##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

|           |  |                                                                                        
|---------- |  | ---------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                        
|[ X ]      |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2003OR

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

For the transition period from: ______________ to _______________

Commission file number: 0-24464

THE CRONOS GROUP

(Exact name of Registrant as specified in its charter)


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

16, ALLÉE MARCONI, BOÎTE POSTALE 260, L-2120 LUXEMBOURG
(Address of principal executive offices)(zip code)

Registrants telephone number, including area codes:
(352) 453145



---



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 [   ]

The number of Common Shares outstanding as of November 12, 2003:

|       |  |                             
|------ |  | ----------------------------
|Class  |  | Number of Shares Outstanding
|       |  |                             
|Common |  | 7,260,080                   





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TABLE OF CONTENTS



|                                |                                                                                                |                                                                                         |  |  |  |  |  | 
|------------------------------- | ---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I   FINANCIAL INFORMATION
|                                | Item 1   Financial Statements                                                                
|                                |                                                                                                | Management Representation                                                              
|                                |                                                                                                | Condensed Unaudited Consolidated Statements of Income                                  
|                                |                                                                                                | Condensed Unaudited Consolidated Balance Sheets                                        
|                                |                                                                                                | Condensed Unaudited Consolidated Statements of Cash Flows                              
|                                |                                                                                                | Consolidated Unaudited Statement of Shareholders Equity                               
|                                |                                                                                                | Notes to the Condensed Unaudited Consolidated Financial Statements                     
|                                | Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                |                                                                                                | General                                                                                
|                                |                                                                                                | Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002
|                                |                                                                                                | Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002  
|                                |                                                                                                | Liquidity and Capital Resources                                                        
|                                | Item 3  Quantitative and Qualitative Disclosures about Market Risk                           
|                                | Item 4  Controls and Procedures                                                              
|PART II  OTHER INFORMATION    
|                                | Item 1  Legal Proceedings                                                                    
|                                | Item 2  Changes in Securities and Use of Proceeds                                            
|                                | Item 3  Defaults Upon Senior Securities                                                      
|                                | Item 4  Submission of Matters to a Vote of Security Holders                                  
|                                | Item 5  Other Information                                                                    
|                                | Item 6  Exhibits and Reports on Form 8-K                                                     
|Signatures                     
|Exhibit Index                  
|Exhibit 10.1                   
|Exhibit 10.2                   
|Exhibit 10.3                   
|Exhibit 10.4                   
|Exhibit 10.5                   
|Exhibit 31.1                   
|Exhibit 31.2                   
|Exhibit 32                     



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##### Table of Contents



The Cronos Group

TABLE OF CONTENTS

|                               |  |                                                                                                 |    |  |    | 
|------------------------------ |  | ----------------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I  FINANCIAL INFORMATION |  |                                                                                                 | 1  | 
|                               |  | Item 1   FINANCIAL STATEMENTS                                                                  |    |  | 1  | 
|                               |  | Management Representation                                                                       |    |  | 1  | 
|                               |  | Condensed Unaudited Consolidated Statements of Income                                           |    |  | 2  | 
|                               |  | Condensed Unaudited Consolidated Balance Sheets                                                 |    |  | 3  | 
|                               |  | Condensed Unaudited Consolidated Statements of Cash Flows                                       |    |  | 4  | 
|                               |  | Consolidated Unaudited Statement of Shareholders Equity                                        |    |  | 5  | 
|                               |  | Notes to the Condensed Unaudited Consolidated Financial Statements                              |    |  | 6  | 
|                               |  | Item 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS |    |  | 13 | 
|                               |  | General                                                                                         |    |  | 13 | 
|                               |  | Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002         |    |  | 15 | 
|                               |  | Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002           |    |  | 16 | 
|                               |  | Liquidity and Capital Resources                                                                 |    |  | 17 | 
|                               |  | Item 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |    |  | 19 | 
|                               |  | Item 4   CONTROLS AND PROCEDURES                                                               |    |  | 19 | 
|PART II   OTHER INFORMATION   |  |                                                                                                 | 21 | 
|                               |  | Item 1   Legal Proceedings                                                                     |    |  | 21 | 
|                               |  | Item 2   Changes in Securities and Use of Proceeds                                             |    |  | 24 | 
|                               |  | Item 3   Defaults Upon Senior Securities                                                       |    |  | 24 | 
|                               |  | Item 4   Submission of Matters to a Vote of Security Holders                                   |    |  | 24 | 
|                               |  | Item 5   Other Information                                                                     |    |  | 24 | 
|                               |  | Item 6   Exhibits and Reports on Form 8-K                                                      |    |  | 24 | 





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##### Table of Contents



The Cronos Group




PART I   FINANCIAL INFORMATION




Item 1   Financial Statements




Management Representation

Unless the context indicates otherwise, the Company means The Cronos
Group and, where appropriate, includes its subsidiaries and predecessors, while
Cronos or the Group means The Cronos Group together with its subsidiaries
and predecessors.

The unaudited condensed consolidated interim financial statements included
herein have been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC). Certain information and
disclosures normally included in annual financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to such rules and
regulations.

These condensed consolidated financial statements should be read in
conjunction with the financial statements and the notes thereto included in the
Companys latest Annual Report on Form 10-K.

This financial information reflects, in the opinion of management, all
adjustments necessary to present fairly, the results for the interim periods.
Such adjustments consist of only normal recurring adjustments. The results of
operations for such interim periods are not necessarily indicative of the
results to be expected for the full year.

1



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##### Table of Contents



The Cronos Group




Condensed Unaudited Consolidated Statements of Income

(US dollar amounts in thousands, except share amounts)

|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|-------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | -
|                                             |  | Three Months Ended |        | Nine Months Ended
|                                             |  | September 30,      |        | September 30,    
|                                             |  | 2003               |        | 2002              |  | 2003 |        | 2002
|                                             |  |                    |        |                   |  |      |        |     
|Gross lease revenue                          |  | $                  | 29,756 |                   |  | $    | 28,279 |      |  | $ | 87,135 |  |  | $ | 84,533 |  
|Equipment trading revenue                    |  |                    | 1,570  |                   |  |      | 27     |      |  |   | 3,015  |  |  |   | 608    |  
|Commissions, fees and other income:          |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|- Container Equity Programs                  |  |                    | 281    |                   |  |      | 309    |      |  |   | 838    |  |  |   | 929    |  
|- Unrelated parties                          |  |                    | 388    |                   |  |      | 679    |      |  |   | 1,977  |  |  |   | 2,624  |  
|Equity in earnings of affiliate              |  |                    | 514    |                   |  |      | 169    |      |  |   | 1,026  |  |  |   | 169    |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Total revenues                               |  |                    | 32,509 |                   |  |      | 29,463 |      |  |   | 93,991 |  |  |   | 88,863 |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Direct operating expenses                    |  |                    | 6,034  |                   |  |      | 6,482  |      |  |   | 18,925 |  |  |   | 21,456 |  
|Payments to Managed Container Owners:        |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|- Container Equity Programs                  |  |                    | 6,393  |                   |  |      | 4,592  |      |  |   | 16,930 |  |  |   | 12,626 |  
|- Other Managed Container Owners             |  |                    | 9,243  |                   |  |      | 9,300  |      |  |   | 27,322 |  |  |   | 26,907 |  
|Equipment trading expenses                   |  |                    | 1,453  |                   |  |      | 27     |      |  |   | 2,761  |  |  |   | 545    |  
|Depreciation and amortization                |  |                    | 3,656  |                   |  |      | 3,878  |      |  |   | 10,939 |  |  |   | 11,616 |  
|Selling, general and administrative expenses |  |                    | 3,519  |                   |  |      | 3,434  |      |  |   | 11,118 |  |  |   | 10,204 |  
|Interest expense                             |  |                    | 1,035  |                   |  |      | 1,531  |      |  |   | 3,376  |  |  |   | 4,834  |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Total expenses                               |  |                    | 31,333 |                   |  |      | 29,244 |      |  |   | 91,371 |  |  |   | 88,188 |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Income before income taxes                   |  |                    | 1,176  |                   |  |      | 219    |      |  |   | 2,620  |  |  |   | 675    |  
|Income taxes provision (benefit)             |  |                    | 300    |                   |  |      |       |      |  |   | 766    |  |  |   | (2,325 | )
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Net income                                   |  |                    | 876    |                   |  |      | 219    |      |  |   | 1,854  |  |  |   | 3,000  |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Basic net income per common share            |  | $                  | 0.12   |                   |  | $    | 0.03   |      |  | $ | 0.25   |  |  | $ | 0.41   |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  
|Diluted net income per common share          |  | $                  | 0.12   |                   |  | $    | 0.03   |      |  | $ | 0.25   |  |  | $ | 0.40   |  
|                                             |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        |  

