UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

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

OR

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report _____________________

For the transition period from _______ to _______

Commission file number 001-33725

Textainer Group Holdings Limited

(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)

Bermuda

(Jurisdiction of incorporation or organization)
Century House, 16 Par-La-Ville Road, Hamilton HM 08, Bermuda
(Address of principal executive offices)
Michael J. Harvey
Textainer Group Holdings Limited
Century House, 16 Par-La-Ville Road, Hamilton HM 08, Bermuda
(441) 296-2500
mjh@textainer.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

Title of each class

Common Shares, $0.01 par value

Trading Symbol(s)

TGH

Name of each exchange on which registered

New York Stock Exchange

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

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

50,495,789 Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes ☒	No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.	Yes ☐	No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☐	Accelerated filer ☒	Non-accelerated filer ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP	☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

TABLE OF CONTENTS

Information Regarding Forward-Looking Statements; Cautionary	Page		
				
	Language																		1		
																							
PART I																					
Item 1.	Identity of Directors, Senior Management and Advisers	2		
Item 2.	Offer Statistics and Expected Timetable			2		
Item 3.	Key Information	3		
																	
Item 4.	Information on the Company	35		
Item 4A.	Unresolved Staff Comments		52		
															
Item 5.	Operating and Financial Review and Prospects		52		
Item 6.	Directors, Senior Management and Employees		69		
Item 7.	Major Shareholders and Related Party Transactions	76		
Item 8.	Financial Information			80		
Item 9.	The Offer and Listing	81		
										
Item 10.	Additional Information	82		
										
Item 11.	Quantitative and Qualitative Disclosures About Market				
			Risk		91		
							
Item 12.	Description of Securities Other than Equity Securities	93		
PART II																					
Item 13.	Defaults, Dividend Arrearages and Delinquencies	94		

Item 14.	Material Modifications to the Rights of Security		Page		
						
		Holders and Use of Proceeds	94		
Item 15.	Controls and Procedures			94		
Item 16.	[Reserved]		95		
Item 16A.	Audit Committee Financial Expert		95		
Item 16B.	Code of Ethics	95		
																
Item 16C.	Principal Accountant Fees and Services	96		
																
Item 16D.	Exemptions from the Listing Standards for Audit				
		Committees			96		
Item 16E.	Purchases of Equity Securities by the Issuer and					
		Affiliated Purchasers		96		
Item 16F.	Change in Registrant’s Certifying Accountant		97		
Item 16G.	Corporate Governance	98		
PART III																					
Item 17.	Financial Statements		100		
Item 18.	Financial Statements	100		
Item 19.	Exhibits		100		
Signatures																		114		

In this Annual Report on Form 20-F, unless indicated otherwise, references to: (1) “Textainer,” “TGH,” “the Company,” “we,” “us” and “our” refer, as the context requires, to Textainer Group Holdings Limited, which is the registrant and the issuer of the class of common shares that has been registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended, or Textainer Group Holdings Limited and its subsidiaries; (2) “TEU” refers to a “Twenty-Foot Equivalent Unit,” which is a unit of measurement used in the container shipping industry to compare shipping containers of various lengths to a standard 20′ dry freight container, thus a 20′ container is one TEU and a 40′ container is two TEU; (3) “CEU” refers to a Cost Equivalent Unit, which is a unit of measurement based on the approximate cost of a container relative to the cost of a standard 20′ dry freight container, so the cost of a standard 20′ dry freight container is one CEU; the cost of a 40′ dry freight container is 1.6 CEU; the cost of a 40′ high cube dry freight container (9′6″ high) is 1.7 CEU; and the cost of a 40’ high cube refrigerated container is 8.0 CEU; (4) “our owned fleet” means the containers we own; (5) “our managed fleet” means the containers we manage that are owned by other Container Investors; (6) “our fleet” and “our total fleet” mean our owned fleet plus our managed fleet plus any containers we lease from other lessors; and (7) “Container Investors” means the owners of the containers in our managed fleet.

Dollar amounts in this Annual Report on Form 20-F are expressed in thousands, unless otherwise indicated.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS; CAUTIONARY LANGUAGE

This Annual Report on Form 20-F, including the sections entitled Item 3, “Key Information -- Risk Factors,” and Item 5, “Operating and Financial Review and Prospects,” contains forward-looking statements within the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not statements of historical facts and may relate to, but are not limited to, expectations or estimates of future operating results or financial performance, capital expenditures, introduction of new products, regulatory compliance, plans for growth and future operations, as well as assumptions relating to the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue” or the negative of these terms or other similar terminology.

Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which cannot be foreseen. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including, among others, the risks we face that are described in the section entitled Item 3, “Key Information -- Risk Factors” and elsewhere in this Annual Report on Form 20-F.

We believe that it is important to communicate our future expectations to potential investors, shareholders and other readers. However, there may be events in the future that we are not able to accurately predict or control and that may cause actual events or results to differ materially from the expectations expressed in or implied by our forward-looking statements. The risk factors listed in Item 3, “Key Information -- Risk Factors,” as well as any cautionary language in this Annual Report on Form 20-F, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you decide to buy, hold or sell our common shares, you should be aware that the occurrence of the events described in Item 3, “Key Information -- Risk Factors” and elsewhere in this Annual Report on Form 20-F could negatively impact our business, cash flows, results of operations, financial condition and share price. Potential investors, shareholders and other readers should not place undue reliance on our forward-looking statements.

Forward-looking statements regarding our present plans or expectations involve risks and uncertainties relative to return expectations and related allocation of resources and changing economic or competitive conditions which could cause actual results to differ from present plans or expectations, and such differences could be material. Similarly, forward-looking statements regarding our present expectations for operating results and cash flow involve risks and uncertainties related to factors such as utilization rates, per diem rates, container prices, demand for containers by container shipping lines, supply, the magnitude and duration of the ongoing COVID-19 pandemic and other factors discussed under Item 3, “Key Information -- Risk Factors” or elsewhere in this Annual Report on Form 20-F, which could also cause actual results to differ from present plans. Such differences could be material.

All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. We assume no obligation to, and do not plan to, update any forward-looking statements after the date of this Annual Report on Form 20-F as a result of new information, future events or developments, except as required by federal securities laws. You should read this Annual Report on Form 20-F and the documents that we reference and have filed as exhibits with the understanding that we cannot guarantee future results, levels of activity, performance or achievements and that actual results may differ materially from what we expect.

Industry data and other statistical information used in this Annual Report on Form 20-F are based on independent publications, reports by market research firms or other published independent sources. Good faith estimates are used for some data that is derived from our review of internal surveys and the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information.

In this Annual Report on Form 20-F, unless otherwise specified, all monetary amounts are in U.S. dollars. To the extent that any monetary amounts are not denominated in U.S. dollars, they have been translated into U.S. dollars in accordance with our accounting policies as described in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

1

PART I

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

2

ITEM 3.	KEY INFORMATION

A.	Selected Financial Data

The selected financial data presented below under the heading “Statement of Income Data” for the years ended December 31, 2020, 2019 and 2018 and under the heading “Balance Sheet Data” as of December 31, 2020 and 2019 have been derived from our audited consolidated financial statements included in Item 18, “Financial Statements” in this Annual Report on Form 20-F. The selected financial data presented below under the heading “Statement of Income Data” for the years ended December 31, 2017 and 2016 and under the heading “Balance Sheet Data” as of December 31, 2018, 2017 and 2016 are audited and have been derived from our audited consolidated financial statements not included in this Annual Report on Form 20-F. The data presented below under the heading “Other Financial and Operating Data” have not been audited. Historical results are not necessarily indicative of the results of operations to be expected in future periods. You should read the selected consolidated financial data and operating data presented below in conjunction with Item 5, “Operating and Financial Review and Prospects” and with Item 18, “Financial Statements” in this Annual Report on Form 20-F.

							Fiscal Years Ended December 31,								
			2020				2019				2018				2017				2016			
							(Dollars in thousands, except per share data)						
Statement of Income Data:																						
Revenues:																						
Lease rental income - owned fleet	$	538,425		$	517,859		$	501,362		$	444,888		$	460,427			
Lease rental income - managed fleet			62,448				101,901				111,342				104,566				105,511			
Lease rental income			600,873				619,760				612,704				549,454				565,938			
																						
Management fees - non-leasing			5,271				7,590				8,529				7,146				5,937			
																						
Trading container sales proceeds			31,941				58,734				19,568				4,758				15,628			
Cost of trading containers sold			(28,409)			(51,336)			(16,118)			(3,302)			(15,904)		
Trading container margin																						
			3,532				7,398				3,450				1,456				(276)		
																						
Gain on sale of owned fleet containers, net			27,230				21,397				36,071				26,210				6,761			
																						
Operating expenses:																						
Direct container expense - owned fleet			55,222				45,831				53,845				59,538				60,029			
Distribution expense to managed fleet container investors			57,311				93,858				102,992				96,718				98,028			
																						
Depreciation expense			261,665				260,372				249,500				235,293				302,599			
Amortization expense			2,572				2,093				3,721				4,092				5,053			
General and administrative expense			41,880				38,142				44,317				39,677				34,540			
Bad debt (recovery) expense, net			(1,668)			2,002				2,697				477				21,166			
Container lessee default (recovery) expense, net			(1,675)			7,867				17,948				4,605				30,735			
Gain on insurance recovery and legal settlement			—			(14,881)			(8,692)			—			—		
Gain on settlement of pre-existing management agreement			—			(1,823)			—			—			—		
																	
Total operating expenses			415,307				433,461				466,328				440,400				552,150			
Income from operations			221,599				222,684				194,426				143,866				26,210			
			3																			

						Fiscal Years Ended December 31,							
		2020				2019				2018				2017			2016			
									(Dollars in thousands, except per share data)					
Other (expense) income:																				
Interest expense		(123,230)			(153,185)			(138,427)			(117,475)		(85,215)		
Write-off of unamortized deferred debt issuance																				
costs and bond discounts		(8,750)			—			(881)			(7,550)		—		
Interest income		531				2,505				1,709				613			408			
Realized (loss) gain on derivative instruments, net		(12,295)			1,946				5,238				(1,191)		(8,928)		
Unrealized (loss) gain on derivative instruments,																				
net		(6,044)			(15,442)			(5,790)			4,094			6,210			
Other, net		1,488				(4)			—			3			(8)		
Net other expense		(148,300)				(164,180)				(138,151)				(121,506)			(87,533	)		
Income (loss) before income tax and																	(61,323)		
noncontrolling interest		73,299				58,504				56,275				22,360					
Income tax benefit (expense)		374				(1,948)			(2,025)			(1,618)		3,447			
Net income (loss)		73,673				56,556				54,250				20,742			(57,876	)		
Less: Net (income) loss attributable to the																				
noncontrolling interests		(851)			168				(3,872)			(1,377)		5,393			
Net income (loss) attributable to Textainer Group																				
Holdings Limited common shareholders	$	72,822		$	56,724		$	50,378		$	19,365		$	(52,483)		
Net income (loss) attributable to Textainer Group																				
																				
Holdings Limited common shareholders per share:																				
Basic	$	1.37		$	0.99		$	0.88		$	0.34		$	(0.93)		
Diluted	$	1.36		$	0.99		$	0.88		$	0.34		$	(0.93)		
Weighted average shares outstanding (in thousands):																				
Basic		53,271				57,349				57,200				56,845			56,608			
Diluted		53,481				57,459				57,487				57,159			56,608			
Other Financial and Operating Data (unaudited):																				
																				
Cash dividends declared per common share	$	—	$	—	$	—	$	—	$	0.51			
Purchase of containers and fixed assets	$	746,145		$	466,993		$	854,383		$	300,125		$	505,528			
Payments on container leaseback financing receivable	$	116,263		$	281,445		$	—	$	—	$	—		
Utilization rate (1)		96.60%			97.40%			98.10%			96.40%		94.70%		
Total fleet in TEU (as of the end of the period)		3,774,053				3,500,812				3,354,724				3,279,892			3,142,556			
Balance Sheet Data (as of the end of the period):																				
Cash and cash equivalents (including restricted cash)	$	205,165		$	277,905		$	224,928		$	237,569		$	142,123			
Containers, net		4,125,052				4,156,151				4,134,016				3,791,610			3,717,542			
Net investment in finance leases (current and long-																				
term)		879,960				295,303				167,060				182,624			237,234			
Container leaseback financing receivable (current																				
and long-term)		363,868				271,658				—			—		—		
Total assets		5,741,376				5,202,617				4,768,769				4,401,252			4,310,729			
Long-term debt (including current portion)		4,115,344				3,797,729				3,409,827				2,990,308			3,038,297			
Total liabilities		4,454,658				3,916,972				3,532,778				3,195,215			3,130,189			
Total Textainer Group Holdings Limited																				
shareholders' equity		1,259,608				1,259,379				1,206,813				1,148,297			1,121,681			
Noncontrolling interests		27,110				26,266				29,178				57,740			58,859			

(1)	We measure the utilization rate on the basis of CEU on lease, using the actual number of days on-hire, expressed as a percentage of CEU available for lease, using the actual days available for lease. CEU available for lease excludes CEU that have been manufactured for us but have not yet been delivered to a lessee and CEU designated as held for sale units.

4

B.	Capitalization and Indebtedness Not applicable.

C.	Reasons for the Offer and Use of Proceeds Not applicable.

D.	Risk Factors

An investment in our common shares involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained elsewhere in this Annual Report on Form 20-F, including our financial statements and the related notes thereto, before you decide to buy, hold or sell our common shares. Any of the risk factors we describe below could adversely affect our business, cash flows, results of operations and financial condition. The market price of our common shares could decline and you may lose some or all of your investment if one or more of these risks and uncertainties develop into actual events.

Summary of Risks Related to the Company and Investment in our Shares

The following is a summary of the risks related to our Company and your investment in our shares. You are encouraged to review all of the risk factors that follow for more detailed information and discussion of how these risks and other risks related to our company and common shares may impact us:

•	The demand, pricing and utilization of our leased containers depends on many factors beyond our control, including global economic conditions, economic stability, new container prices, prevailing lease rates, freight demand, international trade and trade barriers, environmental regulations, industry consolidation and other factors.

•	Other results may fluctuate based on risks associated with re-leasing containers after their initial long-term lease and gains and losses associated with the disposition or trading of used equipment. Credit events such as lease defaults, which are enhanced due to our reliance on a limited number of lessees can also impact our results.

•	Our business and capital structure rely on a significant amount of debt and our indebtedness reduces our financial flexibility and could impede our ability to operate. We own the substantial majority of our containers and they are largely financed with debt. Our ability to service our debt and fund future capital expenditures, depends on many factors beyond our control. Our debt facilities have significant covenants and we rely on hedging with the use of derivatives which has risks.

•	We face various operational and competitive risks which including, repositioning our containers which may cost us significant amounts, a surplus of containers and a lack of storage space could negatively impact us, if containers are not leased shortly after we purchase them, we face risks, consolidation or disruptions with container manufacturers could harm our business, we face extensive competition in the container leasing industry and our lessees may decide to buy, rather than lease their containers.

•	The international nature of the container shipping industry exposes us to numerous risks, additionally terrorist attacks, the threat of such attacks or the outbreak of war and hostilities could negatively impact us and may expose us to liability, risks from the political and economic policies of China, its legal system and China’s economic activity, exchange rate fluctuations, cargo security regulations and the lack of an international title registry for containers could have an adverse impact on us.

5

•	We face a number of other business risks including IT system risks, cyber-attack and security breaches, insurance risks, US government contracting risks, risks from acquisitions and joint ventures, risks from attracting and retaining senior executives, environmental regulations, risks from our joint venture with Trifleet Leasing, potential litigation arising from container management activities, and risks from U.S. laws that impact our international operations.

•	There are a number of tax risks related to our business and common shares, these include (i) U.S. investors in our company could suffer adverse tax consequences if we are characterized as a passive foreign investment company (ii) we may become subject to unanticipated tax liabilities, (iii) our U.S. subsidiaries may be treated as personal holding companies for U.S. federal tax purposes, (iv) changes in tax laws or their application could adversely affect us, (v) our ability to use our net operating losses to offset future taxable income may be subject to certain limitations, (vi) and the calculation of our income tax expense requires judgment and the use of estimates.

•	There are a number of risks related to our shares and public listings, including (i) we may not be able to resume paying a dividend and any dividends paid in the future could be reduced or eliminated, (ii) we face risks from our share repurchase program, (iii) changes in accounting rules could significantly impact how we, our managed fleet container investors and our customers account for our leases, (iv) the market price and trading volume of our common shares, which may be affected by market conditions beyond our control, have been volatile and could continue to remain volatile, (v) we face risks related to our dual listing on the Johannesburg Stock Exchange, (vi) U.S. investors may not be able to enforce judgments against us, (vii) we face risks in relation to our continued compliance with corporate governance and financial reporting obligations, (viii) future sales of a large number of our securities into the public market, or the expectation of such sales, could cause the market price of our common shares to decline significantly, (ix) we have provisions in our bye-laws that may discourage a change of control, (x) you may have greater difficulties in protecting your interests than as a shareholder of a U.S. or South African corporation, and (xi) our bye-laws restrict shareholders from bringing legal action against our officers and directors.

Risks Related to Our Business and Industry Which May be Beyond Our Control

The demand and pricing for leased containers depends on many factors beyond our control.

Substantially all of our revenue derives from activities related to the leasing, managing and selling of containers. Our ability to continue successfully leasing containers to container shipping lines, earning management fees on leased containers, selling used containers and sourcing capital required to purchase new and used containers depends, in part, upon the continued demand to lease containers and purchase used containers.

Demand for leased containers depends largely on the rate of growth of world trade and economic growth, with worldwide consumer demand being the most critical factor affecting this growth. Demand for leased containers is also driven by our customers’ “lease vs. buy” decisions. In the past, economic downturns in the U.S., Europe, Asia and countries with consumer-oriented economies have resulted in a reduction in the rate of growth of world trade and demand by container shipping lines for leased containers and it is likely that any future downturns would have similar results. Thus, a decrease in world trade can and has adversely affected our utilization and per diem rates and led to reduced revenue and increased operating expenses (such as storage and repositioning costs) and can have an adverse effect on our financial performance. We cannot predict whether, or when, such downturns will occur or the severity or duration of any downturn. Other material factors affecting demand for leased containers, utilization and per diem rates include the following:

•	prices of new and used containers;

•	economic conditions, profitability, competitive pressures and consolidation in the container shipping and container leasing industry;

•	shifting trends and patterns of cargo traffic;

•	fluctuations in demand for containerized goods outside their area of production;

6

•	the availability and terms of container financing for us and for our competitors and customers;

•	fluctuations in interest rates and currency exchange rates;

•	overcapacity, undercapacity and consolidation of container manufacturers;

•	the lead times required to purchase containers;

•	the number of containers purchased in the current year and prior years by competitors and container lessees;

•	container ship fleet overcapacity or undercapacity;

•	repositioning by container shipping lines of their own empty containers to higher demand locations in lieu of leasing containers;

•	port congestion and the efficient movement of containers as affected by labor disputes, work stoppages, increased vessel size, shipping line alliances or other factors that reduce or increase the speed at which containers are handled;

•	consolidation, withdrawal or insolvency of individual container shipping lines;

•	actual or threatened import/export tariffs, duties, restrictions or trade disputes;

•	customs procedures, foreign exchange controls and other governmental regulations, including environmental or maritime rules that impact container shipping, such as the low sulphur oxide emission rules that took effect in January 2020;

•	natural disasters or events that are severe enough to affect local and global economies or interfere with trade, such as the Novel Coronavirus (or “COVID-19”) pandemic; and

•	other political and economic factors.

Many of these and other factors affecting the container industry are inherently unpredictable and beyond our control. These factors will vary over time, often quickly and unpredictably, and any change in one or more of these factors may have a material adverse effect on our business and results of operations. In addition, many of these factors also influence the decision by container shipping lines to lease or buy containers. Should one or more of these factors influence container shipping lines to buy a larger percentage of the containers they operate, our utilization rate and/or per diems could decrease, resulting in decreased revenue and increased storage and repositioning costs, which would harm our business, results of operations and financial condition.

Global economic weakness has in the past and may in the future materially and negatively impact our business, results of operations, cash flows, financial condition and future prospects.

While domestic and global economic growth resumed following the global financial crisis in 2008 and 2009, the continued sustainability of the international economic growth is uncertain particularly due to the ongoing Novel Coronavirus pandemic which created severe economic contractions and rebounds in 2020. The Novel Coronavirus pandemic has added to uncertainty about container trade demand, freight rates and our lessees’ financial performance and solvency. As a result, we continue to face heightened risk that our financial performance and cash flow could be severely affected by defaults or payment delays by our customers.

Uncertainties relating to Novel Coronavirus include the duration of the outbreak, the countries impacted by the outbreak, recurrence or changes in the scope of the outbreak, and actions that may be taken to contain or treat its impact, by governments and others, including declarations of states of emergency, business closures, manufacturing restrictions and a prolonged period of travel and/or other similar restrictions and limitations. The magnitude of the Novel Coronavirus pandemic, including the extent of any impact on our business, financial position, results of operations or liquidity, which could be material, cannot be reasonably determined at this time due to the continuing development and fluidity of the situation. Continued disruptions from the Novel Coronavirus may lead to increased credit concerns regarding our customers, reduced container demand, lower utilization of our fleet, lower lease rates, lower sale prices for our used containers, disruptions in the capital markets, increased risk of non-compliance with our debt covenants and operational and business process disruptions for us and our customers.

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Any slowdown or reversal of the U.S. and global trade growth due to the Novel Coronavirus or otherwise could heighten a number of material risks to our business, results of operations, cash flows and financial condition, as well as our future prospects, including the following:

•	Containerized cargo volume growth -- A contraction or slowdown in containerized cargo volume growth would likely create lower utilization, higher direct costs, weaker shipping lines going out of business, pressure for us to offer lease concessions and lead to a reduction in the size of our customers’ container fleets.

•	Credit availability and access to equity markets -- Issues involving liquidity and capital adequacy affecting lenders could affect our ability to fully access our credit facilities or obtain additional debt and could affect the ability of our lenders to meet their funding requirements when we need to borrow. Further, a high level of volatility in the equity markets could make it difficult for us to access the equity markets for additional capital at attractive prices, if at all. If we are unable to obtain credit or access the capital markets, our business could be negatively impacted. In several of the years prior to 2017, the returns provided from lease transactions were lower due to increased competition in part caused by increased debt financing access for the container leasing industry. At the end of 2016, lower container returns coupled with the impact of Hanjin’s bankruptcy and lower residual values impacted our ability to meet the then prevailing financial covenant conditions in our lending facilities, required covenant amendments and limited our ability to access funds for investment in additional new containers for the first few months of 2017.

Lease and/or utilization rates may decrease, which could adversely affect our business, results of operations and financial condition.

We compete mostly on the pricing and the availability of containers. Lease rates for our containers depend on a large number of factors, including the following:

•	the supply of, and demand for, containers available;

•	the price of new containers (which is positively but not exclusively correlated with the price of steel);

•	the type and length of the lease;

•	interest rates and the availability of financing for leasing companies and shipping lines;

•	assumptions regarding residual value and future lease pricing;

•	the type and age of the container;

•	the location of the container being leased;

•	the quantity of containers available for lease by our competitors; and

•	lease rates offered by our competitors.

Most of these factors are beyond our control. In particular the price of steel declined materially in 2015 and continued to decline in the beginning of 2016 and this was a significant factor in the decline in new container prices and lease rates at that time. New container prices and lease rates reached historically low levels in the beginning of 2016, but starting in the second half of 2016 and until late 2018 steel prices, container prices and lease rates all increased materially. From late 2018 until the middle of 2020 steel prices, container prices and lease rates generally declined and demand for new containers also declined given trade disputes and the emergence of the Novel Coronavirus pandemic. Since the middle of 2020, steel prices, container prices and lease rates have all materially improved as cargo demand increased and container factory production has been limited. The demand increase associated with the Novel Coronavirus is also due to trade and cargo handling disruptions. The resolution of these disruptions and possible decline in demand for goods upon the resolution of the Novel Coronavirus pandemic could cause container prices and lease rates to decline. In addition, lease rates can be negatively impacted by, among other things, the entrance of new leasing companies or container factories, overproduction of new containers by factories and the over-buying by shipping lines, leasing companies and tax-driven container investors. The impact on us of the market downturn that ended in the second half of 2016 was more severe than in the past due to the substantial

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growth in our owned fleet in the prior few years and the relatively high prices paid for new containers in the period from 2010 to 2012 that were initially leased at historically high rates on leases that matured during this period of low lease rates. If future market lease rates decrease or return to historically low levels, revenues generated by our fleet will be adversely affected, which will harm our business, results of operations, cash flows and financial condition. Container utilization rates for us and our competitors increased in 2020 and are currently at high levels by historical standards. If future container utilization rates decrease, revenues generated by our fleet will be adversely affected, which will harm our business, results of operations, cash flows and financial condition.

Reductions in the prices of new containers would harm our business, results of operations and financial condition.

Lease rates for new containers are positively but not exclusively correlated to the price of new containers, which is positively correlated with the price of steel, a major component used in the manufacture of new containers. In the past five years, prices for new standard 20’ dry freight containers have moved in a wide range, with prices ranging between $1,185 and $2,363 during this time. Our average new container cost per CEU increased in 2020 compared to 2019 as container prices increased due to higher steel costs, limited factory production and higher container demand. Container prices increased from 2016 to late 2018 and then declined until early 2020 when increases resumed. If new container prices decline, the lease rates achievable when older, off-lease containers are leased out will also decrease and the prices obtained for containers sold at the end of their useful lives may also decrease. From the beginning of 2013 until the second half of 2016, we saw new container pricing and the sale prices of our containers sold at the end of their useful lives decline. From late 2018 until early 2020, we generally saw new container pricing and lease rates decline, and these trends reversed for the rest of 2020. A decline in new container prices causes low market lease rates and low resale values for containers, which have and may in the future adversely affect our business, results of operations and financial condition, even if low new container prices allow us to purchase new containers at a lower cost. Our future financial performance and profitability depends in part on the lease rates increasing for current leases that expire during the several years as many of these leases were concluded with low initial lease rates. Low prevailing new container prices and lease rates would increase the difficulty of raising lease rates on long-term container leases that expire in the future.

We derive a substantial portion of our lease billings from a limited number of container lessees, and the loss of, or reduction in business, by any of these container lessees could harm our business, results of operations and financial condition.

We have derived, and believe that we will continue to derive, a significant portion of lease billings and cash flow from a limited number of container lessees. Lease billings from our 20 largest container lessees represented $580.8 million or 87.3% of the total fleet billings during 2020. Our two largest customers in 2020 were Mediterranean Shipping Company S.A., which accounted for $136.6 million or 20.5% and CMA-CGM S.A., which accounted for $84.5 million or 12.7% of our total fleet’s billings. Due to the ongoing consolidation in the shipping line industry, our 20 largest container lessees are becoming an increasing percentage of our total revenue, with correspondingly increased concentration of credit risk. Given the high concentration of our customer base, a default by any of our largest customers would result in a major reduction in leasing revenue, large repossession expenses, potentially large lost equipment charges and a material adverse impact on our performance and financial condition. Our experience with the Hanjin bankruptcy is an example of the occurrence of one of these materially adverse events.

The introduction and use of very large container ships (18,000 TEU+) on the major trade lanes may lead to further industry consolidation and shipping line alliance participation, and even greater reliance by us on our largest customers, and negatively impact the performance of smaller and mid-size shipping lines. Several of the largest shipping lines have invested heavily in these very large ships and reportedly have achieved meaningful unit cost advantages and increased market share on the major trade lanes. In response, some smaller shipping lines have started to exit the major trade lanes, while others are seeking to form closer operating partnerships.

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Consolidation, shipping line alliances, and concentration in the container shipping industry could decrease the demand for leased containers.

We primarily lease containers to container shipping lines. The container shipping lines have historically relied on a large number of leased containers to satisfy their needs. The shipping industry has been consolidating for a number of years, and further consolidation is possible. In recent years, two major German shipping lines have each acquired South American shipping lines, a French shipping line acquired a Singaporean shipping line, two large Chinese shipping lines merged, a German shipping line merged with a Middle Eastern shipping line and a Danish shipping line acquired a German shipping line. Three major Japanese shipping lines also merged together. Additionally, Hanjin declared bankruptcy in August 2016, further reducing the number of large shipping lines. Historically, shipping lines have also formed a number of alliances to share vessel space and the creation of new alliances and changes in the membership of each alliance is ongoing. Consolidation of major container shipping lines and growth of alliances could create efficiencies and decrease the demand that container shipping lines have for leased containers because they may be able to fulfill a larger portion of their needs through their owned container fleets. Consolidation could also create concentration of credit risk if the number of our container lessees decreases. If shipping line alliances are effective at making shipping lines more efficient, this could reduce the demand for containers. The growth of alliances may add pressure to those shipping lines that do not join an alliance as they may find it more difficult to cost effectively serve shippers needs and/or shippers may choose to only ship cargo with alliances due to solvency concerns or otherwise. Additionally, large container shipping lines with significant resources could choose to manufacture or purchase their own containers, which would decrease their demand for leased containers and could harm our business, results of operations and financial condition.

The demand for leased containers is partially tied to international trade. If this demand were to decrease due to increased barriers to trade, or for any other reason, it could reduce demand for intermodal container leasing, which would harm our business, results of operations and financial condition.

A substantial portion of our containers are used in trade involving goods being shipped from the People’s Republic of China (the “PRC” or “China”) and other Asian countries to the United States, Europe, Latin America or other regions and within Asia. The willingness and ability of international consumers to purchase foreign goods is dependent on political support, in the United States, Europe, Latin America and other countries, for an absence of government-imposed barriers to international trade in goods and services. For example, international consumer demand for foreign goods is related to price; if the price differential between foreign goods and domestically-produced goods were to decrease due to increased tariffs on foreign goods, strengthening in the applicable foreign currencies relative to domestic currencies, rising wages, increasing input or energy costs or other factors, demand for foreign goods could decrease, which could result in reduced demand for intermodal container leasing. A similar reduction in demand for intermodal container leasing could result from an increased use of quotas or other technical barriers to restrict trade. In 2018, a number of major trading economies implemented, and increased tariffs and other trade restrictions and significant renegotiations of existing trade agreements commenced. This continued in 2019 with partial resolutions to certain disputes seen at the end of that year. If these trade restrictions and tariffs continue or increase it may materially impact container demand and change trade patterns. The Novel Coronavirus pandemic initially decreased trade demand but cargo growth resumed in mid-2020 particularly for consumer goods and medical supplies. The long term impact of the Novel Coronavirus on trade and cargo demand is uncertain.

Asian economic instability could reduce demand for leasing, which would harm our business, results of operations and financial condition.

Many of our customers are substantially dependent upon shipments of goods exported from Asia. From time to time, there have been health scares, such as the Novel Coronavirus outbreak in China in early 2020, Severe Acute Respiratory Syndrome and avian flu, financial turmoil, natural disasters, and political instability in Asia. In the past, these events have adversely affected our container lessees and the general demand for shipping and have led to reduced demand for leased containers or otherwise caused adverse affects on us. Ongoing or future events such as these may have similar or worse impacts on our business. Any reduction in demand for leased containers would harm our business, results of operations and financial condition.

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The impact of new low sulphur emission rules is uncertain and may adversely affect us and the container shipping industry.

Effective January 1, 2020, under the rules of the International Maritime Organization (“IMO”) the permitted level of sulphur oxide emissions from ships, including container ships, was reduced from 3.5% of emission mass to 0.5% of emissions mass. In order to comply with these regulations our shipping line customers either switched to low sulphur diesel fuels, installed emissions scrubbers on vessels to remove sulphur oxide from emissions gases or switched to alternative fuels like natural gas for their ships. Shipping lines compliance strategies may include a mix of the compliance approaches and may evolve depending on the cost of complying with each approach. Installing gas scrubbers is an expensive capital addition to a ship and requires extensive retrofitting which removes vessels from service for a period of time. As the rules only became effective in 2020, it is difficult to predict what the long-term impact will be on our customers and us from these regulations. If the higher fuel and environmental compliance costs from these rules are not successfully passed on via higher freight rates to shippers, or if freight demand declines due to higher shipping costs, our shipping line customers’ financial performance may weaken and the risk of default by our customers could increase. If higher freight rates cause lower cargo demand, the demand for our containers may decline and/or container lease rates and used container prices may decline, which would harm our business, results of operations and financial condition.

Risks Inherent to Our Business and Industry

We face risks associated with re-leasing containers after their initial long-term lease.

We estimate the useful lives of our standard dry freight containers to be 13 to 14 years, open-top and flat-rack containers to be 14 to 16 years, refrigerated containers to be 12 years and tank containers to be 20 years. When we purchase newly produced containers, we typically lease them out under long-term leases with terms of 5 or more years at a lease rate that is correlated to the price paid for the container and prevailing interest rates. As containers leased under term leases are not leased out for their full economic life, we face risks associated with re-leasing containers after their initial long-term lease. If prevailing container lease rates decline significantly between the time a container is initially leased out and when its initial long-term lease expires, or if overall demand for containers declines, we may be unable to earn a similar lease rate from the re-leasing of containers when their initial term leases expire which could materially adversely impact our results and financial performance. Additionally, for containers purchased new in 2015 and 2016, many of these containers are on long-term leases with low per diems that are below current lease rates. Our ability to improve our financial performance depends in part on the ability to renew or re-lease these containers at the time of the expiration of their initial leases at higher rates than the per diems these containers were originally leased out. If container lease rates decline below levels that prevailed in 2015 and 2016 and we are unable to renew these leases at higher rates our financial results may not improve or may weaken.

Gains and losses associated with the disposition or trading of used equipment may fluctuate and adversely affect our business, results of operations and financial condition.

We regularly sell used containers at the end of their useful lives in marine service or when we believe it maximizes the projected financial return, considering the location, sale price, cost of repair, possible repositioning expenses, earnings prospects and remaining useful life. The realized residual value of these containers affects our profitability. The volatility of the residual values of used containers may be significant. These values depend upon, among other factors, demand for used containers for secondary purposes, comparable new container costs, used container availability, condition and location of the containers, and market conditions. Most of these factors are outside of our control. Additionally, if shipping lines or our leasing company competitors determine to sell their used containers at a younger age than we believe to be the useful life of our equipment, our containers may be more difficult to sell or may sell for less than containers that were more recently manufactured.

Gains or losses on the disposition of used container equipment and the sales fees earned on the disposition of managed containers fluctuate and may be significant if we sell large quantities of used containers. In 2020, 2019 and 2018, we incurred approximately $11 million, $14 million, and $14 million, respectively, of container impairments due to the fact that when we determined to dispose of containers their book value exceeded the fair market value. Low disposal prices and the high volume of containers being disposed of can cause an elevated level of container

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impairments to occur. Continued low disposal prices and/or high disposal volumes could harm our business, results of operations and financial condition. See Item 5, “Operating and Financial Review and Prospects” for a discussion of our gains or losses on the disposition of used container equipment.

In addition to disposing of our fleet’s used containers at the end of their useful life, we opportunistically purchase used containers for resale from our shipping line customers and other sellers. Shipping lines either enter into trading arrangements with us at the time they are ready to dispose of older containers or enter into purchase leaseback transactions with us where they sell us older containers and then lease them back until the shipping line is ready to dispose of the containers. We face resale price risk with both transactions since by the time the container is provided to us from the shipping line the prevailing prices for older containers may have declined from the value we assumed at the time of purchase.

If the supply of trading equipment becomes limited because these sellers develop other means for disposing of their equipment or develop their own sales network, our equipment trading revenues and our profitability could be negatively impacted. If selling prices rapidly deteriorate and we are holding a large inventory that was purchased when prices for trading equipment were higher or if prices decline over the life of our purchase leaseback transactions, then our gross margins from trading and the sale of containers acquired through purchase leaseback transactions will decline or become negative.

The bankruptcy of Hanjin Shipping Co. in August 2016 substantially impacted us.

On August 31, 2016, Hanjin filed for bankruptcy protection in South Korea. In the following months, its services ceased operation. The insolvency of Hanjin severely disrupted container trade and the container shipping industry. At the time of the insolvency, containers leased to Hanjin with ownership interests attributable to Textainer represented approximately 4.8% of the total owned and managed fleet in TEU. We incurred substantial costs from the Hanjin insolvency, arising from container recovery expenses, unpaid current and future rental income from Hanjin, container repair expenses, container repositioning expenses, re-leasing expenses and the loss of unreturned containers. Additionally, many containers formerly leased to Hanjin were re-leased at substantially lower lease rates than the rates in the leases with Hanjin and other containers were disposed, often at prices below the book value for the containers. We recovered 94% of the containers formerly leased to Hanjin, with the balance of the containers uneconomic or impossible to recover. We maintained insurance that covered certain costs and losses from customer defaults. At the time of the Hanjin default, our policy provided for $80 million of coverage after a $5 million deductible was met. We collected substantially all of our insurance claim related to the Hanjin insolvency, however this was insufficient to cover all of our losses and disruptions related to Hanjin. At the time of its insolvency Hanjin was the 7th largest container shipping line in the world and the bankruptcy of Hanjin substantially impacted us, including as follows:

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•	A material portion of the losses we reported for 2016 were attributable to Hanjin’s default and the expenses caused by the default and these expenses related to the default continuing in 2017 and were not fully covered by insurance;

•	As a result of the Hanjin default, lower container lease rates and lower used container sales prices, our cash flow was substantially reduced in the second half of 2016 and the first half of 2017 and this impacted our ability to comply with financial covenants in certain debt facilities and to invest in new containers in 2016 and the first half of 2017; we obtained waivers and amendments from lenders to address these issues and subsequently refinanced the majority of our debt;

•	Customer default insurance may not be available in the future to us or may not be affordable; we have renewed our insurance several times since the Hanjin default; however, the policy and coverage terms are not as favorable as before the Hanjin default and the premium has substantially increased, our customer default insurance expired at the end of 2020 and we determined not to renew coverage given the premium, deductible and policy terms and this coverage may not become economic in the future; and

•	The Hanjin bankruptcy has led to further consolidation in the shipping line industry, increasing our reliance on a reduced number of customers; as a result of the Hanjin default shippers have heightened concern about the shipping line that carries their cargo and this may impact the container shipping industry in ways we are unable to anticipate and which may adversely impact us.

Lessee defaults have and may continue to harm our business, results of operations and financial condition by decreasing revenue and increasing storage, repositioning, collection, insurance, and recovery expenses.

Our containers are leased to numerous container lessees. Lessees are required to pay rent and to indemnify us for damage to or loss of containers. Lessees may default in paying rent and performing other obligations under their leases. A delay or diminution in amounts received under the leases (including leases on our managed containers), or a default in the performance of maintenance or other lessee obligations under the leases could adversely affect our business, results of operations and financial condition and our ability to make payments on our debt.

We experienced several lessee defaults in 2016, including the default of Hanjin discussed above, which severely negatively impacted our financial performance, and we believe that there is the continued risk of lessee defaults in the future. In 2019 we also experienced lessee defaults, with the largest matter arising from fraudulent conduct by the owners of a regional shipping line. Historically, efforts to maintain high freight rates on the major trade lanes generally have not been sustainable for long periods of time. Excess vessel capacity due to new ship production, including the production of very large ships, and the re-activation of previously laid up vessels will continue to be a factor in the future, especially if older vessels are not scrapped. Major shipping lines are expected to have healthy profits overall for 2020 given the trade demand increase that commenced in the middle of the year, however reliable information about the financial position and resources of many shipping lines can be difficult to obtain and all shipping lines may not benefit equally from the higher trade demand. Excess vessel capacity and continued new vessel deliveries, especially the delivery of very large vessels, may cause freight rate pressure to return in the future. Additionally, the commencement of various tariff and trade restriction actions between major trading nations in 2018 which continued and accelerated in 2019 has increased uncertainty about container trade growth and demand and may increase default risk if tariff actions return and/or increase. While certain trade disputes were resolved at the end of 2019, the duration of these tariff actions may have altered trade patterns and may have lasting impacts on container demand. The implementation of low sulphur oxide emissions rules noted above may weaken the financial performance of our customers and increase their risk of default. The Novel Coronavirus pandemic has added to uncertainty about container trade demand, freight rates and our lessees’ financial performance and the current higher shipping demand and improved lessee financial performance may not continue. As a result, we continue to face heightened risk that our financial performance and cash flow could be severely affected by defaults by our customers.

When lessees default, we may fail to recover all of our containers, and the containers that we do recover may be recovered in locations where we will not be able to quickly re-lease or sell them on commercially acceptable terms. In recovery actions we must locate the containers and often need to pay accrued storage and handling charges to depots and terminals, which may include debts incurred by the defaulting shipping line. We also may have to reposition these containers to other places where we can re-lease or sell them, which could be expensive, depending

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on the locations and distances involved. Following repositioning, we may need to repair the containers and pay container depots for storage until the containers are re-leased. These recovery and repair costs, and repositioning costs generally are reflected in our financial statements under container lessee default expense, net, and direct container expense – owned fleet, respectively. Accordingly, the amount of our bad debt expense may not capture the total adverse financial impact on us from a shipping line’s default. For our owned containers, these costs directly reduce our income and for our managed containers, lessee defaults decrease rental revenue and increase direct container expense, and thus reduce our management fee revenue. While we previously maintained insurance to cover some defaults, recent premium increases, large deductible amounts, and significant policy exclusions made the coverage uneconomic and we determined to let our coverage lapse for 2021. In 2015 and 2016 we filed significant insurance claims for lessee defaults we experienced. As a result of these insurance claims, potential future insurance claims or changes in the perceived risk of providing default insurance, such insurance might not be available to us in the future on commercially reasonable terms or at all. If we resume insurance, in any insurance claim our insurers may not agree with our determination that we have suffered an insured loss or our calculation of the amount of the insured loss. Any such future defaults could harm our business, results of operations and financial condition.

Historically we have recovered a very high percentage of the containers from defaulted lessees. However, in recent years we encountered defaults from several smaller lessees and lessees in locations where recoveries did not track to our historical experience and significant losses were incurred. These losses were due to a number of containers being unrecoverable as the containers were not in the control of the lessee or the containers were detained by depots or terminals that demanded storage charges in excess of the value of the detained containers after accounting for repair and repositioning costs. Additionally, in certain recent insolvencies, even when we have recovered the containers, they have generally been in very poor condition which limits their ability to be re-leased and reduces their disposal value, both of which add to the ultimate cost of the default. If a material amount of future recoveries from defaulted lessees continue to deviate from our historical recovery experience, our financial performance and cash flow could be severely adversely affected.

Certain liens may arise on our containers.

Depot operators, manufacturers, repairmen, terminals, ship owners and transporters do come into possession of our containers from time to time and have amounts due to them from the lessees or sublessees of the containers. In the event of nonpayment of those charges by the lessees or sublessees, we may be delayed in, or entirely barred from, repossessing the containers, or be required to make payments or incur expenses to discharge the lien to take possession of our containers.

Risks Related to our Debt and Leverage

Our indebtedness reduces our financial flexibility and could impede our ability to operate.

We have historically operated with, and anticipate continuing to operate with, a significant amount of debt. As of December 31, 2020, we had outstanding indebtedness of $4,142 million under our debt facilities. All of our outstanding indebtedness is secured debt collateralized primarily by our container assets and finance leases. There is no assurance that we will be able to refinance our outstanding indebtedness on terms that we can afford or at all. If we are unable to refinance our outstanding indebtedness, or if we are unable to increase the amount of our borrowing capacity, it could limit our ability to grow our business.

