UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported):  August 11, 2016
 
TRITON INTERNATIONAL LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

	
					
Bermuda	 	001-37827	 	98-1276572	
(State or other jurisdiction of incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	
 
Canon's Court
22 Victoria Street
Hamilton HM 12 Bermuda
(Address of Principal Executive Offices, including Zip Code)
 
Telephone: (914) 251-9000
(Registrant's Telephone Number, Including Area Code)
 
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant any of the following provisions:
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.
 
On August 11, 2016 , Triton International Limited issued a press release announcing its results of operations for the quarter ended June 30, 2016 .  A copy of the press release is furnished with this report as Exhibit 99.1.
 
The information in this Current Report on Form 8-K, including the attached exhibit, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be set forth by specific reference in such filing.
 
Item 9.01. Financial Statements and Exhibits.
 
(d)   Exhibits
 
99.1        Press release issued by Triton International Limited dated August 11, 2016 .

2

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 hereunto duly authorized.

	
				
 	 	Triton International Limited	
 	 	
Dated: August 11, 2016	 	By:	/s/ John Burns	
 	 	Name:	John Burns	
 	 	Title:	Senior Vice President and Chief Financial Officer	

3

TRITON INTERNATIONAL LIMITED REPORTS SECOND QUARTER 2016 RESULTS AND DECLARES $0.45 QUARTERLY DIVIDEND

Hamilton, Bermuda - August 11, 2016 – Triton International Limited (NYSE: TRTN) , ("Triton") today reported results for the second quarter ended June 30, 2016 . On July 12, 2016 Triton Container International Limited ("TCIL") and TAL International Group, Inc. ("TAL") completed their previously announced strategic combination and became wholly owned subsidiaries of Triton. In this press release, Triton has presented selected combined information for the second quarter ended June 30, 2016 together with individual financial statements for Triton, TCIL and TAL for the three and six months ended June 30, 2016 , and 2015.

Second Quarter and Recent Highlights:
		
•	On July 12, 2016, TCIL and TAL completed their combination to form Triton International, the world’s largest, most capable and most efficient lessor of intermodal freight containers.	
		
•	On August 11, 2016, Triton announced a quarterly dividend of $0.45 per share payable on September 22, 2016 to shareholders of record as of September 8, 2016 .	

The following reflects selected combined information of TCIL and TAL:
		
•	Combined Adjusted pre-tax income for TCIL and TAL was $18.4 million for the second quarter of 2016 , a decrease of 77.4% from the second quarter of 2015 .	
		
•	Combined leasing revenues for TCIL and TAL were $299.6 million for the second quarter of 2016 , a decrease of 9.2% from the second quarter of 2015 .	
		
•	Combined equipment utilization averaged 93.3% for the second quarter of 2016 .	
		
•	Through August 11, 2016, the combined companies have invested approximately $555 million in new and sale-leaseback containers for delivery in 2016 .	

The combined results shown in this press release represent the aggregate of TCIL's and TAL's individual results for the three and six months ended June 30, 2016 and 2015 and do not reflect Triton’s pro-forma results on a GAAP basis. These combined results do not reflect all transaction-related expenses since the transaction was completed on July 12, 2016, subsequent to quarter end, nor do they include the effect of any purchase accounting adjustments made in relation to the completion of the transaction. There will be additional transaction-related expenses and other charges that will be expensed in future periods.

As of June 30, 2016, Triton had not yet acquired TCIL and TAL, and, as such, had not commenced operations, had no significant assets or liabilities and had not conducted any material activities through June 30, 2016 . For the three and six months ended June 30, 2016 , Triton reported a net loss of $0.02 million and $0.03 million , respectively, mainly related to incidental costs incurred in Triton's formation and other costs in connection with the completion of the transaction. Therefore, no revenues or operating expenses existed for Triton as of June 30, 2016. Following completion of the transaction on July 12, 2016, Triton's results will reflect TCIL's historical financial information as the accounting acquirer, combined with TAL's financial information from the date of completion of the transaction, inclusive of the effect of purchase accounting adjustments. Such treatment is consistent with the accounting treatment prescribed under the acquisition method of accounting.

