in demand for our
"PoolStat" chassis management services as more shipping
lines are entering into these chassis sharing arrangements. In addition, we have
continued to experience high demand in our own Trac Lease neutral chassis pools
at railroads and marine terminals.

30

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Our container fleet (including units on hire as direct financing
leases) decreased in size by 7.0% from December 31, 2003 to December 31, 2004,
while our chassis fleet held at essentially the same level. We were not able to
take full advantage of the strong customer demand for containers and chassis
during the latter part of 2003 and the first nine months of 2004, as a result of
the delay in filing our Annual Report on Form 10-K for 2002, our Quarterly and
Annual Reports on Forms 10-Q and 10-K for 2003 and our Quarterly Reports on Form
10-Q for 2004 which adversely affected our ability to obtain the financing
necessary for us to purchase equipment for lease to customers. In addition, the
requirement to maintain certain levels of unrestricted cash continued to limit
the amount of new business we have written with our customers during the first
nine months of 2004. This requirement was eliminated when our revolving credit
facility and one other facility were repaid in full during November 2004. We
have successfully completed $747.0 million of financings and commitments from
January 1, 2004 to December 31, 2004, of which $517.0 million is secured by
equipment and leases, while the remaining $230.0 million is unsecured debt. Of
the $517.0 million of new financings and commitments secured by equipment and
leases, approximately $333.0 million was used (1) to satisfy required payments
to equipment manufacturers, (2) to finance previously unencumbered assets, (3)
to re-finance existing secured debt, and (4) for other working capital
requirements. This left $184.0 million available under these facilities for
future use at December 31, 2004. Of the $230.0 million of unsecured debt, one
financing for $150.0 million was completed during September 2004, with $49.1
million of the proceeds concurrently used to reduce existing unsecured debt. A
second financing for $80.0 million of unsecured debt was completed during
November 2004. (For further discussion of these transactions, see "Debt and
Capital Lease Obligations" below and Note 4 to the Consolidated Financial
Statements.) In addition, our cost of new financing during 2004 was higher than
we experienced in 2003, due to higher interest rates in general and increased
borrowing costs resulting from the lowering of our credit ratings over the past
year. The increase in interest expense during 2004 was the result of increased
interest rates and bank fees paid in order to obtain waivers related to our
delayed filings, offset by carrying lower debt balances as compared to the prior
year period. We regularly evaluate financing proposals which, when coupled with
available cash balances and funds available under commitments mentioned above,
could be used for growth, for refinancing existing facilities and for working
capital.

31

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As of December 31, 2004, our commitments for future capital
expenditures totaled approximately $149.6 million with approximately $116.7
million committed for fiscal 2005. Our available liquidity at December 31, 2004,
including $223.0 million available under credit facilities, was
$507.6 million after deducting $24.9 million of restricted cash. Required
debt repayments and capital lease payments for the next 12 months totaled $240.6
million. Based on our existing cash balances, financings closed, and our
financial projections of operating cash flow for the future, we believe that we
will have sufficient liquidity to grow our portfolio while meeting our
obligations and commitments as they become due.

Other than interest expense and depreciation expense on our
operating lease equipment, our primary expenses are corporate administrative and
lease operating expenses, which include maintenance and repair expense, as well
as storage and positioning expense. Our lessees are generally responsible for
lease operating expenses during the term of their lease. Our corporate
administrative expenses are primarily employee related costs such as salary
expense, costs of employee benefits, information technology expenses and travel
and entertainment costs, as well as expenses incurred for outside services such
as legal, consulting and audit related fees. During 2004, lease operating and
administrative expenses as a percentage of total revenues were 35.9%, compared
to 38.9% during the same period in 2003. The additional personnel and systems
enhancements we are adding to improve our internal controls, as well as
additional procedures being implemented to comply with Sarbanes-Oxley
requirements, have added incremental administrative expenses in 2004. During
2004, the incremental administrative expenses were offset by a reduction in
legal fees resulting from the Audit Committee and SEC investigations and a
reduction in storage costs resulting from an increase in fleet utilization.

During 2003 and 2004, we
incurred significant costs related to the investigations by our Audit Committee
and the SEC, separation agreements with our former Chief Financial Officer and
our former President, legal representation for the Company as well as our
officers, directors and employees, the payment of fees in order to obtain
necessary waivers from our financial institutions and, during 2004, the
proceedings before The New York Stock Exchange to delist our securities. We will
continue to incur additional costs relating to the formal investigation by the
SEC and the class action lawsuit, including the cost of legal representation for
the Company and our current and former officers, directors and employees.

Non-performing receivables
totaled $12.5 million at December 31, 2004 compared with $12.8 million at
December 31, 2003. Reserves of $11.8 million and $11.9 million, respectively,
have been established against these non-performing receivables. During 2004,
receivable write-offs net of recoveries totaled $3.7 million as compared with
$1.9 million for the same period in 2003.

Our net income for the year
ended December 31, 2004 was $8.4 million as compared with $41.2 million for the
year ended December 31, 2003, a reduction of 79.6%. The December 31, 2004 net
income included non-cash expense of $49.2 million (for which no tax benefit is
derived) resulting from the change in fair value of the warrants issued by us during
September 2004 in connection with a Securities Purchase Agreement pursuant to
which we sold $150.0 million of 6.0% notes due in 2014 (See Note 4 to the
Consolidated Financial Statements). In addition, our 2004 net income included an
after tax gain on the settlement of an insurance litigation of $5.2 million. Our
net income per share on a fully diluted basis for the year ended December 31,
2004 and 2003 was $0.29 and $1.42, respectively. Annualized return on average
stockholders' equity was 2.2% for the year ended December 31, 2004 compared to
11.5% for the year ended December 31, 2003. Excluding the non-cash expense for
the change in the fair value of the warrants and the gain on settled insurance
litigation, the annualized return on average stockholder's equity was 13.5% for
the year ended December 31, 2004.

32

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We conduct business with shipping line customers throughout the
world and are therefore subject to the risks of operating in disparate political
and economic conditions including those associated with increasing oil prices.
Offsetting this risk is the worldwide nature of the shipping business and the
ability of our shipping line customers to shift their operations from areas of
unfavorable political and/or economic conditions to more promising areas.
Approximately 99% of our revenues are billed and paid in U.S. dollars. We
believe these factors substantially mitigate foreign currency rate risks.

Our container leasing operations are primarily conducted through
our subsidiary, Interpool Limited, a Barbados corporation, as well as through
CAI, our consolidated 50% owned subsidiary. Our effective tax rate benefits
substantially from the application of an income tax convention, pursuant to
which the profits of Interpool Limited from international container leasing
operations are exempt from federal taxation in the United States. As discussed
below, these profits are subject to Barbados tax at rates that are significantly
lower than the applicable rates in the United States. For further information
regarding the United States and Barbados Tax Treaty and the recently-enacted
Protocol to this Treaty, see Note 2 to the Consolidated Financial Statements and
the "United States Federal Income Tax" section of Management's Discussion and
Analysis for this Form 10-K.

The sections that follow analyze our results of operations by
financial statement caption and provide a more detailed discussion of our
performance for the year ended December 31, 2004 as compared to December 31,
2003 and for the year ended December 31, 2003 compared to the year ended
December 31, 2002.

Results of Operations
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Equipment Leasing
Revenue. Our equipment leasing revenues increased to $388.2 million for
the year ended December 31, 2004, from $374.3 million in the year ended December
31, 2003, an increase of $13.9 million or 4%.

Container leasing segment
revenues increased to $181.5 million for the year ended December 31, 2004, from
$175.1 million in the year ended December 31, 2003, an increase of $6.4 million
or 4%. The increase was primarily attributable to an increase in container
operating lease revenues of $9.4 million, partially offset by a decrease in
direct financing lease revenues of $3.1 million. The incremental container
operating lease revenues, as compared to the prior year period, are primarily
due to our container operating lease fleet which increased in size by 7%. The
daily rental rates for the overall container fleet were lower, partially
offsetting the incremental revenue resulting from the increased average size of
our container operating lease fleet. Utilization rates of our container fleet
have historically been calculated assuming containers managed by CAI were 100%
utilized since they were not available to us to put on hire regardless of
whether all of these units are generating revenue. Under this method,
utilization rates of our container operating lease fleet were 99% at December
31, 2004 and 2003. The utilization rates of our operating lease container fleet,
considering CAI's actual utilization rates for our operating lease
containers managed by CAI, were 96% and 94% at December 31, 2004 and 2003,
respectively.

33

---

Domestic intermodal
equipment segment revenues increased to $206.7 million for the year ended
December 31, 2004, from $198.5 million in the year ended December 31, 2003, an
increase of $8.2 million or 4%. The increase was attributable to an increase in
chassis operating lease revenues of $9.4 million, partially offset by a decrease
in direct financing lease revenues of $1.2 million. The incremental chassis
operating lease revenues are primarily due to an increase in the utilization and
daily rental rates for our chassis fleet as compared to the prior year period.
The utilization rates of our domestic intermodal chassis operating lease fleet
were 97% and 96% at December 31, 2004 and 2003, respectively.

Computer leasing equipment
segment revenues decreased $0.6 million as compared to the prior year period due
to the liquidation of the computer leasing segment which was completed during
the first quarter of 2004.

Other Revenue. Our other revenues decreased to
$16.2 million for the year ended December 31, 2004, from $27.8 million in the
year ended December 31, 2003, a decrease of $11.6 million or 42%.

Container leasing segment
other revenues decreased to $8.7 million for the year ended
December 31, 2004, from $11.8 million in the year ended December 31,
2003, a decrease of $3.1 million or 26%. The decrease was primarily
attributable to a decrease in container positioning revenue of $2.0 million as
well as a reduction in billable repairs to our lessees at the termination of a
lease of $1.2 million.

Domestic intermodal
equipment segment other revenues decreased to $7.5 million for the year
ended December 31, 2004, from $16.0 million in the year ended December 31,
2003, a decrease of $8.5 million or 53%. The decrease was primarily
attributable to a reduction in billable services for positioning of equipment
provided to the United States military of $4.0 million and a reduction in
billable repairs to our lessees at the termination of a lease of
$4.4 million.

Lease Operating and
Administrative Expenses. Our lease operating and administrative expenses
decreased to $145.3 million for the year ended December 31, 2004 from
$156.4 million in the year ended December 31, 2003, a decrease of $11.1 million or
less than 7%.

The decrease was primarily due to:

| |  | A decrease in storage costs of $4.7 million primarily due to increased
utilization experienced within CAI's container fleet as well as within the
domestic intermodal chassis product line.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A decrease of $2.7 million in positioning and handling expenses, primarily
due to a reduction in services incurred for the United States military.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

34

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| |  | A decrease in maintenance and repair costs of $2.6 million primarily due to a
decrease in repairs of equipment for both the chassis and container product
lines.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A decrease in legal and consulting fees of $2.0 million primarily due to a
reduction in legal fees related to the Audit Committee and SEC investigations in
2003 and the class action lawsuit, partially offset by increased consulting
services.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A decrease in commission expense of $1.1 million primarily due to the write-off
of deferred sales commissions in the prior year period, as well as an overall
reduction in agency commissions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in foreign exchange gains of $1.1 million primarily due to the
effects of foreign currency fluctuations.
| | - | --------------------------------------------------------------------------------------------------------------------

| |  | A decrease in travel and entertainment expense of $0.7 million primarily due to
reduced executive travel incurred within the container leasing segment.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in salary expense of $3.9 million primarily related to an increase
in headcount and other employee related costs, partially offset by the expenses
recorded in 2003 related to separation agreements with our former Chief
Financial Officer who resigned in July 2003 and our former President who
resigned in October 2003.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A further breakdown of the lease operating and administrative
expense variances, as compared to the prior period, by reportable segment is as
follows:

| |  | Container leasing segment lease operating and administrative expenses decreased
to $46.7 million for the year ended December 31, 2004 from $54.2 million in the
year ended December 31, 2003, a decrease of $7.5 million or 14%. This
decrease can be summarized as follows:
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Container
                (Dollars in millions)                          Leasing
                ---------------------                         ---------
                Storage expense                               $(3.9)
                Legal and consulting fees                      (1.7)
                Commissions expense                            (1.1)
                Exchange                                       (1.1)
                Maintenance and repairs expense                (0.8)
                Travel and entertainment expense               (0.7)
                Positioning and handling expense               (0.5)
                Salaries expense                                3.0
                Other, net                                     (0.7)
                                                             -------
                Total                                        $ (7.5)
                                                             =======`

| |  | Domestic intermodal equipment segment lease operating and administrative
expenses decreased to $98.6 million for the year ended December 31, 2004 from
$102.1 in the year ended December 31, 2003, a decrease of $3.5 million or 3%.
This decrease can be summarized as follows:
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

35

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`Domestic
                                                           Intermodal
                (Dollars in millions)                       Equipment
                ---------------------                      ----------
                Positioning and handling expense             $(2.2)
                Maintenance and repairs expense               (1.8)
                Storage expense                               (0.8)
                Legal and consulting fees                     (0.3)
                Salaries expense                               0.9
                Other, net                                     0.7
                                                             ------
                Total                                        $(3.5)
                                                             ======`

During 2003 and 2004, we
incurred significant costs related to the investigations by our Audit Committee
and the SEC, separation agreements with our former Chief Financial Officer and
our former President, legal representation for the Company as well as our
officers, directors and employees, the payment of fees in order to obtain
necessary waivers from our financial institutions and, during 2004, the
proceedings before The New York Stock Exchange to delist our securities. We will
continue to incur additional costs relating to the formal investigation by the
SEC and the class action lawsuit including the cost of legal representation for
the Company and our current and former officers, directors and employees. The
costs incurred during 2003 and 2004 are as follows:

`Year Ended      Year Ended
                                                    December 31,     December 31,
                (Dollars in millions):                 2003             2004
                ----------------------                 ----             ----
                Audit fees for the reaudits
                    and restatements                   $3.6             $0.5
                Cost of investigations                  5.9              0.2
                Legal and consulting fees               3.2              2.4
                Separation agreements                   5.9              0.3
                Bank waiver fees                        1.6              2.5
                                                        ---              ---
                Amounts before tax                    $20.2             $5.9
                                                      =====             ====
                Amounts net of tax                    $12.9             $4.0
                                                      =====             ====`

Provision for
Doubtful Accounts. Our provision for doubtful accounts decreased to $1.5
million for the year ended December 31, 2004 from $4.2 million for the year
ended December 31, 2003. The decrease was primarily attributable to an
improvement in the risk profile of our outstanding receivables, partially offset
by the reversal during the prior year period of bad debt provisions previously
recorded by Microtech, without a similar reversal of bad debt provisions during
the current year period ($0.4 million). During the year ended December 31, 2004,
our non-performing receivables decreased $0.3 million ($12.5 million at December
31, 2004 and $12.8 million at December 31, 2003). As of December 31, 2004 and
December 31, 2003, our non-performing receivables, net of applicable reserves,
were 1.01% and 1.27%, respectively, of accounts receivable, net. Our provision
for doubtful accounts is provided based upon a quarterly review of the
receivables. This review is based on the risk profile of the receivables, credit
quality indicators such as the level of past-due amounts and economic
conditions, as well as the value of underlying collateral in the case of direct
financing lease receivables.

36

---

Fair Value Adjustment
for Derivative Instruments. Our non-cash fair value adjustment
for derivative instruments income amounted to $2.4 million for the year ended
December 31, 2004 as compared to income of $0.8 million for the year ended
December 31, 2003. The income for the year ended December 31, 2004, as well as
the prior year period, was primarily due to the change in fair value of interest
rate swap agreements held which do not qualify as cash flow hedges.

Fair Value Adjustment
for Warrants. Our non-cash fair value adjustment for warrants expense
amounted to $49.2 million for the quarter and year ended December 31, 2004,
without a similar item in the prior year period. The expense for the year ended
December 31, 2004 was due to the change in the fair value of the Warrants issued
during September 2004 in connection with the 6.0% Notes, which Warrants are
classified as a liability on the accompanying Consolidated Balance Sheets. Due
primarily to the increase in the market value of our common stock during the last quarter
of 2004, the fair market value of these Warrants increased from $22.5 million at
September 30, 2004 to $71.7 million at December 31, 2004. For the period of time
that these Warrants are classified as a liability, any further increase in the
fair market value of the Warrants will result in an additional non-cash expense
to the Consolidated Statements of Income. If the fair market value of the
Warrants decreases in the future, we will record non-cash income in our
Consolidated Statements of Income. Accordingly, future changes to the fair
market value of these Warrants have the potential to cause volatility in our
future results.

Depreciation and
Amortization of Leasing Equipment. Our depreciation and
amortization expenses increased to $89.5 million for the year ended December 31,
2004, from $87.5 million for the year ended December 31, 2003, an increase of
$2.0 million or 2%. This increase was primarily due to additions to our
operating lease fleet.

Impairment of Leasing
Equipment.Our impairment of leasing equipment expense decreased
to $4.6 million for year ended December 31, 2004, from $9.0 million for the year
ended December 31, 2003, a decrease of $4.4 million. This decrease was primarily
due to a reduction in impairment losses related to damaged equipment that was
subsequently remanufactured ($3.0 million), and a decrease in impairment losses
for idle equipment ($1.5 million).

(Income)/Loss for
Investments Accounted for Under the Equity Method. The increase
in (income)/loss for investments accounted for under the equity method of $2.1
million during the year ended December 31, 2004 resulted primarily from improved
earnings for certain investments accounted for under the equity method.

Gain on Insurance Settlement. During the year
ended December 31, 2004, we signed an agreement settling the lawsuit
and claims under our insurance policy related to the default of a South Korean
Customer. In connection with this settlement, we recognized a pre-tax
gain of $6.3 million related to the $26.4 million settlement of the claim during
the three months ended June 30, 2004. (See Note 16  Settled Insurance
Litigation).

Other (Income)/Expense, Net. We had other income
of $15.7 million during the year ended December 31, 2004 compared to $5.1
million of other income for the year ended December 31, 2003. The increase of
$10.6 million was primarily due to:

37

---

| |  | An increase in gains on equipment sales of $13.7 million,
including an increase of $10.4 million in gains on equipment sales to third
parties recognized by CAI. The increase in gains on equipment sales recognized
by CAI was due to an increase in volume, as well as an increase in the returns
generated on the equipment sales due to the favorable market conditions within
the container resale sector. In addition, during the fourth quarter of 2004, we
sold certain assets of CTC Container Trading (U.K.) Limited, a wholly-owned
subsidiary which leased specialized cargo carrying units and other equipment for
use by companies operating in the North Sea, which resulted in a pre-tax profit
of approximately $0.9 million. The remainder of the increase in gains on
equipment sales was primarily due to the favorable market conditions we
experienced in the resale sector for containers as compared to the prior year
period, as well as sales of certain railcars which contributed favorably to
profits on equipment sales.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A $2.9 million gain recorded in October, 2003 resulting from the consolidation
of assets and liabilities of a special purpose entity (which no longer qualified
for off-balance sheet treatment for accounting purposes) formed as part of our
container lease securitization program. This gain resulted primarily from the
favorable credit loss experience through September 30, 2003 on the underlying
direct financing leases as compared to the assumed credit losses of 1.5%. See
Note 7 to the Consolidated Financial Statements for further discussion of the
accounting for this special purpose entity.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest Expense. Our interest expense increased to $112.0 million in the year ended
December 31, 2004 from $106.7 million in the year ended December 31, 2003, an
increase of $5.3 million or 5%. The increase in interest expense was primarily
attributable to an increase in amortization of deferred financing fees of $2.8
million, increased interest rates resulting in increased interest expense of
$2.6 million and an increase of $0.9 million for bank fees in order to obtain
waivers related to our delayed filings. These increases were partially offset by
reduced borrowings resulting in a reduction in interest expense of $1.0 million.

Interest Income. Our interest income decreased to $3.4 million in the year ended
December 31, 2004 from $4.0 million in the year ended December 30, 2003, a
decrease of $0.6 million or 15%. The decrease in interest income was primarily
due to reduced earnings on invested cash balances due to lower interest rates,
partially offset by an increase in average invested balance.

Minority Interest Expense, Net.The change in
minority interest expense, net of $6.5 million for the year ended December 30,
2004 as compared to the prior year was primarily due to a $13.5 million
increase in net income reported by our 50%-owned consolidated subsidiary, CAI.

Provision for Income Taxes. We recorded an income
tax provision of $13.7 million for the year ended December 31, 2004 as compared
to $3.3 million for the year ended December 31, 2003. This increase was
principally caused by an increase in taxable income of $26.9 million as adjusted
for the $49.2 million permanent tax difference that arose from the non-cash
expense pertaining to the Warrant liability. In addition, a larger proportion of
taxable income was generated from United States sources as compared to
lower-taxed international source income.

38

---

Interpool Limited's pre-tax income (international sourced
income) is taxed at a low rate (approximately 3%) due to the income tax
convention between the United States and Barbados. The domestic intermodal
division's pre-tax income (United States sourced income), including corporate
activities and the results of operations of CAI, is taxed at the higher United
States tax rates. During the year ended December 31, 2004, 36% of taxable
income was generated from United States sources as compared to a loss
experienced during the year ended December 31, 2003, thus contributing to
the increase in the provision for income taxes.

Net
Income. As a result of the factors described above, our net
income decreased to $8.4 million in the year ended December 31, 2004 from $41.2
million in the year ended December 31, 2003.

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

Equipment Leasing
Revenue. Our equipment leasing revenues increased to $374.3
million for the year ended December 31, 2003, from $325.1 million in the year
ended December 31, 2002, an increase of $49.2 million or 15%.

Container leasing segment
revenues increased to $175.1 million for the year ended December 31, 2003, from
$138.3 million in the year ended December 31, 2002, an increase of $36.8 million
or 27%. The increase was attributable to $17.1 million of incremental leasing
revenues as a result of consolidating the activities of CAI for a full year in
2003 as compared to approximately six months in 2002. In addition, container
operating lease revenues increased $10.1 million and direct financing lease
revenues increased $9.6 million. The incremental container operating lease
revenues are primarily due to our container operating lease fleet which
increased in size by 11% and an increase in the utilization rates for our
containers as compared to the prior year period. The daily rental rates for
containers were relatively flat as compared to the prior year period.
Utilization rates of our container fleet have historically been calculated
assuming containers managed by CAI were 100% utilized since they were not
available to us to put on hire regardless of whether all of these units are
generating revenue. Under this method, utilization rates of our container
operating lease fleet were 99% and 98% at December 31, 2003 and 2002,
respectively. The utilization rates of our operating lease container fleet,
considering CAI's actual utilization rates for our operating lease
containers managed by CAI, were 94% and 92% at December 31, 2003 and 2002,
respectively.

Domestic intermodal
equipment segment revenues increased to $198.5 million for the year ended
December 31, 2003, from $185.3 million in the year ended December 31, 2002, an
increase of $13.2 million or 7%. The increase was attributable to an increase in
chassis operating lease revenues of $12.4 million and direct financing lease
revenues which increased $0.8 million. The incremental chassis operating lease
revenues are primarily due to our chassis operating lease fleet which increased
in size by 5% and an increase in the utilization rates for our chassis as
compared to the prior year period. The daily rental rates for chassis were
relatively flat as compared to the prior year period. The utilization rates of
our domestic intermodal chassis operating lease fleet were 96% and 93% at
December 31, 2003 and 2002, respectively.

Computer leasing equipment
segment revenues decreased to $0.6 million for the year ended December 31, 2003,
from $1.5 million in the year ended December 31, 2002, a decrease of $0.9
million or 60%. This decrease is due to the liquidation of the computer leasing
segment which was taking place throughout 2003.

39

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Other Revenue.Our other revenues increased to
$27.8 million for the year ended December 31, 2003, from $19.9 million in the
year ended December 31, 2002, an increase of $7.9 million or 40%.

Container leasing segment
other revenues increased to $11.8 million for the year ended December 31, 2003,
from $8.1 million in the year ended December 31, 2002, an increase of
$3.7 million or 46%. The increase was primarily attributable to an increase
in container positioning revenue of $2.1 million and an increase in
billable repairs to our lessees at the termination of a lease of $1.6 million.

Domestic intermodal
equipment segment other revenues increased to $16.0 million for the year ended
December 31, 2003, from $11.8 million in the year ended December 31, 2002,
an increase of $4.2 million or 36%. The increase was primarily attributable to
an increase in billable services for positioning of equipment provided to the
United States military of $4.0 million.

Lease Operating and
Administrative Expenses. Our lease operating and administrative expenses
increased to $156.4 million for the year ended December 31, 2003 from $117.0
million in the year ended December 31, 2002, an increase of $39.4 million or
34%.

The increase was primarily due to:

| |  | An increase of $13.0 million resulting from the consolidation of the activities
of CAI for the full year in 2003 compared to approximately six months in the
prior year.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in legal fees of $11.6 million primarily related to the Audit
Committee and SEC investigations as well as the restatement of our 2001 and 2000
annual financial results and the financial results of the first three quarters
of 2002.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in salary expense of $5.9 million due to recording of substantially
all costs related to separation agreements with our former Chief Financial
Officer who resigned in July 2003 and our former President who resigned in
October 2003. In addition, salary expense increased by $2.6 million as a result
of an increase in headcount and other employee related costs.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in maintenance and repair costs of $4.7 million primarily due to the
refurbishment of chassis for use within the chassis product line and an increase
in repairs within the container product line.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in audit expenses of $4.3 million primarily as a result of the
restatement of our 2001 and 2000 annual financial results and the financial
results of the first three quarters of 2002.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

40

---

| |  | An increase of $3.5 million in positioning and handling expenses, primarily due
to an increase in services provided for the United States military during 2003.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in insurance expense of $0.8 million primarily due to premiums for
insurance coverage against customer insolvency and related equipment losses. The
premium rates and deductibles for this type of insurance have increased as a
result of higher claim experience by the Company and others within the industry.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A decrease in storage costs of $6.4 million primarily due to increased
utilization, as well as a reduction in storage related expenses as we sold
equipment recovered from a customer in default.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A decrease in computer leasing equipment segment lease operating and
administrative expenses of $0.4 million due to the liquidation of the computer
leasing segment which was taking place throughout 2003.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A further breakdown of the
lease operating and administrative expense variances, as compared to the prior
period, by reportable segment is as follows:

| |  | Container leasing segment lease operating and administrative expenses (excluding
the activities of CAI as CAI was a consolidated entity for the full year in 2003
compared to approximately six months in the prior year) increased to
$27.0 million for the year ended December 31, 2003 from $26.1 in the year
ended December 31, 2002, an increase of $0.9 million or 3%. This increase
can be summarized as follows:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Container
               (Dollars in millions)                       Leasing
               --------------------                       ----------
                Legal fees                                   $1.7
                Audit expense                                 1.3
                Salaries expense                              1.2
                Maintenance and repairs expense               1.2
                Insurance expense                             0.3
                Storage expense                              (5.0)
                Other, net                                    0.2
                                                             -----
                Total                                        $0.9
                                                             =====`

| |  | Domestic intermodal equipment segment lease operating and administrative
expenses increased to $102.1 million for the year ended December 31, 2003 from
$76.3 in the year ended December 31, 2002, an increase of $25.8 million or 34%.
This increase can be summarized as follows:
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Domestic
                                                           Intermodal
                (Dollars in millions)                       Equipment
                ---------------------                       -----------
                Legal fees                                   $9.9
                Salaries expense                              7.3
                Maintenance and repairs expense               3.5
                Positioning and handling expense              3.5
                Audit expense                                 3.0
                Insurance expense                             0.5
                Storage expense                              (1.4)
                Other, net                                   (0.5)
                                                            -------
                Total                                       $25.8
                                                            ========`

41

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Provision for
Doubtful Accounts. Our provision for doubtful accounts decreased
to $4.2 million for the year ended December 31, 2003 from $7.8 million for the
year ended December 31, 2002. The decrease was primarily attributable to reduced
provisions for Microtech ($2.0 million) and additional provisions for specific
customers which became part of our non-performing receivables during 2002.
During 2003, our non-performing receivables increased $1.7 million ($12.8
million at December 31, 2003 and $11.1 million at December 31, 2002). As of
December 31, 2003 and 2002, our non-performing receivables, net of applicable
reserves, were 1.27% and 2.54%, respectively, of accounts receivable, net. Our
provision for doubtful accounts is provided based upon a quarterly review of the
receivables. This review is based on the risk profile of the receivables, credit
quality indicators such as the level of past-due amounts and economic
conditions, as well as the value of underlying collateral in the case of direct
financing lease receivables. (See Note 3 to the Consolidated Financial
Statements.)

Fair Value Adjustment for Derivative Instruments.
Our non-cash fair value adjustment for derivative instruments income amounted to
$0.8 million for the year ended December 31, 2003 as compared to expense of $5.5
million in the year ended December 31, 2002, a change of $6.3 million. This
change is primarily related to the change in the fair market value of interest
rate swaps accounted for as free standing derivatives.

Depreciation and
Amortization of Leasing Equipment. Our depreciation and
amortization expenses decreased to $87.5 million for the year ended December 31,
2003, from $88.7 million for the year ended December 31, 2002, a decrease of
$1.2 million or 1%.

While our operating fleet grew, the related increase in
depreciation was offset by the following:

| |  | A decrease related to the write-off of $7.5 million during the year ended
December 31, 2002, representing the book value of the unrecovered equipment from
a lease customer in default. No similar write off was recorded in 2003.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A depreciation reduction of $2.3 million and $0.2 million for chassis and
containers, respectively, due to the change to our estimated useful lives which
was effective April 1, 2002. For further discussion of leasing equipment see
Note 1 to the Consolidated Financial Statements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A $1.0 million decrease in impairment write-downs recorded in 2003 ($3.1
million) as compared to 2002 ($4.1 million) based on an evaluation of the
carrying value of our long-lived assets.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in depreciation expense of $7.7 million resulting from the
consolidation of the activities of CAI for full year 2003, as opposed to
approximately six months in 2002.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

42

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Impairment of Leasing Equipment. Our impairment of
leasing equipment expense decreased to $9.0 million for the year ended December
31, 2003, from $9.6 million for the year ended December 31, 2002, a decrease of
$0.6 million. This decrease was primarily due to a reduction in impairment
losses for idle equipment ($0.8 million), partially offset by an increase in
impairment losses related to damaged equipment that was subsequently
remanufactured ($0.3 million).

Losses for
Investments Accounted for Under the Equity Method.The decrease
in losses for investments accounted for under the equity method of $4.9 million
during the year ended December 31, 2003 as compared to the prior year period
resulted primarily from decreased equity method losses of CAI that we recorded
through June 26, 2002, at which time CAI became our consolidated subsidiary. For
the period from January 1, 2002 through June 26, 2002, our share of the equity
losses of CAI was $4.0 million. In addition, for the year ended December 31,
2003, we recorded $1.7 million representing our share of equity losses as a
result of certain other investments accounted for under the equity method of
accounting, as compared to equity losses of $2.6 million for the year ended
December 31, 2002.

Other
(Income)/Expense, Net.We had other income of $5.1 million during
the year ended December 31, 2003 compared to $1.1 million of other expense for
the year ended December 30, 2002. The change of $6.2 million for the year ended
December 31, 2003 was primarily due to:

| |  | The establishment of reserves during 2002 for our notes receivable from PCR
($4.0 million), which effectively reduced the carrying value of these notes to
zero during 2002, and the establishment of a reserve for our guarantee of PCR
debts due to third parties as well as other liquidation accruals which are our
responsibility ($5.7 million).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Payments of $2.7 million made to PCR by a company controlled by certain of our
officers and directors which were expensed during 2002.
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| |  | The write-off in 2002 of Microtech's $1.4 million of computer equipment
related receivables from PCR which have been determined to be uncollectible.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A $2.9 million gain recorded in October 2003 resulting from the consolidation
of assets and liabilities of a special purpose entity (which no longer qualified
for off-balance sheet treatment for accounting purposes) formed as part of our
container lease securitization program. This gain resulted primarily from the
favorable credit loss experience through September 30, 2003 on the underlying
direct financing leases as compared to the assumed credit losses of 1.5%. See
Note 8 to the Consolidated Financial Statements for further discussion of the
accounting for this special purpose entity.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | An increase in fee income of $0.7 million as a result of our acting as an agent
and arranging a lease transaction between two parties during 2003.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Gains on equipment sales of $0.7 million during the year ended December 31, 2003
as compared to losses on equipment sales of $4.3 million during the prior year
period. The change of $5.0 million resulted primarily from gains on equipment
sales to third parties recognized by CAI which became a consolidated subsidiary
on June 27, 2002, as well as losses on the sale of leasing equipment of $3.0
million resulting primarily from equipment recovered from a customer in default
which generated losses during 2002.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

43

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| |  | In 2003 we recorded $0.5 million in insurance revenue, which resulted in the
recovery of costs incurred, resulting from a policy covering losses realized on
a defaulted loan as compared to $10.6 million recorded in 2002.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The sale of our Chicago property in 2002, which had been acquired as part of the
acquisition of TA and resulted in a pre-tax gain of $4.8 million.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A reduction in gains on retirement of debt of $1.1 million as compared to the
prior year period.
| | - | ------------------------------------------------------------------------------------------------

Interest Expense. Our interest expense decreased to $106.7 million in the year
ended December 31, 2003 from $108.3 million in the year ended December 31,
2002, a decrease of $1.6 million or 1%. The decrease in interest expense was
primarily attributable to reduced interest rates resulting in reduced interest
expense of $10.2 million and a reduction in amortization of deferred financing
fees of $2.6 million as compared to the prior year period. These decreases to
interest expense were partially offset by increased borrowings to fund capital
expenditures, resulting in incremental interest expense of $7.7 million, an
increase in interest expense of $1.7 million related to CAI for a full year of
expense in 2003 compared with approximately six months in 2002 and $1.7 million
of bank fees in order to obtain waivers related to our delayed filings.

Interest Income. Our interest income decreased to $4.0 million in the year ended
December 31, 2003 from $4.6 million in the year ended December 31, 2002, a
decrease of $0.6 million or 13%. The decrease in interest income was primarily
due to reduced earnings on invested cash balances due to lower interest rates,
as well as a decline in invested cash balances.

Minority Interest Expense, Net. The change in
minority interest expense, net of $0.1 million for the year ended December 31,
2003 as compared to the prior year resulted primarily from a decrease in
minority interest income of $0.1 million as a result of the consolidation of CAI
effective June 27, 2002.

Provision/(Benefit) for Income Taxes.
We recorded an income tax provision of $3.3 million for the year ended December
31, 2003 as compared to a tax benefit of $1.4 million for the year ended
December 31, 2002. This increase in the provision for income taxes was caused by
an increase in pre-tax income of $41.5 million and the mix between pre-tax
income and losses generated from international sources and United States
sources. The international container division that is taxed at lower rates
(approximately 3%) based upon the income tax convention between the United
States and Barbados, contributed favorably to net income. The domestic
intermodal division (including corporate activities) which is taxed at higher
United States tax rates, experienced reduced losses during the year ended
December 31, 2003, as compared to the prior year. Additionally, other provisions
for deferred tax asset valuation allowances increased the tax provision by $1.2
million during the year ended December 31, 2003 while the provisions for
deferred tax asset valuation allowances decreased tax benefits by $6.3 million
for the year ended December 31, 2002.

44

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Net
Income. As a result of the factors described above, our net income
increased to $41.2 million in the year ended December 31, 2003 from $4.4 million
in the year ended December 31, 2002.

Liquidity and Capital Resources

Historically, we have used
funds from various sources to meet our corporate obligations and to finance the
acquisition of equipment for lease to customers. The primary funding sources
have been cash provided by operations, borrowings (generally from banks),
securitization of lease receivables, the issuance of capital lease obligations
and the sale of our securities. In addition, we have generated cash from the
sale of equipment being retired from our fleet. In general, we have sought to
meet debt service requirements from the leasing revenue generated by our
equipment. Our scheduled capital lease and debt service payments (principal and
estimated interest) for 2005 total $341.9 million and for 2006 total $230.0
million. Scheduled payments due to us under non-cancelable operating and direct
financing lease agreements with our lessees total $302.2 million for 2005 and
$260.6 million for 2006 (see Note 3 to our Consolidated Financial Statements).
In addition, as of December 31, 2004, we had approximately $284.6 million of
unrestricted cash and marketable securities on hand. The combination of
unrestricted cash and marketable securities ($284.6 million) and non-cancelable
lease payments due to us during 2005 and 2006 ($562.8 million) exceeds our
scheduled debt service payments (principal and estimated interest) of $571.9
million for 2005 and 2006 by approximately $275.5 million. As indicated
previously in Item 7 of this document, demand for both chassis and containers is
currently strong, and our utilization rates, as well as those of our competitors
are at high levels. We anticipate that industry demand for chassis and
containers will continue to be strong well into 2006, driven primarily by the
fact that all major shipyards are reporting large order backlogs through 2007.
As of October 1, 2004, the existing order backlog was enough to account for an
increase of approximately 50% in the world's cellular container ship fleet
and is expected to result in demand for a significant number of additional
containers and chassis, as well as high utilization of existing units, for the
next several years. Lease rates on both new and used chassis have been rising
since the middle of 2004, reflecting increases in the cost of new chassis and
increased utilization of used chassis. Lease rates for new containers have also
been increasing along with the cost of the underlying units. Lease rates for
used containers were competitive for much of 2004, although expiring leases are
sometimes renewed at lower lease rates. It is management's expectation that
lease rates will also remain strong for the next several years.

We have usually funded a
significant portion of the purchase price for new containers and chassis through
borrowings under a revolving credit facility and other lines of credit, or
through secured financings with financial institutions. While we successfully
completed financings and commitments totaling $747.0 million during 2004, $563.0
million of which has been utilized and $184.0 million of which is available for
use in the future, our ability to borrow funds on terms as favorable as those
available previously was limited from March 31, 2003 through September 30, 2004.
This limitation was due to the delay in filing our Annual Report on Form 10-K
for 2002, our Quarterly and Annual Reports on Forms 10-Q and 10-K for 2003 and
our Quarterly Reports on Form 10-Q for 2004. These factors, coupled with the
requirement to maintain certain levels of unrestricted cash until the delayed
financial filings were completed, affected the amount of business we wrote with
our customers during 2004. During the first quarter of 2005, we received an
additional $223.0 million in net financing commitments, none of which has been
utilized as of the date this report was filed with the SEC, and completed a
draw-down under a lease arrangement with a Japanese lessor for which we received
additional cash proceeds of approximately $4.2 million. In addition, we
regularly evaluate financing proposals which, when coupled with available cash
balances and funds available under commitments mentioned above, could be used
for growth, for re-financing existing facilities and for working capital.

45

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Our financial restatement
and re-audits, as well as the completion of the internal investigations by
special counsel to our Audit Committee, prevented the timely completion of our
financial statements and Form 10-K for the year ended December 31, 2003, our
financial statements and SEC filings for 2004 and other required periodic
reports contained in our loan documents. We requested and received necessary
waivers under our loan documents. During February 2004, we provided our lenders
with a revised schedule for completing and filing our financial statements and
periodic SEC filings for 2003 and 2004, and requested that our lenders waive any
default resulting from the late preparation and filing of the financial
statements and required periodic reports. We completed and filed each of the
financial statements and required periodic reports mentioned above before the
dates required by our lenders.

During 2003 and 2004, we
received waivers from various financial institutions for the delay in issuing
our SEC financial reports. In connection with certain of those waivers, we
agreed to certain modifications to the terms of several of our debt agreements,
including, in a few cases, the pledging of additional collateral and changes to
amortization schedules. With the filing of our report on form 10-Q for the third
quarter of 2004 on December 27, 2004 we were no longer delinquent with our SEC
financial filings and the waivers were no longer required. In addition, the two
facilities where amortization schedules had been accelerated were paid off in
full during the fourth quarter of 2004.

In connection with our
delayed SEC filings and the receipt of waivers from our lenders necessitated by
the delayed filings, beginning in January 2004, the members of our Board of
Directors and certain of their affiliates who own shares of our common stock
agreed to defer their receipt of any dividend payments, until we were in
compliance with all SEC filing requirements. As of December 27, 2004, we were no
longer delinquent with regard to our SEC filings and the deferred dividends
described above were paid prior to December 31, 2004.

Over the years, we have
explored from time to time the possibility of raising capital or reducing our
leverage through the issuance and sale of our equity securities. As of the date
this Form 10-K is being filed, we have not entered into any agreement for any
such transaction other than the sale of our Warrants in September 2004. There is
no assurance that any such transaction will occur or, if a transaction occurs,
what the terms thereof would be.

Cash Flow

Net cash provided by operating activities amounted to $160.3
million in 2004, $150.0 million in 2003 and $120.1 million in 2002. While net
income for the year ended December 31, 2004 was $32.8 million lower than net
income for the year ended December 31, 2003, it included a non-cash expense of
$49.2 million related to the adjustment of the fair value of warrants issued by
us in the third quarter of 2004. Excluding this adjustment for the fair value of
the warrants, net cash provided by these activities increased $16.4 million.
This increase, along with a decrease in other receivables ($26.8 million) was
partially offset by a decrease in accounts payable and accrued expenses ($13.6
million) and an increase in other assets ($13.0 million). The increase in net
cash provided by these activities in 2003 as compared to 2002 was primarily due
to an increase in net income, as well as changes in operating assets and
liabilities in the ordinary course of business.

46

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Net cash used for investing
activities amounted to $8.3 million in 2004, $212.7 million in 2003 and $176.4
million in 2002. The decrease in net cash used in these activities in 2004 as
compared to 2003 was primarily due to a decrease in the investment in direct
financing leases ($65.5 million), a decrease in acquisition of leasing equipment
($30.9 million), an increase in cash collections on direct financing leases
($11.1 million) and an increase in the proceeds from disposition of leasing
equipment ($98.7 million). The increase in net cash used in these activities in
2003 as compared to 2002 was primarily due to an increase in the acquisition of
leasing equipment ($45.6 million) and an increase in the investment in direct
financing leases ($45.2 million), partially offset by an increase in cash
collections on direct financing leases ($18.0 million).

Net cash provided by
financing activities amounted to $16.4 million in 2004, $33.0 million in 2003
and $123.1 million in 2002. The decrease in net cash provided by these
activities in 2004 as compared to 2003 was primarily due to an increase in
repayment of revolving credit lines ($189.5 million), an increase in repayment
of long term debt and capital lease obligations ($183.1 million) and a decrease
in borrowings under revolving credit facilities ($57.5 million), partially
offset by an increase in the proceeds from the issuance of debt ($415.5
million). The decrease in net cash provided by these activities in 2003 as
compared to 2002 was primarily due to a decrease in the proceeds from the
issuance of debt ($1,015.6 million), partially offset by a decrease in repayment
of long term debt and capital lease obligations ($819.4 million), a decrease in
repayment of revolving credit lines ($65.3 million) and an increase in
borrowings under revolving credit facilities ($41.0 million).

The following table sets forth certain historical cash flow
information for the three years ended December 31, 2004.

`Year Ended December 31
                                                                          2004       2003         2002
                                                                          ----       ----         -----
                                                                             (Dollars in millions)
Net cash provided by operating activities                                $160.3     $150.0        $120.1
Proceeds from disposition of leasing equipment                            153.1       54.4          12.0
Acquisition of leasing equipment                                         (206.6)    (237.5)       (191.9)
Investment in direct financing leases                                     (43.7)    (109.3)        (64.1)
Net collections on direct financing leases                                 88.9       77.8          59.7
Net proceeds of issuance of long-term debt and capital lease
obligations in excess of payment of long-term debt and capital lease
obligations                                                               240.0        7.6         203.8
Net (repayment) borrowings of revolving credit lines                     (215.5)      31.5         (74.8)`

47

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Contractual Obligations and Commercial Commitments

We and our subsidiaries are
parties to various operating and capital leases and are obligated to make
payments related to our long-term borrowings. (See Notes 4 and 8 to the
Consolidated Financial Statements.) We are also obligated under various
commercial commitments, including obligations to our equipment manufacturers.

The following tables summarize our contractual obligations and
commercial commitments at December 31, 2004.

`Amounts Due by Period
                                                               (Dollars in millions)
                                                    Less than 1                                   More than
     Contractual Obligations          Total           year           1-3 years       4-5 years      5 years
     -----------------------          -----        -----------        ---------      ---------      ---------
     Long-Term Debt                 $  990.7       $161.3            $298.5         $108.7         $ 422.2
     Capital Lease Obligations         727.5         79.3             125.5          136.8           385.9
     Interest on Long-Term
       Debt and Capital Lease
       Obligations                     732.6        101.3             168.9          122.8           339.6
     Operating Leases                   56.6         15.2              29.1            9.6             2.7
     Unconditional Purchase
     Obligations                       149.6        116.7              32.9            ---             ---
     Employment Agreements              10.3          2.8               2.5            2.4             2.6
     Separation Agreements               2.6          1.3               1.3            ---             ---
                                         ---          ---               ---            ---             ---
     Total Contractual Cash
     Obligations                    $2,669.9       $477.9            $658.7         $380.3         $1,153.0
                                    ========       ======            ======         ======         ========

                                      Total                     Amount of Commitment Expiration Per Period
Other Commercial                     Amounts    -----------------------------------------------------------------
 Commitments                        Committed      Less than 1
-----------                         ----------       year           1-3 years        4-5 years      Over 5 years
                                                     ----            ---------        ---------     ------------
Standby Letters of Credit              $ 6.0         $6.0              $---           $---             $---
Guarantees                              16.8         ---                1.5            6.6              8.7
                                        ----         ----              ----           ----             ----
Total Commercial Commitments           $22.8         $6.0              $1.5           $6.6             $8.7
                                       =====         ====              ====           ====             ====`

Debt and Capital Lease Obligations:

The following table summarizes our debt and capital
lease obligations as of December 31, 2004 and 2003:

48

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`(Dollars in Millions)
                                                                          December 31, 2004      December 31, 2003
                                                                          -----------------      -----------------
Capital lease obligations payable in varying amounts through 2013                $329.6                $325.2
Chassis Securitization Facility, interest at 5.99% and 5.59% at
  December 31, 2004 and 2003, respectively
      Warehouse facility                                                           22.5                  25.5
      Debt obligation                                                              53.9                  86.4
      Capital lease obligation                                                    397.8                 404.7
Secured equipment financing facility, interest at 4.45% at December
  31, 2004, revolving period ending October 31, 2006, term out period
  ending April 30, 2012                                                           243.0                   ---
Revolving credit facility, interest rate at 3.09% at December 31, 2003              ---                 193.5
Revolving credit facility CAI, interest rate at 4.56% and 3.37% at
  December 31, 2004 and 2003, respectively                                         65.0                  87.0
Container securitization facility, interest at 6.50% at December 31,
  2003                                                                              ---                  76.6
6.00% Notes due 2014 (unsecured) net of unamortized discount of $33.7
  at December 31, 2004                                                            196.3                   ---
7.35% Notes due 2007 (unsecured)                                                  115.4                 147.0
7.20% Notes due 2007 (unsecured)                                                   45.3                  62.8
9.25% Convertible redeemable subordinated debentures, mandatory
  redemption 2022 (unsecured)                                                      37.2                  37.2
9.875% Preferred capital securities due 2027 (unsecured)                           75.0                  75.0
Notes and loans payable with various rates ranging from 3.60% to 7.90%
  and maturities from 2005 to 2010                                                137.2                 194.8
                                                                                  -----                 -----
Total Debt and Capital Lease Obligations                                        1,718.2               1,715.7
                                                                                -------               -------
   Less Current Maturities                                                        240.6                 219.2
Total Non-Current Debt and Capital Lease Obligations                           $1,477.6              $1,496.5
                                                                               ========              ========`

Our debt consists of notes,
loans and capital lease obligations with installments payable in varying amounts
through 2027, with a weighted average interest rate of 6.2% in 2004. The
principal amount of debt and capital lease obligations payable under fixed rate
contracts is $898.7 million. Remaining debt and capital lease obligations of
$819.5 million is payable under floating rate arrangements, of which $408.3
million has been converted to fixed rate debt through the use of interest rate
swap agreements. At December 31, 2004, most of our debt and capital lease
obligations are secured by a substantial portion of our leasing equipment,
direct financing leases, and accounts receivable, except for $469.2 million of
debt which is unsecured. For further information on the accounting treatment for
interest rate swap contracts see Note 5 to the Consolidated Financial
Statements.