The amount of our indebtedness, and the terms of the related indebtedness (including interest rates and covenants), could have important consequences for us, including the following:

•	require us to dedicate a substantial portion of our cash flows from operations to make payments on our debt, thereby reducing funds available for operations, investments, dividends, and future business opportunities and other purposes;

•	limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•	reduce our ability to make acquisitions or expand our business;

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•	make it more difficult for us to satisfy our current or future debt obligations;

•	failure to comply with our debt obligations, including financial and other restrictive covenants, could result in an event of default under the agreements governing such indebtedness, which could lead to, among other things, an acceleration of our indebtedness or foreclosure on the assets securing our indebtedness and have a material adverse effect on our business or financial condition;

•	limit our ability to borrow additional funds or to sell assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, or other purposes; and

•	increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates.

We may not generate sufficient cash flow from operations to service and repay our debt and related obligations and have sufficient funds left over to achieve or sustain profitability in our operations, meet our working capital and capital expenditure needs and/or compete successfully in our industry. An uncured event of default in some or all of our debt facilities could cause some or all of our entities to be declared bankrupt or liquidated.

We will require a significant amount of cash to service and repay our outstanding indebtedness, fund future capital expenditures, and our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and repay our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. Our business primarily generates cash from our container assets. Our lenders, rating agencies and the investors in our asset-backed debt securities look to the historical and anticipated performance of our container assets when deciding whether to lend to us and the terms for such lending. It is possible that:
•	our business will not generate sufficient cash flow from operations to service and repay our debt and to fund working capital requirements and future capital expenditures;

•	future borrowings will not be available under our current or future credit facilities in an amount sufficient to enable us to refinance our debt; or

•	we will not be able to refinance any of our debt on commercially reasonable terms or at all due to declining historical or anticipated financial performance of our assets or for other reasons.

The terms of our debt facilities impose, and the terms of any future indebtedness may impose, significant operating, financial and other restrictions on us and our subsidiaries.

Restrictions imposed by our secured debt facilities, revolving credit facilities, term loan and bonds may limit or prohibit, among other things, our ability

to:

•	incur additional indebtedness;

•	pay dividends on or redeem or repurchase our common shares;

•	enter into new lines of business;

•	issue capital stock of our subsidiaries;

•	make loans and certain types of investments;

•	incur liens;

•	sell certain assets or merge with or into other companies or acquire other companies;

•	enter into certain transactions with shareholders and affiliates; and

•	receive dividends, distributions, or other payments from our subsidiaries.

We are also required to comply with certain financial covenants. These restrictions could adversely affect our ability to finance our future operations or capital needs and pursue available business opportunities. A breach of any of these financial covenants and restrictions, due to weaker financial performance, reduced asset values or otherwise

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could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and fees, to be immediately due and payable and proceed against any collateral securing that indebtedness, which will constitute substantially all of our container assets and finance leases. As a result of the Hanjin bankruptcy, coupled with the lower container returns provided in recent years due to increased competition and lower realized used container prices, in 2016 and 2017 we experienced difficulty in meeting certain of the financial covenants on our lending facilities. We obtained various covenant amendments and waivers to address this situation and subsequently refinanced the majority of our debt with revised covenants. If needed in the future, we may be unable to obtain covenant amendments and waivers from our lenders and some or all of our indebtedness could be in default. Additionally, covenant amendments and waivers may limit our ability to access additional funds for container investment and the cost and expense of covenant amendments, waivers and/or refinancing may limit our available funds for container investment.

If we are unable to enter into interest rate swaps and caps on reasonable commercial terms or if a counterparty under our interest rate swap and cap agreements defaults, our exposure associated with our variable rate debt could increase.

We have typically funded a significant portion of the purchase price of new containers through borrowings under our revolving credit facilities and our secured debt facilities and intend to use borrowings under our revolving credit facilities and our secured debt facilities for such funding in the future. All of our outstanding debt, other than the $1,922 million in aggregate principal amount under various asset backed notes and term loans is subject to variable interest rates. We have entered into various interest rate swap and cap agreements to mitigate our exposure associated with variable rate debt. The swap agreements involve payments by us to counterparties at fixed rates in return for receipts based upon variable rates indexed to the London Inter Bank Offered Rate. There can be no assurance that interest rate swaps and caps will be available in the future, or if available, will be on terms satisfactory to us. Moreover, our interest rate swap agreements are subject to counterparty credit exposure, which is defined as the ability of a counterparty to perform its financial obligations under a derivative contract. While we monitor our counterparties’ credit ratings on an on-going basis, we cannot be certain that they will stay in compliance with the related derivative agreements and not default in the future. If we are unable to obtain interest rate swaps and caps or if a counterparty under our interest rate swap and cap agreements defaults, our exposure associated with our variable rate debt could increase.

The phase out of the London Inter Bank Offered Rate, or LIBOR, may adversely impact us.

As noted above the substantial majority of our debt is variable rate debt and this debt is generally priced under rates that are indexed to USD LIBOR. USD LIBOR will be discontinued after June 2023. We have floating rate debt agreements that will be outstanding after 2021 which have rates set under LIBOR. We must agree with our lenders for the repricing of this debt under a new rate index prior to the discontinuance of USD LIBOR. Our interest rate hedges and swaps are also priced according to USD LIBOR and will also be impacted by this matter. None of our current debt agreements provide for the mechanics of a transition to a new interest rate index and the debt markets acceptance of a replacement for USD LIBOR is uncertain and evolving. In the United States, the Alternative Reference Rate Committee (“ARRC”), a group of diverse private-market participants assembled by the Federal Reserve Board and the Federal Reserve Bank of New York, was tasked with identifying alternative reference rates to replace USD LIBOR. The Secured Overnight Finance Rate (“SOFR”) has emerged as the AARC’s preferred alternative rate for LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities in the repurchase agreement market. At this time, the market acceptance of SOFR or other alternatives is uncertain. Given the amount of our floating rate debt and our significant annual interest expense, the impact of the discontinuance of USD LIBOR may adversely affect us and our financing structure.

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Even with hedged variable rate debt and fixed rate debt, we face interest rate risk.

We generally hedge and fix our overall debt exposure to have a maturity similar to the average remaining lease term of our long-term lease contracts. However if during the duration of our hedging, interest rates increase but lease rate per diems do not also increase, as our hedges expire our financial performance may decline due to higher interest rates not being offset by higher per diems. If this occurs, we may not be able to generate sufficient cash flows to service our debt obligations and/or we may breach our debt covenants, all of which would materially and adversely impact us. Additionally, in recent years we have entered into long term finance and operating leases that have a duration of longer than seven years and we do not believe that hedging the debt associated with the entire duration of these leases is economic. If interest rates materially increase in the later years of these leases and the debt associated with these leases remains unhedged our results may be adversely affected.

We own a large number of containers in our fleet and are subject to significant ownership risk and increasing our owned fleet entails increasing our debt, which could result in financial instability.

Ownership of containers entails greater risk than management of containers for container investors. In 2020, the percentage of containers in our fleet that we own increased from 85.4% at the beginning of the year to 88.0% at the end of the year. In the years prior to 2017, we have consistently increased the number of owned containers in our fleet as a percentage of the total fleet, however in 2017 we assumed management of a large fleet from an insolvent leasing company which caused the owned percentage of our fleet to decline a few percentage points. In December 2019 we purchased the fleet of containers we previously managed for Leased Assets Pool Company Limited, an affiliate of Trencor and this increased our owned fleet percentage in 2019. The increased number of containers in our owned fleet increases our exposure to financing costs, financing risks, changes in per diem rates, re-leasing risk, changes in utilization rates, lessee defaults, repositioning costs, storage expenses, impairment charges and changes in sales prices upon the disposition of containers. The number of containers in our owned fleet fluctuates over time as we purchase new containers, sell containers into the secondary resale market, add third party container investors and/or acquire other fleets.

If we continue to increase the number of containers in our owned fleet, we will likely have more capital at risk and may need to maintain higher debt balances. Additional borrowings may not be available under our revolving credit facilities or our secured debt facilities, and we may not be able to refinance these facilities, if necessary, on commercially reasonable terms or at all. We may need to raise additional debt or equity capital in order to fund our business, expand our sales activities and/or respond to competitive pressures. We may not have access to the capital resources we desire or need to fund our business or may not have access on attractive terms. These factors, among others, may reduce our profitability and adversely affect our plans to maintain the container ownership portion of our business.

We Face Operational and Competitive Risks

We may incur significant costs to reposition our containers, which could harm our business, results of operations and financial condition.

When lessees return containers to locations where supply exceeds demand and when lessees default and we recover containers, we sometimes reposition containers to higher demand areas. Repositioning expenses vary depending on geographic location, distance, freight rates and other factors, and may not be fully covered by drop-off charges collected from the previous lessee of the containers or pick-up charges paid by the new lessee. We seek to limit the number of and impose surcharges on containers returned to low demand locations. Market conditions, however, may not enable us to continue such practices. In addition, we may not be able to accurately anticipate which locations will be characterized by higher or lower demand in the future, and our current contracts will not protect us from repositioning costs if locations that we expect to be higher demand locations turn out to be lower demand locations at the time the containers are returned. For example, the vast majority of our long-term leases require that a high percentage of the containers are returned in Asia, primarily in China. If long-term trade patterns change, it may not be economically desirable to have the bulk of our containers returned in China at the end of long-term leases. Additionally, our customer default insurance that covers lessee insolvencies does not sufficiently insure

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us for container repositioning expense. Any such increases in costs to reposition our containers could harm our business, results of operations and financial condition.

A contraction or slowdown in containerized cargo growth or negative containerized cargo growth would lead to a surplus of containers and a lack of storage space, which could negatively impact us.

We depend on third party depot operators to repair and store our equipment in port areas throughout the world. Growth in the world’s container fleet has significantly outpaced growth in depot capacity and even in the current period of historically high utilization, we continue to experience limited depot capacity in certain major port cities. Additionally, the land occupied by depots is increasingly being considered prime real estate, as it is coastal land in or near major cities, and this land may be developed into other uses or there may be increasing restrictions on depot operations by local communities. This trend has already caused depot storage costs to increase and could further increase depots’ costs and in some cases force depots to relocate to sites further from the port areas. If these changes affect a large number of our depots, or if we experience a period of lower container utilization, it could significantly increase the cost of maintaining and storing our off-hire containers. Additionally, if depot space is unavailable, we may be unable to accept returned containers from lessees, which may cause us to breach our lease agreements. The current period of very high container utilization may further add financial stress to third party depots as they are receiving limited amounts for storing containers. This financial stress could cause depot closures and further exacerbate the risks we face from limited container storage space.

If we are unable to lease our new containers shortly after we purchase them, our business, results of operations, cash flows and financial condition may be harmed.

Lease rates for new containers are positively correlated to the fluctuations in the price of new containers, which is positively correlated with the price of steel, a major component used in the manufacture of new containers. If we are unable to lease the new containers that we purchase within a short period of time of such purchase, the market price of new containers and the corresponding market lease rates for new containers may decrease, regardless of the higher cost of the previously purchased containers. Additionally, if we believe new container prices are attractive, we may purchase more containers than we have immediate demand for if we expect container prices or lease rates may rise. If prices do not rise or new container demand weakens, we may be unable to lease this speculative inventory on attractive terms or at all. Declines in new container prices, lease rates, or the inability to lease new containers could harm our business, results of operations and financial condition.

Consolidation of container manufacturers or the disruption of manufacturing for the major manufacturers could result in higher new container prices and/or decreased supply of new containers. Any material increase in the cost or reduction in the supply of new containers could harm our business, results of operations and financial condition.

We currently purchase all of our containers from manufacturers based in the PRC. If it were to become more expensive for us to procure containers in the PRC or to transport these containers at a low cost from the manufacturer to the locations where they are needed by our container lessees because of changes in exchange rates between the U.S. Dollar and Chinese Yuan, consolidation among container suppliers, increased tariffs imposed by the U.S. or other governments, changing trade patterns, increased fuel costs, increased labor costs, or for any other reason, we may have to seek alternative sources of supply and we may not be able to make alternative arrangements quickly enough to meet our container needs, and the alternative arrangements may increase our costs.

The availability and price of containers depend significantly on the capacity and bargaining position of the major container manufacturers. Three major manufacturers have approximately 80% of that industry’s market share. Additionally, one of the major container manufacturers is under common ownership with a large container lessor, which may impact our ability to competitively source containers from this manufacturer. This market structure and the commodity inputs used in manufacturing have led to significant variability in container prices. In particular, the increased focus on environmental matters in China may reduce the supply (and increase the cost) of steel and other raw materials used in our containers and the mandatory use of water borne paint by all container factories in China has already increased the cost of containers and created container production constraints. If an increased cost of purchasing containers is not matched by a corresponding increase in lease rates, or if we have difficulty in sourcing containers, our business, results of operations and financial condition would be harmed.

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Sustained reduction in the production of new containers could harm our business, results of operations and financial condition.

Container manufacturing shutdowns in China in the wake of the financial crisis drastically reduced the production of standard dry freight containers from the fourth quarter of 2008 through the end of 2009, combined with continued retirement of older containers in the ordinary course, led to a decline in the world container fleet of approximately 4% in 2009, creating a shortage of containers as worldwide cargo volumes increased by 12.0% in 2010 and 8.6% in 2011. During the period of shutdowns, container manufacturers lost up to 60% of their skilled work force and had limited production capacity in 2010 as they had to hire and train a new skilled work force. Although manufacturers resumed production in 2011 and continued steady production from 2012 through 2020, if there is a sustained reduction in the production of new containers due to the Novel Coronavirus or otherwise, it could impact our ability to expand our fleet, which could harm our business, results of operations and financial condition.

We face extensive competition in the container leasing industry.

We may be unable to compete favorably in the highly competitive container leasing and container management businesses. We compete with a relatively small number of major leasing companies, many smaller lessors, companies, and financial institutions offering finance leases, and promoters of container ownership and leasing as a tax-efficient investment. Some of these competitors may have greater financial resources and access to capital than we do. Additionally, some of these competitors may have large, underutilized inventories of containers, which could, if leased, lead to significant downward pressure on per diem rates, margins, and prices of containers. Competition among container leasing companies depends upon many factors, including, among others: per diem rates; supply reliability; lease terms, including lease duration, drop-off restrictions and repair provisions; customer service; and the location, availability, quality, and individual characteristics of containers. In recent years, several container leasing companies have acquired other container lessors and we may face increased competition from these merged firms. Following the completion of each consolidation, the new entity may face further pressure for fleet growth and may compete even more aggressively, causing further declines in rental rates available from container leases. New entrants into the leasing business may be attracted by the historically high rate of containerized trade growth, access to the capital markets and low pricing for containers. New entrants may be willing to offer pricing or other terms that we are unwilling or unable to match. Additionally, the management agreements under which we manage containers for other parties do not restrict these container investors from having other container fleets managed by competing leasing companies or from directly competing with us.

Our lessees may decide to buy, rather than lease their containers.

We, like other suppliers of leased containers, are dependent upon decisions by shipping lines to lease rather than to buy their container equipment. Shipping lines own a significant amount of the world’s intermodal containers and effectively compete with us. In part due to constraints on their financing and need to allocate capital to new ship purchases, scrubber installations for low sulphur emissions compliance and port terminals, in recent years, shipping lines have generally reduced their purchases of new containers. In 2020, we believe that about two-thirds of all shipping containers were purchased by leasing companies. Although we believe that this percentage should somewhat rebalance itself, we still expect leasing companies to be a major purchaser of the new containers to be produced. Should shipping lines decide to buy a larger percentage of the containers they operate, our utilization rate would decrease, resulting in decreased leasing revenues, increased storage costs and increased repositioning costs. A decrease in the portion of leased containers would also reduce our investment opportunities and significantly constrain our growth.

For reporting periods beginning in 2019, the new accounting guidance under both generally accepted accounting principles in the United States of America (“U.S. GAAP”) and International Financial Reporting Standards (“IFRS”) requires recognition of right-of-use asset and corresponding lease liability of operating leases on the lessees’ balance sheet. Because the new leasing guidance virtually eliminates the financial statement benefit of entering into operating leases for the lessees, it could change our customers’ “lease vs. buy” decision and/or decision on lease structures and terms.

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Use of counterfeit and improper refrigerant in refrigeration machines for refrigerated containers could cause irreparable damage to the refrigeration machines, death, or personal injury, and materially impair the value of our refrigerated container fleet.

In past years, there were a limited number of reports of counterfeit and improper refrigerant gas being used to service refrigeration machines in depots primarily in Asia. The use of this counterfeit gas has led to the explosion of several refrigeration machines. Several of these incidents resulted in personal injury or death, and in all cases, the counterfeit gas led to irreparable damage to the refrigeration machines.

Safer testing procedures were developed and implemented by refrigeration manufacturers and industry participants in order to determine whether counterfeit or improper gas was used to service a refrigeration machine. However, there can be no assurance that these procedures will prove to continue to be reliable and cost effective. If industry procedures and tests are not proven safe and effective or if the use of such counterfeit and improper refrigerant recurs and is widespread or other counterfeit refrigerant issues emerge in the future, the value of our refrigerated container fleet and our ability to lease refrigerated containers could be materially impaired and could therefore have a material adverse effect on our financial condition, results of operations and cash flows. Additionally, we might be subject to claims for damages by parties injured by contaminated refrigeration machinery operated by our lessees which may materially adversely affect us.

Risks Arising From the International Operations

The international nature of the container shipping industry exposes us to numerous risks.

We are subject to risks inherent in conducting business across national boundaries, any one of which could adversely impact our business. These risks

include:

•	regional or local economic downturns;

•	fluctuations in currency exchange rates;

•	changes in governmental policy or regulation;

•	restrictions on the transfer of funds or other assets into or out of different countries;

•	import and export duties and quotas;

•	domestic and foreign customs, tariffs and taxes;

•	war, hostilities and terrorist attacks, or the threat of any of these events;

•	government instability;

•	nationalization of foreign assets;

•	government protectionism;

•	compliance with export controls and economic sanctions, including those of the U.S. Department of Commerce and the U.S. Treasury or other governments;

•	compliance with import procedures and controls, including those of the U.S. Department of Homeland Security or other governments;

•	consequences from changes in tax laws, including tax laws pertaining to the container investors;

•	potential liabilities relating to foreign withholding taxes;

•	labor or other disruptions at key ports;

•	difficulty in staffing and managing widespread operations; and

•	restrictions on our ability to own or operate subsidiaries, make investments, or acquire new businesses in various jurisdictions.

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•	Outbreaks of regional or international epidemics or pandemics such as a Coronavirus or SARS.

One or more of these factors or other related factors may impair our current or future international operations and, as a result, harm our business, results of operations and financial condition.

Our results of operations are subject to changes resulting from the political and economic policies of the PRC and economic activity in the PRC.

A substantial portion of our containers are leased out from locations in the PRC. The main manufacturers of containers are also located in the PRC. The political and economic policies of the PRC and the level of economic activity in the PRC may have a significant impact on our company and our financial performance.

Changes in the political leadership of the PRC may have a significant effect on laws and policies that impact economic growth and trade and the corresponding need for containers to ship goods from the PRC, including the introduction of measures to control inflation, changes in the rate or method of taxation, and the imposition of additional restrictions on currency conversion, remittances abroad, and foreign investment. Moreover, economic reforms and growth in the PRC have been more successful in certain provinces than in others, and the continuation of or increases in such disparities could affect the political or social stability of the PRC. Furthermore, the current high level of debt by some companies in China may lead to defaults which may not be supported by the Chinese government. In recent years the rate of economic growth in the PRC has declined. Additionally, government policies that reduce the emphasis on manufacturing and increase priorities for domestic consumption and services may alter trade patterns and dampen demand for containers. Chinese government environmental policies and practices may reduce steel production which would impact container costs and may limit factory production, which could impact trade growth and container demand.

A large number of our shipping line customers are domiciled either in the PRC (including Hong Kong) or in Taiwan. In 2020, approximately 24.1% of our total lease billing was attributable to shipping line customers that were either domiciled in the PRC (including Hong Kong) or in Taiwan. All container manufacturing facilities from which we purchased our containers in 2020 are located in the PRC. A reduced rate of economic growth, changes to economic or trade policy or political instability in either the PRC or Taiwan could have a negative effect on our major customers, our ability to obtain containers and correspondingly, our results of operations and financial condition.

The legal systems in the PRC and other jurisdictions have inherent uncertainties that could limit the legal protections available to us and even if legal judgments are obtained, collection may be difficult.

We currently purchase all of our containers from manufacturers based in the PRC. In addition, a substantial portion of our containers are leased out from locations in the PRC. California law governs almost all of these agreements. However, disputes or settlements arising out of these agreements may need to be enforced in the PRC. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However, since these laws and regulations are relatively new and the PRC legal system continues to evolve, the interpretations of many laws, regulations and rules are not always uniform and may be subject to considerable discretion, variation, or influence by external forces unrelated to the legal merits of a particular matter. The enforcement of these laws, regulations, and rules involves uncertainties that may limit remedies available to us. Any litigation or arbitration in the PRC may be protracted and may result in substantial costs and diversion of resources and management attention. In addition, the PRC may enact new laws or amend current laws that may be detrimental to us, which may have a material adverse effect on our business operations. If we are unable to enforce any legal rights that we may have under our contracts or otherwise in the PRC, our ability to compete and our results of operations could be harmed.

In addition, as our containers are used in trade involving goods being shipped to locations throughout the world, it is not possible to predict, with any degree of certainty, the jurisdictions in which enforcement proceedings may be commenced. Litigation and enforcement proceedings have inherent uncertainties in any jurisdiction and are expensive. These uncertainties are enhanced in countries that have less developed legal systems where the interpretation of laws and regulations is not consistent, may be influenced by factors other than legal merits and may be cumbersome, time-consuming and even more expensive. For example, repossession from defaulting lessees may

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be difficult and more expensive in jurisdictions whose laws do not confer the same security interests and rights to creditors and lessors as those in the United States and where the legal system is not as well developed. Additionally, even if we are successful in obtaining judgments against defaulting lessees, these lessees may have limited owned assets and/or heavily encumbered assets and the collection and enforcement of a monetary judgment may be unsuccessful. As a result, the remedies available and the relative success and expedience of collection and enforcement proceedings with respect to the containers in various jurisdictions cannot be predicted.

Because substantially all of our revenues are generated in U.S. dollars, but a significant portion of our expenses are incurred in other currencies, exchange rate fluctuations could have an adverse impact on our results of operations.

The U.S. dollar is our primary operating currency. Almost all of our revenues are denominated in U.S. dollars, and approximately 72% of our direct container expenses - owned fleet were denominated in U.S. dollars for the year ended December 31, 2020. Accordingly, a significant amount of our expenses is incurred in currencies other than the U.S. dollar. This difference could lead to fluctuations in net income due to changes in the value of the U.S. dollar relative to the other currencies. During 2020, 2019 and 2018, 28%, 23% and 21%, respectively, of our direct container expenses – owned fleet were paid in up to 20 different foreign currencies. A decrease in the value of the U.S. dollar against non-U.S. currencies in which our expenses are incurred translates into an increase in those expenses in U.S. dollar terms, which would decrease our net income. While the prices of the used containers we trade or dispose are primarily quoted and billed in U.S. Dollars, declines in the currencies where these containers are sold relative to the U.S. Dollar can serve to reduce the market prices for used containers, which will decrease our net income. We do not engage in foreign currency hedging activities which might reduce the volatility associated with exchange rates.

Terrorist attacks, the threat of such attacks or the outbreak of war and hostilities could negatively impact our operations and profitability and may expose us to liability.

Terrorist attacks and the threat of such attacks have contributed to economic instability in the U.S. and elsewhere, and further acts or threats of terrorism, violence, war, or hostilities could similarly affect world trade and the industries in which we and our container lessees operate. For example, worldwide containerized trade dramatically decreased in the immediate aftermath of the September 11, 2001 terrorist attacks in the U.S., which affected demand for leased containers. In addition, terrorist attacks, threats of terrorism, violence, war, or hostilities may directly impact ports, depots, our facilities or those of our suppliers or container lessees and could impact our sales and our supply chain. A severe disruption to the worldwide ports system and flow of goods could result in a reduction in the level of international trade and lower demand for our containers.

Our lease agreements require our lessees to indemnify us for all costs, liabilities and expenses arising out of the use of our containers, including property damage to the containers, damage to third-party property and personal injury. However, our lessees may not have adequate resources to honor their indemnity obligations after a terrorist attack. Accordingly, we may not be protected from liability (and expenses in defending against claims of liability) arising from a terrorist attack.

Risks Related to Our Business Operations

We rely on our proprietary information technology systems to conduct our business. If these systems fail to perform their functions adequately, or if we experience an interruption in their operation, our business, results of operations and financial condition could be harmed.

The efficient operation of our business is highly dependent on our proprietary information technology systems. We rely on our systems to record transactions, such as repair and depot charges, purchases and disposals of containers and movements associated with each of our owned or managed containers. We use the information provided by these systems in our day-to-day business decisions in order to effectively manage our lease portfolio, reduce costs and improve customer service. We also rely on these systems for the accurate tracking of the performance of our managed fleet for each container investor. In 2020 we commenced efforts to replace several legacy computer systems that are central to our business operations. The failure of our systems to perform as we

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expect, or any failure to successfully replace our legacy systems, could disrupt our business, adversely affect our results of operations and cause our relationships with lessees and container investors to suffer. Our information technology systems are vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, power loss and computer systems failures and viruses or cyber-attacks. Even though we have developed redundancies and other contingencies to mitigate any disruptions to our information technology systems, these redundancies and contingencies may not completely prevent interruptions to our information technology systems. In recent years we have moved various information technology systems and data to cloud-based storage providers and software vendors. We face additional risks from relying on third parties to store, process and manage our data and software. Any such interruptions could harm our business, results of operations and financial condition.

Cyber-attacks and/or information technology security breaches on us or our customers could materially and adversely affect us.

If we, our customers or other third parties with which we do business were to fall victim to successful cyber-attacks or experience other cybersecurity incidents that cause system failure, downtime, or the loss of sensitive data, we may incur substantial costs and suffer other negative consequences. Our ability to handle the delivery and return of containers, lease billing, and the sale of older containers is dependent on the stable operation of our information technology systems. Our customers’ ability to generate revenue and make timely payments to us is similarly dependent on the stable operation of their information technology systems. Successful breaches, employee malfeasance, or human or technological error could result in, for example, unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third-party data or systems; theft of sensitive, regulated, or confidential data; the loss of access to critical data or systems through ransomware, destructive attacks, or other means; and business delays, service or system disruptions or denials of service.

Cybersecurity incidents have increased in number and severity and it is expected that these trends will continue. Should the Company be affected by such an incident, we may incur substantial costs and suffer other negative consequences, which may include substantial remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives to customers or business partners in an effort to maintain relationships after an attack, as well as litigation and legal risks.

We face risks from our tank container management agreement with Trifleet Leasing (The Netherlands) B.V.

We entered into a tank container management agreement with Trifleet Leasing (The Netherlands) B.V. (“Trifleet”) in June 2013. Under this agreement, we invest funds with Trifleet for the purchase and leasing of tank containers. Trifleet is our exclusive manager for investments in tank containers. Intermodal tank containers are used for the transport and storage of liquid foodstuffs, chemicals, and gases. This is a specialized market subject to a number of regulations and strict operating procedures. As Trifleet is investing funds on our behalf in tank containers, our return on any investments under this management agreement are highly reliant on their skill and performance, as well as the overall investment climate for tank containers. While we approve of the amounts committed under the management agreement, Trifleet selects the lessees, negotiates lease terms, determines equipment specifications, negotiates equipment orders and supervises production, and is responsible for all other management activities including customer billing, equipment return, re-leasing, maintenance, and repairs. If Trifleet or the tank container market does not perform as we anticipate, we may not receive adequate returns on our investment and our results could be materially impacted. Additionally, given the nature of tank containers and their cargos, our ownership of tank containers could expose us to different and additional risks than we generally face as the owner and lessor of dry freight and refrigerated containers. While lessees, Trifleet and ourselves all maintain insurance, and lessees agree to accept liability for claims caused by the operation of tank containers, this may still be inadequate to shield us from costs and liability from any claims arising from tank containers that we own pursuant to the Trifleet management agreement. In December 2020, Trifleet was purchased by GATX Corporation, a publicly traded company that primarily leases railcars. Given the recent sale of Trifleet, we may face additional risks in the continued performance of our tank investments managed by Trifleet and in our continued relationship with Trifleet.

If our insurance is inadequate or if we are unable to obtain insurance, we may experience losses.

Under all of our leases, our lessees are generally responsible for loss of or damage to a container beyond ordinary wear and tear, and they are required to purchase insurance to cover any other liabilities. Our depots are also

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required to maintain insurance and indemnify us against losses. We also maintain our own insurance to cover our containers when they are not on-hire to lessees or when the lessee fails to have adequate primary coverage, and third-party liability insurance for both on-hire and off-hire containers. In addition, we previously maintained insurance that, after satisfying significant deductibles, would cover loss of revenue as a result of default under most of our leases, as well as the recovery cost or replacement value of most of our containers. Given the high premium, significant deductible, and policy exclusions in this policy, we determined to let this coverage lapse for 2021. Lessees’ and depots’ insurance policies and indemnity rights may not protect us against losses. Our own insurance may prove to be inadequate or have too high deductibles to prevent against losses or in the future coverage may be unavailable or uneconomic, and losses could arise from a lack of insurance coverage.

The U.S. government has special contracting requirements that create additional risks.

In January 2019, we were informed that the U.S. Transportation Command Directorate of Acquisition (“USTranscom”) had issued a multi-vendor contract that included us as one of the vendors selected to supply leased marine containers and intermodal equipment to the U.S. Military. As a multi-vendor contract, there is no guarantee that the U.S. Military will accept our bids to supply containers and related services. Thus, expected revenues from the USTranscom contract are difficult to predict and may not materialize or prove profitable. If we do not perform in accordance with the terms of the USTranscom contract, we may receive a poor performance report that would be considered by the U.S. Military in making any future awards.

In contracting with the U.S. Military, we are subject to U.S. government contract laws, regulations and other requirements that impose risks not generally found in commercial contracts. For example, U.S. government contracts require contractors to comply with a number of socio-economic requirements and to submit periodic reports regarding compliance, are subject to audit and modification by the U.S. government in its sole discretion, and impose certain requirements relating to software and/or technical data that, if not followed, could result in the inadvertent grant to the U.S. government of broader licenses to use and disclose such software or data than intended.

These laws, regulations and contract provisions also permit, under certain circumstances, the U.S. government unilaterally to:

•	suspend or prevent us for a set period of time from receiving new government contracts or extending existing contracts based on violations or suspected violations of laws or regulations;

•	terminate the USTranscom contract;

•	reduce the scope and value of the USTranscom contract;

•	audit our performance under the USTranscom contract and our compliance with various regulations; and

•	change certain terms and conditions in the USTranscom contract.

In addition, the U.S. Military may terminate the USTranscom contract either for its convenience at any time or if we default by failing to perform in accordance with the contract schedule and terms. Termination for convenience provisions generally enable the contractor to recover only those costs incurred or committed, and settlement expenses and profit on the work completed prior to termination. Termination for default provisions do not permit these recoveries and make the contractor liable for excess costs incurred by the U.S. Military in procuring undelivered items from another source.

In addition, the U.S. government could bring criminal and civil charges against us based on intentional or unintentional violations of the representations and certifications that we have made in the USTranscom contract. Although adjustments arising from U.S. government audits and reviews have not seriously harmed our business in the past, future audits and reviews could cause adverse effects. We could also suffer serious harm to our reputation if allegations of impropriety were to be made against us.

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We may choose to pursue acquisitions or joint ventures that could present unforeseen integration obstacles or costs and we face risks from our joint venture.

We may pursue acquisitions and joint ventures. Acquisitions involve a number of risks and present financial, managerial and operational challenges, including:

•	potential disruption of our ongoing business and distraction of management;

•	difficulty integrating personnel and financial and other systems;

•	hiring additional management and other critical personnel; and

•	increasing the scope, geographic diversity, and complexity of our operations.

In addition, we may encounter unforeseen obstacles or costs in the integration of acquired businesses. Also, the presence of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition may have a material adverse effect on our business. Acquisitions or joint ventures may not be successful, and we may not realize any anticipated benefits from acquisitions or joint ventures.

Our senior executives are critical to the success of our business and any inability to retain them or recruit and successfully integrate new personnel could harm our business, results of operations and financial condition.

Our senior management has a solid history in the container leasing industry. We rely on this knowledge and experience in our strategic planning and in our day-to-day business operations. Our success depends in large part upon our ability to retain our senior management, the loss of one or more of whom could have a material adverse effect on our business.

Our success also depends on our ability to retain our experienced sales force and technical personnel as well as recruit new skilled sales, marketing, and technical personnel. Competition for these individuals in our industry is intense and we may not be able to successfully recruit, train or retain qualified personnel. If we fail to retain and recruit the necessary personnel, our business, and our ability to obtain new container lessees and provide acceptable levels of customer service could suffer. We have “at will” employment agreements with all of our executive officers.

The lack of an international title registry for containers increases the risk of ownership disputes.

Although the Bureau International des Containers registers and allocates a four letter prefix to every container in accordance with ISO standard 6346 (Freight container coding, identification and marking) to identify the owner/operator and each container has a unique prefix and serial number, there is no internationally recognized system of recordation or filing to evidence our title to containers nor is there an internationally recognized system for filing security interests in containers. Although this has not occurred to date, the lack of a title recordation system with respect to containers could result in disputes with lessees, end-users, or third parties who may improperly claim ownership of containers.

We may incur costs associated with cargo security regulations, which may adversely affect our business, results of operations and financial condition.

We may be subject to regulations promulgated in various countries, including the U.S., seeking to protect the integrity of international commerce and prevent the use of containers for international terrorism or other illicit activities. For example, the Container Security Initiative, the Customs-Trade Partnership Against Terrorism and Operation Safe Commerce are among the programs administered by the U.S. Department of Homeland Security that are designed to enhance security for cargo moving throughout the international transportation system by identifying existing vulnerabilities in the supply chain and developing improved methods for ensuring the security of containerized cargo entering and leaving the U.S. Moreover, the International Convention for Safe Containers, 1972, as amended, adopted by the International Maritime Organization, applies to containers, and seeks to maintain a high level of safety of human life in the transport and handling of containers by providing uniform international safety regulations. As these regulations develop and change, we may incur compliance costs due to the acquisition of new, compliant containers and/or the adaptation of existing containers to meet new requirements imposed by such regulations. Additionally, certain companies are currently developing or may in the future develop products

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designed to enhance the security of containers transported in international commerce. Regardless of the existence of current or future government regulations mandating the safety standards of intermodal shipping containers, our competitors may adopt such products, or our container lessees may require that we adopt such products. In responding to such market pressures, we may incur increased costs, which could have a material adverse effect on our business, results of operations and financial condition.

Environmental liability and regulations may adversely affect our business, results of operations and financial condition.

We are subject to federal, state, local and foreign laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants to air, ground and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. We could incur substantial costs, including cleanup costs, fines and costs arising out of third-party claims for property or natural resource damage and personal injury, as a result of violations of or liabilities under or compliance with environmental laws and regulations in connection with our or our lessees’ current or historical operations. Under some environmental laws in the U.S. and certain other countries, the owner or operator of a container may be liable for environmental damage, cleanup, or other costs in the event of a spill or discharge of material from the container without regard to the fault of the owner or operator. While we typically maintain certain limited liability insurance and typically require lessees to provide us with indemnity against certain losses, the insurance coverage may not be sufficient to protect against any or all liabilities and such indemnities may not be sufficient, or available, to protect us against losses arising from environmental damage. Moreover, our lessees may not have adequate resources, or may refuse to honor their indemnity obligations and our insurance coverage is subject to large deductibles, coverage limits and significant exclusions.

Environmental regulations also impact container production and operation, including regulations on the use of chemical refrigerants due to their ozone depleting and global warming effects. Our refrigerated containers currently use R134A refrigerant. While R134A does not contain chlorofluorocarbons (“CFCs”), the European Union (“EU”) instituted regulations to phase out the use of R134A in automobile air conditioning systems which began in 2011 due to concern that the release of R134A into the atmosphere may contribute to global warming. While the European Union regulations do not currently restrict the use of R134A in refrigerated containers or trailers, it is possible that the phase out of R134A in automobile air conditioning systems will be extended to containers in the future and our operations could be impacted. It has been proposed that R134A usage in containers be banned beginning in 2025, although the final decision has not been made as of yet.

Container production also raises environmental concerns. The floors of dry freight containers are plywood typically made from tropical hardwoods. Due to concerns regarding de-forestation and climate change, many countries have implemented severe restrictions on the cutting and export of this wood. Accordingly, container manufacturers have switched a significant portion of production to alternatives such as birch, bamboo, and other farm grown wood and users are also evaluating alternative designs that would limit the amount of plywood required and are also considering possible synthetic materials. New woods or other alternatives have not proven their durability over the typical life of a dry freight container, and if they cannot perform as well as the hardwoods have historically, the future repair and operating costs for these containers may be impacted. The insulation foam in the walls of certain refrigerated containers requires the use of a blowing agent that contains CFCs. Manufacturers are phasing out the use of this blowing agent in manufacturing, however, if future regulations prohibit the use or servicing of containers with insulation manufactured with this blowing agent, we could be forced to incur large retrofitting expenses and these containers might bring lower rental rates and disposal prices. EU regulations currently restrict the sale or use of refrigerated containers manufactured with the CFC containing blowing agent and strict enforcement of these regulations could impact our ability to lease or sell these refrigerated containers in EU countries. The container industry in China historically used solvent-based paint systems. Regulations in China for the container industry required stopping the use of solvent-based paint systems in 2017, due to the restrictions on volatile organic compounds used in solvent-based paints. To comply with the regulations, new water borne paint systems were developed and are being used by container manufacturers. The use of water borne paint systems has required significant factory investment and it is problematic to apply water borne paint during the winter in colder parts of China. The conversion to water borne paint impacts factory capacity, increases the cost of containers and requires greater investment by us in container inspection and factory supervision. The industry does not have significant years of experience with water borne paint

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and the long term durability of water borne paint may not be the same as solvent based paint which could impact the useful life and resale value of containers with water borne paint.

We are subject to certain U.S. laws that may impact our international operations and any investigation or determination that we violated these laws may affect our business and operations adversely.

As a Bermuda corporation that has an indirect wholly-owned U.S. subsidiary with operations in the U.S., our U.S. operations are subject to certain U.S. laws that may also impact our international operations. We are subject to the regulations imposed by the Foreign Corrupt Practices Act, which generally prohibits U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business. We are also subject to U.S. Executive Orders and U.S. Treasury sanctions regulations restricting or prohibiting business dealings in or with certain nations and with certain specially designated nationals (individuals and legal entities). Any determination or investigation into violations of these laws and regulations could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We could face litigation involving our management of containers for container investors.

We manage containers for container investors under management agreements that are negotiated with each container investor. We make no assurances to container investors that they will make any amount of profit on their investment or that our management activities will result in any particular level of income or return of their initial capital. Although our management agreements contain contractual protections and indemnities that are designed to limit our exposure to such litigation, such provisions may not be effective, and we may be subject to a significant loss in a successful litigation by a container investor.

Tax Risks Related to Our Business and Investment in Our Common Shares

U.S. investors in our company could suffer adverse tax consequences if we are characterized as a passive foreign investment company for U.S. federal income tax purposes.

Based upon the nature of our business activities, we could become classified as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Such characterization could result in adverse U.S. tax consequences to direct or indirect U.S. investors in our common shares. For example, if we are a PFIC, our U.S. investors could become subject to increased tax liabilities under U.S. tax laws and regulations and could become subject to burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and depends on the composition of our income and assets from time to time. Specifically, for any taxable year we will be classified as a PFIC for U.S. tax purposes if either:

•	75% or more of our gross income in the taxable year is passive income, or

•	the average percentage of our assets (which includes cash) by value in a taxable year which produce or are held for the production of passive income is at least 50%.

In applying these tests, we are treated as owning or generating directly our pro rata share of the assets and income of any corporation in which we own at least 25% by value. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend the cash we have raised.

Under the PFIC rules, unless a U.S. investor is permitted to and does elect otherwise under the Internal Revenue Code, such U.S. investor would be liable to pay U.S. federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our common shares, as if the excess distribution or gain had been recognized ratably over the investor’s holding period for our common shares. Based on the composition of our income, valuation of our assets, and our election to treat certain of our subsidiaries as disregarded entities for U.S. federal income tax purposes, we do not believe we were a PFIC for any period after our initial public offering (“IPO”) date and we do not expect that we should be treated as a PFIC for our current taxable year. However, there can be no assurance at all in this regard. Because the PFIC determination is highly fact intensive and made at the end of each taxable year, it is possible that we may be a PFIC

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for the current or any future taxable year or that the U.S. Internal Revenue Service (“IRS”) may challenge our determination concerning our PFIC status.

We may become subject to unanticipated tax liabilities that may have a material adverse effect on our results of operations.

Textainer Group Holdings Limited is a Bermuda company, and we believe that a significant portion of the income derived from our operations will not be subject to tax in Bermuda, which currently has no corporate income tax, or in many other countries in which we conduct activities or in which our customers or containers are located. However, this belief is based on the anticipated nature and conduct of our business, which may change. It is also based on our understanding of our position under the tax laws of the countries in which we have assets or conduct activities. This position is subject to review and possible challenge by taxing authorities and to possible changes in law that may have retroactive effect.

A portion of our income is treated as effectively connected with our conduct of a trade or business within the U.S., and is accordingly subject to U.S.

federal income tax. It is possible that the IRS may challenge that a greater portion of our income is effectively connected income that should be subject to U.S.

federal income tax.

Our results of operations could be materially and adversely affected if we become subject to a significant amount of unanticipated tax liabilities.

Our U.S. subsidiaries may be treated as personal holding companies for U.S. federal tax purposes now or in the future.

Any of our direct or indirect U.S. subsidiaries could be subject to additional U.S. tax on a portion of its income if it is considered to be a personal holding company (“PHC”) for U.S. federal income tax purposes. This status depends on whether more than 50% of the subsidiary’s shares by value could be deemed to be owned (taking into account constructive ownership rules) by five or fewer individuals and whether 60% or more of the subsidiary’s adjusted ordinary gross income consists of “personal holding company income,” which includes certain forms of passive and investment income. The PHC rules do not apply to non-U.S. corporations. We believe that none of our U.S. subsidiaries should be considered PHCs. In addition, we intend to cause our U.S. subsidiaries to manage their affairs in a manner that reduces the possibility that they will meet the 60% income threshold. However, because of the lack of complete information regarding our ultimate share ownership (i.e., particularly as determined by constructive ownership rules), our U.S. subsidiaries may become PHCs in the future and, in that event, the amount of U.S. federal income tax that would be imposed could be material.

Changes in tax laws or their application could adversely affect the results of our operations.

Our worldwide operations are taxed under the laws of the jurisdictions in which we operate. However, the integrated nature of our worldwide operations can produce conflicting claims from revenue authorities in different countries as to the profits to be taxed in the individual countries, including disputes relating to transfer pricing. Some of the jurisdictions in which we operate have double tax treaties with other foreign jurisdictions, which provide a framework for mitigating the impact of double taxation on our revenues and capital gains. However, mechanisms developed to resolve such conflicting claims are largely uncertain, and can be expected to be very lengthy in coming to a final determination in the applicable jurisdictions.