1

Selected Combined Information

The following selected key financial information illustrates the combined performance of TCIL and TAL for the three and six months ended June 30, 2016 and 2015 (dollars in millions):

							
 	Three Months Ended 
 June 30,	Six Months Ended 
 June 30,	
 	2016	2015	% Change	2016	2015	% Change	
Adjusted pre-tax income(1)	$18.4	$81.5	(77.4%)	$50.7	$174.2	(70.9%)	
Leasing revenues	$299.6	$329.8	(9.2%)	$611.9	$658.9	(7.1%)	
Adjusted EBITDA(1)	$240.7	$294.0	(18.1%)	$493.2	$592.9	(16.8%)	
Adjusted net income(1)	$16.5	$65.5	(74.8%)	$42.6	$142.2	(70.0%)	
Net income	$4.2	$62.9	(93.3%)	$19.4	$129.5	(85.0%)	

(1) Adjusted pre-tax income, Adjusted EBITDA, and Adjusted net income are non-GAAP financial measures that we believe are useful in evaluating our operating performance. Triton's, TCIL's and TAL's definition and calculation of Adjusted pre-tax income, Adjusted EBITDA, and Adjusted net income, including reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, are outlined in the attached schedules.

Operating Performance

"We are very excited to have completed this transformative combination and formed Triton International, the world’s largest, most capable and most efficient container leasing company,” commented Brian M. Sondey, Chairman and Chief Executive Officer of Triton International. "With the closing now behind us, operations at the new Triton are off to a running start. We continue to expect our new company to have significant scale, cost, container supply and operating capability advantages compared to our peers, and we are on track to achieve our goal of $40 million of annual cost savings after our systems are fully integrated. The new company has also been well received by our customers, vendors and lenders. I would like to thank our employees and all of our business partners for helping us successfully launch Triton International."

"While overall business conditions remained challenging, we did see some improvement during the second quarter, with leasing demand returning after a long period of slow activity. Modest trade growth, combined with limited production of new containers, has resulted in many of our customers experiencing spot container shortages and has led to increased demand for our containers. Net pick-up activity for the combined operations of TCIL and TAL was meaningfully positive during the second quarter of 2016 for the first time since the third quarter of 2014, and our combined utilization has started to recover, increasing by 0.2% during the second quarter to reach 93.7% as of June 30, 2016. Utilization of the Triton container fleet currently stands at 93.8% ."

"While leasing demand and net pick-up activity improved during the second quarter, market leasing rates and used container sale prices remained very low due to aggressive competition. Low market leasing rates continued to compress our leasing margins, as containers were returned from high-rate leases and subsequently leased out at lower market rates, and as existing leases were renegotiated and extended at lower rate levels. Used container sale prices also continued to decrease in the second quarter, leading to significant losses on the sale of containers. The loss on sale was particularly large for the TAL fleet during the second quarter due to mark-to-market adjustments related to TAL’s much larger inventory of containers for sale."

2

"Business conditions are also challenging for our shipping line customers, and several of our customers are in active financial restructuring negotiations. While our collections performance generally has been strong, credit risks will remain elevated until freight rates and the financial performance of the container shipping lines improve."

"The combined Adjusted pre-tax income for TCIL and TAL was $18.4 million during the second quarter of 2016, down 77% from the second quarter of 2015 and down 43% from the first quarter of 2016. This decrease primarily reflects ongoing lease rate pressure and the further decrease of used container selling prices in the second quarter. The improved leasing demand that we began to experience in the second quarter will mainly benefit future periods."

Outlook

Mr. Sondey continued, "Leasing demand remains solid as we start the third quarter, and we have recently seen some limited improvements in pricing trends. We expect dry container net pick-up activity to be strong for the third quarter, and our utilization should continue to increase. Prevailing lease rates remain far below historical levels and well below our portfolio average, but we have seen some improvement in market leasing rates as depot and factory container inventories shrink. Used container sale prices have so far stabilized during the third quarter, benefiting from a reduced volume of off-hires and improved lease-out opportunities for our older depot containers. If current demand levels and pricing trends continue through the third quarter, we expect our Adjusted pre-tax income to increase sequentially in the third quarter, excluding the impacts of purchase accounting."

Dividend

Triton’s Board of Directors has approved and declared a $0.45 per share quarterly cash dividend on its issued and outstanding common stock, payable on September 22, 2016 to shareholders of record at the close of business on September 8, 2016 .

3

Investors’ Webcast

Triton will hold a Webcast at 9 a.m. (New York time) on Friday, August 12, 2016 to discuss its second quarter results. To participate by phone, please dial 1-877-418-5277 (domestic) or 1-412-717-9592 (international) approximately 15 minutes prior to the start time and reference the Triton International Limited conference call. To access the live Webcast or archive, please visit Triton's website at http://www.trtn.com. An archive of the Webcast will be available one hour after the live call through Friday, September 23, 2016.

About Triton International Limited

Triton International Limited is the parent of Triton Container International Limited and TAL International Group, Inc., each of which merged under Triton on July 12, 2016 to create the world’s largest lessor of intermodal freight containers and chassis. With a container fleet of nearly five million twenty-foot equivalent units ("TEU"), Triton’s global operations include acquisition, leasing, re-leasing and subsequent sale of multiple types of intermodal containers and chassis.