Debt Modifications: Throughout 2003 and 2004, in connection with obtaining necessary
waivers from lenders for late filing of our periodic reports with the SEC and
the restatement of our past financial statements, we agreed to certain
modifications to our existing debt agreements as follows:

| |  | Our container securitization facility was amended to relinquish our right to
request additional advances under the facility and we agreed that all lease
payments subsequently received under the facility would be used to reduce the
indebtedness. In addition, we agreed to comply with several new covenants,
consistent with those contained in the amendment to our revolving credit
agreement, as described below. This facility was paid in full during December
2004.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

49

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| |  | In May 2003, we established a $200.0 million revolving warehouse facility within
our chassis securitization facility and received funding from a $25.5 million
debt obligation issuance. In July 2003 and October 2003, we agreed, among other
things, to suspend our ability to incur additional funding under the warehouse
facility until such time as the loan and guarantee parties have each agreed in
their sole discretion to reinstate their funding commitments. The loan and
guarantee parties are under no obligation to reinstate any commitments to the
warehouse facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | In July 2003 and October 2003, and January and February 2004, in connection with
obtaining necessary amendments under the revolving credit facility due to the
late filing of our periodic reports with the SEC and the restatement of our past
financial statements, we agreed, among other things, to reduce advance rates
under this revolving facility, to add several events of default, to increase the
interest rate margin, and to maintain specified levels of unrestricted cash and
cash equivalents until delinquent SEC filings were made. Specifically, we agreed
to maintain unrestricted cash and cash equivalents of at least $71.0 million at
all times and at least $80.0 million as of the last business day of each month,
until our 2002 Form 10-K was filed. Our 2002 Form 10-K was filed on January 9,
2004. Subsequent to January 9, 2004, we were obligated to maintain unrestricted
cash and cash equivalents of at least $60.0 million at all times and at least
$67.5 million as of the last business day of the month until completion and
filing of all delayed financial statements for 2003 and 2004. This minimum cash
requirement was also adopted in the waivers of the container securitization and
one other loan agreement. In conjunction with the waiver received during
February 2004, we replaced our annual amortization payment with monthly
amortization payments under our revolving credit facility beginning in March
2004. The related minimum cash requirement was subsequently reduced
dollar-for-dollar with the amortization payments and, at June 30, 2004, amounted
to $50.0 million. Beginning with the amortization payment due September 1, 2004,
the minimum cash requirement was again reduced dollar-for-dollar as amortization
payments were made. These facilities were paid in full during November 2004.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | We also agreed to restrictions on dispositions of collateral and on encumbrances
of assets as well as a limitation on concessions that could be made to our other
financial institutions in connection with obtaining waivers. The October 2003
amendment also required us to provide additional financial information to the
lenders under the facility and to continue the engagement of a financial
advisor. With the filing of our Form 10-Q for the third quarter of 2004 during
December 2004, the payment in full of certain financing facilities during the
fourth quarter of 2004, and the agreement of three lenders during the first
quarter of 2005, these restrictions and reporting requirements are no longer in
effect.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | In addition to the debt specifically identified above, we had additional notes
and loans outstanding with various financial institutions. In the fourth quarter
of 2003, we agreed to certain modifications to the provisions of some of these
instruments. These modifications included, in certain instances, changes to the
amortization schedule resulting in a requirement for accelerated principal
payments of $16.6 million ($2.0 million of which were made during January and
February 2004 and the rest of which were eliminated when the facility in
question was paid in full during March 2004), an average interest rate increase
of 241 basis points on two debt facilities having a total of $67.7 million
outstanding as of December 31, 2003 and the pledging of $9.1 million in
additional collateral to four facilities having a total of $38.6 million
outstanding at the time the additional collateral was pledged.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

50

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| |  | In April 2003, in connection with a borrowing under the container
securitization, we entered into an interest rate swap agreement with an original
notional amount of $31.2 million. This swap contract matures in 2009 and the
swap was used to manage interest rate risks on the floating rate borrowings in
the securitization facility. In May 2003, in connection with a borrowing under
the chassis revolving warehouse securitization facility, we entered into an
interest rate swap with an original notional amount of $25.5 million. This swap
contract matures in 2014 and the swap is used to manage interest rate risks on
floating rate facilities.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

New Financings and Commitments: During 2004, we
entered into new financings and commitments totaling $747.0 million of which
$563.0 million was utilized. The new debt utilized during 2004 consisted of the
following:

`New Borrowings
Total New Debt and Capital Lease Obligations                                 2004
--------------------------------------------                            --------------
Capital lease obligations payable through 2013 with interest
  imputed at rates from 5.45% to 7.45%                                       $55.8
6.00% Notes due 2014 (unsecured)                                             230.0
Secured equipment financing facility, interest at 4.45% at
  December 31, 2004, revolving period ending 10/31/06, term out
  period ending 4/30/12                                                      243.0
Notes and loans repayable with various rates ranging from 4.28%
  to 7.53% and maturities from 2005 to 2009                                   34.2
                                                                              ----
Total New Debt and Capital Lease Obligations 2004                           $563.0
Original Issue Discount on 6.00% Notes due 2014                              (34.2)
                                                                              ----
Total Net New Debt and Capital Lease Obligations 2004                       $528.8
                                                                            ======`

New Financings: The following
financings, which are included in the above summary, were completed during
2004:

| |  | In March 2004, we completed secured financings of $81.6 million and in May 2004,
$13.6 million, the proceeds of which were used to pay amounts due to equipment
manufacturers and for general corporate purposes. One of the March financings
which was originally $76.0 million was subsequently refinanced in November and
thus not included above.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | We successfully completed a secured financing of $15.0 million during July 2004
with installments payable through 2005 at an interest rate of LIBOR plus 2.5%. A
portion of the proceeds was used to satisfy a note payable from PCR to an
unrelated financial institution, which we guaranteed for PCR. The remaining
proceeds were used for general corporate purposes.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

51

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| |  | During August 2004, we entered into a lease arrangement with a Japanese lessor
involving $21.1 million of equipment previously financed with a financial
institution during December 2003 and May 2004. The lease "advance
rate" against this equipment was 107% ($22.5 million total advance),
increasing the cash proceeds received by us by $5.8 million from the level of
the previous financings. The lease expires in December 2008, and we have a fixed
purchase option at that time for $14.6 million that we expect to exercise. The
aggregate fixed interest rate is 7.44%.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | On September 14, 2004, we entered into a Securities Purchase Agreement pursuant
to which we sold $150.0 million total principal amount of a new series of 6.0%
notes due 2014 (the "Notes") in a private transaction with four investors. In
connection with the sale of the Notes, we also issued to the investors two
series of Warrants exercisable for a total of 8,333,333 shares of our common
stock at an exercise price of $18.00 per share (the "Warrants"). The exercise
price will be subject to customary anti-dilution adjustments as set forth in the
Warrants.
The Notes mature on September 1, 2014, with interest payable semi-annually at a
rate of 6.0% per annum. We have the right to redeem the Notes at any time after
September 1, 2009 with a declining premium. The maturity of the Notes can be
accelerated upon the occurrence of an "Event of Default" as such term is defined
in the indenture governing the Notes (the "Indenture"). The Indenture also
contains various restrictive covenants, including limitations on the payment of
dividends and other restricted payments, limitations on incurrence of
indebtedness, and limitations on asset sales, the violation of which would
result in an Event of Default.
The first series of Warrants (the "Series A" Warrants) is exercisable at any
time for a total of 5,475,768 shares. The second series of warrants (the Series
"B" Warrants) will become exercisable at any time for a total of 2,857,565
shares, following stockholder approval of such exercise at a special meeting of
our stockholders. We also entered into agreements with the investors to file
registration statements with the Securities and Exchange Commission, for the
benefit of the investors, with respect to the Notes and the Warrants. The terms
of the Warrants provide that the exercise price will be paid by the investors to
us solely in cash except that after we have filed a registration statement with
the Securities and Exchange Commission relating to the Warrants and underlying
common stock, in the event such registration statement has not become effective
or is otherwise not available to the Warrant holders or if the exercise of the
Warrants for cash would not be permitted under the federal securities laws, the
exercise price may be paid by tendering a principal amount of 6.0% Notes equal
to the exercise price of the Warrants then being exercised. The sale of the
Notes and Warrants pursuant to the Securities Purchase Agreement was made in
reliance on the exemption from the registration requirements of the Securities
Act of 1933 (the "Act") pursuant to Section 4(2) of the Act.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

52

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| |  | Of the $150.0 million in proceeds from the September 14, 2004 sale of the Notes
and Warrants, we repurchased, at face value, a portion of our outstanding 7.35%
notes due 2007 ($31.6 million) and 7.20% notes due 2007 ($17.5 million) which
were held by the investors. The remaining proceeds are being used for general
corporate purposes, including, but not limited to, the purchase of equipment,
retirement of debt, potential acquisitions and/or working capital.
The Warrants expire on September 1, 2014, although we have the right under
certain conditions to require that they be exercised at any time after our
common stock trades at $30.00 per share or more for five consecutive trading
days assuming the shares being issued upon exercise are registered shares.
The fair value of the warrants at the date of the transaction was estimated at
$22.5 million and was recorded in warrant liability on the Consolidated Balance
Sheet, with the offset recorded as a discount on the Notes. This discount is
being amortized as interest expense using the effective interest method over the
ten-year life of the Notes. The overall interest rate on the Notes, considering
the amortization of the discount, is approximately 8.3%.
EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and
potentially Settled in a Company's Own Stock ("EITF 00-19") requires
freestanding contracts that are settled in a Company's own stock, including
common stock warrants, to be designated as an equity instrument, asset or
liability. Under the provisions of EITF 00-19, a contract designated as an asset
or liability must be carried at fair value until the contract meets the
requirements for classification as equity, until the contract is exercised or
until the contract expires. We have classified these warrants as a liability, as
noted above, because the requirements of EITF 00-19 for classification of the
warrants as equity have not yet been met. During the period in which the
warrants are classified as a liability, any changes in fair value will be
reported as fair value adjustment for warrants in the Consolidated Statement of
Income. Due primarily to the increase in the market value of our common stock
during the last quarter of 2004, the fair market value of these Warrants has
increased from $22.5 million at September 30, 2004 to $71.7 million at December
31, 2004. As a result, during the three months ended December 31, 2004, we have
recorded a non-cash expense of $49.2 million (for which no tax benefit is
derived) which has been reflected as fair value adjustment for warrants on the
accompanying Consolidated Statements of Income. Accordingly, future changes to
the fair market value of these Warrants have the potential to cause volatility
in our future results. For the period of time that these warrants are classified
as a liability, any increase in the fair market value of the Warrants will
result in an additional non-cash expense to the Consolidated Statements of
Income. If the fair market value of the Warrants decreases in the future we will
record non-cash income in our Consolidated Statements of Income. At such time as
all of the conditions of EITF 00-19 are met for classification of the Warrants
as equity, the liability account representing the fair value of the warrants at
the date the conditions are met will be reclassified to additional
paid-in-capital on the Consolidated Balance Sheets.
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| |  | We have agreed to file a Registration Statement for the Warrants and the Notes
with the Securities and Exchange Commission by May 1, 2005. In addition, we have
agreed to use commercially reasonable efforts to have the Warrant Registration
Statement and the Notes Registration Statement declared effective by July 1,
2005. It is impossible for us to predict when either of these registration
statements will become effective. If either of these Registration Statements is
not effective by October 1, 2005, or is not filed by May 1, 2005, we will be
required to pay liquidated damages to the holders of these securities based upon
a value of $150.0 million for the Notes and $150.0 million for the Warrants. For
the first 90 days, the amount of liquidated damages to be paid related to the
Warrants and the Notes will be calculated using a rate of 0.25% per annum for each day the
Registration Statements are not effective after September 30, 2005 or if the
Registration Statements are not filed by May 1, 2005. This percentage will be
increased by 0.25% for each 90 day period, until these conditions are met, up to
a maximum of 1.00% per annum.
A condition that must be met for equity treatment under the provisions of EITF
00-19 is that there can be no possibility of a net cash settlement of the
Warrants. Under the terms of the Warrant Agreement, in the event that
stockholder approval of the issuance of common stock pursuant to the Series B
Warrants is not obtained prior to April 30, 2005, the holders of the Series B
Warrants have the right to settle their warrants for cash. In order to do this,
the Series B Warrant holders, upon payment of the exercise price would receive
cash from us in an amount equal to 105% of the market price of our common stock
on the day prior to exercise. For example, if the market value of our stock was
$22 at the date that the Series B Warrant holders exercised their right for a
net cash settlement, the net cash settlement paid to the holders of the Series B
Warrants would be approximately $14.6 million ($22 market value X 105% X
2,857,565 shares  less exercise price of 2,857,565 shares X $18). We
intend to hold a special meeting of the Stockholders as soon as practicable and
at that meeting will seek stockholder approval for the exercise of the Series B
Warrants. It is impossible for us to hold this meeting until our Proxy
requesting this approval has been filed with and accepted by the Securities and
Exchange Commission and all stockholders have been notified regarding the
meeting. In connection with the sale of the Notes and Warrants, certain of our
significant stockholders, whose combined ownership interest represents more than
50% of the issued and outstanding shares of our common stock, entered into a
voting agreement pursuant to which they have agreed to vote to approve the
exercise of the second series of Warrants by the investors. In addition, Martin
Tuchman, our Chairman and Chief Executive Officer, Warren L. Serenbetz, a former
member of our Board of Directors, and an entity controlled by members of Mr.
Serenbetz's family agreed to certain restrictions on their ability to transfer
shares of our common stock in private transactions. If the approval for the
issuance of the shares related to the Series B Warrants is obtained after April
30, 2005 and prior to the exercise of the Series B Warrants by the Holders of
the Warrants, the holders of the Series B Warrants will lose their right to
exercise the net cash settlement feature of Series B Warrants once such
shareholder approval is received. At that time, this will no longer be a
condition for liability treatment under the provisions of EITF 00-19.
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| |  | Copies of the Securities Purchase Agreement, the Indenture, the Warrant
Agreement, the Notes Registration Rights Agreement and the Investor Rights
Assessment were filed as exhibits to our report on Form 8-K issued September 15,
2004.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | On November 1, 2004, we consummated a secured equipment financing with one of
our existing lenders. The financing is secured by shipping containers and
related leases owned by one of our special purpose consolidated subsidiaries and
leased to various third parties. The financing allows for advances from time to
time up to the amount of available collateral under the facility, subject to a
maximum principal amount that may be outstanding under the facility of $252.0
million. Of the $243.0 million drawn down on November 1, 2004, we used $224.4
million to refinance outstanding indebtedness, which includes the entire $154.8
million of outstanding borrowings under our revolving credit facility, which has
now been terminated, as well as an existing $69.6 million loan from this lender.
The remaining balance of $18.6 million was used for transaction fees and working
capital purposes. The interest rate under this new facility is currently LIBOR
plus 175 basis points, with a reduction to LIBOR plus 150 basis points possible
as our credit rating improves. This agreement, as amended, requires that we
enter into interest rate swap contracts in order to effectively convert at least
seventy percent of the debt associated with operating lease equipment and ninety
percent of the debt associated with direct financing leases from floating rate
debt to fixed rate debt by March 31, 2005. As of December 31, 2004, we have not
entered into any swap contracts related to this facility. The facility has a
two-year term, after which the outstanding balance will be paid out in full over
66 months if it is not refinanced.
This
agreement requires that we maintain a tangible net worth (as defined in the
Agreement) of at least $300.0 million. The facility also requires us to maintain
a fixed charge coverage ratio of 1.5 to 1 and a funded debt to tangible net
worth ratio of 4.0 to 1.0 and contains other customary restrictive covenants. At
December 31, 2004 we were in compliance with these covenants.
During the first quarter of 2005, we received additional commitments under this
facility totaling $248.0 million from six additional financial institutions. As
of the date this Form 10-K was filed, none of these additional commitments had
been utilized.
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| |  | On November 29, 2004, we sold $80.0 million total principal amount of new 6.0%
notes (the "November notes") due 2014 to eight investors under the
same indenture used for the $150.0 million unsecured financing completed during
September 2004. The terms of the November notes are identical to those of the
notes sold during September (as described previously in this document) with the
following exceptions: (1) there were no warrants associated with the November
notes and (2) the original issue discount on the November notes was
approximately 14.7% versus 15.0% for the September notes. The November notes
were sold at a discount which provided net proceeds totaling $68.1 million. The
net proceeds are for general corporate purposes, including, but not limited to
the purchase of equipment, retirement of debt, acquisitions, and/or working
capital.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | In December 2004, we completed two capital lease obligation transactions
totaling $50.0 million, the proceeds of which were used for general corporate
purposes.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | In addition to the revolving credit facility mentioned previously, we
paid-in-full three other secured lending facilities, totaling $37.0 million,
during November 2004, including two facilities with Yardville National Bank (a
subsidiary of an entity in which our Chief Executive Officer owns approximately
five percent of the common stock and serves on the executive Committee of the
Board of Directors.) Also in December 2004 we paid in full the remaining
outstanding debt obligations of the container securitization.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commitments: A commitment for $150.0 million was
completed on December 29, 2004 and will be open for 364 days, after which it
will either be renewed, refinanced or will be paid out in full over the
following 48 months. The advance rate under this facility will be either 60% or
75% at our option. The interest rate is determined by a pricing grid and can
range from LIBOR plus 140 to 180 basis points, depending upon our tangible debt
to total net worth ratio (as defined in the agreement) or our corporate credit
rating, and the advance rate chosen. As of December 31, 2004, the rate would be
LIBOR plus 165 basis points at a 75% advance rate and LIBOR plus 150 basis
points at a 60% advance rate. There is a commitment fee of 45 basis points per
annum on any unused portion of this commitment, payable quarterly in arrears.
Another commitment for $25.0 million was available for future use at December
31, 2004. This commitment was scheduled to be open until March 31, 2005, after
which any unfunded portion of the commitment would expire. This commitment was
subsequently cancelled during February 2005 to allow the financial institution
to provide a larger commitment as part of the $150.0 million facility mentioned
above. During the first quarter of 2005, we received additional commitments
under a secured equipment financing established on November 1, 2004 totaling
$248.0 million from six additional financial institutions. As of the date this
Form 10-K was filed, none of these additional commitments had been utilized.

Container Securitization Facility: Effective
October 1, 2003, a customer elected to return a portion of the equipment covered
by a direct financing lease which had been included in a qualified special
purpose entity as part of the lease securitization program. The equipment was
subsequently leased to another customer under the terms of an operating lease
agreement. As such, the lease could no longer be considered a financial asset
and the Securitization Trust entity could no longer be treated as an off-balance
sheet qualified special purpose entity for accounting purposes. Therefore,
effective October 1, 2003, we consolidated the assets and liabilities of this
special purpose entity and recorded the remaining obligation of this special
purpose entity amounting to $17.8 million as debt and capital lease obligations
on the Consolidated Balance Sheets. At December 31, 2003, $13.3 million of this
debt remained outstanding. This debt was repaid in full during December 2004.
See Note 7 to the Consolidated Financial Statements for further discussion
regarding the change in accounting for this special purpose entity.

Covenants: Under our secured equipment financing
facility (and most of our other debt instruments, we were required to maintain
covenants (as defined) for tangible net worth (the most stringent of which
required the Company to maintain tangible net worth of at least $300.0 million),
a fixed charge coverage ratio of 1.5 to 1 and a funded debt to net worth ratio
(as defined in the agreement) of 4.0 to 1. A servicing agreement to which we are
a party requires that we maintain a tangible net worth (as defined in the
agreement) of at least $375.0 million plus 50% of any positive net income
reported from October 1, 2004 forward. Additionally, under a credit agreement,
we are required to maintain a security deposit in the aggregate amount of at
least 80% of the outstanding loan balance, including interest. This amounted to
$4.8 million at December 31, 2004 and is included in other assets on the
Consolidated Balance Sheet. At December 31, 2004, we were in compliance with
these covenants, as amended. At December 31, 2004, under a restriction in our
6.0% Note Indenture, approximately $3.6 million of retained earnings were
available for dividends.

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Other: As of December 31, 2004, our commitments
for future capital expenditure totaled approximately $149.6 million with
approximately $116.7 million committed for 2005. Our available liquidity,
including $223.0 million available under credit facilities, at December 31, 2004
was $507.6 million after deducting $24.9 million of restricted cash.
Required debt repayments and capital lease payments for 2005 totaled $240.6
million as of December 31, 2004 which we anticipate making through our
unrestricted cash balances and cash flow from operations.

In the past, cash on hand,
cash flow from operations, borrowings under credit facilities and the net
proceeds of the issuance of debt and equity securities has been sufficient to
meet our needs for working capital, capital expenditures and required debt
repayments. We expect to continue to rely in substantial part on long-term
financing for the purchase of equipment or strategic acquisitions to expand our
business in the future. We cannot assure that long-term financing will be
available for these purposes on acceptable terms or at all. In addition, from
time to time, we may explore new sources of capital both at the parent and
subsidiary levels. We successfully entered into secured financing commitments of
approximately $517.0 million during 2004, $333.0 million of which was utilized
as of December 31, 2004, plus an additional $230.0 million of unsecured
financings. We regularly evaluate financing proposals which when coupled with
available cash balances and funds available under commitments mentioned above,
could be used for growth, for refinancing existing facilities and for working
capital.

Settled Insurance Litigation

In connection with an insurance claim related to the default of
a South Korean customer and a subsequent lawsuit filed by the insurance carriers
against us, on June 17, 2004 we signed an agreement settling the lawsuit and our
claims under the policy. Under the terms of the settlement agreement, the
insurance carriers paid us a total of $26.4 million during 2004. In addition, we
received the right to retain any of the equipment we had recovered since the
date of the claim. We recognized a pre-tax gain of $6.3 million related to the
$26.4 million settlement, which is recorded in gain on insurance settlement on
the Consolidated Statements of Income.

CAI

In April 1998, we acquired
a 50% common equity interest in CAI. CAI owns and leases its own fleet of
containers and also manages, for a fee, containers owned by us and third
parties. We entered into an operating relationship with CAI primarily to
facilitate the leasing in the short-term market of containers coming off
long-term operating lease, to gain access to new companies looking to lease
containers on a long-term basis and to realize cost efficiencies from the
operation of a coordinated container lease marketing group. For containers
managed by CAI for us in the short-term market, we earn the net operating income
and pay CAI a fee for managing our equipment and leasing it on our behalf. The
calculation is based on the average daily net operating income of CAI's
fleet of owned, leased-in and managed containers (including the portion of
CAI's fleet that consists of our equipment) for each day such managed
containers are part of the CAI fleet. The marketing group which is organized as
our wholly-owned subsidiary, is responsible for soliciting container lease
business for both us and for CAI, including long-term operating and direct
financing lease business and short-term lease business on master lease
agreements. We have a right to purchase all long-term operating and direct
financing lease business generated by the marketing group, subject to offering
to CAI, at cost, 10% of this long-term operating and direct financing lease
business. By mutual agreement, CAI has purchased for its own account long-term
operating and direct financing lease business generated by the marketing group
in excess of such amount. In addition, on occasion, we have entered into
transactions with CAI pursuant to which we have acquired equipment, and the
related leases, from CAI on terms that resulted in a profit for CAI. Such
equipment, as well as certain other containers purchased from time to time, are
currently managed for us by CAI for a fee based upon the actual net operating
income earned by such containers.

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In connection with the
acquisition of our equity interest in CAI, we loaned CAI $33.7 million under a
Subordinated Note Agreement (the "Note") that is collateralized by
all containers owned by CAI as of April 30, 1998 or thereafter acquired, subject
to the priority security interest lien of CAI's senior credit facility,
except for certain excluded collateral. Interest on the Note is at an annual
fixed rate of 10.5% and is payable quarterly. The original repayment terms
required mandatory quarterly principal payments of $1.7 million beginning July
30, 2003 through April 30, 2008. The Note was subject to certain financial
covenants and was cross-collateralized with CAI's senior credit facility,
subject to the terms of a subordination agreement.

On June 27, 2002, CAI entered into an amended $110.0 million
senior revolving credit agreement with a group of financial institutions. To
facilitate the closing of this new credit facility, we agreed to extend the
repayment terms of our Note so as to require mandatory quarterly principal
payments of $1.7 million beginning July 30, 2006 through April 30, 2011 and
modified certain financial covenants in the Note. Interest on the Note continues
to accrue at an annual fixed rate of 10.5% and is payable quarterly. The Note
continues to be cross-collateralized with CAI's senior credit agreement, subject to
the terms of an amended and restated subordination agreement. At the same time,
we were provided a majority position on CAI's board of directors. As a result of
these transactions and gaining a majority position on CAI's board, our financial
statements include CAI as a consolidated subsidiary commencing June 27, 2002.
Previously, CAI was accounted for under the equity method of accounting. Our
share of the equity losses of CAI for the periods from January 1, 2002 through
June 26, 2002 have been recorded in losses for investments accounted for under
the equity method in the accompanying Consolidated Statements of Income. Since
June 27, 2002, CAI's results of operations have been included in the appropriate
captions on the accompanying Consolidated Statements of Income. The assets and
liabilities of CAI at December 31, 2004 and 2003 have been included on the
accompanying Consolidated Balance Sheets.

A total of $65.0 million
was outstanding under CAI's senior revolving credit facility at December
31, 2004. Borrowings under CAI's senior credit facility are secured by
substantially all of CAI's assets, other than certain excluded assets, and
are payable on June 27, 2005. CAI is currently in discussions with its lenders
regarding a renewal of its senior revolving credit facility. The senior credit
facility contains various financial and other covenants. At December 31, 2004,
CAI was in compliance with these covenants. The senior credit facility was
amended in May 2003 to increase the letter of credit commitment by the
lenders' administrative agent.

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In April 2004, we reached an agreement with CAI resolving
differences in interpretation of certain provisions of the Operating and
Administration Agreement (the "CAI Agreement") governing payment of appropriate
remedial compensation when an age disparity develops between our containers
managed by CAI and the balance of CAI's managed fleet. Pursuant to our agreement
with CAI, we paid CAI $2.0 million for resolution of all disputes through
February 29, 2004. The impact of this agreement was recorded by us during the
three months ended March 31, 2004, as a reduction in consolidated pre-tax
income of $1.0 million ($0.6 million net of tax). We anticipate that the
earnings related to certain of our containers managed by CAI will be reduced to
the extent the average age of such containers exceeds the average age of all
other containers in CAI's fleet.

Chassis Holdings I, LLC

For many years, The Ivy
Group, a New Jersey general partnership composed directly or indirectly of
certain of our current and former directors and executive officers, together
with certain of its principals, leased chassis to our wholly-owned subsidiary
Trac Lease, Inc. ("Trac Lease") for use in Trac Lease's business.
As of January 1, 2001, Trac Lease leased a total of 6,047 chassis from The Ivy
Group and its principals for an aggregate annual lease payment of approximately
$2.6 million.On July 1, 2001, we restructured our relationship with The
Ivy Group and its principals to provide us with managerial control over the
6,047 chassis previously leased by Trac Lease from The Ivy Group and its
principals. As a result of the restructuring, the partners of The Ivy Group
contributed these 6,047 chassis and certain other assets and liabilities to a
newly formed subsidiary, Chassis Holdings I, LLC ("Chassis Holdings"),
in exchange for $26.0 million face value of preferred membership units and 10%
of the common membership units, and Trac Lease contributed 902 chassis and two
thousand dollars in cash to Chassis Holdings in exchange for $3.0 million face
value of preferred membership units and 90% of the common membership units. The
preferred membership units are entitled to receive a preferred return prior to
the receipt of any distributions by the holders of the common membership units.
The value of the contributed chassis was determined by taking the arithmetic
average of the results of independent appraisals performed by three nationally
recognized appraisal firms in connection with our establishment of a chassis
securitization facility in July 2000. As the managing member of Chassis
Holdings, Trac Lease exercises sole managerial control over the entity's
operations. Chassis Holdings leases all of its chassis to Trac Lease at a rental
rate equal to the then current Trac Lease fleet average per diem. Chassis
Holdings and the holders of the preferred membership units are party to a
Put/Call Agreement providing that the holders of preferred units may put such
units to Chassis Holdings under certain circumstances and Chassis Holdings has
the right to redeem such units under certain circumstances. Chassis Holdings
will be required to make certain option payments to the holders of the preferred
membership units in order to preserve its right to redeem such units. Dividends
paid on the common units and distributions on the preferred units totaling $3.1
million, $2.9 million and $3.1 million for the years ended December 31,
2004, 2003 and 2002, respectively, are included in minority interest
(income)/expense, net in the accompanying Consolidated Statements of Income.

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Chassis Distribution Agreement

In April 2003, we agreed to
become a 50% owner through an initial investment of $0.5 million of a limited
liability company (the "LLC") formed with a foreign chassis
manufacturer. The purpose of the LLC is to be the exclusive worldwide
distributor of chassis built by this manufacturer and for us to share in the
profits the LLC earns in selling these chassis to third parties. Under the terms
of the Distribution agreement for this equipment, we have agreed to purchase at
least 15,000 chassis at preferred pricing over a ten-year period, of which 5,651
chassis were purchased or ordered by us through December 31, 2004. We may elect
to purchase additional equipment during the ten-year period at identical terms.
The LLC began operations during the second quarter of 2003. We consolidate the
financial statements of the LLC.

Share Repurchases

In December 2004, Warren L.
Serenbetz (a former member of our Board of Directors) advised us that he
intended to exercise 668,438 stock options which represented the remaining
options issued to him under the terms of the 1993 Stock Option Plan. In
addition, Mr. Serenbetz requested, and the Compensation Committee of the Board
of Directors allowed him, to exercise these options on a cashless basis. These
options had an exercise price of $10.25 per share and the market value at the
date he exercised his options was $22.05 per share.

In connection with the cashless exercise feature, we withheld
310,725 shares with a market value of $6.9 million representing the cost to Mr.
Serenbetz of exercising these options. In addition, we withheld 110,086 shares
with a market value of $2.4 million representing the amounts advanced to Mr.
Serenbetz for the payment of his minimum taxes related to the exercise. The
remaining 247,627 shares were issued to Mr. Serenbetz.

The 420,811 shares withheld by the Company for the exercise
price of the options and Mr. Serenbetz's minimum taxes have been recorded as
treasury shares, at their market value at the date of exercise on the
accompanying Consolidated Balance Sheets. The exercise also resulted in the
issuance of 668,438 shares at a par value of $.001 and increased additional
paid-in-capital by $6.9 million. In addition, since these options were granted
to Mr. Serenbetz as compensation for services rendered, we are entitled to claim
a tax deduction for non-employee compensation on our 2004 federal tax return.
Since we did not recognize compensation expense on the grant or exercise of
these options, the tax benefit (amounting to $3.1 million) has been recorded as
additional paid-in-capital at the time these options were exercised.

During 2002, we purchased
9,300 shares for an aggregate price of $0.13 million. No shares were repurchased
during 2003.

United States Federal Income Tax

We are subject to federal and
state income taxes as a Subchapter "C" corporation under the Internal
Revenue Code. Interpool, Trac Lease and other United States subsidiaries file a
consolidated United States federal income tax return. This consolidated group is
liable for federal income taxes on its worldwide income.

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Personal Holding
Company Issues. The federal income tax laws have two requirements
for classifying a company as a personal holding company. We and our subsidiaries
currently satisfy the first requirement, the ownership of more than 50% of the
value of Interpool's stock by five or fewer individuals. Whether or not we
or any of our subsidiaries satisfy the second requirement (that at least 60% of
such corporation's adjusted ordinary gross income constitutes personal
holding company income) will depend upon such corporation's income mix.

Based upon the operating
results for 2004, we will not be considered a personal holding company for
federal income tax purposes for 2004. If we or any of our subsidiaries were
classified as a personal holding company for federal income tax purposes, in
addition to our regular federal income tax liability, our undistributed personal
holding company income (generally taxable income with certain adjustments,
including a deduction for federal income taxes and dividends paid) would be
subject to a personal holding company tax at the rate of 15%. Management
anticipates that for the immediate future, our current level of dividends will
be sufficient to avoid having any undistributed personal holding company income,
and thus does not anticipate that any personal holding company tax will be
imposed. There can be no assurance, however, that we will not at some point in
the future become liable for personal holding company tax. Furthermore, we may
at some point in the future elect to increase the dividend rate on our common
stock in order to avoid personal holding company tax.

We have incurred certain
losses from leasing activities that are characterized for tax purposes as
"Suspended Passive Activity Losses." These losses can be carried
forward indefinitely to offset income from future leasing activities. As of
December 31, 2004, such suspended passive activity loss carryovers, including
the passive activity loss carryovers of CAI, totaled approximately $356.0
million.

Interpool Limited. Under certain circumstances,
Interpool may be liable for United States federal income taxes on earnings of
Interpool Limited and any other foreign subsidiaries of ours, whether or not
such earnings are distributed to us. This would occur if Interpool Limited
realized "Subpart F income" as defined in the Code, if it were deemed to be
a foreign personal holding company, or if it were to have an increase in
earnings invested in United States property.

Subpart F income includes
foreign personal holding company income, such as dividends, interest and rents.
Although a substantial portion of Interpool Limited's income consists of
rents from container leasing activities, we believe that such rents are not
Subpart F income because they are derived from the active conduct of a trade or
business and received from unrelated persons. However, Interpool Limited has
received some dividend and interest income in past years, which was taxed as
Subpart F income.

If Interpool Limited were
treated as a foreign personal holding company for any year, we would be taxed on
the amount we would have received if Interpool Limited had distributed all its
income to us as a dividend. However, based on the operating results for 2004,
Interpool Limited will not be considered a foreign personal holding company for
2004. The American Jobs Creation Act of 2004 repealed the foreign personal
holding company provisions beginning after December 31, 2004.

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A parent company is also
subject to taxation when a foreign subsidiary increases the amount of its
earnings invested in United States property during any calendar year. We do not
expect that Interpool Limited will invest any earnings in United States
property.

No deferred U.S. Federal
income taxes have been provided on the unremitted earnings of Interpool Limited
since it is the Company's intention to indefinitely reinvest such earnings. At
December 31, 2004, unremitted earnings of this subsidiary were approximately
$334.0 million. The deferred U.S. Federal Income taxes related to the unremitted
earnings of this subsidiary would be approximately $110.0 million, assuming
these earnings are taxable at the U.S. statutory rate, net of foreign tax
credits. We are now exploring the implications of the repatriation provision
recently enacted by the American Jobs Creation Act of 2004, but we have not yet
decided whether to repatriate any unremitted earnings.

United
States/Barbados income tax convention. Interpool Limited's business is
managed and controlled in Barbados; it also has a permanent establishment in the
United States. Under the income tax convention between the United States and
Barbados, including any protocols and amendments (the "pre-2005 Treaty"), any
profits of Interpool Limited from leasing of containers used in international
trade generally are taxable only in Barbados and not in the United States.

Interpool Limited has been
entitled to the benefits of the Tax Convention for each year by satisfying the
two-pronged test to the "limitation of benefits" provision: (1) more
than 50% of the shares of Interpool Limited were owned, directly or indirectly,
by any combination of individual United States residents or citizens (the
"51% U.S. ownership test"), and (2) its income was not used in
substantial part, directly or indirectly, to meet liabilities to persons who are
not residents or citizens of the United States (the "base erosion
test"). We believe Interpool Limited passed both of these tests and was
eligible for the benefits of the pre-2005 Treaty through December 31, 2004. If
Interpool Limited had ceased to be eligible for the benefits of the pre-2005
Treaty, a substantial portion of its income would become subject to the 35%
United States federal income tax and the 30% branch profits tax.

The Tax Convention does not
afford Interpool Limited any relief from the personal holding company tax or any
other tax that may be imposed on the undistributed earnings of a Barbados
corporation. However, based on the operating results for 2004, Interpool Limited
will not be considered a foreign personal holding company and there will be no
personal holding company tax for 2004. The American Jobs Creation Act of 2004
repealed the foreign personal holding company provisions beginning after
December 31, 2004.

July 2004 Protocol to
the United States and Barbados Tax Treaty. On July 14, 2004, the United
States and Barbados signed a protocol to the pre-2005 Treaty which was ratified
on December 20, 2004 ("post-2004 Treaty") that contains a more restrictive
limitation on benefits provision than the pre-2005 Treaty. The post-2004 Treaty
took effect on January 1, 2005 following its ratification by the United States
Senate and the government of Barbados on December 20, 2004. Under the post-2004
Treaty, in addition to having to satisfy the 51% U.S. ownership and base erosion
tests described above, Interpool Limited is only eligible for Treaty benefits
with respect to its container rental and sales income if Interpool, Inc. is
listed on a "recognized stock exchange" and Interpool, Inc.'s stock is
"primarily" and "regularly" traded on such exchange.

62

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During April 2004
Interpool, Inc. was de-listed by the New York Stock Exchange. During this
de-listing, our common stock was traded on the over-the-counter market under the
symbol IPLI. In December 2004, after making all delinquent SEC filings, we
applied for relisting on the New York Stock Exchange. On January 13, 2005 our
common stock was re-listed on the New York Stock Exchange; a "recognized
stock exchange" within the meaning of the post-2004 Treaty. Interpool
believes this listing and its current trading volume satisfies the
"primarily" and "regularly" traded requirements of the
post-2004 Treaty, and Interpool Limited qualified for benefits under the
post-2004 Treaty on January 13, 2005. We have estimated there should be no U.S.
current tax expense for the period January 1, 2005 to January 12, 2005.

Barbados tax returns. As a company resident in
Barbados, Interpool Limited is required to file tax returns in Barbados and pay
any tax liability to Barbados. However, no Barbados tax returns have been
prepared or filed for Interpool Limited for any period subsequent to its 1997
tax year. We believe the failure to file these returns has not resulted in any
material underpayment of taxes, interest or penalties (other than a normal late
filing penalty), because we believe no material Barbados taxes would have been
due for the years for which returns have not been filed. We further believe
Interpool Limited's failure to file these returns would not present any other
material risk to Interpool. Preparation of these tax returns is currently in
process, and it is our intent to submit them as promptly as practical.

State and Local Taxes

Income
taxes. Interpool and Trac Lease are liable for state and local
income taxes on their income, and Interpool Limited is liable for state and
local income taxes on its earnings attributable to operations in the United
States.

Sales tax To date, Interpool, Trac Lease and
Interpool Limited generally have not paid sales taxes on their long-term leasing
revenues to the states in which they conduct business because management has
believed such revenues to be exempt from state sales taxes on several grounds,
including a long-standing interpretation of the Commerce Clause of the United
States Constitution that would prohibit the imposition of a tax on cargo
containers and chassis used primarily for transportation of goods in interstate
commerce or international trade. Under the terms of our equipment leases, in the
event sales tax is imposed, we would generally be entitled to recover any such
sales tax from our lessees. Interpool and Trac Lease do, however, collect and
remit sales tax on their short-term chassis pool (intrastate) activity.

Inflation

Management believes that
inflation has not had a material adverse effect on our results of operations. In
the past, the effects of inflation on administrative and operating expenses have
been largely offset through economies of scale achieved through expansion of the
business.

Critical Accounting Policies and Estimates

The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to use judgment in making
estimates and assumptions that affect reported amounts of assets and
liabilities, the reported amounts of income and expense during the reporting
period and the disclosure of contingent assets and liabilities at the date of
the financial statements. Management has identified the policies and estimates
below as critical to our business operations and the understanding of our
results of operations. For a detailed discussion on these and other significant
accounting policies, see Note 1 to the Consolidated Financial Statements. These
policies and estimates are considered critical due to the existence of
uncertainty at the time the estimate is made, the likelihood of changes in
estimates from period to period and the potential impact that these estimates
can have on our financial statements. The following accounting policies and
estimates include inherent risks and uncertainties related to judgments and
assumptions made by management. Management's estimates are based on the
relevant information available at the end of each period.

63

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Allowance for Doubtful Accounts The
allowance for doubtful accounts is set on a quarterly basis and is based on the
risk profile of the receivables, credit quality indicators such as the level of
past due amounts and non-performing accounts and economic conditions, as well as
the value of underlying collateral. Changes in economic conditions or other
events may necessitate additions or deductions to the allowance for doubtful
accounts. The allowance is intended to provide for losses inherent in the
accounts receivable, and requires the application of estimates and judgments as
to the outcome of collection efforts and the realization of collateral, among
other things.

Accounting for
Leasing Equipment  Long-lived assets are depreciated on a
straight-line basis over their estimated useful lives to residual values that
approximate fair value. Equipment useful lives are based upon actual experience
in our fleet as well as the useful lives assigned to the equipment by
independent appraisers. We continue to review our depreciation policies on a
regular basis to evaluate if changes have taken place that would suggest that a
change in the depreciation policies is warranted. Periodically a determination
is made as to whether the carrying amount of the fleet exceeds its estimated
future undiscounted cash flows. In addition, all idle equipment is evaluated to
determine whether the units will be repaired and returned to service or sold
based upon the best economic alternative. Assets to be disposed are reported at
the lower of the carrying amount or fair value.

Lease Residual Values  Operating lease
equipment is carried at cost less accumulated depreciation and is depreciated to
estimated residual values using the straight-line basis of depreciation over
their estimated useful lives. Direct financing leases are recorded at the
aggregated future minimum lease payments, including any bargain or economically
compelled purchase options granted to the customer, less unearned income. We
generally bear greater risk in operating lease transactions (versus direct
financing lease transactions) due to redeployment costs and related risks that
are avoided under a direct financing lease. Management performs annual reviews
of the estimated residual values which can vary depending on a number of
factors.

Goodwill  Goodwill, in accordance with SFAS
No. 142, Goodwill and Other Intangible Assets ("SFAS 142") is reviewed
for possible impairment at least annually during the fourth quarter of each
fiscal year. A review of goodwill may be initiated prior to conducting the
annual analysis if events or changes in circumstances indicate that the carrying
value of goodwill may be impaired. During this review, management relies on a
number of factors including operating results, business plans, economic
projections, anticipated future cash flows and market place data.

64

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Accounting for Customer Defaults  We have
sought to reduce credit risk by maintaining insurance against customer
insolvency and equipment related losses. We cease the recognition of lease
revenues for amounts billable to the lessee after the lease default date at the
time we determine that such amounts are not probable of collection from the
lessee. In connection with the accounting for the insurance policy, we record a
receivable which is limited to the actual costs incurred or losses recognized
that would have been billable to the lessee pursuant to the lease contract
(which are also covered by the insurance contract). Items that are covered under
the insurance contract, for amounts billable to the lessee in accordance with
the lease, that are in excess of costs incurred and losses recognized by us, are
considered a gain contingency.

Derivative Financial
Instruments  We utilize interest rate swaps to hedge
against the effects of future interest rate fluctuations. We do not enter into
derivative financial instruments for trading or speculative purposes.

On January 1, 2001, we
adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities("SFAS 133"). Derivative instruments are included in
the Consolidated Balance Sheet at their fair values in accounts payable and
accrued expenses and changes in fair values are recognized immediately in
earnings, unless the derivatives qualify as hedges of future cash flows. For
derivatives qualifying as hedges of future cash flows, the effective portion of
changes in fair value is recorded temporarily in accumulated other comprehensive
loss as a separate component of equity, and contractual cash flows, along with
the related impact of the hedged items, continue to be recognized in earnings.
Any ineffective portion of a hedge is reported in current earnings. Amounts
accumulated in other comprehensive loss are reclassified to earnings in the same
period that the hedged transaction impacts earnings.

The net interest
differential, including premiums paid or received, if any, on interest rate
swaps, is recognized on an accrual basis as an adjustment to interest expense to
correspond with the hedged position. We may, at our discretion, terminate or
redesignate any interest rate swap agreement prior to maturity. At that time,
any gains or losses on termination would continue to amortize into income to
correspond to the recognition of interest on the hedged debt. If such debt
instrument was also terminated, the gain or loss associated with the terminated
derivative included in accumulated other comprehensive loss at the time of
termination of the debt would be recognized in the Consolidated Income Statement
at that time.

Warrant Valuation  Our outstanding warrants
are classified as a liability in accordance with EITF 00-19. Under the
provisions of EITF 00-19, a contract designated as an asset or liability must be
carried at fair value until the contract meets the requirements for treatment as
equity, until the contract is exercised or until the contract expires.
Accordingly, future changes to the fair market value of these Warrants have the
potential to cause volatility in our future results. For the period of time that
these Warrants are classified as a liability, any increase in the fair market
value of the Warrants will result in an additional non-cash expense to the
Consolidated Statements of Income. If the fair market value of the Warrants
decreases in the future, we will record non-cash income in our Consolidated
Statements of Income. We estimate the fair value of our Warrants on a quarterly
basis using a lattice model.

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Income Taxes  Deferred tax liabilities and
assets are recognized for the expected future tax consequences of events that
have been reflected in the Consolidated Financial Statements. Deferred tax
liabilities and assets are determined based on the differences between the book
values and the tax basis of particular assets and liabilities, using tax rates
in effect for the years in which the differences are expected to reverse. A
valuation allowance is provided to offset any net deferred tax assets if, based
upon the available evidence which may be subject to management estimates, it is
more likely than not that some or all of the deferred tax assets will not be
realized.

In certain situations, a
taxing authority may challenge positions adopted in our income tax filings. We
may apply a different tax treatment for these selected transactions in filing
the tax return than for income tax financial reporting purposes. We regularly
assess the tax positions for such transactions and include reserves for those
differences in position. The reserves are utilized or reversed once the statute
of limitations has expired or the matter is otherwise resolved. In addition, we
believe the ultimate outcome of these matters will not have a material impact on
the Company's financial condition or liquidity.

Through December 31, 2004
we claimed tax benefits under an income tax convention between the United States
and Barbados ("pre-2005 Treaty"), the jurisdiction in which our
subsidiary, Interpool Limited, operates our container business, is incorporated.
Specifically, under the pre-2005 Treaty, any profits of Interpool Limited from
leasing of containers used in international trade generally are taxable only in
Barbados at an approximate 3% tax rate, and not in the United States. Interpool
Limited was entitled to the benefits of the tax convention for each year that
more than 50% of the shares of Interpool Limited were owned, directly or
indirectly, by any combination of individual United States residents or citizens
(the "51% U.S. ownership test") and its income was not used in
substantial part, directly or indirectly, to meet liabilities to persons who
were not residents or citizens of the United States (the "base erosion
test"). We believe Interpool Limited passed both of these tests through
December 31, 2004.

Historically, no deferred
U.S. Federal income taxes have been provided on the unremitted earnings of the
subsidiary since it is our past practice and future intention to permanently
reinvest such earnings. We have documented our ability to reinvest earnings
generated annually from our international operations. This documentation
contains certain management judgments and estimates of economic conditions and
the future demand for containers. Any unremitted earnings that we would be
unable to reinvest in our international operations could be subject to taxation
at United States tax rates. We are now exploring the implications of the
repatriation provision contained in the American Jobs Creation Act of 2004, but
we have not yet decided whether to repatriate any unremitted earnings.