In recent years, tax authorities around the world have increased their scrutiny of company tax filings, and have become more rigid in exercising any discretion they may have. As part of this, the Organization for Economic Co-operation and Development (“OECD”) has proposed a number of tax law changes under its Base Erosion and Profit Shifting (“BEPS”) Action Plans to address issues of transparency, coherence and substance.

These OECD tax reform initiatives also need local country implementation, including in Bermuda and the U.S., which may result in significant changes to established tax principles. In response to EU efforts to investigate the tax policies of non-EU jurisdictions, effective December 31, 2018 Bermuda adopted the Economic Substance Act of 2018, which requires that Bermuda registered entities engaged in certain relevant activities (which include

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finance, leasing and shipping) maintain sufficient economic substance and activities in Bermuda. The failure to comply with the Economic Substance Act may result in fines and penalties and ultimately the striking off of an entity from the Bermuda corporate register. We may be unable to comply with the Economic Substance Act or compliance with the act may materially adversely impact our operations and results. Penalties for noncompliance could adversely affect our operations and results.

On March 27, 2020, the US Coronavirus Aid, Relief, and Economic Security Act (“CARES”) of 2020 was signed into law. For applicable impacted years, the CARES Act introduced measures such as (1) additional carryback years as well as the elimination of the 80% taxable income limitation on net operating losses (“NOL”) usage; (2) enhanced interest deductibility on 163(j) business interest expense (raising adjusted taxable income deduction limit threshold from 30% to 50%); (3) accelerated AMT credit refunds; (4) retroactive technical correction of qualified improvement property costs recovery period;

(5)	enhanced deductibility of charitable contributions from 10% taxable income limitation to 25%; and (6) introduced payroll tax deferral programs and loan forgiveness programs (Paycheck Protection Program). None of these measures have a material impact on the Company’s tax situation.

In general, such tax reform efforts, including with respect to tax base or rate, transfer pricing, intercompany dividends, cross border transactions, controlled corporations, and limitations on tax relief allowed on the interest on intercompany debt, will require us to continually assess our organizational structure against tax policy trends, and could lead to an increased risk of international tax disputes and an increase in our effective tax rate, and could adversely affect our financial results.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

We have significant net operating loss carry-forwards in the United States. As of December 31, 2020, we had net operating loss carry-forwards relating to U.S. federal income taxes; $106,151 which will begin to expire from December 31, 2021 through December 31, 2037 if not utilized and $25,279 has no expiration date.

In the United States, utilization of these net operating loss carry-forwards for federal income tax purposes may be subject to an annual limitation if there is an ownership change within the meaning of Section 382 of the Internal Revenue Code (“Section 382”). In general, an ownership change within the meaning of Section 382 occurs if a transaction or series of transactions over a three-year period result in a cumulative change of more than 50% in the beneficial ownership of a company’s stock. We do not believe we have a limitation on the ability to utilize our net operating loss carry-forwards under Section 382 as of December 31, 2020. However, issuances, sales and/or exchanges of our stock (including, potentially, relatively small transactions and transactions beyond our control) occurring after December 31, 2020, taken together with prior transactions with respect to our stock over a three-year period, could trigger an ownership change under Section 382 in the future and therefore a limitation on our ability to utilize our net operating loss carryforwards. Any such limitation could cause some loss carryforwards to expire before we would be able to utilize them to reduce taxable income in future periods, possibly resulting in a substantial income tax expense or write down of our tax assets or both.

The calculation of our income tax expense requires judgment and the use of estimates.

We periodically assess tax positions based on current tax developments, including enacted statutory, judicial, and regulatory guidance. In analyzing our overall tax position, consideration is given to the amount and timing of recognizing income tax liabilities and benefits. In applying the tax and accounting guidance to the facts and circumstances, income tax balances are adjusted appropriately through the income tax provision. We account for income tax positions on uncertainties by recognizing the effect of income tax positions only if those positions are more likely than not of being sustained and maintain reserves for income tax positions we believe are not more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. However, due to the judgment required in estimating those reserves, actual amounts paid, if any, could differ from these estimates.

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Risks Related to Our Common Shares and Public Listings

We may not be able to resume paying a dividend and any dividends paid in the future could be reduced or eliminated.

We eliminated our dividend payment in the fourth quarter of 2016. We may not be able or may choose not to reinstate our dividend program and pay future dividends, and if reinstated any future dividend could again be eliminated or reduced. The declaration, amount and payment of future dividends are at the discretion of our board of directors and will be dependent on our future operating results and the cash requirements of our business. There are a number of factors that can affect our ability to pay dividends and there is no guarantee that we will pay dividends in any given year, in each quarter of a year, or pay any specific amount of dividends. In addition, we will not pay dividends in the event we are not allowed to do so under Bermuda law, are in default under (or such payment would cause a default under) TL’s revolving credit facilities or term loan, or if such payment would cause us to breach any of our covenants. These covenants include certain financial covenants, which would be directly affected by the payment of dividends, such as a maximum ratio of consolidated funded debt to consolidated tangible net worth (which amount would decrease by the amount of any dividend paid). The reduction, suspension or elimination of dividends may negatively affect the market price of our common shares. Furthermore, since we are a holding company, substantially all of the assets shown on our consolidated balance sheet are held by our subsidiaries. Accordingly, our earnings and cash flow and our ability to pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends as permitted under our lending agreements.

We face risks from our share repurchase program.

In September 2019 we announced a share repurchase program to repurchase up to $25 million of our shares, in March 2020 we announced an increase by another $25 million to this program and in September 2020 we further increased the program by $50 million. Purchases under this program are at our discretion and we may not purchase all $100 million of shares under the program. This program may be increased, reduced, or terminated at any time by us. Share repurchases may reduce our financial flexibility, limit our ability to reduce debt, limit our ability to resume a dividend program and may reduce our funds available for container investments. Using funds to repurchase shares could cause our debt to equity ratio to increase and may impair our ability to comply with the financial covenants in our debt agreements. Share repurchases may also reduce the number of shares available for other investors to purchase in the market which could add to share price volatility for our stock. We face these and other risks related to share repurchases. During 2020 and 2019, the Company repurchased approximately 6,736,493 and 879,000 shares, respectively, for a total amount of approximately $68.5 million and $8.6 million, respectively. The Company did not repurchase any of its common shares during 2018.

Future changes in accounting rules could significantly impact how we, our managed fleet container investors, and our customers account for our leases.

Our consolidated financial statements are prepared in accordance with U.S. GAAP. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) which was adopted by the Company on January 1, 2019. Under this new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. Lessees were required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The new lease guidance also simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Additionally, IFRS has issued similar changes to lease accounting under IFRS 16 Leases. Because the new leasing guidance virtually eliminates for lessees the financial statement benefit of entering into operating leases, it could change the way we and our customers conduct our businesses. Future changes in accounting rules will also impact container investors whose containers are managed by us. The accounting of these changes could make it more difficult for such container investors to raise funding and may also make managed container programs less attractive to container investors.

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The market price and trading volume of our common shares, which may be affected by market conditions beyond our control, have been volatile and could continue to remain volatile.

The market price of our common shares has been and may continue to be highly volatile and subject to wide fluctuations. In addition, the trading volume in our common shares has fluctuated and may continue to fluctuate, causing significant price variations to occur. Since our initial public offering, our common shares have fluctuated from an intra-day low of $4.23 per share to an intra-day high of $43.96 per share. If the market price of the shares declines significantly, the value of an investment in our common shares would decline. The market price of our common shares may fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our common shares or result in fluctuations in the price or trading volume of our common shares include:

•	variations in our quarterly operating results;

•	failure to meet analysts’ earnings estimates;

•	publication of research reports about us, other intermodal container lessors or the container shipping industry or the failure of securities analysts to cover our common shares or our industry;

•	additions or departures of key management personnel;

•	adverse market reaction to any indebtedness we may incur or preference or common shares we may issue in the future;

•	changes in our dividend payment or share repurchase policies or failure to execute our existing policies;

•	actions by shareholders;

•	changes in market valuations of similar companies;

•	announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments;

•	speculation in the press or investment community;

•	changes or proposed changes in laws or regulations affecting the container shipping industry or enforcement of these laws and regulations, or announcements relating to these matters; and

•	impact of global financial crises or stock market disruptions.

Recently and in the past, the stock market has experienced extreme price and volume fluctuations. These market fluctuations could result in extreme volatility in the trading price of our common shares, which could cause a decline in the value of your investment in our common shares. In addition, the trading price of our common shares could decline for reasons unrelated to our business or financial results, including in reaction to events that affect other companies in our industry even if those events do not directly affect us. You should also be aware that price volatility may be greater if the public float and trading volume of our common shares are low.

We face risks related to our dual listing on the Johannesburg Stock Exchange and our relationship with Trencor.

Trencor Limited, a company traded on the Johannesburg Stock Exchange (the “JSE”) in South Africa, owned approximately 47.5% of our issued and outstanding common shares as of December 31, 2018. In December 2019 we commenced a secondary, or dual, listing of our common shares on the JSE under the symbol “TXT”. Promptly following our dual listing, Trencor distributed approximately 24.3 million of its shares in the Company to Trencor’s own shareholders and these shares are now trading on the JSE. In June 2020, Trencor distributed its remaining 3.0 million shares in the Company to Trencor’s own shareholders and those shares trade on the JSE. Following the June 2020 distribution of shares, Trencor no longer holds any shares in the Company. Two of our eight directors are also directors of Trencor. These directors owe fiduciary duties to each company and may have conflicts of interest in matters involving or affecting us as well as Trencor. Any sale or transfer of some or all of the common shares owned by large South African shareholders could adversely affect our share price.

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While our primary listing remains on the New York Stock Exchange, or NYSE, and we follow the corporate governance requirements applicable to a Bermuda company listed as a foreign private issuer on the NYSE, holders of our TXT shares on the JSE, may seek to impose on us some or all of the corporate governance practices applicable to South African companies which may result in constraints on management and may involve significant costs. These include the King IV Report on Corporate Governance, a document accepted by the JSE and promulgated by the South African Institute of Directors which, among other things, suggests that corporations in their corporate decision-making consider the following stakeholders in addition to the owners of shares: parties who contract with the enterprise; parties who have a non-contractual nexus with the enterprise (including civil society and the environment); and the state.

Any future issuance of securities by us on the JSE would be subject to compliance with JSE rules and subject to review by the JSE and possibly South African exchange control regulations. These requirements could restrict or limit our ability to issue new shares in South Africa. If a significant percentage of our shares remain on the JSE, limits on our ability to issue new equity in South Africa could materially impact our ability to access capital for growth and negatively impact our business.

If we are unwilling or unable to comply with the current or future continuing listing requirements of the JSE we may have our shares delisted from the JSE. The JSE is the primary stock exchange in South Africa and there are restrictions on South African investors holding securities outside South Africa, including on the NYSE. A delisting from the JSE might cause significant sales of our common shares and negatively impact the price of our common shares on the NYSE. If we wish to voluntarily delist our shares from the JSE we may be required to provide a cash tender offer to all holders on the JSE and we may be unwilling or financially unable to do so, which could limit our ability to avoid negative share price impacts from any delisting of our shares on the JSE.

We are a holding company with no material direct operations and rely on our operating subsidiaries to provide us with funds necessary to meet our financial obligations and to pay dividends.

We are a holding company with no material direct operations. Our principal assets are the equity interests we directly or indirectly hold in our operating subsidiaries, which own our operating assets. As a result, we are dependent on loans, dividends, and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations and to pay dividends on our common shares. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions or lending covenants. If we are unable to obtain funds from our subsidiaries, we may be unable to, or our board may exercise its discretion not to pay dividends on our common shares.

It may not be possible for investors to enforce U.S. judgments against us.

We and all of our direct and indirect subsidiaries, except Textainer Equipment Management (U.S.) Limited and Textainer Equipment Management (U.S.)

II	LLC, are incorporated in jurisdictions outside the U.S. A substantial portion of our assets and those of our subsidiaries are located outside of the U.S. In addition, half of our directors are non-residents of the U.S., and all or a substantial portion of the assets of these non-residents are located outside the U.S. As a result, it may be difficult or impossible for U.S. investors to serve process within the U.S. upon us, our non-U.S. subsidiaries, or our directors, or to enforce a judgment against us for civil liabilities in U.S. courts. In addition, you should not assume that courts in the countries in which we or our subsidiaries are incorporated or where our assets or the assets of our subsidiaries are located would enforce judgments of U.S. courts obtained in actions against us or our subsidiaries based upon the civil liability provisions of applicable U.S. federal and state securities laws, or would enforce, in original actions, liabilities against us or our subsidiaries based on those laws.

We are a foreign private issuer and, as a result, under NYSE rules, we are not required to comply with certain corporate governance requirements.

As a foreign private issuer, we are permitted by the NYSE to comply with Bermuda corporate governance practice in lieu of complying with certain

NYSE corporate governance requirements. This means that we are not required to comply with NYSE requirements that:

•	the board of directors consists of a majority of independent directors;

•	independent directors meet in regularly scheduled executive sessions;

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•	the audit committee satisfy NYSE standards for director independence (although we must still comply with independence standards pursuant to Rule 10A-3 promulgated under the U.S. Securities Exchange Act of 1934, as amended);

•	the audit committee have a written charter addressing the committee’s purpose and responsibilities;

•	we have a corporate governance and nominating committee composed of independent directors with a written charter addressing the committee’s purpose and responsibilities;

•	we have a compensation committee composed of independent directors with a written charter addressing the committee’s purpose and responsibilities;

•	we establish corporate governance guidelines and a code of business conduct;

•	our shareholders approve any equity compensation plans; and

•	there be an annual performance evaluation of the nominating and corporate governance and compensation committees.

Our board of directors has adopted an audit committee charter, a compensation committee charter and a corporate governance and nominating committee charter. Additionally, we have a company code of conduct, corporate governance guidelines, conduct performance evaluations of our board and committees, and have obtained shareholder approval for our equity compensation plan. However, we use some of the exemptions available to a foreign private issuer. As a result, our board of directors may not consist of a majority of independent directors and our compensation committee may not consist of any or a majority of independent directors. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.

Required public company corporate governance and financial reporting practices and policies have increased our costs, and we may be unable to provide the required financial information in a timely and reliable manner.

Our management may not be able to continue to meet the regulatory compliance and reporting requirements that are applicable to us as a public company. This result may subject us to adverse regulatory consequences, and could lead to a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. If we do not maintain compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or if we or our independent registered public accounting firm identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, we could suffer a loss of investor confidence in the reliability of our financial statements, which could cause the market price of our common shares to decline.

In addition, if we fail to maintain effective controls and procedures, we may be unable to provide the required financial information in a timely and reliable manner or otherwise comply with the standards applicable to us as a public company. Any failure by us to timely provide the required financial information could materially and adversely impact our financial condition and the market value of our common shares. Furthermore, testing and maintaining internal controls can divert our management’s attention from other matters that are important to our business. These regulations have increased our legal and financial compliance costs, we expect the regulations to make it more difficult to attract and retain qualified officers and directors, particularly to serve on our audit committee, and make some activities more difficult, time consuming and costly.

Future sales of a large number of our securities into the public market, or the expectation of such sales, could cause the market price of our common shares to decline significantly.

Sales of substantial amounts of common securities into the public market, or the perception that such sales will occur, may cause the market price of our common shares to decline significantly. In September 2012, we completed a sale of 8,625,000 common shares, including 2,500,000 common shares offered by a selling shareholder, Halco. The price of our shares could be negatively impacted if we undertake additional offerings to sell securities. In addition, at our 2019 Annual General Meeting our shareholders approved an amendment and restatement of the 2015 Share Incentive Plan as the 2019 Share Incentive Plan and to increase the maximum number of our common

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shares issuable pursuant to such plan by 2,500,000 shares and to extend the term of such plan for ten years from the date of the annual meeting of shareholders. The common shares to be issued pursuant to awards under our 2019 Share Incentive Plan have been registered on registration statements on Form S-8 filed with the Securities Exchange Commission and, when issued, will be freely tradable under the Securities Act of 1933.

We have provisions in our bye-laws that may discourage a change of control.

Bermuda law and our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These include provisions:

•	requiring the approval of not less than 66% of our issued and outstanding voting shares for certain merger or amalgamation transactions that have not been approved by our board of directors;

•	prohibiting us from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the person becomes an interested shareholder, unless certain conditions are met;

•	authorizing our board of directors to issue blank-check preference shares without shareholder approval;

•	establishing a classified board with staggered three-year terms;

•	only authorizing the removal of directors (i) for cause by the affirmative vote of the holders of a majority of the votes cast at a meeting or

(ii)	without cause by the affirmative vote of the holders of 66% of the common shares then issued and outstanding and entitled to vote on the resolution; and

•	establishing advance notice requirements for nominations for election to our board of directors.

These provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that is opposed by our management and/or our board of directors. Public shareholders who might desire to participate in these types of transactions may not have an opportunity to do so. These provisions could substantially impede the ability of public shareholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our common shares and your ability to realize any potential change of control premium.

As a shareholder of our company, you may have greater difficulties in protecting your interests than as a shareholder of a U.S. or South African corporation.

The Companies Act 1981 of Bermuda, as amended (the “Companies Act”), applies to our company and differs in material respects from laws generally applicable to U.S. or South African corporations and their shareholders. Taken together with the provisions of our bye-laws, some of these differences may result in you having greater difficulties in protecting your interests as a shareholder of our company than you would have as a shareholder of a U.S. corporation listed on NYSE or a South Africa corporation listed on the JSE. This affects, among other things, the circumstances under which transactions involving an interested director are voidable, whether an interested director can be held accountable for any benefit realized in a transaction with our company, what approvals are required for business combinations by our company with a large shareholder or a wholly-owned subsidiary, what rights you may have as a shareholder to enforce specified provisions of the Companies Act or our bye-laws, and the circumstances under which we may indemnify our directors and officers.

Our bye-laws restrict shareholders from bringing legal action against our officers and directors.

Our bye-laws contain a broad waiver by our shareholders of any claims or right of action, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud.

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ITEM 4.	INFORMATION ON THE COMPANY

A.	History and Development of the Company

Our business began operations in 1979. We reorganized our business in 1993 and incorporated Textainer Group Holdings Limited under the laws of Bermuda as a holding company of a group of corporations involved in the purchase, ownership, management, leasing and disposal of a fleet of intermodal containers. Textainer Group Holdings Limited is incorporated with an indefinite duration under registration number EC18896.

Textainer Group Holdings Limited’s common shares are primary listed on the NYSE under the symbol “TGH”. The Company’s common shares are secondary listed on the JSE in Johannesburg, South Africa under the symbol “TXT”. Textainer Group Holdings Limited’s headquarters office is located at Century House, 16 Par-La-Ville Road, Hamilton HM 08 Bermuda and our telephone number is (441) 296-2500. Our agent in the United States is Daniel W. Cohen, Textainer Group Holdings Limited, c/o Textainer Equipment Management (U.S.) Limited, 650 California Street, 16th Floor, San Francisco, CA 94108.

At December 31, 2020, Textainer Group Holdings Limited had two directly-owned subsidiaries:

•	Textainer Equipment Management Limited (“TEML”), our wholly-owned subsidiary incorporated in Bermuda, which together with its four wholly-owned subsidiaries (see Item 4 (C), “Organizational Structure”) provides container management, acquisition and disposal services to affiliated and unaffiliated container investors; and

•	Textainer Limited (“TL”), our wholly-owned subsidiary incorporated in Bermuda, which owns containers directly and via six subsidiaries:

•	Textainer Marine Containers II Limited (“TMCL II”), a Bermuda company which is wholly-owned by TL;

•	Textainer Marine Containers V Limited (“TMCL V”), a Bermuda company which is wholly-owned by TL;

•	Textainer Marine Containers VI Limited (“TMCL VI”), a Bermuda company which is wholly-owned by TL;

•	Textainer Marine Containers VII Limited (“TMCL VII”), a Bermuda company which is wholly-owned by TL;

•	Leased Assets Pool Company Limited (“LAPCO”), a Bermuda company which is wholly-owned by TL; and

•	TAP Funding Ltd. (“TAP Funding”), a Bermuda company in which TL and TAP Limited (“TAP”) hold common shares of 50.1% and 49.9%, respectively, and voting rights of 66.7% and 33.3%, respectively (see Note 1 “Nature of Business and Summary of Significant Accounting Polices” and Note 14 “Subsequent Events” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further information).

Our internet website address is www.textainer.com. The information contained on, or that can be accessed through, our website is not incorporated into and is not intended to be a part of this Annual Report on Form 20-F.

Significant Events

In August 2016, Hanjin Shipping company Co., Ltd (“Hanjin”), filed for bankruptcy. The Company maintained insurance that covers a portion of the exposure related to the value of containers that are unlikely to be recovered from its customers, the cost to recover containers and up to 183 days of lost lease rental income. The Company entered into a final agreement with the insurance companies on December 31, 2018 and the total remaining payments of $9,814 for the Company’s owned fleet were received in January and early February 2019. In 2019, the Company received a net cash distribution of $14,881 from the Hanjin bankruptcy estate for its owned fleet. As of December 31, 2020, there is no insurance receivable for the Company’s owned fleet related to this

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bankrupt customer. (see Note 2 “Insurance Receivable and Impairment” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for additional information).

In October 2018, TL entered into an agreement to purchase 75% of the total outstanding common shares of TW Container Leasing, Ltd. (“TW”) from Wells Fargo Container Corp. (“WFC”) for a cash consideration of $29,658. In January 2019, the Company dissolved TW, its wholly-owned subsidiary.

In September 2019, the Company announced that Trencor Limited (“Trencor”), a company publicly traded on the JSE in Johannesburg, South Africa under the symbol “TRE” and the former holder of 27.2 million common shares or approximately 47.5% of the Company's issued and outstanding common shares, filed with the JSE a circular (the "Trencor circular") requesting that Trencor's shareholders approve the unbundling of Trencor's shares in Textainer. The Trencor circular was approved by Trencor's shareholders in October 2019 and the Trencor share unbundling was implemented in December 2019. In June 2020, Trencor distributed the remaining 3.0 million shares it retained in the Company to Trencor’s own shareholders.

In December 2019, the Company filed a Pre-Listing Announcement with the JSE to commence a secondary, or dual, listing of the Company's common shares on the Main Board of the JSE under the share code "TXT" with commencement of trading on December 11, 2019. The secondary listing was not in connection with any current capital raising effort.

In December 2019, the Company entered into a stock purchase agreement with TAC Limited, a wholly-owned subsidiary of Trencor, to purchase LAPCO. The purchase price consideration consisted of $65,527 in cash paid to TAC Limited and cash amounts paid by the Company to fully repay LAPCO’s debt facility of $126,289. The Company repaid LAPCO's existing debt at the closing by refinancing this debt in the Company's existing revolving credit facility. LAPCO owned a fleet of approximately 161,000 TEU of intermodal containers managed by the Company and approximately 3,000 TEU of containers managed by other container lessors (see Note 1 “Nature of Business and Summary of Significant Accounting Policies” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for additional information).

In June 2020, we concluded a container purchase totaling approximately 4,200 containers that we had been managing for an institutional investor for a total purchase consideration of $12,515. The purchase of these previously managed containers resulted to the settlement of the deemed container leaseback financial liability and termination of the management agreement between the Company and the Container Investor.

In July 2020, we concluded a container purchase totaling approximately 19,800 containers from a shipping company for a total purchase consideration of $29,900.

In August 2020, TMCL VII issued $450,000 aggregate principal amount of Series 2020-1 Fixed Rate Asset Backed Notes (“TMCL VII 2020-1 Bonds”). In September 2020, TMCL VII issued $607,800 aggregate principal amount of Series 2020-2 Fixed Rate Asset Backed Notes (“TMCL VII 2020-2 Bonds”) and $221,000 aggregate principal amount of Series 2020-3 Fixed Rate Asset Backed Notes (“TMCL VII 2020-3 Bonds”). Proceeds from 2020-1 Bonds, 2020-2 Bonds and 2020-3 Bonds were primarily used to pay down debt in our secured debt facility and revolving credit facility and to pay off the TMCL VII Series 2018-1 (“TMCL VII 2018-1”), TMCL V Series 2017-1 (“TMCL V 2017-1”) and TMCL V Series 2017-2 Fixed Rate Asset Backed Notes (“TMCL V 2017-2”). (see Note 8 “Debt” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for additional information).

In January 2021, the Company completed the acquisition of 49.9% of the common shares of TAP Funding from TAP Ltd. for a total purchase price consideration of $21.5 million. Following the acquisition, the Company owns 100% of TAP Funding which became a wholly-owned subsidiary of the Company. In February 2021, the Company terminated its TAP Funding Revolving Credit Facility.

In February 2021, TMCL VII issued $523,500 of aggregate Class A and $26,500 of aggregate Class B Series 2021-1 Fixed Rate Asset Backed Notes (“the TMCL VII 2021-1 Bonds”) to qualified institutional investors pursuant to Rule 144A under the Securities Act and to non-U.S. persons in accordance with Regulation S promulgated under the Securities Act. The TMCL VII 2021-1 Bonds totaling $550,000 represent partially amortizing notes payable

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over an expected payment term of 7.5 years. Proceeds from the TMCL VII 2021-1 Bonds were primarily used to pay down debt in our revolving credit facilities.

The TMCL VII 2021-1 Bonds are secured by a pledge of TMCL VII’s assets.

In February 2021, TL completed a $70,270 seven-year term loan with a group of financial institutions that represents a partially amortizing term loan based on defined repayment schedules until February 2028. Interest on the outstanding amount due under this term loan is based on a fixed rate of 2.65% per annum, payable monthly in arrears. Proceeds from this term loan were used to pay down TL’s revolving credit facility.

In February 2021, the Company dissolved LAPCO, which was a wholly-owned subsidiary of TL.

Principal Capital Expenditures

Our capital expenditures for containers in our owned fleet and fixed assets during 2020, 2019 and 2018 were $862.4 million, $748.4 million and $854.4 million, respectively. We received proceeds from the sale of containers and fixed assets during 2020, 2019 and 2018 of $151.0 million, $150.7 million and $147.3 million, respectively.

As all of our containers are used internationally, where no one container is domiciled in one particular place for a prolonged period of time, all of our long-lived assets are considered to be international with no single country of use. Our capital requirements are primarily financed through cash flows from operations and our debt facilities.

B.	Business Overview Our Company

We are one of the world’s largest lessors of intermodal containers based on fleet size, with a total fleet of approximately 2.4 million containers, representing 3.8 million TEU. Containers are an integral component of intermodal trade, providing a secure and cost-effective method of transportation because they can be used to transport freight by ship, rail or truck, making it possible to move cargo from point of origin to final destination without repeated unpacking and repacking.

We lease containers to approximately 250 shipping lines and other lessees, including almost all of the world’s top 20 container lines, as measured by the total TEU capacity of their container vessels. We believe that our scale, global presence, customer service, market knowledge and long history with our customers have made us one of the most reliable suppliers of leased containers. We have a long track record in the industry, operating since 1979, and have developed long-standing relationships with key industry participants. Our top 20 customers, as measured by revenues, have on average been our customers for 27 years.

We have provided an average of approximately 320,000 TEU of new containers per year for the past five years and have been one of the largest buyers of new containers over the same period. We are one of the largest sellers of used containers, having sold an average of approximately 150,000 containers per year for the last five years to more than 1,500 customers.

We provide our services worldwide via an international network of 14 regional and area offices and around 400 independent depots.

We operate our business in three core segments.

•	Container Ownership. As of December 31, 2020, we owned containers accounting for approximately 88% of our fleet.

•	Container Management. As of December 31, 2020, we managed containers on behalf of 13 unaffiliated container investors, providing acquisition, management and disposal services. As of December 31, 2020, total managed containers accounted for approximately 12% of our fleet.

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•	Container Resale. We generally sell containers from our fleet when they reach the end of their useful lives in marine service or when we believe it is financially attractive for us to do so, considering location, sale price, the cost of repair, and possible repositioning expenses. We also purchase and lease or resell containers from shipping line customers, container traders and other sellers of containers.

Our total revenues primarily consist of leasing revenues derived from the lease of owned and managed containers. The most important driver of our profitability is the extent to which revenues on our owned fleet and management fee income exceed our operating costs. The key drivers of our revenues are fleet size, rental rates, utilization and direct costs. Our operating costs primarily consist of depreciation, container impairment, interest expense, direct operating expenses and administrative expenses. Our lessees are generally responsible for loss of or damage to a container beyond ordinary wear and tear, and they are required to purchase insurance to cover any other liabilities.

Our container lessees use containers for their global trade utilizing many worldwide trade routes. The Company earns its revenue from these international carriers when the containers are on lease. Substantially all of our leasing related revenues are denominated in U.S. dollars.

Our total fleet consists of containers that we own, and containers owned by other container investors that we manage. In general, owning containers during periods of high demand for containers provides higher margins than managing containers, since we receive all of the net operating income for the containers that we own but only a percentage of the net operating income of the containers that we manage as a management fee. On the other hand, managing containers during periods of low demand for containers reduces the negative financial impact of such periods since the container investors bear the cost or risk of owning the containers.

For 2020, our income from operations was $221.6 million and income before income tax and noncontrolling interests was $73.3 million. During 2020, the average utilization of our owned fleet was 96.6%. For geographic and financial information relating to each of our reportable operating segments, see Note 10 “Segment Information” in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

Industry Overview

Containers are built in accordance with standard dimensions and weight specifications established by the International Organization for Standardization (“ISO”). The industry-standard measurement unit is the Twenty-Foot Equivalent Unit (“TEU”), which compares the length of a container to a standard 20′ container. For example, a 20′ container is equivalent to one TEU and a 40′ container is equivalent to two TEU. Standard dry freight containers are typically 8′ wide, come in lengths of 20′, 40′ or 45′ and are either 8′6″ or 9′6″ high. The three principal types of containers are described as follows:

•	Dry freight standard containers. A dry freight standard container is constructed of steel sides, roof, an end panel on one end and a set of doors on the other end, a wooden floor and a steel undercarriage. Dry freight standard containers are the least expensive and most commonly used type of container. They are used to carry general cargo, such as manufactured component parts, consumer staples, electronics and apparel. The largest portion of our fleet is comprised of dry freight containers, which are by far the most common of the three principal types of intermodal containers.

•	Dry freight specialized containers. Dry freight specialized containers consist of open-top and flat-rack containers. An open-top container is similar in construction to a dry freight standard container except that the roof is replaced with a tarpaulin supported by removable roof bows. A flat-rack container is a heavily reinforced steel platform with a wood deck and steel end panels. Open-top and flat-rack containers are generally used to transport heavy or oversized cargo, such as marble slabs, building products or machinery.

•	Other containers. Other containers include refrigerated containers, tank containers, 45′ containers, pallet-wide containers and other types of containers. The two most prominent types of such containers are refrigerated containers and tank containers. A refrigerated container has an integral refrigeration unit on one end which plugs into an outside power source and is used to transport perishable goods. Tank containers are used to transport liquid bulk products such as chemicals, oils, and other liquids.

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Containers provide a secure and cost-effective method of transportation because they can be used in multiple modes of transportation, making it possible to move cargo from a point of origin to a final destination without repeated unpacking and repacking. As a result, containers reduce transit time and freight and labor costs, as they permit faster loading and unloading of shipping vessels and more efficient transportation of cargo than traditional break bulk shipping methods. The protection provided by containers also reduces damage, loss and theft of cargo during shipment. While the useful life of containers varies based upon the damage and normal wear and tear suffered by the container, we estimate that our useful life for a standard dry freight container used in intermodal transportation is on average 13 to 14 years. Some shipping lines have recently indicated that they intend to keep their containers for longer than 13 to 14 years.

According to Drewry Maritime Research, as of December 2019, leasing companies owned approximately 51% of the total worldwide container fleet of approximately 42.7 million TEU. We estimated that leasing companies still owned approximately 51% of the total worldwide container fleet, as of end of 2020. Given the uncertainty and variability of export volumes and the fact that shipping lines have difficulty in accurately forecasting their container requirements at different ports, the availability of containers for lease significantly reduces a shipping line’s need to purchase and maintain excess container inventory. In addition, leasing a portion of their total container fleets enables shipping lines to serve their manufacturer and retailer customers better by:

•	increasing their flexibility to manage the availability and location of containers;

•	increasing their ability to meet peak demand requirements, particularly prior to holidays such as Christmas and Lunar New Year; and

•	reducing their capital expenditures.

Global demand growth for shipping is expected to significantly improve in 2021 due to continued spending on consumer goods and once the COVID-19 pandemic is under control subject to successful vaccine rollout. Although manufacturers have increased production to meet market demand, additional capacity has been added gradually and further constrained by shortages of certain components. Container prices may also remain high for 2021 as manufacturers are in a strong position to protect current elevated prices while production capacity is very limited. While new production inventory is currently less than 200,000 TEU, depot inventory is also at historically low level as evidenced by the continued high utilization rates throughout the industry. Deliveries of mega ships and introduction of IMO 2020 are expected to continuously generate a positive impact on leased container demand in 2021; however, the on-going COVID-19 pandemic has added to uncertainty on trade growth and impact on our industry.

The shipping business has been characterized by cyclical swings due in part to lengthy periods of excess or scarce vessel capacity. We believe that these sustained periods of vessel supply/demand imbalances are mainly a function of the multi-year ordering and production cycle associated with the manufacture of new vessels, which requires shipping lines to estimate market growth many years into the future, and the shipping line industry’s shift to the use of significantly larger vessels. Container leasing companies are partially insulated from the risks of these shipping cycles by the relatively short production time associated with the manufacture of new containers. Lead times for new container orders are typically only a few months, so the rate of new container ordering can be quickly adjusted to reflect unexpected market changes.

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According to Drewry Maritime Research, intermodal leasing companies, as ranked by total TEU, are as follows (1):

Company	TEU			Percent of		
	(000's)			Total		
									
Triton International Limited (2)		6,134		27.5%		
Textainer (3)		3,774		16.9%		
Florens Leasing		3,656		16.4%		
SeaCo Global		2,305		10.3%		
CAI International, Inc. (2)		1,745		7.8%		
Beacon Intermodal Leasing		1,563		7.0%		
SeaCube Container Leasing Ltd.		980		4.4%		
Touax Global Container Solutions		434		1.9%		
Blue Sky Intermodal		384		1.7%		
UES International		345		1.5%		
Other		1,015		4.5%		
Grand Total							
		22,335		100.0%		

(1)	All companies’ information at December 2019, except as otherwise noted.

(2)	Triton’s and CAI’s fleet at December 31, 2020, according to their most recent published information.

(3)	Textainer Group’s owned and managed fleet at December 31, 2020.

Competitive Strengths

We believe that we possess a number of strengths that provide us with a competitive advantage, including:

One of the Largest Container Lessors in the Industry. We operate one of the world’s largest fleets of leased intermodal containers, with a total fleet of 3.8 million TEU as of December 31, 2020. We provide our services worldwide via a network of regional and area offices and independent depots. Our consistent presence in the market buying and selling containers provides us with broad market intelligence, and valuable insight into the demand patterns of our shipping line customers and resale container buyers.

Proven Ability to Grow Our Fleet Over Time. Our ability to invest in our fleet has allowed us to become one the world’s largest container lessors. We have demonstrated our ability to increase the size of our container fleet by purchasing containers from manufacturers and by acquiring existing container fleets or their management rights. Over the past 22 years, we have acquired the rights to manage over 1,500,000 TEU from former competitors and we have acquired approximately 892,000 TEU of containers from our managed fleet. As one of the largest buyers of new containers, we have developed strong relationships with container manufacturers. These relationships, along with our large volume buying power and solid financial structure, enable us to reliably purchase containers during periods of high demand.

Ability to Generate Attractive Returns Throughout the Container Life-Cycle. One of our strengths is our ability to generate attractive revenue streams throughout the economic life of a container in marine service and upon resale of the container at the end of its marine service life. At the end of a lease’s initial term, we generally have the ability to either negotiate an extension of the lease term or to take back the container and re-lease or sell it in order to maximize the container’s return. We focus on renewing or extending our long-term container leases beyond their expiration dates (typically three to five years from the start of the lease, but generally longer for leases entered into during 2020 and 2021). In addition, we attempt to negotiate favorable return provisions on all leases and maintain an active presence in the master and spot lease markets. This flexibility, coupled with our international coverage, organization and resources, allows us to deploy containers to those markets where we can re-lease or sell them on comparatively attractive terms in order to optimize our returns and the residual value of our fleet.

Strong Long-Standing Relationships with Customers. Our scale, long presence in the business and reliability as a supplier of containers has resulted in strong relationships with our customers. We lease containers to approximately 250 shipping lines and other lessees, including almost all of the world’s top 20 container lines, as measured by vessel fleet size in TEU and we have sold containers to an average of more

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than 1,500 resale customers for the last five years. We believe our ability to consistently supply containers in locations where our customers need them makes us a reliable lessor of containers. Our top 20 customers, as measured by revenues, have on average been our customers for 27 years.

Multiple Sources of Revenue. We believe that the long-term nature of our lease portfolio, as well as the presence of both owned and managed containers in our fleet, provides us with a more predictable source of revenues and operating cash flow and higher operating margins over time, enabling us to manage and grow our business more effectively. We derive revenues from leasing our owned containers, managing containers owned by third parties and buying and selling containers. These multiple revenue streams provide for a diverse income base, help to mitigate the effects of our cyclical industry on profitability and allow us to optimize our use of capital.

Experienced Management Team. Our management team has a solid history in the industry. The management team has extensive experience in sourcing, leasing, financing, selling, trading and managing containers, as well as a long track record of successfully acquiring and selling container assets.

Business Strategies

We intend to grow our business profitably by pursuing the following strategies:

Leverage Our Status as one of the Largest Container Lessors and Consistent Purchaser and Seller of Containers. We endeavor to make regular purchases of containers to replace older containers and increase the size of our fleet. We believe that this consistent purchasing behavior and the resulting scale and young fleet age profile provides us with a competitive advantage in maintaining strong relationships with manufacturers and growing our market share with our existing customers.

Be the Most Reliable Supplier of Quality Containers. We continue to provide superior equipment and ensure that it is available in the right location and at the right time. Having one of the world’s largest owned and managed container fleets, we are in a strong position to be the most reliable supplier of dry freight containers to meet the demands of shipping lines.

Pursue Attractive Container Related Acquisition Opportunities. We will continue to seek to identify and attempt to acquire attractive portfolios of containers and companies to allow us to grow our fleet profitably. We believe that the consolidation trend in our industry will continue and may offer us future growth opportunities. We also believe that current economic conditions may result in potential acquisition opportunities, including the purchase and leaseback of customer-owned containers. Purchase and leaseback transactions can be attractive to our customers because they free up cash for other capital needs. These transactions enable us to buy attractively priced containers and at the same time place them on leases for the remainder of their marine service lives.

Focus on Maintaining High Levels of Utilization, Prioritize Profitability and Operating Efficiency. We will continue to target higher utilization. We will prioritize profitability with attractive yields on our assets through our disciplined focus on optimal lease pricing, longer-term leases and portfolio management. As of December 31, 2020, approximately 88% of our total on hire fleet (based on total TEU) was on long-term and finance leases, compared to approximately 77% ten years ago. We also drive operating efficiency by maintaining a low-cost structure, having brought down our fleet management cost per CEU per day by approximately 20% over the 10 years ended December 31, 2020. We believe that we can grow our fleet without a proportionate increase in our headcount, thereby improving our profitability by spreading our operating expenses over a larger revenue base.

Extend the Lease of In-fleet Containers. Since many shipping lines must utilize capital to finance vessels, it is possible that some will conclude in 2021, as they did in prior years, that it is more cost-effective to extend leases of in-fleet containers than either buy containers or lease new containers.

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Grow Our Container Resale Business. We sell containers to optimize their residual value in multiple markets, including locations with low lease-out demand. In order to improve the sales price of our containers, we often move them from the location where they are returned by the lessee to another location that has a higher market price. We benefit not only as a result of the increased sales price but also because we often receive rental revenue from a shipping line for the one-way lease of the container. We also buy and resell containers from shipping line customers, container traders and other sellers of containers. We attempt to improve the sales price of these containers in the same manner as with containers from our fleet.

Maintain Access to Diverse Sources of Capital. We have successfully utilized a wide variety of financing alternatives to fund our growth, including secured debt financings, bank financing, and equity from third party investors in containers. We believe this diversity of funding, combined with our access to the public equity markets, provides us with an advantage in terms of both cost and availability of capital, versus our smaller competitors and also some of our shipping line customers.

Operations

We operate our business through a network of regional and area offices and independent depots. We maintain three regional offices as follows:

•	Americas Region in Cranford, New Jersey, USA responsible for North and South America;

•	European Region in New Malden, UK responsible for Europe, the Mediterranean, the Middle East, and Africa; and

•	Asian Pacific Region in Singapore, responsible for Asia and Australia.

Regional vice presidents are in charge of regional leasing and operations. Marketing directors and assistants located in the regional and area offices handle day-to-day marketing and collection activities. Our operations include a global sales force, container operations group, container resale group and logistics services group. Our headquarters office is in Hamilton, Bermuda. Our administrative office is located in San Francisco, California.

Our Container Fleet

As of December 31, 2020, we operated 3,774,053 TEU. We attempt to continually invest in our container fleet each year in an effort to replace the older containers being retired from marine service and to build our fleet size. We purchased an average of approximately 320,000 TEU of new containers per year over the past five years. Our ability to invest in our fleet on a consistent basis has been instrumental in becoming one of the world’s largest container lessors. The containers that we lease are either owned outright by us or owned by third parties and managed by us. The table below summarizes the composition of our owned and managed fleets, in TEU and CEU, by type of containers as of December 31, 2020:

			TEU					CEU			
	Owned	Managed	Total		Owned	Managed	Total		
Standard dry freight	3,088,396		434,413		3,522,809		2,752,515		386,972		3,139,487		
Refrigerated	182,673		8,921		191,593		736,353		36,105		772,458		
Other specialized	50,677		8,973		59,650		79,677		13,338		93,015		
Total fleet	3,321,746		452,307		3,774,053		3,568,545		436,415		4,004,960		
Percent of total fleet	88.0%	12.0%	100.0%	89.1%	10.9%	100.0%	

The amounts in the table above did not change significantly from December 31, 2020 to the date of this Annual Report on Form 20-F. 42

Our containers are designed to meet a number of criteria outlined by the ISO. The standard criteria include the size of the container and the gross weight rating of the container. This standardization ensures that the widest possible number of transporters can use containers and it facilitates container and vessel sharing by the shipping lines. The standardization of the container is also an important element of the container leasing business since we can operate one fleet of containers that can be used by all of our customers.

Maintenance and repair of our containers is performed by independent depots that we retain in major port areas and inland locations. Such depots also handle and inspect containers that are either picked up or redelivered by lessees, and store containers that are not leased.

Our Leases

Most of our revenues are derived from leasing our owned fleet and managed fleet of containers to our core shipping line customers. The vast majority of our container leases are structured as operating leases, though we also provide customers with finance leases. Regardless of lease type, we seek to exceed our targeted return on our owned and managed containers over the life of each container by managing container utilization, lease rates, drop-off restrictions and the disposal process. We lease containers under three different types of operating leases (term leases, master leases and spot leases) and also under finance leases.