Contact
John Burns
Senior Vice President and Chief Financial Officer
Investor Relations
(914) 697-2900

4

The following table sets forth the combined equipment fleet utilization(2) for TCIL and TAL as of and for the periods indicated:

	
															
 	Quarter Ended	
 	June 30,
2016	 	March 31,
2016	 	December 31,
2015	 	September 30,
2015	 	June 30,
2015	
Average Utilization	93.3	%	 	94.0	%	 	94.8	%	 	96.2	%	 	97.2	%	

															
 	June 30,
2016	 	March 31,
2016	 	December 31,
2015	 	September 30,
2015	 	June 30,
2015	
Ending Utilization	93.7	%	 	93.5	%	 	94.4	%	 	95.5	%	 	96.9	%	

(2) Utilization is computed by dividing total units on lease (in cost equivalent units, or "CEUs") by the total units in fleet (in CEUs), excluding new units not yet leased and off-hire units designated for sale.

The following table provides the composition of the combined equipment fleet as of June 30, 2016 , December 31, 2015, and June 30, 2015 (in units, TEUs and CEUs):

	
																		
 	Equipment Fleet in Units	 	Equipment Fleet in TEU	
 	June 30, 2016	 	December 31, 2015	 	June 30, 2015	 	June 30, 2016	 	December 31, 2015	 	June 30, 2015	
Dry	2,586,100		 	2,632,257		 	2,593,791		 	4,154,335		 	4,217,703		 	4,163,511		
Refrigerated	200,943		 	198,292		 	194,857		 	384,600		 	379,134		 	372,271		
Special	86,100		 	88,148		 	88,227		 	150,603		 	154,137		 	155,008		
Tank	11,715		 	11,243		 	9,852		 	11,715		 	11,243		 	9,852		
Chassis	21,784		 	21,216		 	20,293		 	39,355		 	38,210		 	36,325		
Equipment leasing fleet	2,906,642		 	2,951,156		 	2,907,020		 	4,740,608		 	4,800,427		 	4,736,967		
Equipment trading fleet	18,344		 	21,135		 	28,256		 	30,402		 	35,989		 	46,614		
Total	2,924,986		 	2,972,291		 	2,935,276		 	4,771,010		 	4,836,416		 	4,783,581		

	
									
 	Equipment Fleet in CEU	
 	June 30, 2016	 	December 31, 2015	 	June 30, 2015	
Operating leases	5,848,136		 	5,855,833		 	5,750,341		
Finance leases	235,806		 	252,229		 	246,907		
Equipment trading fleet	84,832		 	107,080		 	119,226		
Total	6,168,774		 	6,215,142		 	6,116,474		

5

Important Cautionary Information Regarding Forward-Looking Statements

Certain statements in this release, other than purely historical information, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that include the words "expect," "intend," "plan," "believe," "project," "anticipate," "will," "may," "would" and similar statements of a future or forward-looking nature may be used to identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond Triton's, TCIL's and TAL's control. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements.

These factors include, without limitation, economic, business, competitive, market and regulatory conditions and the following: failure to realize the anticipated benefits of the transaction, including as a result of a delay or difficulty in integrating the businesses of TCIL and TAL; uncertainty as to the long-term value of Triton's common shares; the expected amount and timing of cost savings and operating synergies resulting from the transaction; decreases in the demand for leased containers; decreases in market leasing rates for containers; difficulties in re-leasing containers after their initial fixed-term leases; their customers' decisions to buy rather than lease containers; their dependence on a limited number of customers for a substantial portion of their revenues; customer defaults; decreases in the selling prices of used containers; extensive competition in the container leasing industry; difficulties stemming from the international nature of their businesses; decreases in the demand for international trade; disruption to their operations resulting from the political and economic policies of foreign countries, particularly China; disruption to their operations from failures of or attacks on their information technology systems; their compliance with laws and regulations related to security, anti-terrorism, environmental protection and corruption; their ability to obtain sufficient capital to support their growth; restrictions on their businesses imposed by the terms of their debt agreements; and other risks and uncertainties, including those risk factors set forth in the section entitled "Risk Factors" beginning on page 34 of the proxy statement/prospectus included in Triton’s Registration Statement on Form S-4, as amended.