On July 14, 2004, the
United States and Barbados signed a protocol to the pre-2005 Treaty which was
ratified on December 20, 2004 ("post-2004 Treaty") that contains a
more restrictive limitation on benefits provision than the pre-2005 Treaty. The
post-2004 Treaty took effect on January 1, 2005 following its ratification by
the United States Senate and the government of Barbados on December 20, 2004.
Under the post-2004 Treaty, in addition to having to satisfy the 51% U.S.
ownership and base erosion tests described above, Interpool Limited is only
eligible for Treaty benefits with respect to its container rental and sales
income if Interpool, Inc. is listed on a "recognized stock exchange"
and Interpool, Inc.'s stock is "primarily" and
"regularly" traded on such exchange.

66

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As described elsewhere in
this report, on January 13, 2005 our common stock was listed on the New York
Stock Exchange; a "recognized stock exchange" within the meaning of
the post-2004 Treaty. Interpool believes this listing and its current trading
volume satisfies the "primarily" and "regularly" traded
requirements of the post-2004 Treaty, and that Interpool Limited qualified for
benefits under the post-2004 Treaty on January 13, 2005. We have estimated there
should be no U.S. current tax expense for the period January 1, 2005 to January
12, 2005.

Recent Accounting Pronouncements

In June 2002, the FASB
issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities("SFAS 146"). SFAS 146 requires that a liability for
costs associated with exit or disposal activities be recognized when the
liability is incurred. Existing U.S. GAAP provides for the recognition of such
costs at the date of management's commitment to an exit plan. In addition,
SFAS 146 requires that the liability be measured at fair value and be adjusted
for changes in estimated cash flows. The provisions of the new standard were
effective for exit or disposal activities initiated after December 31, 2002.
Adoption of SFAS 146 did not materially affect our Consolidated Financial
Statements.

In November 2002, the FASB
issued FASB Interpretation No. 45, Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others("FIN 45"). FIN 45 elaborates on the disclosures to be made
by a guarantor in interim and annual financial statements about its obligations
under certain guarantees it has issued. A guarantor is required to disclose (a)
the nature of the guarantee, including the approximate term, how the guarantee
arose, and the events and circumstances that would require the guarantor to
perform under the guarantee; (b) the maximum potential amount of future payments
under the guarantee; (c) the carrying amount of the liability, if any, for the
guarantor's obligation under the guarantee; and (d) the nature and extent
of any recourse provisions or available collateral that would enable the
guarantor to recover the amounts paid under the guarantee. FIN 45 also clarifies
that a guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. Disclosure requirements were effective for financial statements with
periods ending after December 15, 2002 while the initial recognition and initial
measurement provisions were to be applied on a prospective basis to guarantees
issued or modified after December 31, 2002. We have adopted the provisions of
FIN 45 as required. (See Note 8 to the Consolidated Financial Statements for
disclosures regarding our guarantees.) The adoption of FIN 45 did not have a
material impact on our Consolidated Financial Statements.

In December 2003, the FASB issued FASB Interpretation No. 46
(revised December 2003), Consolidation of Variable Interest Entities
("FIN 46R") which addresses how a business should evaluate whether it has a
controlling financial interest in an entity through means other than voting
rights and accordingly should consolidate the entity. FIN 46R revised FASB
Interpretation No. 46 which was issued in January 2003. We adopted FIN 46R as of
December 31, 2003. There was no impact on our financial condition or results of
operations.

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In May 2003, the FASB
issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity ("SFAS 150"). This
statement establishes standards for the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. The statement also includes required disclosures for financial
instruments within its scope. Under the classification and disclosure provisions
of this pronouncement, we were required to display the Company-Obligated
Mandatorily Redeemable Preferred Securities in Subsidiary Grantor Trusts within
the liability section on the face of the Consolidated Balance Sheets. (See Note
4 to the Consolidated Financial Statements for disclosures regarding our
Company-Obligated Mandatorily Redeemable Preferred Securities.) Most of the
guidance in SFAS 150 is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. On November 7, 2003, certain
provisions of SFAS 150, relating to mandatorily redeemable non-controlling
interest, were deferred indefinitely. The adoption of SFAS 150 did not affect
our financial conditions or results of operations.

In November 2003, the
Emerging Issues Task Force ("EITF") issued EITF Issue No. 03-1. The
Meaning of Other-Than-Temporary Impairment and its Application to Certain
Investments. Issue No. 03-1 requires new tabular and narrative disclosure
items effective for fiscal years ending after December 15, 2003. Companies are
required to provide expanded information about their debt and marketable equity
securities with market values below carrying values. The narrative information
must include positive and negative information management considered in
concluding the unrealized loss was not other-than-temporary and therefore was
not recognized in earnings. For further discussion regarding unrealized holding
losses, see Note 1 to the Consolidated Financial Statements.

In December 2004, the FASB
published SFAS No. 123(R), Share-Based Payment,("SFAS 123
(R)") which will be effective for periods beginning after June 15, 2005. We
currently account for our stock option plans in accordance with SFAS No. 148,
Accounting for Stock-Based Compensation("SFAS 148"). This
Statement amends SFAS No. 123, Accounting for Stock-Based Compensation("SFAS 123"), which allows for the retention of principles within
Accounting Principles Board Opinion 25, Accounting for Stock Issued to
Employees("APB 25"). As permitted, we have chosen to continue to
account for stock-based compensation using the intrinsic value method described
in APB 25 and related interpretations. APB 25 generally requires compensation
costs, if any, to be recognized for the difference between the exercise price
and the market price of the underlying stock on the date of the grant.
Alternatively, SFAS 123 employs fair value-based measurement and generally
results in the recognition of compensation expense for all stock-based awards.
The adoption of SFAS 123(R) will require the recognition of compensation expense
for all share-based compensation. Based on the number of options currently
outstanding, the adoption of SFAS 123(R) is not expected to have a significant
impact on our financial condition or results of operations. However, all future
grants of share-based compensation will result in the recognition of
compensation expense.

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The nature of our business
exposes us to market risk arising from changes in interest rates. We manage
interest rate risk to protect margins on existing transactions. Interest rate
risk is the risk of earnings volatility attributable to changes in interest
rates. Additionally, we consider interest rate swap contracts as an integral
part of borrowing transactions. Generally we seek to reduce our exposure by
entering into amortizing interest rate swap contracts, which coincide with the
principal and maturity of the underlying debt instruments hedged. We do not use
leveraged swaps and do not use leverage in any of our investment activities that
would put principal capital at risk.

The following table sets
forth principal cash flows and related weighted average interest rates by
expected maturity dates for debt and capital lease obligations at December 31,
2004:

`Total
 (Dollars in Thousands)    Obligation       2005         2006         2007         2008         2009      Thereafter
----------------------     ----------       ----         ----         ----         ----         ----      ----------
Variable rate facilities    $411,119     $122,453      $50,641      $52,976      $48,034      $54,043      $82,972
Average interest rate %                      4.3%         4.3%         4.3%         4.3%         4.4%         4.4%

Fixed rate facilities(1)  $1,307,079     $118,100      $88,481     $231,938      $89,178      $54,268     $725,114
Average interest rate %                      6.9%         7.0%         7.0%         7.0%         7.1%         7.1%

Total Debt                $1,718,198     $240,553     $139,122     $284,914     $137,212     $108,311     $808,086
Average interest rate %                      6.4%         6.5%         6.5%         6.6%         6.9%         6.9%`

|(1) | These fixed rate facilities include variable instruments that have been
converted to fixed rate debt through the use of interest rate swap agreements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

Based on outstanding debt
balances at December 31, 2004 of variable rate facilities, which have not been
converted to fixed rate debt through the use of interest rate swaps, a 10%
change in variable interest rates would have resulted in a $1.9 million change
in pre-tax earnings.

For further information
regarding our floating and fixed rate debt, see Note 4 to the Consolidated
Financial Statements.

Credit Risk

We maintain detailed credit
records about our customers. Our credit policy sets different maximum exposure
limits for our customers. Credit criteria may include, but are not limited to,
customer trade route, country, social and political climate, assessments of net
worth, asset ownership, bank and trade credit references, credit bureau reports,
operational history and financial strength.

We seek to reduce credit
risk by maintaining insurance coverage against customer insolvency and related
equipment losses. We maintain contingent physical damage, recovery and loss of
revenue insurance, which provides coverage in the event of a customer's
insolvency, bankruptcy or default giving rise to our demand for return of all of
our equipment. The policy covers the cost of recovering our equipment from the
customer, including repositioning cost, damage to the equipment and the value of
equipment which could not be located or was uneconomical to recover. It also
covers a portion of the equipment leasing revenue that we might lose as a result
of the customer's default (i.e., up to 180 days of lease payments following
an occurrence under the policy). Our current policy, which will expire on April
30, 2005, includes coverage of $9.0 million with a $3.0 million deductible, per
occurrence. While we believe we will be able to renew this coverage on
comparable or more favorable terms, for an additional twelve month period, there
can be no assurance that this or similar coverage will be available in the
future or that such insurance will cover the entirety of any loss.

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At December 31, 2004
approximately 47% of accounts receivable and 70% of the net investment in direct
financing leases were from customers outside of the United States.

In 2004, our top 25
customers represented approximately 75% of consolidated billings, with no single
customer accounting for more than 7.9%.

Allowance for Doubtful Accounts

The allowance for doubtful
accounts includes our estimate of allowances necessary for receivables on both
operating and direct financing lease receivables. The allowance for doubtful
accounts is developed based on two key components (1) specific reserves for
receivables which are impaired for which management believes full collection is
doubtful and (2) reserves for estimated losses inherent in the receivables based
upon historical trends. We believe our allowance for doubtful accounts is
adequate to provide for credit losses inherent in our accounts receivable. The
allowance for doubtful accounts is intended to provide for losses inherent in
the accounts receivable, and requires the application of estimates and judgments
as to the outcome of collection efforts and the realization of collateral, among
other things. In addition, changes in economic conditions or other events may
necessitate additions or deductions to the allowance for doubtful accounts.
Direct financing leases are evaluated on a case by case basis. When evaluating
our operating and direct financing lease receivables for impairment, we
consider, among other things, the level of past-due amounts of the respective
receivable, the borrower's financial condition, credit quality indicators
of the borrower, the value of underlying collateral and third party credit
enhancements such as guarantees and insurance policies. Once a direct financing
lease is determined to be non-performing, our procedures provide for the
following events to take place in order to evaluate collectibility:

| |  | The past due amounts are reclassified to accounts receivable,
| | - | -------------------------------------------------------------

| |  | The equipment value supporting such direct financing lease is reclassified to
leasing equipment, and
| | - | ----------------------------------------------------------------------------------------------------

| |  | Collectibility is evaluated, taking into consideration equipment book value and
the total outstanding receivable, as well as the likelihood of collection
through the recovery of equipment.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The adequacy of our
allowance for doubtful accounts is provided based upon a quarterly review of the
collectibility of our receivables. This review is based on the risk profile of
the receivables, credit quality indicators such as the level of past-due amounts
and economic conditions, as well as the value of underlying collateral in the
case of direct financing lease receivables. (See Note 3 to the Consolidated
Financial Statements.)

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As of December 31, 2004 and
2003, included in accounts receivable are non-performing receivables of $12.5
million and $12.8 million, respectively. Our average non-performing receivables
are $12.7 million and $11.7 million for the years ended December 31, 2004
and 2003, respectively. As of December 31, 2004 and 2003, included in the
allowance for doubtful accounts are reserves for the non-performing receivables
of $11.8 million and $11.9 million, respectively. As of December 31, 2004 and
2003 our non-performing receivables, net of applicable reserves, were 1.01% and
1.27%, respectively, of accounts receivable, net.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

INTERPOOL, INC.

|Report of Independent Registered Public Accounting Firm
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 Changes in Stockholders' 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
Notes to Consolidated Financial Statements | Page No.
73
74
75
76
77
78
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------

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Report of Independent Registered
Public Accounting Firm

The Board of Directors
Interpool, Inc.:

We have audited the accompanying consolidated balance sheets of
Interpool, Inc. (a Delaware corporation) and subsidiaries as of December 31,
2004 and 2003 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three year
period ended December 31, 2004. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Interpool, Inc. and subsidiaries as
of December 31, 2004 and 2003, and the results of their operations and their
cash flows for each of the years in the three year period ended December 31,
2004 in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to
the consolidated financial statements, in 2002 the Company changed its method of
accounting for (i) goodwill and (ii) the impairment or disposal of long-lived
assets.

(signed) KPMG LLP
Short Hills, N.J.
March 28, 2005

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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(dollars in thousands, except share and per share amounts)

`ASSETS                                                                                               2004            2003
                                                                                                     ----            ----
CASH AND CASH EQUIVALENTS (including restricted cash of $24,927 and $24,985 at December 31,
     2004 and 2003, respectively)                                                                   $309,458       $141,019
MARKETABLE SECURITIES, available for sale at fair value                                                   27             24
ACCOUNTS RECEIVABLE, less allowance of $14,091 and $16,358, respectively                              72,598         69,055
NET INVESTMENT IN DIRECT FINANCING LEASES                                                            363,445        426,815
OTHER RECEIVABLES, net                                                                                 3,602         25,485
LEASING EQUIPMENT, net of accumulated depreciation and amortization of $538,575 and $522,431,
     respectively                                                                                  1,579,196      1,636,716
OTHER ASSETS                                                                                          75,760         73,922
                                                                                                      ------         ------
TOTAL ASSETS                                                                                      $2,404,086     $2,373,036
                                                                                                  ==========     ==========
LIABILITIES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                                               $127,057       $198,062
WARRANT LIABILITY                                                                                     71,722            ---
INCOME TAXES:
     Current                                                                                           1,915            367
     Deferred                                                                                         49,204         37,392
                                                                                                      ------         ------
TOTAL TAXES                                                                                           51,119         37,759

DEFERRED INCOME                                                                                        2,018          2,704
DEBT AND CAPITAL LEASE OBLIGATIONS
     Due within one year                                                                             240,553        219,192
     Due after one year                                                                            1,477,645      1,496,495
                                                                                                   ---------      ---------
         TOTAL DEBT AND CAPITAL LEASE OBLIGATIONS                                                  1,718,198      1,715,687

TOTAL LIABILITIES                                                                                 $1,970,114     $1,954,212
                                                                                                  ----------     ----------
MINORITY INTEREST IN EQUITY OF SUBSIDIARIES                                                           39,786         35,184
                                                                                                      ------         ------
STOCKHOLDERS' EQUITY
     Preferred stock, par value $.001 per share; 1,000,000 authorized, none issued                       ---            ---
     Common stock, par value $.001 per share; 100,000,000 shares authorized, 28,278,759
       and 27,602,452 issued at December 31, 2004 and 2003, respectively                                  28             28
     Additional paid-in capital                                                                      138,021        128,538
     Unamortized deferred compensation                                                                  (554)        (1,184)
     Treasury stock, at cost, 646,711 and 225,900 shares at December 31, 2004 and 2003,
       respectively                                                                                  (11,508)        (2,229)
     Retained earnings                                                                               273,948        272,815
     Accumulated other comprehensive loss                                                             (5,749)       (14,328)
                                                                                                      -------       --------
TOTAL STOCKHOLDERS' EQUITY                                                                           394,186        383,640
                                                                                                     -------        -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                        $2,404,086     $2,373,036
                                                                                                  ==========     ==========`

The accompanying notes to the Consolidated Financial Statements are an integral
part of these statements.

74

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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002(dollars and shares in thousands)

`2004          2003         2002
REVENUES:                                                                         ----          ----         ----
   Equipment leasing revenue, including income recognized on direct
      financing leases of $41,659, $46,362 and $36,246, respectively             $388,183     $374,287    $325,080
   Other revenue                                                                   16,204       27,825      19,855
                                                                                   ------       ------      ------
TOTAL REVENUES                                                                    404,387      402,112     344,935
                                                                                  -------      -------     -------

COSTS AND EXPENSES:
  Lease operating expenses                                                         95,332      106,692       89,078
  Administrative expenses                                                          49,943       49,734       27,945
  Provision for doubtful accounts                                                   1,476        4,248        7,843
  Fair value adjustment for derivative instruments                                 (2,430)        (837)       5,530
  Fair value adjustment for warrants                                               49,222          ---          ---
  Depreciation and amortization of leasing equipment                               89,458       87,498       88,707
  Impairment of leasing equipment                                                   4,610        9,049        9,550
  (Income)/loss for investments accounted for under the equity method                (416)       1,698        6,603
  Other (income)/expense, net                                                     (15,686)      (5,079)       1,131
  Gain on insurance settlement                                                     (6,267)         ---         ---
  Interest expense                                                                112,013      106,688      108,344
  Interest income                                                                  (3,390)      (3,960)      (4,638)
                                                                                   -------      -------      ------
                                                                                  373,865      355,731      340,093
                                                                                  -------      -------      -------
Income before minority interest expense and provision/(benefit) for
  income taxes                                                                     30,522       46,381        4,842
MINORITY INTEREST EXPENSE                                                          (8,372)      (1,910)      (1,846)
                                                                                   -------      -------      -------
Income before provision/(benefit) for income taxes                                 22,150       44,471        2,996
PROVISION/(BENEFIT) FOR INCOME TAXES                                               13,721        3,281       (1,393)
                                                                                   ------        -----       ------
NET INCOME                                                                         $8,429      $41,190       $4,389
                                                                                   ======      =======       =======
INCOME PER SHARE
NET INCOME PER SHARE:
     Basic                                                                          $0.31        $1.51        $0.16
                                                                                    =====        =====        =====
     Diluted                                                                        $0.29        $1.42        $0.15
                                                                                    =====        =====        =====
WEIGHTED AVERAGE SHARES OUTSTANDING (in thousands):
     Basic                                                                         27,380       27,365       27,360
                                                                                   ======       ======       ======
     Diluted                                                                       28,960       30,396       29,202
                                                                                   ======       ======       ======`

The accompanying notes to the Consolidated Financial
Statements are an integral part of these statements.

75

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INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(dollars and shares in thousands)

`Common Stock                                                   Acum.
                             ------------------                                              Other                   Total
                                                Additional  Unamortized                      Comp.                   Share-
                              Outstanding  Par   Paid-in     Deferred    Treasury  Retained  Income   Comp-Income    holder's
                                Shares    Value  Capital    Compensation  Stock    Earnings  (Loss)     (Loss)       Equity
                              ----------  -----  -------    ------------  -------  --------  -----    -----------    --------
BALANCE, December 31, 2001
as previously reported          27,355     $28   $124,182       $---     $(2,099)  $239,065  $(9,907)                $351,269

Adjustment (see Note 1)            ---     ---       ---         ---        ---         803      ---         ---          803

BALANCE, December 31, 2001,
as adjusted                     27,355      28   124,182         ---      (2,099)   239,868   (9,907)                 352,072

Net income                         ---     ---       ---         ---        ---       4,389      ---       4,389        4,389

Other comprehensive loss           ---     ---       ---         ---        ---        ---   (15,091)    (15,091)     (15,091)
                                                                                                         -------
Comprehensive loss                                                                                      $(10,702)
                                                                                                        =========
Purchase of 9,300 shares of
  treasury stock                   ---     ---       ---         ---        (130)      ---       ---                     (130)

Capital contribution by
  officers and directors           ---     ---     1,983         ---        ---       ---        ---                    1,983

Cash dividends declared:

  Common stock, $.2275  per share  ---     ---       ---         ---        ---      (6,227)     ---                   (6,227)
                                                                                     -------                           ------
BALANCE, December 31, 2002      27,355      28   126,165         ---      (2,229)   238,030  (24,998)                 336,996

Net income                         ---     ---       ---         ---        ---     41,190       ---      41,190       41,190

Other comprehensive income         ---     ---       ---         ---        ---       ---     10,670      10,670       10,670
                                                                                                          ------
Comprehensive income                                                                                     $51,860
                                                                                                         =======
Capital contribution by
  officers and directors           ---     ---       698         ---        ---       ---        ---                      698

Options exercised                   22     ---       351         ---        ---       ---        ---                      351

Restricted stock award             ---     ---     1,324      (1,324)       ---       ---        ---                      ---

Amortization of restricted
stock award                        ---     ---       ---         140        ---       ---        ---                      140

Cash dividends declared:

  Common stock, $.25 per share     ---     ---       ---         ---        ---     (6,405)      ---                   (6,405)
                                                                                     ------                            -------
BALANCE, December 31, 2003      27,377     $28   $128,538    $(1,184)    $(2,229)  $272,815 $(14,328)                $383,640

Net income                         ---     ---       ---         ---        ---      8,429       ---       8,429        8,429

Other comprehensive income         ---     ---       ---         ---        ---        ---     8,579       8,579        8,579
                                                                                                            ----
Comprehensive income                                                                                     $17,008
                                                                                                         =======
Restricted stock award               2     ---       371        (371)       ---        ---       ---                      ---

Amortization of restricted
stock award                        ---     ---       ---          85        ---        ---       ---                       85

Forfeitures restricted
stock award                        ---     ---    (1,017)        916        ---        ---       ---                     (101)

Options exercised (See Note 14)    248     ---    10,006         ---      (9,279)     ---        ---                      727

Stock grant                          5     ---       123         ---        ---        ---       ---                      123

Cash dividends declared:

  Common stock, $0.25 per
  share                            ---     ---       ---         ---        ---     (7,296)      ---                   (7,296)
                                                                                     ------                            ------
BALANCE, December 31, 2004      27,632     $28   $138,021      $(554)   $(11,508) $273,948   $(5,749)                $394,186
                                ======     ===   ========      =====     ========  ========   =======               ========`

76

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The accompanying notes to the Consolidated Financial
Statements are an integral part of these statements.

INTERPOOL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(dollars in thousands)

`2004          2003           2002
                                                                                       ----          ----           -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                             $8,429       $41,190      $  4,389
Adjustments to reconcile net income to net cash provided by operating
activities --
   Depreciation and amortization                                                       97,123        94,210        91,457
   Impairment of leasing equipment                                                      4,610         9,049         9,550
   Amortization of debt discount                                                          506           ---           ---
   Accrued losses on business transferred under contractual agreement                     ---           ---        13,780
   Provision/(benefit) for deferred income taxes                                       11,483         1,808        (3,118)
   (Gain)/loss on sale of leasing equipment                                           (14,743)       (1,213)        4,257
   Loss on sale of marketable securities                                                  ---            50            30
   Gain on sale of land held for sale                                                     ---           ---        (4,766)
   Provision for uncollectible accounts                                                 1,476         4,248         7,843
   Gain on retirement of debt                                                             ---           ---        (1,118)
   Restricted stock grant expense                                                          85           140           ---
   Fair value adjustment for derivative instruments                                    (2,430)         (837)        5,530
   Fair value adjustment for warrants                                                  49,222           ---           ---
   (Income)/losses for investments accounted for under the equity method                 (416)        1,698         6,603
   Gain on settled insurance litigation                                                (6,267)          ---           ---
   (Increase)/decrease in accounts receivable                                          (3,619)       (9,351)        8,018
   Decrease (increase) in other receivables                                            26,610          (194)       (5,447)
   (Increase)/decrease in other assets                                                (11,342)        1,701        (9,938)
   (Decrease)/increase in accounts payable and accrued expenses                        (5,801)        7,834       (11,168)
   Increase/(decrease) in income taxes payable                                          1,488          (436)         (248)
   Other, net                                                                           3,915           140         4,493
                                                                                        -----           ---         -----
         Net cash provided by operating activities                                    160,329       150,037       120,147
                                                                                      -------       -------       -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of leasing equipment                                                     (206,613)     (237,521)     (191,938)
Proceeds from dispositions of leasing equipment                                       153,058        54,386        12,041
Proceeds from sale of land                                                                ---           ---         7,955
Investment in direct financing leases                                                 (43,708)     (109,254)      (64,088)
Cash collections on direct financing leases                                            88,939        77,793        59,749
Purchase of marketable securities                                                         ---           (10)       (1,494)
Sales and matured marketable securities and other investing activities                    ---         1,445           574
Investment in and advances to subsidiary                                                  ---           ---           765
Proceeds from minority interest partner in chassis distributor                            ---           500           ---
                                                                                          ---           ---           ---
         Net cash used for investing activities                                        (8,324)     (212,661)     (176,436)
                                                                                       -------     ---------     ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt                                                        627,296       211,813     1,227,406
Payment of long-term debt and capital lease obligations                              (387,296)     (204,229)   (1,023,645)
Borrowings of revolving credit lines                                                   30,500        88,000        47,000
Repayment of revolving credit lines                                                  (245,995)      (56,505)     (121,846)
Purchase of treasury stock                                                                ---           ---          (130)
Dividends paid                                                                         (8,071)       (6,049)       (5,643)
                                                                                       -------       -------        ------
Net cash provided by financing activities                                              16,434        33,030       123,142
                                                                                       ------        ------       -------
Net increase/(decrease) in cash and cash equivalents                                  168,439       (29,594)       66,853

CASH AND CASH EQUIVALENTS, beginning of period                                        141,019       170,613       103,760
                                                                                      -------       -------       -------

CASH AND CASH EQUIVALENTS, end of period                                             $309,458      $141,019      $170,613
                                                                                     ========      ========      ========
Supplemental schedule of non-cash investing activities:
Direct financing lease financed through capital lease obligation                          ---        $4,397       $10,284
Transfers from leasing equipment to direct financing leases                           $24,449       $25,775       $40,227
Transfer from direct financing leases to leasing equipment                            $12,546        $3,651           ---
Exercise of stock option on a cashless basis                                             $727           ---           ---`

The accompanying notes to the Consolidated Financial Statements are an integral
part of these statements.

77

---

---

INTERPOOL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)      Nature of operations and significant
accounting policies:

The nature of operations
and the significant accounting policies used by Interpool, Inc. and subsidiaries
(the "Company" or "Interpool") in the preparation of the
accompanying consolidated financial statements are summarized below. The
Company's accounting records are maintained in United States dollars and
the consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America ("U.S.
GAAP").

Nature of operations--

The Company and its
subsidiaries conduct business principally in a single industry segment, the
leasing of intermodal dry freight standard containers, chassis and other
transportation related equipment. Within this single industry segment, the
majority of the Company's operations come from two reportable segments:
container leasing and domestic intermodal equipment leasing. The container
leasing segment specializes primarily in the leasing of intermodal dry freight
standard containers, while the domestic intermodal equipment segment specializes
primarily in the leasing of intermodal container chassis. The Company leases its
containers principally to international container shipping lines located
throughout the world. The customers for the Company's chassis are a large
number of domestic companies, many of which are domestic subsidiaries or
branches of international shipping lines, as well as major U.S. railroads.
Equipment is purchased directly or acquired through conditional sales contracts
and lease agreements, many of which qualify as capital leases.

The Company's
container leasing operations are primarily conducted through our wholly-owned
subsidiary, Interpool Limited, a Barbados corporation, as well as CAI, our 50%
owned consolidated subsidiaries . Profits of Interpool Limited from
international container leasing operations are exempt from federal taxation in
the United States. These profits are subject to Barbados tax at rates that are
substantially lower than the applicable rates in the United States.

The Company also had
limited operations in a third reportable segment that specialized in leasing
microcomputers and related equipment. The computer leasing segment consisted of
two majority owned subsidiaries, Microtech Leasing Corporation
("Microtech") and Personal Computer Rental Corporation
("PCR"). During the third quarter of 2001, the Company adopted a plan
to exit this segment. The Company liquidated the assets of Microtech as of March
31, 2004. PCR ceased active operations and began to liquidate in the first
quarter of 2003. At March 31, 2004, all of the assets of PCR were liquidated.

Beginning June 27, 2002,
the Company's consolidated financial statements include Container
Applications International, Inc. ("CAI"), which was previously
accounted for under the equity method of accounting. The Company owns a 50%
common equity interest in CAI. (See Note 11 for further information regarding
CAI.)

78

---

Basis of consolidation--

The Company's
consolidated financial statements are prepared in accordance with U.S. GAAP. The
consolidated financial statements include the accounts of the Company and
subsidiaries more than 50% owned or otherwise controlled by the Company. All
significant intercompany transactions have been eliminated. Minority interest in
equity of subsidiaries represents the minority stockholders' proportionate
share of the equity in the income of the subsidiaries.

In connection with certain
investments in which the Company does not own a majority interest but has the
ability to assert significant influence over the investee, these investments are
accounted for using the equity method of accounting. The Company's
investment in its equity method investees is included in other assets on the
accompanying Consolidated Balance Sheet.

Goodwill--

On June 29, 2001, the FASB
approved its proposed SFAS No. 142, Goodwill and Other Intangible Assets("SFAS 142").SFAS 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually in accordance with the
provisions of SFAS 142. SFAS 142 also requires that intangible assets with
definite useful lives be amortized over their respective estimated useful lives
to their estimated residual value, and reviewed for impairment in accordance
with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets to Be
Disposed Of ("SFAS 144").

Commencing January 1,
2002, as a result of adopting SFAS 142, goodwill is no longer amortized but is
reviewed for impairment. During December 2002, the Company conducted its annual
goodwill impairment test. The test disclosed that at December 31, 2002 the
fair value of an investment accounted for using the equity method included in
the domestic intermodal leasing segment was below its carrying value. As a
result, the Company's basis for this equity method investment was written
down by $1,095 to its estimated fair market value. During December 2003 and
2004, the Company conducted its annual goodwill impairment tests. The tests
disclosed that at both December 31, 2003 and 2004, the implied fair value of the
goodwill was in excess of its carrying value, therefore additional impairment
charges were not required. Total goodwill recorded at December 31, 2004 and
2003 was $5,495 for both years and is included in other assets on the
accompanying Consolidated Balance Sheet. This goodwill is included in total
assets within the Domestic Intermodal Leasing segment.

Translation of foreign currencies--

The Company has determined that the U. S. dollar is
its functional currency for each of its overseas operations therefore, all gains
and losses resulting from translating foreign currency transactions into the
functional currency are included in income.

Revenues--

Equipment leasing revenues
include revenue from operating leases and income on direct financing leases,
which is recognized over the term of the lease using the effective interest
method. Rental income on operating leases is recognized on the accrual basis
based on the contractual agreement with the lease customer.

79

---

Other revenue consists
primarily of fees charged to the lessee for handling, delivery and repairs which
is recognized as earned based on the terms of the contractual agreements with
the lease customer.

Maintenance and repair expense--

Maintenance and repair
expenses are accounted for under the direct expense method; thus these amounts
are charged to operating expenses when incurred.

Cash and cash equivalents--

The Company considers
investments with original maturities of three months or less to be cash
equivalents. The Company's policy is to invest cash in excess of short-term
operating and debt service requirements in cash equivalents. These instruments
are stated at cost, which approximates market value because of the short-term
nature of the instruments.

Allowance for doubtful accounts--

The Company's
allowance for doubtful accounts is provided based upon a quarterly review of the
collectibility of its receivables. This review is based on the risk profile of
the receivables, credit quality indicators such as the level of past-due amounts
and economic conditions, as well as the value of underlying collateral. An
account is considered past due when a payment has not been received in
accordance with the contractual terms. Accounts are generally charged off after
an analysis is completed which indicates that collection of the full principal
balance is in doubt. Changes in economic conditions or other events may
necessitate additions or deductions to the allowance for doubtful accounts. The
allowance for doubtful accounts is intended to provide for losses inherent in
the accounts receivable, and requires the application of estimates and judgments
as to the outcome of collection efforts and the realization of collateral, among
other things. The Company believes its allowance for doubtful accounts is
adequate to provide for credit losses inherent in its accounts receivable. See
Note 3 to the Consolidated Financial Statements for further discussion regarding
the allowance for doubtful accounts.

Non-performing receivables--

Non performing receivables
reflect both operating lease receivables and direct financing lease receivables
which the Company considers impaired. When evaluating its operating and direct
financing lease receivables for impairment, the Company considers, among other
things, the level of past-due amounts of the respective receivable, the
borrower's financial condition, credit quality indicators of the borrower,
and the value of underlying collateral.

80

---

---

Direct financing leases--

Direct financing leases are
recorded at the aggregate future minimum lease payments, including any purchase
options granted to the customer, less unearned income. Income from these leases
is recognized over the term of the lease using the effective interest method.

Stock-based compensation--

Stock option plans areaccounted for in accordance with SFAS No. 148, Accounting for Stock-Based
Compensation("SFAS 148").This Statement amends SFAS No.
123, Accounting for Stock-Based Compensation("SFAS 123"),
which allows for the retention of principles within Accounting Principles Board
Opinion 25, Accounting for Stock Issued to Employees. As permitted by the
Statement, the Company has chosen to continue to account for stock-based
compensation using the intrinsic value method. To date, all options were granted
with an exercise price equal to the market price of the Company's stock at
grant date.

The following table
illustrates the effect on net income and earnings per share had the fair value
method of accounting been applied to the Company's stock compensation
plans.

`Year Ended December 31,
                                                       -------------------------------------------
                                                           2004            2003          2002
                                                           ----            ----          ----
Net income, as reported                                  $8,429          $41,190       $4,389
Add:  Stock based employee compensation expense
included in net income, net of related tax effects        1,463              383          ---
Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects               (1,503)            (452)        (112)
                                                         ------             ----         ----
Pro forma net income                                     $8,389          $41,121       $4,277
                                                         ======          =======       ======

Earnings per share:
Basic-as reported                                          $0.31           $1.51        $0.16
                                                           =====           =====        =====
Basic-pro forma                                            $0.31           $1.50        $0.16
                                                           =====           =====        =====
Diluted-as reported                                        $0.29           $1.42        $0.15
                                                           =====           =====        =====
Diluted-pro forma                                          $0.29           $1.42        $0.15
                                                           =====           =====        =====`

This pro forma impact only
takes into account options granted since January 1, 1995. The average fair value
of options granted during 2004 was $9.76 per option. The fair value was
estimated using the Black-Scholes Option pricing model based on the market price
at Grant Date of $22.05 and the following assumptions: risk-free interest rate
of 3.57%, expected life of 7 years, volatility of 45% and dividend yield of
1.44%. No Options were granted by the Company in 2003.

The average fair value of
options granted during 2002 was $6.66 per option. The fair value was estimated
using the Black-Scholes Option pricing model based on the market price at Grant
Date of $13.73 and the following assumptions: risk-free interest rate of 3.5%,
expected life of 7 years, volatility of 50% and dividend yield of 1.31%.

81

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Insurance receivables--

The Company has maintained
insurance coverage in the event of a lessee's insolvency, bankruptcy or
default. Amounts recorded as an insurance claim receivable are included in other
receivables, net at December 31, 2003 in the Consolidated Balance Sheets and are
limited to those amounts that are probable of collection and include only
incurred costs and losses related to the insurable event. There are no insurance
receivables at December 31, 2004. Amounts recorded as insurance claim receivable
are recorded in other (income)/expense, net in the Consolidated Statements of
Income. Upon collection of the receivable from the insurance carriers, any
amounts in excess of or less than the receivable recorded would be recorded as
gain or loss on insurance settlement in the Consolidated Statements of Income.

Property and equipment--

The Company records
property and equipment at cost, except for property and equipment that has been
impaired, for which the Company reduces the carrying amount to the estimated
fair value at the impairment date. Property and equipment is included in other
assets on the accompanying Consolidated Balance Sheet. The Company capitalizes
significant improvements; the Company charges repairs and maintenance costs that
do not extend the lives of the assets to expense as incurred. The Company
removes the cost and accumulated depreciation of assets sold or otherwise
disposed of from the accounts and recognizes any resulting gain or loss upon the
disposition of the assets.

The Company depreciates the
cost of property and equipment over their estimated useful lives on a
straight-line basis as follows: buildings  40 years; furniture and
fixtures  3 to 7 years; computers and office equipment  3 to 5
years; and other property and equipment  3 to 10 years.

Leasing equipment--

The Company records
equipment at cost, except for equipment that it considers impaired. When
equipment is considered impaired, the Company reduces the carrying amount to the
equipment's estimated fair value at the impairment date. The Company
capitalizes significant improvements if such improvements extend the life of the
equipment. The Company charges repair and maintenance costs that do not extend
the lives of the assets to expense as incurred. Upon disposition of equipment,
the Company removes the cost and accumulated depreciation of assets disposed of
from the accounts and recognizes any resulting gain or loss.

Depreciation and
amortization of leasing equipment (both equipment on-lease to customers and
available for hire) is provided under the straight-line method based upon the
following estimated useful lives:

`Dry freight standard containers            12.5 years
        Chassis                                    17.5 to 22.5 years
        Other                                      15 years`

82

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In March 2002, the Company
completed a $500,000 chassis securitization facility. At that time, independent
appraisals indicated a chassis useful life of between 20 and 25 years. As a
result, effective April 1, 2002, the Company revised its estimate of the useful
life of certain of its chassis from 17.5 years to 22.5 years. The effect of this
change was to decrease depreciation expense by $6,866 ($4,120 net of tax) for
the year ended December 31, 2002 which resulted in a $0.15 and $0.14 increase in
the basic and diluted net income per share, respectively. The valuations and
in-depth review concluded that no change was required to the residual value of
the Company's chassis.

CAI, the Company's 50%
owned subsidiary, had an independent valuation performed on its container fleet
to determine the useful life of the containers as well as the estimated market
value at the end of their useful life. As a result, effective April 1, 2002, the
Company adjusted the useful life for all of its containers to 12.5 years
(previously 12.5 to 15 years) and changed its residual values to the estimated
market value of the containers as determined by the appraisal. The effect of
these changes for the year ended December 31, 2002 was to decrease depreciation
expense of the Company by $489. In addition, the Company recognized additional
depreciation recorded by CAI prior to June 27, 2002 of $626 that was recorded by
the Company in loss for investments accounted for under the equity method. The
net effect of all these changes increased net income by $51 for the year ended
December 31, 2002 considering the Company's 50% common equity interest in
CAI.

Gains or losses resulting
from the disposition of leasing equipment are recorded in the year of
disposition. These amounts are recorded in other (income)/expense, net on the
Consolidated Statement of Income.

In August 2001, the FASB
approved its proposed SFAS No. 144, Accounting for the Impairment or Disposal
of Long Lived Assets("SFAS 144"). SFAS 144 addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS 144 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances occur measured by a comparison of the
carrying amount of an asset to undiscounted future net cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future undiscounted cash flows, an impairment charge is recognized for the
amount by which the carrying amount of the asset exceeds the fair value of the
asset. SFAS 144 requires companies to separately report discontinued operations
and extends that reporting to a component of an entity that either has been
disposed of (by sales, abandonment, or in a distribution to owners) or is
classified as held for sale. Assets to be disposed are reported at the lower of
the carrying amount or fair value less costs to sell. The Company adopted SFAS
144 on January 1, 2002. During the first quarter of 2002, the Company evaluated
the carrying value of its long-lived assets as prescribed by SFAS 144. The
adoption of this statement in the first quarter of 2002 did not result in an
adjustment to our Consolidated Financial Statements.

At December 31, 2004, 2003
and 2002, the Company performed a review of its container and chassis fleets in
order to determine whether these assets are impaired in accordance with SFAS
144. The container fleet is reported within the container leasing segment, while
the chassis are reported within the domestic intermodal equipment segment. This
review indicated that there was no impairment to the fleet with the exception of
specific units that were idle, some of which were badly damaged, and other
specific units with design flaws. The Company performed a review of this
equipment to determine whether the units would be repaired and returned to
service or sold based upon the best economic alternative for the Company. This
determination was based on the condition of the unit, its location and the
resale market within that location. All units identified for sale were then
written down, if required, to estimated net realizable value. The measurement of
an impairment loss requires a determination of fair value, which is based on the
best information available. The Company uses market prices of similar equipment
when available and the estimated residual value of a used chassis within the
remanufacturing process to determine fair value. For the years ended December
31, 2004, 2003 and 2002, the impairment loss on chassis and containers
(excluding CAI) was $4,335, $8,059 and $8,784, respectively. Impairment amounts
are recorded in impairment of leasing equipment on the accompanying Consolidated
Statements of Income.

83

---

During the years ended
December 31, 2004, 2003 and 2002, CAI performed a review of its container
fleet in order to determine whether these assets were impaired in accordance
with SFAS 144. The container fleet is reported in the container leasing segment.
The loss was calculated by comparing the equipment's net book value to the
estimated realizable value of the equipment. The total impairment loss recorded
by CAI at December 31, 2004 was $275 which reduced income before taxes by $138
after taking into account the Company's 50% minority interest adjustment.
This compares to an impairment loss at December 31, 2003 of $990 which
reduced income before taxes by $495 after taking into account the Company's
50% minority interest adjustment. The total impairment loss at December 31,
2002 was $4,231. The Company's 50% share of this loss is $2,115 of which
$1,732 was recognized by CAI before June 27, 2002 and was recorded by the
Company in loss for investments accounted for under the equity method. In
addition $766 of additional depreciation was recognized by CAI after June 27,
2002 which reduced income before taxes by $383 after taking into account the
Company's 50% minority interest adjustment.

Marketable and other investment securities--

Management has determined
that all securities are to be held for an indefinite period of time and
classified as securities available-for-sale carried at market value. Unrealized
holding gains and losses for available-for-sale securities are credited
(charged) to a component of stockholders' equity net of related income
taxes. Management determines the appropriate classifications of securities at
the time of purchase.

Premium and discount on
securities are included in interest income over the period from acquisition to
maturity using the level-yield method. The specific identification method is
used to record gains and losses on security transactions.

Through September 30, 2003,
the Company classified its retained interest in the off-balance sheet direct
financing lease securitization completed in March 1999 as an available-for-sale
security in the Consolidated Balance Sheets. Effective October 1, 2003, a
customer elected to return a portion of the equipment covered by a direct
financing lease which had been included in the lease securitization program.
This equipment was subsequently leased to another customer under the terms of an
operating lease agreement. As such, the lease could no longer be considered a
financial asset and the Securitization Trust special purpose entity could no
longer be treated as an off-balance sheet qualified special purpose entity for
accounting purposes. Therefore, effective October 1, 2003, the Company
consolidated the assets and liabilities of this special purpose entity. For
further information regarding the lease securitization program and the
consolidation of this special purpose entity, see Note 7 to the Consolidated
Financial Statements. Impairment losses of $134 for the year ended
December 31, 2002, were recorded and included in the accompanying
Consolidated Income Statements based upon management's analysis of
projected cash flows of the underlying direct financing lease receivables in the
Securitization Trust.

84

---

During the year ended
December 31, 2004, no sales of available-for-sale securities took place. During
the year ended December 31, 2003, sale of available-for-sale securities resulted
in proceeds of $1,445, and gross losses of $50. During the year ended December
31, 2002, sales of available-for-sale securities resulted in proceeds of $574,
gross gains of $5, and gross losses of $35.

The amortized cost and
estimated fair value of available for sale securities as of December 31, 2004
and 2003 are as follows:

`Gross Unrealized
                           Amortized        Holding        Holding        Estimated
                             Cost            Gains          Losses       Fair Value
                           ---------        -------        -------       ----------
2004
----
Marketable Securities           $24             $3          $---               $27
                                ===             ==          ====               ===

2003
---
Marketable Securities           $24            $--          $---               $24
                                ===            ===          ====               ===`

Comprehensive income/(loss)--

Comprehensive income/(loss)
consists of net income for the current period and gains and losses that have
been previously excluded from the income statement and were only reported as a
component of equity.

The tax effect of other
comprehensive income/(loss) is as follows:

`Before Tax         Tax          Net of
                                                           Amount         Effect       Tax Amount
                                                         -----------      ------       -----------
Year Ended December 31, 2004
Unrealized holding gains arising during the period:
Marketable securities                                             $3          $(1)           $2
Cumulative foreign currency translation adjustment                88          (32)           56
Swap agreements                                               12,022       (3,501)        8,521
                                                              ======       ======         =====
                                                             $12,113      $(3,534)       $8,579
                                                             =======      =======        ======`

85

---

`Before Tax         Tax          Net of
                                                        Amount         Effect       Tax Amount
                                                     ---------- -      ------       -----------
Year Ended December 31, 2003
Unrealized holding gains arising during the period:
Marketable securities (1)(2)                                  $83         $(29)          $54
Cumulative foreign currency translation adjustment             71          (25)           46
Swap agreements                                            15,270       (4,700)       10,570
                                                           ======       ======        ======
                                                          $15,424      $(4,754)      $10,670
                                                          =======      =======       =======`

|(1) | Amounts are net of losses on sales of marketable securities of $50
(before income tax effect of $2) recognized in the income statement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

|(2) | Amounts are net of a realized loss of $44 (before income tax
effect of $18) considered permanent and recognized in the income statement.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

`Before Tax         Tax          Net of
                                                              Amount         Effect       Tax Amount
                                                             ----------      ------       ----------
Year Ended December 31, 2002
Unrealized holding losses arising during the period:
Marketable securities (3)                                          $(40)         $14          $(26)
Other investment securities (4)                                    (304)          15          (289)
Cumulative foreign currency translation adjustment                  (66)          23           (43)
Swap agreements                                                 (23,436)       8,703       (14,733)
                                                                =======        =====       =======
                                                               $(23,846)      $8,755      $(15,091)
                                                               ========       ======      ========`

|(3) | Amounts are net of losses on sales of marketable securities of $30
(before income tax effect of $12) recognized in the income statement.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(4) | Amounts are net of impairments of $134 (before income tax effect
of $5) recognized in the income statement.
|--- | -----------------------------------------------------------------------------------------------------------

The components of
accumulated other comprehensive loss, net of taxes, are as follows:

`December 31,
                                                                        ----------------
                                                                        2004         2003
                                                                        -----------------
Marketable securities                                                       $2         $---
Cumulative foreign currency translation adjustment                          59            3
Swap agreements                                                         (5,810)     (14,331)
                                                                        ======      =======
                                                                       $(5,749)    $(14,328)
                                                                       =======     ========`

Fair value of financial instruments

Statement of Financial
Accounting Standards No. 107, Disclosures about Fair Value of Financial
Instruments ("SFAS 107") requires disclosure of the estimated fair
value of the Company's financial instruments, excluding leasing
transactions accounted for under Statement of Financial Accounting Standards No.
13, Accounting for Leases ("SFAS 13"). The fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than a forced or
liquidation sale. Estimated fair values have been determined using the best
available data and estimation methodology suitable for each category of
financial instrument. The estimation methodologies used to estimate the fair
values and recorded book balances of the Company's financial instruments at
December 31, 2004 and 2003 are as follows:

86

---

Cash and cash equivalents

For such short-term
investments, the carrying value is considered to be a reasonable estimate of
fair value.

Marketable securities

For marketable securities
in the Company's portfolio, fair value was determined by reference to
quoted market prices, when available.

Accounts receivable

The carrying value of
accounts receivable is considered to be a reasonable estimate of fair value
based on their short-term nature.

Accounts payable and accrued expenses

The carrying value of
accounts payable and accrued expenses is considered to be a reasonable estimate
of fair value based on their short-term nature.

Interest rate swaps

Interest rate swap
contracts are included in accounts payable and accrued expenses on the
Consolidated Balance Sheets. The estimated fair value (which is also the
recorded book value) is calculated externally using market data taking into
account current market rates.

Warrant liability

The warrants issued by the
Company during September 2004, are classified as a liability on the Consolidated
Balance Sheets. The estimated fair value of this liability (which is also the
recorded book value) is calculated quarterly using external market data.
Assuming that the warrants are not exercised or expired, the warrants will
continue to be classified as a liability until certain conditions set forth in
applicable accounting literature (specifically, ETIF 00-19, Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock) are satisfied, at which time the value of the warrants
will be reclassified to stockholders' equity.

