##### 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 EXCHANGEACT OF 1934
|--- | --------------------------------------------------------------------------------------

For the quarterly period ended: March 31, 2002

OR



|[   ] | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT 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
(State or other Jurisdiction of incorporation or organization) |  | NOT APPLICABLE
(I.R.S. Employer Identification No.)

16, ALLÉE  MARCONI,  BOITE  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 May 9, 2002:

|       |                              |  |           | 
|------ | ---------------------------- |  | --------- | 
|Class  | Number of Shares Outstanding
|       |                              | 
|Common |                              |  | 7,364,580 | 





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TABLE OF CONTENTS



|                               |                                                                                                |                                                                                 |  |  |  |  |  | 
|------------------------------ | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1  Financial Statements                                                                 
|                               |                                                                                                | Management Representation                                                      
|                               |                                                                                                | Condensed Consolidated Statements of Income                                    
|                               |                                                                                                | Condensed Consolidated Balance Sheets                                          
|                               |                                                                                                | Condensed Consolidated Statements of Cash Flows                                
|                               |                                                                                                | Consolidated Statements of Shareholders Equity                                
|                               |                                                                                                | Notes to the Condensed Consolidated Financial Statements                       
|                               | Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               |                                                                                                | General                                                                        
|                               |                                                                                                | Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001
|                               |                                                                                                | Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000
|                               |                                                                                                | Liquidity and Capital Resources                                                
|                               | Item 3  Quantitative and Qualitative Disclosures about Market Risk                           
|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                    



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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 Consolidated Statements of Income                                     |    |    | 2  | 
|                               |                                                                                                | Condensed Consolidated Balance Sheets                                           |    |    | 3  | 
|                               |                                                                                                | Condensed Consolidated Statements of Cash Flows                                 |    |    | 4  | 
|                               |                                                                                                | Consolidated Statements of Shareholders Equity                                 |    |    | 5  | 
|                               |                                                                                                | Notes to the Condensed Consolidated Financial Statements                        |    |    | 6  | 
|                              
|                               | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |                                                                                 |    | 12 |   
|                              
|                               |                                                                                                | General                                                                         |    |    | 12 | 
|                               |                                                                                                | Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001 |    |    | 13 | 
|                               |                                                                                                | Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000 |    |    | 14 | 
|                               |                                                                                                | Liquidity and Capital Resources                                                 |    |    | 15 | 
|                              
|                               | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |                                                                                 |    | 16 |   
|                              
|PART II  OTHER INFORMATION    |                                                                                                |                                                                                 | 17 |   
|                              
|                               | ITEM 1  LEGAL PROCEEDINGS                                                                     |                                                                                 |    | 17 |   
|                               | ITEM 2  CHANGES IN SECURITIES AND USE OF PROCEEDS                                             |                                                                                 |    | 18 |   
|                               | ITEM 3  DEFAULTS UPON SENIOR SECURITIES                                                       |                                                                                 |    | 18 |   
|                               | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |                                                                                 |    | 18 |   
|                               | ITEM 5  OTHER INFORMATION                                                                     |                                                                                 |    | 18 |   
|                               | ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K                                                      |                                                                                 |    | 18 |   





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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. 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 Consolidated Statements of Income
(US dollar amounts in thousands, except per share amounts)
(Unaudited)

|                                                                                   |  |                    |        |      |  |   |        |  
|---------------------------------------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                                                                   |  | Three Months Ended
|                                                                                   |  | March 31,         
|                                                                                   |  |                   
|                                                                                   |  | 2002               |        | 2001
|                                                                                   |  |                    |        |     
|Gross lease revenue                                                                |  | $                  | 28,329 |      |  | $ | 31,479 |  
|Equipment trading revenue                                                          |  |                    | 384    |      |  |   |       |  
|Commissions, fees and other income:                                                |  |                    |        |      |  |   |        |  
|- US Limited Partnerships                                                          |  |                    | 311    |      |  |   | 333    |  
|- unrelated parties                                                                |  |                    | 968    |      |  |   | 912    |  
|Gain on sale of investment:                                                        |  |                    |        |      |  |   |        |  
|- realized holding gain                                                            |  |                    |       |      |  |   | 301    |  
|                                                                                   |  |                    |        |      |  |   |        |  
|Total revenues                                                                     |  |                    | 29,992 |      |  |   | 33,025 |  
|                                                                                   |  |                    |        |      |  |   |        |  
|Direct operating expenses                                                          |  |                    | 7,757  |      |  |   | 6,620  |  
|Payments to managed container owners:                                              |  |                    |        |      |  |   |        |  
|- US Limited Partnerships                                                          |  |                    | 3,955  |      |  |   | 5,755  |  
|- Other managed container owners                                                   |  |                    | 8,826  |      |  |   | 10,263 |  
|Equipment trading expenses                                                         |  |                    | 367    |      |  |   |       |  
|Depreciation and amortization                                                      |  |                    | 3,849  |      |  |   | 4,056  |  
|Selling, general and administrative expenses                                       |  |                    | 3,366  |      |  |   | 3,468  |  
|Interest expense                                                                   |  |                    | 1,644  |      |  |   | 2,192  |  
|                                                                                   |  |                    |        |      |  |   |        |  
|Total expenses                                                                     |  |                    | 29,764 |      |  |   | 32,354 |  
|                                                                                   |  |                    |        |      |  |   |        |  
|Income before income taxes                                                         |  |                    | 228    |      |  |   | 671    |  
|Income taxes                                                                       |  |                    | 40     |      |  |   | 77     |  
|                                                                                   |  |                    |        |      |  |   |        |  
|Net income                                                                         |  |                    | 188    |      |  |   | 594    |  
|Other comprehensive income (loss):                                                 |  |                    |        |      |  |   |        |  
|- unrealized holding loss arising during the year on
available for sale securities |  |                    |       |      |  |   | (294   | )
|- reclassification adjustment                                                      |  |                    |       |      |  |   | (150   | )
|                                                                                   |  |                    |        |      |  |   |        |  
|Comprehensive income                                                               |  | $                  | 188    |      |  | $ | 150    |  
|                                                                                   |  |                    |        |      |  |   |        |  
|Net income per common share (basic and diluted)                                    |  | $                  | 0.03   |      |  | $ | 0.06   |  
|                                                                                   |  |                    |        |      |  |   |        |  