The following table provides a summary of our total on-hire container fleet by lease type, measured in TEU, as of December 31, 2020 and 2019:

		Percent of Total On-Hire Fleet				
Lease Portfolio	2020			2019			
Term leases								
		70.3%		75.1%		
Finance leases	17.2%		10.4%		
Master leases	10.9%		12.4%		
Spot leases	1.6%		2.1%		
Total							
	100.0%		100.0%		

Term leases

Term leases (also referred to as long-term leases) provide a customer with a specified number of containers for a specified period, typically for 5 or more years, with an associated set of pick-up and drop-off conditions. Our term leases generally require our lessees to maintain all units on lease for the duration of the lease. Term leases also include lifecycle leases, under which lessees will lease containers until they reach a pre-specified age which is typically near the end of their useful lives rather than for a specified period. Once containers under lifecycle leases are returned to us, they are generally sold due to the age of the containers. Term leases provide us with enhanced cash flow certainty due to their extended duration but carry lower per diem rates than other lease types.

As of December 31, 2020, our term leases had an average remaining duration of 3.5 years, assuming no leases are renewed. However, we believe that many of our customers will renew leases for containers that are less than sale age at the expiration of the lease. In addition, for leases that are not extended our containers typically remain on-hire at the contractual per diem rate for an average of an additional 11 months beyond the end of the contractual lease term. For additional information about the minimum future rentals under the long-term leases for our owned and managed fleet at December 31, 2020, see Note 5 “Leases” in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

Finance Leases

Finance leases provide our lessees with an alternative method to finance their container acquisitions. Finance leases are long-term in nature, typically ranging from three to thirteen years and require relatively little customer service attention. They ordinarily require fixed payments over a defined period and provide lessees with a right to purchase the subject containers for a nominal amount at the end of the lease term. Per diem rates include an element of repayment of capital and, therefore, typically are higher than rates charged under other leases. Finance leases

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require the lessee to keep the containers on lease for the entire term of the lease. As of December 31, 2020, our finance leases had an average remaining term of 10.3 years.

Master leases

Master leases provide a framework of terms and conditions pursuant to which lessees can lease containers on an as-needed basis for unspecified periods of time. Master lease terms and conditions are valid for a set period, typically one year, and provide the lessee with greater flexibility than is typical in term leases. Under our master leases, lessees know in advance their per diem rates and drop-off locations, subject to monthly drop-off location limits. In addition, under these master lease agreements, the lessee is generally not committed to leasing a minimum number of containers from us during the lease term and may generally return the containers to us at any time, subject to certain restrictions. Due to their flexibility and duration, master leases command higher per diem rates than term leases.

Spot leases

Spot leases provide the customer with containers for a relatively short lease period with fixed pick-up and drop-off locations. Spot leases are generally used to position a container to a desired location for subsequent lease or sale.

Maintenance, Repair and Damage Protection

Under all of our leases, our lessees are generally responsible for loss of or damage to a container beyond ordinary wear and tear, and they are required to purchase insurance to cover any other liabilities. Any damage must be repaired at the expense of the lessee according to standardized guidelines promulgated by the Institute of International Container Lessors (“IICL”). Lessees are also required to obtain insurance to cover loss of the equipment on lease, public liability and property damage insurance as well as indemnify us from claims related to their usage of the leased containers. In some cases, a Damage Protection Plan (“DPP”) is provided whereby the lessee pays us (in the form of either a higher per-diem rate or a fixed one-time payment upon the return of a container) to assume a portion of the financial burden of repairs up to a pre-negotiated amount. This DPP does not cover damages from war or war risks, loss of a container, constructive total loss of the container, damages caused by contamination or corrosion from cargo, damages to movable parts and any costs incurred in removing logos, which are all responsibilities of the lessees. DPP is generally cancelable by either party with prior written notice. Maintenance is monitored through inspections at the time that a container is leased out and returned. In 2020, DPP revenue was 2.2% of total lease rental income. We also maintain our own insurance to cover our containers when they are not on-hire to lessees or when the lessee fails to have adequate primary coverage, and third-party liability insurance for both on-hire and off-hire containers. In addition, we previously maintained insurance that, after satisfying significant deductibles, would cover loss of revenue as a result of default under most of our leases, as well as the recovery cost or replacement value of most of our containers. Given the high premium, significant deductible and policy exclusions in this policy, we determined to let this coverage lapse for 2021.

Lease Agreements

In general, our lease agreements consist of two basic elements, a master terms and conditions agreement (“Master Agreement”), and a lease schedule. Lease schedules contain the business terms (including daily rate, term duration and drop-off schedule, among other things) for specific leasing transactions, while Master Agreements outline the general rights and obligations of the lessor and lessee under all of the lease schedules covered by the Master Agreement. For most customers, we have a small number of Master Agreements (often one) and a large number of lease schedules.

Our standard Master Agreements generally require the lessees to pay rentals, depot charges, taxes and other charges when due, to maintain the containers in good condition and repair, to return the containers in good condition in accordance with the return conditions set forth in the Master Agreement, to use the containers in compliance with all laws, and to pay us for the value of the containers as determined under the terms of the agreements if the container is lost or destroyed. The default clause gives us certain legal remedies in the event that the lessee is in breach of the lease.

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Re-leasing, Logistics and Depot Management

We believe that managing the period after termination of our containers’ first lease is one of the most important aspects of our business. The container shipping industry is characterized by large regional trade imbalances, with loaded containers generally flowing from export-oriented economies in Asia to North America and Western Europe. Because of these trade imbalances, container shipping lines have an incentive to return leased containers in North America and Western Europe to avoid the cost of shipping empty containers back to Asia. Successful management of the deployment of our containers after they come off their first lease requires disciplined re-leasing capabilities, logistics management, depot management, careful cost control and profitable disposals of used containers.

Re-leasing

Since our leases allow our lessees to return their containers, we typically lease a container several times during its life. New containers can usually be leased with a limited sales and customer service infrastructure because initial leases for new containers typically cover large volumes of units and are fairly standardized transactions. Used containers, on the other hand, are typically leased in smaller transactions that are structured to accommodate pick-ups and returns in a variety of locations. Our utilization rates depend in part on our re-leasing capabilities. Factors that affect our ability to re-lease used containers include the size of our lessee base, ability to anticipate lessee needs, their presence in relevant geographic locations and the level of service we provide our lessees. We believe that our global presence and relationships with approximately 250 container lessees provide us an advantage in re-leasing our containers relative to many of our smaller competitors.

Logistics

Other methods of reducing off-lease risks include:

•	Limiting or prohibiting container returns to low-demand areas. In order to reduce our repositioning costs, our leases typically include a prohibition on returning containers to specific locations, limitations on the number of containers that may be returned to lower demand locations, drop-off charges for returning containers to lower demand locations or a combination of these provisions.

•	Taking advantage of a robust resale market when available. In order to optimize the investment return on a container, we have sold containers in our excess inventory and/or weak demand locations when an analysis indicates it is financially more attractive than attempting to re-lease or reposition the container.

•	Seeking one-way lease opportunities to move containers from lower demand locations to higher demand locations. One-way leases may include incentives, such as free days, credits and limited damage waivers. The cost of offering these incentives is generally less than the cost we would incur if we were to pay to reposition the containers. We also use one-way leases to move containers from locations where the market price for selling containers is low to locations with a higher market price, to improve the resale value of the containers.

•	Paying to reposition our containers to higher demand locations. At locations where our inventories remain high, despite the efforts described above, we will selectively choose to pay to reposition excess containers to locations with higher demand or higher resale prices.

•	Diversifying our customers. We have sought to diversify our customers and, correspondingly, the locations where containers are needed around the world.

Depot Management

As of December 31, 2020, we managed our container fleet through approximately 400 independent container depot facilities in approximately 200 locations. Depot facilities are generally responsible for repairing containers when they are returned by lessees and for storing the containers while they are off-hire. Our operations group is responsible for managing our depot relationships and periodically visiting the depot facilities to conduct quality assurance audits to control costs and ensure repairs meet industry standards. We occasionally supplement our internal operations group with the use of independent inspection agents. Furthermore, depot repair work is periodically audited to prevent over-charging. We are in regular communication with our depot partners through the use of electronic data interchange (“EDI”) and/or e-mail. The electronic exchange of container activity information

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with each depot is conducted via the internet. As of December 31, 2020, a large majority of our off-lease inventory was located at depots that are able to report container activity and damage detail via EDI. We use the industry standard, ISO 9897 Container Equipment Data Exchange messages, for most EDI reporting.

Most of the depot agency agreements follow a standard form and generally provide that the depot will be liable for loss or damage of off-hire containers and, in the event of loss, will pay us the previously agreed loss value of the applicable containers. The agreements require the depots to maintain insurance against container loss or damage and we carry insurance to cover the risk when a depot’s insurance proves insufficient.

Our container repair standards and processes are generally managed in accordance with standards and procedures specified by the IICL. The IICL establishes and documents the acceptable interchange condition for containers and the repair procedures required to return damaged containers to the acceptable interchange condition. At the time that containers are returned by lessees, the depot arranges an inspection of the containers to assess the repairs required to return the containers to acceptable IICL condition. As part of the inspection process, damages are categorized either as lessee damage or normal wear and tear. Items typically designated as lessee damage include dents in the container and debris left in the container, while items such as rust are typically designated as normal wear and tear. In general, lessees are responsible for the lessee damage portion of the repair costs and we are responsible for normal wear and tear. The lessees are generally billed the lessee damage portion at the time the containers are returned.

Management Services

As of December 31, 2020, we owned 88% of the containers in our fleet and managed the rest on behalf of 13 unaffiliated container investors. We earn acquisition, management and disposal fees on managed containers. Our information technology (“IT”) systems track revenues and operating expenses attributable to specific containers and the container investors receive payments based on the net operating income of their own containers. Fees to manage containers typically include acquisition fees of 1% to 2% of the purchase price; daily management fees of 8% to 13% of net operating income; and disposal fees of 5% to 10% of cash proceeds when containers are sold. We earned combined acquisition, management and disposal fees on our managed fleet of $9.7 million, $15.2 million and $16.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. If operating expenses were to exceed revenues, the container investors would be obligated to pay the excess or we would deduct the excess, including our management fee, from future net operating income. In some cases, we are compensated for sales through a percentage sharing of sales proceeds over an agreed floor amount. We will typically indemnify the container investors for liabilities or losses arising from negligence, willful misconduct or breach of our obligations in managing the containers. The container investors will indemnify us as the manager against any claims or losses arising with respect to the containers, provided that such claims or losses were not caused by our negligence, willful misconduct or breach of our obligations. Typically, the terms of the management agreements are for the expected economic useful life in marine service of the containers subject to the agreement.

In June 2003, we entered into our first contract with the U.S. Transportation Command Directorate of Acquisition (“USTranscom”) pursuant to which we serve as a major supplier of leased marine containers to the U.S. Military. Compared to our shipping line customers, we provide a much broader level of services to the U.S. Military under the USTranscom contract. Furthermore, unlike our shipping line customers, who pick up from and return containers to container depots, for the U.S. Military we are required to arrange transportation from a container depot to a military facility upon lease out and to pick up a container at a military facility and return it to a container depot when the lease period has ended. This requires us to arrange for movement of the empty containers by truck, rail and/or vessel. The USTranscom contract provides added compensation for these services.

This contract also allows the U.S. Military to return containers in many locations throughout the world. Since the inception of the initial USTranscom contract, we have delivered or transitioned approximately 188,000 containers and chassis to the U.S. Military, of which approximately 129,000 containers have been returned. In addition, approximately 57,000 containers have been reported as unaccounted for and the U.S. Military paid a stipulated loss value for each such container. The initial USTranscom contract expired on June 23, 2013 and we were awarded a new contract on December 12, 2013. The new contract covered a base year starting on December 24, 2013 and was subsequently renewed annually from 2014 to 2017. This second USTranscom contract expired on September 30, 2018 and was extended through February 28, 2019. Textainer, as one of three vendors, was awarded a new contract on January 28, 2019. The new contract covers a base year starting on March 1, 2019, with four option

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years running through February 29, 2024. On March 1, 2021, Textainer exercised the right to supply containers for the third out of five years (or second option year).

Resale of Containers

Our Resale Division sells off-hire containers from our fleet at the end, typically about 13 years, of their useful lives in marine service or when we believe it is financially attractive for us to do so, considering the location, sale price, cost of repair, and possible repositioning expenses. In addition, we buy new trading containers and used trading containers from shipping lines and other third parties that we then lease or resell. Our Resale Division has a team of 18 container sales and operations specialists in five offices globally that manage the sale process for these used containers. Our Resale Division is one of the largest sellers of used containers among container lessors, selling an average of approximately 150,000 containers per year for the last five years to more than 1,500 customers. From 2016 through 2020, this Division generated $70.6 million in income before income tax and noncontrolling interests, including $16.4 million during 2020. We generally sell containers to depots, domestic storage companies, freight forwarders (who often use the containers for one-way trips into less developed countries) and other purchasers of used containers.

Underwriting and Credit Controls

We only lease to container shipping lines and other lessees or sell to buyers that meet our credit criteria. Our credit approval process is rigorous, and our underwriting and credit decisions are controlled by our credit committee, which is made up of senior management from different disciplines. Our credit committee sets different maximum exposure limits depending on our relationship and previous experience with each customer lessee and container sales customer. Credit criteria may include, but are not limited to, trade route, country, social and political climate, assessments of financial performance including net worth and profitability, asset ownership, bank and trade credit references, credit bureau reports, operational history and financial strength. Our marketing and resale staff are also responsible for collections, which positively contributes to our strong collection and credit approval process through our staff’s close communication with our customers.

Our credit department sets and reviews credit limits for new and existing customer lessees and container sales customers, monitors compliance with those limits on an on-going basis, monitors collections, and deals with customers in default. Our credit committee meets regularly to assess performance of our container lessees and to recommend actions to be taken in order to reduce credit risks. Our underwriting processes are aided by the long payment experience we have with most of our customer lessees and container sales customers, our broad network of relationships in the container shipping industry that provides current information about customer lessees’ and container sales customers’ market reputations and our focus on collections.

Other factors reducing losses due to default by a lessee or customer include the growth in the container shipping industry, our constant monitoring of collections, effective collection mechanism, our historically high recovery rate for containers in default situations and the re-marketability of our container fleet. The growth in the container shipping industry helps reduce the risk of customer defaults since the core assets of a poorly performing shipping line, its ships and containers, have historically been needed to meet the demand for world containerized trade. In addition, the law in several major port locations is highly favorable to creditors and many of our large customers call on ports that will allow us to arrest, or seize, the customers’ ships or fuel storage bunkers, or repossess our containers if the customer is in default under our container leases.

Over the past five years, we recovered, on average, 89% of the containers that were the subject of defaulted contracts which we had completed the recovery process and at least 1,000 CEU on lease. In connection with the Hanjin bankruptcy, 94% of the containers leased to Hanjin have been turned in, with the balance of the containers uneconomic or impossible to recover. We maintained insurance that covered certain costs and losses from customer defaults. At the time of the Hanjin default our policy provided for $80 million of coverage after a $5 million deductible was met. We collected substantially all of our insurance claim related to the Hanjin insolvency and after receiving subrogation waivers from our insurers, in the fourth quarter of 2019 we received payments directly from the Hanjin bankruptcy estate, however this was insufficient to cover all of our losses and disruptions related to Hanjin. We typically incur operating expenses such as repairs and repositioning when containers are recovered after a default. While we previously maintained insurance to cover some defaults, recent premium increases, large

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deductible amounts and significant policy exclusions made the coverage uneconomic and we determined to let our coverage lapse for 2021. Due to the above, over the last five years, our write-offs of customer receivables for our owned and managed fleet have averaged 1.5% of our lease rental income over such period.

Marketing and Customer Service

Our global sales and customer service force is responsible for developing and maintaining relationships with senior management staff at our shipping line customers, negotiating lease contracts and maintaining day-to-day coordination with operations staff. This close customer communication often assists us in negotiating lease contracts that satisfy both our financial return requirements and our customers’ operating needs. It also makes us more likely to be aware of our customers’ potential equipment shortages and makes our customers more likely to be aware of our available container inventories.

Our senior sales people have considerable industry experience and we believe that the quality of our customer relationships and the level of communication with our customers represent an important advantage for us. As of December 31, 2020 our global sales and customer service group consisted of 82 people, with 14 in North America, 44 in Asia and Australia, 18 in Europe and 6 in Africa.

Customers

We believe that our staff, organization and long presence in the business have resulted in very strong relationships with our shipping line customers. Our top 20 customers, as measured by lease billings of our total owned and managed fleet, have on average been our customers for 27 years and have an average Dynamar credit rating, a common credit report used in the maritime sector, of 3.7 as of December 31, 2020. The Dynamar credit rating ranges from 1 to 10, with 1 indicating low credit risk. Our top 20 customers include almost all of the world’s largest shipping lines, as measured by container vessel fleet size. We currently have containers on-hire to approximately 250 customers. Our customers are mainly international shipping lines, but we also lease containers to freight forwarding companies and the U.S. Military. Our top 20 and top 5 customers accounted for approximately 87.3% and 54.0%, respectively, of our total owned and managed fleet’s 2020 lease billings. Our two largest customers in 2020 were Mediterranean Shipping Company S.A., which accounted for $136.6 million or 20.5% and CMA-CGM S.A., which accounted for $84.5 million or 12.7% of our total owned and managed fleet’s 2020 lease billings. A default by any of our major customers, such as the bankruptcy of Hanjin in 2016, could have a material adverse impact on our business, results from operations and financial condition. In addition, the largest lessees of our owned fleet are often among the largest lessees of our managed fleet. The largest lessees of our managed fleet are responsible for a significant portion of the billings that generate our management fee revenue. For further discussion, see Note 1 “Nature of Business and Summary of Significant Accounting Policies” to our consolidated statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

Proprietary Information Technology

We have developed proprietary IT systems that allow us to monitor container status and offer our customers a high level of service. Our systems include internet-based updates regarding container availability and booking status. Our systems record the status of and provide the accounting and billing for each of our containers individually by container number. We also have the ability to produce complete management reports for each portfolio of equipment we own and manage. This makes us a preferred candidate to quickly assume management of competitors’ container fleets. We also maintain proprietary technology in support of our military business.

In addition, our systems allow our business partners to conduct certain business with us through our website, www.textainer.com. These systems allow customers to check our container inventories, review design specifications, request bookings for container pick-ups, create redelivery bookings and review and approve repair bills. Our website also allows depots to download recent statements for self-billing activity and to check the status of containers.

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Suppliers

We have long relationships with all of our major suppliers. We currently purchase all of our containers in the PRC. There are currently three major manufacturers, in addition to few smaller manufacturers, of dry freight standard and specialized containers. Our operations staff reviews the designs for our containers and periodically audits the production facilities of our suppliers. In addition, we use our Asian operations group and occasionally third-party inspectors to visit factories when our containers are being produced to provide an extra layer of quality control. Nevertheless, defects in our containers do sometimes occur. We work with the manufacturers to correct these defects, and our manufacturers have generally honored their warranty obligations in such cases.

Competition

We compete with at least six other major container leasing companies in addition to many smaller lessors, companies and financial institutions offering finance leases, and promoters of container ownership and leasing as a tax-efficient investment. It is common for our shipping line customers to utilize several leasing companies to meet their container needs.

Other lessors compete with us in many ways, including pricing, lease flexibility and supply reliability, as well as the location, availability, quality and individual characteristics of their containers and customer service. While we are forced to compete aggressively on price, we emphasize our supply reliability and high level of customer service to our customers. We invest heavily to ensure container availability in higher demand locations. We dedicate a large part of our organization to building customer relationships, maintaining close day-to-day coordination with customers’ operating staff and have developed powerful and user-friendly systems that allow our customers to transact business with us through the internet. We believe that our close customer relationships, experienced staff, reputation for market leadership, scale efficiencies and proprietary systems provide important competitive advantages.

Legal Proceedings

From time to time we are a party to litigation matters arising in connection with the normal course of our business. While we cannot predict the outcome of these matters, in the opinion of our management, any liability arising from these matters will not have a material adverse effect on our business. Nevertheless, unexpected adverse future events, such as an unforeseen development in our existing proceedings, new claims brought against us or changes in our current insurance arrangements could result in liabilities that have a material adverse impact on our business.

Environmental

We are subject to federal, state, local and foreign laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants to air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. While we maintain certain limited liability insurance coverage as well as require our lessees to provide us with indemnity against certain losses, the insurance coverage may not be sufficient to protect us against losses arising from environmental damage and/or systems or services we may be required to install.

In addition to environmental regulations affecting container movement, shipping, movement and spillage, environmental regulations also impact container production and operation, including regulations on the use of chemical refrigerants (i.e. CFC’s and solvent-based paints) due to their ozone depleting and global warming effects, and regulations on the cutting and export of hardwood due to concerns regarding de-forestation and climate change. These environmental regulations may impact the future repair and operating costs for these containers and we could be required to incur large retrofitting expenses for our refrigerated containers. To comply with the new regulations, new water borne paint systems have been developed and are being used by container manufacturers. The conversion to water borne paint may impact factory capacity, increase the cost of containers and require greater investment by us in container inspection and factory supervision.

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For further discussions, see Item 3, “Key Information -- Risk Factors – Environmental liability and regulations may adversely affect our business, results of operations and financial condition.”

Regulation

We may be subject to regulations promulgated in various countries, including the U.S., seeking to protect the integrity of international commerce and prevent the use of containers for international terrorism or other illicit activities. As these regulations develop and change, we may incur increased compliance costs due to the acquisition of new, compliant containers and/or the adaptation of existing containers to meet any new requirements imposed by such regulations. For further discussions, see Item 3, “Key Information -- Risk Factors – We may incur costs associated with cargo security regulations, which may adversely affect our business, results of operations and financial condition.”

We may also be affected by legal or regulatory responses to potential global climate change. Please see Item 3, “Key Information -- Risk Factors – Environmental liability and regulations may adversely affect our business, results of operations and financial condition.”

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C.	Organizational Structure

Our current corporate structure as of March 18, 2021 is as follows:

We currently own 100% of all of our direct and indirect subsidiaries.

TAP Funding was a joint venture involving TL and TAP. As of December 31, 2020, TL owned 50.1% and TAP owned 49.9% of the common shares and TL had two voting rights and TAP had one voting right of TAP Funding, with the exception of certain matters such as bankruptcy proceedings, the incurrence of debt and mergers and consolidations, which require unanimity. On January 19, 2021, the Company completed the acquisition of the 49.9% outstanding common shares of TAP Funding from TAP Ltd. Following the acquisition, TL owns 100% of TAP Funding and became a wholly-owned subsidiary of the Company (see Note 14 “Subsequent Events” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for additional information).

Trencor, owned 47.5% of our outstanding share capital as of December 31, 2018. Trencor is a South African public investment holding company, that has been listed on the JSE in Johannesburg, South Africa since 1955. Trencor’s origins date from 1929, and it currently is engaged in finance related activities. These shares were previously held by Halco Holdings Inc. (“Halco”), a company owned by Halco Trust, a discretionary trust. In February 2018, Halco Trust distributed and transferred to Trencor Limited, a nominated discretionary beneficiary of Halco Trust, the trust’s 100% shareholding in Halco. In May 2018, Halco declared dividends to Trencor which resulted in Trencor becoming the direct shareholder of 47.5% of our common shares. Halco went into voluntary liquidation on October 12, 2018. On December 11, 2019, we commenced a secondary, or dual, listing of our common shares on the JSE in Johannesburg, South Africa under the symbol “TXT”. Promptly following our dual

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listing, Trencor distributed approximately 24.3 million of its shares in the Company to Trencor’s own shareholders and these shares now trade on the JSE. Trencor retained 3 million, or approximately 5.3% of our common shares as of December 31, 2019. In June 2020, Trencor distributed its remaining 3.0 million of our common shares or approximately 5.3% of our common shares to Trencor’s own shareholders and those shares trade on the JSE. Following the June 2020 distribution of shares, Trencor no longer holds any shares in the Company. Hennie Van der Merwe and David M. Nurek are members of our board of directors and the board of directors of Trencor.

D.	Property, Plant and Equipment

As of December 31, 2020, our employees were located in 14 regional and area offices in 13 different countries. We maintain an office in Bermuda, where Textainer Group Holdings Limited is incorporated. We have 13 offices outside Bermuda, including our administrative office in San Francisco, California and offices in Cranford, New Jersey; New Malden, United Kingdom; Hamburg, Germany; Durban, South Africa; Yokohama, Japan; Seoul, South Korea; Taipei, Taiwan; Singapore; Sydney, Australia; Port Kelang, Malaysia; Hong Kong; and Shanghai, China.

We lease our office space in Bermuda, the U.S., United Kingdom and Singapore and have exclusive agents that secure office space for us in our other locations. The lease for our Bermuda office expires in December 2021, the lease for our San Francisco office expires in May 2027, the lease for our Cranford, New Jersey office expires in November 2021, the lease for our New Malden, United Kingdom office expires in December 2024 and our lease for our Singapore office expires in July 2024. In addition, we have non-exclusive agents who represent us in India, Indonesia, Pakistan, Republic of the Philippines, Sri Lanka, Thailand and Vietnam. We believe that our current facilities are adequate to meet current requirements and that additional or substitute space will be available as needed to accommodate our expected growth.

ITEM 4A.	UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following Operating and Financial Review and Prospects should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 20-F. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those contained in or implied by any forward-looking statements. See “Information Regarding Forward-Looking Statements; Cautionary Language.” Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 20-F, particularly in Item 3, “Key Information-- Risk Factors.”

Dollar amounts in this section of this Annual Report on Form 20-F are expressed in thousands of U.S. dollars unless otherwise indicated.

For the discussion of the financial condition and results of operations for the years ended December 31, 2019 compared to the year ended December 31, 2018, refer to Item 5 “Operating and Financial Review and Prospects - Operating Results” and “- Liquidity and Capital Resources” in our Form 20-F for the fiscal year ended December 31, 2019 filed with the U.S. Securities and Exchange Commission on March 30, 2020, which discussion is incorporated herein by reference.

Executive Summary

Operating since 1979, we are one of the world’s largest lessors of intermodal containers based on fleet size, with a total fleet of approximately 2.4 million containers, representing 3.8 million TEU. During 2020: (i) we invested in approximately $1,080 million of containers for our fleet, (ii) our utilization averaged 96.6% in 2020 compared to 97.4% in 2019, (iii) our total fleet surpassed 4 million CEU as of December 31, 2020, and (iv) we repurchased approximately 6,736,493 shares of our common shares.

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Our business comprises of three reportable segments for financial reporting purposes: Container Ownership, Container Management and Container Resale. Our total revenues primarily consist of leasing revenues derived from the leasing of our owned and managed containers and other non-leasing fees received for managing containers owned by third parties, equipment resale and military management. For further details of our business overview, see Item 4, “Information on the Company.”

COVID-19 Impact

In March 2020, the World Health Organization declared the outbreak of Novel Coronavirus (“COVID-19”) a pandemic, which continues to spread throughout the United States and the world and has resulted in new and changing government measures to contain the virus, including travel bans and restrictions, shelter-in-place orders, and business limitations and shutdowns. The decrease in global trade volumes and economic activity due to the COVID-19 pandemic led to disruptions in global shipping and reduced container demand during the first half of 2020. However, we have seen sharp rebound in cargo volumes and recent positive signs of leasing demand improvements as COVID-19 related restrictions have eased in the United States and Europe, demand for consumer goods and medical supplies have caused freight volumes to rapidly increase and recent positive developments from the vaccine rollouts. Even as certain government restrictions are lifted and economies gradually reopen, the shape of the economic recovery is still uncertain as the pandemic is resurgent in many places.

We currently believe these disruptions are temporary and we have strongly benefited from the increased global containerized trade volumes that have emerged since the second half of 2020. We heavily invested in new containers during the second half of 2020 in response to strong container demand and substantially all our containers purchased in 2020 are currently on lease and those for delivery in 2021 are already committed to leases. As we look into the new year, we remain focused on the continued execution of our turnaround plan. While macro uncertainty from COVID-19 remains, we are encouraged by our improved financial performance and the overall strong market fundamentals arising from expected elevated cargo volumes, high container prices and high freight rates through the first half of 2021. For additional information regarding the risk and uncertainties that we could encounter as a result of the COVID-19 pandemic and related global conditions, see Item 3, “Key Information - Risk Factors” and elsewhere in this Annual Report on Form 20-F.

Key Factors Affecting Our Performance

We believe there are a number of key factors that have affected, and are likely to continue to affect, our operating performance. These key factors include the following, among others:

•	the demand for leased containers;

•	lease rates;

•	steel prices;

•	interest rates and availability of debt financing at acceptable terms;

•	our ability to lease our new containers shortly after we purchase them;

•	access to container production capacity;

•	prices of new and used containers and the impact of changing prices on containers held for sale and the residual value of our in-fleet owned containers;

•	remarketing risk;

•	the creditworthiness of our customers;

•	further consolidation among shipping lines and/or container lessors;

•	further consolidation of container manufacturers and/or decreased access to new containers; and

•	global and macroeconomic factors that affect trade generally, such as recessions, terrorist attacks, pandemics, such as the COVID-19 pandemic, or the outbreak of war and hostilities.

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For further details of these and other factors which may affect our business and results of operations, see Item 3, “Key Information-- Risk Factors.”

Revenue

Our revenue comprises lease rental income, management fees – non-leasing and trading container margin.

Lease Rental Income. We generate lease rental income by leasing our owned container fleet and managed container fleet to container shipping lines and other customers. Lease rental income comprises daily per diem rental charges due under the lease agreements, together with payments for other charges set forth in the leases, such as handling fees, drop-off charges and pick-up charges and credits (together “geography revenue”) and charges for a DPP. The operating results of our owned container business are determined by the amount by which our container rental revenue exceeds our ownership costs, consisting primarily of depreciation, interest expense, storage, handling and other direct operating expenses and management costs.

Lease rental income and operating expenses arising from the leasing services of the managed portion of our fleet are included on a gross amount basis in our consolidated statements of operations. We earn management fees from management of the container investor’s containers, which include the leasing, repair, repositioning and storage of the managed fleet pursuant to management agreements with container investors. The management agreements typically cover the entire economic life of the containers.

Utilization is a key performance indicator that demonstrates how much of our equipment is on lease at a point in time or over a period of time. We measure utilization on the basis of CEU on lease, dividing the actual number of CEU days on-hire by actual CEU days available for lease. We calculate containers available for lease by excluding containers that have been manufactured for us but have not yet been delivered to a lessee and containers designated as held for sale units. Our utilization is primarily a function of our current lease structure, overall level of container demand, the location of our available containers and prevailing lease terms by location. The location of available containers is critical because containers available in high-demand locations are more readily leased and are typically leased on more favorable terms than containers available in low-demand locations.

Lease rental income is also affected by per diem rates. The per diem rate for a lease is set at the time we enter into a lease agreement. Our long-term per diem rate for new containers has historically been strongly influenced by new container pricing (which in turn is heavily influenced by the cost of container manufacturing inputs such as steel, paint, wood, labor and other components), interest rates, the balance of supply and demand for containers at a particular time and location, our estimate of the residual value of the container at the end of its useful life in marine service, the type of the container being leased, container purchasing activities by container shipping lines and competitors, and efficiencies in container utilization by container shipping lines. Average per diem rates for containers in our owned fleet and in the portfolios of containers comprising our managed fleet change slowly in response to changes in new container prices because existing lease agreements can only be re-priced upon expiration of the lease.

Management Fees – non-leasing. Management fee from non-leasing services is generated by our management services, which include the acquisition and disposition of containers. We provide these management services pursuant to management agreements with container investors. Under these agreements, we earn fees for the acquisition of new containers and a sales commission upon disposition of containers under management. Our acquisition fees are calculated as a percentage of the cost of the container and are deferred and recognized as earned on a straight-line basis over the deemed lease term. Our sales commissions are either a fixed dollar amount or based on a percentage of the sales price.

All rental operations are conducted worldwide in our name as agent for the container investors. Customer accounts receivable and vendor payables arising from direct container operations of the managed portion of our fleet are included in our consolidated balance sheets.

Trading Container Margin. Our Container Resale Division purchases new trading containers and used containers from third parties, primarily shipping lines, and resells these containers to a wide variety of buyers.

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Trading container margin represents the sales proceeds of these containers net of the cost at the time the containers are sold.

Gain on Sale of Owned Fleet Containers, net

Gain on sale of owned fleet containers, net, represents the excess of the sale price of our owned fleet containers over their net book value at the time of sale. Containers are generally sold at the end of their useful lives in marine service or when we believe it is financially attractive for us to do so, considering the location, sale price, cost of repair and possible repositioning expenses. Gain on sale of owned fleet containers, net, also includes gains (losses) recognized at the inception of sales-type leases of our owned fleet, representing the excess (deficiency) of the estimated fair value of containers placed on sales-type leases over (below) their book value.

Operating Expenses

Our operating expenses include direct container expenses – owned fleet, distribution expenses to managed fleet container investors, depreciation expense, amortization expense, general and administrative expenses, bad debt (recovery) expense, net and container lessee default (recovery) expense, net.

Direct Container Expenses – Owned Fleet. Storage, handling, maintenance, repositioning, agency costs, insurance expenses and other direct container expenses are operating costs of our owned fleet. Storage and handling expenses occur when our customers drop off containers at depots around the world. Storage and handling expenses vary significantly by location. Other direct container expenses include maintenance expenses, which are the result of normal wear and tear on the containers, and repositioning expenses, which are incurred when we contract to move containers from locations where our inventories exceed actual or expected demand to locations with higher demand. Other direct container expenses also include agency costs, which are operational expenses incurred in our agent offices, and insurance expenses, which include customer default insurance premiums. Storage, handling, maintenance, repositioning, and other direct container expenses are directly related to the number of containers in our owned fleet and inversely related to our utilization rate for those containers. As utilization increases, we typically have lower storage, handling, maintenance and repositioning expenses. We use the direct expense method of accounting for maintenance and repairs.

Our leases require the lessee to pay for any damage to the container beyond normal wear and tear at the end of the lease term. We also offer a DPP pursuant to which the lessee pays a fee over the term of the lease (per diem) or a lump sum upon return of containers in exchange for not being charged for certain damages at the end of the lease term. This revenue is recognized as earned over the term of the lease. We do not recognize DPP revenue and related expense over the lease term for customers who are billed at the end of the lease term under the DPP or for other lessees who do not participate in the DPP. Based on past history, there is uncertainty as to collectability of these amounts from lessees who are billed at the end of the lease term because the amounts due under the DPP are typically re-negotiated at the end of the lease term or the lease term is extended.

Distribution to Managed Fleet Container Investors. Our distribution amounts to container investors for the managed fleet includes the net operating income of each container investor’s fleet, reduced by the management fees earned and retained by the Company. This amount also includes expenses related to the operation of the managed containers which are presented on a gross basis in the consolidated statements of operations.

Our management fees from leasing services are calculated as a percentage of net operating income of the containers. Net operating income is calculated as the lease payment and any other revenue attributable to a container, minus operating expenses related to that container (but not depreciation or financing expenses of the container investor). The container investors are responsible for the direct container expenses incurred in the operation of the managed fleet. The management fee percentage generally varies based upon the type of lease and the terms of the management agreement. Management fee percentages for long-term leases are generally lower than management fee percentages for master or spot leases because less daily involvement by management personnel is required to manage long-term leases.

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Depreciation Expense. We depreciate our standard dry freight containers over a period of 13 to 14 years, refrigerated containers over a period of 12 years, tank containers over a period of 20 years and open top and flat rack containers over a period of 14 to 16 years, on a straight-line basis to a fixed residual value. We regularly assess both the estimated useful life of our containers and the expected residual values, and, when warranted, adjust our depreciation estimates accordingly. Depreciation expense will vary over time based upon the number and the purchase price of containers in our owned fleet. Beginning from the third quarter of 2017, depreciation of our existing owned fleet decreased as a result of an increase in the estimated residual value of our 20’ dry containers, 40’ dry containers and 40’ high cube dry containers. Beginning from the third quarter of 2018, depreciation of our existing owned fleet decreased as a result of an increase in the estimated residual value of our 40’ high cube dry containers, partially offset by a decrease in the estimated residual value of our 40’ high cube refrigerated containers.

In addition, we evaluate our containers held for use in our leasing operation to determine whether there has been any event such as a decline in results of operations or residual values that would cause the book value of our containers held for use to be impaired. When an impairment exists, containers held for use are written down to their fair value and the amount of the write down is recorded in depreciation expense.

When the Company is required to write down the cost basis of its containers identified for sale to fair value less cost to sell, the Company measures the fair value of its containers identified for sale under a Level 2 input. The Company relies on its recent sales prices for identical or similar assets in markets, by geography, that are active. The Company records impairments to write down the value of containers identified for sale to their estimated fair value less cost to sell. Any subsequent increase in fair value are recognized as reversal of container impairment but not in excess of the cumulative loss previously recognized.

Amortization Expense. Amortization expense represents the amortization of the price paid for the rights to manage the container fleets of Capital Intermodal Limited, Capital Intermodal GmbH and Capital Intermodal Assets Limited (collectively “Capital Intermodal”) and Amphibious Container Leasing Limited (“Amficon”); Capital Lease Limited, Hong Kong (“Capital”). The purchase prices are being amortized over the expected useful lives of the contracts on a pro-rata basis to the expected management fees.

General and Administrative Expense. Our general and administrative expenses are primarily employee-related costs such as salary, employee benefits, short-term and long-term incentive compensation expense, rent, travel and entertainment costs, as well as expenses incurred for outside services such as legal, consulting, tax and audit-related fees.

Bad Debt (Recovery) Expense, Net. Bad debt expense, net, represents the amounts recorded to provide for an allowance for the doubtful collection of accounts receivable for the owned fleet, net of recoveries of previously reserved balances.

Container Lessee Default (Recovery) Expense, Net. Container lessee default (recovery) expense, net, represents the amounts recorded for container write-off and container recovery costs from lessee default, net of gain associated with recoveries on containers previously estimated as a lost from lessee default.

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A. Operating Results

Comparison of the Years Ended December 31, 2020 and 2019

The following table summarizes our revenues and gain on sale of owned fleet containers, net for the years ended December 31, 2020 and 2019 and changes between those periods:

			Year Ended December 31,			2020 vs 2019				
			2020			2019				$ Change	% Change			
			(Dollars in thousands)										
Lease rental income - owned fleet	$	538,425		$	517,859		$	20,566			4.0%		
Lease rental income - managed fleet			62,448			101,901				(39,453)		(38.7%)		
Lease rental income													(3.0%)		
		$	600,873		$	619,760		$	(18,887)				

Management fees - non-leasing	$	5,271		$	7,590		$	(2,319)		(30.6%)		

Trading container sales proceeds	$	31,941		$	58,734		$	(26,793)		(45.6%)		
Cost of trading containers sold			(28,409)		(51,336)			22,927			(44.7%)		
Trading container margin													(52.3%)		
		$	3,532		$	7,398		$	(3,866)				

Gain on sale of owned fleet containers, net	$	27,230		$	21,397		$	5,833			27.3%		

Lease rental income - owned fleet increased $20,566 (4.0%) from 2019 to 2020 primarily due to an increase of $21,532 in the growth of our fleet on finance leases and an increase of $12,347 (2.7%) in our total operating fleet that was available for lease, partially offset by a decrease of $10,420 (-1.3%) in average per diem rental rates and a decrease of $4,986 (-1.1%) in utilization.

Lease rental income – managed fleet decreased $39,453 (-38.7%) from 2019 to 2020 primarily due to our acquisition of a previously managed fleet at December 31, 2019 and a decrease in average per diem rental rates and utilization.

Management fees – non-leasing decreased $2,319 (-30.6%) from 2019 to 2020; $1,210 of the decrease resulted from a reduction in the amortization of acquisition fees on container purchases for the managed fleet mainly due to our acquisition of a previously managed fleet at December 31, 2019 and a $975 decrease in sales commissions.

Trading container margin decreased $3,866 (-52.3%) from 2019 to 2020; $4,255 of the decrease resulted from a reduction in unit sales volume, partially offset by a $389 increase due to an improvement in per unit margin.

Gain on sale of owned fleet containers, net, increased $5,833 (27.3%) from 2019 to 2020; $4,911 of the increase resulted from an improvement in average gain per container sold and $838 of the increase resulted from a decrease in day-one loss on sales-type leases.

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The following table summarizes our total operating expenses for the years ended December 31, 2020 and 2019 and changes between those periods:

			Year Ended December 31,		2020 vs 2019				
			2020			2019			$ Change	% Change			
			(Dollars in thousands)									
Direct container expense - owned fleet	$	55,222		$	45,831		$	9,391			20.5%		
Distribution expense to managed fleet container investors			57,311			93,858			(36,547)		(38.9%)		
Depreciation expense			261,665			260,372			1,293			0.5%		
Amortization expense			2,572			2,093			479			22.9%		
General and administrative expense			41,880			38,142			3,738			9.8%		
Bad debt (recovery) expense, net			(1,668)		2,002			(3,670)		(183.3%)		
Container lessee default (recovery) expense, net			(1,675)		7,867			(9,542)		(121.3%)		
Gain on insurance recovery and legal settlement			—		(14,881)		14,881			(100.0%)		
Gain on settlement of pre-existing management agreement			—			(1,823)		1,823			100.0%		
Total operating expenses												(4.2%)		
		$	415,307		$	433,461		$	(18,154)				

Direct container expense – owned fleet increased $9,391 (20.5%) from 2019 to 2020 primarily due to a $7,020 increase in storage expense and a $4,216 increase in maintenance expense, partially offset by a $1,691 decrease in insurance expense.

Distribution expense to managed fleet container investors decreased $36,547 (-38.9%) from 2019 to 2020 primarily due to our acquisition of a managed fleet at December 31, 2019 and a lower lease rental income.

Depreciation expense increased $1,293 (0.5%) from 2019 to 2020; $4,259 of the increase was due to a net increase in the size of our owned depreciable fleet, partially offset by a $3,144 decrease due to net decrease to write down the value of containers held for sale to their estimated fair value less cost to sell.

Amortization expense represents the amortization of amounts paid to acquire the rights to manage the container fleets of Capital, Amficon and Capital Intermodal. The Capital Intermodal management right amount was fully amortized at December 31, 2020. Amortization expense increased $479 (22.9%) from 2019 to 2020 primarily due to an update in the estimates for management fee revenue.

General and administrative expense increased $3,738 (9.8%) from 2019 to 2020 primarily due to a $4,493 increase in compensation and benefit costs, partially offset by a $915 decrease in travel expense.

Bad debt (recovery) expense, net, changed from a net expense of $2,002 for 2019 to a net recovery of $1,668 for 2020. This change was primarily due to improvements in collections and our general customer credit profile, partially offset by a credit loss expense of $865 for 2020, which related to our adoption of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) on the effective date of January 1, 2020, see Note 1 (f) "Nature of Business and Summary of Significant Accounting Policies" to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further information.

Container lessee default (recovery) expense, net changed from a net expense of $7,867 for 2019 to a net recovery of $1,675 for 2020. The 2020 recovery was primarily due to aggregate payments of $1,386 received on a settlement agreement with an insolvent lessee in the second quarter of 2020. The 2019 expense was primarily due to $9,059 for written off containers that were deemed unlikely to be recovered from an insolvent lessee, partially offset by $1,988 gain associated with recoveries on containers previously estimated as lost with insolvent lessees.

Gain on insurance recovery and legal settlement for 2019 amounted to $14,881. The 2019 amount includes a $14,040 cash distribution from Hanjin bankruptcy estate received during the fourth quarter of 2019.