Debt and capital securities

The fair value of the
Company's debt and capital securities was based on quoted market prices
where available. For those borrowings with floating interest rates, it is
presumed their estimated fair value generally approximates their carrying value.
The fixed-rate debt instruments, where quoted market prices were not available,
were valued using a present value discounted cash flow analysis with a discount
rate approximating current market rates of similar term debt at the end of the
year. The discount rates used in the present value calculations ranged from
5.20% to 5.86% at December 31, 2004 and 4.75% to 5.02% at December 31, 2003.

87

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`December 31, 2004                 December 31, 2003
                                                     ---------------------------     ------------------------------
                                                     Estimated     Recorded Book     Estimated Fair    Recorded Book
                                                     Fair Value       Balance            Value            Balance
                                                     ----------    -------------     --------------    -------------
Financial Assets:
Cash and cash equivalents                              $309,458      $309,458           $141,019          $141,019
Marketable securities                                        27            27                 24                24
Accounts receivable                                      72,598        72,598             69,055            69,055

Financial Liabilities:
Accounts payable and accrued expenses (excluding
  interest rate swap contracts)                         107,312       107,312            164,036           164,036
Interest rate swap contracts                             19,745        19,745             34,026            34,026
Warrant liability                                        71,722        71,722                ---               ---
Debt                                                    922,568       915,741            904,273           910,755
Capital securities                                       66,375        75,000             68,813            75,000`

Concentration of Credit risk--

At both December 31, 2004
and 2003, approximately 47% of accounts receivable and 70% of the net investment
in direct financing leases were from customers outside of the United States.

In 2004, 2003 and 2002 the
Company's top 25 customers represented approximately 75%, 74% and 71%,
respectively, of its consolidated billings, with no single customer accounting
for more than 8.2% in any year.

Net income per share--

Basic net income per share
is computed by dividing net income by the weighted average number of shares
outstanding during the period (which is net of treasury shares). Diluted income
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock. The dilutive effect of stock options and warrants and the unvested
portion of restricted stock grants is computed using the treasury stock method,
which assumes the repurchase of common shares at the average market price for
the period. Stock options and warrants that do not have a dilutive effect
(because the exercise price is above the market price) are not included in the
diluted income per share. For the year ended December 31, 2004 (using the
treasury stock method) warrants to purchase 76,052 shares and options to
purchase 905 shares were not dilutive and were not included in diluted earnings
per share. For the years ended December 31, 2003, and 2002, all stock
options to acquire common shares were dilutive. There were no warrants
outstanding during the year ended December 31, 2003 and 2002. Unvested
restricted stock grants were dilutive for the years ended December 31, 2004
and 2003. See Note 14 to the Consolidated Financial Statements. There were no
unvested restricted stock grants outstanding during the year ended
December 31, 2002. The convertible redeemable subordinated debentures
issued by the Company in December 2002, January 2003 and February 2003 were
dilutive for the year ended December 31, 2003. For the years ended
December 31, 2004 and 2002, these debentures (convertible into 1,487,285 and
17,599 shares, respectively) were not dilutive and were not included in diluted
earnings per share. For further discussion of the debt characteristics of the
convertible redeemable subordinated debentures, see Note 4 to the Consolidated
Financial Statements.

88

---

A reconciliation of the
numerator and denominator of basic EPS with that of diluted EPS is presented
below:

`Year Ended December 31.
                                                           -----------------------
                                                        2004         2003         2002
                                                        ----         ----         ----
 Numerator
      Net Income - Basic EPS                            $8,429      $41,190      $4,389
      Interest Expense on convertible debentures,
      net of tax of 1,334                                  ---        2,001         ---
                                                         -----        -----         ---
      Net Income-Diluted EPS                            $8,429      $43,191      $4,389
                                                       =======      =======      ======

 Denominator
      Weighted average common shares
      outstanding-Basic                                 27,380       27,365      27,360
      Dilutive stock options and warrants                1,573        1,569       1,842
      Dilutive convertible debentures                      ---        1,461         ---
      Dilutive restricted stock grants                       7            1         ---
                                                             -            -         ---
      Weighted average common shares
      outstanding-Diluted                               28,960       30,396      29,202
                                                        ======       ======      ======

 Earnings per common share
      Basic                                              $0.31        $1.51       $0.16
                                                         =====        =====       =====
      Diluted                                            $0.29        $1.42       $0.15
                                                         =====        =====       =====`

Use of estimates--

The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
reported amounts of revenues and expenses during the reporting period and
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.

Reclassifications--

Certain reclassifications
have been made to the 2003 and 2002 amounts in order to conform to the 2004
presentation. In addition, the Company determined it was necessary to
change the classification of certain types of revenue which had been previously
reported as a reduction to lease operating expenses. This revenue consists
primarily of fees charged to lessees for handling, repositioning and repairs
which had previously reduced the related costs for these services. This revenue
will be reported separately as other revenue on the face of the Company's
Consolidated Statements of Income. These reclassifications have no impact on net
income.

89

---

Adjustment to Opening Retained Earnings--

During the fourth quarter
of 2004, the Company sold certain assets (with a book value of approximately
$1,865) of CTC Container Trading (U.K.) Limited ("CTC"), a
wholly-owned subsidiary which leased specialized cargo carrying units and other
equipment for use by companies operating in the North Sea. While quantifying the
approximate impact related to this sale, the Company noted that there was an
elimination entry of approximately $803, net of tax, in the Interpool Limited
consolidation related to CTC. This entry reduced retained earnings with a
comparable reduction to leasing equipment. The entry originated when Interpool
Limited sold container equipment to CTC at a profit prior to 1994. The
elimination entry was recorded to eliminate the inter-company profits generated
from the sale of the equipment. The inter-company profit included in the
elimination entry should have been amortized over the period the equipment was
being depreciated by CTC using the higher book values. No such amortization ever
took place. The depreciation would have ended prior to any period being reported
on by the Company in the December 31, 2004 Form 10-K. The effect of this error
was to understate earnings during the period that the equipment was being
depreciated. The Company determined the impact of this error should be reported
as an adjustment to opening retained earnings.

(2)        
  Income taxes:

Significant components of
deferred tax assets and liabilities as of December 31, 2004 and 2003 were as
follows:

`2004          2003
                                                      ----          ----
   Deferred tax assets:
       Loss carry forwards                           $141,893     $123,607
       Other                                           19,425       28,187
                                                       ------       ------
          Total deferred tax assets                   161,318      151,794
            Valuation allowances                       (9,963)     (16,009)
                                                       ------      -------
          Net deferred tax assets                     151,355      135,785
                                                      -------      -------

   Deferred tax liabilities:
       Operating property, net                        197,951      170,167
       Other                                            2,608        3,010
                                                        -----        -----
          Total deferred tax liabilities              200,559      173,177
                                                      -------      -------
          Net deferred tax liability                  $49,204      $37,392
                                                      -------      -------`

One of the Company's subsidiaries had net operating loss
carryforwards ("NOLs") for Federal income tax purposes totaling approximately
$15,602 for which a $6,070 valuation allowance had been recorded. Since this
$15,602 NOL expired in 2004, the related deferred tax asset of $6,070 was
written off during the year resulting in a reduction to the valuation allowance
of that amount. Other changes to the valuation allowance during the year
related to various items including an equity investment, Chassis Holdings 1,
LLC, and state NOLs. In 2003 the Company recorded additional valuation
allowances aggregating $1,203 for future tax deductions related to an equity
investment, Chassis Holdings I, LLC and for losses incurred with respect to PCR.

Through December 31, 2004,
the Company, including CAI, has incurred passive activity loss carryovers of
approximately $355,639 for U.S. federal income tax purposes. These losses can be
carried forward indefinitely to offset income from future leasing activities.
Additionally, the Company and its subsidiaries have net operating loss
carryovers aggregating approximately $323,898 which can be used to offset fully
or partially future taxable income for state purposes. For New Jersey state tax
purposes these losses are scheduled to expire between 2005 and 2012 if not
utilized.

90

---

A significant subsidiary of
the Company, Interpool Limited, is a Barbados corporation. Under the terms of an
income tax convention between the United States and Barbados, Interpool
Limited's leasing income is fully taxable by Barbados, but exempt from U.S.
Federal taxation. For information regarding the July 2004 Protocol between the
United States and Barbados, see Note 17 to the Consolidated Financial
Statements. The Barbados tax rate is a maximum of 21⁄2% of income earned in
Barbados.

No deferred U.S. Federal
income taxes have been provided on the unremitted earnings of Interpool Limited
since it is the Company's intention to indefinitely reinvest such earnings.
At December 31, 2004 unremitted earnings of Interpool Limited were approximately
$334,000. The deferred U.S. Federal income taxes related to the unremitted
earnings of Interpool Limited would be approximately $110,000, assuming these
earnings were taxable at the U.S. statutory rate, net of foreign tax credits. We
are now exploring the implications of the repatriation provision recently
enacted by the American Jobs Creation Act of 2004, but we have not yet decided
whether to repatriate any unremitted earnings.

As a company resident in
Barbados, Interpool Limited is required to file tax returns in Barbados and pay
any tax liability to Barbados. However, no Barbados tax returns have been
prepared or filed for Interpool Limited for any period subsequent to its 1997
tax year. The Company believes the failure to file these returns has not
resulted in any material underpayment of taxes, interest or penalties (other
than a nominal late filing penalty), because the Company believes no material
Barbados taxes would have been due for the years for which returns have not been
filed. The Company further believes Interpool Limited's failure to file
these returns would not present any other material risk to Interpool.
Preparation of these tax returns iscurrently in process, and it is the
Company's intent to submit themas promptly as practical.

`2004         2003       2002
                                                               ----         ----       ----
 U.S. statutory rate                                           35.0%         35.0%      35.0%
 Difference due to operation of subsidiary in Barbados        (72.7)        (32.9)    (285.5)
 State taxes                                                    9.9           1.3      (52.0)
 Warrant liability                                             77.8           ---       ---
 Other                                                         11.2           1.4        4.3
 PCR losses                                                     ---           ---       39.3
 Valuation allowances                                           0.7           2.6      212.4
                                                                ---           ---      -----

 Effective tax rate                                            61.9%          7.4%     (46.5)%
                                                               ====           ===      =====`

The non-cash expense of $49,222 recorded in 2004 pertaining to
the increase in the Company's liability for warrants (see Note 4 to the
Consolidated Financial Statements) is non-deductible for Federal income tax
purposes. This resulted in a 77.8% increase in the Company's 2004 actual tax
rate.

91

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The provision (benefit) for income taxes is as follows:

`2004          2003          2002
                                  ----          ----          ----
             U.S.               $13,636        $1,724       $(1,883)
             Other                   85         1,557           490
                                     --         -----           ---
                                $13,721        $3,281       $(1,393)
                                =======        ======       =======

             Current              $2,238       $1,473        $1,725
             Deferred             11,483        1,808        (3,118)
                                  ------        -----        ------
                                $13,721        $3,281       $(1,393)
                                =======        ======       =======`

(3)          Leasing
activities:

As lessor--

The Company has entered into
various leases of equipment that qualify as direct financing leases. At the
inception of a direct financing lease, the Company records a net investment
based on the total investment (representing the total future minimum lease
payments plus unguaranteed residual value), net of unearned lease income. The
unguaranteed residual value is generally equal to the purchase option of the
lessee, and is included in total lease receivables (approximately $66,298 and
$63,927 at December 31, 2004 and 2003, respectively). Unearned income represents
the excess of total future minimum lease payments plus residual value over
equipment cost. Receivables under these direct financing leases, net of unearned
income, are collectible through 2015 as follows:

`December 31, 2004
                                  --------------------------------------------
                                  Total Lease        Unearned        Net Lease
                                  Receivable       Lease Income      Receivable
                                  -----------      ------------      ----------
         2005                       $113,953         $33,913           $80,040
         2006                         99,874          25,234            74,640
         2007                         92,509          17,479            75,030
         2008                         56,112          11,220            44,892
         2009                         31,943           7,797            24,146
         Thereafter                   78,152          13,455            64,697
                                      ------          ------            ------
                                    $472,543        $109,098          $363,445
                                    ========        ========          ========`

As of December 31, 2003,
the Company had total lease receivable, unearned lease income and net lease
receivables of $572,956, $146,141 and $426,815 respectively.

As of December 31, 2004,
the Company also had noncancelable operating leases, under which it will receive
future minimum rental payments as follows:

92

---

`2005                    $188,249
               2006                     160,690
               2007                     129,454
               2008                      78,831
               2009                      45,577
               Thereafter                44,510
                                         ------
                                       $647,311
                                       ========`

The Company capitalizes
lease commissions and amortizes this cost over the average life of the related
lease contract. At December 31, 2004 and 2003, $2,473 and $3,902 of these
commissions were included in other assets on the accompanying Consolidated
Balance Sheet.

Allowance for doubtful accounts--

The following summarizes
the activity in the allowance for doubtful accounts:

`2004         2003             2002
                                                 ----         ----             ----

 Balance, beginning of year                   $16,358        $14,033          $6,674
      Provision charged to expense              1,476          4,248           7,843
      Increase for allowance due to
      consolidation of CAI as of June
      27, 2002                                    ---            ---           1,898
      Write-offs                               (5,247)        (2,140)         (2,504)
      Recoveries                                1,507            226             132
      Other                                        (3)            (9)            (10)
                                              -------        --------        --------
 Balance, end of year                         $14,091        $16,358         $14,033
                                              =======        =======         =======`

The allowance for doubtful
accounts includes the Company's estimate of allowances necessary for
receivables on both operating and direct financing lease receivables. The
allowance for doubtful accounts is developed based on two key components (1)
specific reserves for receivables which are impaired for which management
believes full collection is doubtful and (2) reserves for estimated losses
inherent in the receivables based upon historical trends. The Company believes
its allowance for doubtful accounts is adequate to provide for credit losses
inherent on its accounts receivable. The allowance for doubtful accounts is
intended to provide for losses inherent in the accounts receivable, and requires
the application of estimates and judgments as to the outcome of collection
efforts and the realization of collateral, among other things. In addition,
changes in economic conditions or other events may necessitate additions or
deductions to the allowance for doubtful accounts. Direct financing leases are
evaluated on a case by case basis. When evaluating its operating and direct
financing lease receivables for impairment, the Company considers, among other
things, the level of past-due amounts of the respective receivable, the
borrower's financial condition, credit quality indicators of the borrower,
the value of underlying collateral and third party credit enhancements such as
guarantees and insurance policies. Once a direct financing lease is determined
to be non-performing, Company procedures provide for the following events to
take place in order to evaluate collectibility:

| |  | The past due amounts are reclassified to accounts receivable,
| | - | -------------------------------------------------------------

93

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| |  | The equipment value supporting such direct financing lease is
reclassified to leasing equipment, and
| | - | ----------------------------------------------------------------------------------------------------

| |  | Collectibility is evaluated, taking into consideration equipment
book value, and the total outstanding receivable, as well as the likelihood of
collection through the recovery of equipment.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2004 and
2003, included in accounts receivable are non-performing receivables of $12,498
and $12,795, respectively. The Company's average non-performing receivables
are $12,704 and $11,669 for the years ended December 31, 2004 and 2003,
respectively. As of December 31, 2004 and 2003, included in the allowance for
doubtful accounts are reserves for the non-performing receivables of $11,764 and
$11,918, respectively. As of December 31, 2004 and 2003, our non-performing
receivables, net of applicable reserves, were 1.01% and 1.27%, respectively, of
accounts receivable, net.

All outstanding amounts due
for non-performing direct financing lease accounts are reclassified to accounts
receivable, therefore an allowance for doubtful accounts for the net investment
in direct financing leases is not required.

The Company seeks to reduce
credit risk by maintaining insurance coverage against customer insolvency and
related equipment losses. The Company maintains contingent physical damage,
recovery and loss of revenue insurance, which provides coverage in the event of
a customer's insolvency, bankruptcy or default giving rise to its demand
for return of all of its equipment. The policy covers the cost of recovering the
Company's equipment from the customer, including repositioning cost, damage
to the equipment and the value of equipment that could not be located or was
uneconomical to recover. It also covers a portion of the equipment leasing
revenue that the Company might lose as a result of the customer's default
(i.e., up to 180 days of lease payments following an occurrence under the
policy). The Company's current policy, which will expire on April 30, 2005,
includes coverage of $9,000 with a $3,000 deductible, per occurrence. While the
Company believes it will be able to renew this coverage on comparable or more
favorable terms, for an additional twelve month period, there can be no
assurance that this or similar coverage will be available in the future or that
such insurance coverage will cover the entirety of any loss.

(4)     
     Debt:

The following table
summarizes the Company's debt and capital lease obligations as of December
31, 2004 and 2003.

94

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`Total Debt and Capital Lease Obligations                                  December 31, 2004      December 31, 2003
----------------------------------------                                  -----------------      -----------------

Capital lease obligations payable in varying amounts through 2013              $329,623               $325,258
Chassis Securitization Facility, interest at 5.99% and 5.59% at
  December 31, 2004 and 2003, respectively
      Warehouse facility                                                         22,490                 25,490
      Debt obligation                                                            53,875                 86,413
      Capital lease obligation                                                  397,834                404,674
Secured equipment financing facility, interest at 4.45% at December
  31, 2004, revolving period ending October 31, 2006, term out period
  ending April 30, 2012                                                         243,000                   ---
Revolving credit facility, interest rate at 3.09% at December 31, 2003            ---                  193,495
Revolving credit facility CAI, interest at 4.56% and 3.37% at December
  31, 2004 and 2003, respectively                                                65,000                 87,000
Container securitization facility, interest at 6.50% at December 31,
  2003                                                                            ---                   76,565
6.00% Notes due 2014 (unsecured) net of unamortized discount of
  $33,729 at December 31, 2004                                                  196,271                   ---
7.35% Notes due 2007 (unsecured)                                                115,395                147,000
7.20% Notes due 2007 (unsecured)                                                 45,335                 62,825
9.25% Convertible redeemable subordinated debentures, mandatory
  redemption 2022 (unsecured)                                                    37,182                 37,182
9.875% Preferred capital securities due 2027 (unsecured)                         75,000                 75,000
Notes and loans repayable with various rates ranging from 3.60% to
  7.90% and maturities from 2005 to 2010                                        137,193                194,785
                                                                                -------                -------
Total Debt and Capital Lease Obligations                                      1,718,198              1,715,687
                                                                               ---------              ---------
   Less Current Maturities                                                      240,553                219,192
Total Non-Current Debt and Capital Lease Obligations                         $1,477,645             $1,496,495
                                                                              ==========             ==========`

At December 31, 2004, the
Company had available $223,000 under various facilities which includes
approximately $39,000 available under CAI's revolving credit facility. A
commitment for $150,000 was completed on December 29, 2004 and will be open for
364 days, after which it will either be renewed, refinanced, or will be paid out
in full over the following 48 months. The advance rate under this facility will
be either 60% or 75% at the Company's option. The interest rate is
determined by a pricing grid and can range from LIBOR plus 140 to 180 basis
points, depending upon the Company's tangible debt to total net worth ratio
or its corporate credit rating, and the advance rate chosen. As of December 31,
2004, the rate would be LIBOR plus 165 basis points at a 75% advance rate and
LIBOR plus 150 basis points at a 60% advance rate. There is a commitment fee of
45 basis points per annum on any unused portion of this commitment, payable
quarterly in arrears. Another commitment for $25,000 was available for future
use at December 31, 2004. This commitment was scheduled to be open until March
31, 2005, after which any unfunded portion of the commitment would expire. This
commitment was subsequently cancelled during February 2005 to allow the
financial institution to provide a larger commitment as part of the 150,000
facility mentioned above. During the first quarter of 2005, we received
additional commitments under a secured equipment financing established on
November 1, 2004 totaling $248,000 from six additional financial institutions.
As of the date this Form 10-K was filed, none of these additional commitments
had been utilized.

As of December 31, 2004,
the annual maturities of capital leases and related interest were as follows:

95

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`Payment               Interest               Principal
                                     -------               --------               ---------
      2005                           $96,962                $17,634                $79,328
      2006                            68,826                 13,643                 55,183
      2007                            80,990                 10,641                 70,349
      2008                            79,685                  7,974                 71,711
      2009                            69,904                  4,888                 65,016
      Thereafter                     391,535                  5,665                385,870
                                     -------                  -----                -------
                                    $787,902                $60,445               $727,457
                                    ========                =======               ========`

As of December 31, 2004, the
scheduled principal maturities of debt, were as follows:

`2005                              $161,225
                 2006                                83,939
                 2007                               214,564
                 2008                                65,501
                 2009                                43,296
                 Thereafter                         422,216
                                                    -------
                                                   $990,741
                                                   ========`

The Company's debt
consists of notes, loans and capital lease obligations with installments payable
in varying amounts through 2027, with a weighted average interest rate of 6.2%
and 6.0% in 2004 and 2003, respectively. The principal amount of debt and
capital lease obligations payable under fixed rate contracts was $898,712.
Remaining debt and capital lease obligations of $819,486 were payable under
floating rate arrangements, of which $408,367 was effectively converted to fixed
rate debt through the use of interest rate swap agreements. At December 31,
2004, most of the debt and capital lease obligations of the Company are secured
by a substantial portion of the Company's leasing equipment, direct
financing leases and accounts receivable, except for $469,183 of debt which is
unsecured. For further information on the accounting treatment for interest rate
swap contracts see Note 5 to the Consolidated Financial Statements.

In March 2002, the Company
established a $500,000 chassis asset-backed securitization facility. This
facility is guaranteed by MBIA and was therefore rated AAA by Standard &
Poor's and Aaa by Moody's. On September 30, 2002, the Company entered into a
sale/leaseback transaction and expanded the total debt and capital lease
obligations to a total of $540,968 outstanding, of which $129,328 is a debt
obligation and $411,640 is a capital lease obligation under the sale/leaseback.
In May 2003, the Company established a $200,000 revolving warehouse facility
within its chassis securitization facility and received funding from a $25,500
debt obligation issuance. In July 2003 and October 2003, the Company agreed,
among other things, to suspend its ability to incur additional funding under the
warehouse facility until such time as the loan and guarantee parties have each
agreed in their sole discretion to reinstate their funding commitments.
Additionally in January 2004, as a result of the downgrade of the ratings on the
Company's debt securities Moody's reduced the "shadow rating" of the Company's
chassis securitization. The Company was subsequently advised by the provider of
the insurance "wrap" portion of the chassis securitization that, as a result of
the downgrade of the shadow rating, the Company was liable to indemnify such
provider for certain of the provider's increased capital charge costs. During
October 2004, the Company reached an agreement with such provider, pursuant to
which it will pay approximately $220 per month in additional premium, declining
as the loan is paid down. Such additional premium will be further adjusted
downward after eighteen months if the shadow rating improves, potentially going
away entirely. In addition, as part of this agreement the wrap provider and the
other participants in the chassis securitization have permanently waived any
early amortization event or default associated with the downgrade of the shadow
rating. At December 31, 2004, the total debt and capital lease obligation
outstanding under the facility totaled $474,199 of which $22,490 was outstanding
under the warehouse facility, $53,875 is a debt obligation and $397,834 is a
capital lease obligation. The interest rate on this facility is 5.99%, including
the effect of interest rate swap contracts in place as of December 31, 2004.
This facility continues to be accounted for as an on-balance sheet secured
financing. The assets used to secure this facility are segregated in a Delaware
statutory titling trust (the "Trust") and in a special purpose entity (which is
consolidated by the Company) and consist of $18,500 of accounts receivable and
fixed assets with a net book value of $522,480 at December 31, 2004. In
addition, $24,927 of cash and marketable securities at December 31, 2004 are
restricted for use by the Trust and the special purpose entity and included on
the Company's consolidated balance sheet. The assets, which are segregated in
the special purpose entity and included on the Company's consolidated balance
sheet, are not available to pay the claims of the Company's creditors.

96

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On November 1, 2004, the
Company consummated a secured equipment financing with one of its existing
lenders. The financing is secured by shipping containers and related leases
owned by a special purpose consolidated subsidiary of the Company and leased to
various third parties. The financing allows for advances from time to time up to
the amount of available collateral under the facility, subject to a maximum
principal amount that may be outstanding under the facility of $252,000. The
interest rate under this new facility is LIBOR plus 175 basis points, with a
reduction to LIBOR plus 150 basis points possible as the Company's credit
rating improves. This agreement, as amended, requires that the Company enter
into interest rate swap contracts in order to effectively convert at least
seventy percent of the debt associated with operating lease equipment and ninety
percent of the debt associated with direct financing leases from floating rate
debt to fixed rate debt by March 31, 2005. The facility has a two-year term,
after which the outstanding balance will be paid out in full over 66 months if
it is not refinanced. At December 31, 2004 $243,000 of debt was outstanding
under this facility and $9,000 was available for future use. Of the $243,000
drawn down, the Company used $224,400 to refinance outstanding indebtedness,
which included the entire $154,800 of outstanding borrowings under its revolving
credit facility, which has now been terminated, as well as an existing $69,600
loan from this lender. The remaining balance of $18,600 was used for transaction
fees and working capital purposes. During the first quarter of 2005 the Company
received additional commitments under this facility totaling $248,000 from six
additional financial institutions. As of the date this Form 10-K was filed, none
of these additional commitments had been utilized.

The Company had a $215,000
revolving credit facility with a group of commercial banks. In July 2000, this
facility was renewed and amended with the term extended to July 31, 2005. The
credit limit was $215,000 through July 31, 2003; thereafter the credit limit
declined to $193,500 through July 31, 2004 and $172,000 through July 31, 2005.
In July 2003 and October 2003, in connection with obtaining necessary waivers
under the revolving credit facility due to the late filing of the Company's
periodic reports with the SEC and the restatement of its past financial
statements, the Company agreed, among other things, to reduce advance rates
under this facility, to define several additional events as events of default,
to increase the interest rate margin until it is in compliance with all SEC
reporting requirements, and to maintain specified levels of unrestricted cash
and cash equivalents until the delinquent SEC filings are made. The Company also
agreed to restrictions on dispositions of collateral and encumbrances of assets
as well as a limitation on concessions that could be made to its other financial
institutions in connection with obtaining waivers. The October 2003 amendment
also required the Company to provide additional financial information to the
lenders under the facility and to continue the engagement of a financial
advisor. On November 1, 2004, the Company paid off the entire $154,757 of
outstanding borrowings under its revolving credit facility, and terminated the
facility.

97

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On June 27, 2002, CAI entered into an amended $110,000 senior
revolving credit agreement with a group of financial institutions. To facilitate
the closing of this new credit facility, the Company agreed to extend the
repayment terms of its Note so as to require mandatory quarterly principal
payments of $1,683 beginning July 30, 2006 through April 30, 2011 and modified
certain financial covenants in the Note. Interest on the Note continues to
accrue at an annual fixed rate of 10.5% and is payable quarterly. The Note
continues to be cross-collateralized with CAI's senior credit agreement, subject to
the terms of an amended and restated subordination agreement.

A total of $65,000 was
outstanding under CAI's senior revolving credit facility at December 31,
2004. Borrowings under CAI's senior credit facility are secured by
substantially all of CAI's assets totaling approximately $181,958 in the
Company's Consolidated Financial Statements at December 31, 2004, and are
payable on June 27, 2005. CAI is currently in discussions with its lenders
regarding a renewal of their senior revolving credit facility. The senior credit
facility contains various financial and other covenants. CAI was in compliance
with the covenants at December 31, 2004.

In July 2001, the
Company's container securitization facility, which was originally
established as an off-balance sheet source of financing in March 1999, was
amended allowing additional financings to be accounted for as on-balance sheet
secured debt financing. In August 2002, the container securitization facility
was extended with the maximum outstanding limited to $150,000. In October 2002
the facility was renewed and the facility amount was increased to $200,000.
Subsequently, the Company amended its container securitization facility to
relinquish the right to request additional advances under the facility and
agreed that all lease payments subsequently received under the facility would be
used to reduce the indebtedness. On December 28, 2004, the Company paid off the
remaining $25,933 of outstanding borrowings under this facility, and terminated
the facility.

On September 14, 2004, the
Company entered into a Securities Purchase Agreement pursuant to which it sold
$150,000 total principal amount of a new series of 6.0% notes due 2014 (the
"Notes") in a private transaction with four investors. In connection
with the sale of the Notes, the Company also issued to the investors two series
of Warrants exercisable for a total of 8,333,333 shares of the Company's
common stock at an exercise price of $18.00 per share (the
"Warrants"). The exercise price will be subject to customary
anti-dilution adjustments as set forth in the Warrants.

98

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The Notes mature on
September 1, 2014, with interest payable semi-annually at a rate of 6.0% per
annum. The Company has the right to redeem the Notes at any time after September
1, 2009 with a declining premium. The maturity of the Notes can be accelerated
upon the occurrence of an "Event of Default" as such term is defined
in the indenture governing the Notes (the "Indenture"). The Indenture
also contains various restrictive covenants, including limitations on the
payment of dividends and other restricted payments, limitations on incurrence of
indebtedness, and limitations on asset sales, the violation of which by the
Company would result in an Event of Default.

The first series of
Warrants (the "Series A" Warrants) is exercisable at any time for a
total of 5,475,768 shares. The second series of warrants (the Series
"B" Warrants) will become exercisable at any time for a total of
2,857,565 shares, following stockholder approval of such exercise at a special
meeting of the Company's stockholders. The Company also entered into
agreements with the investors to file registration statements with the
Securities and Exchange Commission, for the benefit of the investors, with
respect to the Notes and the Warrants. The terms of the Warrants provide that
the exercise price will be paid by the investors to the Company solely in cash
except that after the Company has filed a registration statement with the
Securities and Exchange Commission relating to the Warrants and underlying
common stock, in the event such registration statement has not become effective
or is otherwise not available to the Warrant holders or if the exercise of the
Warrants for cash would not be permitted under the federal securities laws, the
exercise price may be paid by tendering a principal amount of 6.0% Notes equal
to the exercise price of the Warrants then being exercised. The sale of the
Notes and Warrants pursuant to the Securities Purchase Agreement was made in
reliance on the exemption from the registration requirements of the Securities
Act of 1933 (the "Act") pursuant to Section 4(2) of the Act

Of the $150,000 in proceeds
from the September 14, 2004 sale of the Notes and Warrants, the Company
repurchased, at face value, a portion of its outstanding 7.35% notes due 2007
($31,605) and 7.20% notes due 2007 ($17,490) which were held by the investors.
The remaining proceeds are being used for general corporate purposes, including,
but not limited to, the purchase of equipment, retirement of debt, potential
acquisitions and/or working capital.

The Warrants expire on
September 1, 2014, although the Company has the right under certain conditions
to require that they be exercised at any time after its common stock trades at
$30.00 per share or more for five consecutive trading days assuming the shares
being issued upon exercise are registered shares.

The fair value of the
warrants at the date of the transaction was estimated at $22,500 and was
recorded in warrant liability on the Consolidated Balance Sheet, with the offset
recorded as a discount on the Notes. This discount is being amortized as
interest expense using the effective interest method over the ten-year life of
the Notes. The overall interest rate on the Notes, considering the amortization
of the discount, is approximately 8.3%.

EITF 00-19, Accounting
for Derivative Financial Instruments Indexed to, and potentially Settled in a
Company's Own Stock ("EITF 00-19") requires freestanding contracts that are
settled in a Company's own stock, including common stock warrants, to be
designated as an equity instrument, asset or liability. Under the provisions of
EITF 00-19, a contract designated as an asset or liability must be carried at
fair value until the contract meets the requirements for classification as
equity, until the contract is exercised or until the contract expires. The
Company has classified these warrants as a liability, as noted above, because
the requirements of EITF 00-19 for classification of the warrants as equity have
not yet been met. During the period in which the warrants are classified as a
liability, any changes in fair value will be reported as fair value adjustment
for warrants in the Consolidated Statement of Income. Due primarily to the
increase in the market value of the Company's common stock during the last
quarter of 2004, the fair market value of these Warrants has increased from
$22,500 at September 30, 2004 to $71,722 at December 31, 2004. As a result,
during the three-months ended December 31, 2004, the Company has recorded a
non-cash expense of $49,222 (for which no tax benefit is derived) which has been
reflected as fair value adjustment for warrants on the accompanying Consolidated
Statements of Income. Accordingly, future changes to the fair market value of
these Warrants have the potential to cause volatility in our future results. For
the period of time that these warrants are classified as a liability, any
increase in the fair market value of the Warrants will result in an additional
non-cash expense to the Consolidated Statements of Income. If the fair market
value of the Warrants decreases in the future the Company will record non-cash
income in its Consolidated Statements of Income. At such time as all of the
conditions of EITF 00-19 are met for classification of the Warrants as equity,
the liability account representing the fair value of the warrants at the date
the conditions are met will be reclassified to additional paid-in-capital on the
Consolidated Balance Sheets.

99

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The Company has agreed to file a Registration Statement for the
Warrants and the Notes with the Securities and Exchange Commission by May 1,
2005. In addition, the Company has agreed to use commercially reasonable efforts
to have the Warrant Registration Statement and the Notes Registration Statement
declared effective by July 1, 2005. It is impossible for the Company to predict
when either of these registration statements will become effective. If either of
these Registration Statements is not effective by October 1, 2005, or is not
filed by May 1, 2005, the Company will be required to pay liquidated damages to
the holders of these securities based upon a value of $150,000 for the Notes and
$150,000 for the Warrants. For the first 90 days, the amount of liquidated
damages to be paid related to the Warrants and the Notes will be calculated
using a rate of 0.25% per annum for each day the Registration Statements are not effective
after September 30, 2005 or if the Registration Statements are not filed by May
1, 2005. This percentage will be increased by 0.25% for each 90 day period,
until these conditions are met, up to a maximum of 1.00% per annum.

A condition that must be met for equity treatment under the
provisions of EITF 00-19 is that there can be no possibility of a net cash
settlement of the Warrants. Under the terms of the Warrant Agreement, in the
event that stockholder approval of the issuance of common stock pursuant to the
Series B Warrants is not obtained prior to April 30, 2005, the holders of the
Series B Warrants have the right to settle their warrants for cash. In order to
do this, the Series B Warrant holders, upon payment of the exercise price of the
Series B Warrants, would receive cash from the Company in an amount equal to
105% of the market price of the Company's common stock on the day prior to
exercise. For example, if the market value of the Company's stock was $22 at the
date that the Series B Warrant holders exercised their right for a net cash
settlement, the net cash settlement paid to the holders of the Series B Warrants
would be approximately $14,574 ($22 market value X 105% X 2,857,565 shares
 less exercise price of 2,857,565 shares X $18). The Company intends to
hold a special meeting of the Stockholders as soon as practicable and at that
meeting will seek stockholder approval for the exercise of the Series B
Warrants. It is impossible for the Company to hold this meeting until the
Company's Proxy requesting this approval has been filed with and accepted by the
Securities and Exchange Commission and all stockholders have been notified
regarding the meeting. In connection with the sale of the Notes and Warrants,
certain of the Company's significant stockholders, whose combined ownership
interest represents more than 50% of the issued and outstanding shares of its
common stock, entered into a voting agreement pursuant to which they have agreed
to vote to approve the exercise of the second series of Warrants by the
investors. In addition, Martin Tuchman, the Company's Chairman and Chief
Executive Officer, Warren L. Serenbetz, a former member of its Board of
Directors, and an entity controlled by members of Mr. Serenbetz's family agreed
to certain restrictions on their ability to transfer shares of the Company's
common stock in private transactions. If the approval for the issuance of the
shares related to the Series B Warrants is obtained after April 30, 2005 and
prior to the exercise of the Series B Warrants by the holders of the Warrants,
the holders of the Series B Warrants will lose their right to exercise the net
cash settlement feature of Series B Warrants once such stockholder approval is
received. At that time, this will no longer be a condition for liability
treatment under the provisions of EITF 00-19.

100

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On November 29, 2004, the
Company sold $80,000 total principal amount of new 6.0% notes (the
"November notes") due 2014 to eight investors under the same indenture
used for the $150,000 unsecured financing completed during September 2004. The
terms of the November notes are identical to those of the notes sold during
September (as described previously in this document) with the following
exceptions: (1) there were no warrants associated with the November notes; and
(2) the original issue discount on the November notes was approximately 14.7%
versus 15.0% for the September notes. The November notes were sold at a discount
which provided net proceeds totaling $68,065. The net proceeds are for general
corporate purposes, including, but not limited to the purchase of equipment,
retirement of debt, acquisitions, and/or working capital.

In July and August 1997, the Company issued $225,000 of ten year
notes, comprised of $150,000 of 7.35% Notes due 2007 and $75,000 of 7.20% Notes
due 2007. The net proceeds from these offerings were used to repay secured
indebtedness, to purchase equipment and for other investments. During 2004, the
Company retired $31,605 of the 7.35% Notes and $17,490 of the 7.20% Notes. As of
December 31, 2004, $115,395 and $45,335 principal amount of the 7.35% and 7.20%
Notes, respectively, remains outstanding.

In July 2002, the Company
commenced a registered subscription rights offering of up to $31,465 of its
9.25% Convertible Redeemable Subordinated Debentures. The debentures were
offered to holders of its common stock pursuant to the exercise of
non-transferable subscription rights and were to be convertible into shares of
its common stock. The Company had the right in its discretion to accept offers
from other parties to purchase debentures not subscribed for by stockholders. On
August 14, 2002, the Company terminated the subscription rights offering due to
a delay in filing its Form 10-Q for the quarter ended June 30, 2002. The Company
re-commenced the offering during November 2002 and accepted subscriptions for
$32,118 of debentures, which were issued in December 2002. The Company also
increased the size of the offering and subsequently accepted $5,064 of
additional subscriptions in January and February 2003, resulting in a total of
$37,182 of debentures being issued. The debentures bear interest at an annual
rate of 9.25%. They have a mandatory redemption feature upon the earlier of the
occurrence of a change of control or on December 27, 2022. They have an optional
redemption feature after the third anniversary at a price of 100% of outstanding
principal, plus accrued interest. They have a special redemption feature between
December 27, 2006 and December 27, 2007, during which period the Company may
redeem the debentures by issuing common stock at $25.50 per debenture plus
accrued interest, if the average closing price of its common stock for five
consecutive trading days equals or exceeds $25.50 per share. Lastly, at any
time, the holder of the debentures may convert the debentures into the
Company's common stock at a per share conversion price of $25 per
debenture.

101

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On January 27, 1997,
Interpool Capital Trust, a Delaware business trust and special purpose entity
(the "Trust"), issued to outside investors 75,000 shares of 9-7/8%
Capital Securities with an aggregate liquidation preference of $75,000 (the
"Capital Securities") for proceeds of $75,000. Interpool owns all the
common securities of the Trust. The proceeds received by the Trust from the sale
of the Capital Securities were used by the Trust to acquire $75,000 of 9-7/8%
Junior Subordinated Deferrable Interest Debentures due February 15, 2027 of the
Company (the "Debentures"). The sole asset of the Trust is $77,320
aggregate principal amount of the Debentures. The Capital Securities represent
preferred beneficial interests in the Trust's assets. Distributions on the
Capital Securities are cumulative and payable at the annual rate of 9-7/8% of
the liquidation amount, semi-annually in arrears and commenced February 15,
1997. The Company has the option to defer payment of distributions for an
extension period of up to five years if it is in compliance with the terms of
the Capital Securities. Interest at 9-7/8% will accrue on such deferred
distributions throughout the extension period. The Capital Securities will be
subject to mandatory redemption upon repayment of the Debentures to the Trust.
The redemption price decreases from 104.9375% of the liquidation preference in
2007 to 100% in 2017 and thereafter. Under certain limited circumstances, the
Company may, at its option, prepay the Debentures and redeem the Capital
Securities prior to 2007 at a prepayment price specified in the governing
instruments. The obligations of the Company under the Debentures, under the
Indenture pursuant to which the Debentures were issued, under certain guarantees
and under certain back-up obligations, in the aggregate constitute a full and
unconditional guarantee by the Company of the obligations of the Trust under the
Capital Securities.

In May 2003, the FASB
issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity("SFAS 150"). The
adoption of SFAS 150 required the Company to display the Company-obligated
mandatorily redeemable preferred securities in subsidiary grantor trusts within
the liability section. At December 31, 2004 and 2003 these Capital Securities
are included in debt and capital lease obligations in the Consolidated Balance
Sheets.

Covenants: Under the Company's secured equipment
financing facility (and most of its other debt instruments, the Company was
required to maintain covenants (as defined) for tangible net worth (the most
stringent of which required the Company to maintain tangible net worth of at
least $300,000), a fixed charge coverage ratio of 1.5 to 1 and a funded debt to
net worth ratio (as defined in the agreement) of 4.0 to 1. A servicing agreement
to which the Company is a party requires that it maintains a tangible net worth
(as defined in the agreement) of at least $375,000 plus 50% of any positive net
income reported from October 1, 2004 forward. Additionally, under a credit
agreement, the Company is required to maintain a security deposit in the
aggregate amount of at least 80% of the outstanding loan balances, including
interest. This amounted to $4,834 at December 31, 2004 and is included in other
assets on the Consolidated Balance Sheet. At December 31, 2004, the Company was
in compliance with these covenants, as amended. At December 31, 2004, under a
restriction in the Company's 6.0% Note Indenture approximately $3,561 of
retained earnings were available for dividends.

102

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(5)        
  Derivative instruments:

The Company's assets
are primarily fixed rate in nature while its debt instruments are primarily
floating rate. The Company employs derivative financial instruments (interest
rate swap agreements) to effectively convert certain floating rate debt
instruments into fixed rate instruments and thereby manage its exposure to
fluctuations in interest rates.

As of December 31, 2004 and
December 31, 2003, included in accounts payable and accrued expenses in the
accompanying Consolidated Balance Sheets is a liability of $19,745 and $34,026,
respectively, representing the market value of the Company's interest rate
swap contracts.

The unrealized pre-tax
income on cash flow hedges for the year ended December 31, 2004 of $12,022 and
the related income tax effect of $3,501 have been recorded by the Company as
a component of other comprehensive income (loss).

The unrealized pre-tax
income on cash flow hedges for the year ended December 31, 2003 of $15,270 and
the related income tax effect of $4,700 have been recorded by the Company as
a component of other comprehensive income (loss). See Note 1 to the Consolidated
Financial Statements for additional disclosures regarding swap agreements and
their impact on other comprehensive income.

The Company may at its discretion terminate or redesignate any
such interest rate swap agreements prior to maturity. At that time, any gains or
losses previously reported in accumulated other comprehensive loss on
termination would continue to amortize into interest expense or interest income
to correspond to the recognition of interest expense or interest income on the
hedged debt. If such debt instrument was also terminated, the gain or loss
associated with the terminated derivative included in accumulated other
comprehensive loss at the time of termination of the debt would be recognized in
the Consolidated Income Statement at that time.

103

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For the year
ended December 31, 2004, Company reported $2,429 of pre-tax income in the Consolidated Statements
of Income due to changes in the fair value of interest rate swap agreements held
which do not qualify as cash flow hedges under SFAS 133. This compares to $834
of pre-tax income for the year ended December 31, 2003.

In addition to the amounts included in the fair value adjustment
for derivative instruments related to changes in the fair value of interest rate
swap agreements, a change in the fair value of the Warrants issued during
September 2004 in connection with the 6.0% Notes, which is classified as a
liability on the accompanying Consolidated Balance Sheets, resulted in a non
cash charge of $49,222 (for which no tax benefit is derived) which is included
in fair value adjustment for warrants on the accompanying Consolidated Statement
of Income.

As of December 31, 2004,
the annual maturities of the notional principal amounts, with installments
payable in varying amounts through 2014, and the weighted average interest rates
expected to be received or paid for interest rate swap contracts were as
follows:

`Notional        Receive           Pay
                                      Amount          Rate             Rate
                                     --------        --------          ----

2005                                  $85,248         2.32%           5.08%
2006                                   53,027         2.38%           5.26%
2007                                  161,645         2.40%           5.81%
2008                                   29,337         2.41%           5.56%
2009                                   27,675         2.41%           5.64%
Thereafter                             67,789         2.41%           5.43%
                                       ------         ----            ----
Total                                $424,721         2.39%           5.51%
                                     ========         ====            ====`

The weighted average
receive rate is based on the floating rate option specified by the interest rate
swap contract and are either one-month or three-month USD-LIBOR.

(6)       
   Sale of PCR and Discontinuation of Microtech's
Operations

During the three months
ended September 30, 2001, the Company adopted a formal plan to dispose of PCR, a
51%-owned subsidiary, and to discontinue the operations of Microtech, (after
acquiring the remaining 24.5% ownership interest of this 75.5%-owned subsidiary)
and liquidate its lease portfolio. Within the historical financial statements of
the Company, PCR and Microtech comprised the computer-leasing segment and
specialized in the leasing of microcomputers and related equipment.

104

---

On December 31, 2001, the
Company acquired from the management of Microtech (who are the same individuals
who managed PCR) the remaining 24.5% ownership interest in Microtech for $792 in
cash, thereby increasing the Company's ownership in Microtech to 100%.

In addition, on December
31, 2001, the Company completed the contractual sale of its 51% ownership stake
of PCR to an investment group comprised of the management of PCR. Under the
agreement, the Company sold its share of PCR for $3,200. The purchase price was
satisfied through the issuance of a non-recourse note in the amount of $2,560
and a cash payment of $640 received by the Company on January 2, 2002. This
transaction was not accounted for as a sale by the Company because of the level
of the Company's continued involvement in PCR subsequent to the transaction
which included:

| |  | A $3,500 loan due from PCR under a long-term revolving credit
facility;
| | - | -----------------------------------------------------------------------

| |  | A $1,400 direct financing lease and other receivables due from PCR
primarily for its lease of computer equipment from Microtech;
| | - | --------------------------------------------------------------------------------------------------------------------------------

| |  | A $5,000 guarantee provided by the Company for PCR borrowings from
an unrelated financial institution. This guarantee was paid off through a
secured financing arrangement completed by the Company in July 2004.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | A $3,000 guarantee provided by certain directors and officers of
the Company for a line of credit obtained by PCR from a financial institution
related to the Company;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Bonus and consulting contracts entered into between the Company
and the key executives of PCR.
| | - | ----------------------------------------------------------------------------------------------

During 2002, the Company
included in other (income)/expense, net in the Company's Consolidated
Income Statement losses resulting from PCR's operations with a
corresponding reduction to assets of business transferred under contractual
agreement in the Company's Consolidated Balance Sheet. During the first
three quarters of 2002, $4,002 of such PCR's losses were recorded by the
Company.

During the fourth quarter
of 2002, the Company determined that it was unlikely that PCR would be able to
continue as a going concern, and, in the first quarter of 2003, PCR entered
bankruptcy proceedings and began the voluntary liquidation of its business. As a
result, during the fourth quarter of 2002, the Company accrued for its
obligations related to the liquidation of PCR. The amounts accrued by the
Company in 2002 included $4,429 related to its guarantee of PCR's debt,
$2,681 in payments made by The Ivy Group (which had assumed the $3,000 guarantee
made by certain officers and directors of the Company) to pay off PCR's
bank debt and provide short-term liquidity (see further discussion below), the
write-off of $1,400 in computer equipment related receivables due to Microtech,
and $1,168 related to consulting and bonus agreements provided to key officers
of PCR. These amounts have been included in other (income)/expense, net in the
Company's Consolidated Statements of Income.