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

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The Cronos Group




Condensed Unaudited Consolidated Balance Sheets

(US dollar amounts in thousands, except share amounts)

|                                                        |  |               |         |              |  |   |         |  
|------------------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------- | -
|                                                        |  | September 30, |         | December 31,
|                                                        |  | 2003          |         | 2002        
|Assets                                                  |  |               |         |              |  |   |         |  
|Cash and cash equivalents                               |  | $             | 3,275   |              |  | $ | 4,626   |  
|Restricted cash                                         |  |               | 452     |              |  |   | 493     |  
|Amounts due from lessees, net                           |  |               | 22,615  |              |  |   | 22,580  |  
|Amounts receivable from container owners                |  |               | 7,167   |              |  |   | 7,542   |  
|New container equipment for resale                      |  |               | 11,514  |              |  |   | 2,570   |  
|Net investment in direct financing leases               |  |               | 7,872   |              |  |   | 7,912   |  
|Investment in unconsolidated affiliate                  |  |               | 7,303   |              |  |   | 3,603   |  
|Container equipment, net                                |  |               | 127,745 |              |  |   | 136,926 |  
|Other equipment, net                                    |  |               | 585     |              |  |   | 513     |  
|Goodwill                                                |  |               | 11,038  |              |  |   | 11,038  |  
|Other intangible assets, net                            |  |               | 768     |              |  |   | 909     |  
|Other assets                                            |  |               | 14,050  |              |  |   | 15,477  |  
|                                                        |  |               |         |              |  |   |         |  
|Total assets                                            |  | $             | 214,384 |              |  | $ | 214,189 |  
|                                                        |  |               |         |              |  |   |         |  
|Liabilities and shareholders equity                    |  |               |         |              |  |   |         |  
|Amounts payable to container owners                     |  | $             | 19,264  |              |  | $ | 18,583  |  
|Amounts payable to container manufacturers              |  |               | 14,466  |              |  |   | 8,590   |  
|Direct operating expense payables and accruals          |  |               | 4,947   |              |  |   | 5,071   |  
|Debt and capital lease obligations                      |  |               | 93,502  |              |  |   | 100,997 |  
|Current and deferred income taxes                       |  |               | 5,494   |              |  |   | 5,536   |  
|Deferred income and unamortized acquisition fees        |  |               | 4,655   |              |  |   | 5,201   |  
|Other amounts payable and accrued expenses              |  |               | 6,542   |              |  |   | 6,005   |  
|                                                        |  |               |         |              |  |   |         |  
|Total liabilities                                       |  |               | 148,870 |              |  |   | 149,983 |  
|                                                        |  |               |         |              |  |   |         |  
|Shareholders equity                                    |  |               |         |              |  |   |         |  
|Common shares issued and outstanding (7,372,080 shares) |  |               | 14,744  |              |  |   | 14,744  |  
|Additional paid-in capital                              |  |               | 46,839  |              |  |   | 47,125  |  
|Common shares held in treasury (112,000 shares)         |  |               | (297    | )            |  |   | (37     | )
|Restricted retained earnings                            |  |               | 1,832   |              |  |   | 1,832   |  
|Retained earnings                                       |  |               | 2,396   |              |  |   | 542     |  
|                                                        |  |               |         |              |  |   |         |  
|Total shareholders equity                              |  |               | 65,514  |              |  |   | 64,206  |  
|                                                        |  |               |         |              |  |   |         |  
|Total liabilities and shareholders equity              |  | $             | 214,384 |              |  | $ | 214,189 |  
|                                                        |  |               |         |              |  |   |         |  

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

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The Cronos Group




Condensed Unaudited Consolidated Statements of Cash Flows

(US dollar amounts in thousands, except share amounts)

|                                                              |  |                   |         |      |  |   |         |  
|------------------------------------------------------------- |  | ----------------- | ------- | ---- |  | - | ------- | -
|                                                              |  | Nine Months Ended
|                                                              |  | September 30,    
|                                                              |  | 2003              |         | 2002
|                                                              |  |                   |         |     
|Net cash provided by operating activities                     |  | $                 | 16,089  |      |  | $ | 16,064  |  
|                                                              |  |                   |         |      |  |   |         |  
|Cash flows from investing activities                          |  |                   |         |      |  |   |         |  
|Purchase of container equipment                               |  |                   | (13,547 | )    |  |   | (14,515 | )
|Purchase of property and other equipment                      |  |                   | (240    | )    |  |   |        |  
|Investment in unconsolidated affiliate                        |  |                   | (1,675  | )    |  |   |        |  
|Investment in direct finance lease equipment                  |  |                   | (82     | )    |  |   | (1,093  | )
|Proceeds from sales of container and other equipment          |  |                   | 8,452   |      |  |   | 11,759  |  
|                                                              |  |                   |         |      |  |   |         |  
|Net cash used in investing activities                         |  |                   | (7,092  | )    |  |   | (3,849  | )
|                                                              |  |                   |         |      |  |   |         |  
|Cash flows from financing activities                          |  |                   |         |      |  |   |         |  
|Proceeds from issuance of term debt                           |  |                   | 15,024  |      |  |   | 16,345  |  
|Repayments of term debt and capital lease obligations         |  |                   | (24,712 | )    |  |   | (27,162 | )
|Shares repurchased                                            |  |                   | (260    | )    |  |   |        |  
|Dividend paid                                                 |  |                   | (441    | )    |  |   |        |  
|Cash deposits (restricted)                                    |  |                   | 41      |      |  |   | (41     | )
|                                                              |  |                   |         |      |  |   |         |  
|Net cash used in financing activities                         |  |                   | (10,348 | )    |  |   | (10,858 | )
|                                                              |  |                   |         |      |  |   |         |  
|Net (decrease) increase in cash and cash equivalents          |  |                   | (1,351  | )    |  |   | 1,357   |  
|Cash and cash equivalents at beginning of period              |  |                   | 4,626   |      |  |   | 4,914   |  
|                                                              |  |                   |         |      |  |   |         |  
|Cash and cash equivalents at end of period                    |  | $                 | 3,275   |      |  | $ | 6,271   |  
|                                                              |  |                   |         |      |  |   |         |  
|Supplementary disclosure of cash flow information:            |  |                   |         |      |  |   |         |  
|Cash paid during the period for:                              |  |                   |         |      |  |   |         |  
|- interest                                                    |  | $                 | 3,030   |      |  | $ | 4,274   |  
|- income taxes                                                |  |                   | 953     |      |  |   | 434     |  
|Cash received during the period for:                          |  |                   |         |      |  |   |         |  
|- dividends                                                   |  |                   |        |      |  |   | 1,125   |  
|- interest                                                    |  |                   | 220     |      |  |   | 225     |  
|- income taxes                                                |  |                   | 60      |      |  |   | 1,016   |  
|Non-cash activities:                                          |  |                   |         |      |  |   |         |  
|- container equipment acquired under capital lease            |  |                   | 1,626   |      |  |   | 6,962   |  
|- direct finance lease equipment acquired under capital lease |  |                   | 567     |      |  |   | 626     |  
|- container equipment contributed to Joint Venture Program    |  |                   | 999     |      |  |   | 4,672   |  

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

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The Cronos Group




Consolidated Unaudited Statement of Shareholders Equity

(US dollar amounts in thousands, except share amounts)

Nine months ended September 30, 2003

|                                     |  |        |        |         |  |             |        |          |  |            |      |               |  |   |       |       |  |   |       |  |  |   |        |  
|------------------------------------ |  | ------ | ------ | ------- |  | ----------- | ------ | -------- |  | ---------- | ---- | ------------- |  | - | ----- | ----- |  | - | ----- |  |  | - | ------ | -
|                                     |  |        |        |         |  | Additional  |        | Common   |  | Restricted |      |               |  |   |       | Total
|                                     |  | Common |        | paid-in |  | shares held |        | retained |  | Retained   |      | shareholders
|                                     |  | shares |        | capital |  | in treasury |        | earnings |  | earnings   |      | equity       
|Balance,
December 31, 2002           |  | $      | 14,744 |         |  | $           | 47,125 |          |  | $          | (37  | )             |  | $ | 1,832 |       |  | $ | 542   |  |  | $ | 64,206 |  
|Amortization of
employee share
grant |  |        |        |         |  |             | 8      |          |  |            |      |               |  |   |       |       |  |   |       |  |  |   | 8      |  
|Declaration of
dividend              |  |        |        |         |  |             | (294   | )        |  |            |      |               |  |   |       |       |  |   |       |  |  |   | (294   | )
|Purchase of
treasury shares          |  |        |        |         |  |             |        |          |  |            | (260 | )             |  |   |       |       |  |   |       |  |  |   | (260   | )
|Net income                           |  |        |        |         |  |             |        |          |  |            |      |               |  |   |       |       |  |   | 1,854 |  |  |   | 1,854  |  
|                                     |  |        |        |         |  |             |        |          |  |            |      |               |  |   |       |       |  |   |       |  |  |   |        |  
|Balance,
September 30, 2003          |  | $      | 14,744 |         |  | $           | 46,839 |          |  | $          | (297 | )             |  | $ | 1,832 |       |  | $ | 2,396 |  |  | $ | 65,514 |  
|                                     |  |        |        |         |  |             |        |          |  |            |      |               |  |   |       |       |  |   |       |  |  |   |        |  

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

5



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##### Table of Contents






Notes to the Condensed Unaudited Consolidated Financial Statements

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

1.       The condensed unaudited consolidated financial statements include the
accounts of The Cronos Group and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.



|2. |  | Stock-Based Compensation (US dollar amounts in thousands, except share
and per share amounts)
|-- |  | ---------------------------------------------------------------------------------------------

The Group has adopted disclosure requirements under Statement of Financial
Accounting Standards (SFAS) No. 123 (SFAS 123) Accounting for Stock-Based
Compensation, but continues to account for stock-based compensation under
Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock
Issued to Employees. Under APB 25, compensation expense is measured by the
difference between the quoted market price of the stock at the date of the
grant or award and the price, if any, to be paid by an employee and is
recognized as expense over the period in which the related services are
performed. In accordance with SFAS 123, the Company discloses the fair value
of its stock options, which is calculated based on the Black Scholes
option-pricing model.

In December 2002, the Financial Accounting Standards Board issued SFAS No.
148 (SFAS 148), Accounting for Stock-Based Compensation  Transition and
Disclosure. SFAS 148 provides alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
compensation. In addition, SFAS 148 amended the disclosure requirements of
SFAS 123 to require prominent disclosures in both annual and interim financial
statements of the method of accounting for stock-based employee compensation
and the method used to report results. The Company has adopted the disclosure
requirements of SFAS 148.