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

2



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The Cronos Group

Condensed Consolidated Balance Sheets
(US dollar amounts in thousands, except per share amounts)
(unaudited)

|                                                  |  |           |         |              |  |   |         |  
|------------------------------------------------- |  | --------- | ------- | ------------ |  | - | ------- | -
|                                                  |  | March 31, |         | December 31,
|                                                  |  | 2002      |         | 2001        
|                                                  |  |           |         |             
|Assets                                            |  |           |         |              |  |   |         |  
|Cash and cash equivalents                         |  | $         | 6,306   |              |  | $ | 4,914   |  
|Amounts due from lessees (net)                    |  |           | 24,936  |              |  |   | 22,825  |  
|Amounts receivable from container owners          |  |           | 9,304   |              |  |   | 8,675   |  
|New container equipment for resale                |  |           | 1,461   |              |  |   | 1,463   |  
|Net investment in direct financing leases         |  |           | 7,736   |              |  |   | 7,306   |  
|Container equipment (net)                         |  |           | 152,637 |              |  |   | 150,440 |  
|Other equipment (net)                             |  |           | 338     |              |  |   | 375     |  
|Restricted cash                                   |  |           | 452     |              |  |   | 452     |  
|Goodwill                                          |  |           | 11,039  |              |  |   | 11,039  |  
|Other intangible assets                           |  |           | 1,049   |              |  |   | 1,096   |  
|Other assets including prepayments                |  |           | 16,149  |              |  |   | 17,234  |  
|                                                  |  |           |         |              |  |   |         |  
|Total assets                                      |  | $         | 231,407 |              |  | $ | 225,819 |  
|                                                  |  |           |         |              |  |   |         |  
|Liabilities and shareholders equity              |  |           |         |              |  |   |         |  
|Amounts payable to container owners               |  | $         | 20,334  |              |  | $ | 16,889  |  
|Amounts payable to container manufacturers        |  |           | 10,690  |              |  |   | 12,888  |  
|Other amounts payable and accrued expenses        |  |           | 13,785  |              |  |   | 13,020  |  
|Debt and capital lease obligations                |  |           | 111,436 |              |  |   | 107,920 |  
|Current and deferred income taxes                 |  |           | 6,985   |              |  |   | 6,912   |  
|Deferred income and unamortized acquisition fees  |  |           | 6,510   |              |  |   | 6,711   |  
|                                                  |  |           |         |              |  |   |         |  
|Total liabilities                                 |  |           | 169,740 |              |  |   | 164,340 |  
|                                                  |  |           |         |              |  |   |         |  
|Shareholders equity                              |  |           |         |              |  |   |         |  
|Common shares                                     |  |           | 18,317  |              |  |   | 18,317  |  
|Additional paid-in capital                        |  |           | 49,846  |              |  |   | 49,846  |  
|Common shares held in treasury (1,793,798 shares) |  |           | (6,000  | )            |  |   | (6,000  | )
|Accumulated deficit                               |  |           | (496    | )            |  |   | (684    | )
|                                                  |  |           |         |              |  |   |         |  
|Total shareholders equity                        |  |           | 61,667  |              |  |   | 61,479  |  
|                                                  |  |           |         |              |  |   |         |  
|Total liabilities and shareholders equity        |  | $         | 231,407 |              |  | $ | 225,819 |  
|                                                  |  |           |         |              |  |   |         |  