The foregoing list of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere. Any forward-looking statements made herein are qualified in their entirety by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on Triton or its business or operations. Except to the extent required by applicable law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

-Financial Tables Follow-

6

TRITON INTERNATIONAL LIMITED AND ITS SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)

								
 	June 30, 2016	 	December 31, 2015	
ASSETS:	 	 	 	
Prepaid assets	$	8		 	$	—		
Total current assets	8		 	—		
Total assets	$	8		 	$	—		
 	 	 	 	
LIABILITIES AND SHAREHOLDER'S EQUITY:	 	 	 	
Accounts payable	—		 	11		
Total current liabilities	—		 	11		
Total liabilities	$	—		 	$	11		
Shareholder's equity:	 	 	 	
Common shares, $0.01 par value, 100 shares authorized, and 100 shares issued respectively	—		 	—		
Receivable from TCIL common shares	—		 	—		
Additional paid-in capital	44		 	—		
Accumulated (deficit)	(36	)	 	(11	)	
Total shareholder's equity	8		 	(11	)	
Total liabilities and shareholder's equity	$	8		 	$	—		

7

TRITON INTERNATIONAL LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except share data)
(Unaudited)

								
 	Three Months Ended June 30, 2016	 	Six Months Ended June 30, 2016	
Revenues:	 	 	 	
 Revenues	$	—		 	$	—		
Total revenues	—		 	—		
 	 	 	 	
Operating expenses:	 	 	 	
Administrative expenses	21		 	25		
Transaction and other non-recurring costs	—		 	—		
Operating expenses	—		 	—		
Total operating expenses	21		 	25		
Operating (loss)	(21	)	 	(25	)	
Other expenses:	 	 	 	
Other expenses	—		 	—		
Total other expenses	—		 	—		
(Loss) before income taxes	(21	)	 	(25	)	
(Loss) tax expense	—		 	—		
Net (loss)	$	(21	)	 	$	(25	)	
Net (loss) per common share—Basic	$	(210	)	 	$	(250	)	
Net (loss) per common share—Diluted	$	(210	)	 	$	(250	)	
Cash dividends paid per common share	$	—		 	$	—		
Weighted average number of common shares outstanding—Basic	100		 	100		
Dilutive share options and restricted shares	—		 	—		
Weighted average number of common shares outstanding—Diluted	100		 	100		

8

TRITON INTERNATIONAL LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

				
 	Six Months Ended June 30, 2016	
Cash flows from operating activities:	 	
Net loss	$	(25	)	
Adjustments to reconcile net loss:	 	
Expenses paid by TCIL on behalf of Triton	44		
Changes in assets and liabilities:	 	
Increase in prepaid assets	(8	)	
Decrease in accounts payable	(11	)	
Net cash provided by operating activities	—		
Cash flows from investing activities:	 	
Net cash provided by investing activities	—		
Cash flows from financing activities:	 	
Net cash provided by financing activities	—		
Net increase in unrestricted cash and cash equivalents	$	—		
Cash and cash equivalents, beginning of period	—		
Cash and cash equivalents, end of period	$	—		
Supplemental non-cash activities:	 	
Capital contribution from TCIL in the form of expenses paid on behalf of Triton	$	44		

9

TRITON CONTAINER INTERNATIONAL LIMITED
Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)

								
 	June 30,
2016	 	December 31,
2015	
ASSETS:	 		 	 		
Leasing equipment, net of accumulated depreciation and allowances of $1,651,513 and $1,566,963	$	4,189,723		 	$	4,362,043		
Net investment in finance leases	64,664		 	68,107		
Revenue earning assets	4,254,387		 	4,430,150		
Unrestricted cash and cash equivalents	89,788		 	56,689		
Restricted cash	20,918		 	22,575		
Accounts receivable, net of allowances of $7,143 and $8,297	127,346		 	127,676		
Other assets	36,126		 	37,911		
Fair value of derivative instruments	—		 	2,153		
Total assets	$	4,528,565		 	$	4,677,154		
LIABILITIES AND EQUITY:	 		 	 		
Equipment purchases payable	$	1,232		 	$	12,128		
Fair value of derivative instruments	6,833		 	257		
Accounts payable and other accrued expenses	115,934		 	120,033		
Debt, net of unamortized deferred financing costs of $21,279 and $19,024	3,021,044		 	3,166,903		
Total liabilities	3,145,043		 	3,299,321		
Equity:	 		 	 		
Class A common shares, $0.01 par value; 294,000,000 authorized, 44,537,630 and 44,535,732 issued and outstanding	445		 	445		
Class B common shares, $0.01 par value; 6,000,000 authorized, issued and outstanding	60		 	60		
Additional paid-in capital	177,054		 	176,088		
Accumulated earnings	1,059,318		 	1,044,402		
Accumulated other comprehensive (loss)	(3,810	)	 	(3,666	)	
Noncontrolling interests	150,455		 	160,504		
Total equity	1,383,522		 	1,377,833		
Total liabilities and equity	$	4,528,565		 	$	4,677,154		