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Gain on settlement of pre-existing management agreement for 2019 amounted to $1,823 which related to the settlement of the container management agreement in conjunction with our acquisition of LAPCO on December 31, 2019. See Note 1 (b) “Nature of Business and Summary of Significant Accounting Policies” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further information.

The following table summarizes other income (expenses) for the years ended December 31, 2020 and 2019 and changes between those periods:

		Year Ended December 31,			2020 vs 2019				
		2020				2019				$ Change	% Change			
		(Dollars in thousands)										
Interest expense	$	(123,230)	$	(153,185)	$	29,955			(19.6)%		
Write-off of unamortized deferred debt issuance costs																
and bond discounts		(8,750)			—			(8,750)		100.0%		
Interest income		531				2,505				(1,974)		(78.8)%		
Realized (loss) gain on derivative instruments, net		(12,295)			1,946				(14,241)		(731.8)%		
Unrealized loss on derivative instruments, net		(6,044)			(15,442)			9,398			(60.9)%		
Other, net		1,488				(4)			1,492			(37300.0)%		
Net other expense													(9.7)%		
	$	(148,300)	$	(164,180)	$	15,880					

Interest expense decreased $29,955 (-19.6%) from 2019 to 2020 primarily due to a $38,844 decrease resulting from a reduction in average interest rates of 1.02 percentage point, partially offset by a $8,793 increase resulting from an increase in the average debt balance of $206,314.

Write-off of unamortized deferred debt issuance costs and bond discounts for 2020 amounted to $8,750, which was primarily related to the early redemption of 2017-1 Bonds, 2017-2 Bonds and 2018-1 Bonds.

Interest income decreased $1,974 (-78.8%) from 2019 to 2020 primarily due to a $2,022 decrease resulting from a reduction in average interest rates.

Realized (loss) gain on derivative instruments, net changed from a net gain of $1,946 for 2019 to a net loss of $12,295 for 2020. This change was primarily due to a decrease in market rates as compared to spot strike rates in our contracts which caused a negative net settlement differential in 2020 compared to a positive net settlement differential in 2019.

Unrealized loss on derivative instruments, net decreased $9,398 (-60.9%) from 2019 to 2020 primarily due to a smaller reduction in the value of the interest rate derivatives between 2019 and 2020 compared to the year between 2018 and 2019, mainly resulting from a decrease in the forward LIBOR curve at the end of the respective periods.

Other, net for 2020 amounted to $1,488, which included aggregate payments of $830 received on a non-refundable deposit of a cancelled container purchase and lease arrangement with a customer and fee for the early release of cash withheld in escrow account for our acquisition of the LAPCO fleet in 2019.

The following table summarizes income tax benefit (expense) and net income (loss) attributable to the noncontrolling interests for the years ended

December 31, 2020 and 2019 and changes between those periods:

		Year Ended December 31,					2020 vs 2019			
		2020		2019					$ Change	% Change		
		(Dollars in thousands)										
Income tax benefit (expense)	$	374	$	(1,948)	$	2,322			(119.2)%	
Net income (loss) attributable to the														
noncontrolling interest	$	851	$	(168)	$	1,019			(606.5)%	

Income tax benefit (expense) changed to an income tax benefit of $374 in 2020 from income tax expense of $1,948 in 2019. Our effective tax rate in 2020 decreased to a (0.51)% benefit rate from a 3.3% expense rate in 2019. The change in income tax benefit (expense) in 2020 compared to 2019 was primarily due to repricing of existing net deferred tax liabilities. The income tax benefit in 2020 was mainly attributable to the lower tax uncertainty and a

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higher benefit from foreign rate difference. See Note 7 “Income Taxes” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further information.

Net income (loss) attributable to the noncontrolling interest changed to an income of $851 for 2020 from a loss of $168 for 2019. Net income (loss) attributable to the noncontrolling interest represents the noncontrolling interest’s portion of TAP Funding Limited’s (“TAP Funding”) net income (loss). Net income attributable to the noncontrolling interests for 2020 was primarily due to the decrease in interest expense mentioned above. Net loss attributable to the noncontrolling interests for 2019 was primarily due to an unrealized loss on derivative instruments mentioned above. On January 19, 2021, the Company completed the acquisition of 49.9% of the common shares of TAP Funding which resulted to the Company’s 100% ownership of TAP Funding. See Note 1 “Nature of Business and Summary of Significant Accounting Polices” and Note 14 “Subsequent Event” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further information.

Segment Information

For further discussion, see Note 1 “Nature of Business and Summary of Significant Accounting Policies” and Note 10 “Segment Information” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

The following table summarizes our income before income taxes and noncontrolling interests attributable to each of our business segments for the years ended December 31, 2020 and 2019 (before inter-segment eliminations) and percentage changes between those periods:

	Year Ended December 31,					2020 vs 2019			
	2020			2019					$ Change	% Change		
		(Dollars in thousands)										
Container ownership	$	41,831		$	14,296		$	27,535			192.6%	
Container management		23,641			27,747				(4,106)		(14.8)%	
Container resale		16,433			21,036				(4,603)		(21.9)%	
Other		(3,254)		(4,089)			835			(20.4)%	
Eliminations		(5,352)		(486)			(4,866)		1001.2%	
Income before income tax and noncontrolling														
interests	$	73,299		$	58,504		$	14,795			25.3%	

Income before income taxes and noncontrolling interests attributable to the Container Ownership segment increased $27,535 (192.6%) from 2019 to 2020. The following table summarizes the variances included within this increase:

Decrease in interest expense			From 2019 to 2020				
	$	30,051				
	Increase in lease rental income - owned fleet			21,227				
Change from container lessee default expense, net to container lessee default recovery, net			9,542				
	Decrease in unrealized loss on derivative instruments, net			9,398				
Increase in gain on sale of owned fleet containers, net			5,833				
	Change from bad debt expense, net to bad debt recovery, net			3,653				
Gain on insurance recovery and legal settlement in 2019			(14,881)			
	Change from realized gain on derivative instruments, net to realized loss on derivative instruments, net			(14,241)			
							
Increase in direct container expense			(11,017)			
	Write-off of unamortized deferred debt issuance costs and bond discounts in 2020			(8,750)			
Decrease in interest income			(1,605)			
	Increase in depreciation expense			(1,569)			
Other			(106)			
								
		$	27,535				
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Income before income taxes and noncontrolling interests attributable to the Container Management segment decreased $4,106 (-14.8%) from 2019 to 2020. The following table summarizes the variances included within this increase:

Decrease in distribution expense to managed fleet container investors Increase in management fees

Decrease in lease rental income - managed fleet

Increase in general and administrative expense

Gain on settlement of pre-existing management agreement in 2019 Other

From 2019 to 2020

$	36,547

5,168

(39,453)

(3,821)

(1,823)

(724)

$	(4,106)

Income before income taxes and noncontrolling interests attributable to the Container Resale segment decreased $4,603 (-21.9%) from 2019 to 2020. The following table summarizes the variances included within this increase:

Decrease in gain on container trading, net			From 2019 to 2020			
	$	(3,867)		
Decrease in management fees			(723)		
Other			(13)		
						
		$	(4,603)		

Loss before income taxes and noncontrolling interests attributable to Other activities unrelated to our reportable business segments decreased $835 (-20.4%) from 2019 to 2020 primarily due to an increase in foreign exchange gain and a decrease in general and administrative expense.

Segment eliminations increased $4,866 (1,001.2%) from 2019 to 2020. This change consisted of a $5,162 increase in acquisition fees received by our Container Management segment from our Container Ownership segment, partially offset by a $296 increase in depreciation expense related to capitalized acquisition fees received by our Container Management segment from our Container Ownership segment. Our Container Ownership segment capitalizes acquisition fees billed by our Container Management segment as part of containers, net and records depreciation expense to amortize the acquisition fees over the useful lives of the containers, which is eliminated in consolidation.

Currency

As in previous years, almost all of our revenues are denominated in U.S. dollars and approximately 72% of our direct container expenses – owned fleet in 2020 were denominated in U.S. dollars. Our operations in locations outside of the U.S. have some exposure to foreign currency fluctuations, and trade growth and the direction of trade flows can be influenced by large changes in relative currency values. In 2020, our non-U.S. dollar operating expenses were spread among 16 currencies, resulting in some level of self-hedging. We do not engage in currency hedging.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of income and expenses during the reporting period and the disclosure of contingent assets and liabilities as of the date of the financial statements. We have identified the policies and estimates below as among those critical to our business operations and the understanding of our results of operations. These policies and estimates are considered critical due to the existence of uncertainty at the time the estimates are made, the likelihood of changes in estimates

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from period to period and the potential impact that these estimates can have on our financial statements. The following accounting policies and estimates include inherent risks and uncertainties related to judgments and assumptions made by us. Our estimates are based on the relevant information available at the end of each period.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of March 18, 2021, the date of issuance of this Annual Report on Form 20-F. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Revenue Recognition

Lease Rental Income. Lease rental income arises principally from leasing containers to various international shipping lines and includes all rental charges billed to the lessees. Lease rental income - owned fleet comprises rental income for the container fleet owned by the Company. Lease rental income - managed fleet comprises rental income for the container fleet owned by the container investors. For lease accounting purposes, the management agreements with these container investors are deemed to convey to the Company the right to control the use of the managed containers and are therefore accounted for as “lease rental income - managed fleet” as reported in the consolidated statements of operations.

We recognize revenue from operating leases of containers as earned over the term of the lease. The Company’s container leases generally do not include step-rent provisions, nor do they depend on indices or rates. The Company recognizes revenue on container leases that include lease concessions in the form of free-rent periods using the straight-line method over the minimum terms of the leases.

We cease recognition of lease revenue if and when a container lessee defaults in making timely lease payments or we otherwise determine that future lease payments are not likely to be collected from the lessee. Our determination of the collectability of future lease payments is made by management on the basis of available information, including the current creditworthiness of container shipping lines that lease containers from us, historical collection results and review of specific past due receivables. If we experience unexpected payment defaults from our container lessees, we will cease revenue recognition for those leases, which will reduce container rental revenue.

Finance lease income is recognized using the effective interest method, which generates a constant rate of interest over the period of the lease. The same risks of collectability discussed above apply to our collection of finance lease income. If we experience unexpected payment defaults under our finance leases, we will cease revenue recognition for those leases that will reduce finance lease income.

Lease rental income and operating expenses arising from the leasing services of the managed portion of our fleet are included at gross amounts in our consolidated statements of operations. Our management fees earned from leasing and management services of the managed fleet are the balance after ‘lease rental income – managed fleet’ minus ‘distribution expense to managed fleet container investors’ in our consolidated statements of operations. Fees are typically calculated as a fixed percentage of net operating income. Net operating income is revenue from the containers under management minus direct operating expense related to those containers.

Container Rental Equipment

Depreciation. When we acquire containers, we record the cost of the container on our balance sheet. We then depreciate the container over its estimated useful life (which represents the number of years we expect to be able to lease the container to shipping lines) to its estimated “residual value” (which represents the amount we estimate we will recover upon the sale or other disposition of the equipment at the end of its “useful life” as a shipping container). Our estimates of useful life are based on our actual experience with our fleet, and our estimates of residual value are based on a number of factors including average selling prices.

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The Company estimates the useful lives and residual values of its containers to be as follows:

Dry containers other than open top and flat rack containers:

20'

40'

40' high cube

45' high cube

Refrigerated containers:

20'

20' high cube

40' high cube

Open top and flat rack containers:

20' folding flat rack

40' folding flat rack

20' open top

40' open top

Tank containers

As of December 31, 2020 and 2019

Estimated useful	Residual	
life (years)		Value	

13	$	1,000

14	$	1,200

13	$	1,400

13	$	1,500

12	$	2,750

12	$	2,049

12	$	4,000

15	$	1,300

16	$	1,700

15	$	1,500

14	$	2,500

20	10% of cost

We review our depreciation policies, including estimates of useful lives and residual values, on a regular basis to determine whether a change in estimates of useful lives and residual values is warranted.

We completed our 2020 annual depreciation policy review during the second half of the year and concluded no change was necessary. To perform the assessment, we analyzed sales data over a minimum of a ten-year period which reflected the cyclical nature of the global economic environment and more specifically, our industry, and assessed whether the average selling prices fall within a reasonable range compared to current residual values. We believe a ten-year length of time includes sufficient periods of high and low used container prices to allow us to more accurately predict future residual values. If the ten-year period was outside of the range of a container type, we evaluated the trend in average selling prices over three, five, and seven-year periods to corroborate the trend in the ten-year period. We then performed a peer comparison to evaluate if there were significant differences between the residual values of our containers as compared to peers within the industry.

Valuation of Leasing Equipment. On a quarterly basis, we evaluate our containers held for use in our leasing operation to determine whether there has been any event such as a decline in results of operations or residual values that would cause the book value of our containers held for use to be impaired. When testing for impairment, the evaluation is performed at the lowest level of identifiable cash flows which we have determined to be groups of containers based on equipment type. The estimated undiscounted cash flows are based on historical lease operating revenue, expenses and residual values, adjusted to reflect current market conditions. Impairment exists when the estimated future undiscounted cash flows to be generated by an asset group are less than the net book value of that asset group. Any such impairment would be expensed in our results of operations. There was no such impairment for the years ended December 31, 2020, 2019 and 2018.

Containers Held for Sale

We also evaluate all off-lease containers to determine whether the containers will be repaired and returned to service or sold based upon what we estimate will be the best economic alternative. If we designate a container as held for sale, depreciation on the container ceases, and the container is reported at the lower of (1) its recorded value or (2) the amount we expect to receive upon sale (less the estimated cost to sell the container). Containers held for sale are evaluated for impairment on a quarterly basis based on sale prices for similar types of equipment in the locations in which the containers are stored. Any write-down of containers held for sale is reflected in our statement of operations as an expense. If a large number of containers are designated as held for sale or prices for used

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containers drop, impairment charges for containers held for sale may increase which would result in decreased net income. Subsequent additions or reductions to the fair values of these written down assets are recorded as adjustments to the carrying value of the equipment held for sale. Any subsequent increase in fair value is recognized as a reversal to container impairment but not in excess of the cumulative loss previously recognized.

We will continue to monitor the performance of our container fleet and evaluate the key factors driving market conditions and assess the assumptions used in our impairment testing analysis should market conditions warrant a reassessment.

Recent Accounting Pronouncements

For further discussion, see Note 1 “Nature of Business and Summary of Significant Accounting Policies” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

B. Liquidity and Capital Resources

As of December 31, 2020, we had cash and cash equivalents (including restricted cash) of $205,165. Our principal sources of liquidity have been our cash flows from operations including the sale of containers and borrowings under debt facilities. As of December 31, 2020, we had the following outstanding borrowings and borrowing capacities per debt facility (in thousands):

																	Available					
							Additional										Borrowing, as		Current and		
Facility:				Current		Borrowing			Total				Current		Limited by our		Available		
				Borrowing			Commitment			Commitment				Borrowing			Borrowing Base			Borrowing			
TL Revolving Credit Facility	$	1,438,500		$	61,500	$	1,500,000		$	1,438,500		$	61,500		$	1,500,000			
TL 2019 Term Loan			149,477			—			149,477				149,477			—		149,477			
TMCL II Secured Debt Facility			649,531			550,469			1,200,000				649,531			4,906			654,437			
TMCL VI Term Loan			225,123			—			225,123				225,123			—		225,123			
TMCL VII 2019-1 Bonds (1)			303,333			—			303,333				303,333			—		303,333			
TMCL VII 2020-1 Bonds (1)			434,288			—			434,288				434,288			—		434,288			
TMCL VII 2020-2 Bonds (1)			593,652			—			593,652				593,652			—		593,652			
TMCL VII 2020-3 Bonds (1)			215,972			—			215,972				215,972			—		215,972			
TAP Funding Revolving Credit Facility (2)			132,150			22,850			155,000				132,150			3,686			135,836			
Total (3)	$	4,142,026		$	634,819	$	4,776,845		$	4,142,026		$	70,091		$	4,212,117			

(1)	Amounts on the TMCL VII 2019-1 Bonds, TMCL VII 2020-1 Bonds, TMCL VII 2020-2 Bonds and TMCL VII 2020-3 Bonds exclude an unamortized discount of $81, $79, $157 and $82, respectively.

(2)	On February 10, 2021, the Company fully paid and terminated the TAP Funding Revolving Credit Facility (see Note 14 “Subsequent Event” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further information).

(3)	Current borrowing for all debts excludes prepaid debt issuance costs in an aggregate amount of $26,283.

We have typically funded a significant portion of the purchase price of new containers through borrowings under our TL Revolving Credit Facility and TMCL II Secured Debt Facility and intend to continue to utilize these facilities in the future. In 2020, at such time as our secured debt facilities reached an appropriate size, the facilities were refinanced through the issuance of bonds to institutional investors. We anticipate similar refinancing at such times as the TL Revolving Credit Facility, TMCL II Secured Debt Facility or any similar revolving debt facilities we establish nears their maximum size. This timing will depend on our level of future purchases of containers, the size of our debt facilities in the future, and prevailing conditions in the debt markets.

Our cash inflows from operations are affected by the utilization rate of our fleet and the per diem rates of our leases, whereas the cash inflows from proceeds for the sale of containers are affected by market demand for used

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containers and our available inventory of containers for sale. Our cash outflows are affected by payments and expenses related to our purchasing of containers, interest on our debt obligations or other contingencies discussed in Note 11 “Commitments and Contingencies” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F, which may place demands on our short-term liquidity.

We are a holding company with no material direct operations. Our principal assets are the equity interests we directly or indirectly hold in our operating subsidiaries, which own our operating assets. As a result, we are dependent on loans, dividends and other payments from our subsidiaries to generate the funds necessary to meet our financial obligations and to pay dividends, if any, on our common shares. Our subsidiaries are legally distinct from us and may be prohibited or restricted from paying dividends or otherwise making funds available to us under certain conditions. If we are unable to obtain funds from our subsidiaries, we may be unable to, or our board may exercise its discretion not to, pay dividends on our common shares. Our board of directors takes a fresh view every quarter, taking into consideration our cash needs for opportunities that may be available to us, and sets our dividend, if any, accordingly. The TL Revolving Credit Facility and TL 2019 Term Loan also prohibit TL from paying dividends to TGH in excess of certain limits. A substantial amount of cash used by TGH to pay dividends to its common shareholders has historically been received from TL and TEML in the form of dividends.

Assuming that our lenders remain solvent, we currently believe that our existing cash and cash equivalents, cash flow from operations, proceeds from the sale of containers and borrowing availability under our debt facilities are sufficient to meet our liquidity needs for the next twelve months. While we are not yet through the pandemic, the financial performance of our customers has generally held up better than anticipated since our customers continue to benefit from recent high cargo volumes and high freight rates. We will continue to monitor our liquidity and the credit markets in light of the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic. However, we cannot predict with any certainty the impact on the Company of any further disruptions in the credit environment.

Description of Indebtedness

For further discussion, see Note 8 “Debt” and Note 9 “Derivative Instruments” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

As of December 31, 2020, the total outstanding principal balance on our fixed rate debt facilities was $1,922 million with fixed interest rates between 2.1% and 5.07% as of December 31, 2020. Final maturities on these fixed rate debt facilities are between December 2026 and September 2045. As of December 31, 2020, the total outstanding principal balance on our floating rate debt facilities was $2,220 million with interest rates between 1.65% and 2.11%, primarily LIBOR plus a margin, as of December 31, 2020. Final maturities on these floating rate debt facilities are between December 2021 and July 2026.

Debt Covenants

All of our debt facilities are secured by specific pools of containers and related assets owned by the Company. TGH also acts as an unconditional guarantor of the TL Revolving Credit Facility and the TL 2019 Term Loan. In addition to customary events of default as defined in our credit agreements and indenture and various restrictive financial covenants, the Company’s debt facilities also contain other various debt covenants and borrowing base minimums. The TL Revolving Credit Facility and TL 2019 Term Loan also contains cross default provisions that may result in an acceleration of principal repayment under these debt facilities if an uncured default condition were to exist.

The debt agreements are the obligations of our subsidiaries and related debt covenants may be calculated at the consolidated or subsidiary level. We are subject to financial covenants such as those related to leverage, interest coverage, container sales proceeds ratio, net income and debt levels, including limitations on certain liens, indebtedness and investments. The table below reflects the key covenants for the Company that cover the majority of our debt agreements as of December 31, 2020:

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Financial Covenant		TGH		TL		TEML	
Consolidated leverage ratio (1)	Shall not exceed 3.50:1	Shall not exceed 3.50:1		—	
Consolidated fixed charge coverage ratio	Shall not be less than 1.20:1		—		—	
Consolidated interest coverage ratio	—	Shall not be less than 4.00:1		—	
Consolidated funded debt	—		—	Shall not exceed $1,000	
Consolidated tangible net worth	Shall not be less than $972,000 plus 50%					
		of TGH’s net income following June 30,					
		2018		—		—	
Annual after-tax profit	—		—	Shall not be less than $2,000	

(1)	In January 2021, we amended the TL debt facilities which modified the consolidated leverage ratio for TGH to 3.80:1.

All of the Company’s debt facilities also contain restrictive covenants on borrowing base minimums. We were in full compliance with these requirements as of December 31, 2020.

Cash Flow

The following table summarizes historical cash flow information for the years ended December 31, 2020 and 2019:

			Year Ended December 31,			2020 vs 2019				
			2020			2019				$ Change	% Change			
			(Dollars in thousands)										
Net income	$	73,673		$	56,556		$	17,117			30.3%		
Adjustments to reconcile net income to net cash provided by operating																
activities:			322,582			371,989				(49,407)		(13.3%)		
Net cash provided by operating activities																
			396,255			428,545				(32,290)		(7.5%)		
Net cash used in investing activities			(689,902)		(761,792)			71,890			(9.4%)		
Net cash provided by financing activities			220,730			386,182				(165,452)		(42.8%)		
Effect of exchange rate changes			177			42				135			321.4%		
Net (decrease) increase in cash																
			(72,740)		52,977				(125,717)		(237.3%)		
Cash, cash equivalents and restricted cash, beginning of the year			277,905			224,928				52,977			23.6%		
Cash, cash equivalents and restricted cash, end of the year																
	$	205,165		$	277,905		$	(72,740)		(26.2%)		

Operating Activities

Net cash provided by operating activities decreased $32,290 (-7.5%) from 2019 to 2020. The decrease in net cash provided by operating activities was primarily due to a $39,920 decrease in net working capital adjustments, partially offset by a $7,630 increase in net income adjusted for non-cash items such as depreciation expense, unrealized loss on derivative instruments, amortization and write-off of debt issuance costs and accretion of bond discounts. The decrease in net working capital provided by operating activities were primarily due to a $13,991 decrease in accounts receivable, a $12,338 decrease in trading containers and a $7,590 decrease in prepaid expenses and other current assets.

Investing Activities

Net cash used in investing activities decreased $71,890 (-9.4%) from 2019 to 2020 primarily due to cash paid in 2019 for LAPCO acquisition of $171,841 and a $165,182 decrease in payments for container leaseback financing receivable, partially offset by a $279,152 increase in cash paid for container and fixed asset purchases.

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Financing Activities

Net cash provided by financing activities decreased $165,452 (-42.8%%) from 2019 to 2020 primarily due to a $750,013 increase in principal payments on debt, partially offset by a $675,037 increase in proceeds from debt. Additionally, the decrease in net cash provided by financing activities were due to a $59,896 increase in purchase of treasury shares under the Company’s share repurchase program which commenced in September 2019, $17,448 proceed from container leaseback financing liability from 2019 and $12,515 payment on the extinguishment of container leaseback financing liability that was due to container investor in 2020.

C. Research and Development, Patents and Licenses, etc.

We do not carry out research and development activities and our business and profitability are not materially dependent upon any patents or licenses. We have registered “TEXTAINER,” “TEX” and “tex” (logo) in the U.S. Patent and Trademark Office and in the patent and trademark agencies of thirteen countries as trademarks.

D. Trend Information

Please see Item 5, “Operating and Financial Review and Prospects – Tabular Disclosure of Contractual Obligations” for a description of identifiable trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity either increasing or decreasing at present or in the foreseeable future. We will require sufficient capital in the future to meet our payments and other obligations under our contractual obligations and commercial commitments. The need to make such payments is a “Trend” as it is unlikely that all such obligations will be eliminated from our future business activities. We intend to utilize cash on hand in order to meet our obligations under our contractual obligations and commercial commitments. It is likely that we will generate sufficient operating cash flow to meet these ongoing obligations in the foreseeable future. From time to time, we may issue additional debt in order to raise capital for future requirements.

E. Off-Balance Sheet Arrangements

At December 31, 2020, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

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F. Tabular Disclosure of Contractual Obligations

The following table sets forth our contractual obligations and commercial commitments by due date as of December 31, 2020:

								Payments Due by Twelve Month Period Ending December 31								
				Total			2021			2022			2023				2024			2025			2026 and			
																							thereafter		
											(Dollars in thousands)												
												(Unaudited)												
TL Revolving Credit Facility	$	1,438,500	$	31,316	$	135,245	$	1,271,939		$	—	$	—	$	—		
TL 2019 Term Loan			149,477			10,898			11,285			11,686				12,102			12,532		$	90,974			
TMCL II Secured Debt Facility (1)			649,531			51,964			56,707			56,439				56,439			56,439		$	371,541			
TMCL VI Term Loan			225,123			25,206			25,206			25,206				25,206			124,299		$	—		
TMCL VII 2019-1 Bonds (2)			303,333			28,000			28,000			28,000				28,000			28,000		$	163,333			
TMCL VII 2020-1 Bonds			434,288			52,906			56,170			56,925				57,669			56,661		$	153,956			
TMCL VII 2020-2 Bonds			593,652			63,858			60,569			66,179				68,745			69,031		$	265,270			
TMCL VII 2020-3 Bonds			215,972			20,111			20,111			20,111				20,111			20,111		$	115,417			
TAP Funding Revolving Credit Facility			132,150			132,150			—			—			—		—	$	—		
Interest on obligations (3)			361,754			94,777			83,209			67,954				46,007			34,238		$	35,568			
Interest rate swaps and caps payables (receivables),																									
net (4)			30,923			16,578			11,662			1,992				513			115		$	63			
Container contracts payable			231,647			231,647			—			—			—		—		—		
Office lease obligations			14,395			2,273			2,253			2,328				2,305			2,122			3,114			
Total contractual obligations (5) (6)	$	4,780,745	$	761,683	$	490,417	$	1,608,760		$	317,098		$	403,549		$	1,199,237			

(1)	The estimated future repayments for TMCL II Secured Debt Facility are based on the assumption that the facility will not be extended on its associated conversion date.

(2)	Amounts on the TMCL VII 2019-1 Bonds, TMCL VII 2020-1 Bonds, TMCL VII 2020-2 Bonds, TMCL VII 2020-3 Bonds, exclude an unamortized discount of $81, $79, $157 and $82.

(3)	Using 0.14% which was one-month spot interest rate of LIBOR plus a margin rate that varies based on each debt facility. Weighted average interest rate at 2.35%.

(4)	Calculated based on the difference between our fixed contractual rates and the counterparties’ average rate estimated at 0.14% which was one-month spot interest of LIBOR rate as of December 31, 2020, for all periods, for all interest rate contracts outstanding as of December 31, 2020.

(5)	Future scheduled payments for all debts exclude prepaid debt issuance costs in an aggregate amount of $26,283.

(6)	Excluded container leaseback financing liability amounting to $4,762 as of December 31, 2020 which is accounted for as a financing transaction under FASB Accounting Standards Update No. 2016-02, Leases (“Topic 842”) (“ASU 2016-02”). This is excluded due to the uncertainty in the timing and variable amounts of future cash flows since the estimated future scheduled payments is dependent upon assumptions regarding the amounts distributed to the Container Investors which is based on net operating income of the managed fleet, reduced by the management fees earned. The Container Investors have no rights or recourse against the Company in the event of a lessee default or any other risk in respect of the managed containers.

G. Safe Harbor

This Annual Report on Form 20-F contains forward-looking statements. See “Information Regarding Forward-Looking Statements; Cautionary Language.”

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ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.	Directors and Senior Management

The following table sets forth information regarding our executive officers and directors as of March 18, 2021. Our board of directors is elected annually on a staggered basis and each director holds office for three years or until his successor has been duly elected, except in the event of his death, resignation, removal or earlier termination of his office. Our bye-laws provide for, among other things, the election of our board of directors on a staggered basis. The business address of each of our executive officers and non-management directors is Century House, 16 Par-La-Ville Road, Hamilton HM 08, Bermuda.

David M. Nurek, Robert D. Pedersen and Grace Tang are designated Class III directors, to hold office until our 2023 annual general meeting of shareholders, Olivier Ghesquiere and Hennie Van der Merwe are designated Class II directors, to hold office until our 2021 annual general meeting of shareholders and John A. Maccarone, Dudley R. Cottingham, and Hyman Shwiel are designated Class I directors, to hold office until our 2022 annual general meeting of shareholders. Directors may be re-elected when their term of office expires.

In December 2019, we commenced a secondary, or dual, listing of our common shares on the JSE in Johannesburg, South Africa under the symbol “TXT”. Promptly following our dual listing, Trencor distributed approximately 24.3 million of its shares in the Company to Trencor’s own shareholders and those shares are trading on the JSE. In June 2020, Trencor distributed its remaining 3.0 million shares or approximately 5.3% of our outstanding share capital to Trencor’s own shareholders and these shares are trading on the JSE. Following the June 2020 distribution of shares, Trencor no longer holds any shares in the Company. See Item 4, “Information on the Company— Organizational Structure” and Item 7, “Major Shareholders and Related Party Transactions” for an explanation of the relationship between us and Trencor. As indicated below, two of our directors are also directors of Trencor.

Executive Officers and Directors	Age	Position	
								
Hyman Shwiel (1)(2)(3)			76			Chairman	
Olivier Ghesquiere	54		Director, President and Chief Executive Officer	
Dudley R. Cottingham (1)(2)(3)	69		Director	
John A. Maccarone (2)(3)	76		Director	
David M. Nurek (1)(2)(3)(4)	71		Director	
Hennie Van der Merwe (5)	73		Director	
Robert D. Pedersen	61		Director	
Grace Tang (1)	61		Director	
Michael K. Chan	58		Executive Vice President and Chief Financial Officer	

(1)	Member of the audit committee.

(2)	Member of the compensation committee.

(3)	Member of the corporate governance and nominating committee.

(4)	Chairman of Trencor. Following the June 2020 unbundling of the remaining shares, Trencor no longer hold any share interest in the Company.

(5)	Chief Executive Officer and Director of Trencor. Following the June 2020 unbundling of the remaining shares, Trencor no longer hold any share interest in the Company.

Certain biographical information about each of these individuals is set forth below.

Directors

Hyman Shwiel has been a member of our board of directors since September 2007. Mr. Shwiel was a partner with Ernst & Young LLP for 25 years. He served during that period in various roles, including Area Managing Partner and as National Director of Enterprise and Professional Risk. Upon his retirement in 2005, he became a consultant to Ernst & Young until 2007. Mr. Shwiel holds a C.T.A. and a M.B.A. from the University of Cape Town and is a Chartered Accountant (South Africa) and a CPA.

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Olivier Ghesquiere was appointed President and Chief Executive Officer and to our board of directors in August 2018. Mr. Ghesquiere served as our Executive Vice President – Leasing from January 2017 to August 2018, responsible for worldwide sales and marketing related activities and operations. Mr. Ghesquiere served as our Senior Vice President – Marketing and Sales since December 2015. Mr. Ghesquiere worked at Groupe Ermewa S.A. as Chief Operating Officer and then Chief Executive Officer from January 2009 through February 2015 where he was responsible for growing the railcar and locomotive fleet to become the second largest in Europe. During that time Mr. Ghesquiere was also chairman of Eurotainer SA for which he was the Managing Director from April 2004 through December 2008 where he developed their tank container business focusing on higher value segments of the market. Mr. Ghesquiere has served as Vice Chairman and chairman of the International Tank Container Organization (ITCO) leasing committee from 2006 through 2010. Mr. Ghesquiere holds a Masters in Applied Economics from the Louvain School of Management, Belgium.

Dudley R. Cottingham has been a member of our board of directors since December 1993 and served as assistant Secretary and/or secretary between December 1993 and October 2007. He has also served in the past as president of certain of our subsidiaries and continues to serve as a director of our Bermuda subsidiaries. Mr. Cottingham has over 35 years of experience in public accounting for a variety of international and local clients. He is a director and the audit committee chairman of Bermuda Press (Holdings) Ltd., a newspaper publishing and commercial printing company listed on the Bermuda Stock Exchange and is chairman of the listing committee of the Bermuda Stock Exchange. He is chairman and an Investment and Operational Committee member of the Aurum Funds which are listed on the Bermuda Stock Exchange. He was a managing director of and was formerly a partner of Arthur Morris & Company Limited, a provider of audit and accounting services for international clients, since 1982. Mr. Cottingham is currently a consultant and had served as vice president and director of Continental Management Ltd., a Bermuda company providing corporate representation, administration and management services, since 1982 and a director of Continental Trust Corporation Ltd., a Bermuda company that provides corporate and individual trust administration services, since 1994. He is a director of Morris, Cottingham & Co. Ltd. and their other group companies in Turks & Caicos Islands. Mr. Cottingham is a Chartered Accountant.

John A. Maccarone served as our President and Chief Executive Officer from January 1999 until October 2011 when he retired from Textainer and as a member of our board of directors since December 1993. Mr. Maccarone co-founded Intermodal Equipment Associates, a marine container leasing company based in San Francisco, and held a variety of executive positions with the company from 1979 until 1987, when he joined the Textainer Group as President and Chief Executive Officer of TEML, now a subsidiary of our company. From 1977 through 1978, Mr. Maccarone was Director of Marketing based in Hong Kong for Trans Ocean Leasing Corporation, a San Francisco-based company. From 1969 to 1976, Mr. Maccarone was a marketing representative for IBM Corporation in Chicago, Illinois. From 1966 to 1968, he served as a Lieutenant in the U.S. Army Corps of Engineers in Thailand and Virginia. Mr. Maccarone holds a B.S. in Engineering Management from Boston University and an M.B.A. from Loyola University of Chicago.

David M. Nurek has been a member of our board of directors since September 2007. Mr. Nurek was appointed as an alternate director of Trencor in November 1992 and as a non-executive member of its board of directors in July 1995. He is chairman of Trencor and a member of Trencor’s audit, remuneration, social and ethics, risk and governance committees. In August 2019, Mr. Nurek retired from his position as an executive of Investec Bank Limited, a subsidiary of Investec Limited, which is listed on the JSE. Investec Limited has entered into a dual listed company structure with Investec plc, which is quoted on the London Stock Exchange (collectively, the “Investec Group”). He was the regional chairman of Investec Limited’s various businesses in the Western Cape, South Africa, and also the Investec Group’s worldwide head of legal risk. Prior to joining Investec Limited in June 2000, Mr. Nurek served as chairman of the South African legal firm Sonnenberg Hoffmann & Galombik, which has since changed its name to Edward Nathan Sonnenbergs Inc. Mr. Nurek serves as a non-executive on the boards of directors of various listed and unlisted companies in South Africa and holds a Diploma in Law and a Graduate Diploma in Company Law from the University of Cape Town and completed a Program of Instruction for Lawyers at Harvard Law School and a Leadership in Professional Services Firms program at Harvard Business School.

Hennie Van der Merwe has been a member of our board of directors since August 2017 and between March 2003 to 2011. Mr. Van der Merwe joined Trencor in 1997 and began serving as a director of Trencor in 1998. He was appointed the Chief Executive Officer of Trencor in August 2017 and a member of Trencor’s risk and governance committees. Mr. Van der Merwe also serves as non-executive chairman of the board of Master Drilling Group Limited and as a non-executive director of Bell Equipment Limited, both of which are listed on the JSE. From 1984 to 1991, he held various senior executive positions in the banking sector in South Africa, lastly as chief

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executive officer of Senbank, the corporate/merchant banking arm of Bankorp Group Ltd. From 1991 to 1998, Mr. Van der Merwe served as deputy chairman for Waco International Ltd., an international industrial group listed on the JSE with subsidiaries listed on the Sydney and London Stock Exchanges. Prior to entering the business world, Mr. Van der Merwe practiced as an attorney at law in Johannesburg, South Africa. Mr. Van der Merwe holds Bachelor of Arts and L.L.B degrees in Law from the University of Stellenbosch in South Africa, and a Master of Law in Tax Law from the University of the Witwatersrand in South Africa.

Robert D. Pedersen has been a member of our board of directors since April 2017. Mr. Pedersen was appointed President and Chief Executive Officer of TEML, our management company, in October 2011 and retired on March 31, 2017. Mr. Pedersen served as our Executive Vice President responsible for worldwide sales and marketing related activities and operations since January 2006. Mr. Pedersen was Senior Vice President of our leasing group from 1999 to 2005. From 1991 to 1999, Mr. Pedersen held several positions within our company, and from 1978 through 1991, he worked in various capacities for Klinge Cool, a manufacturer of refrigerated container cooling units, XTRA, a container lessor, and Maersk Line, a container shipping line. Mr. Pedersen is a graduate of the A.P. Moller Shipping and Transportation Program and the Merkonom Business School in Copenhagen, where he majored in Company Organization.

Grace Tang has been a member of our board of directors since August 2020. Ms. Tang was a partner with PwC for 22 years until her retirement in 2020. She served on the Board of Partners of the PwC China, Hong Kong, Taiwan and Singapore firms. She served as the leader of the Industrial Products sector and also the multinational client practice in China where she assisted domestic Chinese and international clients. Ms. Tang serves as an instructor of the Masters of Business Administration and Master of Professional Accounting degree programs at the Peking University. Ms. Tang is a US certified public accountant, a member of the American Institute of Certified Public Accountants, and a fellow of the Hong Kong Institute of Certified Public Accountants. Ms. Tang has a B.S. from the University of Utah and an M.B.A. from Utah State University.

Executive Officers

For certain biographical information about Olivier Ghesquiere, see “Directors” above.

Michael K. Chan was appointed Executive Vice President and Chief Financial Officer (CFO) in September 2018. Mr. Chan served as our Vice President and Senior Vice President of Finance from April 2017 through August 2018, responsible for overseeing treasury, investor relations, accounting, financial reporting, and financial planning and analysis. Mr. Chan also served as a Controller from 1994 to 2006. Prior to re-joining the company in 2017, Mr. Chan was CFO at Ygrene Energy Fund from 2015 to 2017, a market-leading specialty finance company, where he raised nearly $1 billion in capital and achieved the industry’s first AAA rating on the company’s senior notes. From 2011 to 2015, Mr. Chan worked as Senior Director of Treasury and Capital Markets for The Cronos Group, a leading global container leasing company which was acquired by Shenzhen Stock Exchange listed Bohai Leasing Company. Before that, Mr. Chan held the CFO position at The Chartres Lodging Group from 2006 to 2011, where he was instrumental in executing key acquisitions and sales for the hotel investment and asset management company. Mr. Chan joined Coopers & Lybrand in 1989, now PricewaterhouseCoopers (PwC) and held the position of Audit Manager. Mr. Chan is a member of the American Institute of Certified Public Accountants (AICPA) and holds a B.S. in Business Administration – Accounting from California State University East Bay.

Board of Directors

Our board of directors currently consists of eight members. Our bye-laws provide that our board of directors shall consist of five to twelve directors, as the board of directors may determine from time to time.

B.	Compensation

The aggregate direct compensation we paid to our executive officers as a group (two persons) for the year ended December 31, 2020 was approximately $2,269, which included approximately $316 in bonuses and approximately $842 in vested restricted stock and funds set aside or accrued to provide for health and life insurance, retirement, or similar benefits. This amount does not include expenses we incurred for other payments, including dues for professional and business associations, business travel and other expenses, which amounted to approximately $11. We did not pay our officers who also serve as directors any separate compensation for their directorship during 2020, other than reimbursements for travel expenses.

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During 2020, our executive officers as a group were granted 94,844 performance-based restricted share units and 28,956 time-based restricted share units through our 2019 Share Incentive Plan.

All of our full-time employees, including employees of our direct and indirect subsidiaries and dedicated agents and our executive officers, were eligible to participate in our 2020 Short Term Incentive Plan (“STIP”). Under that plan, all eligible employees received an incentive award based on their respective job classification and our return on equity and net income. In 2020, all STIP participants, including our executive officers received 86.5% of their target incentive award that applied to calendar year 2019 performance with the incentive award paid in early 2020.

The aggregate direct compensation we paid to our directors who are not officers for their services as directors as a group for the year ended December 31, 2020 was approximately $517. Some directors were also reimbursed for expenses incurred to attend board or committee meetings which amounted to approximately $34 during 2020. During 2020, our non-executive directors as a group were granted 64,568 time-based restricted share units through our 2019 Share Incentive Plan. Restricted share units granted to directors fully vest one year after their grant date.

Summary of the 2019 Share Incentive Plan

General

The 2019 Plan provides for the grant of share options, restricted shares, restricted share units, share appreciation rights and dividend equivalent rights, collectively referred to as “awards.” Share options granted under the 2019 Plan may be either incentive share options under the provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified share options. We may grant incentive share options only to our employees or employees of any parent or subsidiary of Textainer Group Holdings Limited. Awards other than incentive share options may be granted to our employees, directors and consultants or the employees, directors and consultants of any parent or subsidiary of Textainer Group Holdings Limited.

Authorized Shares

Our board of directors adopted the 2007 Share Incentive Plan (“2007 Plan”) on August 9, 2007, and our shareholders approved the 2007 Plan on September 4, 2007. The maximum number of common shares of Textainer Group Holdings Limited that could be granted pursuant to the 2007 Plan was 3,808,371 shares, representing 8% of the number of common shares issued and outstanding 45 days following our initial public offering on October 9, 2007, subject to adjustments for share splits, share dividends or other similar changes in our common shares or our capital structure. On February 23, 2010, the Company’s Board of Directors approved an increase in the number of shares available for future issuance by 1,468,500 from 3,808,371 shares to 5,276,871 shares, which was approved by the Company’s shareholders at the annual meeting of shareholders on May 19, 2010. The shares to be issued pursuant to awards under the 2007 Plan may be authorized, but unissued, or reacquired common shares. On May 21, 2015, TGH’s board of directors approved an amendment and restatement of the 2007 Plan as the 2015 Plan at the annual meeting of shareholders. The amendment and restatement of the 2007 Plan increased the maximum number of shares available for future issuance by 2,000,000 shares and extended the term of such plan for ten years from the date of the annual meeting of shareholders. On May 23, 2019, TGH’s board of directors approved an amendment and restatement of the 2015 Plan as the 2019 Plan at the annual meeting of shareholders. The amendment and restatement of the 2015 Plan increased the maximum number of shares available for future issuance by 2,500,000 shares and to update the Plan language to eliminate references to IRS Section 162(m) performance based compensation provisions that were eliminated under the new US tax rules that went into effect in January 2018. At December 31, 2020, 2,238,360 shares were available for future issuance under the 2019 Plan.

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Administration

Our board of directors or a committee designated by our board of directors, referred to as the “plan administrator,” administers the 2019 Plan, including selecting the award recipients, determining the number of shares to be subject to each award, determining the exercise or purchase price of each award and determining the vesting and exercise periods of each award. Awards under the plan may vest upon the passage of time or upon the attainment of certain performance criteria.