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

3



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The Cronos Group

Condensed Consolidated Statements of Cash Flows
(US dollar amounts in thousands, except per share amounts)
(Unaudited)

|                                                      |  |                    |        |      |  |   |        |  
|----------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                                      |  | Three Months Ended
|                                                      |  | March 31,         
|                                                      |  |                   
|                                                      |  | 2002               |        | 2001
|                                                      |  |                    |        |     
|Net cash provided by operating activities             |  | $                  | 4,613  |      |  | $ | 4,072  |  
|                                                      |  |                    |        |      |  |   |        |  
|Cash flows from investing activities                  |  |                    |        |      |  |   |        |  
|Purchase of container equipment                       |  |                    | (5,531 | )    |  |   | (7,039 | )
|Purchase of property and other equipment              |  |                    | (13    | )    |  |   | (17    | )
|Investment in direct finance lease equipment          |  |                    | (747   | )    |  |   |       |  
|Proceeds from sales of container equipment            |  |                    | 540    |      |  |   | 2,495  |  
|Proceeds from sale of investment                      |  |                    |       |      |  |   | 484    |  
|                                                      |  |                    |        |      |  |   |        |  
|Net cash used in investing activities                 |  |                    | (5,751 | )    |  |   | (4,077 | )
|                                                      |  |                    |        |      |  |   |        |  
|Cash flows from financing activities                  |  |                    |        |      |  |   |        |  
|Proceeds from issuance of term debt                   |  |                    | 7,985  |      |  |   | 5,989  |  
|Repayments of term debt and capital lease obligations |  |                    | (5,455 | )    |  |   | (6,378 | )
|Cash deposits (restricted)                            |  |                    |       |      |  |   | 87     |  
|                                                      |  |                    |        |      |  |   |        |  
|Net cash provided by (used in) financing activities   |  |                    | 2,530  |      |  |   | (302   | )
|                                                      |  |                    |        |      |  |   |        |  
|Net increase (decrease) in cash and cash equivalents  |  |                    | 1,392  |      |  |   | (307   | )
|Cash and cash equivalents at beginning of period      |  |                    | 4,914  |      |  |   | 6,601  |  
|                                                      |  |                    |        |      |  |   |        |  
|Cash and cash equivalents at end of period            |  | $                  | 6,306  |      |  | $ | 6,294  |  
|                                                      |  |                    |        |      |  |   |        |  
|Supplementary disclosure of cash flow information:    |  |                    |        |      |  |   |        |  
|Cash paid during the period for:                      |  |                    |        |      |  |   |        |  
|- interest                                            |  | $                  | 1,416  |      |  | $ | 2,183  |  
|- income taxes                                        |  |                    | 73     |      |  |   | 220    |  
|Cash received during the period for:                  |  |                    |        |      |  |   |        |  
|- interest                                            |  |                    | 13     |      |  |   | 55     |  
|- income taxes                                        |  |                    | 106    |      |  |   |       |  
|Non-cash activities:                                  |  |                    |        |      |  |   |        |  
|- container equipment acquired under capital lease    |  |                    | 986    |      |  |   | 97     |  
|- other fixed assets acquired under capital lease     |  |                    |       |      |  |   | 276    |  

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

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The Cronos Group

Consolidated Statements of Shareholders Equity
(US dollar amounts in thousands, except per share amounts)
(Unaudited)

Three months ended March 31, 2002

|                           |  |        |        |         |  |             |        |          |  |             |        |               |  |   |       |       |  |   |        |   |  |   |        | 
|-------------------------- |  | ------ | ------ | ------- |  | ----------- | ------ | -------- |  | ----------- | ------ | ------------- |  | - | ----- | ----- |  | - | ------ | - |  | - | ------ | 
|                           |  |        |        |         |  | Additional  |        | Common   |  | Restricted  |        |               |  |   |       | Total
|                           |  | Common |        | paid-in |  | shares held |        | retained |  | Accumulated |        | shareholders'
|                           |  | shares |        | capital |  | in treasury |        | earnings |  | deficit     |        | equity       
|                           |  |        |        |         |  |             |        |          |  |             |        |              
|Balance,
December 31, 2001 |  | $      | 18,317 |         |  | $           | 49,846 |          |  | $           | (6,000 | )             |  | $ | 1,832 |       |  | $ | (2,516 | ) |  | $ | 61,479 | 
|Net income                 |  |        |       |         |  |             |       |          |  |             |       |               |  |   |      |       |  |   | 188    |   |  |   | 188    | 
|                           |  |        |        |         |  |             |        |          |  |             |        |               |  |   |       |       |  |   |        |   |  |   |        | 
|Balance,
March 31, 2002    |  | $      | 18,317 |         |  | $           | 49,846 |          |  | $           | (6,000 | )             |  | $ | 1,832 |       |  | $ | (2,328 | ) |  | $ | 61,667 | 
|                           |  |        |        |         |  |             |        |          |  |             |        |               |  |   |       |       |  |   |        |   |  |   |        | 

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

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The Cronos Group

Notes to the Condensed Consolidated Financial Statements
(US dollar amounts in thousands, except per share amounts)
(Unaudited)



|1. |  | The condensed consolidated financial statements include the accounts of
The Cronos Group and its subsidiaries. All material intercompany accounts
and transactions have been eliminated.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Operating segment data                                                                                                                                                                  
|  
|   |  | Condensed segment information is provided in the tables below:                                                                                                                          