105

---

At the time of closing of
the sale of the Company's interest in PCR, the Company provided a guarantee
of an additional line of credit from a financial institution of up to $3,000 on
PCR's behalf. The financial institution subsequently agreed, at the
Company's request, to rescind this guarantee, retroactive to December 31,
2001. In lieu of the Company's guarantee, effective December 31, 2001,
certain directors and officers of the Company guaranteed an additional line of
credit of up to $3,000 on behalf of PCR. Advances amounting to $698 and $1,983
in 2003 and 2002, respectively, were made to PCR by The Ivy Group to pay off
borrowings under the line of credit and to provide PCR with working capital. The
Ivy Group is a partnership controlled by certain current and former officers and
directors of the Company. The advances made by The Ivy Group to PCR are
considered capital contributions to the Company and payments by the Company to
PCR. The payments to PCR have been determined to be uncollectible and,
accordingly, were written off by the Company as described above. Payments made
in 2002 amounting to $1,983 have been included in additional paid-in-capital.
The remaining payments made in 2003 of $698 were recorded in additional
paid-in-capital during 2003 when the payments were made.

(7)     
     Lease securitization program:

On March 30, 1999, the
Company entered into an asset backed note program (the "ABN Program").
The ABN Program involved the sale by the Company of direct financing leases
collateralized by intermodal containers. The assets were sold to a qualified
special purpose entity whose sole business activity is issuing asset backed
notes ("ABNs"), supported by the future cash flows of the assets and
the underlying residuals.

The Company's retained
interest in this program was accounted for at fair value, with any changes in
fair value over its allocated historical book value recorded as a component of
accumulated other comprehensive income/(loss), net of tax, in the Consolidated
Statement of Changes in Stockholders' Equity. As of September 30, 2003 the
Company's estimated fair market value of its retained interest was $3,801,
using a discounted cash flow model assuming expected credit losses of 1.5% and a
discount rate of 12.6%. Prior to October 1, 2003 and for the year ended December
31, 2002, the Company recorded interest income on the retained interest totaling
$976 and $1,777, respectively, which is included in equipment leasing revenue in
the accompanying Consolidated Statements of Income. Impairment losses of $571
and $134 for the nine months ended September 30, 2003 and for the year ended
December 31, 2002 were recorded and included in the accompanying Consolidated
Statements of Income based upon changes in management's projected cash
flows of the underlying direct financing lease receivables in the securitization
trust. The impairment charge recorded in 2003 resulted primarily from an
amendment and waiver dated September 19, 2003, wherein the Company agreed that
all future cash flows generated by the securitization facility that would have
otherwise been remitted to the Company in satisfaction of its retained interest
would be used to reduce the remaining obligations of its container
securitization facility until such obligations were fully repaid. In addition,
the Company agreed to defer its receipt of servicing fees. Once all obligations
are repaid, the Company would then receive the future lease payments in
satisfaction of its net investment in direct financing leases and deferred
servicing fees. For the nine months ended September 30, 2003 and for the year
ended December 31, 2002 cash flows received on the retained interest were $6,923
and $6,435 respectively.

106

---

Effective October 1, 2003,
a customer elected to return a portion of the equipment covered by a direct
financing lease which had been included in a qualified special purpose entity as
part of the lease securitization program. The equipment was subsequently leased
to another customer under the terms of an operating lease agreement. As such,
the lease could no longer be considered a financial asset and the Securitization
Trust special purpose entity could no longer be treated as an off-balance sheet
qualified special purpose entity for accounting purposes. Therefore, effective
October 1, 2003, the Company consolidated the assets and liabilities of this
special purpose entity. As a result, the Company recorded the net investment in
direct financing leases of $19,742 on the accompanying Consolidated Balance
Sheets which represents the remaining lease payments for the direct financing
leases in the securitization, net of the interest implicit in the leases. In
addition, the Company recorded leasing equipment of $1,326 related to the
equipment subsequently leased under the terms of the operating lease agreement.
The remaining obligations under the ABN's amounting to $17,793 were
recorded as debt and capital lease obligations on the Consolidated Balance
Sheets at October 1, 2003. After consolidating these and other assets and
liabilities of the special purpose entity, net of the book value of the
Company's retained interest in the securitization of $3,801 on October 1,
2003, the Company recognized income of $2,870 in other (income)/expense, net in
the Consolidated Statements of Income at October 1, 2003. This income resulted
from the favorable credit loss experience through September 30, 2003 on the
underlying direct financing leases as compared to the assumed credit losses of
1.5%.

Interpool Limited, a
subsidiary of the Company (the "Servicer"), acted as servicer for the
assets prior to October 1, 2003. Pursuant to the terms of the servicing
agreement as amended on October 18, 2002, the Servicer was paid a fee of 0.75%
of the assets under management. Prior to the amendment to the servicing
agreement, the Servicer was paid a fee of 0.40%. As a result of this amendment,
the Company recorded a permanent impairment loss of $240 for the year ended
December 31, 2002 in the accompanying Consolidated Statements of Income. The
Company's management determined that the servicing fee paid approximates
the fair value for services provided, as such, no servicing asset or liability
was recorded. For the nine months ended September 30, 2003 and for the year
ended December 31, 2002, the Company received servicing fees totaling $706 and
$591 which are included in equipment leasing revenue in the accompanying
Consolidated Statement of Income.

(8)        
  Other contingencies and commitments:

Lease Commitments: The Company and its subsidiaries are
parties to various operating leases relating to office facilities,
transportation vehicles, and certain other equipment with various expiration
dates through 2010. All leasing arrangements contain normal leasing terms
without unusual purchase options or escalation clauses. Rental expense under
operating leases aggregated $20,927, $21,470 and $17,074 for the years ended
December 31, 2004, 2003 and 2002, respectively.

As of December 31,
2004, the aggregate minimum rental commitment under operating leases having
initial or remaining noncancelable lease terms in excess of one year was as
follows:

`2005                                $15,162
2006                                 18,311
2007                                 10,739
2008                                  5,882
2009                                  3,761
Thereafter                            2,780
                                  -------------
                                    $56,635
                                  =============`

107

---

The Company and its
subsidiaries are parties to various capital leases and obligated to make
payments related to its long-term borrowings. (See Note 4 to the Consolidated
Financial Statements).

Employment Agreements: The Company has entered into
employment agreements with certain executive officers and employees which
provide for minimum salary, bonus arrangements and benefits for periods from 1
to 7 years. As of December 31, 2004, the minimum obligation related to these
agreements approximated $10,336.

Separation
Agreements: The Company has entered into separation agreements with its
former President and Chief Operating Officer and its former Executive Vice
President and Chief Financial Officer that provide for payments and benefits for
periods of 1 to 3 years. As of December 31, 2004, the remaining obligation
related to these agreements approximated $2,555. Expenses related to these
separation agreements amounting to $5,844 were recorded during 2003. During
2004, as contemplated by the separation agreement with the Company's former
President and Chief Operating Officer, the Company paid and recorded to expense
employment related taxes in connection with the previous employment of this
executive officer prior to October 9, 2003, amounting to $274. These taxes could
not be estimated in 2003 and a portion of these taxes are recoverable in 2005,
and possibly in later years, by the Company from the former President and Chief
Operating Officer under certain circumstances. For further information regarding
a modification of the separation agreement with the former President and Chief
Operating Officer, see Note 17 to the Consolidated Financial Statements.

Guarantees: At December 31, 2004, the
following guarantees were issued and outstanding:

Indemnifications: In the ordinary course of
business, the Company executes contracts involving indemnifications standard in
the industry and indemnifications specific to a transaction such as an
assignment and assumption agreement. These indemnifications might include claims
related to any of the following: tax matters and governmental regulations, and
contractual relationships. Performance under these indemnities would generally
be triggered by a breach of terms of the contract or by a third party claim. The
Company regularly evaluates the probability of having to incur costs associated
with these indemnifications and have accrued for any expected losses that are
probable. The types of indemnifications for which payment are possible are as
follows:

| | Taxes: In the ordinary course of business, the
Company provides various tax-related indemnifications as part of transactions.
The indemnified party typically is protected from certain events that result in
a tax treatment different from that originally anticipated. The Company's
liability typically is fixed when a final determination of the indemnified
party's tax liability is made. In some cases, a payment under a tax
indemnification may be offset in whole or in part by refunds from the applicable
governmental taxing authority. The Company is party to numerous tax
indemnifications and many of these indemnities do not limit potential payment;
therefore, it is unable to estimate a maximum amount of potential future
payments that could result from claims made under these indemnities.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

108

---

| | Contractual Relationships: The Company entered into
a number of operating leases during 2000 and 2002 in which it guaranteed a
portion of the residual value of the leased equipment. These leases have terms
that expire between 6 and 9 years. If at the end of the lease term the fair
market value of the equipment is below the guaranteed residual value in the
agreement, the Company is liable for a percentage of the deficiency. The total
of these guarantees is $12,405 of which $1,451 could be due in 2 to 3 years,
$6,560 could be due in 4 to 5 years, and the remaining $4,394 potentially due in
greater than 5 years. As of December 31, 2004 and 2003, included in accounts
payable and accrued expenses in the accompanying Consolidated Balance Sheets is
a liability of $188 and $144, respectively, representing the accrual for these
guarantees.
During the second quarter of 2003, the Company arranged a leasing transaction
between one of its major customers and a financial institution for up to 3,000
containers. As part of this transaction, the Company agreed to provide certain
guarantees related to the fair value of the equipment if the lessee terminated
the lease or if the lessee was unable to meet its obligations under the terms of
the lease. In addition, if the lessee agreed to extend the lease, the Company
agreed to purchase the equipment from the financial institution at a stated
value and lease it to the lessee for this additional period at a stated lease
rate. The Company further agreed to provide the lessee with a purchase option at
the end of the extended lease period that would be less than the fair market
value of the equipment at the date the lessee could exercise its option (the
"Bargain Purchase Option").
In return for the arrangement of the transaction on behalf of the financial
institution and the guarantees discussed above, the Company was paid an
arrangement fee and a portion of the initial rent for each container included in
the lease. During the year ended December 31, 2003, 2,076 containers were
delivered to the lessee and the Company received payments amounting to $1,240.
The remaining 924 containers were purchased by the Company and leased to the
customer under the terms of a direct financing lease.
The estimated fair value at the end of the lease term guaranteed by the Company
for these containers amounts to approximately $4,360. The Company has estimated
that its potential liability related to these guarantees is less than the
estimated potential liability related to the Bargain Purchase Option granted to
the lessee. As such, the Company has accrued for the estimated value of its
liability for this Bargain Purchase Option amounting to $1,017 that could be due
in greater than 5 years. All fees collected from the lessor have been deferred
by the Company and included in accounts payable and accrued liabilities on the
accompanying Consolidated Balance Sheets. The fees received from the lessor, net
of the estimated liability for the Bargain Purchase Option, are being recognized
by the Company over the term of the residual guarantee.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

109

---

| | Standby Letters of Credit: As of December 31, 2004,
CAI, a consolidated subsidiary of the Company, has two outstanding letters of
credit totaling $6,000 which guarantee its obligations under certain operating
lease agreements. These letters of credit expire in May 2005.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other:

At December 31, 2004,
commitments for capital expenditures for leasing equipment totaled approximately
$149,634, with approximately $116,681 committed for 2005 and $32,953 committed
for 2006.

The Company is engaged in
various legal proceedings from time to time incidental to the conduct of its
business. Such proceedings may relate to claims arising out of equipment
accidents that occur from time to time which involve death and injury to persons
and damage to property. Accordingly, the Company requires all of its lessees to
indemnify the Company against any losses arising out of such accidents or other
occurrences while the chassis are on-hire to the lessees. In addition, lessees
are generally required to maintain a minimum of $2,000 in general liability
insurance coverage which is standard in the industry. In addition, the Company
maintains a general liability policy of $255,000 in the event that the above
lessee coverage is insufficient. While the Company believes that such coverage
should be adequate to cover current claims, there can be no guarantee that
future claims will never exceed such amounts. Nevertheless, the Company believes
that no current or potential claims of which it is aware will have a material
adverse effect on its financial condition or results of operations and that the
Company is adequately insured against such claims.

Pending Governmental Investigations

Following the
Company's announcement in July 2003 that its Audit Committee had
commissioned an internal investigation by special counsel into our accounting,
the Company was notified that the SEC had opened an informal investigation of
Interpool. As the Company anticipated, this investigation was subsequently
converted to a formal investigation and remains pending as of the date this Form
10-K was filed with the SEC. The Company is cooperating fully with this
investigation. The New York office of the SEC received a copy of the written
report of the internal investigation and has received documents and information
from the Company, its Audit Committee and certain other parties pursuant to SEC
subpoenas. In late 2003, the Company was also advised that the United States
Attorney's office for the District of New Jersey received a copy of the
written report of the internal investigation and opened a parallel investigation
focusing on certain matters described in the report by the Audit
Committee's special counsel. The Company was informed that Interpool is
neither a subject nor a target of the investigation by the U.S. Attorney's
office. The Company cannot predict the final outcome of these investigations and
accordingly cannot be assured that they will not result in the taking of actions
adverse to us.

110

---

Stockholder Litigation

In February and March 2004,
several lawsuits were filed in the United States District Court for the District
of New Jersey, by purchasers of the Company's common stock naming the
Company and certain of its present and former executive officers and directors
as defendants. The complaints alleged violations of the federal securities laws
relating to the Company's reported Consolidated Financial Statements for
the years ended December 31, 2000 and 2001 and the nine months ended September
30, 2002, which the Company announced in March 2003 would require restatement.
Each of the complaints purported to be a class action brought on behalf of
persons who purchased the Company's securities during a specified period.
In April 2004, the lawsuits, which seek unspecified amounts of compensatory
damages and costs and expenses, including legal fees, were consolidated into a
single action with lead plaintiffs and lead counsel having been appointed. The
plaintiffs filed a consolidated amended complaint in September 2004, which
includes allegations of purported misstatements and omissions in the
Company's public disclosures throughout an expanded purported class period
from March 31, 1999 through December 26, 2003. In November 2004, the Company
filed a motion to dismiss the amended complaint, which is currently pending. In
the event the Company's motion to dismiss is denied, the Company would
expect to incur additional defense costs typical of this type of class action
litigation. The Company intends to vigorously defend this lawsuit but is unable
at this time to ascertain the impact this litigation may have on its financial
position or results of operations.

(9)       
   Cash flow information:

For purposes of the
Consolidated Statements of Cash Flows, the Company includes all highly liquid
short-term investments with an original maturity of three months or less in cash
and cash equivalents.

For the years ended
December 31, 2004, 2003 and 2002, cash paid for interest was approximately
$108,542, $105,272 and $108,886, respectively. Cash paid for income taxes was
approximately $1,202, $2,175 and $3,249, respectively.

(10)       
   Related party transactions:

During 2001, the Company leased
approximately 28,500 square feet of commercial space for its corporate offices
in Princeton, New Jersey from 211 College Road Associates, a New Jersey general
partnership in which Martin Tuchman, a director and Chief Executive Officer and
Warren L. Serenbetz, a director until December 15, 2004, held a significant
equity interest. The 2001 annual base rental for this property was approximately
$557 under a triple net lease expiring in 2010. In the opinion of the
Company's management, rent paid under this lease did not exceed rent that
the Company would have paid in an arms' length transaction with an
unrelated third party. On January 28, 2002, the Company executed a Purchase and
Sale Agreement, pursuant to which on May 1, 2002 the Company acquired the
building which houses its corporate offices. The fair market value purchase
price of the approximately 39,000 square feet building was $6,250, based upon a
determination of the fair market value of the property by an independent
property appraisal firm. The purchase price and other terms of the purchase were
unanimously approved by the Company's Board of Directors.

In January 1992 the Company
executed a Consultation Services Agreement with Radcliff Group, Inc. pursuant to
which Radcliff designated Warren L. Serenbetz, a stockholder and director until
December 15, 2004, as an executive consultant. The Consultation Services
Agreement was terminated in January 1995. Under the terms of the agreement
compensation continued through December 2002 and payment of health related costs
will continue through December 31, 2007. The final payment under the terms of
the Consultation Services Agreement was made in January 2003. Compensation under
this agreement was $492 in 2002.

111

---

Eurochassis L.P., a New
Jersey limited partnership in which Raoul J. Witteveen, our former President and
Chief Operating Officer, is one of the limited partners and the general partner,
leases 100 chassis to Trac Lease, a subsidiary of Interpool. Annual lease
expense amounted to $86 for the year ended December 31, 2004 and approximately
$91 for each of the years ended December 31, 2003 and 2002. The annual lease
term renews automatically unless canceled or renewed under renegotiated lease
rate terms by either party prior to the first day of the renewal period. The
members of the Board of Directors have unanimously determined that the terms of
all arrangements between Eurochassis L.P. and Trac Lease are beneficial and fair
to the Company.

In January 1998, the
Company entered into a non-exclusive Consulting Agreement with Atlas Capital
Partners, LLC ("Atlas") pursuant to which Atlas provided investment
banking consultation services. Mitchell I. Gordon, a Director of Interpool from
1998 to October 2003 and Chief Financial Officer and Executive Vice President
from October 2000 to July 2003 also served as president of Atlas when the
Consulting Agreement was entered into. Under the terms of the Consulting
Agreement, Atlas was to have been paid $240 (plus reimbursement of reasonable
expenses), additional compensation of $560 and a twenty percent carried interest
in investments made with funds provided by Interpool. In addition, Atlas was
contractually entitled to an annual bonus in an amount that is usual and
customary in the investment banking business for investment opportunities
actually completed by the Company subject to set-off of the $560 additional
compensation. In 2000, other compensation in the amount of $1,650 to be paid
over three years, was earned by Atlas in connection with the acquisition by the
Company of the North American Intermodal Division of Transamerica. As of October
2000, the Consulting Agreement was terminated with the exception of the deferred
compensation related to the acquisition of Transamerica. Mr. Gordon resigned as
an officer and director of the Company in 2003.

Chassis Holdings I, LLC

The Ivy Group, which is a
New Jersey general partnership composed directly or indirectly of Martin
Tuchman, Radcliff Group, Inc., Raoul J. Witteveen, Thomas P. Birnie and Graham
K. Owen, has previously leased chassis to Trac Lease, Inc. ("Trac
Lease"). As of December 31, 2000, pursuant to various equipment lease
agreements, Trac Lease leased 6,047 chassis from The Ivy Group and its
principals for an aggregate annual lease payment of approximately $2,900. On
January 1, 2001, the various leases for the 6,047 units were combined into a
single lease pursuant to which The Ivy Group and its principals were paid an
aggregate lease payment of $2,691 through June 30, 2001. On July 1, 2001, the
Company restructured its relationship with The Ivy Group and its principals to
provide the Company with managerial control over 6,047 chassis previously leased
by Trac Lease, a wholly owned subsidiary of the Company, from The Ivy Group. As
a result of the restructuring, the partners of The Ivy Group contributed these
6,047 chassis and certain other assets and liabilities to a newly formed
subsidiary, Chassis Holdings I, LLC ("Chassis Holdings"), in exchange
for $26,000 face value of preferred membership units and 10% of the common
membership units, and Trac Lease contributed 902 chassis and $2 in cash to
Chassis Holdings in exchange for $3,000 face value of preferred membership units
and 90% of the common membership units. The preferred membership units are
entitled to receive a preferred return prior to the receipt of any distributions
by the holders of the common membership units. The value of the contributed
chassis was determined by taking the arithmetic average of the results of
independent appraisals performed by three nationally recognized appraisal firms
in connection with the Company's establishment of a chassis securitization
facility in July 2000. As the managing member of Chassis Holdings, Trac Lease
exercises sole managerial control over the entity's operations. Chassis
Holdings leases all of its chassis to Trac Lease at a rental rate equal to the
then current Trac Lease fleet average per diem. Chassis Holdings and the holders
of the preferred membership units are party to a Put/Call Agreement which
provides that the holders of preferred units may put such units to Chassis
Holdings under certain circumstances and Chassis Holdings may redeem such units
under certain circumstances. Chassis Holdings will be required to make certain
option payments to the holders of the preferred membership units in order to
preserve its right to redeem such units.

112

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Based on 90% common unit
ownership held by Trac Lease, the Company's Consolidated Financial
Statements include the accounts of Chassis Holdings. The Ivy Group's
interest in the common and preferred units of Chassis Holdings of approximately
$26,326 is classified as minority interest in equity of subsidiaries in the
accompanying Consolidated Balance Sheets. Dividends paid on the common units and
distributions on the preferred units totaling $3,071, $2,906 and $3,120 for the
years ended December 31, 2004, 2003 and 2002, are included in minority
interest (income)/expense, net in the accompanying Consolidated Statements of
Income.

The members of the Board of
Directors have unanimously determined that the terms of all arrangements between
The Ivy Group and Trac Lease, including the formation of Chassis Holdings, are
beneficial and fair to the Company.

PCR Transactions

In July 2000, Yardville
National Bank (a subsidiary of an entity in which the Company's Chief
Executive Officer owns approximately five percent of the common stock and serves
on the Executive Committee of the Board of Directors) extended a revolving
credit facility of $2,500 to PCR, secured by substantially all of PCR's
assets. On August 31, 2000 this facility was increased to $5,000.

In connection with the sale
of PCR in December 2001, Martin Tuchman and Raoul Witteveen agreed in March 2002
to guarantee this line of credit between PCR and Yardville National Bank which
had been reduced to $3,000 and the Company was released from a guarantee it had
previously executed. This guarantee was subsequently paid off through advances
made to PCR by The Ivy Group. PCR's line of credit with Yardville National
Bank was reduced to $1,656 in March 2002 and later increased to $2,000 in
September 2002. Advances amounting to $698 and $1,983 in 2003 and 2002,
respectively, were made to PCR by The Ivy Group to pay off borrowings under the
line of credit and to provide working capital. The Ivy Group is a partnership
controlled by certain current and former officers and directors of the Company.
The advances made by The Ivy Group to PCR are considered capital contributions
to the Company and payments by the Company to PCR. The payments to PCR have been
determined to be uncollectible and have been expensed by the Company and
included in other (income)/expense, net. Payments made in 2002 amounting to
$1,983 were included in additional paid-in-capital. The remaining payments made
in 2003 of $698 were recorded in additional paid-in-capital during 2003 when the
payments were made.

113

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Since 2000, the Company has
guaranteed PCR debts due to third parties totaling $5,000. At December 31, 2002,
with PCR in liquidation, a determination was made that it was probable that the
Company would incur costs related to the guarantee. As a result, the Company
recorded a liability for $4,429 representing its guarantee of PCR debts, net of
amounts collected related to PCR's liquidation. This amount is included in
accounts payable and accrued expenses in the December 31, 2003 Consolidated
Balance Sheet. The $5,000 guarantee was paid off through a secured financing
arrangement with another financial institution completed by the Company in July
2004.

Bank Loans

In September 2000,
Yardville National Bank (a subsidiary of an entity in which the Company's
Chief Executive Officer owns approximately five percent of the common stock and
serves on the Executive Committee of the Board of Directors) provided a
revolving line of credit to the Company. The line of credit was initially $9,750
and was secured by equipment and the related leases. The interest rate was
Yardville National Bank's base interest rate minus 0.5%. The Company
utilized a portion of this facility from inception through April 2002 when the
loan balance was paid and the facility ended.

In April 2003 and August
2003 the Company borrowed $16,000 and $7,000, respectively, from Yardville
National Bank. The term of the $16,000 loan was three years with thirty-four
fixed monthly principal payments of $250 commencing May 25, 2003 and a final
principal payment of $7,500 due on March 25, 2006. Interest was payable monthly,
at an initial rate of 4.25%, and was adjusted monthly to the prime rate as
published in the Wall Street Journal subject to a 4% minimum and 5% maximum per
annum rate.

The term of the $7,000 loan
was five years with fifty-nine monthly principal payments of $75 commencing
September 7, 2003 and a final principal payment of $2,575 due on August 7, 2008.
Interest was payable monthly, at an initial rate of 4%, and was adjusted monthly
to the prime rate as published in the Wall Street Journal subject to a 4%
minimum and 6% maximum per annum rate.

During November 2004, the
Company paid in full both of these facilities. In connection with our borrowings
from Yardville National Bank, our Board of Directors unanimously determined that
the interest rate and other terms of such borrowings were at least as favorable
to us as could have been obtained in an arms'-length transaction with an
unrelated third party.

Fathom Co., LTD Agency Fees

The Company paid Fathom
Co., LTD ("Fathom"), its local representative in Taiwan, $116 for each
of the years ended December 31, 2004, 2003 and 2002 to represent the Company
with the Taiwan depots that store and repair damaged containers and to provide
customer support. Fathom is owned by a Regional Vice President of Interpool
Limited (who is not an executive officer of the Company) and members of his
family. Management has determined that the fee for these services between Fathom
and Interpool Limited are beneficial and fair to the Company.

114

---

Summary of Related Party Transactions

The effects of the above
related party transactions included in the accompanying Consolidated Statement
of Income are as follows:

`2004       2003        2002
                                                 ----       ----        ----
         Lease operating expense                $3,157     $2,997      $3,234
                                                ======     ======      ======
         Administrative expense                   $116       $157        $857
                                                  ====       ====        ====
         Other (income)/expense, net              $---       $---      $2,763
                                                  ====       ====      ======
         Interest expense                         $733       $540         $40
                                                  ====       ====         ===`

(11)        
   Relationship with CAI:

The Company holds a 50%
common equity interest in CAI, which it acquired in April 1998. CAI owns and
leases its own fleet of containers and also manages, for a fee, containers owned
by the Company and third parties. The Company entered into its operating
relationship with CAI primarily to facilitate the leasing in the short-term
market of containers coming off long-term operating lease, to gain access to new
companies looking to lease containers on a long-term basis and to realize cost
efficiencies from the operation of a coordinated container lease marketing
group. For containers managed by CAI for the Company on a short-term basis, the
Company earns the net operating income and pays CAI a fee for managing its
equipment and leasing it on its behalf. The calculation is based on the average
daily net operating income of CAI's fleet of owned, leased-in and managed
containers (including the portion of CAI's fleet that consists of the
Company's equipment) for each day such managed containers are part of the
CAI fleet. The marketing group, which is organized as a wholly-owned subsidiary
of the Company, is responsible for soliciting container lease business for both
the Company and CAI, including long-term operating and direct financing lease
business and short-term lease business on master lease agreements. The Company
has a right to purchase all long-term operating and direct financing lease
business generated by the marketing group, subject to the Company offering to
CAI, at cost, 10% of this long-term operating and direct financing lease
business. By mutual agreement, CAI has purchased for its own account long-term
operating and direct financing lease business the marketing group has generated
in excess of such amounts. During 2003, CAI sold containers to Interpool in the
amount of $5,890 and recorded a gain on these sales of $557. During 2002, CAI
sold containers to Interpool in the amount of $38,705 and recorded a gain on
these sales of $5,102. These gains have been eliminated from the accompanying
Consolidated Financial Statements. There were no sales between CAI and Interpool
during 2004. Such equipment, as well as certain other containers purchased from
time to time, are currently managed for the Company by CAI for a fee based upon
the actual net operating income earned by such containers.

115

---

The 50% equity interest in
CAI not held by the Company is owned by CAI's chief executive officer.
Under the terms of a Shareholder Agreement entered into in 1998 between the
Company and CAI's chief executive officer, since an initial public offering
for the registration and sale of CAI's common stock has not been initiated
before April 2003, CAI's chief executive officer has the right to request
an independent valuation of CAI. Such independent valuation of CAI has not been
requested. However, following the completion of such an appraisal, the Company
has the right to make a written offer to acquire the chief executive
officer's equity for an amount equal to 50% of the fair value of CAI as
indicated in the appraisal. If an offer is not made by the Company, CAI's
chief executive officer has a right to require CAI to take the necessary steps
to effect an initial public offering to sell his equity. All costs associated
with an initial public offering of CAI would be borne by CAI.

In connection with the
acquisition of its equity interest in CAI, the Company loaned CAI $33,650 under
a Subordinated Note Agreement (Note), which is collateralized by all containers
owned by CAI as of April 30, 1998 or thereafter acquired, subject to the
priority security interest lien of CAI's senior credit facility, except for
certain excluded collateral. Interest on the Note is at an annual fixed rate of
10.5% and is payable quarterly. The original repayment terms required mandatory
quarterly principal payments of $1,683 beginning July 30, 2003 through April 30,
2008. The Note was subject to certain financial covenants and was
cross-collateralized with CAI's senior credit facility, subject to the terms of
a subordination agreement.

On June 27, 2002, CAI entered into an amended $110,000 senior
revolving credit agreement with a group of financial institutions. To facilitate
the closing of this new credit facility, the Company agreed to extend the
repayment terms of its Note so as to require mandatory quarterly principal
payments of $1,683 beginning July 30, 2006 through April 30, 2011 and modified
certain financial covenants in the Note. Interest on the Note continues to
accrue at an annual fixed rate of 10.5% and is payable quarterly. The Note
continues to be cross-collateralized with CAI's senior credit agreement, subject to
the terms of an amended and restated subordination agreement. At the same time,
the Company was granted the right to appoint a majority of CAI's board of
directors. As a result of these transactions and gaining a majority position on
CAI's board, the Company's financial statements include CAI as a consolidated
subsidiary commencing June 27, 2002. Previously, CAI was accounted for under the
equity method of accounting. The Company's share of the equity losses of CAI for
the period from January 1, 2002 through June 26, 2002 have been recorded in
losses for investments accounted for under the equity method in the accompanying
Consolidated Statement of Income. Since June 27, 2002 CAI's results of
operations have been included in the appropriate captions on the accompanying
Consolidated Statements of Income. The assets and liabilities of CAI at December
31, 2004 and 2003, after elimination of intercompany transactions, have been
included on the accompanying Consolidated Balance Sheets.

A total of $65,000 and
$87,000 was outstanding under CAI's senior revolving credit facility at
December 31, 2004 and 2003, respectively. Borrowings under CAI's senior
credit facility are secured by substantially all of CAI's assets, other
than certain excluded assets, and are payable on June 27, 2005. CAI is currently
in discussions with its lenders regarding a renewal of its senior revolving
credit facility. The senior credit facility contains various financial and other
covenants. At December 31, 2004, CAI was in compliance with these covenants.

The senior credit facility
was amended in May 2003 to increase the letter of credit commitment by the
lenders' administrative agent.

116

---

In addition, CAI has
entered into sale-leaseback transactions with third parties pursuant to which
CAI sells maritime shipping containers to such third parties and then leases the
shipping containers back from such third parties. Certain of these leases
contain financial and other covenants. At December 31, 2004, CAI was in
compliance with these covenants.

During the period from 1998
to December 2003, there were several inter-company transactions wherein
Interpool acquired equipment, and the related leases from CAI, at terms that
resulted in a profit for CAI. These transactions were negotiated on an
arms-length basis and management believes that the terms are similar to those
that a third party would have negotiated with CAI under the circumstances.

During 2004, 2003, and
2002, Interpool paid CAI $1,761, $1,774 and $2,189 respectively for the
management of its equipment.

Subsequent to June 27,
2002, revenues and expenses for transactions between the Company and CAI are
eliminated in consolidation. Minority interest expense recorded by the Company
for the year ended December 31, 2004 was $5,696. This compares to minority
interest income recorded by the Company for the year ended December 31, 2003 and
the period from June 27, 2002 to December 31, 2002 of $1,151 and $1,306,
respectively.

In April 2004, the Company
reached an agreement with CAI resolving differences in interpretation of certain
agreements with CAI including provisions governing payment of appropriate
remedial compensation when an age disparity develops between the Company's
containers managed by CAI and the balance of CAI's fleet. Pursuant to the
agreement with CAI, the Company paid CAI $2,000 for resolution of all disputes
through February 29, 2004. The impact of this agreement, was a reduction in
consolidated pre-tax income of $1,000 ($600 net of tax).

(12)       
    Retirement plans:

Certain subsidiaries have
defined contribution plans covering substantially all full-time employees.
Participating employees may make contributions to the plan, through payroll
deductions. Matching contributions are made by the Company equal to 75% of the
employee's contribution to the extent such employee contribution did not
exceed 6% of their compensation. During the years ended December 31, 2004, 2003
and 2002, the Company expensed approximately $533, $454 and $423, respectively,
related to this plan. These amounts are included in administrative expense on
the Consolidated Statement of Income.

(13)       
   Segment and geographic data:

The Company and its
subsidiaries conduct business principally in a single industry segment, the
leasing of intermodal dry freight standard containers, chassis and other
transportation related equipment. Within this single industry segment, the
majority of the Companies operations come from two reportable segments:
container leasing, and domestic intermodal equipment leasing. The container
leasing segment specializes primarily in the leasing of dry freight standard
containers, while the domestic intermodal equipment segment specializes
primarily in the leasing of intermodal container chassis. The Company also had
limited operations in a third reportable segment that specialized in leasing
microcomputers and related equipment.

117

---

The computer leasing
segment consisted of two subsidiaries, Microtech Leasing Corporation
("Microtech") and Personal Computer Rentals ("PCR"). During
the third quarter of 2001, the Company adopted a plan to exit this segment. As
of December 31, 2002 the assets of Microtech continued to be liquidated and
PCR's financial condition had deteriorated. PCR ceased active operations
and liquidated in 2003. (See Note 6 to the Consolidated Financial Statements.)
As of December 31, 2004, all assets of Microtech and PCR were liquidated. For
the year ended December 31, 2002, expenses related to the liquidation of PCR are
included in the Domestic Intermodal Equipment segment.

Beginning June 27, 2002 the
container leasing segment includes revenues and expenses and related balance
sheet accounts for CAI, previously accounted for under the equity method of
accounting.

The accounting policies of
the segments are the same as those described in Note 1. The Company evaluates
performance based on profit or loss before income taxes. The Company's
reportable segments are strategic business units that offer different products
and services. All significant transactions between segments have been
eliminated. Historically, funds have been borrowed by Interpool, Inc. Trac
Lease, and Interpool Limited (or their subsidiaries). Interpool, Inc. has
borrowed all of the Company's public debt. Trac Lease and Interpool, Inc.
comprise the Company's domestic intermodal equipment segment, and Interpool
Limited and CAI comprise the container leasing segment. For purposes of segment
reporting the outstanding debt and related interest expense are recorded by the
borrowing entity. Advance rates for secured loans have been approximately the
same for both chassis and containers, and have generally been in the 75-85%
range. To the extent that we lease chassis equipment in from other parties, the
effective advance rate is generally 100%.

Segment Information:

`Domestic       Computer
                                                         Container        Intermodal       Leasing
                        2004                              Leasing         Equipment       Equipment         Totals
                        ----                             ---------       ----------       ----------       --------

Equipment leasing revenue                                 $181,485         $206,698           $---         $388,183

Other revenue                                                8,671            7,533            ---           16,204

Lease operating and administrative expenses                 46,674           98,594              7          145,275

Provision for doubtful accounts                                950              526            ---            1,476

Fair value adjustments for derivative instruments           (1,328)          (1,102)           ---           (2,430)

Fair value adjustment warrants                                 ---           49,222            ---           49,222

Depreciation and amortization                               57,161           32,297            ---           89,458

Impairment of leasing equipment                              1,373            3,237            ---            4,610

Gain on settled insurance litigation                        (3,781)          (2,486)           ---           (6,267)

Other (income)/expense, net and minority interest           (8,485)           1,171            ---           (7,314)

Income for investments under equity method                     ---             (416)           ---             (416)

Interest income                                             (1,865)          (1,520)            (5)          (3,390)

Interest expense                                            36,347           75,666            ---          112,013

Income / (loss) before income taxes                         63,110          (40,958)            (2)          22,150

Net investment in DFL's                                    277,461           85,984            ---          363,445

Leasing equipment, net                                     685,786          893,410            ---        1,579,196

Equipment purchases                                        212,402           37,919            ---          250,321

Total segment assets                                    $1,107,813       $1,296,248            $25       $2,404,086`

118

---

`Domestic        Computer
                                                         Container       Intermodal       Leasing
                        2003                              Leasing        Equipment       Equipment        Totals
                        ----                             ---------       ----------      ----------       ------

Equipment leasing revenue                                 $175,131         $198,552           $604         $374,287

Other revenue                                               11,838           15,987            ---           27,825

Lease operating and administrative expenses                 54,193          102,127            106          156,426

Provision for doubtful accounts                              2,005            2,634           (391)           4,248

Fair value adjustments for derivative instruments             (632)            (205)           ---             (837)

Depreciation and amortization                               56,677           30,821            ---           87,498

Impairment of leasing equipment                              2,688            6,361            ---            9,049

Other (income)/expense, net and minority interest           (5,085)           1,745            171           (3,169)

Losses for investment under equity method                      ---            1,698            ---            1,698

Interest income                                             (2,636)          (1,318)            (6)          (3,960)

Interest expense                                            33,202           73,485              1          106,688

Income/(loss) before income taxes                           46,557           (2,809)           723           44,471

Net investment in DFL's                                    330,090           96,716              9          426,815

Leasing equipment, net                                     747,377          889,339            ---        1,636,716

Equipment purchases and investment in DFL's                279,888           66,887            ---          346,775

Total segment assets                                    $1,210,635       $1,162,357            $44       $2,373,036`

`Domestic        Computer
                                                        Container       Intermodal       Leasing
                        2002                             Leasing        Equipment       Equipment         Totals
                        ----                            ----------      ----------      ---------         ------

Equipment leasing revenue                                 $138,276        $185,283         $1,521        $325,080

Other revenue                                                8,094          11,761            ---          19,855

Lease operating and administrative expenses                 40,212          76,303            508         117,023

Provision for doubtful accounts                                325           5,939          1,579           7,843

Fair value adjustments for derivative instruments               96           5,434            ---           5,530

Depreciation and amortization                               51,245          37,384             78          88,707

Impairment of leasing equipment                              4,512           5,038             ---          9,550

Other (income)/expense, net and minority interest           (3,052)          4,579          1,450           2,977

Losses for investment under equity method                      ---           6,603            ---           6,603

Interest income                                             (2,243)         (2,395)           ---          (4,638)

Interest expense                                            27,182          81,016            146         108,344

Income/(loss) before income taxes                          $28,093        $(22,857)       $(2,240)         $2,996`

119

---

The Company's shipping
line customers utilize international containers in world trade over many varied
and changing trade routes. In addition, most large shipping lines have many
offices in various countries involved in container operations. The
Company's revenue from international containers is earned while the
containers are used in service carrying cargo around the world, while certain
other equipment is utilized in the United States. Accordingly, the international
information presented below represents our international container leasing
operation conducted through Interpool Limited, a Barbados corporation, while the
United States information presented below represents our domestic intermodal
equipment leasing segment, as well as those revenues and assets relative to CAI
which is headquartered in the United States of America. Such presentation is
consistent with industry practice.

Geographic Information:

`EQUIPMENT LEASING REVENUE           2004                2003               2002
                                       ----                ----               ----
   United States                     $251,019            $236,126           $205,923
   International                      137,164             138,161            119,157
                                      -------             -------            -------
                                     $388,183            $374,287           $325,080
                                     ========            ========           ========

   LEASING EQUIPMENT, NET:
   United States                   $1,034,212          $1,049,875
   International                      544,984             586,841
                                      -------             -------
                                   $1,579,196          $1,636,716
                                   ==========          ==========

   ASSETS:
   United States                   $1,477,714          $1,354,921
   International                      926,372           1,018,115
                                      -------           ---------
                                   $2,404,086          $2,373,036
                                   ==========          ==========`

(14)        
  Capital stock:

The Company's 2004
Stock Option Plan for Key Employees and Directors (the "2004 Plan"),
was adopted by the Board of Directors, and approved by the stockholders at the
Company's Annual Meeting of Stockholders, on December 15, 2004. A total of
1,500,000 shares of common stock have been reserved for issuance under the 2004
Plan. Options may be granted under the 2004 Plan, at the discretion of the
Compensation Committee of the Board of Directors (the "Compensation
Committee"), to key employees and directors (whether or not they are
employees) of Interpool, Inc. and its subsidiaries. The number of shares that
may be the subject of options granted during any calendar year to any one
individual cannot exceed 250,000 shares. No options were granted under this plan
during 2004.

Previously, the Company
maintained a 1993 Stock Option Plan for Executive Officers and Directors (the
"1993 Stock Option Plan"). A total of 3,803,063 options are currently
outstanding under the 1993 Stock Option Plan. No further options may be granted
under the 1993 Stock Option Plan.

120

---

The Company's 1993
Stock Option Plan was adopted by the Company's Board of Directors and
approved by the stockholders in March 1993. A total of 6,000,000 shares of
common stock had been reserved for issuance under the Stock Option Plan. Options
were granted under the Stock Option Plan to executive officers and directors of
the Company or a subsidiary (including any executive consultant of the Company
and its subsidiaries), whether or not they were employees. These options vested
six months from date of grant and expired ten years from the date of grant.

The Company's 2004
Nonqualified Stock Option Plan for Non-Employee, Non-Officer Directors (the
"2004 Directors Plan"), was also adopted by the Board of Directors,
and approved by the stockholders at the Company's 2004 Annual Meeting of
Stockholders on December 15, 2004. A total of 250,000 shares of common stock
have been reserved for issuance under the 2004 Directors Plan. The exercise
price per share is the fair market value of the Company's common stock on
the date on which the option was granted. The options granted pursuant to the
2004 Directors Plan may be exercised at the rate of one-third of the shares on
the first anniversary of the options' grant date and one-third of the
shares on the second anniversary of the options' grant date and one-third
of the shares on the third anniversary of the options' grant date, subject
to applicable holding periods required under rules of the Securities and
Exchange Commission. Options granted pursuant to the 2004 Directors Plan expire
ten years from their grant date.

The 2004 Directors Plan
provides for the automatic grant of nonqualified options to non-employee
non-officer directors. Under the 2004 Directors Plan, each person who is not an
employee or officer and who serves as a member of the Board of Directors
received a grant of options for 15,000 shares of common stock on the business
day following the annual meeting. As a result, options for 90,000 shares of
common stock were granted on December 16, 2004 to six non-employee, non-officer
directors at an exercise price of $22.05. In addition, each person who becomes a
non-employee non-officer director following the 2004 Annual Meeting will
automatically receive a grant of options for 15,000 shares on the first business
day after becoming a director. The 2004 Directors Plan also provides for
additional automatic grants of options for 5,000 shares on an annual basis to
each continuing director, other than an employee or officer, on the first
business day following each future annual meeting, beginning with the annual
meeting to be held during 2005.

Previously, the Company
maintained the 1993 Non-Qualified Stock Option Plan for Non-Employee,
Non-Consultant Directors (the "1993 Directors Plan"). A total of
45,000 options are currently outstanding under the 1993 Directors Plan. No
further options may be granted under the 1993 Directors Plan.

The Company's 1993
Directors' Plan was adopted by the Board of Directors and approved by the
stockholders in March 1993. The 1993 Directors' Plan is administered by the
Compensation Committee of the Board of Directors. Under the 1993 Directors'
Plan a nonqualified stock option to purchase 15,000 shares of common stock was
automatically granted to each non-employee, non-consultant director of the
Company, in a single grant at the time the director first joined the Board of
Directors. The 1993 Directors' Plan authorized grants of options up to an
aggregate of 150,000 shares of common stock. The exercise price per share is the
fair market value of the Company's common stock on the date on which the
option was granted (the "Grant Date"). The options granted pursuant to
the 1993 Directors' Plan vested at the rate of 1/3 of the shares on the
first anniversary of the director's Grant Date, 1/3 of the shares on the
second anniversary of the director's Grant Date, and 1/3 of the shares on
the third anniversary of the director's Grant Date, subject to certain
holding periods required under rules of the Securities and Exchange Commission.
Options granted pursuant to the 1993 Directors' Plan expire ten years from
their Grant Date.

121

---

Through September 16, 1998,
options to purchase 4,408,501 shares under the Company's 1993 Stock Option
Plan for Executive Officers and Directors had been granted, 22,500 of which
expired due to failure to exercise and 22,500 of which were exercised. Options
to purchase 90,000 shares were granted under the Company's 1993
Nonqualified Stock Option Plan for Non-employee, Non-consultant Directors,
45,000 of which expired due to failure to exercise and 15,000 of which were
exercised.

On September 16, 1998 the
Company canceled all but 22,500 of the 4,393,501 options then outstanding under
its 1993 Stock Option Plan for Executive Officers and Directors and the
Company's Nonqualified Stock Option Plan for Non-employee, Non-consultant
Directors and issued 4,371,001 new options in their place. The newly issued
options were granted with an exercise price equal to the closing market price of
the Company's stock as of September 16, 1998 (the "date of
grant"). This resulted in a new measurement date whereby the newly issued
options vested six months from date of grant and expire ten years from date of
grant. All other terms and conditions of the newly issued options were similar
to the canceled options.

In connection with the
resignation of Raoul Witteveen, the Company entered into a separation agreement
that allows for Mr. Witteveen's outstanding stock options, all of which
were fully vested as of the date of his resignation, to be exercisable until
October 9, 2005. Mr. Witteveen's future sale of common stock will be
subject to certain volume restrictions and a right of first refusal on the part
of the Company and its affiliates.

On September 5, 2002,
options to purchase 50,000 shares of the Company's common stock were
granted to Mitchell I. Gordon. The newly issued options were granted under the
1993 Stock Option Plan for Executive Officers and Directors with an exercise
price equal to the closing market price of the Company's stock as of the
grant date. The options were to vest 20% per year beginning January 1, 2003 and
expire ten years from the grant date. In connection with the resignation of
Mitchell I. Gordon, the Company entered into a separation agreement that
provided for the immediate vesting of the options. The compensation cost
recognized by the Company in July 2003, as a result of the immediate vesting of
these options was $496 ($298 net of tax) and is included in administrative
expenses in the accompanying Consolidated Statement of Income.

As of December 31, 2004,
there were 1,750,000 shares of common stock reserved for issuance under the 2004
stock option plans. No options may be granted under the 1993 Plans which expired
in March 2003.

122

---

Changes during 2004, 2003
and 2002 in options outstanding for the combined plans were as follows:

`2004                        2003                        2002
                                   ------------------------   --------------------------  --------------------------
                                                 Weighted                    Weighted                     Weighted
                                                 average                     average                      average
                                    Shares    exercise price    Shares    exercise price    Shares     exercise price
                                   ---------  --------------   ---------  --------------   ---------   --------------
Outstanding at January 1,          4,516,501          10.31    4,539,001        $10.34     4,489,001          $10.30

Granted                               90,000          22.05          ---         ---          50,000           13.73
Exercised                            668,438          10.25       22,500          15.58          ---            ---

                                  ----------------------------------------------------------------------------------
Outstanding at December 31,        3,938,063          10.59    4,516,501         $10.31    4,539,001          $10.34

Exercisable at December 31,        3,798,063          10.30    4,466,501         $10.29    4,384,001          $10.27`

The following table
summarizes information regarding stock options outstanding at December 31, 2004.

`Options Outstanding                                        Options Exercisable
                      ----------------------------------                    ----------------------------------
                                       Weighted Average
                          Number          Remaining                              Number
                        Outstanding      Contractual      Weighted Average     Exercisable     Weighted Average
  Exercise Prices      December 31,      Life (Years)      Exercise Price     December 31,      Exercise Price
-------------------- ---------------- ------------------ ------------------ ---------------- ------------------
    $6.375                  15,000            5.2               $6.375             15,000            $6.375

    10.25                3,683,063            2.8               10.25           3,683,063            10.25

    11.9375                100,000            5.8               11.9375            50,000            11.9375

    13.73                   50,000            7.7               13.73              50,000            13.73

    22.05                   90,000            9.95              22.05                   0            22.05
--------------------------------------------------------------------------------------------------------------
    $6.375-22.05         3,938,063            3.1              $10.59           3,798,063           $10.30`

In connection with the Company's delayed SEC filings
and the receipt of waivers from its lenders necessitated by the delayed filings,
beginning in January 2004, the members of the Company's Board of Directors and
certain affiliates who own shares of the Company's common stock agreed to defer
their receipt of any dividend payments, until the Company was in compliance with
all SEC filing requirements. As of December 27, 2004, the Company was no longer
delinquent with regard to its SEC filings, and the deferred dividends described
above were paid prior to December 31, 2004.