If the stock options had been accounted for under SFAS 123, the impact on
the Groups net income and net income per share would have been as follows:

|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|------------------------------------------------------ |  | ------------------ | ---- | ----------------- |  | ---- | ---- | ---- |  | - | ----- |  |  | - | ----- | 
|                                                       |  | Three Months Ended |      | Nine Months Ended
|                                                       |  | September 30,      |      | September 30,    
|                                                       |  | 2003               |      | 2002              |  | 2003 |      | 2002
|Net income:                                            |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|- as reported                                          |  | $                  | 876  |                   |  | $    | 219  |      |  | $ | 1,854 |  |  | $ | 3,000 | 
|- stock-based compensation
expense, net of tax effects |  |                    | 16   |                   |  |      | 34   |      |  |   | 100   |  |  |   | 220   | 
|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|- pro forma                                            |  | $                  | 860  |                   |  | $    | 185  |      |  | $ | 1,754 |  |  | $ | 2,780 | 
|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|Basic net income per share:                            |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|- as reported                                          |  | $                  | 0.12 |                   |  | $    | 0.03 |      |  | $ | 0.25  |  |  | $ | 0.41  | 
|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|- pro forma                                            |  | $                  | 0.12 |                   |  | $    | 0.03 |      |  | $ | 0.24  |  |  | $ | 0.38  | 
|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|Diluted net income per share:                          |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|- as reported                                          |  | $                  | 0.12 |                   |  | $    | 0.03 |      |  | $ | 0.25  |  |  | $ | 0.40  | 
|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 
|- pro forma                                            |  | $                  | 0.12 |                   |  | $    | 0.02 |      |  | $ | 0.24  |  |  | $ | 0.37  | 
|                                                       |  |                    |      |                   |  |      |      |      |  |   |       |  |  |   |       | 

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|3. |  | Operating segment data
|-- |  | ----------------------

Condensed segment information is provided in the tables below:

|                                      |  |           |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|------------------------------------- |  | --------- | ------ | --------- |  | ---------- | ------ | ----- |  | - | ------- |  |  | - | ------- | 
|                                      |  |           |        |           |  | Other      |        |       |  |   |         |  |  |  
|                                      |  | Container |        | Managed   |  |            |        |       |  |   |         | 
|                                      |  | Equity    |        | Container |  | Owned      |        |       |  |  
|                                      |  | Programs  |        | Owners    |  | Containers |        | Total
|Three months ended September 30, 2003 |  |           |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|Gross lease revenue                   |  | $         | 9,114  |           |  | $          | 12,658 |       |  | $ | 7,984   |  |  | $ | 29,756  | 
|Segment profit (loss)                 |  |           | 613    |           |  |            | (728   | )     |  |   | 1,904   |  |  |   | 1,789   | 
|Segment assets at end of period       |  |           | 17,578 |           |  |            | 20,497 |       |  |   | 153,363 |  |  |   | 191,438 | 
|Three months ended September 30, 2002 |  |           |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|Gross lease revenue                   |  | $         | 7,460  |           |  | $          | 12,676 |       |  | $ | 8,143   |  |  | $ | 28,279  | 
|Segment profit (loss)                 |  |           | 307    |           |  |            | (860   | )     |  |   | 1,321   |  |  |   | 768     | 
|Segment assets at end of period       |  |           | 13,315 |           |  |            | 20,678 |       |  |   | 148,712 |  |  |   | 182,705 | 
|Nine months ended September 30, 2003  |  |           |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|Gross lease revenue                   |  | $         | 25,677 |           |  | $          | 37,759 |       |  | $ | 23,699  |  |  | $ | 87,135  | 
|Segment profit (loss)                 |  |           | 1,409  |           |  |            | (2,191 | )     |  |   | 5,384   |  |  |   | 4,602   | 
|Segment assets at end of period       |  |           | 17,578 |           |  |            | 20,497 |       |  |   | 153,363 |  |  |   | 191,438 | 
|Nine months ended September 30, 2002  |  |           |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|Gross lease revenue                   |  | $         | 21,812 |           |  | $          | 37,874 |       |  | $ | 24,847  |  |  | $ | 84,533  | 
|Segment profit (loss)                 |  |           | 656    |           |  |            | (2,888 | )     |  |   | 4,372   |  |  |   | 2,140   | 
|Segment assets at end of period       |  |           | 13,315 |           |  |            | 20,678 |       |  |   | 148,712 |  |  |   | 182,705 | 

Reconciliation of segment profit for reportable segments to income before
income taxes:

|                                                         |  |                    |       |                   |  |      |      |      |  |   |        |   |  |   |        |  
|-------------------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ---- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                         |  | Three Months Ended |       | Nine Months Ended
|                                                         |  | September 30,      |       | September 30,    
|                                                         |  | 2003               |       | 2002              |  | 2003 |      | 2002
|Segment profit                                           |  | $                  | 1,789 |                   |  | $    | 768  |      |  | $ | 4,602  |   |  | $ | 2,140  |  
|Unallocated selling,
general and administrative
expenses |  |                    | (566  | )                 |  |      | (502 | )    |  |   | (1,841 | ) |  |   | (1,324 | )
|Amortization of intangibles                              |  |                    | (47   | )                 |  |      | (47  | )    |  |   | (141   | ) |  |   | (141   | )
|                                                         |  |                    |       |                   |  |      |      |      |  |   |        |   |  |   |        |  
|Income before income taxes                               |  | $                  | 1,176 |                   |  | $    | 219  |      |  | $ | 2,620  |   |  | $ | 675    |  
|                                                         |  |                    |       |                   |  |      |      |      |  |   |        |   |  |   |        |  

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|4. |  | Earnings per common share (US dollar amounts in thousands, except share and
per share amounts)
|-- |  | ----------------------------------------------------------------------------------------------

The components of basic and diluted net income per share were as follows:

|                                             |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 
|-------------------------------------------- |  | ------------------ | --------- | ----------------- |  | ---- | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                             |  | Three Months Ended |           | Nine Months Ended
|                                             |  | September 30,      |           | September 30,    
|                                             |  | 2003               |           | 2002              |  | 2003 |           | 2002
|Net income available for common shareholders |  | $                  | 876       |                   |  | $    | 219       |      |  | $ | 1,854     |  |  | $ | 3,000     | 
|                                             |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 
|Average outstanding shares of common stock   |  |                    | 7,307,392 |                   |  |      | 7,364,580 |      |  |   | 7,342,517 |  |  |   | 7,364,580 | 
|Dilutive effect of:                          |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 
|- Executive officer common share options     |  |                    |          |                   |  |      |          |      |  |   |          |  |  |   | 15        | 
|- Non-Employee Directors Equity Plan         |  |                    | 154,494   |                   |  |      | 66,144    |      |  |   | 118,730   |  |  |   | 54,402    | 
|                                             |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 
|Common stock and common stock equivalents    |  |                    | 7,461,886 |                   |  |      | 7,430,724 |      |  |   | 7,461,247 |  |  |   | 7,418,997 | 
|                                             |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 
|Basic net income per share                   |  | $                  | 0.12      |                   |  | $    | 0.03      |      |  | $ | 0.25      |  |  | $ | 0.41      | 
|                                             |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 
|Diluted net income per share                 |  | $                  | 0.12      |                   |  | $    | 0.03      |      |  | $ | 0.25      |  |  | $ | 0.40      | 
|                                             |  |                    |           |                   |  |      |           |      |  |   |           |  |  |   |           | 



|5. |  | Amounts receivable from container owners
|-- |  | ----------------------------------------

Amounts receivable from container owners include amounts due from related
parties of $3.2 million and $3.4 million at September 30, 2003, and December
31, 2002, respectively.



|6. |  | Investments in related parties
|-- |  | ------------------------------

Investments in related parties are accounted for as part of the Container
Equity Program segment and take two forms:

Under the first form, Cronos raised capital through investment syndication
activities from 1979 to 1997 by organizing and sponsoring public limited
partnership offerings. Cronos sponsored sixteen public limited partnerships
and raised over $478 million from over 37,000 investors, providing the means to
purchase 181,000 TEU of dry cargo containers, 3,500 TEU of refrigerated
containers and 300 TEU of tank containers. A majority of the limited partners
in a partnership can remove the general partner, thereby terminating the
agreement with Cronos. However, upon any such removal, the general partner is
entitled to payment, generally over five years, of the present fair market
value of its interest in the partnership. At September 30, 2003, eight
sponsored funds remained in existence and are accounted for using the equity
method. The subsidiary of the Company that acts as a general partner maintains
insurance for bodily injury, death and property damage for which a partnership
may be liable, and may be contingently liable for uninsured obligations of the
partnerships. The investment in US Limited Partnerships was $nil at both
September 30, 2003, and December 31, 2002.

Under the second form, the Group has a 50% equity investment in a joint
venture container purchase entity (the Joint Venture Program). The Joint
Venture Program operates as a bankruptcy-remote special purpose entity
organized under the laws of Bermuda and is accounted for using the equity
method. At September 30, 2003, the Joint Venture Program had total assets of
$61.2 million. The investment in the joint venture entity, which represents
the maximum exposure to loss for Cronos, was $7.3 million and $3.6 million at
September 30, 2003, and December 31, 2002, respectively.

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|7. |  | Container equipment
|-- |  | -------------------

Container equipment is net of accumulated depreciation of $91.5 million
and $91.7 million at September 30, 2003, and December 31, 2002, respectively.