|                                       |  |              |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|-------------------------------------- |  | ------------ | ------ | --------- |  | ---------- | ------ | ----- |  | - | ------- |  |  | - | ------- | 
|                                       |  |              |        |           |  | Other      |        |       |  |   |         |  |  |  
|                                       |  |              |        |           |  | Managed    |        |       |  |   |         |  |  |  
|                                       |  | US Limited   |        | Container |  | Owned      |        |       |  |  
|                                       |  | Partnerships |        | Owners    |  | Containers |        | Total
|                                       |  |              |        |           |  |            |        |      
|Three months ended March 31, 2002      |  |              |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|                                      
|Gross lease revenue                    |  | $            | 7,350  |           |  | $          | 12,696 |       |  | $ | 8,283   |  |  | $ | 28,329  | 
|Operating profit before indirect items |  |              | 1,379  |           |  |            | 174    |       |  |   | 2,113   |  |  |   | 3,666   | 
|Operating profit (loss)                |  |              | 321    |           |  |            | (1,026 | )     |  |   | 1,330   |  |  |   | 625     | 
|Segment assets at end of period        |  |              | 11,507 |           |  |            | 15,681 |       |  |   | 169,224 |  |  |   | 196,412 | 
|                                      
|Three months ended March 31, 2001      |  |              |        |           |  |            |        |       |  |   |         |  |  |   |         | 
|                                      
|Gross lease revenue                    |  | $            | 9,222  |           |  | $          | 14,409 |       |  | $ | 7,848   |  |  | $ | 31,479  | 
|Operating profit before indirect items |  |              | 1,733  |           |  |            | 1,573  |       |  |   | 713     |  |  |   | 4,019   | 
|Operating profit                       |  |              | 532    |           |  |            | 340    |       |  |   | 28      |  |  |   | 900     | 
|Segment assets at end of period        |  |              | 13,644 |           |  |            | 16,536 |       |  |   | 148,862 |  |  |   | 179,042 | 

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

|                                             |  |                    |      |      |  |   |      |  
|-------------------------------------------- |  | ------------------ | ---- | ---- |  | - | ---- | -
|                                             |  | Three Months Ended
|                                             |  | March 31,         
|                                             |  |                   
|                                             |  | 2002               |      | 2001
|                                             |  |                    |      |     
|Operating profit                             |  | $                  | 625  |      |  | $ | 900  |  
|Gain on sale of investment                   |  |                    |     |      |  |   | 301  |  
|Selling, general and administrative expenses |  |                    | (350 | )    |  |   | (417 | )
|Amortization of intangible assets            |  |                    | (47  | )    |  |   | (113 | )
|                                             |  |                    |      |      |  |   |      |  
|Income before income taxes                   |  | $                  | 228  |      |  | $ | 671  |  
|                                             |  |                    |      |      |  |   |      |  

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The Cronos Group

Notes to the Condensed Consolidated Financial Statements



|3. |  | Earnings per common share (US dollar amounts in thousands, except per
share amounts)
|-- |  | ------------------------------------------------------------------------------------

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

|                                             |  |                    |           |      |  |   |           | 
|-------------------------------------------- |  | ------------------ | --------- | ---- |  | - | --------- | 
|                                             |  | Three Months Ended
|                                             |  | March 31,         
|                                             |  |                   
|                                             |  | 2002               |           | 2001
|                                             |  |                    |           |     
|Net income available for common shareholders |  | $                  | 188       |      |  | $ | 594       | 
|                                             |  |                    |           |      |  |   |           | 
|Average outstanding shares of common stock   |  |                    | 7,364,580 |      |  |   | 9,158,378 | 
|Dilutive effect of:                          |  |                    |           |      |  |   |           | 
|- Executive officer common share options     |  |                    | 45        |      |  |   | 9,376     | 
|- Warrants                                   |  |                    |          |      |  |   | 4,701     | 
|- 1999 stock option plan                     |  |                    |          |      |  |   |          | 
|- Non employee directors equity plan        |  |                    | 45,257    |      |  |   | 7,816     | 
|                                             |  |                    |           |      |  |   |           | 
|Common stock and common stock equivalents    |  |                    | 7,409,882 |      |  |   | 9,180,271 | 
|                                             |  |                    |           |      |  |   |           | 
|Basic and diluted net income per share       |  | $                  | 0.03      |      |  | $ | 0.06      | 
|                                             |  |                    |           |      |  |   |           | 

4. Amounts receivable from container owners

Amounts receivable from container owners include amounts due from related
parties of $5.0 million and $4.3 million at March 31, 2002 and December 31,
2001, respectively.

5. Investments in related parties

Investments in related parties comprise general partnership and limited
partnership investments in eight sponsored funds. These general and limited
partnership investments 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 March 31, 2002
and December 31, 2001.

For several of the limited partnership investments, distributions have
exceeded the sum of the investment in the partnership and the profit recognized
under the equity method by a total of $0.9 million at both March 31, 2002 and
December 31, 2001. For these partnerships, the net balance is included in
amounts payable to container owners.

6. Container equipment

Container equipment is net of accumulated depreciation of $83.8 million
and $81.2 million at March 31, 2002 and December 31, 2001, respectively.

7



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The Cronos Group

Notes to the Condensed Consolidated Financial Statements

7. Amounts payable to container owners

Amounts payable to container owners include amounts payable to related
parties of $9.1 million and $8.0 million at March 31, 2002 and December 31,
2001, respectively.