Restricted Share Units

Restricted share units represent rights to receive shares of our common stock at a future date which may be subject to vesting conditions based on the passage of time (time-based restricted share units or “RSU”) or the attainment of performance criteria (performance-based restricted share units or “PSU”).

Time-based RSUs granted prior to 2020 vest in increments of 25% per year beginning approximately one year after an award’s grant date. Time-based RSUs granted during 2020 vest in increments of 33.33% per year beginning approximately one year after an award’s grant date.

In 2020, PSUs were granted to provide variable compensation in the form of equity that rewards executives when we achieve long-term results that align with stockholders’ interests. Based on a review of market data and recommendation from Willis Tower Watson, an independent compensation consultant, our board of directors approved the mix of awards for executives to provide the appropriate balance of time-based and performance-based compensation to support our long-term strategy as shown in the table below:

Award Type	2020 Allocation

Percentage	2020 Alignment to Stockholder Interests

Performance-based restricted share units	75%	
Time-based restricted share units	25%	

Payout depends on market condition based on our Total Shareholder Return performance relative to our peer group at the end of a three-year performance period. The value of the earned award depends on our stock price at the end of the performance period.

Value of award depends on our stock price at the time of vesting

Subject to the grantee’s continuous service through the performance period, the number of units that may be earned will be based on the Company’s Total Shareholder Return (TSR) relative to the Russell 2000 Index TSR over the performance period (the “Company’s Rank”). At the end of the three-year performance period, the Company’s Rank will be utilized to determine the percentage of the target units, as set forth in the following table:

Performance Goal Achievement (1)	Percentage of Target Units Earned (2)	
At or above the 75th percentile	200%		
At the 50th percentile	100%		
At the 25th percentile	25%		
Less than the 25th percentile	0%		

(1)	The PSUs granted in 2020 for the 2020-2023 performance period have a 3-year cliff vesting based on the Company’s TSR measured as a percentile ranking in comparison with the peer group. The TSR is calculated using the average closing prices of the Company’s common stock during the 30 trading days prior to and including the first day of the performance period, reinvested dividends during the performance period and the average closing prices during the final 30 trading days of the performance period.

(2)	The percentage of target units earned is limited to 100% if our TSR over the performance period is negative. As of December 31, 2020, the estimated target payout is at maximum performance level of 200%.

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Stock Options

The exercise price of all share options granted under the 2019 Plan will be at least equal to 100% of the fair market value of our common shares on the date of grant. If, however, incentive share options are granted to an employee who owns shares possessing more than 10% of the voting power of all classes of our common shares or the shares of any parent or subsidiary, the exercise price of any incentive share option granted must equal at least 110% of the fair market value on the grant date and the maximum term of these incentive share options must not exceed five years. Share options vest in increments of 25% per year beginning approximately one year after an option’s grant date. The maximum term of all other awards under the 2019 Plan will be ten years. The plan administrator will determine the term and exercise, or purchase price of any other awards granted under the 2019 Plan. There were no stock options granted during 2020.

Transferability of Awards

Under the 2019 Plan, incentive share options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of the participant only by the participant. Other awards shall be transferable by will or by the laws of descent or distribution and to the extent provided in the award agreement. The 2019 Plan permits the designation of beneficiaries by holders of awards, including incentive share options.

In the event a participant in the 2019 Plan terminates employment or is terminated by us (or by our parent or subsidiary) without cause, any options which have become exercisable prior to the time of termination will remain exercisable for three months from the date of termination (unless a shorter or longer period of time is determined by the plan administrator). In the event a participant in the 2019 Plan is terminated by us (or by our parent or subsidiary) for cause, any options which have become exercisable prior to the time of termination will immediately terminate. If termination was caused by death or disability, any options which have become exercisable prior to the time of termination, will remain exercisable for twelve months from the date of termination (unless a shorter or longer period of time is determined by the plan administrator). Unless an individual award agreement otherwise provides, all vesting of all other awards will generally terminate upon the date of termination.

Adjustments for Capital Structure Changes

Subject to any required action by our shareholders, the number of common shares covered by outstanding awards, the number of common shares that have been authorized for issuance under the 2019 Plan, the exercise or purchase price of each outstanding award, the maximum number of common shares that may be granted subject to awards to a participant in any calendar year, and the like, shall be proportionally adjusted by the plan administrator in the event of any increase or decrease in the number of issued common shares resulting from certain changes in our capital structure as described in the 2019 Plan.

Change in Control

In the event of a corporate transaction or a change in control of Textainer Group Holdings Limited, all outstanding awards under the 2019 Plan will terminate unless the acquirer assumes or replaces such awards. In addition, and except as otherwise provided in an individual award agreement, assumed or replaced awards will automatically become fully vested if a participant is terminated by the acquirer without cause within twelve months after a corporate transaction. In the event of a corporate transaction where the acquirer does not assume or replace awards granted under the 2019 Plan, all of these awards become fully vested immediately prior to the consummation of the corporate transaction. In the event of a change in control and except as otherwise provided in an individual award agreement, outstanding awards will automatically become fully vested if a participant is terminated by the acquirer without cause within twelve months after such change in control.

Under the 2019 Plan, a “corporate transaction” is generally defined as:

•	acquisition of 50% or more of the common shares by any individual or entity including by tender offer;

•	a reverse merger or amalgamation in which 40% or more of the common shares is acquired by an individual or entity;

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•	a sale, transfer or other disposition of all or substantially all of the assets of Textainer Group Holdings Limited;

•	a merger, amalgamation or consolidation in which Textainer Group Holdings Limited is not the surviving entity; or

•	a complete liquidation or dissolution.

Under the 2019 Plan, a “change in control” is generally defined as:

•	acquisition of 50% or more of the common shares by any individual or entity which a majority of our board of directors (who have served on the board for at least 12 months) do not recommend that our shareholders accept, or

•	a change in the composition of the board of directors as a result of contested elections over a period of 12 months or less.

Termination of the Plan

Unless terminated sooner, the 2019 Plan will automatically terminate in 2029. The board of directors will have authority to amend or terminate the 2019 Plan. To the extent necessary to comply with applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to awards granted to residents therein, we will obtain shareholder approval of any such amendment to the 2019 Plan in such a manner and to such a degree as required.

2020 Short-Term Incentive Plan

On September 21, 2007, our board of directors approved the Textainer Group Holdings Limited 2008 Bonus Plan (the “Bonus Plan”). The Bonus Plan provides for short-term incentive payments to our employees and those of our affiliates, including our dedicated agents and key executives. Although the Bonus Plan permits the awards to be paid in shares, we expect that the awards will be cash-based. The Bonus Plan is designed to provide incentive awards based on the achievement of goals relating to the Company’s performance and the individual performance while maintaining a degree of flexibility in the amount of incentive compensation paid to such individuals. Annually, our board of directors or the compensation committee review objective target performance criteria when determining the annual short-term incentive bonuses to be awarded to our executive officers. Under the Bonus Plan, performance goals may relate to one or more of the following measures, for the company as a whole, a line of business, service or product: earnings per share, total shareholder return, operating margin, gross margin, return on equity, return on assets, net operating income, pre-tax income, cash flow, earnings before interest, taxes and depreciation, net interest income margin, net income or performance relative to a peer group of companies on any of the foregoing measures.

Employment with Executive Officers and Directors

We have entered into employment agreements with our executive officers. Each of these employment agreements contains provisions requiring us to make certain severance payments in case the executive officer is terminated without cause. Employment is at-will for each of our executive officers and their employment may be terminated at any time for any reason.

Other than as disclosed above, none of our directors has service contracts with us or any of our subsidiaries providing for benefits upon termination of employment.

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C.	Board Practices

Our corporate governance practices are in compliance with, and are not prohibited by, the laws of Bermuda. Therefore, we are exempt from many of the NYSE corporate governance practices, other than the establishment of a formal audit committee satisfying the requirements of Rule 10A-3 under the Exchange Act and notification of non-compliance with NYSE listing requirements pursuant to Rule 10A-3 promulgated under the Exchange Act. For further discussion on the practices that we follow in lieu of the NYSE’s corporate governance rules, see Part II Item 16G, “Corporate Governance” in this Annual Report on Form 20-F.

D.	Employees

We had approximately 160 employees as of December 31, 2020. We believe that our relations with our employees are good, and we are not a party to any collective bargaining agreements.

E.	Share Ownership

See Item 7, “Major Shareholders and Related Party Transactions” for information regarding director and senior management ownership of our common

shares.

ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.	Major Shareholders

The following table presents information regarding the beneficial ownership of our common shares as of December 31, 2020:

•	each person or entity that we know beneficially owns more than 5% of our issued and outstanding shares;

•	each director, director nominee and executive officer; and

•	all of our directors, director nominees and executive officers as a group.

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Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. The percentage of beneficial ownership of our common shares owned is based on 50,495,789 common shares issued and outstanding on December 31, 2020. We do not believe that we are directly or indirectly owned or controlled by any foreign government. The voting rights of our common shares held by major shareholders are the same as the voting rights of shares held by all other shareholders. We are unaware of any arrangement that might result in a change of control.

		Number of Common Shares				
Holders		Beneficially Owned				
		Shares (9)	% (1)			
5% or More Shareholders							
Coronation Asset Management (Pty) Ltd. (2)	5,642,419			11.2%		
Dimensional Fund Advisors LP (3)	2,898,338			5.7%		
Massachusetts Financial Services Company (4)	2,719,033			5.4%		
Isam K. Kabbani (5)	2,579,230			5.1%		
							
Directors and Executive Officers							
John A. Maccarone (6)	1,559,123			3.1%		
Olivier Ghesquiere	424,833			*			
Robert D. Pedersen	358,716			*			
Michael K. Chan	117,852			*			
Hyman Shwiel	44,245			*			
Dudley R. Cottingham (7)	42,245			*			
David M. Nurek (8)	40,816			*			
Hennie Van der Merwe (8)	23,223			*			
Grace Tang	6,944			*			
Current directors and executive officers (9 persons) as a group	2,617,997			5.2%		
*	Less than 1%.							

(1)	Percentage ownership is based on 50,495,789 total shares outstanding as of December 31, 2020. There are 18,977,403 common shares issued and outstanding in a secondary, or dual, listing of our common shares on the JSE in South Africa under the symbol “TXT”.

(2)	Based on the Schedule 13G filed with the SEC on February 10, 2021 by Coronation Asset Management (Pty) Ltd. (a South African company), it had sole voting and dispositive power over the 5,642,419 shares it beneficially owned as of December 31, 2020.

(3)	Based on the Schedule 13G filed with the SEC on February 16, 2021 by Dimensional Fund Advisors LP (a Delaware limited partnership), it had sole voting power over 2,714,630 shares and sole power to direct the disposition of 2,898,338 shares it beneficially owned as of December 31, 2020.

(4)	Based on the Schedule 13G filed with the SEC on February 11, 2021 by Massachusetts Financial Services Company (a Delaware company) it had sole voting and dispositive power over the 2,719,033 shares it beneficially owned as of December 31, 2020.

(5)	Based on the Schedule 13G filed with the SEC on February 12, 2021 by Mr. Isam K. Kabbani, it had sole voting and dispositive power over the 2,579,230 shares held by Delmas Invest Holdings S.A (a Saudi Arabia company) over which Mr. Kabbani has beneficial ownership.

(6)	Includes 1,205,100 shares held by the Maccarone Family Partnership L.P. and 341,969 shares held by the Maccarone Revocable Trust.

(7)	Includes 32,641 shares held by Caribbean Dream Limited, a company owned by a trust in which Mr. Cottingham is the principal beneficiary.

(8)	Mr. Nurek and Mr. Van der Merwe are members of our board of directors and board of directors of Trencor. In June 2020, Trencor distributed its remaining 3.0 million shares in the Company to Trencor’s own shareholders. Following the June 2020 distribution of shares, Trencor no longer holds any shares in the Company.

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(9)	Beneficial ownership by a person assumes the exercise of all share options, warrants and rights held by such person, even if not vested. Common shares beneficially owned include the following outstanding share options, restricted share units and performance restricted share units:

Grant Date

					11/16/2011 to																											
				11/12/2015 (10)			5/19/2016			11/30/2016			5/18/2017			11/30/2017			11/30/2018			11/30/2019		5/28/2020		8/26/2020		10/01/2020			
	Share options																														
	Exercise price		$14.17 to $38.36	$	12.23	$	9.70	$	9.75	$	22.95	$	11.15	$	9.13		N/A	N/A	N/A		
	Expiration date		11/15/2021 to			5/19/2026			11/30/2026			5/18/2027			11/30/2027			11/30/2028			11/30/2029		N/A	N/A	N/A		
				11/12/2025																								
	Robert D. Pedersen	119,854			—			36,029			—			—			—			—	—	—	—		
	Michael K. Chan		—			—			—			3,750			4,750			20,000			20,000		—	—	—		
	Olivier Ghesquiere		—			10,000			19,200			—			17,760			40,000			40,000		—	—	—		
	Performance restricted share units																											
	Olivier Ghesquiere		—			—			—			—			—			—			—	—	—	72,957			
	Michael K. Chan		—			—			—			—			—			—			—	—	—	21,887			
	Restricted share units																													
	John A. Maccarone			—			—			—			—			—			—			—	9,604		—	—		
	Olivier Ghesquiere		—			—			—			—			4,440			20,000			30,000		—	—	22,274			
	Robert D. Pedersen		—			—			—			—			—			—			—	9,604		—	—		
	Michael K. Chan		—			—			—			937			1,187			10,000			15,000		—	—	6,682			
	Hyman Shwiel		—			—			—			—			—			—			—	9,604		—	—		
	Dudley R. Cottingham		—			—			—			—			—			—			—	9,604		—	—		
	David M. Nurek		—			—			—			—			—			—			—	9,604		—	—		
	Hennie Van der Merwe		—			—			—			—			—			—			—	9,604		—	—		
	Grace Tang		—			—			—			—			—			—			—	—	6,944		—		

(10)	Robert Pedersen’s outstanding share options that were granted during 2011 to 2015 are comprised of 16,500 shares of $28.54 exercise price, 23,000 shares of $28.05 exercise price, 26,000 shares of $38.36 exercise price, 27,820 shares of $34.14 exercise price and 26,534 shares of $14.17 exercise price that were granted on 11/16/2011, 11/14/2012, 11/14/2013, 11/19/2014 and 11/12/2015, respectively. Expiration date is ten years from the respective grant date.

As of December 31, 2020, based on information available to the Company, 32,641 of our outstanding common shares were held in Bermuda, our domicile and headquarter country, by one holder of record. An aggregate of 18,977,403 of our outstanding common shares trade under secondary, or dual, listing on the JSE. An aggregate of 31,174,310 of our outstanding common shares, which includes 31,167,773 shares held by Cede & Company, were held in the United States by five holders of record. The shares held by Cede & Company, a nominee of the Depository Trust Company, include common shares beneficially owned by holders in the United States and by non-U.S. beneficial owners.

B.	Related Party Transactions

We do not have a corporate policy regarding related party transactions, nor are there any provisions in our memorandum of association or bye-laws regarding related party transactions, other than the provision, as permitted by Bermuda law, that we, or one of our subsidiaries, may enter into a contract in which our directors or officers are directly or indirectly interested if the director or officer discloses his interest to our board of directors at the first opportunity at a meeting of directors or in writing.

Loans to Executive Officers

As permitted by Bermuda law, in the past, we had extended loans to certain employees in connection with their acquisition of our common shares in accordance with our various employees’ share arrangements. As of December 31, 2020, and 2019, no amounts were outstanding on such loans to employees. Currently, there are no loans outstanding to our directors or executive officers, nor will we extend loans to our directors or executive

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officers in the future, in compliance with the requirements of Section 402 of the Sarbanes-Oxley Act of 2002 and Section 13(k) of the Securities Exchange Act of 1934, as amended.

Indemnification of Officers and Directors

We have entered into indemnification agreements with each of our directors and executive officers to give such directors and officers, as well as their immediate family members, additional contractual assurances regarding the scope of indemnification set forth in our bye-laws, and to provide additional procedural protections which may, in some cases, be broader than the specific indemnification provisions contained in our bye-laws. The indemnification agreements may require us, among other things, to indemnify such directors and officers, as well as their immediate family members, against liabilities that may arise by reason of their status or service as directors or officers and to advance expenses as a result of any proceeding against them as to which they could be indemnified.

Agreements with Maccarone Container Fund, LLC

TEML has entered into a management agreement with Maccarone Container Fund, LLC, related to TEML’s management of containers owned by Maccarone Container Fund, LLC effective 2016. Director John Maccarone and his family members are the beneficial owners of Maccarone Container Fund, LLC. In 2020 and 2019, we managed approximately 1,300 TEU (for which we received approximately $17 per year in management fees) for Maccarone Container Fund, LLC.

Relationships and Agreements with Trencor Limited

Trencor Limited, a company traded on the Johannesburg Stock Exchange (the “JSE”) in South Africa, owned approximately 47.5% of our issued and outstanding common shares as of December 31, 2018. On December 11, 2019, we commenced a secondary, or dual, listing of our common shares on the JSE in Johannesburg, South Africa under the symbol “TXT”. Promptly following our dual listing, Trencor distributed approximately 24.3 million of its shares in the Company to Trencor’s own shareholders and these shares are now trading on the JSE. As of December 31, 2019, Trencor held 5.3% or 3.0 million of the Company’s common shares.

In June 2020, Trencor distributed its remaining 3.0 million of our common shares to Trencor’s own shareholders and these shares are now trading on the JSE. Following the June 2020 distribution of shares, Trencor no longer hold any shares in the Company. Hennie Van der Merwe and David M. Nurek, are members of the Company’s board of directors and the board of directors of Trencor.

In September 2020, the Company received $330 from Trencor in exchange for the early distribution of escrow funds that were held under the escrow agreement in relation to our acquisition of LAPCO in December 2019.

The Company’s personnel assisted Trencor with the conversion of the Company’s financial information from U.S. GAAP to IFRS. Trencor paid $145 and $432 for these accounting services in 2020 and 2019, respectively.

Relationships and Agreements with Leased Assets Pool Company Limited

On December 2, 2019, we entered into a stock purchase agreement with TAC Limited, a wholly-owned subsidiary of Trencor, to purchase LAPCO. On December 31, 2019, we completed the acquisition of LAPCO and the purchase price consideration consisted of $65,527 in cash paid to TAC Limited, cash amounts paid by the Company to fully repay LAPCO’s debt facility of $126,289 and transaction costs incurred to complete the transaction of $104. We repaid LAPCO's existing debt at the closing date by refinancing this debt in our existing revolving credit facility. LAPCO owned a fleet of approximately 161,000 TEU of intermodal containers managed by the Company and approximately 3,000 TEU of containers managed by other container lessors. The transaction is substantially an acquisition of LAPCO’s container fleet because substantially all the fair value of the gross assets we acquired (excluding cash) was concentrated in a single identifiable asset which are containers.

On December 31, 2019, the management agreement between the Company and LAPCO was terminated as a result of our acquisition of LAPCO. There were no stated contractual settlement provisions relating to the management agreement. After the acquisition, LAPCO became a wholly-owned subsidiary of the Company effective on December 31, 2019 (see Note 1 (b) “Nature of Business and Summary of Significant Accounting

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Policies – Principles of Consolidation and Variable Interest Entity” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for additional information).

Transactions with Continental Management Ltd.

A member of our board of directors, Dudley R. Cottingham, was a member of the board of directors of Continental Management Ltd (“Continental”) as of December 31, 2018 and became a consultant effective January 1, 2019. Continental is a Bermuda company that provides corporate representation, administration and management services. In 2020, 2019 and 2018, the Company paid $90, $79 and $121, respectively, to Continental primarily for Bermuda government annual fees and registered office fees.

C.	Interests of Experts and Counsel Not applicable.

ITEM 8.	FINANCIAL INFORMATION

A.	Consolidated Statements and Other Financial Information Financial Statements

Our audited consolidated financial statements which are comprised of our consolidated balance sheets as of December 31, 2020 and 2019 and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2020 and the notes to those statements and the report of independent registered public accounting firm thereon, are included under Item 18, “Financial Statements” of this Annual Report on Form 20-F. Also, see Item 5, “Operating and Financial Review and Prospects” for additional financial information.

Legal Proceedings

See Item 4, “Information on the Company -- Business Overview—Legal Proceedings” for information on our legal proceedings which may have, or have had in the recent past, significant effects on our financial position or profitability.

Dividend Policy

We are not required to pay dividends, and our shareholders do not have contractual or other rights, to receive dividends. The timing and amount of future dividends will be at the discretion of our board of directors and will be dependent on our future operating results and the cash requirements of our business. There are a number of factors that can affect our ability to pay dividends and there is no guarantee that we will pay dividends in any given year. See Item 3, “Key Information -- Risk Factors,” for a discussion of these factors. Our board of directors may decide, in its discretion, at any time, to decrease the amount of dividends, otherwise modify or repeal the dividend policy or discontinue entirely the payment of dividends.

In addition, we will not pay dividends in the event we are not allowed to do so under Bermuda law, are in default under (or such payment would cause a default under) the revolving credit facility of TL, or if such payment would cause us to breach any of our covenants. These covenants include certain financial covenants, which would be directly affected by the payment of dividends, such as a minimum tangible net worth level (which level would decrease by the amount of any dividend paid) and a maximum ratio of consolidated funded debt to consolidated tangible net worth (which amount would decrease by the amount of any dividend paid). Please see Item 5, “Operating and Financial Review and Prospects—Liquidity and Capital Resources” for a description of these covenants. Furthermore, since we are a holding company, substantially all of the assets shown on our consolidated balance sheet are held by our subsidiaries. Accordingly, our earnings and cash flow and our ability to pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends.

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In 2014, we began calculating our earnings and profits under U.S. federal income tax principles for purposes of determining whether distributions exceed our current and accumulated earnings and profits. We believe that some or all of our distributions will be treated as a return of capital to our U.S. shareholders and we report each quarter on our website at www.textainer.com whether that quarter’s distribution exceeds our current accumulated earnings and profits. The taxability of the dividends does not impact our corporate tax position. You should consult with a tax advisor to determine the proper tax treatment of these distributions.

B.	Significant Changes

Except as disclosed in the Annual Report on Form 20-F, no significant changes have occurred since December 31, 2020, which is the date of our audited consolidated financial statements included in this Annual Report on Form 20-F.

ITEM 9.	THE OFFER AND LISTING

A.	Offer and Listing Details Trading Markets and Price History

Our common shares have been primary listed on the NYSE under the symbol “TGH” since October 10, 2007. Prior to that time, there was no public market for our common shares. Our common shares are secondary or dual listed on the JSE in Johannesburg, South Africa under the symbol “TXT” since December 2019. The following table sets forth the high and low closing sale prices, as reported on the NYSE for our common shares for the periods indicated:

		High		Low	
Annual Highs and Lows:							
2020	$	19.82		$	6.51		
2019	$	13.95		$	6.74		
2018	$	25.85		$	9.30		
2017	$	23.55		$	8.50		
2016	$	15.72		$	7.05		
Quarterly Highs and Lows (two most recent full financial years):							
Fourth quarter 2020	$	19.82		$	13.96		
Third quarter 2020	$	14.87		$	7.70		
Second quarter 2020	$	9.54		$	6.88		
First quarter 2020	$	10.95		$	6.51		
Fourth quarter 2019	$	11.40		$	8.68		
Third quarter 2019	$	11.05		$	6.74		
Second quarter 2019	$	10.76		$	9.26		
First quarter 2019	$	13.95		$	9.65		
Monthly Highs and Lows (over the most recent six month period):							
February 2021	$	28.82		$	17.94		
January 2021	$	20.97		$	17.73		
December 2020	$	19.82		$	17.60		
November 2020	$	19.25		$	14.74		
October 2020	$	17.20		$	13.96		
September 2020	$	14.87		$	11.66		

Transfer Agent

The transfer agent and registrar for our common shares is Computershare Shareholder Services, Inc. and its fully owned subsidiary Computershare Trust Company, N.A., having its principal office at 250 Royall Street, Canton, MA 02021. Computershare Investor Services (PTY) LTD and Computershare (PTY) LTD provide administration services and act as the nominee registrar for the common shares traded on the JSE. The address of

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Computershare Investor Services (PTY) LTD and Computershare (PTY) LTD is 15 Biermann Avenue, Rosebank 2196, South Africa.

B.	Plan of Distribution Not applicable.

C.	Markets

See Item 9, “Offer and Listing Details – Trading Markets” above.

D.	Selling Shareholders Not applicable.

E.	Dilution

Not applicable.

F.	Expenses of the Issue Not applicable.

ITEM 10.	ADDITIONAL INFORMATION

A.	Share Capital Not applicable.

B.	Memorandum and Articles of Association

We are an exempted company incorporated under the laws of Bermuda. We are registered with the Registrar of Companies in Bermuda under registration number EC18896. We were incorporated on December 3, 1993 under the name Textainer Group Holdings Limited, prior to that time our business was based in Panama. Our headquarters office is located at 16 Par-La-Ville Road, Hamilton HM 08 Bermuda.

We incorporate by reference into this Annual Report on Form 20-F the description of our memorandum of association and our bye-laws contained in “Description of Share Capital” of our Registration Statement on Form F-1 filed with the SEC on September 26, 2007. Such information is a summary which does not purport to be complete and is qualified in its entirety by reference to our memorandum of association and our bye-laws, copies of which have been filed as Exhibits 3.1 and 3.2, respectively, to such Registration Statement.

C.	Material Contracts

We have not entered into any material contracts during the two years immediately preceding the date of this Annual Report on Form 20-F other than contracts entered into in the ordinary course of business and other than those described in Item 4, “Information on the Company—History and Development of the Company—Significant Events” or elsewhere in this Annual Report on Form 20-F.

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D.	Exchange Controls

Trencor, a South African company listed on the JSE, had 5.3% and 0% of our issued and outstanding shares as of December 31, 2019 and 2020, respectively. South Africa’s exchange control regulations provide for restrictions on exporting capital from South Africa and transactions between South African residents (including corporations) and non-residents are subject to these exchange controls. These restrictions required Trencor to obtain approval from South African exchange control authorities before engaging in transactions that resulted in dilution of their share interest in us through their sale of their own shareholdings. While the South African government has, to some extent, relaxed exchange controls in recent years, it is difficult to predict whether or how it will further relax or abolish exchange control measures in the future. In addition, Trencor was required to comply with JSE Listings Requirements in connection with its holding or sale of our common shares.

E.	Taxation

The following discussion is a summary of the material Bermuda and U.S. federal income tax consequences of an investment in our common shares. This discussion is not exhaustive of all possible tax considerations. In particular, this discussion does not address the tax consequences under state, local, and other national (e.g., non-Bermuda and non-U.S.) tax laws. Accordingly, we urge you to consult your own tax advisor regarding your particular tax circumstances and the tax consequences under state, local, and other national tax laws. The following discussion is based upon laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change, possibly with retroactive effect.

Bermuda Tax Consequences

The following is a summary of the material Bermuda tax consequences of an investment in our common shares. The following discussion is not exhaustive of all possible tax considerations. We urge you to consult your own tax advisor regarding your particular tax circumstances.

Taxation of the Companies

We and our Bermuda subsidiaries have obtained an assurance from the Bermuda Minister of Finance under the Exempted Undertakings Tax Protection Act 1966 that, if any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain, or appreciation, or any tax in the nature of estate duty or inheritance tax, then such tax will not until March 31, 2035 be applicable to us or any of our operations, or to any of our shares, debentures, or other obligations, except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by us in respect of real property owned or leased by us in Bermuda. As an exempted company, we are required to pay an annual Bermuda government fee based on our assessable capital.

Taxation of Holders

Currently, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by our shareholders in respect of our common shares. The issue, transfer, or redemption of our common shares is not currently subject to stamp duty.

United States Federal Income Tax Consequences

The following is a summary of the material U.S. federal income tax consequences of an investment in our common shares. The following discussion is not exhaustive of all possible tax considerations. This summary is based upon the Code, regulations promulgated under the Code by the U.S. Treasury Department (including proposed and temporary regulations), rulings, current administrative interpretations and official pronouncements of the IRS, and judicial decisions, all as currently available and all of which are subject to differing interpretations or to change, possibly with retroactive effect. Any such change could materially and adversely affect the tax consequences described below. No assurance can be given that the IRS will not assert, or that a court will not sustain, a position contrary to any of the tax consequences described below.

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This summary does not address all aspects of U.S. federal income taxation that may be important to a particular holder in light of its investment or tax circumstances or to holders subject to special tax rules, such as banks; financial institutions; insurance companies; dealers in stocks, securities, or currencies; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; tax-exempt organizations; real estate investment trusts; regulated investment companies; qualified retirement plans, individual retirement accounts, and other tax-deferred accounts; certain former citizens or long-term residents of the U.S.; persons subject to the alternative minimum tax; persons holding common shares as part of a straddle, hedge, conversion transaction, or other integrated transaction; persons who acquired common shares pursuant to the exercise of any employee share option or otherwise as compensation for services; persons actually or constructively holding 10% or more of our voting shares; and U.S. Holders (as defined below) whose functional currency is other than the U.S. dollar.

This discussion is not a comprehensive description of all of the U.S. federal tax consequences that may be relevant with respect to an investment in common shares. We urge you to consult your own tax advisor regarding your particular circumstances and the U.S. federal income and estate tax consequences to you of owning and disposing of common shares, as well as any tax consequences arising under the laws of any state, local, foreign or other tax jurisdiction and the possible effects of changes in U.S. federal or other tax laws.

This summary is directed solely to persons who hold their common shares as capital assets within the meaning of Section 1221 of the Code, which includes property held for investment. For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of common shares that is any of the following:

•	a citizen or resident of the U.S. or someone treated as a U.S. citizen or resident for U.S. federal income tax purposes;

•	a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof, or the District of Columbia;

•	an estate, the income of which is subject to U.S. federal income taxation regardless of its source;

•	a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all substantial decisions of the trust; or

•	a trust in existence on August 20, 1996 that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

The term “Non-U.S. Holder” means a beneficial owner of common shares that is not a U.S. Holder or an entity treated as a partnership for U.S. federal income tax purposes. As described in “—Taxation of Non-U.S. Holders” below, the tax consequences to a Non-U.S. Holder may differ substantially from the tax consequences to a U.S. Holder.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of common shares, the U.S. federal income tax consequences to a partner in the partnership will depend on the status of the partner and the activities of the partnership. A holder of common shares that is a partnership and the partners in such partnership should consult their own tax advisors regarding the U.S. federal income tax consequences of an investment in common shares.

Taxation of the Companies

Textainer and Non-U.S. Subsidiaries

A non-U.S. corporation deemed to be engaged in a trade or business within the U.S. is subject to U.S. federal income tax on income which is treated as effectively connected with the conduct of that trade or business. Such income tax, if imposed, is based on effectively connected income computed in a manner similar to the manner in which the income of a domestic corporation is computed, except that a foreign corporation will be entitled to deductions and credits for a taxable year only if it timely files a U.S. federal income tax return for that year. In addition, a non-U.S. corporation may be subject to the U.S. federal branch profits tax on the portion of its effectively connected earnings and profits, with certain adjustments, deemed repatriated out of the U.S. Currently, the maximum U.S. federal income tax rates are 21% for a corporation’s effectively connected income and 30% for the branch profits tax.

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A portion of our income is treated as effectively connected with the conduct of a trade or business within the U.S., and such effectively connected income is subject to U.S. federal income tax. U.S. federal income tax returns have been filed declaring such effectively connected income.

The determination of whether a person is engaged in a U.S. trade or business is based on a highly factual analysis. In general, there is no clear test as to the nature and scope of activities that constitute being engaged in a U.S. trade or business, and it is unclear how a court would construe the existing authorities with respect to our activities. Accordingly, it is possible that the IRS could assert that a significantly greater portion of our income than we currently report is derived from the conduct of a U.S. trade or business and therefore, is effectively connected income that is subject to U.S. federal income tax.

In addition to U.S. federal income tax on income associated with a U.S. trade or business, we are also subject to a 30% U.S. withholding tax imposed on the gross amount of certain “fixed or determinable annual or periodic gains, profits and income” derived from sources within the U.S. (such as rents, dividends and interest on investments), to the extent such amounts are not effectively connected income. This 30% U.S. withholding tax is subject to reduction by applicable treaties. Distributions by our U.S. subsidiaries to us are expected to be subject to this 30% U.S. withholding tax.

U.S. Subsidiaries

Our U.S. subsidiaries are subject to U.S. federal income tax on their worldwide income subject to reduction by allowable foreign tax credits. Certain foreign sourced income earned by the U.S. subsidiaries may be taxed at a rate lower than 21%.

Transfer Pricing

Under U.S. federal income tax laws, transactions among taxpayers that are owned or controlled directly or indirectly by the same interests generally must be at arm’s-length terms. The IRS may distribute, apportion, or allocate gross income, deductions, credits, or allowances between or among such taxpayers if it determines that such transactions are not at arm’s-length terms and that such distribution, apportionment, or allocation is necessary in order to clearly reflect the income of any of such taxpayers. Additionally, if we have not met the requirements of the new CBC Regulations (effective for our taxable years beginning on or after June 30, 2016), we may become subject to penalties and the IRS may pursue a further investigation or audit of our operations, which may result in an adjustment to our transfer pricing policies as described in the immediately preceding sentence. In such a situation, we may incur increased tax liability, possibly materially, thereby reducing our profitability and cash flows.

Taxation of U.S. Holders

The discussion in “—Distributions on Common Shares” and “—Dispositions of Common Shares” below assumes that we will not be treated as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. For a discussion of the rules that apply if we are treated as a PFIC, see “—Passive Foreign Investment Company” below.

Distributions on Common Shares

General. Subject to the discussion in “—Passive Foreign Investment Company” below, if you actually or constructively receive a distribution on common shares, you must include the distribution in gross income as a taxable dividend on the date of your receipt of the distribution, but only to the extent of our current or accumulated earnings and profits, as calculated under U.S. federal income tax principles. Such amount must be included without reduction for any foreign taxes withheld. Dividends paid by us will not be eligible for the dividends received deduction allowed to corporations with respect to dividends received from certain domestic corporations. Dividends paid by us may or may not be eligible for preferential rates applicable to qualified dividend income, as described below. In addition, certain non-corporate U.S. Holders may be subject to an additional 3.8% Medicare tax on dividend income whether or not it is “qualified dividend income.” See “—Medicare Tax” below.

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To the extent a distribution exceeds our current and accumulated earnings and profits, it will be treated first as a non-taxable return of capital to the extent of your adjusted tax basis in the common shares, and thereafter as capital gain. Preferential tax rates for long-term capital gain may be applicable to non-corporate U.S. Holders. In addition, certain non-corporate U.S. Holders may be subject to an additional 3.8% Medicare tax on capital gain. See “—Medicare Tax” below.

Qualified Dividend Income. With respect to non-corporate U.S. Holders (i.e., individuals, trusts, and estates), the maximum individual U.S. federal income tax rate applicable to “qualified dividend income” (“QDI”) generally is 20%. Among other requirements, dividends will be treated as QDI if either (i) our common shares are readily tradable on an established securities market in the U.S., or (ii) we are eligible for the benefits of a comprehensive income tax treaty with the U.S. which includes an information exchange program and which is determined to be satisfactory by the Secretary of the U.S. Treasury. The income tax treaty between the U.S. and Bermuda (the jurisdiction of our incorporation) does not qualify for these purposes. However, subject to the discussion below, under “—Passive Foreign Investment Company—Mark-to-Market Election,” we expect that under current administrative guidance, our common shares are “readily tradable” on an established securities market as a result of being listed on the NYSE.

In addition, for dividends to be treated as QDI, we must not be a PFIC (as discussed below) for either the taxable year in which the dividend was paid or the preceding taxable year. We do not believe that we were a PFIC for our prior taxable year and we intend to conduct our business so that we should not be treated as a PFIC for our current taxable year or any future taxable year. However, because the PFIC determination is highly fact intensive and made at the end of each taxable year, it is possible that we may be a PFIC for the current or any future taxable year. Please see the discussion under “—Passive Foreign Investment Company” below. Additionally, in order to qualify for QDI treatment, you generally must have held the common shares for more than 60 days during the 121-day period beginning 60 days prior to the ex-dividend date. However, your holding period will be reduced for any period during which the risk of loss is diminished.

Since the QDI rules are complex, you should consult your own tax advisor regarding the availability of the preferential tax rates for dividends paid on common shares.

In-Kind Distributions. Generally, distributions to you of new common shares or rights to subscribe for new common shares that are received as part of a pro rata distribution to all of our shareholders will not be subject to U.S. federal income tax. The adjusted tax basis of the new common shares or rights so received will be determined by allocating your adjusted tax basis in the old common shares between the old common shares and the new common shares or rights received, based on their relative fair market values on the date of distribution. However, in the case of a distribution of rights to subscribe for common shares, the adjusted tax basis of the rights will be zero if the fair market value of the rights is less than 15% of the fair market value of the old common shares on the date of distribution and you do not make an election to determine the adjusted tax basis of the rights by allocation as described above. Your holding period for the new common shares or rights should include the holding period for the old common shares on which the distribution was made.

Foreign Tax Credits. Subject to certain conditions and limitations, any foreign taxes paid on or withheld from distributions from us and not refundable to you may be credited against your U.S. federal income tax liability or, alternatively, may be deducted from your taxable income. This election is made on a year-by-year basis and applies to all foreign taxes paid by you or withheld from you that year.

Distributions will constitute foreign source income for foreign tax credit limitation purposes. The foreign tax credit limitation is calculated separately with respect to two specific classes of income. For this purpose, distributions characterized as dividends distributed by us are expected to constitute “passive category income” or, in the case of certain U.S. Holders, “general category income.” Special limitations may apply if a dividend is treated as QDI (as defined above).

Since the rules governing foreign tax credits are complex, you should consult your own tax advisor regarding the availability of foreign tax credits in your particular circumstances.

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Dispositions of Common Shares

Subject to the discussion in “—Passive Foreign Investment Company” below, you will recognize taxable gain or loss on the sale or other taxable disposition of common shares equal to the difference between the U.S. dollar value of (i) the amount realized on the disposition (i.e., the amount of cash plus the fair market value of any property received), and (ii) your adjusted tax basis in the common shares. Such gain or loss will be capital gain or loss.

If you have held the common shares for more than one year at the time of disposition, such capital gain or loss will be long-term capital gain or loss. Preferential tax rates for long-term capital gain apply for non-corporate U.S. Holders. The maximum rate for individuals on net long-term capital gain is currently 20%. In the case of a corporation, capital gains are taxed at the same rate as ordinary income, the maximum rate for which is currently 35%. If you have held the common shares for one year or less, such capital gain or loss will be short-term capital gain or loss taxable as ordinary income. The deductibility of capital losses is subject to limitations. In addition, certain U.S. persons, including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax on capital gain income. See “—Medicare Tax” below.

Any gain or loss recognized on the disposition of common shares is not expected to give rise to foreign source income for U.S. foreign tax credit purposes.

You should consult your own tax advisor regarding the U.S. federal income tax consequences if you receive currency other than U.S. dollars upon the disposition of common shares.

Passive Foreign Investment Company

We will be a PFIC under Section 1297 of the Code if, for a taxable year, either (a) 75% or more of our gross income for such taxable year is passive income (the “income test”) or (b) 50% or more of the average percentage, generally determined by fair market value, of our assets during such taxable year either produce passive income or are held for the production of passive income (the “asset test”). “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. However, rents meeting certain requirements are treated as derived from the conduct of an active trade or business and are not treated as passive income.

Certain “look through” rules apply for purposes of the income and asset tests described above. If we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, we will be treated as if we (a) held directly a proportionate share of the other corporation’s assets, and

(b)	received directly a proportionate share of the other corporation’s income. In addition, passive income does not include any interest, dividends, rents, or royalties that are received or accrued by us from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to income of such related person that is not passive income.

Under the income and asset tests, whether or not we are a PFIC will be determined annually based upon the composition of our income and the composition and valuation of our assets, all of which are subject to change. In analyzing whether we should be treated as a PFIC, we are relying on the amount and character of our projected revenues and the amount and character of our projected capital expenditures, the valuation of our assets, and our election to treat certain of our subsidiaries as disregarded entities for U.S. federal income tax purposes. If the amount and character of our actual revenues and capital expenditures do not match our projections, we may be a PFIC. In these calculations, we have valued our intangible assets based on our market capitalization, determined using the market price of our common shares. Such market price may fluctuate. If our market capitalization is less than anticipated or subsequently declines, this will decrease the value of our intangible assets and we may be a PFIC. Furthermore, we have made a number of assumptions regarding the value of our intangible assets. We believe our valuation approach is reasonable. However, it is possible that the IRS could challenge the valuation of our intangible assets, which may result in our being a PFIC.

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We do not believe that we were a PFIC for our prior taxable year and we intend to conduct our business so that we should not be treated as a PFIC for our current taxable year or any future taxable year. However, because the PFIC determination is highly fact intensive and made at the end of each taxable year, it is possible that we may be a PFIC for the current or any future taxable year or that the IRS may challenge our determination concerning our PFIC status.

Default PFIC Rules under Section 1291 of the Code. If we are a PFIC, the U.S. federal income tax consequences to a U.S. Holder of an investment in common shares will depend on whether such U.S. Holder is permitted to make and makes (i) an election to treat us as a qualified electing fund (“QEF”) under Section 1295 of the Code (a “QEF Election”) or (ii) a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”). A U.S. Holder owning common shares while we were or are a PFIC that has not made either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Holder.”

If you are a Non-Electing U.S. Holder, you will be subject to the default tax rules of Section 1291 of the Code with respect to:

•	any “excess distribution” paid on common shares, which means the excess (if any) of the total distributions received by you during the current taxable year over 125% of the average distributions received by you during the three preceding taxable years (or during the portion of your holding period for the common shares prior to the current taxable year, if shorter); and

•	any gain recognized on the sale or other taxable disposition (including a pledge) of common shares.

Under these default tax rules:

•	any excess distribution or gain will be allocated ratably over your holding period for the common shares;

•	the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC will be treated as ordinary income in the current year;

•	the amount allocated to each of the other years will be treated as ordinary income and taxed at the highest applicable tax rate in effect for that year; and

•	the resulting tax liability from any such prior years will be subject to the interest charge applicable to underpayments of tax.

In addition, notwithstanding any election you may make, dividends that you receive from us will not be eligible for the preferential tax rates applicable to QDI (as discussed above in “—Distributions on Common Shares”) if we are a PFIC either in the taxable year of the distribution or the preceding taxable year, but will instead be taxable at rates applicable to ordinary income.

Special rules for Non-Electing U.S. Holders will apply to determine U.S. foreign tax credits with respect to foreign taxes imposed on distributions on common shares.

If we are a PFIC for any taxable year during which you hold common shares, we will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold common shares, regardless of whether we actually continue to be a PFIC.

QEF Election. We currently do not intend to prepare or provide you with certain tax information that would permit you to make a QEF Election to avoid the adverse tax consequences associated with owning PFIC stock.

Mark-to-Market Election. U.S. Holders may make a Mark-to-Market Election, but only if the common shares are marketable stock. The common shares will be “marketable stock” as long as they remain listed on the NYSE and are regularly traded. Shares are “regularly traded” for any calendar year during which it is traded (other than in de minimis quantities) on at least fifteen days during each calendar quarter. There can be no assurances, however, that our common shares will be treated, or continue to be treated, as regularly traded.