The Group reviews its Owned Container equipment when changes in
circumstances require consideration as to whether the carrying value of the
equipment has become impaired, pursuant to SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Management considers assets to
be impaired if the carrying value of the asset exceeds the future projected
cash flows from related operations (undiscounted and without interest charges).
When impairment is deemed to exist, the assets are written down to fair value
or projected discounted cash flows from related operations. The Group
periodically evaluates future cash flows and potential impairment of its fleet
by container type rather than for each individual container. Therefore, future
losses could result for individual container dispositions due to various
factors including age, condition, suitability for continued leasing, as well as
geographic location of the containers where disposed. In addition, subjective
management judgement is required in estimating future cash flows from container
operations. Accordingly, the estimates may not be indicative of the amounts
that may be realized in future periods.



|8. |  | Amounts payable to container owners
|-- |  | -----------------------------------

Amounts payable to container owners include amounts payable to related
parties of $8.9 million and $8.2 million at September 30, 2003, and December
31, 2002, respectively.



|9. |  | Debt and capital lease obligations
|-- |  | ----------------------------------

Debt and capital lease obligations are secured by container equipment and
include amounts due within twelve months of $10.2 million and $13.1 million at
September 30, 2003, and December 31, 2002, respectively. Interest rates under
these facilities range from 2.7% to 8.6% and they extend to various dates
through 2013. At September 30, 2003, the Group had provided guarantees for the
payment of $93.5 million of outstanding debt and capital lease obligations,
plus related interest.



|10. |  | Commitments and contingencies (to be read in conjunction with Note 13 to
the Companys 2002 Consolidated Financial Statements on Form 10-K)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------



|i. |  | Commitments
|-- |  | -----------

At September 30, 2003, the Group had outstanding orders to purchase $6
million of container equipment.



|ii. |  | Guarantee to US Limited Partnership
|--- |  | -----------------------------------

During 2000, the Group provided an unsecured guarantee to a US Limited
Partnership under a $5 million third-party loan note (the Note), which has a
2006 maturity date. Under the terms of the guarantee, the Group may be liable
for any principal and interest outstanding under the terms of the Note in the
event of a default by the US Limited Partnership. At September 30, 2003, the
balance outstanding under the Note was $2.3 million.



|iii. |  | Guarantee of third-party loan and rent support agreement
|---- |  | --------------------------------------------------------

During 1996 and 1997, the Group sold a total of $26.3 million of
equipment, which was under a direct finance lease with a major shipping line,
to a third-party. The third-party financed the acquisition of this equipment
with a loan of $26.3 million, with a January 2004 maturity date, to which the
Group provided a first loss guarantee for 20% of the outstanding debt. The
Group can collateralize up to 50% of the guarantee with a first security
interest in additional equipment. At September 30, 2003, the balance
outstanding under the loan was $0.2 million. In addition, under the terms of a
rent support agreement for which Cronos earns a fee of $0.1 million per annum,
the Group is required to deposit an amount equal to the aggregate of all rental
charges

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scheduled to be paid under the direct finance lease until the end of
the lease upon the occurrence of a continuing event of default by the shipping
line. At September 30, 2003, there were $0.1 million of rental charges
remaining until the scheduled expiry date in January 2004.

iv.        Guarantee under a purchase, assignment and agency agreement

During 1996, the Group entered into a term lease with a lessee. During
1997, the containers held under the lease were sold, and the lease was assigned
to a financial institution. The transaction was accounted for as a sale. As
part of this contract, the Group continues to manage the containers held under
the term lease and invoices the lessee and collects monies on behalf of the
financial institution. Rental under the lease is approximately $0.5 million
per annum of which the Group remits $0.4 million to the financial institution
as rent and $0.1 million to a retention account held as security by the
institution. As compensation for this service, the Group earns an agency fee.
Under the terms of the contract with the financial institution, if the lessee
fails to make payments, other than in the event of being declared bankrupt, the
Group has provided an unsecured guarantee that it will continue to make
payments to the financial institution. The guarantee and agreement with the
financial institution will expire in 2005.

v.        Guarantees under fixed non-cancellable operating leases

Cronos, as lessee, has entered into secured fixed operating lease
contracts for container equipment under which it has guaranteed the payment of
the future minimum lease obligations. As of September 30, 2003, the future
minimum annual lease payments under these non-cancellable operating leases
were:

|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2004                |  | $ | 7,713  | 
|2005                |  |   | 6,581  | 
|2006                |  |   | 8,440  | 
|2007                |  |   | 2,563  | 
|2008                |  |   | 2,563  | 
|2009 and thereafter |  |   | 13,154 | 
|                    |  |   |        | 
|Total               |  | $ | 41,014 | 
|                    |  |   |        | 

vi.       Agreements
with Other Managed Container Owners  early termination
options

Approximately 53% (based on original equipment cost) of the agreements
(the Agreements) with Other Managed Container Owners contain early
termination options, whereby the container owner may terminate the Agreement if
certain performance thresholds are not achieved. At September 30, 2003,
approximately 39% (based on original equipment cost) of total Agreements were
eligible for early termination. Cronos believes that early termination of
these Agreements by the Other Managed Container Owners is unlikely.

vii.       Agreements
with Other Managed Container Owners  change of control
provisions

Approximately 58% (based on original equipment cost) of Agreements with
Other Managed Container Owners provide that a change in ownership of the Group,
without the prior consent of the container owner, may constitute an event of
default under the Agreement. In substantially all of these Agreements, the
consent of the container owners may not be unreasonably withheld. In the event
that consent is not obtained, 33% of total Agreements may require the Group to
transfer possession of the equipment to another equipment manager. Such
transfer of possession may result in the Group incurring certain costs. The
remaining 25% of total Agreements may require the Group to purchase the
equipment from the container owners pursuant to the terms of their respective
Agreements, generally a stipulated percentage (determined by age of the
equipment) of the original cost of the equipment.

10



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viii.        Contingencies  Disputes with Contrin Holding S.A.

Since 1983, the Group has managed containers for Austrian investment
entities sponsored by companies owned or controlled by Contrin Holding S.A., a
Luxembourg holding company, and for Contrin Holding S.A. itself (collectively,
Contrin).

As described further below, the Group is in litigation with Contrin over
funds that Contrin claims to have remitted to the Group for the purchase of
containers. Contrin claims that in 1994 it transmitted $2.6 million to the
Group for the purchase of containers. The Group did not receive these funds
and believes that the funds were diverted to an account controlled by Stefan M.
Palatin, a former chairman and chief executive officer of the Group, and that
this was known or should have been known by Contrin.

In December 1997, the Group recorded an accrual of $3.4 million relating
to the alleged transfer of $2.6 million, the related interest, plus the
estimated settlement costs of this and other claims by Contrin. On September
30, 2003, the balance of this accrual was $3 million.

On August 8, 2000, Contrin, through an affiliate, Contrin Worldwide
Container Leasing GmbH (CWC) filed an action in the Luxembourg District Court
against the Company, seeking recovery of $2.6 million, together with interest
and costs. On January 10, 2001, the Company responded to Contrins complaint,
requesting that the District Court dismiss the proceeding for lack of
jurisdiction over the dispute, and denying Contrins claims on the merits.
Since January 10, 2001, the parties have supplemented their pleadings and filed
documentary evidence with the court to respond to assertions made by the other
party. No date has been set for a final hearing on CWCs claims against the
Company.

On September 26, 2002, the Company issued its intervening summons in the
proceeding, naming Mr. Palatin, his wife, and Klamath Enterprises, S.A.
(Klamath) as cross-defendants. By its intervening summons, the Company
claims the right to indemnity from the Palatins and Klamath for any liability
imposed upon the Company in favour of Contrin on Contrins claims against the
Company. Klamath is a Panamanian company and the record owner of an estate
located in Amersham, England. The Company alleges that a substantial portion
of the $2.6 million transferred by Contrin for the purchase of containers was
diverted by the Palatins to improve and furnish the Amersham estate, in which
they lived in 1994, and that Mr. Palatin is the beneficial owner of Klamath.
The Company has served the summons on Klamath and is currently in the process
of serving the summons on the Palatins. Once served, the cross-defendants will
have the opportunity to file responsive pleadings and evidence. Klamath,
through its Austrian counsel, has indicated that it will challenge the
jurisdiction of the Luxembourg court over it.

In anticipation of the filing of Contrins claims against the Company in
Luxembourg, the Group, in June of 2000, filed claims for indemnity against Mr.
Palatin and his wife in the High Court of Justice, London, England, and in July
2000, separately, a claim against Barclays Bank PLC (Barclays). Barclays was
the bank that received the $2.6 million from Contrin. For a description of
these claims, see Legal Proceedings.

On August 2, 2001, CWC filed a separate claim against Cronos Containers
N.V. (CNV), a wholly owned Netherlands Antilles subsidiary of the Company, in
the High Court of Justice, London, England. By its claim, Contrin asserts that
CNV, wrongfully and in violation of the container management agreement between
Contrin and CNV, failed to distribute to Contrin $0.5 million in distributions
for the second through fourth calendar quarters of 1996. Contrin seeks
recovery of this sum, plus interest. On December 31, 2001, CNV filed its
defence to CWCs claim, denying CWCs claims and denying that CNV is liable to
CWC in any amount. The trial of CWCs claim, scheduled for December 8, 2003,
has been postponed.

Concurrently with the filing of its defence to CWCs claims, CNV filed a
separate claim against the Palatins and Klamath, seeking recovery of $0.5
million from the Palatins that CNV alleges was misappropriated from CNV by Mr.
Palatin. For the status of this separate claim by CNV against the Palatins and
Klamath, see Legal Proceedings.

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On September 18, 2002, three Austrian affiliates of Contrin filed a claim
against CNV in the High Court of Justice, London, England (the Disposals
Claim). The claimants asserted that CNV breached container management
agreements entered into in 1993 by selling containers without obtaining the
consent of the claimants, in violation of the terms of the container management
agreements. The claimants asserted that they were entitled to all sums
received by CNV from the sale of containers wrongfully disposed of under the
container management agreements or, alternatively, that CNV was liable for
damages for wrongfully depriving the claimants of the use and possession of the
containers sold. On October 3, 2003, the parties to the Disposals Claim
settled the action. CNV agreed to pay the claimants $0.3 million in return for
a dismissal of the Disposals Claim and a release by the claimants of CNV of all
claims asserted by the claimants in the Disposals Claim. CNV made the
settlement payment to the claimants on November 5, 2003. In this regard, a
charge of $0.3 million has been included in the results of operations for the
nine months to September 30, 2003.