8. Debt and capital lease obligations

Debt and capital lease obligations include amounts due within twelve
months of $13.0 million and $12.8 million at March 31, 2002 and December 31,
2001, respectively.



|9. |  | Commitments and contingencies (to be read in conjunction with Note 13 to
the Companys 2001 Consolidated Financial Statements)
|-- |  | ------------------------------------------------------------------------------------------------------------------------------

i. Commitments

At March 31, 2002, the Group had outstanding orders to purchase container
equipment of $1.9 million.

ii. Guarantee to US Limited Partnership

During 2000, the Group provided a guarantee under a $5 million third-party
loan note (the Note), with a 2006 maturity date, to a US Limited Partnership.
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 March 31, 2002, the balance outstanding
under the Note was $3.4 million.

iii. Guarantee of third-party loan & 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 2004 maturity date, to which the Group
provided a first loss guarantee for 20% of the debt. The Group can
collateralize up to 50% of the guarantee with a first security interest in
additional equipment. At March 31, 2002, the balance outstanding under the
loan was $8.1 million.

In addition, under the terms of a rent support agreement, the Group is
required to deposit an amount equal to the aggregate of all rental charges
scheduled to be paid under the direct finance lease for the next twelve months
or until the end of the lease, if sooner, upon the occurrence of a continuing
event of default by the shipping line. Annual rental charges under the lease,
with a 2004 scheduled maturity date, approximate $5.1 million.

iv. Guarantee under a purchase, assignment and agency agreement

During 1996, the Group entered into a term lease with a lessee in the
ordinary course of business. During 1997, the containers held under the lease
were sold, and the lease was assigned, to a financial institution. 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
just under $0.1 million to a retention account held as security by the
institution. The remaining amount is retained by the Group as compensation for
this service.

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 guaranteed that it will continue to make these payments
to the financial institution. The guarantee and agreement with the financial
institution will expire in October 2005.

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The Cronos Group

9. Commitments and contingencies (continued)

v. Agreements with Other Managed Container Owners  early termination
options

Approximately 48% (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 March 31, 2002,
approximately 36% of the Agreements were eligible for early termination.
Cronos believes that early termination of these Agreements by the Other Managed
Container Owners is unlikely.

vi. Agreements with Other Managed Container Owners  change of control
provisions

Approximately 52% (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, 30% of 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 22% of 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.

vii. Contingencies  Dispute 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 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 March 31,
2002, the balance of this accrual was $3.0 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, each party has supplemented their pleadings to respond
to assertions made by the other party. The Company anticipates that a final
hearing will be held by the Court during 2002.

To preserve its rights of indemnity in the face of Contrins claims, the
Group, on June 1, 2000, filed a protective claim against Mr. Palatin and his
wife. By its 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 July 13, 2000, Cronos also filed a protective claim against Barclays
Bank PLC (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 while the
Group evaluates the documentation produced by Barclays.

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The Cronos Group

9. Commitments and contingencies (continued)

vii. Contingencies  Dispute with Contrin Holding S.A. (continued)

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 defense to CWCs claim, denying CWCs
claims and denying that CNV is liable to CWC in any amount. Concurrently with
the filing of its defense to CWCs claims, CNV filed a separate claim against
the Palatins and Klamath Enterprises, S.A. (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 Group intends to
oppose Klamaths application. A hearing on Klamaths application has been set
for July 22, 2002.

Since September 2001, the Group and Contrin have had discussions with a
view to resolving all disputes between them. These discussions have yet to
achieve any success. During the course of the discussions, Contrin has
asserted, in addition to its claims advanced in the Luxembourg District Court
and in the High Court of Justice in England, described above, a claim to $2.6
million, including interest, as its share of the proceeds from containers
disposed of by CNV under the container management agreements between Contrin
and CNV. CNV has rejected the claim as a misinterpretation of the container
management agreements.

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 $2.8 million.

viii. 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 March 31, 2002 the Group had $1.2 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. The information currently available to the Group is insufficient to
enable it to determine the nature or amount of the claims by the respective
companies and their creditors to the distributions available with respect to
the TOEMT containers.

As stated above, Contrin, in its discussions with the Group over a global
resolution of all disputes between the parties, has asserted a right to the
distributions being held by the Group for TOEMT. Contrin has provided the
Group with copies of default judgements Contrin secured in January and June
2001 from the Commercial Court of Vienna, Austria, against TOEMT in the UK, and
TOEMT in the Isle of Man, for $0.1 million and $0.4 million, respectively.
Until clarification is secured by court proceedings and/or through agreement
with the creditors of TOEMT, the Group presently intends to continue to set
aside the distributions due and payable by the Group on the containers it
manages for TOEMT.

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The Cronos Group

10. New accounting pronouncements

On January 1, 2002, the Group adopted Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, and SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

SFAS No. 142 addresses the initial recognition and measurement of
intangible assets acquired outside of a business combination and the accounting
for goodwill and other intangible assets subsequent to their acquisition. SFAS
No. 142 provides that intangible assets with finite useful lives be amortized
and that goodwill and intangible assets with indefinite lives will not be
amortized, but will rather be tested at least annually for impairment. The
adoption of SFAS No. 142 did not have a significant impact on the financial
position or results of operations of the Group. From January 1, 2002, there
will be an annual reduction in goodwill amortization expense of $0.4 million.