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If you make a Mark-to-Market Election, you generally will not be subject to the default rules of Section 1291 of the Code discussed above. Rather, you will be required to recognize ordinary income for any increase in the fair market value of the common shares for each taxable year that we are a PFIC. You will also be allowed to deduct as an ordinary loss any decrease in the fair market value to the extent of net marked-to-market gain previously included in prior years. Your adjusted tax basis in the common shares will be adjusted to reflect the amount included or deducted.

The Mark-to-Market Election will be effective for the taxable year for which the election is made and all subsequent taxable years, unless the common shares cease to be marketable stock or the IRS consents to the revocation of the election. You should consult your own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

Since the PFIC rules are complex, you should consult your own tax advisor regarding them and how they may affect the U.S. federal income tax consequences of an investment in common shares.

Medicare Tax

Certain U.S. persons, including individuals, estates and trusts, may be required to pay an additional 3.8% on, among other things, dividends and capital gains from the sale or disposition of Common Shares. For individuals, the additional Medicare tax applies to the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are allocable to such income. U.S. Holders likely will not be able to credit foreign taxes against the 3.8% Medicare tax. You should consult your tax advisors regarding the implications of the additional Medicare tax resulting from your ownership and disposition of our common shares.

Information Reporting and Backup Withholding

Information reporting requirements will apply to distributions on common shares or proceeds from the disposition of common shares paid within the U.S. (and, in certain cases, outside the U.S.) to a U.S. Holder unless such U.S. Holder is an exempt recipient, such as a corporation. Furthermore, backup withholding (currently at 28%) may apply to such amounts unless such U.S. Holder (i) is an exempt recipient that, if required, establishes its right to an exemption, or (ii) provides its taxpayer identification number, certifies that it is not currently subject to backup withholding, and complies with other applicable requirements. A U.S. Holder may avoid backup withholding if it furnishes a properly completed IRS Form W-9 and is able to make the required certifications.

Backup withholding is not an additional tax. Rather, amounts withheld under the backup withholding rules may be credited against your U.S. federal income tax liability. Furthermore, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

Information Reporting Regarding PFICs and Specified Foreign Financial Assets

If we are a PFIC, all U.S. Holders may be required to file annual tax returns (including on Form 8621) containing such information as the U.S. Treasury requires.

U.S. Holders who are individuals will be subject to reporting obligations with respect to their common shares if they do not hold their common shares in an account maintained by a financial institution and the aggregate value of their common shares and certain other “specified foreign financial assets” exceeds $50,000. Significant penalties can apply if a U.S. Holder is required to disclose its common shares under these rules and fails to do so.

In the event a U.S. Holder does not file the information reports described above relating to ownership of a PFIC or disclosure of specified foreign financial assets, the statute of limitations on the assessment and collection of U.S. federal income taxes of such U.S. holder for the related tax year will not close before such report is filed.

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If you are a U.S. Holder, you are urged to consult with your own tax advisor regarding the application of the PFIC and specified foreign financial assets information reporting requirements and related statute of limitations tolling provisions with respect to our common shares.

Taxation of Non-U.S. Holders

Distributions on Common Shares

Subject to the discussion in “—Information Reporting and Backup Withholding” below, as a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax, including withholding tax, on distributions received on common shares, unless the distributions are effectively connected with a trade or business that you conduct in the U.S. and (if an applicable income tax treaty so requires) attributable to a permanent establishment that you maintain in the U.S.

If distributions are effectively connected with a U.S. trade or business and (if applicable) attributable to a U.S. permanent establishment, you will be subject to tax on such distributions in the same manner as a U.S. Holder, as described in “Taxation of U.S. Holders – Distributions on Common Shares” above. In addition, any such distributions received by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Dispositions of Common Shares

Subject to the discussion in “—Information Reporting and Backup Withholding” below, as a Non-U.S. Holder, you generally will not be subject to U.S. federal income tax, including withholding tax, on any gain recognized on a sale or other taxable disposition of common shares, unless (i) the gain is effectively connected with a trade or business that you conduct in the U.S. and (if an applicable income tax treaty so requires) attributable to a permanent establishment that you maintain in the U.S., or (ii) you are an individual and are present in the U.S. for at least 183 days in the taxable year of the disposition, and certain other conditions are met.

If you meet the test in clause (i) above, you generally will be subject to tax on any gain that is effectively connected with your conduct of a trade or business in the U.S. in the same manner as a U.S. Holder, as described in “Taxation of U.S. Holders – Dispositions of Common Shares” above. Effectively connected gain realized by a corporate Non-U.S. Holder may also, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

If you meet the test in clause (ii) above, you generally will be subject to tax at a 30% rate on the amount by which your U.S. source capital gain exceeds your U.S. source capital loss during the taxable year.

Information Reporting and Backup Withholding

Payments to Non-U.S. Holders of distributions on, or proceeds from the disposition of, common shares are generally exempt from information reporting and backup withholding. However, a Non-U.S. Holder may be required to establish that exemption by providing certification of non-U.S. status on an appropriate IRS Form W-8.

Backup withholding is not an additional tax. Rather, amounts withheld under the backup withholding rules may be credited against your U.S. federal income tax liability. Furthermore, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

F.	Dividends and Paying Agents Not applicable.

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G.	Statement by Experts Not applicable.

H.	Documents on Display

Whenever a reference is made in this Annual Report on Form 20-F to any contract, agreement or other document, the reference may not be complete, and you should refer to the copy of that contract, agreement or other document filed as an exhibit to one of our previous SEC filings. You can read our SEC filings over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. Copies of reports and other information may also be inspected in the offices of the NYSE, 20 Broad Street, New York, New York 10005.

I.	Subsidiary Information Not applicable.

ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of changes in value of a financial instrument, derivative or non-derivative, caused by fluctuations in foreign exchange rates and interest rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.

Foreign Exchange Rate Risk. Although we have significant foreign-based operations, the U.S. dollar is our primary operating currency. Thus, substantially all of our revenue and the majority of our expenses in 2020, 2019 and 2018 were denominated in U.S. dollars. During 2020, 2019 and 2018, 28%, 23% and 21%, respectively, of our direct container expenses – owned fleet were paid in up to 20 different foreign currencies, respectively. We do not hedge these container expenses as there are no significant payments made in any one foreign currency. Foreign exchange fluctuations did not materially impact our financial results in those periods.

Interest Rate Risk. We have entered into various interest rate swap, and cap agreements to mitigate our exposure associated with our variable rate debt.

The swap agreements involve payments by us to counterparties at fixed rates in return for receipts based upon variable rates indexed to LIBOR.

As of December 31, 2020 and 2019, certain of our interest rate swap agreements are designated as cash flow hedges for accounting purposes, and any unrealized gains or losses related to the changes in fair value are recognized in accumulated comprehensive income and re-classed to interest expense as they are realized. As of December 31, 2018, none of the derivative instruments we have entered into qualify for hedge accounting. The fair value of the derivative instruments not designated as cash flow hedges are measured at each of these balance sheet dates and the change in fair value is recorded in the consolidated statements of operations as unrealized gain (loss) on derivative instruments, net and reclassified to realized gain (loss) on derivative instruments, net as they are realized.

We utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs which are observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs which are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, which include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Level 3 inputs which are unobservable inputs that reflect the reporting entity’s own assumptions.

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We use the exchange price notion, which is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. Therefore, the definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).

Our liability valuation reflects our credit standing and the credit standing of the counterparties to the interest rate swaps and caps. The valuation technique we utilized to calculate the fair value of the interest rate swaps and caps was the income approach. This approach represents the present value of future cash flows based upon current market expectations.

The notional amount of the interest rate swap agreements was $1,304,250 as of December 31, 2020, with expiration dates between April 2021 and April 2027. We pay fixed rates between 0.17% and 2.94% under the interest rate swap agreements. The net fair value of these agreements was a liability of $29,235 and an asset of $47 as of December 31, 2020.

We have one interest rate cap agreement which has a notional amount of $30,000 as of December 31, 2020, with expiration date in December 2021.

Based on the average debt balances and the notional amounts of our derivative instruments for the year ended December 31, 2020, it is estimated that a 1% increase in interest rates would result in a net increase of $8,009 in interest expense and realized gain on derivative instruments, net. It would also result in an increase in the fair value of derivative instruments, net of $8,299.

Quantitative and Qualitative Disclosures About Credit Risk

We maintain detailed credit records about our container lessees. Our credit policy sets different maximum exposure limits for our container lessees. Credit criteria may include, but are not limited to, container lessee trade route, country, social and political climate, assessments of net worth, asset ownership, bank and trade credit references, credit bureau reports, including those from Dynamar B.V. or “Dynamar,” and Lloyd’s Marine Intelligence Unit (common credit reporting agencies used in the maritime sector), operational history and financial strength. We monitor our container lessees’ performance and our lease exposures on an ongoing basis, and our credit management processes are aided by the long payment experience we have with most of our container lessees and our broad network of long-standing relationships in the shipping industry that provide current information about our container lessees. In managing this risk, we also make an allowance for doubtful accounts on our accounts receivable. The allowance for doubtful accounts is developed based on two key components:

•	specific reserves for receivables which are impaired for which management believes full collection is doubtful; and

•	general reserves for estimated losses inherent in the receivables based upon historical trends and age of the balances.

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As of December 31, 2020, approximately 98.0% of gross accounts receivable for our total fleet and 99.8% of the gross finance lease receivables were from container lessees and customers outside of the U.S. Customers in Switzerland, France, Taiwan, PRC (including Hong Kong) and Singapore accounted for approximately 20.5%, 12.7%, 12.3%, 11.8% and 11.0%, respectively, of our total fleet container lease billings for 2020. Customers in no other country accounted for greater than 10.0% of our total fleet container lease billings for the same period.

An allowance for doubtful accounts of $2,663 has been established against billed accounts receivables as of December 31, 2020 for our total fleet, of which $2,183 pertains to our owned fleet. During 2020, receivable write-offs from the allowance for doubtful accounts totaled $487 for total fleet, of which $394 pertains to our owned fleet. Due to the COVID-19 pandemic, we may be unable to collect receivables from those shipping line customers that may be significantly impacted by COVID-19. While we are not yet through the pandemic, the financial performance of our customers has generally held up better than anticipated since our customers continue to benefit from recent high cargo volumes and high freight rates and we will continue to closely monitor our customers’ payment performance.

We adopted ASU 2016-13 during 2020 and an allowance for credit losses of $1,333 and $424 have been established to estimate expected lifetime credit losses against our net investment in finance leases and container leaseback financing receivable, respectively, as of December 31, 2020.

For further discussion, see Note 1 “Nature of Business and Summary of Significant Accounting Policies” and Note 6 “Allowance for Credit Losses” to our consolidated statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F.

ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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PART II

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

None.

ITEM 15.	CONTROLS AND PROCEDURES

A.	Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2020.

The “disclosure controls and procedures” means our controls and other procedures that are designed to provide reasonable assurance that the information required to be disclosed by us in the reports that we filed or submitted to the SEC, such as this Annual Report on Form 20-F, was (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, it was concluded that, as of such date, the disclosure controls and procedures were effective as of December 31, 2020.

B.	Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Management, including our Chief Executive Officer and Chief Financial Officer under the oversight of our Board of Directors, assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, management used the criteria for effective internal control over financial reporting described in “Internal Control-Integrated Framework (2013),” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management concluded that our internal control over financial reporting was effective for the year ended December 31, 2020.

All internal control systems and procedures, no matter how well designed, have inherent limitations. Therefore, even those internal control systems and procedures determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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C.	Report of the Registered Public Accounting Firm

Our internal control over financial reporting as of December 31, 2020 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included under Item 18, “Financial Statements” on page F-3 in this Annual Report on Form 20-F.

ITEM 16.	[RESERVED]

ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT

In accordance with NYSE rules, we have an audit committee responsible for advising the board regarding the selection of independent auditors and evaluating our internal controls. As a foreign private issuer, we are not required to comply with NYSE requirements that our audit committee has a minimum of three members and that all of our audit committee members satisfy the NYSE’s requirements for independence. Our audit committee has four members, Mr. Shwiel, Mr. Cottingham, Mr. Nurek and Ms. Tang. Our Board of Directors determined that all members of the Audit Committee are independent as that term is defined in Rule 10A-3 under the Exchange Act. The board affirmatively determined that Mr. Shwiel, Mr. Cottingham and Ms. Tang are audit committee financial experts. Mr. Shwiel is also the chairman of our board of directors. Our board of directors has adopted an audit committee charter effective October 9, 2007.

ITEM 16B.	CODE OF ETHICS

We have adopted the Textainer Group Holdings Limited Code of Business Conduct and Ethics (the “Code of Business Conduct and Ethics”), which covers members of our board of directors and all of our employees (including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions).

The Code of Business Conduct and Ethics addresses, among other things, the following items:

•	honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

•	full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;

•	compliance with applicable governmental laws, rules and regulations;

•	the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and

•	accountability for adherence to the code.

During 2020, no waivers or amendments were made to the Code of Business Conduct and Ethics for any of our directors or executive officers. We have posted the text of the Code of Business Conduct and Ethics on our website at www.textainer.com.

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ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our audit committee pre-approves all services provided by our principal accountants, KPMG LLP. All of the services and fees described below were reviewed and pre-approved by our audit committee. Our audit committee has delegated to the chairman of the audit committee certain limited authority to grant pre-approvals. These decisions to pre-approve a service must be presented to the full audit committee at its next scheduled meeting.

The following is a summary of the fees billed to us by our principal accountants for professional services rendered for 2020 and 2019:

Fee Category	2020				2019			
		Fees				Fees		
Audit Fees										
		$	1,888		$	1,792			
Audit-Related Fees			235			30			
Tax Fees			8			6			
Total Fees	$	2,131		$	1,828			

Audit Fees-- Consists of fees billed for professional services rendered for the audit of our financial statements and services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.

Audit-Related Fees—Consists of fees for attestation related services other than those described above as Audit fees. Fees for both 2020 and 2019 were related to the performance of agreed upon procedures on certain specific lender requirements.

Tax Fees-- Consists of fees billed for professional services for tax compliance, tax advice and tax planning.

ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

The disclosure required by Rule 10A-3(b)(1)(iv)(D) under the Exchange Act regarding exemption from the listing standards for audit committee is not applicable to the Company’s audit committee. One of the four members of our audit committee (Mr. Nurek) is a director of Trencor. Our Board determined that Mr. Nurek is independent as that term is defined in Rule 10A-3 under the Exchange Act given the completion of the unbundling of the Company shares held by Trencor which reduced Trencor’s shareholding in the Company’s outstanding shares from 5.3% as of December 31, 2019 to 0% as of December 31, 2020.

ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

In August 2019, our board of directors approved a share repurchase program of up to $25,000 of the Company’s common shares. Under the program, the Company may purchase its common shares from time to time in the open market, in privately negotiated transactions or such other manner as will comply with applicable laws and regulations. The authorization did not obligate us to acquire a specific number of shares during any period, but it may be modified, suspended or terminated at any time at the discretion of the Company’s board of directors.

In March 2020, our board of directors had approved an amendment to increase the share repurchase program from $25,000 to an aggregate of $50,000.

In September 2020, our board of directors had approved an amendment to increase the share repurchase program from $50,000 to an aggregate of $100,000 (including all common shares repurchased under the program prior to the amendments), commencing in September 2019 up to and including September 1, 2022 (see Note 13 “Share Repurchase Program” and Note 14 “Subsequent Event” to our consolidated financial statements in Item 18, “Financial Statements” in this Annual Report on Form 20-F for further discussion.

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The table below is a summary of the shares repurchased by us and the average price paid per share (excluding commissions) during the year ended December 31, 2020. All shares were repurchased in the open market pursuant to the share repurchase program.

					Issuer Purchases of Common Shares						
							Total number of			Approximate dollar		
		Total number of		Average price paid	shares purchased as			value of shares that		
Period					part of publicly		may yet be purchased		
		shares purchased (3)			per share		announced plan			under the plan			
January 1, 2020 through January 31, 2020	70,543	$	9.87		70,543	$	15,733			
February 1, 2020 through February 29, 2020	285,895	$	9.55		285,895	$	13,003			
March 1, 2020 through March 31, 2020 (1)	1,591,005	$	7.53		1,591,005	$	26,018			
April 1, 2020 through April 30, 2020	1,316,281	$	8.37		1,316,281	$	15,001			
May 1, 2020 through May 31, 2020	—			—	—	$	15,001			
June 1, 2020 through June 30, 2020	317,513	$	7.97		317,513	$	12,470			
July 1, 2020 through July 31, 2020	728,791	$	8.06		728,791	$	6,595			
August 1, 2020 through August 30, 2020	109,446	$	8.87		109,446	$	5,625			
September 1, 2020 through September 30, 2020 (2)	1,537,985	$	13.48		1,537,985	$	34,885			
October 1, 2020 through October 31, 2020	540,116	$	14.38		540,116	$	27,117			
November 1, 2020 through November 30, 2020	20,598	$	14.39		20,598	$	26,821			
December 1, 2020 through December 31, 2020	218,320	$	16.58		218,320	$	23,202			
Total	6,736,493	$	10.13		6,736,493						

(1)	In March 2020, our board of directors authorized to increase an additional $25,000 to our program.

(2)	In September 2020, our board of directors authorized to increase an additional $50,000 to our program.

(3)	During 2020, we repurchased 2,060,207 of our common shares on the JSE.

ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

None.

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ITEM 16G.	CORPORATE GOVERNANCE

Our corporate governance practices are in compliance with, and are not prohibited by, the laws of Bermuda. Therefore, we are exempt from many of the NYSE corporate governance practices, other than the establishment of a formal audit committee satisfying the requirements of Rule 10A-3 under the Exchange Act and notification of non-compliance with NYSE listing requirements pursuant to Rule 10A-3 promulgated under the Exchange Act. The practices that we follow in lieu of the NYSE’s corporate governance rules are described below.

•	We are not required under Bermuda law to maintain a board of directors with a majority of independent directors. However, as of March 2021 seven of our eight directors are independent, as that term is defined by the NYSE.

•	We are not required by Bermuda law to hold regular meetings of the board of directors at which only independent directors are present. However, we regularly hold non-executive sessions of our board of directors, where Mr. Ghesquiere, our President and Chief Executive Officer is not present.

•	Mr. Shwiel serves as the Chairman of our board of directors and he has been determined to be independent under applicable NYSE rules. If the Chairman of our board of directors is not an independent director, our Corporate Governance Guidelines provide that a lead independent director who is an independent director as defined by applicable NYSE rules will be appointed and annually elected by the independent directors of the board. The lead independent director will be responsible for coordinating the activities of the independent directors and shall perform such other duties and responsibilities as the board may determine. In addition to the duties of all board members, the specific responsibilities of the lead independent director are as follows:

•	Act as the principal liaison between the independent directors of the board and the chairman of the board;

•	Develop the agenda for and preside at executive sessions of the board's independent directors when needed;

•	If requested by the chairman, approve with the chairman of the board the agenda for board and board committee meetings and the need for special meetings of the board, and serve as deputy board chairman;

•	Advise the chairman of the board as to the quality, quantity and timeliness of the information submitted by the Company's management that is necessary or appropriate for the independent directors to effectively and responsibly perform their duties;

•	Recommend to the board the retention of advisors and consultants who report directly to the board;

•	Assist the board and Company officers in ensuring compliance with and implementation of the Corporate Governance Guidelines;

•	Serve as chairman of the board when the chairman is not present; and

•	Serve as a liaison for consultation and communication with shareholders.

•	Under Bermuda law, compensation of executive officers need not be determined by an independent committee. We have established a compensation committee that reviews and approves the compensation and benefits for our executive officers and other key executives, makes recommendations to the board regarding compensation matters and is responsible for awarding compensation to our executive officers and other employees under our share compensation plans. The committee also has the discretion to interpret and amend the terms of, and take all other actions necessary to administer, the 2019 Share Incentive Plan. All members of our compensation committee are independent, as that term is defined by the NYSE. The members of our compensation committee are Messrs. Cottingham, Maccarone, Nurek and Shwiel. Our board of directors has also adopted a compensation committee charter.

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•	We have established an audit committee responsible for (i) advising the board regarding the selection of independent auditors, (ii) overseeing the Company’s accounting and financial reporting processes, (iii) evaluating our internal controls, and (iv) overseeing compliance with policies and legal requirements with respect to financial reporting. Our audit committee need not comply with the NYSE’s requirements that the audit committee have a minimum of three members or the NYSE’s standards of independence for domestic issuers. Our audit committee has four members, Mr. Cottingham, Mr. Nurek, Ms. Tang and Mr. Shwiel. Our Board determined that all members of the Audit Committee are independent as that term is defined in Rule 10A-3 under the Exchange Act.

•	We have established a corporate governance and nominating committee, although this committee is not comprised solely of independent directors, as would be required of a domestic issuer. Our corporate governance and nominating committee has four members, Messrs. Cottingham, Maccarone, Nurek, Van der Merwe and Shwiel. As of March 2021, Messrs. Cottingham, Maccarone, Nurek and Shwiel satisfy the NYSE’s standards for director independence. Our board of directors has also adopted a corporate governance and nominating committee charter.

•	Under Bermuda law, we are not required to obtain shareholder consent prior to issuing securities or adopting share compensation plans. Nonetheless, we sought and received the approval of our shareholders for our 2007 Share Incentive Plan on September 4, 2007, on May 21, 2015 we received shareholder approval for the amendment and restatement of our 2007 Share Incentive Plan as the 2015 Share Incentive Plan, and on May 23, 2019 we received shareholder approval for the amendment and restatement of our 2015 Share Incentive Plan as the 2019 Share Incentive Plan. We are also required under Bermuda law to obtain the consent of the Bermuda Monetary Authority for the issuance of securities in certain circumstances.

•	Under Bermuda law, we are not required to adopt corporate governance guidelines or a code of business conduct. Nonetheless, we have adopted both corporate governance guidelines and a code of business conduct.

•	As a foreign private issuer, we are not required to solicit proxies or provide proxy statements to the NYSE. However, we have provided a proxy statement to the NYSE and expect to continue to do so in the future.

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PART III

ITEM 17.	FINANCIAL STATEMENTS

We have responded to Item 18 “Financial Statements.”

ITEM 18.	FINANCIAL STATEMENTS

Reference is made to pages F-1 through F-47 and is incorporated herein by reference.

Audited Consolidated Financial Statements	Page		
			
Reports of Independent Registered Public Accounting Firm	F-2		
												
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018	F-5		
											
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018		F-6		
Consolidated Balance Sheets as of December 31, 2020 and 2019	F-7		
									
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018		F-8		
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018		F-9		
Notes to Consolidated Financial Statements	F-10		
Financial Statement Schedules				
Schedule I – Parent Company Information	F-49		
Schedule II – Valuation Accounts			F-52		
ITEM 19.	EXHIBITS			

The exhibits filed as part of this Annual Report on Form 20-F are listed in the Exhibit Index.

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TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Audited Consolidated Financial Statements	Page		
			
Reports of Independent Registered Public Accounting Firm	F-2		
												
Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019 and 2018	F-5		
											
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2020, 2019 and 2018		F-6		
Consolidated Balance Sheets as of December 31, 2020 and 2019	F-7		
									
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2020, 2019 and 2018		F-8		
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019 and 2018		F-9		
Notes to Consolidated Financial Statements	F-10		
Financial Statement Schedules				
Schedule I – Parent Company Information	F-49		
Schedule II – Valuation Accounts		F-52		
					F-1			

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Textainer Group Holdings Limited:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Textainer Group Holdings Limited and subsidiaries’ (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedules I to II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 18, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and

(2)	involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Residual values of certain container types

As discussed in Note 1 to the consolidated financial statements, the net book value of containers as of December 31, 2020 was $4.1 billion, including $3.9 billion for 20 foot dry, 40 foot dry, 40 foot high cube dry, and 40 foot high cube refrigerated containers. Containers are recorded at cost and depreciated to an estimated residual value on a straight-line basis over the estimated useful lives. To estimate the residual values of the containers, the Company evaluates the average selling prices for used containers over a ten-year period and assesses whether the average selling prices fall within a reasonable range as compared to current residual values. If the average selling prices over the ten-year period are outside of the range, the Company evaluates the trend in average selling prices over three, five, and seven-year periods to corroborate the trend in the ten-year period. The Company then performs a peer comparison to evaluate if there are significant differences between the residual values of the Company’s 20 foot dry, 40 foot dry, 40 foot high cube

F-2

dry, and 40 foot high cube refrigerated containers as compared to peers within the industry. The collective results of the Company’s methodology provide a framework to allow the Company to estimate when a change in residual values is needed.

We identified the assessment of residual values of 20 foot dry, 40 foot dry, 40 foot high cube dry, and 40 foot high cube refrigerated containers as a critical audit matter. This was due to the high degree of auditor judgment required given the significant measurement uncertainty of the residual values and the evaluation of the appropriateness of the methodology used by the Company.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to determine the residual value of containers. This included controls over the relevance and reliability of the average selling prices for used containers, the appropriateness of the Company’s methodology, including the range and the time periods evaluated, and the peer comparison. We tested the average selling prices for used containers by comparing the prices to third party evidence and considering their relevance and reliability. We performed sensitivity analyses over the average selling prices for used containers based on historical data to assess the impact on the analysis. We compared the average selling prices for used containers to published industry reports. We performed sensitivity analyses over the methodology, specifically the appropriateness of the range as well as the time periods used and evaluated the impact if these were changed. We compared the estimated residual values to publicly available peer data. We evaluated the collective results of the procedures performed to assess the sufficiency of the audit evidence obtained related to the critical audit matter.

/s/ KPMG LLP

We have served as the Company’s auditor since 1987.

San Francisco, California

March 18, 2021

F-3

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Textainer Group Holdings Limited:

Opinion on Internal Control Over Financial Reporting

We have audited Textainer Group Holdings Limited and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedules I to II (collectively, the consolidated financial statements), and our report dated March 18, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

San Francisco, California

March 18, 2021

F-4

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands, except per share amounts)

	2020				2019				2018			
Revenues:												
Lease rental income - owned fleet	$	538,425		$	517,859		$	501,362			
Lease rental income - managed fleet		62,448			101,901				111,342			
Lease rental income		600,873			619,760				612,704			
												
Management fees - non-leasing		5,271			7,590				8,529			
												
Trading container sales proceeds		31,941			58,734				19,568			
Cost of trading containers sold		(28,409)		(51,336)			(16,118)		
Trading container margin		3,532			7,398				3,450			
												
Gain on sale of owned fleet containers, net		27,230			21,397				36,071			
												
Operating expenses:												
Direct container expense - owned fleet		55,222			45,831				53,845			
Distribution expense to managed fleet container investors		57,311			93,858				102,992			
Depreciation expense		261,665			260,372				249,500			
Amortization expense		2,572			2,093				3,721			
General and administrative expense		41,880			38,142				44,317			
Bad debt (recovery) expense, net		(1,668)		2,002				2,697			
Container lessee default (recovery) expense, net		(1,675)		7,867				17,948			
Gain on insurance recovery and legal settlement		—		(14,881)			(8,692)		
Gain on settlement of pre-existing management agreement		—		(1,823)			—		
Total operating expenses		415,307			433,461				466,328			
Income from operations		221,599			222,684				194,426			
Other (expense) income:												
Interest expense		(123,230)		(153,185)			(138,427)		
Write-off of unamortized deferred debt issuance costs and bond discounts		(8,750)		—			(881)		
Interest income		531			2,505				1,709			
Realized (loss) gain on derivative instruments, net		(12,295)		1,946				5,238			
Unrealized loss on derivative instruments, net		(6,044)		(15,442)			(5,790)		
Other, net		1,488			(4)			—		
Net other expense												
		(148,300)		(164,180)			(138,151)		
Income before income tax and noncontrolling interests		73,299			58,504				56,275			
Income tax benefit (expense)		374			(1,948)			(2,025)		
Net income		73,673			56,556				54,250			
Less: Net (income) loss attributable to the noncontrolling interests		(851)		168				(3,872)		
Net income attributable to Textainer Group Holdings												
Limited common shareholders	$	72,822		$	56,724		$	50,378			
												
Net income attributable to Textainer Group Holdings Limited												
common shareholders per share:												
Basic	$	1.37		$	0.99		$	0.88			
Diluted	$	1.36		$	0.99		$	0.88			
Weighted average shares outstanding (in thousands):												
Basic		53,271			57,349				57,200			
Diluted		53,481			57,459				57,487			

See accompanying notes to consolidated financial statements.

F-5

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands, except per share amounts)

	2020			2019				2018		
Net income		73,673				56,556			54,250		
Other comprehensive income (loss), before tax:											
Change in derivative instruments designated as cash flow hedges		(12,307)			(110)		—	
Reclassification of realized loss (gain) on derivative instruments											
designated as cash flow hedges		2,806				(7)		—	
Foreign currency translation adjustments		177				42			(127)	
Comprehensive income, before tax		64,349				56,481			54,123		
Income tax benefit related to items of other comprehensive income (loss)		91				—		—	
Comprehensive income, after tax		64,440				56,481			54,123		
Comprehensive (income) loss attributable to the noncontrolling interests		(851)			168			(3,872)	
Comprehensive income attributable to Textainer Group Holdings											
Limited common shareholders	$	63,589		$	56,649		$	50,251		

See accompanying notes to consolidated financial statements.

F-6

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(All currency expressed in United States dollars in thousands)

	2020				2019			
Assets								
Current assets:								
Cash and cash equivalents	$	131,018			180,552			
Accounts receivable, net of allowance of $2,663 and $6,299, respectively		108,578			109,384			
Net investment in finance leases, net of allowance of $169 and $0, respectively		78,459			40,940			
Container leaseback financing receivable, net of allowance of $98 and $0, respectively		27,076			20,547			
Trading containers		9,375			11,330			
Containers held for sale		15,629			41,884			
Prepaid expenses and other current assets		13,713			14,816			
Due from affiliates, net		1,509			1,880			
Total current assets		385,357			421,333			
Restricted cash		74,147			97,353			
Containers, net of accumulated depreciation of $1,619,591 and $1,443,167, respectively		4,125,052			4,156,151			
Net investment in finance leases, net of allowance of $1,164 and $0, respectively		801,501			254,363			
Container leaseback financing receivable, net of allowance of $326 and $0, respectively		336,792			251,111			
Fixed assets, net of accumulated depreciation of $12,918 and $12,266, respectively		746			1,128			
Intangible assets, net of accumulated amortization of $47,931 and $45,359, respectively		2,719			5,291			
Derivative instruments		47			135			
Deferred taxes		1,153			1,388			
Other assets		13,862			14,364			
Total assets	$	5,741,376		$	5,202,617			
Liabilities and Equity								
								
Current liabilities:								
Accounts payable and accrued expenses	$	24,385		$	23,404			
Container contracts payable		231,647			9,394			
Other liabilities		2,288			2,636			
Due to container investors, net		18,697			21,978			
Debt, net of unamortized costs of $8,043 and $8,120, respectively		408,365			242,433			
Total current liabilities		685,382			299,845			
Debt, net of unamortized costs of $18,639 and $21,446, respectively		3,706,979			3,555,296			
Derivative instruments		29,235			13,778			
Income tax payable		10,047			9,909			
Deferred taxes		6,491			7,789			
Other liabilities		16,524			30,355			
Total liabilities		4,454,658			3,916,972			
Equity:								
Textainer Group Holdings Limited shareholders' equity:								
Common shares, $0.01 par value. Authorized 140,000,000 shares; 58,740,919 shares issued								
and 50,495,789 shares outstanding at 2020; 58,326,555 shares issued								
and 56,817,918 shares outstanding at 2019		587			583			
Treasury shares, at cost, 8,245,130 and 1,508,637 shares, respectively		(86,239)		(17,746)		
Additional paid-in capital		416,609			410,595			
Accumulated other comprehensive loss		(9,744)		(511)		
Retained earnings		938,395			866,458			
Total Textainer Group Holdings Limited shareholders’ equity		1,259,608			1,259,379			
Noncontrolling interest		27,110			26,266			
Total equity		1,286,718			1,285,645			
Total liabilities and equity	$	5,741,376		$	5,202,617			

See accompanying notes to consolidated financial statements.

F-7

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

Years ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands, except share amounts)

						Textainer Group Holdings Limited Shareholders' Equity														
															Accumulated					Total									
												Additional		other					Textainer Group								
	Common shares	Treasury shares		paid-in	comprehensive		Retained		Holdings Limited	Noncontrolling		Total		
	Shares			Amount		Shares			Amount			capital			income (loss)			earnings			shareholders' equity			interest			equity			
Balances, December 31, 2017	57,727,220		$	578		(630,000)	$	(9,149)	$	397,821		$	(309)	$	759,356		$	1,148,297		$	57,740		$	1,206,037			
Dividends paid to noncontrolling interest																														
	—			—		—			—			—			—			—			—			(1,996)		(1,996)		
Restricted share units vested	289,685			3		—		—		(3)		—		—		—		—		—		
Exercise of share options	15,259			—	—		—		130			—		—		130			—		130			
Share-based compensation expense	—			—	—		—		7,355			—		—		7,355			—		7,355			
TW Container Leasing, Ltd. capital restructuring	—			—	—		—		780			—		—		780			(30,438)		(29,658)		
Comprehensive income:																														
Net income attributable to Textainer Group																														
Holdings Limited common shareholders	—			—	—		—		—		—		50,378			50,378			—		50,378			
Net income attributable to noncontrolling																														
interests	—			—	—		—		—		—		—		—		3,872			3,872			
Foreign currency translation adjustments	—			—	—		—		—		(127)		—		(127)		—		(127)		
Total comprehensive income																											54,123			
Balances, December 31, 2018	58,032,164			581		(630,000)		(9,149)		406,083			(436)		809,734			1,206,813			29,178			1,235,991			
Dividends paid to noncontrolling interest																														
	—			—		—			—			—			—			—			—			(2,744)		(2,744)		
Purchase of treasury shares	—			—	(878,637)		(8,597)		—		—		—		(8,597)		—		(8,597)		
Restricted share units vested	281,377			2		—		—		(2)		—		—		—		—		—		
Exercise of share options	13,014			—	—		—		126			—					126			—		126			
Share-based compensation expense	—			—	—		—		4,388			—		—		4,388			—		4,388			
Comprehensive income:																														
Net income attributable to Textainer Group																														
Holdings Limited common shareholders	—			—	—		—		—		—		56,724			56,724			—		56,724			
Net income attributable to noncontrolling																														
interests	—			—	—		—		—		—		—		—		(168)		(168)		
Change in derivative instruments designated																														
as cash flow hedges	—			—	—		—		—		(110)		—		(110)		—		(110)		
Reclassification of realized gain on derivative																														
instruments designated as cash flow hedges	—			—	—		—		—		(7)		—		(7)		—		(7)		
Foreign currency translation adjustments	—			—	—		—		—		42			—		42			—		42			
Total comprehensive income																											56,481			
Balances, December 31, 2019	58,326,555			583		(1,508,637)		(17,746)		410,595			(511)		866,458			1,259,379			26,266			1,285,645			
Cumulative adjustment for adoption of ASU 2016-13																														
	—			—		—			—			—			—			(885)		(885)		(7)		(892)		
Purchase of treasury shares	—			—	(6,736,493)		(68,493)		—		—		—		(68,493)		—		(68,493)		
Restricted share units vested	300,404			3		—		—		(3)		—		—		—		—		—		
Exercise of share options	113,960			1		—		—		1,294			—					1,295			—		1,295			
Share-based compensation expense	—			—	—		—		4,723			—		—		4,723			—		4,723			
Comprehensive income:																														
Net income attributable to Textainer Group																														
Holdings Limited common shareholders	—			—	—		—		—		—		72,822			72,822			—		72,822			
Net income attributable to noncontrolling																														
interests	—			—	—		—		—		—		—		—		851			851			
Change in derivative instruments designated																														
as cash flow hedges	—			—	—		—		—		(12,307)		—		(12,307)		—		(12,307)		
Reclassification of realized loss on derivative																														
instruments designated as cash flow hedges	—			—	—		—		—		2,806			—		2,806			—		2,806			
Foreign currency translation adjustments	—			—	—		—		—		177			—		177			—		177			
Income tax benefit related to items of other																														
comprehensive income	—			—	—		—		—		91			—		91			—		91			
Total comprehensive income																											64,440			
Balances, December 31, 2020	58,740,919	$	587		(8,245,130)	$	(86,239)	$	416,609		$	(9,744)	$	938,395		$	1,259,608		$	27,110		$	1,286,718			

See accompanying notes to consolidated financial statements.

F-8

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands)

		2020			2019			2018			
Cash flows from operating activities:											
Net income	$	73,673		$	56,556		$	54,250			
Adjustments to reconcile net income to net cash provided by operating activities:											
Depreciation expense		261,665			260,372			249,500			
Bad debt (recovery) expense, net		(1,668)		2,002			2,697			
Container (recovery) write-off from lessee default, net		(260)		7,179			12,980			
Unrealized loss on derivative instruments, net		6,044			15,442			5,790			
Amortization and write-off of unamortized deferred debt issuance costs and accretion of bond discounts		16,862			7,953			9,531			
Amortization of intangible assets		2,572			2,093			3,721			
Gain on sale of owned fleet containers, net		(27,230)		(21,397)		(36,071)		
Gain on insurance recovery and legal settlement		—		—		(8,692)		
Gain on settlement of pre-existing management agreement		—		(1,823)		—		
Share-based compensation expense		4,723			4,388			7,355			
Decrease (increase) in:											
Accounts receivable, net		11,539			25,530			(34,113)		
Trading containers, net		7,211			19,549			(30,100)		
Receipt of payments on finance leases, net of income earned		44,569			49,796			63,847			
Interest portion of container leaseback financing receivable		(933)		(2,286)		—		
Prepaid expenses and other current assets		1,103			8,693			12,072			
Due from affiliates, net		371			(39)		(558)		
Other assets		502			(10,000)		1,603			
Increase (decrease) in:											
Accounts payable and accrued expenses		981			(4,363)		808			
Other liabilities		(1,354)		13,519			(235)		
Due to container investors, net		(3,281)		(6,407)		611			
Long-term income tax payable		138			339			489			
Deferred taxes, net		(972)		1,449			634			
Total adjustments		322,582			371,989			261,869			
Net cash provided by operating activities		396,255			428,545			316,119			
Cash flows from investing activities:											
Purchase of containers and fixed assets		(746,145)		(466,993)		(854,383)		
Payments on container leaseback financing receivable		(116,263)		(281,445)		—		
Payment for Leased Assets Pool Company Limited, net of cash acquired		—		(171,841)		—		
Payment for TW Container Leasing, Ltd. capital restructuring		—		—		(29,658)		
Proceeds from sale of containers and fixed assets		151,021			150,742			147,254			
Receipt of principal payments on container leaseback financing receivable		21,485			7,745			—		
Net cash used in investing activities		(689,902)			(761,792)			(736,787)			
Cash flows from financing activities:											
Proceeds from debt		2,114,260			1,439,223			2,029,025			
Principal payments on debt		(1,799,870)		(1,049,857)		(1,608,753)		
Purchase of treasury shares		(68,493)		(8,597)		—		
Proceeds from container leaseback financing liability, net		—		17,448			—		
Principal repayments on container leaseback financing liability, net		(12,825)		—		—		
Debt issuance costs		(13,637)		(9,417)		(10,252)		
Issuance of common shares upon exercise of share options		1,295			126			130			
Dividends paid to noncontrolling interest		—		(2,744)		(1,996)		
Net cash provided by financing activities		220,730			386,182			408,154			
Effect of exchange rate changes		177			42			(127)			
Net (decrease) increase in cash, cash equivalents and restricted cash		(72,740)			52,977			(12,641)			
Cash, cash equivalents and restricted cash, beginning of the year		277,905			224,928			237,569			
Cash, cash equivalents and restricted cash, end of the year	$	205,165		$	277,905		$	224,928			
Supplemental disclosures of cash flow information:											
											
Cash paid for interest expense and realized (loss) gain on derivative instruments, net	$	126,958		$	142,248		$	123,581			
Net income taxes paid	$	34		$	42		$	1,138			
Supplemental disclosures of noncash operating activities:											
Right-of-use asset for leased properties	$	574		$	11,276		$	—		
Supplemental disclosures of noncash investing activities:											
Increase (decrease) in accrued container purchases	$	222,253		$	(33,316)	$	(88,377)		
Containers placed in finance leases	$	635,004		$	173,856		$	53,859			
Decrease in insurance receivable due to a decrease in estimated unrecoverable containers	$	—	$	—	$	2,049			

See accompanying notes to consolidated financial statements.

F-9

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020, 2019, and 2018

(All currency expressed in U.S. dollars in thousands, except per share amounts)

(1)	Nature of Business and Summary of Significant Accounting Policies

(a)	Nature of Operations

Textainer Group Holdings Limited (“TGH”) is incorporated in Bermuda. TGH is the holding company of a group of companies, consisting of TGH and its subsidiaries (collectively, the “Company”), involved in the purchase, management, leasing and resale of a fleet of marine cargo containers. The Company manages and provides administrative support to the affiliated and unaffiliated third-party owners’ (the “Container Investors”) container fleets.

The Company conducts its business activities in three main areas: Container Ownership, Container Management and Container Resale. These activities are described below (also see Note 10 “Segment Information”).

Container Ownership

The Company’s containers consist primarily of standard dry freight containers, but also include refrigerated and other special-purpose containers. These owned containers are financed through retained earnings; revolving credit facilities, secured debt facilities and a term loan provided by banks; bonds payable to investors; and a public offering of TGH’s common shares. Expenses related to lease rental income of the owned fleet primarily include direct container expenses, depreciation expense and interest expense.

Container Management

The Company manages, on a worldwide basis, a fleet of containers for and on behalf of the Container Investors. All rental operations are conducted worldwide in the name of the Company who, as agent for the Container Investors, acquires and sells containers, enters into leasing agreements and depot service agreements, bills and collects lease rentals from the lessees, disburses funds to depots for container handling, and remits net amounts, less management fees and commissions, to the Container Investors.

Fees earned by the Company under the management agreements are typically a percentage of net operating income of each Container Investor’s fleet and consist of fees for leasing services related to the management of the containers, sales commissions and net acquisition fees earned on the acquisition of containers. Lease rental income and expenses arising from the operation of the managed fleet are presented on a gross basis, whereby revenue billed to shipping lines and expenses incurred and distributions to the container investors of the managed fleet are presented in the Company’s consolidated statements of operations. Accounts receivable and vendor payables arising from direct container operations of the managed containers are presented on a gross basis in the Company’s consolidated balance sheets. See Note 3 “Managed Container Fleet” for information on the managed fleet containers.

Container Resale

The Company buys and subsequently resells containers (trading containers) from third parties. Container sales revenue represents the proceeds on the sale of containers purchased for resale. Cost of containers sold represents the cost of equipment purchased for resale that were sold as well as the related selling costs. The Company earns sales commissions related to the sale of the containers that it manages.

F-10

(b)	Principles of Consolidation and Variable Interest Entity

The consolidated financial statements of the Company include TGH and all of its subsidiaries in which the Company has a controlling financial interest. All significant intercompany accounts and balances have been eliminated in consolidation.

The Company determines whether it has a controlling financial interest in an entity by evaluating whether the entity is a variable interest entity (“VIE”) or a voting interest entity (“VME”). If it is determined that the Company does not have a variable interest in the entity, no further analysis is required, and the Company does not consolidate the entity.