Contrin has also asserted an interest in the containers managed by the
Group for Transocean Equipment Manufacturing and Trading Limited (TOEMT) and
in the distributions payable with respect to such containers, as discussed
below.

Management considers that prudent provision has been made in the financial
statements for the Contrin matters noted above. There is a reasonable
possibility that a material change could occur with respect to these
commitments and contingencies within one year of the date of these financial
statements. In such an event, management estimates that possible losses could
exceed the amount accrued by $2.5 million.

ix.       TOEMT

TOEMT, which is currently in liquidation in the United Kingdom, has been
separately registered by the same name in both the United Kingdom and in the
Isle of Man. At September 30, 2003, the Group had $1.3 million in amounts
payable to TOEMT on deposit in a bank account pending clarification of the
proper claimants to the distributions payable with respect to the containers
owned by TOEMT. Contrin has provided the Group with copies of default
judgements that Contrin secured in January and June 2001 from the Commercial
Court of Vienna, Austria, against TOEMT, the UK company, in the amount of $0.1
million, and against TOEMT, the Isle of Man company, in the amount of $0.4
million. Contrin has retained separate UK insolvency counsel, and has now also
placed TOEMT, the Isle of Man Company, in liquidation. Contrin has claimed an
entitlement to all of the distributions that the Group has set aside with
respect to the TOEMT containers, and its insolvency counsel, which also
represents the liquidator of both TOEMT (UK) and TOEMT (Isle of Man), has
requested an accounting and extensive information on the Groups management of
the containers for TOEMT. Until clarification is secured by the court
overseeing the liquidations of TOEMT (UK) and TOEMT (Isle of Man) and/or
through agreement with the liquidator of the two TOEMTs, the Group presently
intends to continue to set aside the distributions due and payable by the Group
on the containers it manages for TOEMT.



|11. |  | New accounting pronouncements
|--- |  | -----------------------------

In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires (i) that for financial statements issued after the
issuance of FIN 45, certain disclosures be made by the guarantor in its
financial statements and (ii) that for guarantees issued after December 31,
2002 a guarantor recognize, at the inception of a guarantee, a liability for
the fair value of the obligation undertaken in issuing the guarantee.
Accounting for guarantees issued prior to the initial application of FIN 45
shall not be revised or restated to reflect the recognition or measurement
provisions of FIN 45.

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities. FIN 46 is applicable immediately to any variable interest entity
created after January 31, 2003, and must be applied in the first fiscal year or
interim period after December 15, 2003, for an interest in a variable interest
entity that was acquired before February 1, 2003.

12



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The Group holds a 0.01% share in a variable interest entity to which it
sold $49.7 million of containers in a series of transactions in prior years.
The containers comprise the sole assets of the entity and are managed by Cronos
in return for a management fee. In addition, the Group holds a non-interest
bearing loan note and an option to acquire 75% of the container owning company
in August 2006 for one US dollar. The loan note is subordinate to other loan
notes due to third-parties and falls due for repayment after the other loan
notes have been repaid from funds generated from the containers. At September
30, 2003, the carrying value of the amounts receivable from the container
owning company, which represent the maximum exposure to loss for Cronos as a
result of its involvement with the entity, totalled $9.3 million. The Group is
currently evaluating the interests it holds in this variable interest entity
together with a number of interests held in other entities to determine the
impact on its financial position and results of operation of adopting FIN 46.

In April 2003, the Financial Accounting Standards Board issued SFAS No.
149 (SFAS 149), Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. The Statement amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for other hedging activities under Statement 133. SFAS
149 is effective for contracts entered into or modified after June 30, 2003,
and for hedging relationships designated after June 30, 2003. The Group is
evaluating SFAS 149 but does not believe it will have an impact on its
financial statements.

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (SFAS 150). This statement establishes standards for
how an issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability (or an
asset in some circumstances). Many of those instruments were previously
classified as equity. This statement 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. The
Company believes that SFAS 150 will not have a significant impact on its
financial statements.




Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations




General

The Group generates revenues by leasing to ocean carriers, marine
containers that are owned either by managed container programs (Managed
Container Owners), comprising Container Equity Programs and Other Managed
Container Owners, or by the Group itself (Owned Containers). These leases,
which generate most of the Groups revenues, are generally operating leases.

The following chart summarizes the composition of the Cronos fleet (based
on original equipment cost) at September 30 for each of the periods indicated:

|                               |  |      |     |      |  |  |     |  
|------------------------------ |  | ---- | --- | ---- |  |  | --- | -
|                               |  | 2003 |     | 2002
|Container Equity Programs      |  |      | 33  | %    |  |  | 31  | %
|Other Managed Container Owners |  |      | 41  | %    |  |  | 44  | %
|Owned Containers               |  |      | 26  | %    |  |  | 25  | %
|                               |  |      |     |      |  |  |     |  
|Total                          |  |      | 100 | %    |  |  | 100 | %
|                               |  |      |     |      |  |  |     |  

All containers, whether owned or managed, are operated as part of a single
fleet. The Group has discretion over which ocean carriers, container
manufacturers and suppliers of goods and services it deals with. Since the
Groups management agreements with the Managed Container Owners meet the
definition of leases in SFAS No. 13 (SFAS 13) Accounting for Leases, they
are accounted for in the Groups financial statements as leases under which the
Managed Container Owners are lessors and the Group is lessee. In the nine
months ended September 30, 2003, 88% of payments to Managed Container Owners
represented agreements which generally provided that the amounts payable to
container owners were based upon the rentals

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to ocean carriers after deducting
direct operating expenses and a management fee. The remaining 12% of payments
to Managed Container Owners represented agreements under which there were fixed
payment terms.

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The following chart summarizes the composition of the Cronos fleet (in
thousands), based on twenty-foot equivalent units (TEU), by equipment type,
at September 30 for each of the periods indicated:

|                      |                                         |  |       |      |      |  |       |     | 
|--------------------- | --------------------------------------- |  | ----- | ---- | ---- |  | ----- | --- | 
|                      |                                         |  | 2003  |      | 2002
|Dry Cargo             |                                         |  | 366.0 |      |      |  | 362.7 |    
|Refrigerated          |                                         |  | 12.5  |      |      |  | 13.6  |    
|Tank                  |                                         |  | 2.6   |      |      |  | 2.3   |    
|Dry Freight Specials: |                                         |  |       |      |      |  |       |    
|                      | Cellular Palletwide Containers (CPCs) |  |       | 11.2 |      |  |       | 7.4 | 
|                      | Rolltrailer                             |  |       | 2.8  |      |  |       | 2.7 | 
|                      | Other Dry Freight Specials              |  |       | 4.3  |      |  |       | 3.5 | 
|                      |                                         |  |       |      |      |  |       |    
|Total Fleet           |                                         |  | 399.4 |      |      |  | 392.2 |    
|                      |                                         |  |       |      |      |  |       |    

Favourable conditions in the global shipping markets together with a
number of Cronos marketing initiatives have resulted in strong demand for all
product types. Utilisation for the fleet was 87% at the end of September 2003,
an increase of 2% since the beginning of the year. The average utilisation
rate for the nine months ended September 30, 2003 was 86%, compared to 79% for
the comparable period in 2002. Lease rates have remained relatively stable
during the same time period. As a result of the strong leasing market and
several strategic container repositioning moves from low demand markets into
markets of higher demand, off-hire container inventories have declined by 12%
since January 2003. This has had the effect of increasing gross lease revenue
and at the same time, reducing direct operating expenses as storage and other
costs associated with off-hire containers declined.

During the first nine months of 2003, the Group added $47.4 million of new
equipment to its container fleet. The primary funding source was the Joint
Venture Program which acquired $35.9 million of the new production. Of the
total new equipment acquisitions, over 64% was invested in dry cargo
containers, primarily for term and direct finance leases. The Group added
$11.3 million of containers to its owned fleet, with $3 million each invested
in refrigerated containers, CPCs and tanks.




Three Months Ended September 30, 2003 Compared to Three Months Ended September 30, 2002

Gross lease revenueof $29.8 million for the three months ended September
30, 2003, increased by $1.5 million, or 5%, when compared to the corresponding
period of 2002. Gross lease revenue for dry cargo containers increased by $1
million, reflecting the higher volume of on-hire containers and the addition of
new equipment to the fleet. Similarly, gross lease revenue for CPCs,
rolltrailers and tanks increased by a total of $0.5 million during the period
as a result of the new investment undertaken in each of these products together
with strong market demand.

Equipment trading revenueof $1.6 million in the third quarter of 2003
represented transactions undertaken in which the Group used its relationships
with equipment manufacturers to assist third-parties to design and acquire
their own equipment and organize delivery to designated locations. Equipment
trading expenses of $1.5 million represented equipment and related costs for
this activity. The Group earned $0.1 million from equipment trading activity
during this period.

Commissions, fees and other incomefor the quarter ended September 30,
2003, were $0.7 million, a decline of $0.3 million, or 32%, when compared to
the same quarter in 2002. Direct finance lease income and unrealized exchange
gains recognized on Euro direct finance lease receivables each increased by
$0.1 million. Such increases were offset by declines of $0.2 million in CPC
licence fee income, $0.1 million in property rental income and a $0.2 million
reduction in fees earned on the disposal of managed containers reflecting the
settlement of the Disposal Claim (see Legal Proceedings).

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Equity in earnings of affiliateduring the quarter ended September 30,
2003, was $0.5 million and represented the recognition of the Cronos share of
earnings from the Joint Venture Program, which was established in September
2002.