10

TRITON CONTAINER INTERNATIONAL LIMITED
Consolidated Statements of Operations
(Dollars and shares in thousands, except earnings per share)
(Unaudited)

																
 	Three Months Ended 
 June 30,	 	Six Months Ended 
 June 30,	
 	2016	 	2015	 	2016	 	2015	
Leasing revenues:	 	 	 	 	 	 	 	
Operating leases	$	156,367		 	$	176,986		 	$	317,362		 	$	355,137		
Finance leases	1,966		 	2,003		 	3,996		 	3,983		
Total leasing revenues	158,333		 	178,989		 	321,358		 	359,120		
 	 	 	 	 	 	 	 	
(Loss) gain on sale of leasing equipment, net	(1,930	)	 	1,077		 	(3,767	)	 	6,325		
 	 	 	 	 	 	 	 	
Operating expenses:		 		 		 		
Depreciation and amortization	81,132		 	71,040		 	160,276		 	140,120		
Direct operating expenses	12,015		 	13,506		 	26,482		 	26,122		
Administrative expenses	13,166		 	14,367		 	27,679		 	29,730		
Transaction and other non-recurring costs	3,537		 	4,173		 	6,948		 	9,956		
(Reversal of) provision for doubtful accounts	(52	)	 	84		 	(171	)	 	(2,132	)	
Total operating expenses	109,798		 	103,170		 	221,214		 	203,796		
Operating income	46,605		 	76,896		 	96,377		 	161,649		
Other expenses:		 		 		 		
Interest and debt expense	33,491		 	35,929		 	67,189		 	70,466		
Realized loss on derivative instruments	749		 	1,438		 	1,403		 	3,013		
Write-off of deferred financing costs	141		 	—		 	141		 	—		
Loss (gain) on interest rate swaps, net	4,133		 	(2,059	)	 	8,729		 	1,674		
Other (income) expense, net	(756	)	 	261		 	(989	)	 	(265	)	
Total other expenses	37,758		 	35,569		 	76,473		 	74,888		
Income before income taxes	8,847		 	41,327		 	19,904		 	86,761		
Income tax expense	1,192		 	1,346		 	2,184		 	2,944		
Net income	$	7,655		 	$	39,981		 	$	17,720		 	$	83,817		
Less: income attributable to noncontrolling interest	$	1,481		 	$	3,740		 	$	2,804		 	$	6,706		
Net income attributable to shareholders	$	6,174		 	$	36,241		 	$	14,916		 	$	77,111		

11

TRITON CONTAINER INTERNATIONAL LIMITED
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

								
 	Six Months Ended 
 June 30,	
 	2016	 	2015	
Cash flows from operating activities:	 	 	 	
Net income	$	17,720		 	$	83,817		
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	
Depreciation and amortization	160,276		 	140,120		
Amortization of deferred financing costs	2,672		 	2,851		
Loss (gain) on sale of leasing equipment, net	3,767		 	(6,325	)	
Loss on interest rate swaps, net	8,729		 	1,674		
Write-off of deferred financing costs	141		 	—		
Stock compensation charge	2,288		 	8,102		
Changes in operating assets and liabilities:	 	 	 	
Other changes in operating assets and liabilities	(6,308	)	 	(1,325	)	
Net cash provided by operating activities	189,285		 	228,914		
Cash flows from investing activities:	 	 	 	
Purchases of leasing equipment and investments in finance leases	(64,098	)	 	(302,853	)	
Proceeds from sale of equipment, net of selling costs	60,820		 	89,824		
Cash collections on finance lease receivables, net of income earned	7,911		 	6,578		
Other	(574	)	 	(1,562	)	
Net cash provided by (used in) investing activities	4,059		 	(208,013	)	
Cash flows from financing activities:	 	 	 	
Redemption of common shares	(376	)	 	—		
Financing fees paid under debt facilities	(5,068	)	 	(2,972	)	
Borrowings under debt facilities	44,700		 	535,000		
Payments under debt facilities and capital lease obligations	(188,304	)	 	(535,061	)	
Decrease in restricted cash	1,656		 	3,873		
Distributions to noncontrolling interests	(12,853	)	 	(26,772	)	
Net cash (used in) provided by financing activities	(160,245	)	 	(25,932	)	
Net increase (decrease) in unrestricted cash and cash equivalents	$	33,099		 	$	(5,031	)	
Unrestricted cash and cash equivalents, beginning of period	56,689		 	65,607		
Unrestricted cash and cash equivalents, end of period	$	89,788		 	$	60,576		
Supplemental non-cash investing activities:	 	 	 	
 Amounts incurred, but not yet paid, for container rental equipment purchased	$	1,232		 	$	16,889		