SFAS No. 144 supersedes SFAS No. 121, but retains its fundamental
provisions relating to the recognition and measurement of the impairment of
long-lived assets to be held and used, and the measure of long-lived assets to
be disposed of by sale.

In August 2001, the Financial Accounting Standards Board issued SFAS No.
143, Accounting for Asset Retirement Obligations, which is effective for all
fiscal years beginning after June 15, 2002. This standard requires a company
to record the fair value of a liability for an asset retirement obligation in
the period in which it is incurred, and a corresponding increase in the
carrying value of the related long-lived asset. The Group is currently
evaluating the impact that SFAS No. 143 will have on its financial statements.

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The Cronos Group




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 the Group itself or by the Groups managed
container programs (Managed Container Owners), which are comprised of US
Limited Partnerships and Other Managed Container Owners.

The following table summarizes the composition of the Cronos fleet (based
on original equipment cost) at March 31 for each of the periods indicated:

|                               |  |      |     |      |  |  |     |  
|------------------------------ |  | ---- | --- | ---- |  |  | --- | -
|                               |  | 2002 |     | 2001
|                               |  |      |     |     
|US Limited Partnerships        |  |      | 30  | %    |  |  | 32  | %
|Other Managed Container Owners |  |      | 44  | %    |  |  | 45  | %
|Owned Containers               |  |      | 26  | %    |  |  | 23  | %
|                               |  |      |     |      |  |  |     |  
|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, they are accounted for in the Groups
financial statements as leases under which the container owners are lessors and
the Group is lessee. For the quarter ended March 31, 2002, 79% of payments to
Managed Container Owners represented agreements which generally provided that
the amounts payable to container owners were based upon the rentals to ocean
carriers after deducting direct operating expenses and a management fee. The
remaining 21% of payments to Managed Container Owners represented agreements
under which there were fixed payment terms.

The following table summarizes the composition of the Cronos fleet (in
thousands, based on twenty-foot equivalent units (TEU)), by equipment type,
at March 31 for each of the periods indicated:

|                      |                            |  |       |     |      |  |       |     | 
|--------------------- | -------------------------- |  | ----- | --- | ---- |  | ----- | --- | 
|                      |                            |  | 2002  |     | 2001
|                      |                            |  |       |     |     
|Dry Cargo             |                            |  | 364.4 |     |      |  | 372.9 |    
|Refrigerated          |                            |  | 14.1  |     |      |  | 12.2  |    
|Tank                  |                            |  | 2.3   |     |      |  | 2.0   |    
|Dry Freight Specials: |                            |  |       |     |      |  |       |    
|                      | CPCs                       |  |       | 5.8 |      |  |       | 3.9 | 
|                      | Rolltrailer                |  |       | 2.7 |      |  |       | 2.5 | 
|                      | Other Dry Freight Specials |  |       | 3.5 |      |  |       | 3.0 | 
|                      |                            |  |       |     |      |  |       |    
|Total Fleet           |                            |  | 392.8 |     |      |  | 396.5 |    
|                      |                            |  |       |     |      |  |       |    

During 2001, demand for new container production declined in line with the
global economic slowdown and a reduction in the level of capital available for
new production. Accordingly, prices for new containers reached historic lows
creating further downward pressure on per diem rates and container residual
values. Since March 31, 2001, the combined per diem rate for the Cronos fleet
of containers declined by approximately 14%.

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The Cronos Group

During the first quarter of 2002, the reduction in the level of funding
for new container production contributed to a reduction in the level of
off-hire container inventories for both leasing companies and shipping lines.
In addition to this, the Group experienced an increase in demand for dry cargo
containers which appears to be the result of a general improvement in the
economic climate. The Group expects this improvement to continue into the
second quarter. The Group will seek to exploit the improving demand by
repositioning off-hire equipment to locations of greatest demand and by
pursuing leasing opportunities through its global network of marketing
resources. The combined utilization of the Cronos fleet increased from 73% at
the beginning of the year to 75% by the end of the quarter. At April 30, 2002,
utilization had increased to 77%.

The following table summarizes the combined utilization of the Cronos
fleet (based on approximate original equipment cost):

|                        |  |      |    |      |  |  |    |  
|----------------------- |  | ---- | -- | ---- |  |  | -- | -
|                        |  | 2002 |    | 2001
|                        |  |      |    |     
|Utilization at March 31 |  |      | 75 | %    |  |  | 72 | %




Three Months Ended March 31, 2002 Compared to Three Months Ended March 31,
2001

Gross lease revenueof $28.3 million for the three months ended March 31,
2002, was $3.2 million, or 10%, lower than in the corresponding period of 2001.
This was primarily due to the decline in per diem rental rates for dry
containers reflecting the generally poor global economic climate.

Equipment trading revenueof $0.4 million for the three months ended March
31, 2002, 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 arrange for delivery to designated
locations. Equipment trading expenses represent equipment and related costs
for this activity.

Commissions, fees and other incomefor the three months ended March 31,
2002, of $1.3 million was almost unchanged when compared to the first quarter
of 2001. Increases of $0.2 million in each of direct finance lease income and
equipment consultancy services were offset by a decline in investment income of
$0.2 million, lower licence fee income earned in connection with the patented
CPC of $0.1 million, and a reduction in the amortization of managed container
program acquisition fees.