Direct operating expensesof $6 million for the three months ended
September 30, 2003, were $0.4 million lower when compared to the same period in
2002. This is primarily due to the reduction in storage costs reflecting
improved on-hire volumes and the sale of certain older equipment.

Payments to Managed Container Ownersof $15.6 million during the three
months ended September 30, 2003, increased by $1.7 million, or 13%, when
compared to the corresponding period in 2002. This increase is attributable to
the $2.1 million total increase in net lease revenue (gross lease revenue net
of direct operating expenses) for the managed segments. In the Container
Equity Program segment, the increase in gross lease revenue generated by the
Joint Venture Program, which commenced in September 2002, more than offset the
reduction in revenue caused by the disposal of older US Limited Partnership
equipment.

Depreciation and amortizationof $3.7 million for the three months ended
September 30, 2003, represented a decline of $0.2 million when compared to the
same period in 2002. The reduction was primarily due to the sale of containers
from the Group to the Joint Venture Program as well as to the disposal of older
equipment.

Selling, general and administrative expensesof $3.5 million during the
third quarter of 2003 represented an increase of $0.1 million, or 3%, when
compared to the corresponding period in 2002. This is primarily due to a $0.2
million increase in manpower costs that resulted in part from the decline in
the value of the US dollar against Sterling, the Euro and other major
currencies. This increase was partially offset by a $0.1 million reduction in
occupancy costs that resulted from an office relocation in the United States.
It is estimated that $0.1 million of the total increase in selling, general and
administrative expenses may be attributed to exchange rate movements.

Interest expenseof $1 million for the three months ended September 30,
2003, declined by $0.5 million, or 32%, when compared to the corresponding
period in 2002. The decline in interest expense is due to the global reduction
in interest rates, as well as lower debt balances, including the effect of the
partial repayment of the Groups revolving credit facility following sales of
equipment to the Joint Venture Program.

Income taxesfor the three months ended September 30, 2003, were $0.3
million, or 26% of earnings before taxes, compared to a zero tax charge for the
same period in 2002. During the three months ended September 30, 2002, the
Group conducted an evaluation of its worldwide tax position and, based on this
review, recorded a net tax benefit of $0.4 million in its US subsidiaries.
This benefit was offset by $0.4 million of income tax charges arising primarily
in European entities.




Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002

Gross lease revenueof $87.1 million for the nine months to September 30,
2003, increased by $2.6 million, or 3%, when compared to the same period in
2002 as the combined effects of improved utilzation and increased fleet size
resulted in revenue growth for almost all products. This increase was
partially offset by a $0.5 million decline in revenue for refrigerated
containers due to the disposal of equipment that had reached the end of its
economic life.

Equipment trading revenueof $3 million during the first nine months of
2003 represented transactions undertaken in Australia and Scandinavia where the
Group used its relationships with equipment manufacturers to assist
third-parties to design and acquire their own equipment and organize delivery
to designated locations. Equipment trading expenses represented equipment and
related costs for this activity. The Group earned $0.3 million from equipment
trading activity during the first nine months of 2003 compared to $0.1 million
for the corresponding period in 2002.

Commissions, fees and other incomeof $2.8 million in the nine months
ended September 30, 2003, declined by $0.7 million, or 21%, when compared to
the corresponding period in 2002. CPC license fee income declined by $0.3
million due to decreased third-party demand for CPC equipment. Additionally,
design and consultancy fee income declined by $0.3 million, interest income
declined by $0.2 million, fees

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earned on the disposal of managed containers
declined by $0.3 million and amortized acquisition fee income declined by $0.2
million, reflecting a maturing portfolio of managed container programs. These
reductions were partly offset by unrealized exchange gains of $0.3 million
recognized on Euro direct finance lease receivables and a $0.3 million increase
in income earned on direct finance leases.

Equity in earnings of affiliatewere $1 million during the nine months
ended September 30, 2003, compared to $0.2 million in the corresponding period
of 2002. This represents the recognition of the Cronos share of earnings from
the Joint Venture Program entity that was established in September of 2002.

Direct operating expensesof $18.9 million during the first nine months of
2003 declined by $2.5 million, or 12%, compared to the same period in 2002. A
reduction of $3.1 million in inventory related costs was partially offset by an
increase in the provision for doubtful accounts, reflecting a deterioration in
the credit position of a Far East based shipping line.

Payments to Managed Container Ownersof $44.3 million for the nine months
ended September 30, 2003, increased by $4.7 million, or 12%, when compared to
the same period of the prior year. Net lease revenue for Container Equity
Programs increased by $4.6 million due primarily to the addition of the Joint
Venture Program which was established in September 2002. Net lease revenue for
the Other Managed Container Owner segment increased by $1.6 million due to the
improved operating performance of the fleet. In addition, payments to one
container owner in this segment declined by $1.1 million as the payment terms
for a number of Agreements changed from a fixed payment basis to one under
which the Group earned a management fee based upon the rentals to ocean
carriers after deducting direct operating expenses.

Depreciation and amortizationwas $10.9 million for the nine months ended
September 30, 2003, compared with $11.6 million for the corresponding period in
2002. The increase in depreciation attributable to new container additions was
more than offset by the disposal of refrigerated equipment at the end of its
economic life and by the sale of equipment to the Joint Venture Program.

Selling, general and administrative expensesof $11.1 million during the
first nine months of 2003, increased by $0.9 million, when compared to the same
period of 2002. A reduction of $0.1 million in occupancy costs was more than
offset by increases of $0.8 million in manpower expense and $0.1 million in
each of business insurance and legal costs. The decrease in occupancy costs
was due to office relocations in the UK and US. It is estimated that $0.6
million of the total increase in selling, general and administrative expenses
may be attributed to exchange rate movements.

Interest expenseof $3.4 million in the first nine months of 2003,
declined by $1.5 million, or 30%, when compared to the corresponding period in
2002. The decline in interest expense was due to reductions in interest rates
and lower debt balances, including the partial repayment of the Groups
revolving credit facility in September 2002 following the sale of equipment to
the Joint Venture Program.

Income Taxeswere $0.8 million for the nine months ended September 30,
2003, or 29% of earnings before taxes, compared to a $2.3 million tax benefit
for the same period in 2002. In the second quarter of 2002, the Group agreed
to a settlement with a foreign taxation authority. This followed a review that
focused primarily on the transfer prices under the terms of the principal
trading agreements between Cronos Group companies prior to December 31, 1998.
The Group had previously recorded a charge of $2.9 million in this regard. As
a result of the settlement, the Group reversed $2.5 million of the tax
liability and recorded a tax benefit of the same amount. Further to the
settlement agreed in the second quarter, the Group performed an evaluation of
its worldwide tax position during the third quarter of 2002. Based on this
review, the Group recorded a net tax benefit of $0.4 million in its US
subsidiaries. The total income tax benefit was partly offset by $0.6 million
of income tax charges in the first nine months of 2002.




Liquidity and Capital Resources

The funding sources available to the Group and its consolidated
subsidiaries include operating cash flow and borrowings.

The Groups operating cash flow is derived from lease revenues generated
by the Groups container fleet and fee revenues from its managed container
programs and other parties. Operating cash flow is utilized

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to meet costs
relating to day-to-day fleet support, payments to Managed Container Owners,
selling, general and administrative expenses, interest expense, servicing the
current portion of long-term borrowings and financing a portion of certain
equipment acquisitions.

Operating cash flow is largely dependent upon the timely collections of
lease revenues from shipping lines. Based on loss experience for the last
eleven years, bad debts have approximated 1% of lease revenues. The Group
monitors the ageing of lease receivables, collections and the credit status of
existing and potential customers. In the current economic climate, there is a risk that some
shipping lines may experience financial difficulty. Any resultant material
increase in the level of bad debts could potentially impair the ability of the
Group to meet its operating commitments.

At September 30, 2003, the Group had $119.8 million of available container
borrowing facilities under which $93.5 million was outstanding. In addition,
the Group had $1.5 million of unutilized overdraft facilities.

Cash Flow Statements for the Nine Months ended September 30, 2003 and 2002

Operating Activities:Net cash provided by operating activities was $16.1
million in each of the nine month periods ended September 30, 2003 and 2002.
The cash generated in 2003 included the sale of $8.9 million of container
equipment purchased for resale to Managed Container Owners. The proceeds were
utilized to pay the related liability to container manufacturers.

Investing Activities:Net cash used in investing activities for the first
nine months of 2003 and 2002 was $7.1 million and $3.8 million, respectively.
In 2003, proceeds from the sale of fixed assets of $8.4 million, which included
the sale of $4.6 million of refrigerated equipment to the Joint Venture
Program, were more than offset by equipment acquisitions of $13.5 million and
an equity investment of $1.7 million in the Joint Venture Program. In 2002,
the acquisition of $14.5 million of container and other equipment and an
investment of $1.1 million in direct finance lease equipment was partly offset
by $11.8 million of proceeds from the sale of container equipment, of which
$9.8 million was sold to the Joint Venture Program.

Financing Activities:Net cash used in financing activities was $10.3
million during the first nine months of 2003, as $15 million of additional
borrowings, utilized to finance the acquisition of new container equipment, was
more than offset by debt and capital lease repayments of $24.7 million. The
debt repayments included $13 million of paydowns resulting from the reduction
of a revolving credit loan facility with both surplus cash balances and from
cash realised on container equipment sales. In addition, the Group made
dividend payments of $0.4 million and repurchased $0.3 million of shares. Net
cash provided by financing activities was $10.9 million during the first nine
months of 2002. Proceeds from the issuance of new term debt of $16.3 million
was more than offset by the repayment of $27.2 million of debt and capital
lease obligations, including $11.3 million that was repaid at the inception of
the Joint Venture Program.