12

TAL INTERNATIONAL GROUP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)

								
 	June 30,
2016	 	December 31,
2015	
ASSETS:	 		 	 		
Leasing equipment, net of accumulated depreciation and allowances of $1,289,204 and $1,218,826	$	3,813,218		 	$	3,908,292		
Net investment in finance leases, net of allowances of $671 and $805	159,693		 	177,737		
Equipment held for sale	80,682		 	74,899		
Revenue earning assets	4,053,593		 	4,160,928		
Unrestricted cash and cash equivalents	54,331		 	58,907		
Restricted cash	28,358		 	30,302		
Accounts receivable, net of allowances of $1,209 and $1,314	91,358		 	95,709		
Goodwill	74,523		 	74,523		
Other assets	15,091		 	13,620		
Fair value of derivative instruments	—		 	87		
Total assets	$	4,317,254		 	$	4,434,076		
LIABILITIES AND STOCKHOLDERS' EQUITY:	 		 	 		
Equipment purchases payable	$	8,304		 	$	20,009		
Fair value of derivative instruments	67,191		 	20,348		
Accounts payable and other accrued expenses	53,480		 	56,096		
Net deferred income tax liability	447,992		 	456,123		
Debt, net of unamortized deferred financing costs of $23,720 and $25,245	3,146,494		 	3,216,488		
Total liabilities	3,723,461		 	3,769,064		
Stockholders' equity:	 		 	 		
Preferred stock, $0.001 par value, 500,000 shares authorized, none issued	—		 	—		
Common stock, $0.001 par value, 100,000,000 shares authorized, 37,307,134 and 37,167,134 shares issued respectively	37		 	37		
Treasury stock, at cost, 3,911,843 shares	(75,310	)	 	(75,310	)	
Additional paid-in capital	513,162		 	511,297		
Accumulated earnings	204,568		 	248,183		
Accumulated other comprehensive (loss)	(48,664	)	 	(19,195	)	
Total stockholders' equity	593,793		 	665,012		
Total liabilities and stockholders' equity	$	4,317,254		 	$	4,434,076		

13

TAL INTERNATIONAL GROUP, INC.
Consolidated Statements of Operations
(Dollars and shares in thousands, except earnings per share)
(Unaudited)

																
 	Three Months Ended 
 June 30,	 	Six Months Ended 
 June 30,	
 	2016	 	2015	 	2016	 	2015	
Leasing revenues:	 	 	 	 	 	 	 	
Operating leases	$	138,137		 	$	146,569		 	$	283,035		 	$	291,137		
Finance leases	2,926		 	3,887		 	6,033		 	7,911		
Other revenues	210		 	382		 	1,428		 	765		
Total leasing revenues	141,273		 	150,838		 	290,496		 	299,813		
 	 	 	 	 	 	 	 	
Equipment trading revenues	11,463		 	16,478		 	22,755		 	33,323		
Equipment trading expenses	(11,471	)	 	(14,957	)	 	(22,736	)	 	(30,388	)	
Trading margin	(8	)	 	1,521		 	19		 	2,935		
 	 	 	 	 	 	 	 	
(Loss) on sale of leasing equipment, net	(15,508	)	 	(660	)	 	(29,438	)	 	(2,109	)	
 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	
Depreciation and amortization	63,157		 	60,021		 	126,383		 	118,405		
Direct operating expenses	19,576		 	10,011		 	37,535		 	18,833		
Administrative expenses	10,855		 	10,467		 	21,568		 	22,249		
Transaction and other non-recurring costs	2,295		 	900		 	4,534		 	1,100		
Provision (reversal) for doubtful accounts	78		 	(165	)	 	(231	)	 	(188	)	
Total operating expenses	95,961		 	81,234		 	189,789		 	160,399		
Operating income	29,796		 	70,465		 	71,288		 	140,240		
Other expenses:	 	 	 	 	 	 	 	
Interest and debt expense	28,874		 	29,602		 	58,025		 	58,845		
Write-off of deferred financing costs	173		 	—		 	536		 	—		
Loss (gain) on interest rate swaps, net	135		 	(364	)	 	948		 	352		
Total other expenses	29,182		 	29,238		 	59,509		 	59,197		
Income before income taxes	614		 	41,227		 	11,779		 	81,043		
Income tax expense	2,584		 	14,557		 	7,327		 	28,616		
Net (loss) income	$	(1,970	)	 	$	26,670		 	$	4,452		 	$	52,427		