Common stock dividends declared and unpaid at
December 31, 2004 and 2003 amounted to $1,741 and $2,516, respectively, and are
included in accounts payable and accrued expenses in the accompanying
Consolidated Balance Sheet.

123

---

Deferred Bonus Plan

In November 2002, the Company's Board of Directors
approved a Deferred Bonus Plan (the "Plan") under which employees of the Company
and its affiliates who received discretionary year-end bonuses of greater than
$50 received such bonuses partly in cash and partly in the form of an award of
Interpool common stock. Under the Plan, the first $50 of a participant's bonus
amount was paid in cash. Any amount which exceeded $50 but was less than $150
was paid 50% in cash and 50% in stock. Any bonus amount which exceeded $150 was
paid 100% in stock. Bonus stock awards under this Plan cliff vest in equal
installments over a five-year period, unless the recipient elected to have the
award vest over a ten-year period or the Board of Directors specified another
period. The unvested portion of any bonus stock award will vest immediately if a
change in control of Interpool occurs, if the employee is terminated without
cause, if the employee resigns for a good reason, if the employee dies or
becomes permanently disabled, or in any other circumstance deemed appropriate by
the Board of Directors. If a recipient resigns voluntarily without a good reason
or is terminated for cause the employee will forfeit any unvested portion of any
bonus stock award.

The number of shares of stock awarded was calculated
by dividing the dollar value of the stock portion of the bonus by the average
stock price for the last ten trading days ending on December 31 of the grant
year.

Additional stock was awarded based on the vesting
period selected by the employee. If a five year vesting period was selected, the
shares were increased by 10%. If a ten year vesting period was selected the
shares awarded were increased by 30%. Under the Plan, each employee granted a
bonus stock award has a right from time to time to require the Company to
purchase a total number of shares of stock equal to the number of shares of
stock underlying the Participant's Bonus Stock Award. The shares may be vested
shares or shares which were otherwise acquired by the participant providing that
all shares were beneficially owned by the participant for at least 6 months. The
purchase price shall be equal to the fair market value of a share of stock on
the trading day preceding the date of such purchase.

On January 2, 2003, under this Plan, the Company
granted to eligible employees 139,067 shares of restricted stock that had a fair
value of $16.83 per share at the grant date. At the date of grant, $2,342 of
deferred compensation was credited to paid-in-capital with an offset to
unamortized deferred compensation-stock grant in the equity section of the
Consolidated Balance Sheet. Compensation costs are recognized ratably over the
vesting periods during which the related employee service is rendered. During
the fourth quarter 2003, in accordance with the terms of the separation
agreement with the Company's previous President and Chief Operating Officer,
60,407 unvested shares with a value of $1,018 were forfeited. This forfeiture
resulted in the reversal of $1,018 of previously recorded unamortized deferred
compensation, as well as the reversal of previously recorded compensation
expense of $102. For the year ended December 31, 2003 compensation expense was
$140 and 60,407 shares with a value of $1,018 lapsed. The unamortized deferred
compensation remaining in stockholders equity was $1,184 at December 31,
2003.

124

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On January 2, 2004, under the Company's Deferred
Bonus Plan, the Company granted to eligible employees 27,259 shares of
restricted stock that had a fair value of $13.60 per share at the grant date. At
the date of grant, $371 of deferred compensation was credited to paid-in capital
with an offset to unamortized deferred compensation-stock grant in the equity
section of the Consolidated Balance Sheet. During the first quarter of 2004, our
Chief Executive Officer elected to voluntarily relinquish his entire 2002 bonus.
This resulted in the forfeiture of 60,407 unvested shares of restricted stock
valued at $1,017. This forfeiture resulted in the reversal of $916 of previously
recorded unamortized deferred compensation expense, as well as the reversal of
previously recorded compensation expense of $101. Excluding the reversal of
previously recorded compensation related to this forfeiture, compensation
expense for the year ended December 31, 2004 was $85. The unamortized deferred
compensation remaining in stockholders equity was $554 at December 31, 2004. In
September 2004, the Board of Directors terminated the Deferred Bonus Plan. All
stock previously granted under this Plan will continue to be subject to the
terms of the Plan. However, future bonuses will not be subject to the terms of
the Deferred Bonus Plan.

Stock Appreciation Rights

On July 1, 2004, in connection with employment
agreements with certain executive officers, the Company granted common stock
appreciation rights ("SARS") that provide for the grantees to receive cash
payments measured by any appreciation in the market price of the common stock
over a specified base price. The Company granted such stock appreciation rights
with respect to a total of 275,000 share units at a base price of $14.05. The
$14.05 base price reflected the price on the over-the-counter market on February
20, 2004, the business day before the date on which the terms of the stock
appreciation rights were fixed. The grant of stock appreciation rights was
subsequently ratified by the Board of Directors on March 30, 2004, by which time
the closing price of the Company's common stock had increased to $15.00. At July
1, 2004, the date the employment agreements became effective, the most recent
closing stock price of the Company's common stock was $16.55. Under the terms of
the employment agreements, a total of 260,000 of these stock appreciation rights
vest in 2005 with the remaining 15,000 rights vesting in three equal
installments on December 31, 2006, 2007 and 2008. Any unvested stock
appreciation rights will vest immediately upon a change in control. Upon
vesting, these stock appreciation rights may be exercisable at any time prior to
the expiration of the earlier of 10 days following the termination of the
employee or June 30, 2014.

FASB Interpretation No. 28, Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award Plans, requires
interim calculations of the amount of compensation expense inherent in the SARS
(variable plan accounting). This amount is equal to the increase in the quoted
market price since date of grant or award multiplied by the total number of
rights outstanding. Compensation expense is recognized ratably over the vesting
periods during which the related employee service is rendered. At December 31,
2004, the quoted market price of the Company's common stock was $24.00.
Compensation expense for the year ended December 31, 2004 was $2,120 and is
included in administrative expense on the Consolidated Statements of
Income.

125

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Share Repurchases

In December 2004, Warren L. Serenbetz (a former
member of the Company's Board of Directors) advised the Company that he intended
to exercise 668,438 stock options which represented the remaining options issued
to him under the terms of the 1993 Stock Option Plan. In addition, Mr. Serenbetz
requested, and the Compensation Committee of the Board of Directors allowed him,
to exercise these options on a cashless basis. While the cashless exercise of
options is allowed under the terms of the 1993 Stock Option Plan with Board of
Directors approval, it is not the intent of the Company to allow this in most
cases. The Board of Directors considered Mr. Serenbetz's request in light of the
limited period of time he had to exercise these options having resigned as a
Board member, and approved his request at a meeting held on December 15, 2004.
These options had an exercise price of $10.25 per share and the market value at
the date he exercised his options was $22.05 per share.

In connection with the cashless exercise feature, the
Company withheld 310,725 shares with a market value of $6,852 representing the
cost to Mr. Serenbetz of exercising these options. In addition, the Company
withheld 110,086 shares with a market value of $2,427 representing the amounts
advanced to Mr. Serenbetz for the payment of his minimum taxes
related to the exercise. The remaining 247,627 shares were issued to Mr.
Serenbetz.

The 420,811 shares withheld by the Company for the
exercise price of the options and Mr. Serenbetz's minimum taxes have
been recorded as treasury shares, at their market value at the date of exercise
on the accompanying Consolidated Balance Sheets. The exercise also resulted in
the issuance of 668,438 shares at a par value of $.001 and increased additional
paid-in-capital by $6,852. In addition, since these options were granted to Mr.
Serenbetz as compensation for services rendered, the Company is entitled to
claim a tax deduction for non-employee compensation on its 2004 federal tax
return. Since the Company did not recognize compensation expense on the grant or
exercise of these options, the tax benefit (amounting to $3,154) has been
recorded in additional paid-in-capital at the time these options were
exercised.

No shares were repurchased in 2003. During 2002, the
Company purchased 9,300 shares for an aggregate purchase price of
$130.

(15)       
   Gain on Sale of Land:

In April 2002, the Company sold an industrial
property and recorded a gain of $4,766, which is included in other
(income)/expense, net for the year ended December 31, 2002 in the accompanying
Consolidated Statements of Income.

(16)       
   Settled Insurance Litigation:

In connection with an insurance claim related to the
default of a South Korean customer and a subsequent lawsuit filed by the
insurance carriers against the Company, on June 17, 2004 the Company signed an
agreement settling the lawsuit and its claims under the policy. Under the terms
of the settlement agreement, the insurance carriers paid the Company a total of
$26,400 during 2004. In addition, the Company received the right to retain any
of the equipment it had recovered since the date of the claim. The Company
recognized a pre-tax gain of $6,267 related to the $26,400 settlement, which is
recorded in gain on insurance settlement on the Consolidated Statements of
Income.

126

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(17)      
    Subsequent Events:

July 2004 Protocol to the United States and
Barbados Tax Treaty

Through December 31, 2004 Interpool Limited claimed
treaty benefits under the United States and Barbados income tax treaty
("pre-2005 Treaty"). The pre-2005 Treaty contained a limitation on benefits
provision which denies treaty benefits under certain circumstances. However,
Interpool Limited did not fall within the pre-2005 Treaty's limitation on
benefits provision.

On July 14, 2004, the United States and Barbados
signed a protocol to the pre-2005 Treaty which was ratified on December 20, 2004
("post-2004 Treaty") that contains a more restrictive limitation on benefits
provision than the pre-2005 Treaty. The post-2004 Treaty took effect on January
1, 2005 following its ratification by the United States Senate and the
government of Barbados on December 20, 2004. Under the post-2004 Treaty,
Interpool Limited is only eligible for Treaty benefits with respect to its
container rental and sales income if, among other things, Interpool, Inc., is
listed on a "recognized stock exchange" and Interpool, Inc.'s stock is
"primarily" and "regularly" traded on such exchange.

During April 2004, the Company was de-listed by the
New York Stock Exchange. During this de-listing, its common stock was traded on
the over-the-counter market under the symbol IPLI. In December 2004, after
making all delinquent SEC filings, the Company applied for re-listing on the New
York Stock Exchange. On January 13, 2005 Interpool, Inc. was again listed, and
began trading, on the New York Stock Exchange. Interpool believes this listing
and its current trading volume satisfies the "primarily" and "regularly" traded
requirements of the post-2004 Treaty, and Interpool Limited qualified for
benefits under the post-2004 Treaty on January 13, 2005. We have estimated there
should be no U.S. current tax expense for the period from January 1, 2005 to
January 12, 2005.

Financing Activities

During the first quarter of 2005 the Company received
an additional $223,000 in net financing commitments. Commitments were received
totaling $248,000 under a financing facility established on November 1, 2004
from six financial institutions while the Company cancelled a financing
commitment for $25,000 that existed as of December 31, 2004. This commitment was
cancelled to allow the financial institution involved to provide a larger
commitment to a facility already established during December 2004. As of the
date this Form 10-K was filed, none of these additional commitments had been
utilized.

During February 2005, the Company entered into a
lease arrangement with a Japanese lessor involving $29,922 of equipment
previously financed with a financial institution during December 2003 and May
2004. The Company expects to close in two approximately equal traunches, the
first of which occurred on February 28, 2005, and the second of which is
expected to close by March 31, 2005. The lease ends in December 2008, and we
have a fixed purchase option at that time for $19,449 that we expect to
exercise. The aggregate fixed rate of interest on the lease is 7.44%. The
company received additional cash proceeds totaling $4,210 at the February
closing and expects to receive a comparable amount at the March
closing.

127

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Relisting by the New York Stock Exchange

On January 13, 2005, our common stock was listed on
the New York Stock Exchange under the symbol "IPX."

Rating Agency Actions

On December 17, 2004, Moody's placed the Company's
ratings on review for possible upgrade. At that time, Moody's indicated that an
increase in the Company's ratings of several "notches" could result in the
near-term based on the pace at which our credit profile has improved.
Subsequently, on March 4, 2005, Moody's revised its outlook for the Company from
"possible upgrade" to "positive", and raised their rating for our senior implied
debt to B2 from Caa2, their rating for our senior unsecured debt to B3 from
Caa3, and their rating for our preferred stock to Caa2 from Ca. On February 11,
2005, Standard & Poor's Rating Services affirmed Interpool's ratings, removed us
from CreditWatch, and increased their outlook for the Company from "negative" to
"stable."

Amendment to Separation Agreement

In January 2005, in response to a recent change in
United States tax laws potentially affecting future payments to be made to the
Company's former President and Chief Operating Officer under his separation
agreement, the Company and the Company's former President and Chief Operating
Officer entered into a modification to his separation agreement pursuant to
which, in lieu of the remaining monthly payments through October 2005 and other
amounts to which the Company's former President and Chief Operating Officer
would have been entitled under his original separation agreement, the Company
paid him a lump sum of $467. To secure the performance of his future obligations
to the Company under the separation agreement, the Company's former President
and Chief Operating Officer pledged a total of 22,114 shares of the Company's
common stock (having a market value at that time of approximately $520). Such
pledged shares will be released to the Company's former President and Chief
Operating Officer in installments through October 2005, subject to his continued
compliance with his obligations under the modified separation
agreement.

Mortgage Refinancing

During February 2005, the Company re-financed the
mortgage on its offices on the 27th floor at 633 Third Avenue, New York, NY. The
proceeds of the new mortgage were $3,550, and were used to repay the previous
mortgage ($3,480) plus related fees and expenses. The interest rate on the new
mortgage is fixed at 5.75%. Amortization is based on a 30 year term, and the
mortgage matures in five years with one five year extension available at the
Company's option. Such extension would be at an interest rate of 2.50% above the
Federal Home Loan Bank borrowing rate for member banks at that time, but not
less than the current rate, and would require payment of a 1.0% fee.

128

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Notes Receivable

In 1997, the Company acquired a 37% equity interest
in a company that supplies clinical trial materials management to the
pharmaceutical industry. This investment has been accounted for under the equity
method of accounting. At December 31, 2004, the carrying value of the Company's
investment of $1,814 is included in other assets on the accompanying
Consolidated Balance Sheets.

During 1999 and 2001, the Company lent a total of
$1,946 to this equity investee at an interest rate of 12%. The investee
requested and received multiple extensions for the repayment of these notes. As
a result, the Company treated these notes as non-performing and stopped
recording interest income.

On February 2, 2005 the Company received a payment of
$3,497 from the investee representing payment in full of the notes receivable
and all accrued interest amounting to $1,551. This interest will be recognized
in earnings during the three months ended March 31, 2005.

(18)       
   Quarterly financial data (unaudited)

Restatement of previously reported quarterly results

In April 2003, the Company had re-designated certain
swap agreements to a number of its debt instruments. The documentation of these
hedging relationships did not meet the criteria of SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities ("SFAS 133") to achieve
hedge accounting treatment. Thus, because the hedge documentation requirement of
SFAS 133 was not met, beginning in April 2003 when the hedge documentation was
changed, hedge accounting is precluded on the five then existing interest rate
swaps. In addition, two additional swap agreements were entered into by the
Company after April 2003. The documentation of these swap agreements was the
same.

Because the Company no longer qualifies for hedge
accounting on these swap agreements, the amounts previously recorded in
accumulated other comprehensive loss through March 31, 2003 (amounting to
$3,037) have been amortized over the remaining life of the associated debt
(using the effective interest method) and the change in the value of the
derivatives from March 31, 2003 have been recorded as a fair value adjustment for
derivative instruments in the accompanying Consolidated Financial Statements.
These debt instruments were fully repaid by the Company in December 2004 at
which time the remaining amount in accumulated other comprehensive loss was
recorded as fair value adjustment for derivative instruments in the accompanying
Consolidated Statement of Income. In addition, the swap agreements have been
treated as speculative hedges for the period from January 1, 2004 until December
31, 2004. As a result, the quarterly changes to the market value of these swap
agreements have been recorded as fair value adjustment for derivative
instruments in the Consolidated Financial Statements.

129

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The Company has determined that the effect of this
previously undetected error in documentation of the Company's hedging
relationships for the period from April 1, 2003 to December 31, 2003 is
immaterial. The Company has restated its Consolidated Financial Statements to
reflect these changes for the quarters ended March 31, 2004, June 30, 2004 and
September 30, 2004 and has reflected the impact of these adjustments on the
previously reported quarterly results below:

`2004
                                                            As Restated
                                       ---------------------------------------------------------
                                             1st          2nd              3rd         4th(b)
                                             ---          ---              ---         -----
Equipment leasing revenue                 $94,937       $95,712          $98,353       $99,181
Net income/(loss)                         $10,207       $21,205          $15,036      $(38,019)
Basic income/(loss)  per share              $0.37         $0.77            $0.55        $(1.39)
Diluted income/(loss) per share             $0.35         $0.71            $0.50        $(1.39)

                                                                  2004
                                                              As Reported
                                       ---------------------------------------------------------
                                             1st          2nd              3rd
                                             ---          ---              ---
Equipment leasing revenue                 $94,937       $95,712          $98,353
Net income                                $11,124       $19,624          $15,817
Basic income per share                      $0.41         $0.72            $0.58
Diluted income per share                    $0.38         $0.66            $0.53

                                                                  2003
                                                              As Reported
                                       ---------------------------------------------------------
                                             1st          2nd              3rd          4th
                                             ---          ---              ---          ---
Equipment leasing revenue                 $89,868       $91,549          $95,119       $97,751
Net income                                $11,769       $12,336           $6,546       $10,539
Basic income per share                      $0.43         $0.45            $0.24         $0.38
Diluted income per share                    $0.41         $0.42            $0.23         $0.36

                                                                  2002
                                                              As Reported
                                       ---------------------------------------------------------
                                             1st          2nd              3rd         4th(a)
                                             ---          ---              ---         -----
Equipment leasing revenue                  $74,483     $75,598          $86,028        $88,971
Net income/(loss)                           $6,190      $4,265           $3,032        $(9,098)
Basic income/(loss) per share                $0.23       $0.16            $0.11         $(0.33)
Diluted income/(loss) per share              $0.21       $0.14            $0.10         $(0.32)`

|(a) | The net (loss) during the fourth quarter of 2002 was principally
due to pre-tax impairment losses of $5,715 relating to idle equipment, $3,417 of
pre-tax losses resulting from the Company's share of equity losses and
write-downs for certain investments accounted for under the equity method and
$9,678 of pre-tax losses recognized as a result of the deteriorating financial
condition of PCR.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The net (loss) during the fourth quarter of 2004 was primarily due
to a non-cash expense of $49,222 resulting from the change in fair value of
warrants issued by us in connection with a Securities Purchase Agreement
pursuant to which the Company sold $150,000 of 6.0% notes due in 2014.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

130

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ITEM 9.          CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

ITEM 9A.        
   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and
Procedures

The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed by it in its reports filed or
submitted pursuant to the Securities Exchange Act of 1934, as amended (Exchange
Act), is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms and that
information required to be disclosed by the Company in its Exchange Act reports
is accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.

Under the supervision and with the participation of our management, including
the Company's Chief Executive Officer and Chief Financial Officer, the Company
carried out an evaluation of the effectiveness of the design and operation of
the Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-15(e) as of December 31, 2004. Based upon that evaluation and the material
weaknesses described below, the Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures were not
effective as of such date.

Section 404 Assessment

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to conduct an annual
assessment of our internal control over financial reporting and to include a
report on, and an attestation by our independent registered public accountants,
KPMG LLP, of the effectiveness of these controls, beginning in this Annual
Report on Form 10-K as of December 31, 2004.

On
November 30, 2004, the Securities and Exchange Commission issued an exemptive
order under which certain companies are permitted to delay, for up to 45 days
after the due date of their Annual Report on Form 10-K, the filing of the
internal control report and the related attestation of the independent
registered public accountants. The Company qualifies under the provisions of
this exemptive order for such 45-day delay. In reliance on this exemptive order,
this Annual Report on Form 10-K does not include the internal control report or
related attestation, which the Company plans to file by amendment prior to the
expiration of the 45-day extension.

131

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The
Company is currently performing its assessment of the effectiveness of the
Company's internal control over financial reporting as of December 31, 2004,
using the control criteria framework of the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission published in its report entitled
Internal Control-Integrated Framework. As of the date of this filing, management
has identified certain material weaknesses in the Company's internal control over
financial reporting.

As
we disclosed in our 2002 and 2003 Form 10-K reports, and in our 2003 and 2004
Form 10-Q, we have previously concluded that certain internal control
deficiencies identified by our external auditors and by management, as well as
through the investigation by the Audit Committee of the Board of Directors,
constituted "material weaknesses" or "significant deficiencies" as defined by
the Public Company Accounting Oversight Board (United States). In addition, our
review of internal controls over financial reporting, using the framework
defined by COSO, confirmed that most of the previously disclosed deficiencies
still existed as of December 31, 2004. During the last two years, we have spent
a significant amount of time in becoming current with our financial reporting.
This was necessary due to the restatement of our financial results for the years
2000 and 2001 and the first three quarters of 2002, which was not completed
until January 9, 2004. Throughout the past year, we dedicated our resources
toward the completion of six quarterly Form 10-Q reports for 2003 and 2004 as
well as our Form 10-K annual report for the year ended December 31, 2003. This
work was completed on December 27, 2004. Therefore, we have not been able to
correct all of the deficiencies identified during 2004 and prior years by
December 31, 2004.

Based on the material weaknesses identified below, management, including our
Chief Executive Officer and Chief Financial Officer, concluded that our internal
controls over financial reporting, as required under the Sarbanes-Oxley Act,
were not effective as of December 31, 2004.

132

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Based upon the work completed to date, we have identified the following material
weaknesses in internal control over financial reporting as of December 31, 2004:

| |  | Accounting for direct financing leases. During the
preparation for our 2002 audit, our accounting department noted errors made in
the accounting for four direct financing leases with down payments. In addition,
during the restatement of our 2002 financial statements, we noted that certain
leases were incorrectly classified as operating leases due to weaknesses in the
technical accounting skills of certain employees involved in the classification
of leases under the provisions of SFAS No. 13, Accounting for Leases
("SFAS 13"). We also determined that the system used to account for these leases
does not properly account for earnings on direct financing leases with purchase options
greater than $1 and provides inadequate data to the accounting department. As a
result, there is a material weakness due to the lack of an adequate lease
accounting system as of December 31, 2004.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Policies for the documentation of interest rate swap
transactions. During our 2002 audit, our external auditors noted that our
financial staff did not have the proper level of understanding of the accounting
for derivative instruments used to hedge exposure to floating interest rates
associated with our debt and the required documentation under the provisions of
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS 133"). As a result, we engaged an independent consultant
during November, 2002 to assist us with the preparation of formal documentation
and accounting for these transactions. Nevertheless, during the audit for 2004,
our external auditors identified deficiencies specifically related to the
identification of the forecasted transactions and the methods used to assess
effectiveness and measure ineffectiveness, noting that our financial staff did
not have adequate technical expertise of accounting for derivative instruments
and the required documentation under SFAS 133 as of December 31, 2004. This
resulted in our decision to restate our financial results for the first three
quarters of 2004 as described elsewhere in this Form 10-K.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Communication and review of complex transactions. The investigation by
our Audit Committee during 2003 determined that there was a lack of effective
communication and review of complex transactions with both internal and external
accounting resources. The Company's external auditors identified misstatments
related to two transactions which were corrected in the accompanying
Consolidated Financial Statements as of December 31, 2004. The lack of
appropriate communication and review of complex transactions could have led to a
material missstatement.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Staffing and training. The investigation by our Audit
Committee during 2003 determined that our accounting department was not
adequately staffed. This resulted in incomplete and untimely account
reconciliations between the subsidiary ledgers and the control accounts in the
general ledger, particularly in the areas of accounts receivable and
intercompany accounts. Inadequate staffing also contributed to material weaknesses
associated with direct financing leases, interest rate swap transactions, income
taxes and intercompany eliminations as described in this Item 9A.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

133

---

| |  | Accounting for income taxes. The investigation by our Audit
Committee during 2003 noted that the accounting department did not have adequate
knowledge of generally accepted accounting principles related to accounting for
income taxes and did not perform periodic reviews of the carrying value of its
deferred tax assets. During the preparation of our Form 10-Q for the third
quarter of 2004, our independent auditors noted that an adjustment was required
for the treatment of income tax accruals associated with minority interest
expense. Further, during the fourth quarter of 2004, we did not initially record
the deferred taxes related to an exercise of stock options due to a lack of
effective communication.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Security of information technology. The investigation by
our Audit Committee during 2003 noted a need for the implementation of such
security measures as comprehensive encryption procedures and documentation of
standards for setting operating systems security parameters. During our assessment
of internal control over financial reporting thus far, as required by Section 404 of the
Sarbanes-Oxley Act in 2004, we also noted deficiencies related to system access
to key spreadsheets, particularly in the accounting area, as well for other
information systems modules.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Review of intercompany eliminations. The investigation by
our Audit Committee during 2003 noted a need to implement formal procedures for
identifying necessary intercompany eliminations. During the preparation of our
Form 10-Q for the third quarter of 2004, and as disclosed in this Form 10-K, our
accounting staff noted that an intercompany elimination entry that should have
been reversed during the mid-1990s was still on our consolidated balance sheet.
As a result, the lack of adequate internal review at that time, had it
continued, could have resulted in a material misstatement as of December 31,
2004.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Verification and documentation procedures. The
investigation by our Audit Committee during 2003 noted a need to improve
procedures related to the verification of data and the documentation of reviews
performed in various departments in order to improve the accuracy and
completeness of the records kept by those departments. The processes requiring
improvement included the development and implementation of formal policies and
procedures in many functional areas. There was also inadequate segregation of
duties in some of these areas including accounts payable, billing and accounts
receivable. The review of internal controls over financial reporting as required
by Section 404 of the Sarbanes-Oxley Act during 2004 resulted in the
documentation of procedures in these areas as well as in the identification of
specific risks and weaknesses, including lack of adequate controls over our
billing and procurement processes. As a result, the lack of appropriate internal
review and the lack of appropraite segregation of duties in these areas
represented material weaknesses as of December 31, 2004.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Inadequate system interfaces. The investigation by our
Audit Committee during 2003 noted a need to improve our computer-based systems
in order to eliminate the need for manual intervention to ensure that results
are recorded properly for billing and the processing of fixed asset and
securitization transactions. In addition, during the preparation of our 2003
Form 10-K, we identified that the processes and accounting for the billing of
repairs to customers at the end of a lease and for chassis remanufacturing were
additional areas requiring improvement. As a result, the lack of adequate system
interface controls and the need for manual intervention as of December 31, 2004
represented a material weakness.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

134

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Changes to Internal Control Over Financial
Reporting

There were no changes in our internal control over financial reporting during
the fourth quarter ended December 31, 2004 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting except as described below.

The Company has taken various corrective actions to remediate the
material weaknesses noted above. By their nature such actions require a period
of time to become fully effective. These remedial actions are as follows:

| |  | Accounting for direct financing leases. We reviewed the
accounting for those transactions that existed at the time this deficiency was
originally identified and recorded correcting entries where required as part of
the restatement of our financial statements for the years 2000 and 2001 and the
quarters of 2002. We have reassigned responsibilities and manually verified the
classification and income recognition for all new direct financing leases. In
addition, we have initiated changes to our lease contracts to simplify the
income recognition related to these direct financing leases. We have also
purchased and installed a new accounting system to address the ongoing
accounting and to reduce our reliance on manual verification of the accounting
for our direct financing leases. It became operational for our chassis business
on January 1, 2005, and we anticipate that it will be operational for our
container business during the second quarter of 2005. We anticipate that this
system, combined with our improved knowledge of lease accounting under the
provisions of SFAS 13 and the changes made to our lease contracts, will resolve
our weaknesses in this area by September 30, 2005.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Policies for documentation of interest rate swap
transactions. We have thoroughly reviewed our documentation for all current
swap transactions and are improving the skill sets within our organization in
order to improve the documentation of our hedging relationships under the
provisions of SFAS 133. We believe that this will be remedied during 2005.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Communication and review of complex transactions. We have put in place
procedures to correct this deficiency, including the establishment of regularly
scheduled meetings attended by management, outside counsel and members of our
Audit Committee. These procedures have been effective. We have investigated the
cause for the failure to involve accounting and tax personnel in the 2004 stock
option transaction on a more timely basis and believe that the additional
procedures being implemented, primarily involving increased communication
between management and our accounting and tax personnel, will address this
deficiency and that it will not be a material weakness during 2005.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

135

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| |  | Staffing and training. We have added eight additional
people to our accounting department in order to address our material weakness
related to staffing and training. As of the date of this filing, all account
reconciliations are current. We have also added trained personnel to increase
the skill sets in other areas of the Company during 2003 and 2004. Further, the
development of narrative descriptions for our key financial and business
processes and the evaluation of the related risks and controls required to
complete the work required by Section 404 of the Sarbanes-Oxley Act provided
documentation of the policies and procedures in those areas as well as the
actions required to remediate any deficiencies. However, we believe that
additional attention must be paid to staffing and training throughout the
Company in the future, particularly in the accounting, billing, and procurement
areas. During 2005, we will continue to review our staffing levels and will
continue to evaluate whether the current skill sets of our employees are
adequate to meet our business needs and to ensure that we have a strong and
effective control environment. We will monitor this area closely, make any
necessary staffing changes and will also ensure that additional training is made
available to our staff as required.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Accounting for income taxes. During the second half of 2004
we hired an experienced tax professional, who is also a certified public
accountant. We believe that this addition resulted in significant improvements
during 2004 and will ultimately remediate this deficiency. We believe that the
staffing addition made during 2004 and the procedures being implemented with
regard to the communication and review of complex transactions noted above will remediate
this weakness during 2005, but we will monitor this area closely and take
further actions, including additional staffing, if required.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Security of information technology. The lack of
comprehensive encryption procedures will be remediated in 2005 by implementing
both virtual private network and secure socket layer technologies for employees
located outside our Princeton, NJ, New York, NY, and Westchester, IL offices.
For employees located in the three offices mentioned, the problem has been
corrected through direct point-to-point network connections to our data center.
We have completed the documentation of standards for setting security parameters
for our operating systems. We have initiated a project that will result in
defining and establishing appropriate access to our information systems and
spreadsheets, with the exception of our leasing system, and expect that the
project will be completed, and appropriate access controls in place, by June 30,
2005. Access controls for the leasing system are being addressed as we develop
our new asset management system, completion of which is expected during the
first half of 2006 with individual modules becoming operational earlier.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Review of intercompany eliminations. We have
implemented a procedure to review intercompany accounts on a quarterly basis to
identify appropriate intercompany eliminations and believe that this procedure
is generally working effectively. However, a sufficient period of time has not
elapsed to effectively evaluate this remediation. After reviewing our remaining
intercompany elimination entries and reassigning responsibility for the
elimination entries, we believe that this weakness has been properly addressed
through the implementation of additional controls.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

136

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| |  | Verification and documentation procedures. Remedial actions
have begun, and the re-testing of the design and effectiveness of those actions
will be performed in each area after all remedial actions in such area have been
implemented. It is our expectation that, except for those issues requiring
enhanced information systems which may take additional time to correct, all
deficiencies will be successfully remediated during 2005.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Inadequate system interfaces. Since the identification of
the deficiencies related to the excessive manual intervention due to inadequate
information systems, we have implemented manual processes and controls that, in
our opinion, provide reasonable assurance that our consolidated financial
statements are free of material misstatement. The development of enhanced
information systems is the ultimate remediation in these areas and we have
already begun to develop such systems. We believe that the implementation of
such systems will reduce the requirement for substantive manual testing and,
therefore, reduce the possibility for error. It is our expectation that all
systems will be operational during the first half of 2006, with individual
modules becoming operational earlier.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As
indicated previously in this Form 10-K, we have assigned the highest priority to
the short and long-term correction of the internal control deficiencies that
have been identified and are initiating the steps necessary to analyze and monitor
our control environment and to address any weaknesses and deficiencies. In
addition to the weaknesses and deficiencies mentioned above, we have identified
other, less significant, deficiencies that we do not consider to be "material
weaknesses" but which we nonetheless believe should be remedied. These
significant deficiencies have been disclosed to our Audit Committee and to our
independent auditors. In conjunction with our internal auditors, we will
continue to review, evaluate, document and test our internal controls and
procedures as required under Section 404 of the Sarbanes-Oxley Act and may
identify additional areas where disclosure and corrective measures are advisable
or required.

Management has discussed its remedial action plans with the Audit Committee and
will continue to provide periodic updates on progress made.

Limitations of Effectiveness of Controls

As
of the date of this filing, we are satisfied that actions implemented to date
(including augmenting our internal audit function) and those in progress will
correct the material weaknesses and significant deficiencies in our internal
controls and information systems that have been identified. We note that, like
other companies, any system of internal controls, however well designed and
operated, can provide only reasonable assurance, and not absolute assurance, that
the objectives of the internal control system will be met. The design of any
control system is based, in part, upon the benefits of the control system
relative to its costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision making can be faulty, and that controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by
management override of control. In addition, over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with
the policies or procedures may deteriorate. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood of
future events. Because of inherent limitation in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

137

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We
are continuing our assessment of the effectiveness of our internal control over
financial reporting, and expect this review to be completed shortly. Interpool's
independent auditors, KPMG LLP, are also continuing their testing of the
effectiveness of our internal control over financial reporting and their
assessment of management's assertion related to internal control over financial
reporting as of the date this Form 10-K is filed. Any additional material
weaknesses identified by management arising from the completion of our
assessment or by the auditors upon completion of their attestation regarding our
internal control over financial reporting will be included in an amended Form
10-K that will be issued on or before May 2, 2005.

138

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PART III

ITEM 10.        
  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Our current directors and executive officers are as follows:

`NAME                                      AGE    POSITION
----                                      ---    --------
Martin Tuchman (a)(b)                      64    Chairman of the Board of Directors, Chief
                                                 Executive Officer, President
                                                 and Chief Operating Officer
Arthur L. Burns (c)                        60    General Counsel, Executive Vice President
                                                 and Director
Richard W. Gross                           59    Executive Vice President and Chief Operating
                                                 Officer of Interpool Limited
Herbert Mertz                              51    Executive Vice President, Chief Administrative
                                                 Officer, Chief Operating
                                                 Officer of Trac Lease
James F. Walsh                             55    Executive Vice President and Chief Financial
                                                 Officer
Brian Tracey                               56    Senior Vice President and Chief Accounting
                                                 Officer
Christopher N. Fermanis                    56    Senior Vice President-Law, General Counsel
                                                 Interpool Limited and Trac Lease
William A. Geoghan                         54    Senior Vice President
Peter D. Halstead (a)(b)(c)(d)(e)          62    Director
Clifton H.W. Maloney (c)(d)(e)             67    Director
Michael S. Mathews                         64    Director
Warren L. Serenbetz, Jr.                   52    Director
William J. Shea, Jr.                       50    Director
Joseph J. Whalen (a)(c)(d)(e)              73    Director`

__________

(a)     member of
Compensation Committee in 2002 and 2003

(b)     member of Stock
Option Committee in 2002 and 2003

(c)     member of Corporate
Governance Committee in 2004

(d)     member of Audit
Committee in 2002, 2003 and 2004

(e)     member of the
Compensation Committee in 2004

139

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Martin Tuchman has served as our Chairman of the Board of
Directors and Chief Executive Officer of Interpool, Inc. since February 1988 and
as President and Chief Operating Officer since October 2003. He is also Chairman
of the Board of Directors, Chief Executive Officer and a director of Interpool
Limited, which he co-founded in 1968. He also has served as a director of Trac
Lease since June 1987, President of Trac Lease from June 1987 through January
1994 and currently serves as its Chairman and Chief Executive Officer. Mr.
Tuchman is Chairman of the Board of Directors of Princeton International
Properties, Inc., a family-owned real estate company, which owns and has
interests in properties located in Princeton, New Jersey. Mr. Tuchman was
previously a member of the Society of Automotive Engineers as well as the
American National Standards Institute. Currently, Mr. Tuchman is a member of the
United Nations Business Council, comprised of leading international executives
organized to promote understanding and cooperation between business and
government. He was formerly a member of the Board of Trustees of the New Jersey
Institute of Technology and currently, a member of the NJIT Board of Overseers.
He is also a member of the Board of Directors of Stevens Institute of
Technology's Web Campus. In 1995, Mr. Tuchman was honored as Entrepreneur of the
Year in an awards program sponsored by Ernst & Young LLP and in 1996 was
named Alumnus of the Year by the New Jersey Institute of Technology. Mr. Tuchman
is a member of the Board of Trustees of The Parkinson's Alliance and serves on
the Board of Directors of the Parkinson's Disease Foundation of Columbia
Presbyterian Hospital in New York. As Chairman of The Tuchman Foundation, he
works closely with all Parkinson's disease organizations whose scientists select
grants seeking National Institute of Health's (NIH) approval. In 2000, Mr.
Tuchman was honored by The Smithsonian Institution for his extensive case study
of Interpool for the 2000 Computerworld Smithsonian Collection and Interpool was
nominated for the World Smithsonian Award. Interpool's material is now part of
the Permanent Research Collection on Information Technology at The Smithsonian's
National Museum of American History. Mr. Tuchman is a member of the Yardville
National Bancorp's Board of Directors and serves on its Executive Committee of
the Board of Directors. In addition, Mr. Tuchman is Treasurer and serves on the
Board of Trustees and the Finance Committee of TASK, the Trenton Area Soup
Kitchen. Mr. Tuchman holds a bachelor's degree in mechanical engineering from
the New Jersey Institute of Technology (Newark College of Engineering) and a
master's degree in business administration from Seton Hall University.

Arthur L. Burns has
served as a director since January 1990. He was our General Counsel and
Secretary from January 1990 until 1996 and continued to serve as non-employee
General Counsel until February 2003. Mr. Burns rejoined the Company as General
Counsel and Executive Vice President in October 2003. Mr. Burns was Senior Vice
President of Law and Administration of Interpool Limited from 1980 until June
1996. Prior to joining Interpool Limited, Mr. Burns served as Assistant General
Counsel to GATX Leasing Corp. between 1975 and 1980, and as an associate
attorney at the law firm of Cahill, Gordon & Reindel from 1969 to 1975. Mr.
Burns holds a bachelor's degree in Economics from Holy Cross College and a
law degree from Fordham University School of Law.

Richard W. Gross served as Acting Chief Financial Officer
from July 2003 to February 2004 and was appointed Executive Vice President in
December 2003. Mr. Gross currently serves as Executive Vice President of the
Company and Director and Chief Operating Officer of Interpool Limited. Mr. Gross
rejoined us in 2002 as Senior Vice President of Finance after most recently
serving as Vice President of Finance and Chief Financial Officer of Balboa
Capital Corporation from 1998  2001. Previously Mr. Gross had been with us
for more than twenty years in various senior financial positions, having
responsibility for investor and lender relations. Prior to first joining
Interpool in 1972, Mr. Gross spent five years with Arthur Andersen in their New
York office. Mr. Gross is a certified public accountant and received a Bachelor
of Science degree in Accounting from Long Island University.

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

140

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James F. Walsh was appointed to serve as our Executive
Vice President, Finance in December 2003 and Executive Vice President and Chief
Financial Officer in February 2004. In 1998 Mr. Walsh joined C-S Aviation
Services, an aircraft operating lease company, as Senior Vice President and
Chief Financial Officer and also served as President from 2000 to 2003. From
1987 to 1993 Mr. Walsh served as Senior Vice President and Chief Financial
Officer of Polaris Aircraft Leasing Corporation, a GE Capital company, and,
following the incorporation of Polaris into GE Capital Aviation Services (GECAS)
in 1993, Mr. Walsh was named Senior Vice President and Chief Financial Officer
of GECAS. Prior to joining Polaris, Mr. Walsh held various financial positions
during sixteen years with GE Capital and General Electric Company. Mr. Walsh
holds a Bachelor of Arts degree in Economics from Rutgers College and a Master's
Degree in Business Administration from the University of Bridgeport.

Brian Tracey has served as Senior Vice President of
Interpool, Inc. since October 2000 and was appointed Chief Accounting Officer
during 2003. Mr. Tracey joined Interpool when Interpool acquired the assets of
the North America Intermodal Division of Transamerica Leasing, Inc.
(Transamerica). Prior to joining Interpool, Mr. Tracey was Senior Vice President
of Finance and Business Development at Transamerica where he had held numerous
financial positions after joining Transamerica in 1982. From 1970 to 1982, Mr.
Tracey worked in the audit practice of Arthur Andersen & Co. Mr. Tracey is a
Certified Public Accountant and holds an undergraduate degree in accounting from
Pace College.

Christopher N. Fermanis has been with the Company since
1981. He holds the positions of Senior Vice President  Law of Interpool,
Inc. and General Counsel of Interpool Limited and Trac Lease, Inc. Mr. Fermanis
served as General Counsel of the Company between February and October 2003.
Prior to joining Interpool, Mr. Fermanis was an associate attorney for six years
with the New York law firm of Haight, Gardner, Poor & Havens (now Holland
& Knight). He holds a bachelor's degree from Princeton University and a law
degree from the University of Michigan Law School.

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

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

141

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Michael S. Mathews has served as a member of our Board of
Directors since November 2004. He is currently the managing director of Westgate
Capital Co., a firm he founded in 1993. Mr. Mathews served on the Board of
Petroleum Geo-Services from 1993 until September 2002. From 1998 to 2002, he
served as Vice Chairman of PGS and held the position as Chairman of the
Compensation Committee and was a member of the Audit Committee. From 1989 to
1992, Mr. Mathews served as managing director of Bradford Ventures Ltd., a
private investment firm involved in equity investments, including acquisitions.
Mr. Mathews received an A.B. from Princeton University in 1962 and received a
J.D. from the University of Michigan Law School in 1965.

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

William J. Shea, Jr. has served as a member of our Board
of Directors since November 2004. He is president and co-founder of Kelley
Transportation Services, Inc, a transportation equipment manufacturing and
leasing business headquartered in San Francisco. From 1987-2004, he served as
president of Bay Cities Leasing LLC an operating leasing company specializing in
domestic containers, chassis and intermodal trailers. In 1994, Mr. Shea was
named program manager of the EMP Program - a national pool of 30,000 domestic
containers and chassis operating on Union Pacific, Norfolk Southern, CP Rail, CN
and other Class 1 rail systems. To facilitate EMP Program expansion, Bay Cities
Leasing formed a joint venture with Union Pacific, called Bay Pacific Financial,
to provide $400 million of capital to the program. Mr. Shea served as
co-chairman of Bay Pacific Financial from 1994-2004, when he and his partner
completed the sale of Bay Cities Leasing to Transport International Pool, a unit
of GE Capital Services. He received a B.S. in Economics from the Wharton School
of the University of Pennsylvania in 1977.

Warren L. Serenbetz, Jr. has served as a member of our
Board of Directors since December 2004. He is currently President and Chief
Executive Officer of Radcliff Group, Inc., an investment management company.
From 1992 through 2003, Mr. Serenbetz was Vice-President of Marketing at
Pechiney Plastic Packaging, Inc., a multinational consumer packaging business
with facilities in North America, Europe, Latin America and Asia. From 1986 to
1992, he was Managing Director  Marketing, of American Can Company.
Mr. Serenbetz holds a bachelor of science degree in engineering from Lehigh
University and an MBA Finance from Wharton School of the University of
Pennsylvania.

Joseph J. Whalen has served as a member of our
Board of Directors since April 1996. He originally joined the accounting firm of
Arthur Andersen LLP in 1957 and served as an audit partner in Andersen's New
York and New Jersey offices for more than ten years prior to his retirement in
1994. Mr. Whalen is a member of the American Institute of Certified Public
Accountants and the New Jersey State Society of Certified Public Accountants.
Mr. Whalen also serves on the Board of Directors of Griffon Corporation. Mr.
Whalen is a Certified Public Accountant in New Jersey and holds a bachelor's
degree from St. Peter's College. The Board of Directors has determined that Mr.
Whalen, a member of our Audit Committee, qualifies as an "audit committee
financial expert," as such term is defined in the rules of the Securities and
Exchange Commission.

142

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Board Compensation

As of January 1, 2004, each
member of the Board of Directors who is not an officer or executive consultant
receives an annual service fee of $25,000 for serving on the Board plus $2,000
and reimbursement of expenses for each Board of Directors' meeting attended
and $1,000 for each committee meeting attended. The chairman of each committee
also receives an additional $500 for each attended committee meeting. Additional
compensation may be paid for participation in teleconferences and attendance at
other meetings.

In February 2005, the Board of Directors approved the payment of
special cash bonuses each in the amount of $100,000 to Messrs. Halstead, Maloney
and Whalen for their extraordinary services in assisting the Company during the
period the Company was restating its financial statements and while it was
responding to related inquiries. The recipient directors abstained from this
vote.

See Item 11. Executive Compensation1993 Directors Plan and
2004 Directors Plan for a discussion of stock option plans for members of
our Board of Directors.

Board Committees

Effective January 1, 2004, the Board of Directors has three
standing committees: an Audit Committee, a Compensation Committee and a
Corporate Governance Committee. The Audit Committee's function is to monitor the
integrity of the Company's financial statements and our financial reporting and
disclosure practices. The Audit Committee also reviews management's systems of
internal control relating to finance and accounting and the application of
accounting principles generally accepted in the United States of America. In
addition, the Audit Committee reviews the scope of the services of our
independent auditors and may recommend the independent auditors for appointment
by the Board of Directors subject to stockholder approval. The members of the
Audit Committee for 2004 were Messrs. Maloney (Chairman), Halstead and Whalen.

The Compensation
Committee's functions are to review our general compensation strategy,
establish salaries, review benefit programs, approve certain employment
contracts and administer our stock option plans. The members of the Compensation
Committee for 2004 were Messrs. Whalen (Chairman), Halstead and Maloney.

In addition, our Board of
Directors created a Corporate Governance Committee. The Corporate Governance
Committee is responsible for the selection, qualification and compensation of
Board members and candidates. This committee also acts as a nominating committee
for Board membership and oversees corporate governance matters. The members of
the Corporate Governance Committee for 2004 were Messrs. Maloney (Chairman),
Halstead, Whalen and Burns.

143

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Our Board of Directors may
establish other committees from time to time to facilitate the management of our
business and affairs.

The Charters of the
Company's Audit, Compensation and Corporate Governance Committees are
available on our website at www.interpool.com. Printed copies are also available
to any shareholder upon request.

Section 16(a) Beneficial Ownership Reporting
Compliance

During 2004, Messrs. Tuchman, Burns, Walsh, Gross,
Mertz, Tracey, Geoghan and former director Warren Serenbetz failed to file
timely Form 4's in compliance with the prescribed requirements as set forth
under Section 16(a) of the Securities Exchange Act of 1934. All of these
required reports were subsequently filed. In making this disclosure, we have
relied solely on written representations of our directors, officers and more
than 10% holders and on a review of copies of reports that have been filed with
the Securities and Exchange Commission.