Capital Resources

Capital Expenditures and Commitments

The Group purchases new containers for its own account and for resale to
Managed Container Owners and other parties. At September 30, 2003, the Group
owed container manufacturers $14.5 million for equipment. The Group will fund
$2.2 million of this equipment utilising new and existing debt and capital
lease facilities, $11.2 million will be sold to the Joint Venture Program and
the remaining $1.1 million will be sold to a third-party under an equipment
trading transaction.

In addition, the Group had outstanding orders to purchase container
equipment of $6 million at September 30, 2003. Of this amount, $5.4 million
will be sold to the Joint Venture Program and $0.6 million will be financed by
the Group using existing container funding facilities.

On August 7, 2003, a dividend of 2 cents per common share was approved for
the third calendar quarter of 2003 and paid on October 15, 2003, to
shareholders of record as of the close of business on September 26, 2003.

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On November 4, 2003, a dividend of 4 cents per common share was approved,
payable 2 cents per share on January 8, 2004, for the fourth quarter of 2003 to
shareholders of record as of the close of business on December 22, 2003, and 2
cents per share on April 16, 2004, for the first quarter of 2004 to
shareholders of record as of the close of business on March 25, 2004.

On August 14, 2003, the Company repurchased 100,000 of its outstanding
common shares from a single shareholder of the Company at a purchase price of
$2.60 per share, or $260,000 in the aggregate. On repurchase of the 100,000
shares, the number of outstanding common shares of the Company reduced from
7,360,080 to 7,260,080.

On September 23, 2003, the Group amended a revolving line of credit
agreement to increase the maximum credit available under the facility from $50
million to $70 million, and has agreed to amortize the balance outstanding
under the revolving line of credit, as of September 23, 2004, over five years.

On October 15, 2003, the lenders to the Joint Venture Program increased
their maximum debt commitment from $50 million to $80 million. The Joint
Venture Program was established in September 2002 and is 50% owned by a
subsidiary of the Group and 50% owned by a major international financial
services provider. The purpose of the program is to acquire and lease to
third-party lessees marine cargo containers with the lenders providing up to
80% of the cost of acquiring the containers and the joint venture partners each
providing one-half of the equity to fund the balance of the capital
requirements of the program.

The Group believes that it has sufficient capital resources to support its
operating and investing activities for the next twelve months.




Item 3  Quantitative and Qualitative Disclosures about Market Risk

Interest rate risk:Outstanding borrowings are subject to interest rate
risk. Approximately 87% of total borrowings had floating interest rates at
September 30, 2003. The Group conducted an analysis of borrowings with
variable interest rates to determine their sensitivity to interest rate
changes. In this analysis, the same change was applied to the current balance
outstanding, leaving all other factors constant. It was found that if a 10%
increase were applied to variable interest rates, the effect would be to reduce
annual cash flows by $0.1 million.

Exchange rate risk:Substantially all of the Groups revenues are billed
and paid in US dollars and a significant portion of costs are billed and paid
in US dollars. Of the remaining costs, the majority are individually small,
unpredictable and incurred in various denominations and thus are not suitable
for cost effective hedging. By reference to 2002, it is estimated that for
every 10% incremental decline in the value of the US dollar against various
foreign currencies, the effect would be to reduce annual cash flows by $0.9
million in any given year.

As exchange rates are outside of the control of the Group, there can be no
assurance that such fluctuations will not adversely effect its results of
operations and financial condition.




Item 4  Controls and Procedures

The principal executive and principal financial officers of the Company
have evaluated the disclosure controls and procedures of the Group within 90
days prior to the filing of this quarterly report. As used herein, the term
disclosure controls and procedures has the meaning given to the term by Rule
13a-14 under the Securities Exchange Act of 1934, as amended (Exchange Act),
and includes the controls and other procedures of the Group that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files with the SEC under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and forms. Based upon their evaluation, the principal executive
and financial officers of the Company have concluded that the Groups
disclosure controls and procedures provide reasonable assurance that the
information required to be disclosed by the Company in

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this report is recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and forms applicable to the preparation of this report.

There have been no significant changes in the Groups internal controls or
in other factors that could significantly affect the Groups internal controls
subsequent to the evaluation described above conducted by the Companys
principal executive and financial officers.

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PART II  OTHER INFORMATION




Item 1  Legal Proceedings

Contrins $2.6 Million Claim. The Group manages containers for investment
entities sponsored by or affiliated with Contrin. Approximately 1% (measured
by TEUs) of the Groups fleet of containers is owned by Contrin. The Group is
in litigation with Contrin over funds that Contrin claims to have remitted to
Cronos for the purchase of containers. Contrin claims that in 1994 it
transmitted $2.6 million to Cronos for the purchase of containers. The Group
did not receive these funds and believes that the funds were diverted to an
account controlled by Mr. Palatin, and that this was known or should have been
known by Contrin.

On August 8, 2000, Contrin, through its affiliate, CWC, filed an action in
the Luxembourg District Court against the Company, seeking recovery of $2.6
million, together with interest and costs. On January 10, 2001, the Company
responded to CWCs complaint, (i) requesting that the District Court dismiss
the proceeding for lack of jurisdiction over the dispute, and (ii) denying
Contrins claims on the merits. Since January 10, 2001, the parties have
supplemented their pleadings and filed documentary evidence with the court to
respond to assertions made and evidence submitted by the other party. No date
has been set for a final hearing on CWCs claims against the Company.

On September 26, 2002, the Company issued its intervening summons in the
proceeding, naming Mr. Palatin, his wife, and Klamath as cross-defendants. By
its intervening summons, the Company claims the right to indemnity from the
Palatins and Klamath for any liability imposed upon the Company in favour of
Contrin on Contrins claims against the Company. Klamath is a Panamanian
company and the record owner of an estate located in Amersham, England. The
Company alleges that a substantial portion of the $2.6 million transferred by
Contrin for the purchase of containers was diverted by the Palatins to improve
and furnish the Amersham estate, in which they lived in 1994, and that Mr.
Palatin is the beneficial owner of Klamath and of the Amersham estate. The
Company has served the summons on Klamath and is in the process of serving the
summons on the Palatins. Once served, the cross-defendants will have the
opportunity to file responsive pleadings and evidence. Klamath, through its
Austrian counsel, has indicated that it will challenge the jurisdiction of the
Luxembourg court over it.

In anticipation of the filing of Contrins claims against the Company in
Luxembourg, the Group, on June 1, 2000, filed a protective claim in the High
Court of Justice, London, England, against Mr. Palatin and his wife. By this
claim, the Group seeks to establish that the Palatins are liable to the Group
for any liability which the Group may have to Contrin arising out of the 1994
transfers. On March 29, 2001, the Group secured a freezing injunction from
the High Court of Justice in aid of its UK claim against the Palatins. By the
injunction, the Palatins are prohibited from selling, charging, or otherwise
disposing of their interest in the Amersham estate. The injunction also extends
to Klamath, the record owner of the estate.

The Palatins and Klamath contested the jurisdiction of the High Court of
Justice over them, or, in the alternative, requested that the court exercise
its discretion not to exercise jurisdiction over them. In support of their
application, the Palatins filed an affidavit with the court asserting that the
Amersham estate is owned by Pontino S.A., a Panamanian company, in which they
disclaim any interest. The Group opposed the applications of the Palatins and
Klamath. On December 22, 2002, the court rendered its decision rejecting the
defendants motion for dismissal and on February 26, 2003, the court rejected
the defendants motion for leave to appeal the courts decision, awarded the
Company 90% of its costs in opposing the motions, and ordered the defendants to
pay $30,000 on account of these costs. The defendants have failed to comply
with the courts order, and their counsel has resigned. The Group has sought
and secured a debarring order, preventing the defendants from defending the
action until they comply with the courts cost award.

On July 13, 2000, the Group also filed a protective claim against Barclays
in the High Court of Justice, London, England. Barclays was the bank that
received the $2.6 million from Contrin. By its claim, the Group seeks a
declaration that Barclays is liable to the Group for $2.6 million, plus
interest and costs, arising out of Contrins 1994 transfer to an account with
Barclays in the name of Mrs. Palatin. In February 2001, the Group obtained an
order from the court requiring the production of documents by Barclays. The
Group and Barclays have agreed to a stay of the action and that stay remains in
place.

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Contrins $0.5 Million Claim. On August 2, 2001, CWC filed a separate
claim against CNV in the High Court of Justice, London, England. By its claim,
CWC asserts that CNV, wrongfully and in violation of the container management
agreement between CWC and CNV, failed to distribute to CWC $0.5 million in
distributions for the second through fourth calendar quarters of 1996. CWC
seeks recovery of this sum, plus
interest. On December 31, 2001, CNV filed its defence to CWCs claim,
denying CWCs claims and denying that CNV is liable to the CWC in any amount.
The trial of CWCs claim, scheduled for December 8, 2003, has been postponed.

Concurrently with the filing of its defence to CWCs claims, CNV filed a
separate claim against the Palatins and Klamath, seeking recovery of $0.5
million from the Palatins that CNV alleges was misappropriated from CNV by Mr.
Palatin. On April 8, 2002, Klamath filed its application with the court
seeking an order declaring that the court has no jurisdiction over Klamath or,
in the alternative, that it should exercise its discretion not to assert
jurisdiction over the Groups claims against Klamath. The Palatins filed their
application for dismissal with the court on July 5, 2002, alleging that the
court has no jurisdiction over them. CNV opposed both applications, and both
were heard by the court at the same time as Klamaths and the Palatins
challenge to the jurisdiction of the UK court over them with respect to the
Groups $2.6 million claim against them, discussed above. The court, by its
decision of December 22, 2002, rejected the defendants jurisdictional
challenge to CNVs claim. The defendants in this action were also subject to
the courts award of costs rendered in the $2.6 million action, discussed
above. They have failed to comply with the order, and their counsel has
likewise resigned from representing them in this claim. On May 2, 2003, CNV
secured a default judgement against the Palatins in the amount of $0.5 million,
plus interest of $0.376 million. On July 8, 2003, CNV secured from the court a
charging order in respect of the default judgement against Mr. Palatins
interest in the Amersham estate.