14

TAL INTERNATIONAL GROUP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

								
 	Six Months Ended 
 June 30,	
 	2016	 	2015	
Cash flows from operating activities:	 	 	 	
Net income	$	4,452		 	$	52,427		
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	
Depreciation and amortization	126,383		 	118,405		
Amortization of deferred financing costs	3,351		 	3,941		
Amortization of net loss on terminated derivative instruments designated as cash flow hedges	1,144		 	1,355		
Amortization of lease intangibles	3,580		 	1,047		
Loss on sale of leasing equipment, net	29,438		 	2,109		
Loss on interest rate swaps, net	948		 	352		
Write-off of deferred financing costs	536		 	—		
Deferred income taxes	7,327		 	28,616		
Stock compensation charge	2,177		 	3,449		
Changes in operating assets and liabilities:	 	 	 	
Net equipment sold (purchased) for resale activity	(483	)	 	(4,809	)	
Other changes in operating assets and liabilities	(624	)	 	(3,759	)	
Net cash provided by operating activities	178,229		 	203,133		
Cash flows from investing activities:	 	 	 	
Purchases of leasing equipment and investments in finance leases	(145,667	)	 	(428,963	)	
Proceeds from sale of equipment, net of selling costs	61,301		 	66,026		
Cash collections on finance lease receivables, net of income earned	21,325		 	21,289		
Other	(296	)	 	74		
Net cash (used in) investing activities	(63,337	)	 	(341,574	)	
Cash flows from financing activities:	 	 	 	
Purchases of treasury stock	—		 	(4,446	)	
Stock options exercised and stock related activity	—		 	38		
Financing fees paid under debt facilities	(2,362	)	 	(717	)	
Borrowings under debt facilities	190,001		 	365,000		
Payments under debt facilities and capital lease obligations	(261,555	)	 	(182,251	)	
Decrease in restricted cash	1,944		 	1,159		
Common stock dividends paid	(47,496	)	 	(47,313	)	
Net cash (used in) provided by financing activities	(119,468	)	 	131,470		
Net (decrease) in unrestricted cash and cash equivalents	$	(4,576	)	 	$	(6,971	)	
Unrestricted cash and cash equivalents, beginning of period	58,907		 	79,132		
Unrestricted cash and cash equivalents, end of period	$	54,331		 	$	72,161		
Supplemental non-cash investing activities:	 	 	 	
 Amounts incurred, but not yet paid, for container rental equipment purchased	$	8,304		 	$	34,670		

15

Non-GAAP Financial Measures

We use the terms "EBITDA", “Adjusted EBITDA”, "Adjusted pre-tax income", and "Adjusted net income", throughout this press release.

EBITDA is defined as net income before interest and debt expense, income tax expense, depreciation and amortization, and the write-off of deferred financing costs. Adjusted EBITDA is defined as EBITDA excluding gains and losses on interest rate swaps, plus principal payments on finance leases, plus transaction and other non-recurring costs.

Adjusted pre-tax income is defined as income before income taxes as further adjusted for certain items which are described in more detail below, which management believes are not representative of our operating performance. Adjusted pre-tax income excludes gains and losses on interest rate swaps, the write-off of deferred financing costs, and transaction and other non-recurring costs. Adjusted net income is defined as net income further adjusted for the items discussed above, net of income tax.

EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted pre-tax return on tangible equity are not presentations made in accordance with U.S. GAAP. EBITDA, Adjusted EBITDA, Adjusted pre-tax income, and Adjusted net income should not be considered as alternatives to, or more meaningful than, amounts determined in accordance with U.S. GAAP, including net income, or net cash from operating activities.

We believe that EBITDA, Adjusted EBITDA, Adjusted pre-tax income, Adjusted net income, and Adjusted pre-tax return on tangible equity are useful to an investor in evaluating our operating performance because these measures:

•	are widely used by securities analysts and investors to measure a company’s operating performance and available liquidity to service debt and fund investments without regard to debt or capital structure, income tax rates and depreciation policy estimates, which can vary substantially from company to company;	

•	help investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure, our asset base and certain non-routine events which we do not expect to occur in the future; and	

•	are used by our management for various purposes, including as measures of operating performance and liquidity, to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.	

We have provided a reconciliation of net income, the most directly comparable U.S. GAAP measure, to EBITDA in the tables below for the three and six months ended June 30, 2016 and 2015 . We have also provided reconciliations of income before income taxes and net income, the most directly comparable U.S. GAAP measures, to Adjusted pre-tax income and Adjusted net income in the tables below for the three and six months ended June 30, 2016 and 2015 .

We have also provided reconciliations of operating cash flows to Adjusted EBITDA in the tables below for the current quarter.