Direct operating expensesof $7.8 million in the first three months of
2002 were $1.1 million, or 17.2%, higher than in the corresponding period of
2001. The total cost of repositioning containers from low demand to higher
demand locations was $0.9 million, compared to $0.4 million for the three
months ended March 31, 2001, an increase of $0.5 million. Handling costs and
commissions earned by agents increased by a total of $0.5 million due to the
increase in container activity during the quarter. Storage costs were $0.1
million higher than in the same period of 2001.

Payments to managed container ownersof $12.8 million during the three
months ended March 31, 2002, were $3.2 million, or 20.2%, lower when compared
to the corresponding period in 2001. This decline was due to a reduction in
net lease revenue resulting from lower per diem rates for dry cargo containers,
increased direct operating expenses, and in the case of the US Limited
Partnership segment, a smaller fleet size.

Depreciation and amortizationof $3.8 million during the three months
ended March 31, 2002, was $0.2 million, or 5.1% lower when compared to the
corresponding period in 2001. In addition to a reduction in non-container
depreciation of $0.1 million, there was a $0.1 million decline in the
amortization of intangible assets due to the adoption of SFAS No. 142.

Selling, general and administrative expensesdeclined to $3.4 million in
the first quarter of 2002 from $3.5 million in the corresponding period of
2001, a decrease of $0.1 million. This was primarily due to reductions of $0.1
million in each of manpower and information technology expenses, which were
partially offset by an increase in professional services expenses.

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The Cronos Group

Interest expenseof $1.6 million for the three months ended March 31,
2002, decreased by $0.5 million, or 25%, when compared to the corresponding
period in 2001. The decline in interest expense attributable to the reduction
in interest rates over the course of 2001 more than offset the increase in
interest expense resulting from higher debt balances used to finance new
equipment purchases.

Income taxesfor the first quarter of 2002 were less than $0.1 million and
represented approximately 17.5% of income before income taxes. During the
first quarter of 2001, the charge for income taxes was approximately 11.5% of
income before income taxes.




Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

Gross lease revenueof $31.5 million for the three months ended March 31,
2001, was $2.7 million, or 7.8%, lower than in the corresponding period of
2000. The effect of an increased fleet size, reflecting new container
production during 2000 and 2001, was more than offset by the combined effects
of a reduction in the size of the on-hire fleet and the decline in per diem
rates.

Commissions, fees and other incomefor the three months ended March 31,
2001, of $1.2 million were almost unchanged when compared to the first quarter
of 2000. Minor reductions in finance lease income and other leasing income
were partly offset by increased property revenue.

Gain on sale of investmentof $0.3 million in the first quarter of 2001
represents the sale of shares that had been held in escrow as security for a
1994 tax indemnification agreement. This agreement expired on December 31,
2000, and the shares were released in the first quarter of 2001.

Direct operating expensesof $6.6 million in the first three months of
2001 were $0.9 million, or 12%, lower than in the corresponding period of 2000.
An increase of $0.7 million in storage costs, reflecting a larger off-hire
fleet, was more than offset by lower repositioning costs of $0.3 million, lower
activity related costs of $0.2 million and a total decrease in legal expenses
and provision for doubtful accounts of $1.1 million.

Payments to managed container ownersof $16 million during the three
months ended March 31, 2001, were $1.2 million, or 6.8%, lower when compared to
the corresponding period in 2000. Net lease revenue declined for each of these
segments due primarily to the current global economic climate. Payments to US
Limited Partnerships of $5.8 million in the first quarter of 2001 were $0.4
million lower than in the same period of 2000. Payments to Other Managed
Container Owners were $10.3 million during the three months ended March 31,
2001, a decrease of $0.7 million, or 6.5%, when compared to the same period of
2000.

Depreciation and amortizationof $4.1 million during the three months
ended March 31, 2001, were $0.1 million, or 2.4% higher when compared to the
corresponding period in 2000. This was primarily due to the acquisition of
container equipment during 2000 and in the first quarter of 2001.

Selling, general and administrative expensesdeclined to $3.5 million in
the first quarter of 2001 from $4.3 million in the corresponding period of
2000, a decrease of $0.8 million or 19.3%. This was due primarily to reductions
in non-operating legal and other expenses, manpower, and professional services.

Interest expenseof $2.2 million for the three months ended March 31,
2001, decreased by $0.2 million, or 9%, when compared to the corresponding
period in 2000. This decrease is due to a reduced debt balance together with a
lower average interest rate.

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The Cronos Group




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 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 debt
funded equipment acquisitions.

Cash Flow Statements for the quarters ended March 31, 2002 and 2001

Cash from Operating Activities:Net cash provided by operating activities
was $4.6 million and $4.1 million during the first quarters of 2002 and 2001,
respectively. In 2002, the cash provided by operating activities represented
earnings from operations together with receipts of lease and fee revenues.
This was partly offset by operating cash payments for direct operating
expenses, payments to managed container owners, selling, general and
administrative expenses and interest expense. In addition, there was a
reduction of $2.2 million in amounts payable to container manufacturers. The
net cash generated in 2001 reflected a decrease in container equipment for
resale, resulting from the sale of $8 million of container equipment to a new
managed container owner program, and a decrease in amounts due from lessees.
This was offset by a $10.7 million decrease in amounts payable to container
manufacturers.