Contrins Disposals Claim. On September 18, 2002, three Austrian
affiliates of Contrin filed the Disposals Claim against CNV in the High Court
of Justice, London, England. The claimants asserted that CNV breached
container management agreements entered into in 1993 by selling containers
without obtaining the consent of the claimants, in violation of the terms of
the container management agreements. The claimants asserted that they were
entitled to all sums received by CNV from the sale of containers wrongfully
disposed of under the container management agreements or, alternatively, that
CNV was liable for damages for wrongfully depriving the claimants of the use
and possession of the containers sold. On October 3, 2003, the parties to the
Disposals Claim settled the action. CNV agreed to pay the claimants $0.3
million in return for a dismissal of the Disposals Claim and a release by the
claimants of CNV of all claims asserted by the claimants in the Disposals
Claim. CNV made the settlement payment to the claimants on November 5, 2003.

Collection of Palatin Notes. On May 8, 2001, the Massachusetts Superior
Court entered its judgement against Mr. Palatin and Klamath, affirming the
default judgement secured on February 8, 2000, in the New York State Supreme
Court by a subsidiary of the Company, Cronos Equipment (Bermuda) Limited
(CEB) against Mr. Palatin in the amount of $6.6 million. The court further
ordered the Groups transfer agent to cancel 1,793,798 outstanding common
shares of the Company owned of record by Klamath (the Klamath Shares),
beneficially owned by Mr. Palatin, in partial satisfaction of the New York
State Supreme Court judgement, and to transfer the Klamath Shares on the books
and records of the transfer agent to CEB. The Groups transfer agent promptly
cancelled the Klamath Shares and issued a new stock certificate for 1,793,798
common shares of the Company to CEB. (The Group subsequently retired and
cancelled these shares). As of May 8, 2001, the amount owed by Mr. Palatin to
CEB under the New York judgement totalled $7.3 million, representing the amount
of the judgement ($6.6 million) plus interest thereon at 9% per annum. The
Group reduced the amount owed by Mr. Palatin to CEB under the judgement by $6
million as a result of the cancellation of the Klamath Shares, leaving a
balance due under the judgement of $1.3 million as of May 8, 2001.

On November 23, 2001, CEB filed its claim against Mr. Palatin in the High
Court of Justice, London, England, for the purpose of collecting the remaining
balance due to CEB under the New York judgement. On May 23, 2003, the Court
entered summary judgement in CEBs favour and against Mr. Palatin in the amount
of $1.3 million, together with interest of $0.2 million. On July 29, 2003, CEB
secured from the Court a charging order in support of the default judgement, in
the amount of U.S. $1,451,469, charging Mr. Palatins interest in the Amersham
estate.

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On October 17, 2003, CEB and CNV instituted an action in the High Court of
Justice, London, England, against Mr. Palatin, his wife, and Klamath, seeking
enforcement of the charging order obtained by CEB, in the amount of $1,451,469,
and enforcement of the charging order secured by CNV against Mr. Palatin in the
amount of U.S. $876,000 (discussed above), by a foreclosure and sale of the
Amersham estate.

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Item 2  Changes in Securities and Use of Proceeds



| |  |  | Not applicable
| |  |  | --------------

Item 3  Defaults Upon Senior Securities



| |  |  | Not applicable
| |  |  | --------------

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



| |  |  | Not applicable
| |  |  | --------------

Item 5  Other Information



| |  |  | Not applicable
| |  |  | --------------

Item 6  Exhibits and Reports on Form 8-K



| | (a)                                                                                                                                                                                                                                                                                          |  | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 10.1                                                                                                                                                                                                                                                                                         |  | Second Amended and Restated Loan Agreement, dated as of
September 23, 2003, by and between Cronos Finance (Bermuda) Limited
(CFL) and Fortis, as Agent and Noteholder, Hollandsche Bank-Unie
N.V. as Noteholder and NIB Capital N.V. as Noteholder. This
agreement amends and restates the Amended and Restated Loan
Agreement, dated as of July 19, 2001, as amended which is
incorporated by reference to Exhibit 10.7 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2002.
|
| | 10.2                                                                                                                                                                                                                                                                                         |  | Amendment No. 2 to the Amended and Restated Management
Agreement, dated as of September 23, 2003, by and between CFL and
Cronos Containers (Cayman) Limited.                                                                                                                                                                                                                                                                                                                                                
|
| | 10.3                                                                                                                                                                                                                                                                                         |  | Amendment No. 1, dated September 23, 2003, to the Collateral
Agreement by and between Cronos Equipment (Bermuda) Limited, CFL and
Fortis, dated November 16, 2001, which is incorporated by reference
to Exhibit 10.10 to the Companys Annual Report on Form 10-K for the
year ended December 31, 2002.                                                                                                                                                                                                    
|
| | 10.4                                                                                                                                                                                                                                                                                         |  | Amendment No. 1, dated September 23, 2003, to the Amended and
Restated Guarantee by and between and Fortis, as Agent and
Noteholder, Hollandsche Bank-Unie N.V. as Noteholder and NIB Capital
N.V. as Noteholder. The agreement amends and restates the Guarantee
dated July 19, 2001, which is incorporated by reference to Exhibit
10.2 to the Companys Annual Report on Form 10-K for the year ended
December 31, 2002.                                                                                 
|
| | 10.5                                                                                                                                                                                                                                                                                         |  | Amendment No.2, dated as of October 15, 2003, to the
Management Agreement, dated as of September 18, 2002, by and between
the CF Leasing Limited and Cronos Containers (Cayman) Limited,
incorporated by reference to Exhibit 10.8 to the Companys Annual
Report on Form 10-K for the year ended December 31, 2002.                                                                                                                                                                                        
|
| | 31.1                                                                                                                                                                                                                                                                                         |  | Rule 13a-14 Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 31.2                                                                                                                                                                                                                                                                                         |  | Rule 13a-14 Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | 32                                                                                                                                                                                                                                                                                           |  | Section 1350 Certifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (b)                                                                                                                                                                                                                                                                                          |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | On August 7, 2003, a Current Report on Form 8-K was filed by the Company
announcing the declaration of a dividend of two cents per common share
for the third quarter of 2003. Additionally, the Company announced the
repurchase of 100,000 of its outstanding common shares, as previously

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| |  |  | reported in the Companys Quarterly Report on Form 10-Q for the quarter
ended June 30, 2003.
| |  |  | --------------------------------------------------------------------------------------------

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Signatures

Pursuant to the requirements 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.

THE CRONOS GROUP

|          |  |                     |  |                                              |  |                  
|--------- |  | ------------------- |  | -------------------------------------------- |  | -----------------
|SIGNATURE |  | TITLE               |  | DATE                                        
|          |  |                     |  |                                              |  |                  
|By        |  | /s/ PETER J YOUNGER |  | Director, Chief Operating Officer,           |  | November 12, 2003
|          |  | Peter J Younger     |  | Chief Financial Officer and                  |  |                  
|          |  |                     |  | Chief Accounting Officer                     |  |                  
|          |  |                     |  | (Principal Financial and Accounting Officer) |  |                  

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| |  |  | Exhibit Index
| |  |  | -------------

|       |  |                                                                                                                                                                                                                                                       |  |     
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Number |  | Exhibit                                                                                                                                                                                                                                               |  | Page
|       |  |                                                                                                                                                                                                                                                       |  |     
|10.1   |  | Second Amended and Restated Loan Agreement, dated as of
September 23, 2003, by and between Cronos Finance
(Bermuda) Limited (CFL) and Fortis, as Agent and
Noteholder, Hollandsche Bank-Unie N.V. as Noteholder and
NIB Capital N.V. as Noteholder. |  | E1  
|       |  |                                                                                                                                                                                                                                                       |  |     
|10.2   |  | Amendment No. 2 to the Amended and Restated Management
Agreement, dated as of September 23, 2003 by and between
CFL and Cronos Containers (Cayman) Limited.                                                                                           |  | E98 
|       |  |                                                                                                                                                                                                                                                       |  |     
|10.3   |  | Amendment No. 1, dated September 23, 2003, to the
Collateral Agreement by and between Cronos Equipment
(Bermuda) Limited, CFL and Fortis, dated November 16,
2001.                                                                                    |  | E104
|       |  |                                                                                                                                                                                                                                                       |  |     
|10.4   |  | Amendment No. 1, dated September 23, 2003, to the Amended
and Restated Guarantee by and between and Fortis, as
Agent and Noteholder, Hollandsche Bank-Unie N.V. as
Noteholder and NIB Capital N.V. as Noteholder.                                     |  | E109
|       |  |                                                                                                                                                                                                                                                       |  |     
|10.5   |  | Amendment No.2, dated as of October 15, 2003, to the
Management Agreement, dated as of September 18, 2002, by
and between the CF Leasing Limited and Cronos Containers
(Cayman) Limited.                                                              |  | E113
|       |  |                                                                                                                                                                                                                                                       |  |     
|31.1   |  | Rule 13a-14 Certification                                                                                                                                                                                                                             |  | E117
|       |  |                                                                                                                                                                                                                                                       |  |     
|31.2   |  | Rule 13a-14 Certification                                                                                                                                                                                                                             |  | E118
|       |  |                                                                                                                                                                                                                                                       |  |     
|32     |  | Certification pursuant to 18 U.S.C. § 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. *                                                                                                                                   |  | E119



---

|* |  | This certification, required by Section 906 of the Sarbanes-Oxley Act of
2002, other than as required by Section 906, is not deemed to be
filed with
the Commission or subject to the rules and regulations promulgated by the
Commission under the Securities Exchange Act of 1934, as amended, or to the
liabilities of Section 18 of said Act.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27