16

	
																
TRITON CONTAINER INTERNATIONAL LIMITED
Non-GAAP Reconciliations of Adjusted Pre-tax Income and Adjusted Net Income
(Dollars in Thousands)	
 	Three Months Ended 
 June 30,	 	Six Months Ended 
 June 30,	
 	2016	 	2015	 	2016	 	2015	
Income before income taxes	$	8,847		 	$	41,327		 	$	19,904		 	$	86,761		
Add:	 	 	 	 	 	 	 	
Write-off of deferred financing costs	141		 	—		 	141		 	—		
Net loss (gain) on interest rate swaps	4,133		 	(2,059	)	 	8,729		 	1,674		
    Transaction and other non-recurring costs	3,537		 	4,173		 	6,948		 	9,956		
Less: income attributable to noncontrolling interest	1,481		 	3,740		 	2,804		 	6,706		
Adjusted pre-tax income	$	15,177		 	$	39,701			$	32,918			$	91,685		

 	Three Months Ended 
 June 30,	 	Six Months Ended 
 June 30,	
 	2016	 	2015	 	2016	 	2015	
Net income attributable to shareholders	$	6,174		 	$	36,241		 	$	14,916		 	$	77,111		
Add:	 	 	 	 	 	 	 	
Write-off of deferred financing costs, net of tax	137		 	—		 	137		 	—		
Net loss (gain) on interest rate swaps, net of tax	4,009		 	(1,997	)	 	8,467		 	1,624		
    Transaction and other non-recurring costs, net of tax	3,431		 	4,048		 	6,740		 	9,657		
    Foreign income and withholding tax adjustments	753		 	168		 	1,213		 	447		
Adjusted net income	$	14,504		 	$	38,460			$	31,473			$	88,839		

	
								
TRITON CONTAINER INTERNATIONAL LIMITED
Non-GAAP Reconciliations of Operating Cash Flows to Adjusted EBITDA
(Dollars in Thousands)
	
 	Six Months Ended 
 June 30,	
 	2016	 	2015	
Net cash provided by operating activities	$	189,285		 	$	228,914		
Non-cash expenses	(5,580	)	 	(14,715	)	
(Loss) gain on sale of equipment, net	(3,767	)	 	6,325		
Changes in operating assets & liabilities	6,308		 	1,325		
Interest expense	67,189		 	70,466		
Realized loss on derivative instruments	1,403		 	3,013		
Principal payments on finance leases	7,911		 	6,578		
Transaction and other non-recurring costs	6,948		 	9,956		
Adjusted EBITDA	$	269,697		 	$	311,862		

17

	
													
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of Adjusted Pre-tax Income and Adjusted Net Income
(Dollars in Thousands)	
 	Three Months Ended 
 June 30,	Six Months Ended 
 June 30,	
 	2016	2015	2016	2015	
Income before income taxes	$	614		$	41,227		$	11,779		$	81,043		
Add:	 	 	 	 	
Write-off of deferred financing costs	173		—		536		—		
Net loss (gain) on interest rate swaps	135		(364	)	948		352		
 Transaction and other non-recurring costs	2,295		900		4,534		1,100		
Adjusted pre-tax income	$	3,217		$	41,763		$	17,797		$	82,495		
 	 	 	 	 	
 	Three Months Ended 
 June 30,	Six Months Ended 
 June 30,	
 	2016	2015	2016	2015	
Net (loss) income	$	(1,970	)	$	26,670		$	4,452		$	52,427		
Add:	 	 	 	 	
Write-off of deferred financing costs, net of tax	126		—		335		—		
Net loss (gain) on interest rate swaps, net of tax	125		(235	)	593		228		
    Transaction and other non-recurring costs, net of tax	1,548		581		2,836		711		
Stock compensation tax adjustment	—		—		732		—		
Tax adjustment related to non-deductibility of certain transaction and other non-recurring costs	2,182		—		2,182		—		
Adjusted net income	$	2,011		$	27,016		$	11,130		$	53,366		

	
							
TAL INTERNATIONAL GROUP, INC.
Non-GAAP Reconciliations of Operating Cash Flows to Adjusted EBITDA
(Dollars in Thousands)
	
 	Six Months Ended 
 June 30,	
 	2016	2015	
Net cash provided by operating activities	$	178,229		$	203,133		
Non-cash expenses	(10,252	)	(9,792	)	
(Loss) on sale of equipment, net	(29,438	)	(2,109	)	
Changes in operating assets & liabilities	1,107		8,568		
Interest expense	58,025		58,845		
Principal payments on finance leases	21,325		21,289		
Transaction and other non-recurring costs	4,534		1,100		
Adjusted EBITDA	$	223,530		$	281,034		

18