Code of Business Conduct and Ethics

On December 30, 2003, we
adopted a Code of Business Conduct and Ethics that applies to all of our
directors, officers and employees, including our principal executive officer,
principal financial officer and principal accounting officer. The purpose of the
code is to promote the highest standards of integrity among Interpool employees
in their dealings with and on behalf of Interpool, including dealings with our
banks, our stockholders and with others from whom we obtain financing. The Code
of Business Conduct and Ethics (Exhibit 14.1 to this Form 10-K) is available on
our website at www.interpool.com. Printed copies are also available to any
shareholder upon request.

ITEM 11.        
   EXECUTIVE COMPENSATION

The following table sets
forth information for the calendar years ended December 31, 2004, 2003, and 2002
concerning the annual compensation earned by our chief executive officer and our
four other most highly compensated executive officers:

144

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`SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------------
                                                    Annual Compensation                Long-Term Compensation
                                                    -------------------             ----------------------------
                                                                                          Awards         Payouts
                                                                                    ----------------------------

                                                                           Long                 Secur-
                                                                           Term                 ities
                                                                 Other     Compen-   Re-        Under-             All
                                                                 Annual    sation    stricted   lying      LTIP    Other
Name and Principal                                               Compen-   # of      Stock      Options/   Pay-    Compen-
     Position                    Year     Salary     Bonus       sation(1) Stock     Award(s)   SARS       outs    sation
                                           ($)        ($)         ($)      Options    ($)       (#)(2)      ($)     ($)
------------------------------- -------- ---------- ----------- --------- --------- ---------- ---------- ------ --------
Martin Tuchman                   2004    942,826   2,617,492     155,239(3)    0          0          0
  Chairman of the Board of       2003    897,929     751,041      17,297       0          0          0
  Directors, Chief Executive     2002    855,170     843,381(4)   31,005       0          0          0
  Officer, President and
  Chief Operating Officer

Arthur L. Burns                  2004    375,000     225,000      93,006(5)    0          0          0
  Executive Vice President       2003     88,459(6)   50,000      51,327       0          0     150,000
  and General Counsel            2002          0           0           0       0          0          0


James F. Walsh                   2004    275,000     265,551(7)   81,341(8)    0          0          0
  Executive Vice President       2003     33,712(9)   25,000         ---(10)   0          0       25,000
  and Chief Financial Officer    2002          0           0           0       0          0          0

Richard W. Gross
  Executive Vice President       2004    300,000     260,551(7)      ---(10)   0          0          0
  and Chief Operating Officer,   2003    163,756     136,244           0       0          0      100,000
  Interpool Limited              2002     30,541     100,000      41,300(11)   0          0          0

Hiro Ogawa
  Chief Executive Officer,       2004    474,625     486,200         ---(10)   0          0          0
   Container Applications        2003    492,525     200,000         ---(10)   0          0          0
   International, Inc.           2002    400,000           0         ---(10)   0          0          0`

|(1) | Amounts listed include payments made to or on behalf of the
Executive as provided for in the Executive's employment agreement.
|--- | ------------------------------------------------------------------------------------------------------------------------------

|(2) | Stock Appreciation Rights pursuant to which the recipient shall
receive an amount equal to the amount of any appreciation in the Company's
common stock value above the grant price of $14.05 per share.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Tuchman received payment in the amount of $108,778 for
vacation that had accrued but had not been taken.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Mr. Tuchman earned a bonus in the amount of $843,381 based on
criteria fixed by the Compensation Committee. Mr. Tuchman voluntarily returned
the entire earned 2002 bonus.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr. Burns received $44,130 for living expenses and $29,420 was
paid on his behalf by the Company for taxes associated with such living
expenses. See Employment Agreements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Mr. Burns rejoined the Company in October 2003. Amount shown
includes payments made for the period including 10/08/03 through 12/31/03. See
Employment Agreements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Amount includes a stock bonus of 25 shares of the Company which
had a fair market value on the day it was awarded of $551.
|--- | --------------------------------------------------------------------------------------------------------------------------

|(8) | Mr. Walsh received $32,731 for living expenses and $23,806 was
paid on his behalf by the Company for taxes associated with such living
expenses. See Employment Agreements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Mr. Walsh joined the Company in November 2003. Amount shown
includes payments made for the period including November 17, 2003 through
12/31/04. See Employment Agreements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Amount is less than the lesser of $50,000 or 10% of total annual
salary and bonus.
|---- | ----------------------------------------------------------------------------------

|(11) | Amount includes consulting fees paid prior to employment. See
Employment Agreements.
|---- | ------------------------------------------------------------------------------------

For 2002, Mr. Tuchman was
awarded a bonus of $843,381, of which $100,000 was paid in cash. The balance of
the bonus was in the form of a stock award under our Deferred Bonus Plan.
Pursuant to the terms of the Plan, this stock award consisted of a total of
60,407 shares of common stock, which were to vest over a ten-year period,
commencing January 2, 2004. As discussed in our 2002 Form 10-K. Mr. Tuchman
elected to voluntarily return to the Company the entire bonus he received for
2002.

Stock Option Activity

Following our 2004 Annual Meeting, an option for
15,000 shares was granted to each of the following directors pursuant to the
2004 Directors Plan: Peter D. Halstead, Clifton H.W. Maloney, Michael S.
Mathews, Warren L. Serenbetz, Jr., William J. Shea Jr. and Joseph J. Whalen. No
other options were granted during 2004.

145

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2004 Stock Option Plan

Our 2004 Stock Option Plan
for Key Employees and Directors was adopted by our Board of Directors on
November 3, 2004and approved by our stockholders at our 2004 Annual
Meeting. A total of 1.5 million shares of common stock have been reserved for
issuance under the 2004 Stock Option Plan. Options may be granted under the 2004
Stock Option Plan, in the discretion of the Compensation Committee of the Board
of Directors, to key employees and directors (whether or not they are employees)
of Interpool, Inc. and its subsidiaries. The number of shares that may be the
subject of options granted during any calendar year to any one individual cannot
exceed 250,000 shares.

The 2004 Stock Option Plan
is administered by the Compensation Committee, which consists solely of
independent directors. The Compensation Committee has the authority, within
limitations as set forth in the 2004 Stock Option Plan, to establish rules and
regulations concerning the 2004 Stock Option Plan, and to determine the persons
to whom options may be granted, the number of shares of common stock to be
covered by each option and the terms and provisions of the option to be granted.
The Compensation Committee has the right to cancel any outstanding options and
to issue new options on the terms and upon the conditions as may be consented to
by the optionee affected. In addition, the Compensation Committee has the
authority, subject to the terms of the 2004 Stock Option Plan, to determine the
appropriate adjustments in the terms of each outstanding option in the event of
a change in the common stock or our capital structure.

Options are exercisable by
the holder subject to terms fixed by the Compensation Committee. An option will
be exercisable immediately upon the occurrence of any of the following (but in
no event subsequent to the expiration of the term of an option):

|(1) | the holder's retirement on or after attainment of age 65;
|--- | ---------------------------------------------------------

|(2) | the holder's disability or death; or
|--- | ------------------------------------

|(3) | special circumstances or events as the Compensation Committee
determines merits special consideration.
|--- | ------------------------------------------------------------------------------------------------------

Under the 2004 Stock Option
Plan, a holder may pay the exercise price in cash, by check, by delivery to us
of shares of common stock already owned by the holder for at least six months by
a cashless method in accordance with procedures that may be established by the
Compensation Committee or by such other method as the Compensation Committee may
permit from time to time.

Options granted under the
2004 Stock Option Plan are not transferable except by will or the laws of
descent and distribution. However, the Compensation Committee may, in its
discretion, authorize a transfer of any option (other than an incentive stock
option), by the initial holder to (i) the family members of the initial holder,
(ii) a trust or trusts for the exclusive benefit of such family members, (iii) a
corporation or partnership in which such family members and/or the initial
holder are the only shareholders or partners, or (iv) such other persons or
entities which the Compensation Committee may permit; provided, however, that
subsequent transfers of such option shall be prohibited except by will or the
laws of descent and distribution. If an option holder terminates employment with
us and all subsidiaries or service as a director of Interpool or a subsidiary
while holding an unexercised option, the option will terminate immediately, but
the option holder will have until the end of the tenth business day following
his termination of employment or service to exercise the option.

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However, all options held
by an option holder will terminate immediately if the termination is for cause,
including but not limited to violation of the holder's duties. If cessation
of employment or service is due to retirement on or after attainment of age 65,
disability or death, the option holder or the holder's
successor-in-interest, as the case may be, is permitted to exercise any option
within three months of retirement or within six months of disability or twelve
months of death. Shares subject to options granted under the 2004 Stock Option
Plan which expire, terminate or are canceled without having been exercised in
full become available again for option grants.

The 2004 Stock Option Plan
may be terminated and may be modified or amended by the Compensation Committee
or the Board of Directors at any time; provided, however, that (1) no
modification or amendment increasing the aggregate number of shares which may be
issued under the 2004 Stock Option Plan or under options granted to any
individual during any calendar year, or changing the class of persons who are
eligible to receive options will be effective without stockholder approval
within one year of the adoption of the amendment and (2) no such termination,
modification or amendment of the 2004 Stock Option Plan will alter or affect the
terms of any then outstanding options without the consent of the holders thereof
(except as described below). The Compensation Committee may cancel or terminate
an outstanding option with the consent of the holder and grant an option for the
same number of shares to the individual based on the then fair market value of
the common stock, which may be higher or lower than the exercise price of the
canceled option. In addition, the Compensation Committee or the Board of
Directors may amend the 2004 Stock Option Plan and the terms of outstanding
options, without the consent of the holders thereof, in connection with any tax
law changes which are not consistent with the purpose and intended tax treatment
of the 2004 Stock Option Plan and the options as previously in effect.

Previously, we maintained a
1993 Stock Option Plan for Executive Officers and Directors, which is discussed
below.

1993 Stock Option Plan

No options may be granted
under the 1993 Stock Option Plan more than 10 years after the adoption of the
Stock Option Plan, which period expired in March 2003. Our 1993 Stock Option
Plan for Executive Officers and Directors was adopted by our Board of Directors
and approved by the stockholders in March 1993. A total of 6 million shares of
common stock were reserved for issuance under the 1993 Stock Option Plan.
Options could have been granted under the 1993 Stock Option Plan to executive
officers and Directors of Interpool or a subsidiary (including any executive
consultant of Interpool and its subsidiaries), whether or not they were
employees. As of December 31, 2004, 3,938,063 options were issued and
outstanding, of which 3,798,063 are exercisable. Options under the 1993 Stock
Option Plan were granted to 18 persons.

Effective January 1, 2004
the Compensation Committee began to administer the 1993 Stock Option Plan.
During 2003, the 1993 Stock Option Plan was administered by a committee of the
Board of Directors consisting of Martin Tuchman and Peter Halstead, Directors.

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The 1993 Stock Option Plan
does not require that the members of the Compensation Committee be
"disinterested persons" within the meaning of Rule 16b-3, as from time
to time amended, under the Securities Exchange Act of 1934. The Compensation
Committee has the authority, within limitations as set forth in the 1993 Stock
Option Plan, to establish rules and regulations concerning the 1993 Stock Option
Plan. In addition, the Compensation Committee has the authority, subject to the
terms of the 1993 Stock Option Plan, to determine the appropriate adjustments in
the terms of each outstanding option in the event of a change in the common
stock or our capital structure.

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

|(1) | the holder's retirement on or after attainment of age 65;
|--- | ---------------------------------------------------------

|(2) | the holder's disability or death; or
|--- | ------------------------------------

|(3) | special circumstances or events as the Compensation Committee
determines merits special consideration.
|--- | ------------------------------------------------------------------------------------------------------

Under the 1993 Stock Option
Plan, a holder may pay the exercise price in cash, by check, by delivery to us
of shares of common stock already owned by the holder, or, with respect to
non-qualified stock options and subject to approval by the Compensation
Committee, in shares issuable in connection with the option, or by such other
method as the Compensation Committee may permit from time to time.

Options granted under the
1993 Stock Option Plan are non-transferable and non-assignable; provided,
however, that the estate of a deceased holder may exercise any options held by
the decedent. If an option holder terminates employment with us and all
subsidiaries or service as a director of Interpool or a subsidiary while holding
an unexercised option, the option will terminate immediately, but the option
holder will have until the end of the tenth business day following his
termination of employment or service to exercise the option. However, all
options held by an option holder will terminate immediately if the termination
is for cause, including but not limited to a result of a violation of the
holder's duties. If cessation of employment or service is due to retirement
on or after attainment of age 65, disability or death, the option holder or the
holder's successor-in-interest, as the case may be, is permitted to
exercise any option within three months of retirement or disability or within
six months of death.

The 1993 Stock Option Plan
may be modified or amended by the Compensation Committee or the Board of
Directors at any time; provided, however, that (1) no modification or amendment
increasing the aggregate number of shares which may be issued under options,
increasing materially the benefits accruing to participants under the 1993 Stock
Option Plan, or materially modifying the requirements as to eligibility to
receive options will be effective without stockholder approval within one year
of the adoption of the amendment and (2) no such modification or amendment of
the 1993 Stock Option Plan will alter or affect the terms of any then
outstanding options without the consent of the holders thereof. The Compensation
Committee may cancel or terminate an outstanding option with the consent of the
holder.

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2004 Directors Plan

Our 2004 Nonqualified Stock Option Plan for Non-Employee,
Non-Officer Directors was adopted by our Board of Directors on November 3, 2004
and approved by our stockholders at our 2004 Annual Meeting. A total of 250,000
shares of common stock have been reserved for issuance under the 2004 Directors
Plan. The exercise price per share is the fair market value of our common stock
on the grant date. The options granted pursuant to the 2004 Directors Plan may
be exercised at the rate of one-third of the shares on the first anniversary of
the options' grant date, one-third of the shares on the second anniversary of
the options' grant date and one-third of the shares on the third anniversary of
the options' grant date, subject to applicable, holding periods required under
rules of the Securities and Exchange Commission. Options granted pursuant to the
2004 Directors Plan expire ten years from their grant date. In the event of
disability or death of a director, the option must be exercised prior to the
expiration of the term of the option and within six months of the option
holder's disability or within twelve months of the option holder's death. In the
event of resignation of a director, the option must be exercised within ten days
of the date of resignation.

The 2004 Directors Plan
provides for the automatic grant of nonqualified options to non-employee
non-officer directors. Under the 2004 Directors Plan, each person who is not an
employee or officer and served as a member of our Board of Directors following
the annual meeting held during 2004 received a grant of options for 15,000
shares of common stock on the business day following our annual meeting held in
2004. In addition, each person who becomes a non-employee non-officer director
following the annual meeting held during 2004 will automatically receive a grant
of options for 15,000 shares on the first business day after becoming a
director. The 2004 Directors Plan also provides for additional automatic grants
of options for 5,000 shares on an annual basis to each continuing director,
other than an employee or officer, on the first business day following each
future annual meeting, beginning with the annual meeting to be held during 2005.

Under the 2004 Directors
Plan, a holder may pay the exercise price in cash, by check, by delivery to us
of shares of common stock already owned by the holder for at least six months,
by a cashless method through a registered broker-dealer or by such other method
as the Board of Directors may permit from time to time.

The 2004 Directors Plan is
administered by the Board of Directors. Options granted under the 2004 Directors
Plan are not transferable except by will or the laws of descent and
distribution. However, the Board of Directors may, in its discretion, authorize
a transfer of any option, by the initial holder to (i) the family members of the
initial holder, (ii) a trust or trusts for the exclusive benefit of such family
members, (iii) a company or partnership in which such family members and/or the
initial holder are the only shareholders or partners, or (iv) such other persons
or entities which the Board of Directors may permit; provided, however, that
subsequent transfers of such Option shall be prohibited except by will or the
laws of descent and distribution. If an option holder terminates service as a
director of Interpool or a subsidiary while holding an unexercised option, the
option will terminate immediately, but the option holder will have until the end
of the tenth business day following his termination of service to exercise the
option.

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The 2004 Directors Plan may
be terminated and may be modified or amended by the Board of Directors at any
time; provided, however, that any amendment by the Board of Directors which
would require stockholder approval (pursuant to the rules of any exchange on
which the shares are traded) shall be subject to such stockholder approval. The
Board of Directors may amend the 2004 Directors Plan and the terms of outstanding
options, without the consent of the holders thereof, in connection with any tax
law charges which are not consistent with the purpose and intended tax treatment
of the 2004 Directors Plan and options previously in effect.

Previously, we maintained
the 1993 Non-Qualified Stock Option Plan for Non-Employee, Non-Consultant
Directors, which is discussed below.

1993 Directors Plan

Our Non-Qualified Stock
Option Plan for Non-Employee, Non-Consultant Directors was adopted by our Board
of Directors and approved by the stockholders in March 1993. The 1993 Directors
Plan provided for the automatic grant of 15,000 non-qualified options to
non-employee, non-consultant directors at the time the director first joins the
Board. The 1993 Directors Plan authorized grants of options up to an aggregate
of 150,000 shares of common stock. The exercise price per share was the fair
market value of our common stock on the grant date. The options granted pursuant
to the 1993 Directors Plan may be exercised at the rate of one-third of the
shares on the first anniversary of the options' grant date, one-third of the
shares on the second anniversary of the options' grant date and one-third of the
shares on the third anniversary of the options' grant date, subject to
applicable holding periods required under rules of the Securities and Exchange
Commission. Options granted pursuant to the 1993 Directors Plan expire ten years
from their grant date except that in the event of the death of a director, the
option must be exercised within six months of the date of death or, in the event
of resignation of a director, the option must be exercised within ten days of
the date of resignation.

Under the 1993
Directors' Plan, a holder may pay the exercise price in cash, by check, by
delivery to us of shares of common stock already owned by the holder, or,
subject to approval by the Compensation Committee, in shares issuable in
connection with the option, or by such other method as the Compensation
Committee may permit from time to time.

Effective January 1, 2004,
the Stock Option Plan formerly administered by the Stock Option Committee, began
to be administered by the Compensation Committee.

Pursuant to the 1993
Directors Plan, an option to purchase 15,000 shares of common stock was granted
to each of Peter D. Halstead in June 1994, Joseph J. Whalen in April 1996 and
Clifton H.W. Maloney in February 2000. On September 16, 1998, pursuant to an
option repricing program, 15,000 options held by each of Messrs. Halstead and
Whalen were cancelled and replaced with newly issued options with an exercise
price equal to the closing market price on September 16, 1998, the grant date,
which vested six months from the grant date and expire ten years from the grant
date. All other terms and conditions of the newly issued options are the same as
those of the cancelled options.

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401(k) Plan

We have adopted a deferred
savings plan which is intended to qualify under Section 401(k) of the Code. All
our employees who are based in the United States are eligible to participate in
the 401(k) Plan. Each participant may elect to contribute up to 6% of such
participant's compensation on a pre-tax basis for which the Company makes
matching contributions equal to 75% of the participant's contribution. In
addition, participants can elect to make additional unmatched contributions to
the 401(k) Plan up to an additional 9% of the participant's compensation.
Such salary deferral contributions are 100% vested at all times. Amounts
credited to a participant's account are distributed to the participant at
the earliest of (1) the termination of his or her employment with us, (2) a
requested withdrawal after age 59 1/2 or upon evidence of disability or (3) a
requested withdrawal due to financial hardship. The 401(k) Plan administrator
may authorize loans from the 401(k) Plan to participants in a manner which is
uniform and nondiscriminatory. Under the Code, salary deferral contributions are
not taxable to the employee until the amounts are distributed to the employee,
and all matching contributions are tax deductible to us. The 401(k) Plan
provides for the making by us of any matching or profit sharing contributions to
the 401(k) Plan, in the form of shares of common stock of Interpool.

Compensation Committee Interlocks and Insider
Participation

During fiscal year 2004, Mr. Tuchman participated in
deliberations of our Board of Directors concerning executive officer
compensation. Mr. Tuchman did not participate in discussions regarding his own
compensation.

Employment Agreements With Named Executive
Officers

We have an employment agreement with Martin Tuchman which
currently expires on December 31, 2011, except that on each January 1, the
expiration date is automatically extended for an additional year unless we or
Mr. Tuchman give written notice of an election not to extend beyond the end of
the then current seven-year term. Notice of any election not to extend the
expiration date must be delivered not less than six months prior to the next
occurring January 1.

As compensation for the services to be rendered under his
employment agreement, Mr. Tuchman will be paid an annual base salary of $989,966
in 2005. The base salary under the employment agreement increases by a minimum
of 5% each year. In addition, Mr. Tuchman is entitled to receive an annual bonus
equal to 2% of the amount of any increase in our net income during the year from
its net income during the preceding year.

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As described below, Mr. Tuchman is entitled, under the terms of
his employment agreement and under the bonus plan approved by our Compensation
Committee in 2000, to receive a performance bonus each year based upon several
factors, including the amount of any increase in our net income over the
previous years net income and, if applicable, for any increase over the
highest net income previously reported by the Company. Because our 2004 net
income was lower than our net income in 2003, Mr. Tuchman did not earn a bonus
for 2004 based upon these measures. The Compensation Committee noted, however,
that our 2004 net income was adversely affected by a non-cash expense in the
amount of $49,222,339 resulting from an increase during the fourth quarter of
2004 in the fair value of our common stock purchase warrants issued in September
2004, as described elsewhere in this report, and that without this expense our
2004 net income would have been $57,650,843 representing the highest
net income ever reported by the Company. It also noted that, when all accounting
conditions are met by the Company, the valuation of these warrants will be
reclassified to equity without affecting net income, the measurement used to
compensate Mr. Tuchman under the plans discussed above. Although this expense
was required by generally accepted accounting principles, the members of the
Compensation Committee concluded that Mr. Tuchman should receive a discretionary
bonus reflecting Interpools profitable operations and other
accomplishments during 2004, notwithstanding the adverse effect on net income of
the non-cash expense relating to the warrants. Accordingly, the Compensation
Committee agreed to pay Mr. Tuchman a discretionary bonus for 2004 in the amount
of $2,211,025, which represented the amount of the additional bonuses to which
Mr. Tuchman would have been entitled under the terms of his employment agreement
and under his bonus plan if our 2004 net income had not been adversely affected
by the warrant expense. This discretionary bonus, together with a bonus in the
amount of $406,467 which Mr. Tuchman earned for 2004 under the terms of the
bonus plan based upon increases in the market price of Interpools common
stock during 2004, was paid to Mr. Tuchman in cash during the first quarter of
2005. The Compensation Committee and Mr. Tuchman have also agreed that Mr.
Tuchmans eligibility in 2005 and thereafter for bonuses based on any
future increases in our net income will be measured against adjusted net income
for 2004 of $59,623,588.

The employment agreement (1) includes a non-competition
provision; (2) provides that, in the event of the employees death, the
employees base salary will continue to be paid to his beneficiary for two
additional years and, in the event of termination of the employee without cause,
the employee will continue to receive his base salary for the entire remaining
term then in effect under the employment agreement; and (3) provides for
reimbursement to the employee, for both the employee and his spouse, of all
health related costs and expenses that are not advanced or reimbursed to the
employee pursuant to our medical and dental insurance plans, which additional
reimbursement continues for a period of five years after expiration of the
employment agreement. Mr. Tuchman may also be entitled to receive incentive
bonuses as determined by our Compensation Committee.

In addition to the compensation (including bonuses) provided for
under his employment agreement, as more fully described below, Mr. Tuchman also
receives bonuses under a bonus plan the Compensation Committee of our Board of
Directors adopted effective January 1, 2000, with three measures of incentive
bonus performance: (1) increase in stock price; (2) increase in net income over
the highest previous year; and (3) maintaining an investment grade debt
rating. Based upon the plan as adopted, Mr. Tuchman received additional bonuses
for 2004, 2003 and 2002, in amounts of $406,467, $751,041 and $843,381,
respectively. As discussed in our 2002 Form 10-K, Mr. Tuchman elected to
voluntarily relinquish his entire 2002 bonus.

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Increase in Net
Income: To the extent that our net income exceeds that of the highest
previous year, a bonus equal to 10% of the increase is to be paid to our Chief
Executive Officer. No bonus was paid to Mr. Tuchman in respect to this
performance measure for 2004, 2003 or 2002.

Investment Grade
Rating: Our Chief Executive Officer is entitled to a bonus of $100,000 for
each year in which we maintain an investment grade debt rating by either
Moody's or Standard and Poor's at year-end. No bonus under this
performance measure was awarded in 2004 or 2003. Under this measure, Mr. Tuchman
received a bonus of $100,000 for 2002.

Increased Stock
Price: To the extent our average stock price for a year exceeds the highest
average stock price for any prior year, our Chief Executive Officer will receive
a bonus in the amount of 1.5% of the increase in the average aggregate market
value of our common stock. Because our 2004 average stock price exceeded the
previous "high water mark," a bonus in the amount of $406,467 was
awarded to Mr. Tuchman for 2004 under this performance measure. No bonus under
this performance measure was awarded in 2003. Because our 2002 average stock
price exceeded the 2001 average stock price, a bonus in the amount of $743,381
was awarded to Mr. Tuchman for 2002 under this performance measure however, this
amount constituted a portion of the entire 2002 bonus voluntarily relinquished
by Mr. Tuchman.

We have entered into an
employment agreement with Arthur L. Burns, Executive Vice President, General
Counsel and Director of the Company. Mr. Burns's employment agreement with
the Company became effective on July 1, 2004 and currently expires on October
16, 2006, except that on October 17, 2006 and on each three year anniversary of
such date, the term shall be automatically extended for an additional three year
period, unless the Company or Mr. Burns shall have given written notice of
intention not to renew 180 days prior to the expiration of the then current
term. During 2004, Mr. Burns was paid an annual base salary of $375,000,
participated in all Company fringe benefits programs, and was entitled to
receive a target bonus in the amount of $125,000 upon the successful completion
of performance objectives as determined from time to time. Additional
discretionary bonuses may be paid in such amounts as shall be determined at the
sole discretion of the Compensation Committee. Commencing on January 1, 2005 and
on each subsequent January 1, Mr. Burns's salary and target bonus shall be
either maintained or adjusted upwards as determined in the sole discretion of
the Compensation Committee. In addition, Mr. Burns is reimbursed for all
transition expenses through June 30, 2005 and will receive up to $100,000 in
transition expenses thereafter in lieu of relocation expenses should he elect
not to relocate. In the event that the Company terminates the employment
agreement during the term for any reason other than cause or disability or
elects not to renew Mr. Burns's employment agreement or if Mr. Burns
terminates the employment agreement for good reason, Mr. Burns is entitled to a
severance payment in an amount equal to 36 months of his then current base
salary and target bonus and continued paid participation in all health, life and
disability insurance programs offered by the Company to all employees. In the
event of a change of control, the obligations of the Company under the
employment agreement, including severance obligations shall expire no earlier
than 36 months following the change of control. In addition, the Company granted
Mr. Burns stock appreciation rights to 150,000 shares of common stock at a price
of $14.05 per share, pursuant to which Mr. Burns shall receive an amount equal
to any appreciation in the Company's common stock market value. The stock
appreciation rights vested as of January 15, 2005. The Company has reserved the
right to substitute common stock options under the same terms and conditions of
the stock appreciation rights. The common stock appreciation rights or common
stock options are exercisable by Mr. Burns at any time prior to the expiration
of the earlier of 10 days following the termination of Mr. Burns (except that
the ten day period shall not apply in the event of a termination by the Company
without cause, executive disability or termination by Mr. Burns for good reason)
or June 30, 2014. Upon the termination of the employment agreement and payment
of the severance payment, Mr. Burns has agreed not to compete with the Company,
directly or indirectly, for a period of one year.

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We have entered into an employment agreement with James F.
Walsh, Executive Vice President and Chief Financial Officer of the Company. Mr.
Walsh's employment agreement with the Company became effective on July 1, 2004
and currently expires on November 16, 2005, provided, however, that the term
shall automatically be extended for an additional one year period unless either
the Company or Mr. Walsh shall have given written notice of intention not to
renew 180 days prior to the expiration of the then current term. During 2004,
Mr. Walsh was paid an annual base salary of $275,000, participated in all
Company related fringe benefit programs, and was entitled to receive a target
bonus in the amount of $165,000 upon the successful completion of performance
objectives as determined from time to time. Additional discretionary bonuses may
be paid in such amounts as shall be determined at the sole discretion of the
Compensation Committee. Commencing on January 1, 2005 and on each subsequent
anniversary date, Mr. Walsh's salary and target bonus shall either be maintained
or adjusted upwards as determined in the sole discretion of the Compensation
Committee. In addition, Mr. Walsh is reimbursed for all transition expenses
through December 31, 2004 and will receive up to $100,000 in transition expenses
thereafter in lieu of relocation expenses should he elect not to relocate. The
Company also granted Mr. Walsh stock appreciation rights to 25,000 shares of
common stock at a price of $14.05 per share, pursuant to which Mr. Walsh shall
receive an amount equal to any appreciation in the Company's common stock market
value. The stock appreciation rights vest upon the earlier of a change of
control or privatization of the Company or 5,000 shares on each of January 15,
2005, December 31, 2005, December 31, 2006, December 31, 2007 and December 31,
2008. The Company has reserved the right to substitute common stock options
under the same terms and conditions of the stock appreciation rights. The common
stock appreciation rights or common stock option may be exercisable by Mr. Walsh
at any time prior to the expiration of the earlier of 10 days following the
termination of Mr. Walsh (except that the ten day period shall not apply in the
event of a termination by the Company without cause, executive disability or
termination by Mr. Walsh for good reason) or June 30, 2014. In the event that
the employment agreement is terminated during the term by either the Company for
any reason other than cause or disability or by Mr. Walsh for good reason, Mr.
Walsh shall be entitled to a severance payment in an amount equal to 24 months
of his then current salary and target bonus and continued paid participation in
all Company health, disability and life insurance programs. In the event of a
change of control, the obligations of the Company under the employment
agreement, including severance obligations, shall expire no earlier than 24
months following the change of control. If the Company does not renew Mr.
Walsh's employment agreement following a change in control, Mr. Walsh is
entitled to a severance payment equal to his then current base salary and target
bonus. Upon the termination of the employment agreement and payment of the
severance payment, Mr. Walsh has agreed not to compete with the Company,
directly or indirectly, for a period of one year.

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We have entered into an
employment agreement with Richard W. Gross, Executive Vice President of the
Company and Chief Operating Officer of Interpool Limited. Mr. Gross's
employment agreement with the Company became effective on July 1, 2004 and
currently expires on October 14, 2005, provided, however, that the term shall
automatically be extended for an additional one year period unless either the
Company or Mr. Gross shall have given written notice of intention not to renew
180 days prior to the expiration of the then current term. During 2004, Mr.
Gross was currently paid an annual base salary of $300,000, participated in all
Company related fringe benefit programs, and was entitled to receive a target
bonus in the amount of $160,000 upon the successful completion of performance
objectives as determined from time to time. Additional discretionary bonuses may
be paid in such amounts as shall be determined at the sole discretion of the
Compensation Committee. Commencing on January 1, 2005 and on each subsequent
anniversary date, Mr. Gross's salary and target bonus shall either be
maintained or adjusted upwards in the sole discretion of the Compensation
Committee. In addition, the Company granted Mr. Gross stock appreciation rights
to 100,000 shares of common stock at a price of $14.05 per share, pursuant to
which Mr. Gross shall receive an amount equal to any appreciation in the
Company's common stock market value. Pursuant to the stock appreciation
rights, 50,000 shares vested on January 15, 2005 and the other 50,000 shares
will vest upon the earlier of a change of control or privatization of the
Company or October 15, 2005. The Company has reserved the right to substitute
common stock options under the same terms and conditions of the stock
appreciation rights. The common stock appreciation rights or common stock option
may be exercisable by Mr. Gross at any time prior to the expiration of the
earlier of 10 days following the termination of Mr. Gross (except that the ten
day period shall not apply in the event of a termination by the Company without
cause, executive disability or termination by Mr. Gross for good reason) or June
30, 2014. In the event that the employment agreement is terminated during the
term by either the Company for any reason other than cause or disability or by
Mr. Gross for good reason, Mr. Gross shall be entitled to a severance payment in
an amount equal to 24 months of his then current salary and target bonus and 24
months continued paid participation in all Company health, disability and life
insurance programs. In the event of a change of control, the obligations of the
Company under the employment agreement including severance obligations shall
expire no earlier than 24 months following the change of control. If the Company
does not renew Mr. Gross's employment agreement following a change in
control, Mr. Gross is entitled to a severance payment equal to his then current
salary and target bonus. Upon the termination of the employment agreement and
payment of the severance payment, Mr. Gross has agreed not to compete with the
Company, directly or indirectly, for a period of one year.

In October 2003, we entered into an employment agreement with
Herbert Mertz, Executive Vice President and Chief Administrative Officer of the
Company and Chief Operating Officer of Trac Lease for the period commencing on
January 1, 2004 and expiring on December 31, 2004. During 2004, Mr. Mertz was
paid an annual base salary of $275,000, participated in all Company related
fringe benefit programs and received a bonus in the amount of $175,000. In
October 2004, we entered into an employment agreement with Mr. Mertz for the
period commencing on January 1, 2005 and expiring on December 31, 2005. On or
before 180 days prior to the expiration of the then current term, the Company
shall present Mr. Mertz with an employment agreement for an additional one-year
term which he may accept or reject or give him notice that the term will not be
extended. Under the agreement Mr. Mertz is paid an annual base salary of
$288,750, participates in all Company related fringe benefit programs and is
entitled to receive a target bonus upon the successful completion of performance
objectives in such amount as shall be determined by the Compensation Committee
from time to time. Discretionary bonuses may be paid in amounts as determined by
the Compensation Committee. In the event that the employment agreement is
terminated during the term by either the Company for any reason other than cause
or disability or by Mr. Mertz for good reason, Mr. Mertz is entitled to a
severance payment in an amount equal to two and one-half times his then current
salary and 30 months continued paid participation in all Company health,
disability and life insurance programs. In the event of a change of control, the
obligations of the Company under the employment agreement do not expire less
than 30 months following the change of control. Upon the termination of the
employment agreement, Mr. Mertz agreed not to compete with the Company, directly
or indirectly, for a period of two years.

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Employment Contracts with Former
Executives

We entered into an
employment agreement with Raoul J. Witteveen, our former President and Chief
Operating Officer dated as of January 1, 1992, as amended and restated. As of
January 1, 2003, the new expiration date of Mr. Witteveen's Employment
Agreement was extended to December 31, 2010. Under the terms of his employment
agreement, on each January 1, the expiration date of the employment agreement
was automatically extended for an additional year unless we or the employee
party to such employment agreement gave written notice of an election not to
extend beyond the end of the then current seven-year term. Notice of any such
election not to extend the expiration date was required to be delivered not less
than six months prior to the next occurring January 1. Mr. Witteveen's
Employment Agreement was terminated on October 9, 2003.

As compensation for the
services rendered under the employment agreement, for 2003 Mr. Witteveen was
paid an annual base salary of $632,835.

In addition to the
compensation (including bonuses) provided for under his employment agreement,
Mr. Witteveen also received bonuses under a bonus plan the Compensation
Committee of our Board of Directors adopted effective January 1, 2000, with
three measures of incentive bonus performance: (1) increase in stock price; (2)
increase in net income; and (3) maintaining an investment grade debt
rating. Based upon the plan as adopted, Mr. Witteveen received an additional
bonus for 2002, as follows:

Increase in Net
Income: To the extent that our net income exceeded that of the highest
previous year, a bonus equal to 10% of the increase was to be paid to our Chief
Operating Officer. No bonus was paid to Mr. Witteveen in respect to this
performance measure for 2002.

Investment Grade
Rating: Mr. Witteveen was entitled to a bonus of $100,000 for each year in
which we maintained an investment grade debt rating by either Moody's or
Standard and Poor's at year-end. Under this measure, Mr. Witteveen received
a bonus of $100,000 for 2002.

Increased Stock
Price: To the extent our average stock price for a year exceeded the highest
average stock price for any prior year, Mr. Witteveen was entitled to receive a
bonus in the amount of 1.5% of the increase in the average aggregate market
value of our common stock. Because our 2002 average stock price exceeded the
2001 average stock price, a bonus in the amount of $743,381 was awarded to Mr.
Witteveen for 2002 under this performance measure.

156

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In January 2002, we entered
into an employment agreement with Mitchell I. Gordon, our former Chief Financial
Officer and Executive Vice President. Under the terms of the Employment
Agreement, Mr. Gordon was paid an annual base salary of $250,000 and was
entitled to receive performance based and discretionary bonuses as determined by
the Compensation Committee. The term of the Employment Agreement was scheduled
to expire on December 31, 2003 except that on or before June 30, 2003, we were
required to either notify Mr. Gordon of our intention not to renew his
Employment Agreement or provide the terms under which we will offer a new
agreement. The Employment Agreement (i) included a non-competition provision;
(ii) provided that, in the event of the employee's death, the
employee's base salary will continue to be paid to his beneficiary for the
remainder of the term and; (iii) provided for participation in all Company
medical and dental insurance plans. Mr. Gordon's Employment Agreement was
terminated on July 17, 2003 in connection with the separation agreement that we
entered into with Mr. Gordon.

Separation Agreements

On July 17, 2003, Mitchell
I. Gordon, who had been our Executive Vice President and Chief Financial
Officer, resigned as an employee and officer of the Company. Pursuant to his
resignation, we entered into a separation agreement under which Mr. Gordon
received a payment of $200,000 (his accrued bonus for 2003) and an additional
payment of $800,000 and over the next four years will receive other payments
totaling an additional $3,200,000. In the event of a change of control of the
Company these payment obligations would accelerate. In accordance with the terms
of the separation agreement, Mr. Gordon will continue to receive certain
benefits over the next five years including health, life, disability and
accident insurance as well as a car allowance, at the same cost to Mr. Gordon as
if Mr. Gordon had continued to be an executive officer of the Company. Mr.
Gordon also is provided an office allowance. The cost to us of these continued
benefits to the former executive will amount to approximately $107,000. The
separation agreement provided for the immediate vesting of Mr. Gordon's
stock options. Under the separation agreement, Mr. Gordon agreed to provide
certain consulting services to us. In October 2003, Mr. Gordon resigned from his
positions as a director of the Company and its affiliates. In connection with
Mr. Gordon's separation agreement, Mr. Gordon's prior employment
agreement (which would have continued until December 31, 2003) was terminated
and each of the Company and Mr. Gordon relinquished certain rights there under.

On October 9, 2003, Raoul
Witteveen, who had served as our President and Chief Operating Officer, resigned
as an employee, officer and director of the Company and its affiliates. At the
time of his resignation, we and Mr. Witteveen reached an understanding regarding
the severance and other principal terms that would be set forth in a separation
agreement to be entered into between us and Mr. Witteveen. Under the terms
agreed upon, Mr. Witteveen received an amount equal to his full 2003 annual base
salary ($632,835) for each year through October 9, 2005 as well as health, life,
disability and accident insurance and reimbursements through the same date. Mr.
Witteveen was provided with an office allowance, an allowance for an executive
assistant, and an automobile allowance, in each case through October 9, 2004.
The cost to us of these continued benefits to the former executive was
approximately $211,000. It was also agreed that Mr. Witteveen's outstanding
stock options, all of which were fully vested as of the date of his resignation,
would be exercisable until October 9, 2005, and that Mr. Witteveen's future
sale of common stock would be subject to certain volume restrictions and a right
of first refusal on the part of Interpool and its affiliates. As part of the
separation agreement, Mr. Witteveen agreed not to engage in a competing
business, either directly or indirectly, for a period of two years from his
resignation date. In connection with Mr. Witteveen's separation agreement,
Mr. Witteveen's prior employment agreement (which would have continued
until 2010) was terminated and Mr. Witteveen relinquished his rights there
under. A definitive separation agreement incorporating these terms was executed
on August 10, 2004.

157

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In January 2005, in
response to a recent change in United States tax laws potentially affecting
future payments to be made to Mr. Witteveen under his separation agreement, we
and Mr. Witteveen entered into a modification to his separation agreement
pursuant to which, in lieu of the remaining monthly payments through October
2005 and other amounts to which Mr. Witteveen would have been entitled under his
original separation agreement, we paid him a lump sum of $467,473. To secure the
performance of his future obligations to us under the separation agreement, Mr.
Witteveen pledged to us a total of 22,114 shares of our common stock (having a
market value at that time of approximately $520,000). Such pledged shares will
be released to Mr. Witteveen in installments through October 2005, subject to
his continued compliance with his obligations under the modified separation
agreement.

Deferred Bonus Plan

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

On January 2, 2003, the
Company granted to 12 eligible employees 139,067 shares of restricted stock that
had a fair value of $16.83 per share at the grant date, 4,641 of which vest over
a five year period, 74,019 vest over a ten year period and 60,407 were
forfeited. During the fourth quarter 2003, in accordance with the terms of the
separation agreement with the Company's previous President and Chief
Operating Officer, 60,407 unvested shares were forfeited.

On January 2, 2004, the
Company granted to 17 eligible employees 27,259 shares of restricted stock that
had a fair value of $13.60 per share at the grant date, 7,301 of which vest over
a five year period, 19,958 vest over a ten year period. During the first quarter
2004, our Chief Executive Officer elected to voluntarily relinquish his entire
2002 bonus including 60,407 unvested shares of restricted stock.

158

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In September 2004, the
Board of Directors terminated the Deferred Bonus Plan. All stock previously
issued under the Deferred Bonus Plan will continue to be subject to the terms of
the Deferred Bonus Plan. However, future bonuses will not be subject to the
terms of the Deferred Bonus Plan.

ITEM 12.      
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets
forth certain information with respect to the beneficial ownership of the
Company's common stock as of March 1, 2005 by certain beneficial owners,
each of the Company's directors, certain executive officers and all
executive officers and directors as a group.

`Options
                                                                        Exercisable
                                                         Number of        Within       Percentage
Name of Beneficial Owner                                 Shares (1)       60 Days     Of Class (1)
------------------------                                 ----------     ------------  -------------
Officers and Directors:
Martin Tuchman (2)(3)                                     9,314,643      2,280,000         30.48%
Arthur L. Burns                                             210,008         96,563          *
Warren L. Serenbetz, Jr.(4)(5)(6)(11)                       473,726              0          1.67%
Peter D. Halstead                                            67,500         60,000          *
Clifton H. W. Maloney                                        15,000         15,000          *
Joseph J. Whalen                                             37,500         37,500          *
William J. Shea, Jr.                                              0              0          *
Michael S. Mathews                                                0              0          *
William A. Geoghan (7)                                        9,398          7,500          *
Herbert Mertz (7)                                             9,371          7,500          *
Richard W. Gross (7)                                          2,333              0          *
Brian Tracey                                                  1,176              0          *
James F. Walsh (7)                                               25              0          *
Christopher N. Fermanis (7)                                   1,345              0          *
Executive officers and directors as a
   group (fourteen persons, as of January 2, 2005)       10,142,025      2,504,063         32.94%
Other Stockholders:
Hickory Enterprises, L.P. (8)(9)                          4,654,489              0         16.46%
  165 Signal Hill North
  Wilton, CT 06897
Raoul J. Witteveen (10)                                   4,712,429      1,140,000         16.02%
  Surinamesttaat 37
  2585 CH The Hague
  The Netherlands
Warren L. Serenbetz (4)(6)(12)                              821,142              0          2.90%
  695 West Street
  Harrison, NY 10528
Paul H. Serenbetz (4)(5)                                    291,756              0          1.03%
  12 Howard Avenue
  New Haven, CT 06519
Stuart W. Serenbetz (4)(5)(7)                               292,096              0          1.03%
  Stonebridge Development Corp.
  6 Hickory Drive
  Stamford, CT 06902
Clay R. Serenbetz (4)(5)                                    292,646              0          1.03%
  695 West Street
  Harrison, NY 10528
The Chartres Limited Partnership (13)                        90,000              0          *
  c/o Interpool, Inc.
  633 Third Avenue
  New York, NY 10017
Other Stockholders as a group                            11,154,558      1,140,000         37.91`

159

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__________

*Less than 1%

|(1) | Includes shares subject to options which are exercisable within 60
days. In the event that all said options were exercised, the total number of
outstanding shares of the Company's common stock would be 32,451,141. The
percentage of class is calculated on the basis of an assumption that only the
named individual exercised all of his options. Does not include the following
options not exercisable within 60 days: Herbert Mertz; 50,000; Peter D.
Halstead, 15,000; Joseph J. Whalen, 15,000; Clifton H. W. Maloney, 15,000;
Michael S. Mathews, 15, 000; William J. Shea, Jr., 15,000; Warren L. Serenbetz,
Jr., 15,000. Does not include shares which could be issued upon conversion in
connection with holdings of the Company's 9.25% Convertible Redeemable
Subordinated Debentures with a conversion price of $25.00 per share. Conversion
of the holdings of the Debentures would result in a share issuance as follows:
Martin Tuchman 80,000 shares; Warren L. Serenbetz and related entities and
family members 106,906 shares; Arthur Burns 9,600 shares; Peter Halstead 1,000
shares; Joseph Whalen 8,000 shares; Clifton Maloney 2,000 shares; Richard W.
Gross 8,000 shares; and Herbert Mertz 2,400 shares.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The business address of Mr. Tuchman is 211 College Road East,
Princeton, New Jersey 08540.
|--- | ------------------------------------------------------------------------------------------

|(3) | Includes 6,779,641 shares directly held by Mr. Tuchman; 8,668
shares held by a pension plan f/b/o Mr. Tuchman; 46,619 shares held by a
revocable grantor trust of which Mr. Tuchman is the grantor and trustee and Mr.
Tuchman's brother is the beneficiary; 7,000 shares held by the Tuchman
Foundation; 5,797 shares representing Mr. Tuchman's 51.3% interest in shares
held by Kingstone Capital Group, LLC, a New Jersey limited liability company;
1,500 shares held by a pension plan f/b/o Mr. Tuchman's wife; 182,381 shares
held by Princeton International Properties, Inc., a New Jersey corporation owned
by Mr. Tuchman and his wife; and 3,037 shares held by Mr. Tuchman's wife.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Does not include Mr. Serenbetz's interest in shares held by
Hickory described in footnote (8) below.
|--- | ----------------------------------------------------------------------------------------------------

|(5) | Each of Warren L. Serenbetz, Jr., Paul H. Serenbetz, Stuart W.
Serenbetz and Clay R. Serenbetz is a son of Warren L. Serenbetz. None of Mr.
Serenbetz's sons are minors.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | At the stockholder meeting on December 15, 2004, Warren L.
Serenbetz, Jr. was elected to the board of directors. Warren L. Serenbetz, who
previously served as a director, did not stand for reelection to the board.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes indirect beneficial ownership of shares held by immediate
family members.
|--- | ----------------------------------------------------------------------------------

|(8) | In 1994, Hickory Enterprises, L.P., a Delaware limited partnership
("Hickory") was formed. Warren L. Serenbetz contributed shares of the Company's
common stock in exchange for a limited partnership interest in Hickory. Each of
Warren L. Serenbetz, Jr., Stuart W. Serenbetz, Paul H. Serenbetz and Clay R.
Serenbetz contributed shares of the Company's common stock in exchange for a
general partnership and limited partnership interest in Hickory. Each of the
four general partners in Hickory has one vote in matters before Hickory. Warren
L. Serenbetz, as solely a limited partner, does not have any voting rights or
rights to participate in the management or operations of Hickory.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Includes 117,000 shares held by an exchange fund as to which
Hickory Enterprises retains certain voting rights.
|--- | ---------------------------------------------------------------------------------------------------------------

160

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|(10) | Includes 3,467,730 shares directly held by Mr. Witteveen; 101,210 shares held by
an exchange fund as to which Mr. Witteveen retains certain voting rights; 1,500
shares of which Mr. Witteveen's wife is the record owner; and 1,989 shares
representing Mr. Witteveen's interest in shares held by Kingstone Capital Group,
LLC, a New Jersey limited liability company.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Includes 182,380 shares held by the Radcliff Group, Inc. and 1200
shares owned by family members.
|---- | -------------------------------------------------------------------------------------------------

|(12) | The Warren L. Serenbetz Revocable Trust, of which Warren L.
Serenbetz is the trustee, is the record owner of these shares of the Company's
common stock. The beneficiaries of the Warren L. Serenbetz Revocable Trust are
members of the immediate family of Warren L. Serenbetz.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | On February 1, 1995, Arthur L. Burns entered into an Agreement of
Limited Partnership pursuant to which Mr. Burns contributed 90,000 shares of
restricted common stock to The Chartres Limited Partnership ("Chartres"), in
exchange for a 98% limited partnership interest in Chartres. Each of Meredith K.
Burns and Kristin M. Reynolds, daughters of Arthur L. Burns, are the other
limited partners and the general partners of Chartres. Limited partners do not
have any voting rights or rights to participate in the management or operation
of Chartres.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Equity Compensation Plan Information

The following presents
equity compensation plan information as of December 31, 2004. This table does
not include shares issuable under the Deferred Bonus Plan (the "Bonus
Plan") as outlined in Note 16 to the Consolidated Financial Statements. In
September 2004, the Board of Directors terminated the Bonus Plan. All stock
previously granted under the Plan will continue to be subject to the terms of
the Plan.