Cash from Investing Activities:Net cash used in investing activities was
$5.8 million in the first quarter of 2002, reflecting the acquisition of $5.5
million of container equipment and an investment of $0.7 million in direct
finance lease equipment. This was partly offset with proceeds of $0.5 million
from the sale of container equipment. Net cash used in investing activities
was $4.1 million in the first quarter of 2001. The acquisition of $7.0 million
of container equipment was partly offset by proceeds of $2.5 million from the
sale of container equipment and proceeds from the sale of investments of $0.5
million.

Cash from Financing Activities:Net cash provided by financing activities
was $2.5 million during the first quarter of 2002. Proceeds from the issuance
of new term debt of $8 million was partly offset by $5.5 million of debt and
capital lease obligations repaid by the Group. In the first quarter of 2001,
net cash used in financing activities was $0.3 million. Proceeds from the
issuance of new term debt was offset by debt and capital lease obligations
repaid by the Group.

Capital Resources

The Group purchases new containers for its own account and for resale to
its Other Managed Container Owners and other parties. At March 31, 2002, the
Group owed container manufacturers $10.7 million for equipment, of which $9.3
million is scheduled to be funded in the second quarter of 2002, utilizing
available container funding facilities. For the remaining $1.4 million of
equipment, the Group has entered into agreements with third-parties for the
sale of the equipment. The container manufacturer is scheduled to be paid once
the Group is in receipt of the sales proceeds from the third-party.

In addition, the Group had outstanding orders to purchase container
equipment at March 31, 2002 of $1.9 million. These orders relate to containers
to be financed by the Group using available container funding facilities.

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The Cronos Group




Item 3  Quantitative and Qualitative Disclosures about Market Risk

Interest rate risk:Outstanding borrowings are subject to interest rate
risk. Approximately 82% of total borrowings had floating interest rates at
March 31, 2002. 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 expected effect would be to reduce
annual cash flows by $0.4 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 the first three months of 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 $1.1 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.

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##### Table of Contents






The Cronos Group

PART II  OTHER INFORMATION




Item 1  Legal Proceedings

Dispute with the Contrin Group

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 additional 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, each party has
supplemented their pleadings to respond to assertions made by the other party.
The Company anticipates that a final hearing will be held by the Court during
2002.

To preserve its rights of indemnity in the face of Contrins claims, 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 its 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 claim against the Palatins. By the injunction, the
Palatins are prohibited from selling, charging, or otherwise disposing of their
interest in an estate the Group believes is beneficially owned by the Palatins
in Amersham, England. The injunction also extends to Klamath, a Panamanian
company and the record owner of the estate. The Palatins have contested the
jurisdiction of the High Court of Justice over them, and have filed an
affidavit with the Court asserting that the estate is owned by Pontino S.A., a
Panamanian company, in which they disclaim any interest. The Group believes
that the High Court of Justice has jurisdiction to hear its claim against the
Palatins and that their disclaimer of any beneficial interest in the Amersham
estate is not credible. After agreeing in the summer of 2001 to a temporary
stay of the action in anticipation of a ruling on the Companys motion to
dismiss, pending in Luxembourg in the CWC action described above, the Group
notified the Palatins counsel, on December 14, 2001, that it was electing to
lift the stay and to resume prosecution of the action against the Palatins.
The Palatins have renewed their application to the Court contesting
jurisdiction of the Court over them or, in the alternative, have requested a
stay of any further prosecution of the action pending resolution of a criminal
proceeding pending in Vienna, Austria, against Mr. Palatin. A hearing on the
Palatins motion is scheduled to be heard on July 22, 2002.

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 Group intends to oppose Klamaths
application. A hearing on Klamaths application has been set for July 22,
2002, for hearing at the same time as the Palatins jurisdictional challenge.

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 while the Group
evaluates the documentation produced by Barclays.

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The Cronos Group

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 defense to CWCs claim, denying CWCs
claims and denying that CNV is liable to CWC in any amount. Concurrently with
the filing of its defense 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. Mr. Palatin has
yet to respond to CNVs claim. 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 Group
intends to oppose Klamaths application.

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 canceled the Klamath Shares and issued a new
stock certificate for 1,793,798 common shares of the Company to CEB. The Court
also ordered Mr. Palatin and Klamath to pay CEBs fees and expenses, including
attorneys fees, incurred in securing the final judgement.

As of May 8, 2001, the amount owed by Mr. Palatin to CEB under the New
York judgement totaled $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 to $6 million as a result
of the cancelation 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. CEB will seek to enforce the
claim against the estate that the Group believes is beneficially owned by Mr.
Palatin in Amersham, England. Mr. Palatin has not yet responded to the claim.




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

Not applicable

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The Cronos Group

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

Peter J Younger |  | Director, Chief Operating Officer,
Chief Financial Officer and
Chief Accounting Officer
(Principal Financial and
Accounting Officer) |  | May 9, 2002

19