`(c)
                                                                                           Number of securities
                                                                                           remaining available for
                                           (a)                          (b)                future issuance under
                                 Number of securities to        Weighted-average           equity compensation
                                 be issued upon exercise        exercise price of          plans (excluding
                                 of outstanding options,        outstanding options,       securities reflected
Plan Category                    warrants and rights            warrants and rights        in column (a))
-------------                    -----------------------        -------------------        -----------------------

Equity compensation plans
approved by security holders              3,938,063                       10.59                     1,660,000

Equity compensation plans not
approved by security holders                -----                         -----                        -----
                                          ---------                   ---------                   -----------
Total                                     3,938,063                       10.59                     1,660,000`

For a description of these plans see Item 10 and Note 14 to the
Consolidated Financial Statements.

161

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Rule 10b5-1 Trading Plans

In March 2005, Mr. Tuchman,
our Chief Executive Officer, adopted a personal trading plan as part of a
long-term strategy for asset diversification and liquidity, in accordance with
the Securities and Exchange Commission's Rule 10b5-1. Under the plan, up to
153,000 shares of common stock Mr. Tuchman currently owns may be systematically
sold at market prices on sale dates beginning April 18, 2005 in daily amounts
predetermined by the plan. Mr. Tuchman's 10b5-1 plan terminates on the date
on which all the shares subject to the plan have been sold, or on April 20,
2006, whichever occurs first.

Rule 10b5-1 allows officers
and directors, at a time when they are not in possession of material non-public
information, to adopt written plans to sell shares on a regular basis under
pre-arranged terms, regardless of any subsequent non-public information they may
receive. Sales of shares by Mr. Tuchman pursuant to the terms of the plan will
be disclosed publicly through Form 144 and Form 4 filings with the Securities
and Exchange Commission.

ITEM 13.     
     CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

Chassis Holding I, LLC

The Ivy Group, which is a
New Jersey general partnership composed directly or indirectly of Mr. Tuchman,
Radcliff Group, Inc., Raoul J. Witteveen, Thomas P. Birnie and Graham K. Owen,
has previously leased chassis to Trac Lease. As of December 31, 2000, pursuant
to various equipment lease agreements, Trac Lease leased 6,047 chassis from The
Ivy Group and its principals for an aggregate annual lease payment of
approximately $2.9 million. On January 1, 2001, the various leases for the 6,047
units were combined into a single lease pursuant to which The Ivy Group and its
principals were paid an aggregate lease payment of approximately $2.6 million
through June 30, 2001.

Effective as of July 1,
2001, we restructured our relationship with The Ivy Group and its principals to
provide us with managerial control over these 6,047 chassis. As a result of the
restructuring, the partners of The Ivy Group contributed these 6,047 chassis and
certain other assets and liabilities to our newly formed subsidiary, Chassis
Holdings I, LLC, in exchange for $26.0 million face value of preferred
membership units and 10% of the common membership units, and Trac Lease
contributed 902 chassis and two thousand dollars in cash to Chassis Holdings in
exchange for $3.0 million face value of preferred membership units and 90% of
the common membership units. The preferred membership units are entitled to
receive a preferred return prior to the receipt of any distributions by the
holders of the common membership units. The value of the contributed chassis was
determined by taking the arithmetic average of the results of independent
appraisals performed by three nationally recognized appraisal firms that were
engaged by us in connection with our establishment of a chassis securitization
facility in July 2000. As the managing member of Chassis Holdings, Trac Lease
exercises sole managerial control over the entity's operations. Chassis
Holdings leases all of its chassis to Trac Lease at a rental rate equal to the
then current Trac Lease fleet average per diem. Chassis Holdings and the holders
of the preferred membership units are party to a Put/Call Agreement which
provides that the holders of preferred units may put such units to Chassis
Holdings under certain circumstances and Chassis Holdings has the right to
redeem such units under certain circumstances. Chassis Holdings will be required
to make certain option payments to the holders of the preferred membership units
in order to preserve its right to redeem such units. Dividends paid on the
common units and distributions on the preferred units totaling $3.1 million,
$2.9 million and $3.1 million for 2004, 2003, and 2002, respectively, are
included in minority interest expense in the accompanying consolidated statement
of income.

162

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

The members of the Board of
Directors have unanimously determined that the terms of all arrangements between
The Ivy Group and Trac Lease, including the formation of Chassis Holdings, were
beneficial and fair to Interpool.

The Ivy Group Guarantee of PCR Line of
Credit

In connection with the sale
of PCR in December 2001, Martin Tuchman and Raoul Witteveen agreed in March 2002
to guarantee a pre-existing line of credit between PCR and Yardville National
Bank in the amount of $3,000,000 and the Company was released from a guarantee
it had previously executed. This guarantee was subsequently paid off through
advances made to PCR by The Ivy Group. PCR's line of credit with Yardville
National Bank was reduced to $1,666,000 in March 2002 and later increased to
$2,000,000 in September 2002. Advances amounting to $1,983,134 and $698,000 in
2002 and 2003, respectively, were made to PCR by The Ivy Group to pay off
borrowings under the line of credit and to provide working capital. The Ivy
Group is a partnership controlled by certain current and former officers and
directors of the Company. The advances made by The Ivy Group to PCR were
considered capital contributions to the Company and payments by the Company to
PCR. The payments to PCR have been determined to be uncollectible and were
expensed by the Company in 2002 and included in other (income)/expense, net.
Payments made in 2002 amounting to $1,983,134 have been included in additional
paid-in-capital. The remaining payments made in 2003 of $698,000 have been
included in accounts payable and accrued expenses at December 31, 2002 and were
reclassified to additional paid-in-capital in the period when the payments were
made.

Eurochassis L.P. Transactions

Eurochassis L.P., a New Jersey
limited partnership in which Raoul J. Witteveen, our former President and a
major stockholder, is one of the limited partners and the general partner,
leases 100 chassis to Trac Lease for an annual lease payment of approximately
$86,000. The annual lease term renews automatically unless canceled or renewed
upon renegotiated lease rate terms by either party prior to the first day of the
renewal period. The members of the Board of Directors have unanimously
determined that the terms of all arrangements between Eurochassis L.P. and Trac
Lease are beneficial and fair to the Company.

163

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Radcliff Consultation Services Agreement

We entered into a
Consultation Services Agreement with Radcliff Group, Inc. dated as of January 1,
1992, as amended and restated in February 1993, pursuant to which Radcliff Group
appointed Warren L. Serenbetz, a stockholder and director of the Company through
December 15, 2004, as Executive Consultant. The Consultation Services Agreement
was terminated as of January 1, 1995. In accordance with the terms of the
Consultation Services Agreement, following such termination Radcliff Group
remained entitled to receive its full annual consultation services fee in the
amount of $492,000 through December 31, 2002 and reimbursement to both the
designated Executive Consultant and his spouse of all health related costs and
expenses that were not advanced or reimbursed to the Executive Consultant
pursuant to our medical and dental insurance plans through December 2007.

Executive Office Lease

During 2001 and a portion
of 2002, we leased approximately 28,500 square feet of commercial space for our
executive offices in Princeton, New Jersey from 211 College Road Associates, a
New Jersey general partnership. Martin Tuchman, a Director and the Chief
Executive Officer and Warren L. Serenbetz, a director of the Company, through
December 15, 2004, held a direct or indirect equity interest of 89.73% in 211
College Road Associates. The 2001 annual base rental for this property was
approximately $557,000 under a triple net lease expiring in 2010. In the opinion
of our management, rent paid under this lease did not exceed rent that we would
have paid in an arms' length transaction with an unrelated third party.

On January 28, 2002, we
executed a Purchase and Sale Agreement, pursuant to which, on May 1, 2002, we
purchased the office building in Princeton which houses our executive offices
from 211 College Road Associates. The fair market value purchase price of the
approximately 39,000 square feet building was $6,250,000, based upon a
determination of the fair market value of the property by an independent
property appraisal firm. The purchase price and other terms of the purchase were
approved unanimously by our Board of Directors.

Bank Loans

In April 2003 and August
2003 we borrowed $16,000,000 and $7,000,000, respectively, from Yardville
National Bank, a subsidiary of an entity in which our Chief Executive Officer
owns approximately five percent of the common stock and serves on the Executive
Committee of the Board of Directors. The term of the $16,000,000 loan was three
years. Thirty four fixed monthly principal payments of $250,000 commencing May
25, 2003 were due with a final principal payment of $7,500,000 due on
March 25, 2006. Interest, at an initial rate of 4.25%, was adjusted monthly
to the prime rate as published in the Wall Street Journal subject to a 4%
minimum and 5% maximum per annum rate.

The term of the $7,000,000
loan was five years. Fifty nine fixed monthly principal payments of $75,000
commencing September 7, 2003 were due with a final principal payment of
$2,575,000 due on August 7, 2008. Interest, at an initial rate of 4% was
adjusted monthly to the prime rate as published in the Wall Street Journal
subject to a 4% minimum and 6% maximum per annum rate.

164

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In September 2000,
Yardville National Bank provided a revolving line of credit to the Company. The
line of credit was initially $9,750,000 and was secured by equipment and the
related leases. The interest rate was Yardville National Bank's base
interest rate minus .5%. The Company utilized a portion of this facility from
inception through April 2002 when the loan balance was paid and the facility
ended.

In connection with our
borrowings from Yardville National Bank, our Board of Directors unanimously
determined that the interest rate and other terms of such borrowings were at
least as favorable to us as could have been obtained in an arms'-length
transaction with an unrelated third party.

In addition to our
borrowings from Yardville National Bank, beginning in May 2000 Yardville
National Bank provided a revolving line of credit to our subsidiary PCR. The
line of credit was initially $2,500,000 and was increased to $5,000,000 in July
2000 (upon termination of a similar line of credit provided to our subsidiary
Microtech). The interest rate was Yardville National Bank's base interest
rate minus .5%. Advances under this line of credit were secured by a first lien
on PCR's business assets. In connection with our sale of our interest in
PCR in December 2001, Yardville National Bank released its security interest in
PCR's assets and reduced the amount of the line to $3,000,000. At the same
time, we provided a guarantee of this line of credit on PCR's behalf. In
March 2002, the amount of the credit line was further reduced to approximately
$1,650,000, the balance then outstanding, and, at our request, Yardville
National Bank terminated our guarantee and accepted in lieu thereof a guarantee
from certain of our officers and directors. The PCR line of credit was renewed
and increased to $2,000,000 in September 2002.

During November 2004, all
outstanding borrowings from Yardville National bank were paid in full.

Fathom Co., LTD Agency Fees

We paid Fathom Co., LTD ("Fathom"),
our local representative in Taiwan, $116,400 for each of the years ended
December 31, 2004, 2003 and 2002 to represent us with the Taiwan depots that
store and repair damaged containers and to provide customer support. Fathom is
owned by a Regional Vice President of Interpool Limited (who is not an executive
officer of the Company) and members of his family. Management has determined
that the fee for these services between Fathom and Interpool Limited are
beneficial and fair to the Company.

165

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ITEM 14.       
   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Accounting Fees and Services

The following table sets
forth the aggregate fees billed to the Company by KPMG for professional services
rendered for the fiscal year ended December 31 of the year indicated:

`2004                2003
                                             -----               ----
         Audit Fees (1)                $ 2,225,000            $1,630,000
         Tax Fees                           10,000                14,000
                                       -----------            ----------
         Total Fees                    $ 2,235,000            $1,644,000
                                       ===========            ==========`

_____________________

(1) Includes services relating to audit of the annual
consolidated financial statements included in our Annual Report on Form 10-K,
the review of interim financial information included in our quarterly reports on
Form 10-Q and the audit of internal controls over financial
reporting.

All
fees described above under Audit-Related Fees, Tax Fees and All Other Fees were
approved by our Audit Committee or by the chairman of our Audit Committee.

All Other Fees

There were no fees billed
by our independent auditors during the years ended December 31, 2004 and 2003
for products and services, other than the services rendered in connection with
the audit of the annual consolidated financial statements included in our Annual
Report on Form 10-K, the review of interim financial information included in our
quarterly reports on Form 10-Q and services primarily related to consultation on
tax planning matters.

Relationship with Independent
Accountants

In accordance with policies
adopted by our Audit Committee, all non-audit related services to be performed
by our independent public accountants must be approved in advance by our Audit
Committee or by the chairman of our Audit Committee. However, no pre-approval is
required with respect to the provision of a non-audit service if (i) the
aggregate amount of all non-audit services constitutes not more than 5% of the
total amount of revenues we have provided to the auditors during the fiscal year
in which the non-audit services are provided; (ii) we did not recognize such
services at the time of the engagement to be non-audit services; and (iii) such
services are promptly brought to the attention of our Audit Committee and
approved prior to the completion of the audit by our Audit Committee or the
chairman of our Audit Committee.

166

---

PART IV

ITEM 15.      
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) FINANCIAL STATEMENTS

INTERPOOL, INC.

Report of Independent Public Accountants
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 Changes in Stockholders' 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 Notes to Consolidated Financial Statements

(a)(2) FINANCIAL STATEMENT SCHEDULES

Schedule II-- Valuation and Qualifying Accounts

All other schedules for
which provision is made in the applicable regulations of the Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.

(a)(3) EXHIBITS

|3.1 |  | Restated Certificate of Incorporation of the Company (incorporated
herein by reference to the Company's Registration Statement on Form S-1 (Reg.
No. 33-59498)).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Form of Restated Bylaws of the Company (incorporated herein by
reference to the Company's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|--- | - | --------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Form of Certificate representing the Common Stock (incorporated
herein by reference to the Company's Registration Statement on Form S-1 (Reg.
No. 33-59498)).
|--- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 |  | Form of Indenture between the Company and The Bank of New York, as
trustee, relating to the 9.25% Convertible Redeemable Subordinated Debentures
(incorporated herein by reference is the Company's Registration Statement on
Form S-1 (Reg. No. 333-86370)).
|--- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | Form of First Supplemental Indenture between the Company and The
Bank of New York, as trustee, relating to the 9.25% Convertible Redeemable
Subordinated Debentures (incorporated herein by reference is the Company's
Registration Statement on Form S-1 (Reg. No. 333-86370)).
|--- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

167

---

|4.4 |  | Form of Subscription Rights Agreement (incorporated herein by
reference is the Company's Registration Statement on Form S-1 (Reg. No.
333-86370)).
|--- | - | --------------------------------------------------------------------------------------------------------------------------------------------------

|4.5 |  | Form of Subscription Documentation for Standby Purchasers
(incorporated herein by reference is the Company's Registration Statement on
Form S-1 (Reg. No. 333-86370)).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.6 |  | Indenture between the Company and United States Trust Company of
New York, as Trustee, related to the 7.35% Notes dated July 29, 1997
(incorporated herein by reference to the Company's Current Report on Form 8-K,
dated July 29, 1997).
|--- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.7 |  | Indenture between the Company and United States Trust Company of
New York, as trustee, related to the 7.20% Notes, dated August 5, 1997
(incorporated herein by reference to the Company's Registration Statement on
Form S-4 (Reg. No. 333-38705)).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.8 |  | Indenture between the Company and IBJ Schroeder Bank & Trust
Company, as Trustee, related to the Junior Subordinated Debt Securities dated
January 27, 1997 (incorporated herein by reference to the Company's Annual
Report on Form 10-K for the period ended December 31, 1996).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.9 |  | First Supplemental Indenture between the Company and IBJ Schroeder
Bank & Trust Company, as Trustee, related to the 9-7/8% Series A and Series
B Junior Subordinated Deferrable Interest Debentures dated January 27, 1997
(incorporated herein by reference to the Registrant's Annual Report on Form 10-K
for the period ended December 31, 1996).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.10 |  | Indenture dated as of September 14, 2004, between the Company and
US Bank, as trustee relating to the 6.0% Notes (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|---- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Purchase Agreement dated as of January 30, 1993 by and between
Sequa Capital Corp. and the Company, as amended as of March 5, 1993
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Restructuring Agreement as of August 5, 1992 among the Company,
Trac Lease, Radcliff Group, Interpool Limited, Sequa Capital Corp., Martin
Tuchman, Raoul J. Witteveen, Warren L. Serenbetz, Warren L. Serenbetz, Jr., Paul
H. Serenbetz, Stuart W. Serenbetz and Clay R. Serenbetz (incorporated herein by
reference to the Registrant's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|---- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Employment Agreement dated as of January 1, 1992 by and between
Martin Tuchman and the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Employment Agreement dated as of October 1, 2003 by and between
Herbert Mertz and the Company (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2002).
|---- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Employment Agreement dated as of October 1, 2004 by and between
Herbert Mertz and the Company.
|---- | - | ----------------------------------------------------------------------------------------------

168

---

|10.6 |  | Employment Agreement dated as of July 1, 2004 by and between
Arthur L. Burns and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
2003).
|---- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Employment Agreement dated as of July 1, 2004 by and between James
F. Walsh and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
2003).
|---- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Employment Agreement dated as of July 1, 2004 by and between
Richard W. Gross and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
2003).
|---- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Consultation Services Agreement dated as of January 1, 1992 by and
between Radcliff Group and the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|---- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | 1993 Stock Option Plan for Executive Officers and Directors
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Stockholders' Agreement dated as of May 4, 1993, among the Company
and Messrs. Martin Tuchman, Raoul J. Witteveen, Warren L. Serenbetz, Warren L.
Serenbetz, Jr., Clay R. Serenbetz, Paul H. Serenbetz, Stuart W. Serenbetz and
Arthur L. Burns and the Serenbetz Trust (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Non-Compete Agreement dated as of May 4, 1993, by and between The
Ivy Group and the Company (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 33-71538)).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | Lease Agreements by and between 211 College Road Associates and
Interpool Limited and 211 College Road Associates and Microtech Leasing
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 |  | Lease Agreement dated December 30, 1986 between Princeton
Intermodal Equipment Trust I and Trac Lease (incorporated herein by reference to
the Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 |  | Lease Agreements between The Ivy Group and Trac Lease
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 |  | Amendment No. 1, dated August 10, 1992, to Secured Promissory Note
and Chattel Mortgage, Security Agreement and Assignment by and between The Ivy
Group and the Company (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 |  | Chassis Lease Agreement dated as of August 15, 1992 by and between
Eurochassis L.P. and Trac Lease (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

169

---

|10.18 |  | Transfer and Subscription Agreement among Radcliff Group, Martin
Tuchman, Raoul J. Witteveen, Warren L. Serenbetz, Warren L. Serenbetz, Jr., Clay
R. Serenbetz, Paul H. Serenbetz, Stuart W. Serenbetz, the Serenbetz Trust and
the Company (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.19 |  | Exchange and Subscription Agreement by and between the Company and
Arthur L. Burns (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20 |  | Demand promissory notes of the Company payable to Martin Tuchman,
Warren L. Serenbetz and Princeton International Properties (incorporated herein
by reference to the Company's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.21 |  | Indemnity Agreement between the Company and other
directors (incorporated herein by reference to the Company's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22 |  | Agreement between Arthur L. Burns regarding certain litigation
(incorporated herein by reference to the Company's Registration Statement on
Form S (Reg. No. 33-59498)).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23 |  | Series A Capital Securities Guarantee Agreement dated January 27,
1997 (incorporated herein by reference to the Company's Annual Report on Form
10-K for the period ended December 31, 1996).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24 |  | Agreement of Merger dated March 15, 1996 among Trac Lease, Inc.,
Trac Lease Merger Corp. and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
1995).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.25 |  | Letter Agreement between The Ivy Group and the Company (incorporated
herein by reference to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1995).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.26 |  | Chassis Lease Agreement dated January 1, 1998 between The Ivy
Group and Trac Lease, Inc. (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2000).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27 |  | Consulting Agreement between the Company and Atlas Capital
Partners dated February 28, 1998 (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for period ended June 30, 1998).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.28 |  | Asset Purchase Agreement, dated as of July 27, 2000 by and between
the Company and Transamerica Leasing, Inc. (incorporated herein by reference to
the Company's Form 8-K filed on November 3, 2000).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.29 |  | Amendment No. 1 to the Asset Purchase Agreement dated October 24,
2000 by and between the Company and Transamerica Leasing, Inc. (incorporated
herein by reference to the Company's Form 8-K filed on November 3, 2000).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

170

---

|10.30 |  | Chassis Lease Agreement dated January 1, 2001 between The Ivy
Group and Trac Lease, Inc. (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2000).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.31 |  | Asset Purchase Agreement, dated as of January 26, 2001, by and
between Interpool, Inc. and Transport International Pool, Inc. (incorporated
herein by reference to the Company's Form 8-K filed on April 3, 2001).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.32 |  | Amendment No. 1 to the Asset Purchase Agreement, dated as of March
30, 2001, by and between the Company and Transport International Pool, Inc.
(incorporated herein by reference to the Company's Form 8-K filed on April 3,
2001).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.33 |  | Chassis Holdings I LLC Operating Agreement dated as of July 1, 2001
(incorporated herein by reference to the Company's Quarterly Report on Form
10-Q filed November 14, 2001).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.34 |  | Chassis Holdings I LLC Put/Call Agreement dated as of July 1, 2001
(incorporated herein by reference to the Company's Quarterly Report on Form
10-Q filed November 14, 2001).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.35 |  | Sale and Purchase Agreement between 211 College Road Associates and the
Company (incorporated herein by reference to the Company's Annual Report on
Form 10-K for the period ended December 31, 2001).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.36 |  | Third Amended and Restated Senior Loan and Security Agreement
dated as of December 17, 1997 among the Company, Trac Lease, Inc., Interpool
Limited, Interpool Finance Corp. with CoreStates Bank, N.A., as Agent, and PNC
Bank, National Association, as Co-Agent, and the Institutional Lenders listed
Herein, as Lenders (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.37 |  | First Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of November 17, 1998 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.38 |  | Second Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of May 26, 2000 among the Company, Trac Lease, Inc.,
Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

171

---

|10.39 |  | Third Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of July 20, 2000 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.40 |  | Fourth Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of October 6, 2000 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.41 |  | Fifth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of August 23, 2002 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.42 |  | Sixth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of March 31, 2002 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.43 |  | Seventh Amendment to the Third Amended and Restated Senior Loan
and Security Agreement dated as of May 30, 2003 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

172

---

|10.44 |  | Eighth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of July 31, 2003 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.45 |  | Ninth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of October 31, 2003 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.46 |  | Tenth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of January 8, 2004 among the Company, Trac
Lease, Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank,
National Association (successor to CoreStates Bank, N.A. and f/k/a First Union
National Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and
the Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.47 |  | Eleventh Amendment to the Third Amended and Restated Senior Loan
and Security Agreement dated as of February 25, 2004 among the Company, Trac
Lease, Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank,
National Association (successor to CoreStates Bank, N.A. and f/k/a First Union
National Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and
the Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.48 |  | Separation Agreement between Mitchell I. Gordon and Interpool,
Inc. dated as of July 15, 2003 (incorporated by reference to the Company's Form
8-K Filed on August 5, 2003).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.49 |  | Separation Agreement between Raoul Witteveen and Interpool, Inc.
dated as of August 10, 2004 (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2003).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.50 |  | Securities Purchase Agreement dated as of September 14, 2004 among
the Company and Greywolf Capital Partners II, LP, Greywolf Capital Overseas
Fund, Greywolf High Yield Masters Fund, Caspian Capital Partners, LP, Mariner
LDC, Mariner Opportunities Fund, LP, Mariner Voyager Master Fund LTD, Riva Ridge
Master Fund, LTD, Goldman, Sachs & Co. (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

173

---

|10.51 |  | Warrant Agreement dated as of September 14, 2004, between the
Company and US Bank, as warrant agent (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.52 |  | Notes Registration Rights Agreement dates as of September 14, 2004
among the Company and Greywolf Capital Partners II, LP, Greywolf Capital
Overseas Fund, Greywolf High Yield Masters Fund, Caspian Capital Partners, LP,
Mariner LDC, Mariner Opportunities Fund, LP, Mariner Voyager Master Fund LTD,
Riva Ridge Master Fund, LTD, Goldman, Sachs & Co. (incorporated by reference
to the Company's report on Form 8-K filed on September 15, 2004).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.53 |  | Investor Rights Agreement dates as of September 14, 2004 among the
Company and Greywolf Capital Partners II, LP, Greywolf Capital Overseas Fund,
Greywolf High Yield Masters Fund, Caspian Capital Partners, LP, Mariner LDC,
Mariner Opportunities Fund, LP, Mariner Voyager Master Fund LTD, Riva Ridge
Master Fund, LTD, Goldman, Sachs & Co. (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.54 |  | Amended and Restated Credit Agreement dated as of November 1, 2004
among Interpool Container Funding, SRL, the Company and Fortis Bank (Nederland)
N.V. (incorporated by reference to the Company's Form 10-Q for the quarter ended
June 30, 2004 filed on November 12, 2004).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.55 |  | Form of Note Purchase Agreement dated as of November 29, 2004
among the Company and eight institutional investors (incorporated by reference
to the Company's report on Form 8-K filed on December 2, 2004).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.56 |  | Form of Notes Registration Rights Agreement dated as of November
29, 2004 between the Company and eight institutional investors (incorporated by
reference to the Company's report on Form 8-K filed on December 2, 2004).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.57 |  | 2004 Stock Option Plan for Key Employees and Directors of
Interpool, Inc. (incorporated herein by reference to the
Company's Schedule 14A filed on November 24, 2004).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.58 |  | Interpool, Inc. 2004 Non-Qualified Stock Option Plan for
Non-Employee, Non-Officer Directors (incorporated herein by reference to the
Company's Schedule 14A filed on November 24, 2004).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.59 |  | Voting Agreement dated September 10, 2004.
|----- | - | ------------------------------------------

|10.60 |  | Revolving Credit Agreement dated as of December 29, 2004 among
Interpool Limited, DVB Bank N.V. and the Lenders named therein.
|----- | - | ------------------------------------------------------------------------------------------------------------------------------

|10.61 |  | Security Agreement dated as of December 29, 2004 made by Interpool
Limited in favor of DVB Bank N.V.
|----- | - | ----------------------------------------------------------------------------------------------------

|10.62 |  | Third Amended and Restated Credit Agreement dated as of March 15,
2005 among Interpool Container Funding, SRL, the Company, Fortis Bank
(Netherland) N.V. and the Lenders named therein (incorporated by reference to
the Company's report on Form 8-K filed March 23, 2005).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.63 |  | Third Amended and Restated Servicing Agreement dated as of March
15, 2005 between Interpool Limited and Interpool Container Funding, SRL
(incorporated by reference to the Company's report on Form 8-K filed March 23,
2005).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

174

---

|10.64 |  | Rule 10b5-1 Sales Plan between Martin Tuchman and Goldman, Sachs &
Co., dated as of March 16, 2005.
|----- | - | ---------------------------------------------------------------------------------------------------

|14.1 |  | Code of Business Conduct and Ethics (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|21.1 |  | Subsidiaries of the Company (incorporated herein by reference to
the Company's Registration Statement on Form S-1 (Reg. No. 33-71538)).
|---- | - | ---------------------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification of Martin Tuchman.
|---- | - | --------------------------------

|31.2 |  | Certification of James F. Walsh.
|---- | - | --------------------------------

|32.1 |  | Certification of Martin Tuchman.
|---- | - | --------------------------------

|32.2 |  | Certification of James F. Walsh.
|---- | - | --------------------------------

175

---

Report of Independent Registered Public Accounting
Firm on Supplementary Information

The Board of Directors
Interpool, Inc.:

We have audited and
reported separately herein on the consolidated balance sheets of Interpool, Inc.
and subsidiaries as of December 31, 2004 and 2003 and the related consolidated
statements of income, changes in stockholders' equity and cash flows for
each of the years in the three year period ended December 31, 2004. In
connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
Schedule II included in this Annual Report on Form 10-K. This consolidated
financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this consolidated
financial statement schedule based on our audits.

In our opinion, such
consolidated financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.

As discussed in Note 1 to
the consolidated financial statements, in 2002 the Company changed its method of
accounting for (i) goodwill and (ii) the impairment or disposal of long-lived
assets.

(Signed) KPMG LLP

Short Hills, N.J.
March 28, 2005

176

---

INTERPOOL, INC. AND SUBSIDIARIES
SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 and 2002

ALLOWANCE FOR DOUBTFUL ACCOUNTS

(in thousands)

`Reclassification
                                                                    of Liabilities
                                                                      of Business
                                                                      Transferred                                       Balance
                                Balance at    Charge to                  Under                                             at
                                Beginning     Costs and               Contractual                                        End of
                                 of Year      Expenses     Acquired    Agreement   (Write-offs)  Recoveries   Other       Year
                                ----------   ----------    --------  -------------  -----------  ----------   -----     -------

Year Ended December 31, 2004      $16,358        $1,476       $---         $---       $(5,247)     $1,507        $(3)   $14,091
                                  =======        ======       ====         ====       =======      ======        ===    =======

Year Ended December 31, 2003      $14,033        $4,248       $---         $---       $(2,140)       $226        $(9)   $16,358
                                  =======        ======       ====         ====       =======        ====        ===    =======

Year Ended December 31, 2002       $6,674        $7,843     $1,898         $---       $(2,504)       $132       $(10)   $14,033
                                   ======        ======     ======         ====       =======        ====       ====    =======`

---

SIGNATURES

Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| | INTERPOOL, INC.
(Registrant)
| | ----------------------------

|March 28, 2005 | By  /s/ Martin Tuchman
Martin Tuchman
Chairman of the Board, Chief Executive Officer, President, Chief Operating
Officer, and Director (Principal Executive Officer)
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.

|March 28, 2005 | By  /s/ Martin Tuchman
Martin Tuchman
Chairman of the Board of Directors, Chief Executive Officer, President,
Chief Operating Officer and Director
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------

|March 28, 2005 | By  /s/ Warren L. Serenbetz, Jr.
Warren L. Serenbetz, Jr.
Director
|-------------- | ------------------------------------------------------------------

|March 28, 2005 | By  /s/ Arthur L. Burns
Arthur L. Burns
Executive Vice President, General Counsel and Director
|-------------- | ----------------------------------------------------------------------------------------------

|March 28, 2005 | By  /s/ Peter D. Halstead
Peter D. Halstead
Director
|-------------- | ----------------------------------------------------

|March 28, 2005 | By  /s/ Joseph J. Whalen
Joseph J. Whalen
Director
|-------------- | --------------------------------------------------

|March 28, 2005 | By  /s/ Clifton H. W. Maloney
Clifton H. W. Maloney
Director
|-------------- | ------------------------------------------------------------

|March 28, 2005 | By  /s/ James F. Walsh
James F. Walsh
Executive Vice President and Chief Financial Officer
|-------------- | ------------------------------------------------------------------------------------------

|March 28, 2005 | By  /s/ Brian Tracey
Brian Tracey
Senior Vice President
(Chief Accounting Officer)
|-------------- | ----------------------------------------------------------------------------------

|March 28, 2005 | By  /s/ Michael S. Mathews
Michael S. Mathews
Director
|-------------- | ------------------------------------------------------

|March 28, 2005 | By  /s/ William J. Shea, Jr.
William J. Shea, Jr.
Director
|-------------- | ----------------------------------------------------------

EXHIBIT INDEX

|3.1 |  | Restated Certificate of Incorporation of the Company (incorporated
herein by reference to the Company's Registration Statement on Form S-1 (Reg.
No. 33-59498)).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Form of Restated Bylaws of the Company (incorporated herein by
reference to the Company's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|--- | - | --------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Form of Certificate representing the Common Stock (incorporated
herein by reference to the Company's Registration Statement on Form S-1 (Reg.
No. 33-59498)).
|--- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 |  | Form of Indenture between the Company and The Bank of New York, as
trustee, relating to the 9.25% Convertible Redeemable Subordinated Debentures
(incorporated herein by reference is the Company's Registration Statement on
Form S-1 (Reg. No. 333-86370)).
|--- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | Form of First Supplemental Indenture between the Company and The
Bank of New York, as trustee, relating to the 9.25% Convertible Redeemable
Subordinated Debentures (incorporated herein by reference is the Company's
Registration Statement on Form S-1 (Reg. No. 333-86370)).
|--- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.4 |  | Form of Subscription Rights Agreement (incorporated herein by
reference is the Company's Registration Statement on Form S-1 (Reg. No.
333-86370)).
|--- | - | --------------------------------------------------------------------------------------------------------------------------------------------------

|4.5 |  | Form of Subscription Documentation for Standby Purchasers
(incorporated herein by reference is the Company's Registration Statement on
Form S-1 (Reg. No. 333-86370)).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.6 |  | Indenture between the Company and United States Trust Company of
New York, as Trustee, related to the 7.35% Notes dated July 29, 1997
(incorporated herein by reference to the Company's Current Report on Form 8-K,
dated July 29, 1997).
|--- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.7 |  | Indenture between the Company and United States Trust Company of
New York, as trustee, related to the 7.20% Notes, dated August 5, 1997
(incorporated herein by reference to the Company's Registration Statement on
Form S-4 (Reg. No. 333-38705)).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.8 |  | Indenture between the Company and IBJ Schroeder Bank & Trust
Company, as Trustee, related to the Junior Subordinated Debt Securities dated
January 27, 1997 (incorporated herein by reference to the Company's Annual
Report on Form 10-K for the period ended December 31, 1996).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.9 |  | First Supplemental Indenture between the Company and IBJ Schroeder
Bank & Trust Company, as Trustee, related to the 9-7/8% Series A and Series
B Junior Subordinated Deferrable Interest Debentures dated January 27, 1997
(incorporated herein by reference to the Registrant's Annual Report on Form 10-K
for the period ended December 31, 1996).
|--- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.10 |  | Indenture dated as of September 14, 2004, between the Company and
US Bank, as trustee relating to the 6.0% notes (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|---- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Purchase Agreement dated as of January 30, 1993 by and between
Sequa Capital Corp. and the Company, as amended as of March 5, 1993
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Restructuring Agreement as of August 5, 1992 among the Company,
Trac Lease, Radcliff Group, Interpool Limited, Sequa Capital Corp., Martin
Tuchman, Raoul J. Witteveen, Warren L. Serenbetz, Warren L. Serenbetz, Jr., Paul
H. Serenbetz, Stuart W. Serenbetz and Clay R. Serenbetz (incorporated herein by
reference to the Registrant's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|---- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Employment Agreement dated as of January 1, 1992 by and between
Martin Tuchman and the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Employment Agreement dated as of October 1, 2003 by and between
Herbert Mertz and the Company (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2002).
|---- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Employment Agreement dated as of October 1, 2004 by and between
Herbert Mertz and the Company.
|---- | - | ----------------------------------------------------------------------------------------------

|10.6 |  | Employment Agreement dated as of July 1, 2004 by and between
Arthur L. Burns and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
2003).
|---- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Employment Agreement dated as of July 1, 2004 by and between James
F. Walsh and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
2003).
|---- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Employment Agreement dated as of July 1, 2004 by and between
Richard W. Gross and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
2003).
|---- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Consultation Services Agreement dated as of January 1, 1992 by and
between Radcliff Group and the Company (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|---- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | 1993 Stock Option Plan for Executive Officers and Directors
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Stockholders' Agreement dated as of May 4, 1993, among the Company
and Messrs. Martin Tuchman, Raoul J. Witteveen, Warren L. Serenbetz, Warren L.
Serenbetz, Jr., Clay R. Serenbetz, Paul H. Serenbetz, Stuart W. Serenbetz and
Arthur L. Burns and the Serenbetz Trust (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Non-Compete Agreement dated as of May 4, 1993, by and between The
Ivy Group and the Company (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 33-71538)).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | Lease Agreements by and between 211 College Road Associates and
Interpool Limited and 211 College Road Associates and Microtech Leasing
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.14 |  | Lease Agreement dated December 30, 1986 between Princeton
Intermodal Equipment Trust I and Trac Lease (incorporated herein by reference to
the Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 |  | Lease Agreements between The Ivy Group and Trac Lease
(incorporated herein by reference to the Company's Registration Statement on
Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 |  | Amendment No. 1, dated August 10, 1992, to Secured Promissory Note
and Chattel Mortgage, Security Agreement and Assignment by and between The Ivy
Group and the Company (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 |  | Chassis Lease Agreement dated as of August 15, 1992 by and between
Eurochassis L.P. and Trac Lease (incorporated herein by reference to the
Company's Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.18 |  | Transfer and Subscription Agreement among Radcliff Group, Martin
Tuchman, Raoul J. Witteveen, Warren L. Serenbetz, Warren L. Serenbetz, Jr., Clay
R. Serenbetz, Paul H. Serenbetz, Stuart W. Serenbetz, the Serenbetz Trust and
the Company (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.19 |  | Exchange and Subscription Agreement by and between the Company and
Arthur L. Burns (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20 |  | Demand promissory notes of the Company payable to Martin Tuchman,
Warren L. Serenbetz and Princeton International Properties (incorporated herein
by reference to the Company's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.21 |  | Indemnity Agreement between the Company and other
directors (incorporated herein by reference to the Company's Registration Statement on Form S-1 (Reg. No.
33-59498)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22 |  | Agreement between the Company and Arthur L. Burns regarding
certain litigation (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 33-59498)).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23 |  | Series A Capital Securities Guarantee Agreement dated January 27,
1997 (incorporated herein by reference to the Company's Annual Report on Form
10-K for the period ended December 31, 1996).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24 |  | Agreement of Merger dated March 15, 1996 among Trac Lease, Inc.,
Trac Lease Merger Corp. and the Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the period ended December 31,
1995).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.25 |  | Letter Agreement between The Ivy Group and the Company (incorporated
herein by reference to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1995).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.26 |  | Chassis Lease Agreement dated January 1, 1998 between The Ivy
Group and Trac Lease, Inc. (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2000).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27 |  | Consulting Agreement between the Company and Atlas Capital
Partners dated February 28, 1998 (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for period ended June 30, 1998).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.28 |  | Asset Purchase Agreement, dated as of July 27, 2000 by and between
the Company and Transamerica Leasing, Inc. (incorporated herein by reference to
the Company's Form 8-K filed on November 3, 2000).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.29 |  | Amendment No. 1 to the Asset Purchase Agreement dated October 24,
2000 by and between the Company and Transamerica Leasing, Inc. (incorporated
herein by reference to the Company's Form 8-K filed on November 3, 2000).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.30 |  | Chassis Lease Agreement dated January 1, 2001 between The Ivy
Group and Trac Lease, Inc. (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2000).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.31 |  | Asset Purchase Agreement, dated as of January 26, 2001, by and
between Interpool, Inc. and Transport International Pool, Inc. (incorporated
herein by reference to the Company's Form 8-K filed on April 3, 2001).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.32 |  | Amendment No. 1 to the Asset Purchase Agreement, dated as of March
30, 2001, by and between the Company and Transport International Pool, Inc.
(incorporated herein by reference to the Company's Form 8-K filed on April 3,
2001).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.33 |  | Chassis Holdings I LLC Operating Agreement dated as of July 1, 2001
(incorporated herein by reference to the Company's Quarterly Report on Form
10-Q filed November 14, 2001).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.34 |  | Chassis Holdings I LLC Put/Call Agreement dated as of July 1, 2001
(incorporated herein by reference to the Company's Quarterly Report on Form
10-Q filed November 14, 2001).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.35 |  | Sale and Purchase Agreement between 211 College Road Associates and the
Company (incorporated herein by reference to the Company's Annual Report on
Form 10-K for the period ended December 31, 2001).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.36 |  | Third Amended and Restated Senior Loan and Security Agreement
dated as of December 17, 1997 among the Company, Trac Lease, Inc., Interpool
Limited, Interpool Finance Corp. with CoreStates Bank, N.A., as Agent, and PNC
Bank, National Association, as Co-Agent, and the Institutional Lenders listed
Herein, as Lenders (incorporated herein by reference to the Company's
Registration Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.37 |  | First Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of November 17, 1998 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.38 |  | Second Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of May 26, 2000 among the Company, Trac Lease, Inc.,
Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.39 |  | Third Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of July 20, 2000 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.40 |  | Fourth Amendment to Third Amended and Restated Senior Loan and
Security Agreement dated as of October 6, 2000 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with First Union National Bank
(Successor to CoreStates Bank, N.A.), as Agent, and PNC Bank, National
Association, as Co-Agent, and the Institutional Lenders listed Herein, as
Lenders (incorporated herein by reference to the Company's Registration
Statement on Form S-1 (Reg. No. 333-86370)).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.41 |  | Fifth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of August 23, 2002 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.42 |  | Sixth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of March 31, 2002 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.43 |  | Seventh Amendment to the Third Amended and Restated Senior Loan
and Security Agreement dated as of May 30, 2003 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.44 |  | Eighth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of July 31, 2003 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.45 |  | Ninth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of October 31, 2003 among the Company, Trac Lease,
Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank, National
Association (successor to CoreStates Bank, N.A. and f/k/a First Union National
Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and the
Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.46 |  | Tenth Amendment to the Third Amended and Restated Senior Loan and
Security Agreement dated as of January 8, 2004 among the Company, Trac
Lease, Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank,
National Association (successor to CoreStates Bank, N.A. and f/k/a First Union
National Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and
the Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.47 |  | Eleventh Amendment to the Third Amended and Restated Senior Loan
and Security Agreement dated as of February 25, 2004 among the Company, Trac
Lease, Inc., Interpool Limited, Interpool Finance Corp. with Wachovia Bank,
National Association (successor to CoreStates Bank, N.A. and f/k/a First Union
National Bank), as Agent, and PNC Bank, National Association, as Co-Agent, and
the Institutional Lenders listed herein, as Lenders (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.48 |  | Separation Agreement between Mitchell I. Gordon and Interpool,
Inc. dated as of July 15, 2003 (incorporated by reference to the Company's Form
8-K Filed on August 5, 2003).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.49 |  | Separation Agreement between Raoul Witteveen and Interpool, Inc.
dated as of August 10, 2004 (incorporated herein by reference to the Company's
Annual Report on Form 10-K for the period ended December 31, 2003).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.50 |  | Securities Purchase Agreement dated as of September 14, 2004 among
the Company and Greywolf Capital Partners II, LP, Greywolf Capital Overseas
Fund, Greywolf High Yield Masters Fund, Caspian Capital Partners, LP, Mariner
LDC, Mariner Opportunities Fund, LP, Mariner Voyager Master Fund LTD, Riva Ridge
Master Fund, LTD, Goldman, Sachs & Co. (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.51 |  | Warrant Agreement dated as of September 14, 2004, between the
Company and US Bank, as warrant agent (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.52 |  | Notes Registration Rights Agreement dates as of September 14, 2004
among the Company and Greywolf Capital Partners II, LP, Greywolf Capital
Overseas Fund, Greywolf High Yield Masters Fund, Caspian Capital Partners, LP,
Mariner LDC, Mariner Opportunities Fund, LP, Mariner Voyager Master Fund LTD,
Riva Ridge Master Fund, LTD, Goldman, Sachs & Co. (incorporated by reference
to the Company's report on Form 8-K filed on September 15, 2004).
|----- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.53 |  | Investor Rights Agreement dates as of September 14, 2004 among the
Company and Greywolf Capital Partners II, LP, Greywolf Capital Overseas Fund,
Greywolf High Yield Masters Fund, Caspian Capital Partners, LP, Mariner LDC,
Mariner Opportunities Fund, LP, Mariner Voyager Master Fund LTD, Riva Ridge
Master Fund, LTD, Goldman, Sachs & Co. (incorporated by reference to the
Company's report on Form 8-K filed on September 15, 2004).
|----- | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.54 |  | Amended and Restated Credit Agreement dated as of November 1, 2004
among Interpool Container Funding, SRL, the Company and Fortis Bank (Nederland)
N.V. (incorporated by reference to the Company's Form 10-Q for the quarter ended
June 30, 2004 filed on November 12, 2004).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.55 |  | Form of Note Purchase Agreement dated as of November 29, 2004
among the Company and eight institutional investors (incorporated by reference
to the Company's report on Form 8-K filed on December 2, 2004).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.56 |  | Form of Notes Registration Rights Agreement dated as of November
29, 2004 between the Company and eight institutional investors (incorporated by
reference to the Company's report on Form 8-K filed on December 2, 2004).
|----- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.57 |  | 2004 Stock Option Plan for Key Employees and Directors of
Interpool, Inc. (incorporated herein by reference to the
Company's Schedule 14A filed on November 24, 2004).
|----- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.58 |  | Interpool, Inc. 2004 Non-Qualified Stock Option Plan for
Non-Employee, Non-Officer Directors (incorporated herein by reference to the
Company's Schedule 14A filed on November 24, 2004).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.59 |  | Voting Agreement dated September 10, 2004.
|----- | - | ------------------------------------------

|10.60 |  | Revolving Credit Agreement dated as of December 29, 2004 among
Interpool Limited, DVB Bank N.V. and the Lenders named therein.
|----- | - | ------------------------------------------------------------------------------------------------------------------------------

|10.61 |  | Security Agreement dated as of December 29, 2004 made by Interpool
Limited in favor of DVB Bank N.V.
|----- | - | ----------------------------------------------------------------------------------------------------

|10.62 |  | Third Amended and Restated Credit Agreement dated as of March 15,
2005 among Interpool Container Funding, SRL, the Company, Fortis Bank
(Netherland) N.V. and the Lenders named therein (incorporated by reference to
the Company's report on Form 8-K filed March 23, 2005).
|----- | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.63 |  | Third Amended and Restated Servicing Agreement dated as of March
15, 2005 between Interpool Limited and Interpool Container Funding, SRL
(incorporated by reference to the Company's report on Form 8-K filed March 23,
2005).
|----- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.64 |  | Rule 10b5-1 Sales Plan between Martin Tuchman and Goldman, Sachs &
Co., dated as of March 16, 2005.
|----- | - | ---------------------------------------------------------------------------------------------------

|14.1 |  | Code of Business Conduct and Ethics (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2002).
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|21.1 |  | Subsidiaries of the Company (incorporated herein by reference to
the Company's Registration Statement on Form S-1 (Reg. No. 33-71538)).
|---- | - | ---------------------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification of Martin Tuchman.
|---- | - | --------------------------------

|31.2 |  | Certification of James F. Walsh.
|---- | - | --------------------------------

|32.1 |  | Certification of Martin Tuchman.
|---- | - | --------------------------------

|32.2 |  | Certification of James F. Walsh.
|---- | - | --------------------------------