TAP Funding

On December 20, 2012, the Company’s wholly-owned subsidiary, Textainer Limited (“TL”), purchased 50.1% of the outstanding common shares of TAP Funding Ltd. (“TAP Funding”) (a Bermuda company) from TAP Ltd. (“TAP”). Both before and after this purchase, TAP Funding leases containers to lessees under operating and finance leases. TAP is governed by members and management agreements and the Company’s wholly-owned subsidiary, Textainer Equipment Management Limited (“TEML”), manages all of TAP Funding’s containers, making day-to-day decisions regarding the marketing, servicing and design of TAP Funding’s leases. TL’s purchase of a majority ownership of TAP Funding’s common shares allowed the Company to increase the size of its owned fleet at an attractive price. Under TAP Funding’s members agreement, TL owns 50.1% and TAP owns 49.9% of the common shares of TAP Funding. As common shareholders, TL has two voting rights and TAP has one voting right of TAP Funding, with the exception of certain matters such as bankruptcy proceedings and the incurrence of debt and mergers and consolidations, which require unanimity. TL also has two seats and TAP has one seat on TAP Funding’s board of directors. In addition, TL has an option to purchase the remaining outstanding common shares of TAP Funding held by TAP during the period beginning January 1, 2023 and through December 31, 2024 for a purchase price equal to the equity carrying value of TAP Funding plus 6% of TAP’s percentage ownership interest in TAP Funding minus the sum of any and all U.S. federal, state and local taxes of any nature that would be recognized by TL if TAP Funding was liquidated by TL immediately after TL purchased its shares.

TAP Funding is a VME and the Company consolidates TAP Funding as the Company has a controlling financial interest in TAP Funding, in which TL owns 50% or more voting interest. TAP Funding’s profits and losses are allocated to TL and TAP on the same basis as their ownership percentages. The equity owned by TAP in TAP Funding is shown as a “noncontrolling interest” on the Company’s consolidated balance sheets and the net income (loss) attributable to the noncontrolling interest’s operations is shown as “net (income) loss attributable to the noncontrolling interests” on the Company’s consolidated statements of operations. On January 19, 2021, the Company completed the acquisition of 49.9% of the common shares of TAP Funding (see Note 14 “Subsequent Events”).

Leased Assets Pool Company Limited

On December 31, 2019, the Company completed the acquisition of Leased Assets Pool Company Limited (“LAPCO”) (a Bermuda company) from Trencor Limited. After the acquisition, LAPCO became a wholly-owned subsidiary of TL. As a result of the LAPCO acquisition which was accounted for as an asset acquisition of LAPCO’s container fleet, the management agreement between the Company and LAPCO was terminated and effectively settled the pre-existing contractual relationship at acquisition date. Under the terms of the management agreement, the Company previously managed a substantial portion of LAPCO’s container fleet. Because the terms of the pre-existing management agreement were determined to be favorable to the Company compared to current market terms for similar arrangements, a portion of the excess of the fair value of the net assets acquired over the purchase consideration was deemed to be applicable to the effective settlement of the management agreement. Therefore, a gain of $1,823 was recorded on the acquisition date in the consolidated statements of operations as “gain on settlement of pre-existing management agreement” during the year ended December 31, 2019.

Managed Containers

The Company enters into container management agreements with Container Investors. The fees earned by the Company for managing container portfolios on behalf of Container Investors are commensurate with the

F-11

level of effort required to provide those management services and the Company does not have the obligation to absorb losses or the right to receive benefits that may be significant to the Container Investors. As such, the Company is not the primary beneficiary and does not consolidate the Container Investors. Managed containers which are owned by Container Investors are not assets of the Company and are not included in the consolidated financial statements, except for certain managed containers that the Company is deemed to own with associated container leaseback financial liability of the Company in accordance with Topic 842, Leases (see Note 1(a) “Nature of Operations” and Note 3 “Managed Container Fleet”).

Owned Containers

The majority of the container equipment included in the accompanying consolidated financial statements is owned by TL, Textainer Marine Containers II Limited (“TMCL II”), Textainer Marine Containers V Limited (“TMCL V”), Textainer Marine Containers VI Limited (“TMCL VI”) and Textainer Marine Containers VII Limited (“TMCL VII”), all Bermuda companies and all of which were wholly-owned subsidiaries of the Company as of December 31, 2020 and 2019. All owned containers are pledged as collateral for debt as of December 31, 2020 and 2019.

(c)	Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents are comprised of interest-bearing deposits or money market securities with original maturities of three months or less. The Company maintains cash and cash equivalents and restricted cash (see Note 11 “Commitments and Contingencies—Restricted Cash”) with various financial institutions. These financial institutions are located in Bermuda, Canada, Hong Kong, Malaysia, Singapore, South Africa, the United Kingdom and the United States. A significant portion of the Company’s cash and cash equivalents and restricted cash is maintained with a small number of banks and, accordingly, the Company is exposed to the credit risk of these counterparties in respect of the Company’s cash and cash equivalents and restricted cash. Furthermore, the deposits maintained at some of these financial institutions exceed the amount of insurance provided on the deposits. Restricted cash is excluded from cash and cash equivalents and is included in long-term assets reported within the consolidated balance sheets.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the amounts shown in the consolidated statements of cash flows:

Cash and cash equivalents		2020			2019			2018			
	$	131,018		$	180,552		$	137,298			
Restricted cash included in long-term assets		74,147			97,353			87,630			
Cash, cash equivalents and restricted cash, end of period	$	205,165		$	277,905		$	224,928			

(d)	Intangible Assets

Intangible assets, consisting primarily of exclusive rights to manage container fleets, are amortized over the expected life of the contracts based on forecasted income to the Company. The contract terms range from 11 to 13 years. The Company reviews its intangible assets for impairment if events and circumstances indicate that the carrying amount of the intangible assets may not be recoverable. The Company compares the carrying value of the intangible assets to expected future undiscounted cash flows for the purpose of assessing the recoverability of the recorded amounts. If the carrying amount exceeds expected undiscounted cash flows, the intangible assets shall be reduced to their fair value. The Company recorded a write-off of intangible assets amounting to $0 and $2 during the years ended December 31, 2020 and 2019, respectively, for the management rights relinquished relating to the purchase of containers previously managed for a container investor. As of December 31, 2020, the aggregate future amortization of intangible assets of $2,719 is expected to amortize through year 2022.

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(e)	Revenue Recognition

The components of the Company’s revenue as presented in the consolidated statements of operations and in Note 10 “Segment Information” are as

follows:

Lease Rental Income

Lease rental income arises principally from leasing containers to various international shipping lines and includes all rental charges billed to the lessees. Lease rental income - owned fleet comprises rental income for the container fleet owned by the Company. Lease rental income - managed fleet comprises rental income for the container fleet owned by the Container Investors. For lease accounting purposes, the management agreements with these Container Investors are deemed to convey to the Company the right to control the use of the managed containers and are therefore accounted for as “lease rental income - managed fleet” as reported in the consolidated statements of operations (see Note 3 “Managed Container Fleet” for further information).

Revenue is recorded when earned according to the terms of the container rental contracts with customers. Revenue is earned and recognized evenly over the period that the equipment is on lease. These contracts are typically for terms of five or more years and are generally classified as operating leases. Where minimum lease payments vary over the lease term, revenue is recognized on a straight-line basis over the term of the lease. Lease rental income comprises daily per diem rental charges due under the lease agreements, together with payments for other charges set forth in the leases, such as handling fees, drop-off charges, pick-up charges, and charges for a damage protection plan.

Under long-term lease agreements, containers are usually leased from the Company for periods of five or more years. Under master lease agreements, the lessee is not committed to leasing a minimum number of containers from the Company during the lease term and may generally return the containers to the Company at any time, subject to certain restrictions in the lease agreement. Under long-term lease and master lease agreements, revenue is earned and recognized evenly over the period that the equipment is on lease.

Under finance leases, the containers are usually leased from the Company for the remainder of the container’s useful life and ordinarily provide lessees with a right to purchase the subject containers for a nominal amount at the end of the lease term. Finance lease income is recognized using the effective interest method, which generates a constant rate of interest over the period of the lease.

Under sales-type leaseback arrangements that are accounted for as financing transactions, payments made by the customers are recorded as a reduction to the container leaseback financing receivable and as interest income. Interest income is recognized using the effective interest method, which generates a constant rate of interest over the period of the arrangement.

The Company’s container leases generally do not include step-rent provisions, nor do they depend on indices or rates. The Company recognizes revenue on container leases that include lease concessions in the form of free-rent periods using the straight-line method over the minimum terms of the leases.

Management Fees - Non-leasing

Under the Company’s management service agreements with Container Investors, fees are earned for the acquisition and sale of containers under management (see Note 3 “Managed Container Fleet” for further information). Acquisition fees from purchases of containers for managed fleet are deferred and recognized as earned on a straight-line basis over the deemed lease term.

Trading Container Margin

The Company’s trading container sales proceeds arise from the resale of new and used containers to a wide variety of buyers. The related expenses represent the cost of trading containers sold as well as other selling costs that are recognized as incurred. Revenue is recorded when control of the containers is transferred to the customer, which typically occurs upon delivery to, or pick-up by, the customer and when collectability is reasonably assured.

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(f)	Allowance for Credit Losses

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses over the life of the Company’s net investments in finance leases and container leaseback financing receivable. Operating lease receivables are accounted for under Topic 842, Leases and are not within the scope of Topic 326. The guidance requires the measurement of expected credit losses using a forward-looking approach based on relevant information from past events, current conditions, and reasonable and supportable forecasts that affect collectability.

The Company adopted ASU 2016-13 and all related amendments on the effective date of January 1, 2020 using the modified retrospective method by recognizing the cumulative effect adjustment to the opening balance of retained earnings at the adoption date. Periods prior to the adoption date that are presented for comparative purposes are not adjusted. As a result of the adoption of ASU 2016-13, the Company recognized a beginning balance transition adjustment to the allowance for credit losses on January 1, 2020 of $892, with a cumulative effect adjustment to the opening balance of retained earnings in the consolidated balance sheet and consolidated statement of stockholder’s equity as of December 31, 2020.

Accounts receivable, net investment in finance leases and container leaseback financing receivable are stated at amortized cost net of allowance for credit losses (see Note 6 “Allowance for Credit Losses” for further information).

Accounts Receivables

The Company maintains allowances, if necessary, for doubtful accounts against accounts receivables resulting from the inability of its lessees to make required payments related to billed amounts under the operating leases, finance leases, container leaseback financing receivable and for sales of owned fleet containers and trading containers. The allowance is developed based on two components: (1) specific reserves for receivables for which management believes full collection is doubtful; and (2) a general reserve for estimated losses inherent in the receivables. These allowances are based on an ongoing review of the credit worthiness, but not limited to, each lessee’s payment history, management’s current assessment of the financial condition of the Company’s lessees, their ability to make their required payments and the recoverability. The Company considers an account past due when a payment has not been received in accordance with the terms of the lease agreement, and if the financial condition of the Company’s lessees deteriorates resulting in an impairment of their ability to make payments, additional allowances may be required.

Accounts receivables are generally written off after an analysis is completed which indicates that collection of the full balance is remote. Changes in economic conditions or other events may necessitate additions or deductions to the allowance for doubtful accounts. The allowance is intended to provide for losses inherent in the owned and managed fleet’s accounts receivable and requires the application of estimates and judgments as to the outcome of collection efforts and the realization of collateral, among other things.

Net Investment in Finance Leases and Container Leaseback Financing Receivables

The Company maintains allowances for credit losses against net investment in finance leases and container leaseback financing receivable related to unbilled amounts under the finance leases and the sales-type leaseback arrangements accounted for as financing receivable. The Company estimates its potential future expected credit losses based on historical losses from lessee defaults, current economic conditions and reasonable and supportable forecasts that may affect the collectability of the reported amount. The Company monitors its container lessees’ performance and its lease exposures on an ongoing basis. The Company evaluates its exposure by portfolio with similar risk characteristics based on the credit worthiness, external credit data and overall credit quality of its lessees.

F-14

The Company’s internal risk rating categories are “Tier 1” for the lowest level of risk which are typically the large international shipping lines with strong financial and asset base; “Tier 2” for moderate level of risk which includes lessees which are well-established in the market; and “Tier 3” for the highest level of risk which includes smaller shipping lines or lessees that exhibit high volatility in payments on a regular basis.

(g)	Direct Container Expenses – Owned Fleet

Direct container expense – owned fleet represents the operating costs arising from the containers owned by the Company and includes storage, handling, maintenance and repair, repositioning, agent, and insurance expense. These costs are recognized when incurred.

(h)	Distribution Expense to Managed Fleet Container Investors

Our distribution amounts to Container Investors for the managed fleet includes the net operating income of each Container Investor’s fleet, reduced by associated lease management fees earned and retained by the Company. This amount is also reduced by expenses related to the operation of the managed containers which are presented on a gross basis in the consolidated statements of operations. Expenses related to the operation of the managed containers such as storage, handling, repairs, repositioning, agent, insurance expense and general and administrative expenses are recognized when incurred.

(i)	Trading Containers and Containers Held for Resale

The Company, through one or more of its subsidiaries, buys trading containers for resale, which are valued at the lower of cost or fair value. The cost of trading containers sold is specifically identified. In addition, containers identified as being available for sale are valued at the lower of carrying value or fair value, less cost to sell. The fair value is estimated based on recent gross sales proceeds for sales of similar containers. Trading containers and containers held for resale are not subject to depreciation.

(j)	Foreign Currencies

A functional currency is determined for each of the Company’s entities based on the currency of the primary economic environment in which the entity operates. The Company’s functional currency is the U.S. dollar, excluding its foreign subsidiaries Textainer Equipment Management (United Kingdom) Limited and Textainer Equipment Management (Singapore) Pte Ltd. Assets and liabilities denominated in a currency other than the entity’s functional currency are re-measured into its functional currency at the balance sheet date with a gain or loss recognized in current year net income. Foreign currency exchange gains or losses that arise from exchange rate changes on transactions denominated in a foreign currency are recognized in net income as incurred. Foreign currency exchange losses, reported in “direct container expense – owned fleet” in the consolidated statements of operations were $251, $393, and $1,085 for the years ended December 31, 2020, 2019 and 2018, respectively. For consolidation purposes, the financial statements are translated into U.S. dollars using the current exchange rate for the assets and liabilities and a weighted average exchange rate for the revenues and expenses recorded during the year with any translation adjustment shown as an element of accumulated other comprehensive income.

(k)	Fixed Assets and Capitalized Implementation Costs

Fixed assets are recorded at cost and depreciated on a straight-line basis over the estimated useful lives of such property, furniture and equipment, ranging from three to seven years. Expenditures for maintenance and repairs are expensed as they are incurred.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles - Goodwill and Other (Topic 350) - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). The amendments in the update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted ASU

F-15

2018-15 on January 1, 2020 using the prospective transition approach and the implementation costs that were capitalized for the year ended December 31, 2020 amounted to $4,212 were included in “prepaid expenses and other current assets” in the Company’s consolidated balance sheet. Amortization of the capitalized implementation costs will commence when the hosting arrangement is ready for its intended use and will be amortized over the term of the hosting arrangement on a straight-line basis.

(l)	Containers

Capitalized container costs include the container cost payable to the manufacturer and the associated transportation costs incurred in moving the Company’s containers from the manufacturer to the containers’ first destined port. Containers are depreciated using the straight-line method over their estimated useful lives to an estimated dollar residual value. Used containers are depreciated based upon their remaining useful lives at the date of acquisition to an estimated dollar residual value.

The Company evaluates the estimated residual values and remaining estimated useful lives on a regular basis to determine whether a change in its estimates of useful lives and residual values is warranted. To perform this assessment, the Company analyzed sales data over a minimum of a ten-year period which reflected the cyclical nature of the global economic environment and its industry and assessed whether the average selling prices fall within a reasonable range compared to current residual values. The Company determined that a ten-year length of time includes sufficient periods of high and low used container prices to estimate future residual values. If the ten-year period was outside of the range of a container type, the Company evaluated the trend in average selling prices over three, five, and seven-year periods to corroborate the trend in the ten-year period. The Company then performed a comparison of the estimated residual values to publicly available peer data within the industry. The Company completed its annual depreciation policy review and concluded no change was necessary during the year ended December 31, 2020.

The Company estimates the useful lives and residual values of its containers to be as follows:

			As of December 31, 2020 and 2019			
			Estimated useful			Residual		
			life (years)			Value		
	Dry containers other than								
	open top and flat rack								
	containers:								
20'	13	$	1,000			
	40'	14	$	1,200			
	40' high cube	13	$	1,400			
	45' high cube	13	$	1,500			
Refrigerated containers:								
	20'	12	$	2,750			
	20' high cube	12	$	2,049			
	40' high cube	12	$	4,000			
Open top and flat rack containers:								
	20' folding flat rack	15	$	1,300			
	40' folding flat rack	16	$	1,700			
	20' open top	15	$	1,500			
	40' open top	14	$	2,500			
	Tank containers	20			10% of cost		
		F-16						

The cost, accumulated depreciation and net book value of the Company’s container leasing equipment by equipment type as of December 31, 2020 and 2019 were as follows:

					2020									2019						
		Cost		Accumulated		Net Book			Cost		Accumulated		Net Book			
				Depreciation		Value					Depreciation		Value		
Dry containers other than																				
open top and flat rack																				
containers:																				
20'	$	1,532,753		$	(428,913)	$	1,103,840	$	1,627,878		$	(396,247)	$	1,231,631			
40'		144,881			(55,154)		89,727			167,011			(58,852)		108,159			
40' high cube		2,717,384			(672,416)		2,044,968			2,510,937			(592,374)		1,918,563			
45' high cube		27,880			(12,747)		15,133			28,670			(11,488)		17,182			
Refrigerated containers:																				
20'		20,164			(8,493)		11,671			20,484			(7,258)		13,226			
20' high cube		2,605			(1,742)		863			5,139			(3,090)		2,049			
40' high cube		1,103,817			(398,721)		705,096			1,052,707			(338,068)		714,639			
Open top and flat rack containers:																				
20' folding flat		17,228			(5,132)		12,096			17,617			(4,538)		13,079			
40' folding flat		49,167			(18,275)		30,892			51,152			(17,278)		33,874			
20' open top		13,253			(1,790)		11,463			13,259			(1,625)		11,634			
40' open top		22,271			(4,738)		17,533			23,313			(4,351)		18,962			
Tank containers		93,240			(11,470)		81,770			81,151			(7,998)		73,153			
																				
	$	5,744,643		$	(1,619,591)	$	4,125,052	$	5,599,318		$	(1,443,167)	$	4,156,151			

See Note 3 “Managed Container Fleet” for information on the managed fleet containers included above.

Impairment of Container Rental Equipment

The Company reviews its containers for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The Company compares the carrying value of the containers to the expected future undiscounted cash flows for the purpose of assessing the recoverability of the recorded amounts. If the carrying value exceeds expected future undiscounted cash flows, the assets are reduced to fair value. There was no such impairment on the Company’s leasing equipment for the years ended December 31, 2020, 2019 and 2018.

Write-Off of Container Rental Equipment due to Lessees in Default

The Company evaluates the recoverability of the recorded amounts of containers that are unlikely to be recovered from lessees in default. The Company recorded a gain on container recovery of $1,644 during the year ended December 31, 2020 due to a settlement agreement with an insolvent lessee on containers which were previously written off in 2018. The Company recorded impairment (recoveries) charges during the years ended December 31, 2020, 2019 and 2018 of $(1,647), $7,179 and $12,980, respectively, to write-off containers that were unlikely to be recovered from lessees in default, net of gains of $1,647, $1,988 and $0 associated with recoveries on containers previously estimated as lost with lessees in default for the years ended December 31, 2020, 2019 and 2018, respectively. These amounts are recorded in the consolidated statements of operations as “container lessee default (recovery) expense, net”.

Impairment of Containers Held for Sale

Containers identified as being available for sale are valued at the lower of carrying value or fair value, less costs to sell. The Company records impairment to write-down the value of containers held for sale to their estimated fair value less cost to sell. The fair value was estimated based on recent gross sales proceeds for sales of similar types of containers in the locations in which the containers are stored. When containers are retired or otherwise sold, the cost and related accumulated depreciation are removed, and any resulting gain or loss is

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recognized. Any subsequent increase in fair value less cost to sell is recognized as a reversal of container impairment but not in excess of the cumulative loss previously recognized. During the years ended December 31, 2020, 2019 and 2018, the Company recorded container impairments of $11,094, $14,238 and $13,795, respectively, to write down the value of containers held for sale to their estimated fair value less cost to sell, net of reversals of previously recorded impairments on containers held for sale due to rising used container prices. The impairment charges are included in “depreciation expense” in the consolidated statements of operations.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded the following net gain on sale of containers, included in “gain on sale of owned fleet containers, net” in the consolidated statements of operations:

	2020			2019			2018					
	Units		Amount		Units		Amount		Units		Amount			
Gain on sale of previously written	51,541		$	15,451		52,319		$	6,665		28,291		$	14,563				
down owned fleet containers, net																		
Gain on sale of owned fleet	54,807			11,779		52,126			14,732		79,119			21,508				
containers not written down, net																		
Gain on sale of owned fleet containers, net	106,348		$	27,230		104,445		$	21,397		107,410		$	36,071				

Gain on sale of owned fleet containers, net

The Company also generally sells containers at the end of their useful lives or when it is financially attractive to do so. The gain on sale of owned fleet containers is the excess of the sale price over the carrying value for these units at the time of sale. Revenue is recorded when control of the containers is transferred to the customer, which typically occurs upon delivery to, or pick-up by, the customer and when collectability is reasonably assured.

Gain on sale of owned fleet containers, net, also includes gains (losses) recognized at the inception of sales-type leases of our owned fleet, representing the excess (deficiency) of the estimated fair value of containers placed on sales-type leases over (below) their book value.

(m)	Income Taxes

The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when the realization of a deferred tax asset is deemed to be unlikely.

The Company also accounts for income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in the recognition or measurement are reflected in the period in which the change in judgment occurs. If there are findings in future regulatory examinations of the Company’s tax returns, those findings may result in an adjustment to income tax expense.

The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

(n)	Debt Issuance Costs

The Company capitalizes costs directly associated with the issuance or modification of its debt and the balance of the debt issuance costs, net of amortization, are netted against the debt recorded in the consolidated balance sheets.

Debt issuance costs are amortized using the interest rate method and the straight-line method over the general terms of the related fixed principal payment debt and the related revolving debt facilities, respectively,

F-18

and the amortization is recorded as “interest expense” in the consolidated statements of operations. In 2020, 2019 and 2018, debt issuance costs of $13,637, $9,417 and $10,285, respectively, were capitalized and amortization of debt issuance costs of $7,712, $7,369 and $8,400, respectively, were recorded in interest expense.

When the Company’s debt is modified or terminated, any unamortized debt issuance costs related to a decrease in borrowing capacity with any of the Company’s lenders is immediately written-off and recorded in write-off of unamortized deferred debt issuance costs and bond discounts. In 2020, write-offs of unamortized deferred debt issuance costs and bond discounts included $122 and $8,628 of write-offs related to the amendment of TAP Funding Revolving Credit Facility and the early redemption of 2017-1 Bonds, 2017-2 Bonds and 2018-1 Bonds, respectively, (see Note 8 “Debt”). In 2018, write-offs of unamortized deferred debt issuance costs and bond discounts included $529 and $352 of write-offs related to the amendment of the TL Revolving Credit Facility and the termination of the TL Term Loan, respectively, (see Note 8 “Debt”). No unamortized debt issuance costs were written-off during the year ended December 31, 2019.

(o)	Concentrations

Although substantially all of the Company’s income from operations is derived from assets employed in foreign countries, virtually all of this income is denominated in U.S. dollars. The Company does pay some of its expenses in various foreign currencies. During 2020, 2019 and 2018, $15,225 or 28%, $10,527 or 23%, and $11,141 or 21%, respectively, of the Company’s direct container expenses – owned fleet were paid in up to 20 different foreign currencies. In accordance with its policy, the Company does not hedge these container expenses as there are no significant payments made in any one foreign currency.

The Company’s customers are mainly international shipping lines, which transport goods on international trade routes. Once the containers are on-hire with a lessee, the Company does not track their location. The domicile of the lessee is not indicative of where the lessee is transporting the containers. The Company’s business risk in its foreign concentrations lies with the creditworthiness of the lessees rather than the geographic location of the containers or the domicile of the lessees.

Except for the lessees noted in the tables below, no other single lessee made up greater than 10% of the Company’s lease rental income from its owned fleet during the years ended December 31, 2020, 2019 and 2018, and more than 10% of the Company’s gross accounts receivable from its owned fleet as of December 31, 2020 and 2019:

Lease Rental Income - owned fleet	2020				2019				2018		
Customer A	18.4%	15.4%	14.0%	
Customer B	12.7%	13.3%	13.4%	
Customer C	9.4%	8.3%	8.4%	
Gross Accounts Receivable - owned fleet				2020				2019		
Customer A				30.3%			17.1%	
Customer B				12.9%			11.2%	
Customer C				10.3%			7.0%	

Total fleet lease rental income, as reported in the consolidated statements of operations, comprises revenue earned from leases on containers in the Company’s total fleet, including revenue earned from leases on containers in its managed fleet. Except for the lessees noted in the table below, no other single lessee accounted for more than 10% of the Company’s total fleet lease rental income during the years ended December 31, 2020, 2019 and 2018, and more than 10% of the Company’s gross accounts receivable from its total fleet as of December 31, 2020 and 2019:

Lease Rental Income - total fleet		2020		2019		2018			
Customer A	17.8%	14.8%	13.8%		
	Customer B	13.3%	13.5%	13.7%		
Customer C	9.7%	8.7%	8.7%		
		F-19						

Gross Accounts Receivable - total fleet	2020		2019		
Customer A	37.7%	16.6%	
Customer C	16.7%	7.7%	
Customer B	11.6%	12.0%	

As of December 31, 2020, and 2019, approximately 98.0% and 95.6%, respectively, of the Company’ gross accounts receivable for its total fleet were from container lessees and customers domiciled outside of the U.S. As of December 31, 2020 and 2019, approximately 99.8% and 97.5%, respectively, of the Company’s gross finance lease receivables for its total fleet were from container lessees and customers outside of the U.S. Except for the countries outside of the U.S. noted in the table below, customers in no other single country made up greater than 10% of the Company’s total fleet container lease billings during 2020, 2019 and 2018.

Country		2020	2019			2018			
Switzerland										
		20.5%			13.3%	14.1%		
France		12.7%			14.0%	13.8%		
Taiwan		12.3%			15.5%	14.6%		
People's Republic of China		11.8%			14.1%	15.0%		
Singapore		11.0%			11.1%	10.5%		

(p)	Derivative Instruments and Hedging

The Company has entered into various interest rate swap and cap agreements to mitigate its exposure associated with its variable rate debt. The swap agreements involve payments by the Company to counterparties at fixed rates in return for receipts based upon variable rates indexed to the London Inter Bank Offered Rate (“LIBOR”). The fair value of the derivative instruments is measured at each balance sheet date and is reflected on a gross basis on the consolidated balance sheets. The Company establishes criteria for both the designation and effectiveness of hedging activities. See Note 9 “Derivative Instruments” for further discussions.

If a derivative meets the definition of a cash flow hedge and is so designated, changes in the fair value of the derivative are recorded as a component of accumulated other comprehensive income, net of a provision for income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings in the period that the hedged transaction affects earnings. For derivative instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, the changes in the fair value are recognized in earnings during the period of change.

(q)	Share Options and Restricted Share Units

The Company estimates the fair value of all employee share options, restricted share units (“RSU”) and performance restricted share units (“PSU”) awarded under its 2019 Share Incentive Plan (the “2019 Plan”) on the grant date. The Company uses the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the estimated fair value for share options. The Company uses the fair market value of the Company’s common shares on the grant date, discounted for estimated dividends that will not be received by the employees during the vesting period, for determining the estimated fair value for time based RSUs. For PSUs or market based restricted share units that were granted with a market condition, the Company uses the Monte-Carlo simulation valuation model. See Note 12 “Share-Based Compensation” for further discussions.

Compensation expense for share options and RSUs with only a service condition is recognized on a straight-line basis over the requisite service period, generally the vesting period of the award. Provided that the requisite service period is rendered, compensation expense for PSUs with a market condition is recognized on a straight-line basis even if the market condition is not achieved. Compensation expense is recognized net of forfeitures that are estimated at the time of grant based on the Company’s historical experience and revised in

F-20

subsequent periods if actual forfeitures differ from those estimates. The expected forfeiture rate was 3.5%, 3.4% and 4.3% as of December 31, 2020, 2019 and 2018, respectively.

Share-based compensation expense of $4,723, $4,388 and $7,355 was recorded during 2020, 2019 and 2018, respectively, of which $4,257, $3,780 and $6,746 was presented as a part of “general and administrative expenses”, and the remaining balance was presented as a part of “direct container expenses – owned fleet” during 2020, 2019 and 2018, respectively in the Company’s consolidated statements of operations.

(r)	Comprehensive Income

The Company discloses the effect of its foreign currency translation adjustment, change in fair value of cash flow hedging derivative instruments, and reclassification of realized gain or loss on cash flow hedging instruments as components of “other comprehensive income” in the Company’s consolidated statements of comprehensive income.

(s)	Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s management evaluates its estimates on an ongoing basis, including those related to the container rental equipment, intangible assets, accounts receivable, income taxes and accruals.

These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments regarding the carrying values of assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions.

F-21

(t)	Net Income Attributable to Textainer Group Holdings Limited Common Shareholders Per Share

Basic earnings per share (“EPS”) is computed by dividing net income attributable to Textainer Group Holdings Limited common shareholders by the weighted average number of shares outstanding during the applicable period. Diluted EPS reflects the potential dilution that could occur if all outstanding share options were exercised for, and all outstanding RSUs and PSUs were converted into, common shares. Potentially dilutive share options, RSUs and PSUs that were anti-dilutive under the treasury stock method were excluded from the computation of diluted EPS. A reconciliation of the numerator and denominator of basic EPS with that of diluted EPS during 2020, 2019 and 2018 is presented as follows:

Share amounts in thousands			2020			2019			2018		
Numerator:											
Net income attributable to Textainer Group											
Holdings Limited common shareholders	$	72,822	$	56,724	$	50,378		
Denominator:											
Weighted average common shares											
outstanding-- basic			53,271			57,349			57,200		
Dilutive share options and RSUs			210			110			287		
Weighted average common shares											
outstanding-- diluted			53,481			57,459			57,487		
Net income attributable to Textainer Group											
Holdings Limited common shareholders											
per common share											
Basic	$	1.37	$	0.99	$	0.88		
Diluted	$	1.36	$	0.99	$	0.88		
											
Share options, RSUs and PSUs excluded from											
the computation of diluted EPS because they											
were anti-dilutive			1,674			1,805			1,232		

(u)	Fair Value Measurements

Fair value represents the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those levels:

•	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•	Level 2: Inputs other than quoted prices which are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

As of December 31, 2020 and 2019, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and payable, due from affiliates, net, container contracts payable, and due to container investors, net, approximate their fair values due to the short-term nature of these financial instruments. See Note 9 “Derivative Instruments” for further discussions on fair value of derivative instruments.

F-22

The following table summarizes the Company’s assets measured at fair value on a non-recurring basis as of December 31, 2020 and 2019:

				Quoted Prices in				Significant Other	Significant				Years Ended		
				Active Markets for					Unobservable				December 31,		
				Identical Assets				Observable Inputs		Inputs				2020 and 2019			
				(Level 1)				(Level 2)	(Level 3)				Cumulative			
													Impairment (2)		
December 31, 2020															
Assets															
	Containers held for sale (1)					$	5,845					$	2,118			
	Total	$	—	$	5,845		$	—	$	2,118			
December 31, 2019															
Assets															
	Containers held for sale (1)	$	—	$	22,217		$	—	$	6,346			
	Total															
		$	—	$	22,217		$	—	$	6,346			

(1)	Represents the carrying value of containers included in “containers held for sale” in the consolidated balance sheets that have been impaired to write down the value of the containers to their estimated fair value less cost to sell.
(2)	Represents the cumulative net impairment charges recognized on equipment held for sale from the date of designated held for sale status to the indicated period end date.

Fair Value of Containers Held for Sale

The Company recorded impairments to write down the value of containers identified for sale to their estimated fair value less cost to sell under a Level 2 input. The Company relies on its recent sales proceeds for sales of similar types of containers in the locations in which the containers are stored. Subsequent additions or reductions to the fair values of these written down assets are recorded as adjustments to the carrying value of the equipment held for sale.

Fair Value of Other Assets and Liabilities

At December 31, 2020 and 2019, the fair value of net investment in finance leases (including the short-term balance) was approximately $856,392 and $299,275 at December 31, 2020 and 2019, respectively, compared to book values of $879,960 and $295,303 at December 31, 2020 and 2019, respectively. The fair value of container leaseback financing receivable (including the short-term balance) was approximately $363,774 and $267,551 at December 31, 2020 and 2019, respectively, compared to book values of $363,868 and $271,658 at December 31, 2020 and 2019, respectively. The fair value of long-term debt (including current maturities) based on the borrowing rates available to the Company was approximately $4,144,332 and $3,798,683 at December 31, 2020 and 2019, respectively, compared to book values of $4,115,344 and $3,797,729 at December 31, 2020 and 2019, respectively.

(v)	Leases

The Company adopted FASB Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”) on the effective date of January 1, 2019 by using the effective date transition method and by electing the “package of practical expedients.” As a result of the adoption of the new lease accounting guidance, the Company (as a lessee) recognized a right-of-use asset and lease liability in the consolidated balance sheets for all existing office space leases on January 1, 2019, with the exception for short-term leases and leases that commence at or near the end of the underlying asset’s economic life.

As a result of the adoption of the new lease accounting guidance, the Company’s accounting (as a lessor) for finance leases and operating leases remained substantially unchanged and did not have an impact on the timing of revenue recognition relating to lease rental income in its consolidated statements of operations. The

F-23

Company’s consolidated statements of cash flows report all cash receipts from leases, including principal payments received from finance leases within operating activities instead of investing activities as a result of the adoption of ASU 2016-02. See Note 5 “Leases” for further discussion.

(w)	Recently Issued Accounting Standards and Pronouncements

In March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate Reform (“Topic 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). In January 2021, the FASB also issued Accounting Standards Update No 2021-01, Reference Rate Reform: Scope (“ASU 2021-01”), which expands the scope of Topic 848. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the reference rate reform if certain criteria are met, that reference LIBOR or another rate that is expected to be discontinued due to reference rate reform. The amendments in ASU 2020-04 are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company will continue its review of the debt and derivative agreements during the transition period until the USD LIBOR cessation by the end of June 2023. The Company expects the adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.

On April 10, 2020, the FASB issued a question-and-answer document regarding accounting for lease concessions and other effects of the coronavirus disease pandemic (“COVID-19”). The document clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Leases ASC 842. Instead, an entity that elects not to evaluate whether a concession is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election only when concessions related to the effects of COVID-19 do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. Upon issuance of this document, the Company made the election to apply the practical expedient method to account for any concessions as if they were contemplated as part of our existing leases and will apply this election consistently for all leases. There were no concessions related to the COVID-19 that were granted (as a lessor) or received (as a lessee) as of December 31, 2020.

In October 2020, the FASB issued Accounting Standards Update No. 2020-10, Codification Improvements – Disclosures (“ASU 2020-10”) to align with the SEC’s regulations. This ASU improves consistency by amending the codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The Company will adopt ASU 2020-10 as of the reporting period beginning January 1, 2021. This ASU will not affect the Company's results of operations, cash flows or financial position and the Company does not expect the adoption to have a material impact on the disclosures to the consolidated financial statements.

(2) Insurance Receivable and Impairment

In 2019, one of the Company’s customers became insolvent and the total net book value of its owned containers to this insolvent customer was $63,120. The Company maintains insurance that covers a portion of the exposure related to the value of containers that are unlikely to be recovered from its customers, the cost to recover containers and up to 183 days of lost lease rental income. Based on prior recovery experience, the Company estimated that containers with a book value of $9,468 would not be recovered from this insolvent customer. Accordingly, the Company recorded impairment charges of $9,059 included in “container lessee default (recovery) expense, net” in the consolidated statements of operations for the year ended December 31, 2019. The Company also recorded bad debt expense of $2,921 in the consolidated statements of operations during the year ended December 31, 2019 to fully reserve for this insolvent customer’s outstanding accounts receivable.

F-24

During the year ended December 31, 2020, the Company received $3,091 of cash collection from this insolvent customer, including payments for previously reserved outstanding accounts receivable. An insurance receivable of $2,106 and $1,792, net of insurance deductible was recorded in the “prepaid expenses and other current assets” in the consolidated balance sheets as of December 31, 2020 and 2019, respectively. As of December 31, 2020, the Company had not yet submitted a final insurance claim which is pending the results of its review of the insolvent customer’s restructuring plan. The restructuring plan was approved by the bankruptcy court on November 4, 2020. As of December 31, 2020, the bankruptcy settlement amount is not determinable and realizable.

Insurance receivable recorded on the Company’s owned fleet related to this insolvent customer are as follows:					
					
Estimated unrecovered containers, net of insurance deductible	$	409		
Recovery costs			1,383		
Insurance receivable related to this insolvent customer as of December 31, 2019			1,792		
Recovery costs			314		
Insurance receivable related to this insolvent customer as of December 31, 2020	$	2,106		

In 2018, four of the Company’s customers became insolvent and the total net book value of its owned containers to these insolvent customers were $23,044. The Company recorded impairment charges of $12,543 on the unrecoverable containers for these insolvent customers and container recovery costs of $4,864, both included in container lessee default expense in the consolidated statements of operations during 2018. The Company also recorded bad debt expense of $2,049 in the consolidated statements of operations to fully reserve for these insolvent customers’ outstanding accounts receivable during 2018. Due to a better than expected recovery, the Company recorded a gain on container recovery of $1,644 and $1,488 included in “container lessee default (recovery) expense, net” in the consolidated statements of operations during the years ended December 31, 2020 and 2019, respectively. There is no insurance receivable associated with these insolvent customers as respective losses are below the insurance deductible.

In 2016, one of the Company’s customers filed for bankruptcy. The Company maintains insurance that covers a portion of the exposure related to the value of containers that are unlikely to be recovered from this customer, the cost to recover containers and up to 183 days of lost lease rental income. The Company entered into a final agreement with the insurance companies on December 31, 2018 and the total remaining payments of $9,814 for the Company’s owned fleet were received in 2019. Accordingly, the Company recorded a $8,692 gain on insurance recovery and legal settlement in the consolidated statements of operations during the year ended December 31, 2018, which related to the final insurance settlement for insurable costs including primarily unrecovered containers and incurred container recovery costs, net of the insurance deductible. In 2019, the Company recorded a $14,881 gain on insurance recovery and legal settlement in the consolidated statements of operations on a net cash distribution from the bankruptcy estate for its owned fleet received during the year.

(3) Managed Container Fleet

As part of the Company’s on-going business operation, the Company from time to time purchases containers on behalf of Container Investors. The Company enters into management agreements with the Container Investors whereby the Company, as agent for the Container Investors, purchases and leases out these containers and manages all of the Container Investors’ rights and obligations in respect of such containers and leases. The acquisition of these containers is funded entirely by the Container Investors and all risks and rewards of ownership of these containers vest and remain exclusively with the Container Investors. The Container Investors have no rights or recourse against the Company in the event of physical loss or damage, failure to lease out, any lessee default or any other risk in respect of the containers.

F-25

The Container Investors pay the Company an acquisition fee for acquiring containers on their behalf at the time of acquisition and a fee for management services, including services associated with ultimately disposing of the containers on behalf of the Container Investors.

Lease rental income and expenses from the managed fleet owned by Container Investors are presented on a gross basis.

Lease rental income – managed fleet represents rental charges billed to the ultimate lessee for the managed fleet, including charges for handling fees, drop-off charges, pick-up charges, and charges for a damage protection plan that is set forth in the leases.

Management fees from non-leasing services are earned for acquiring new managed containers and sales commissions are earned from sales of the managed containers on behalf of the Container Investors, which are generally calculated as a fixed percentage of the cost of the managed containers purchased and the proceeds from the sale of the managed containers, respectively.

Acquisition fees from purchases of containers for the managed fleet are deferred and recognized as earned on a straight-line basis over the deemed lease term. As of December 31, 2020 and 2019, deferred revenue from acquisition fees amounted to $1,049 and $3,109, respectively, which were reported as “accounts payable and accrued expenses” in the consolidated balance sheets.

See Note 1 (e) “Accounting Policies and Recent Accounting Pronouncements – Revenue Recognition” for further information.

F-26

Containers - December 31, 2018 and Prior

Distribution expense to managed fleet container investors represents direct container expenses of the managed containers and the amounts distributed to the Container Investors, reduced by associated lease management fees earned and retained by the Company.

Managed containers in the Company’s managed fleet on or before December 31, 2018 are not included in the Company’s container leasing equipment in the Company’s consolidated balance sheet as of December 31, 2020 and 2019.

Container Purchases On or After January 1, 2019

Distribution expense to managed fleet container investors represents direct container expenses of the managed containers.

From an accounting perspective, in accordance with Topic 842 which is effective January 1, 2019 for the Company and under the above management arrangements, the Company is deemed to control the containers owned by the Container Investors before they are leased out. Furthermore, the deemed leaseback is considered a sales-type lease under Topic 842, with the Company as lessee and the Container Investors as lessors.

For accounting purposes, the Company is deemed to own the managed containers purchased by the Company on or after January 1, 2019 for and on behalf of Container Investors, notwithstanding the contractual management relationship which the Company has with the Container Investors. Accordingly, such managed containers are included in the Company’s container leasing equipment in the Company’s consolidated balance sheet as of December 31, 2020 and 2019 and depreciated using the straight-line method over their estimated useful lives to an estimated dollar residual value per the Company’s depreciation policy (see Note 1 (k) “Accounting Policies and Recent Accounting Pronouncements – Containers”). The purchase consideration paid by the Container Investors for such containers is reported as a deemed financial liability of the Company. Subsequent net operating income distributions made by the Company to the Container Investors are recorded as a reduction to the financial liability and as interest expense using the effective interest method. The net book value for these managed containers and the associated financial liability will reduce over time and will be removed upon container sale, irrespective of the amount realized in such sale.

During the year ended December 31, 2020, the Company paid $12,515 in cash to purchase the previously managed containers from a Container Investor which resulted in the extinguishment of the deemed financial liability. As a result of the settlement of the container leaseback financial liability, the management agreement between the Company and the Container Investor was terminated.

As of December 31, 2020 and 2019, the Company’s deemed container leaseback financial liability to the Container Investors amounted to $4,762 and $17,449, respectively, which were reported as "other liabilities” in the consolidated balance sheet.

The Company’s container leasing equipment for the owned and managed fleet as of December 31, 2020 and 2019, were as follows:

					2020									2019							
		Cost			Accumulated		Net Book			Cost			Accumulated			Net Book		
					Depreciation			Value						Depreciation				Value		
Containers - owned fleet	$	5,740,717	$	(1,619,304)	$	4,121,413	$	5,582,986	$	(1,442,986)	$	4,140		
Containers - managed fleet		3,926			(287)		3,639			16,332			(181)			16		
Total containers																					
	$	5,744,643	$	(1,619,591)	$	4,125,052	$	5,599,318	$	(1,443,167)	$	4,156		
																					
					F-27															

Total management fee income from the managed fleet, including management fees earned from acquisition fees and sales commissions during 2020, 2019 and 2018 were as follows (also, see Note 4 “Transactions with Affiliates and Container Investors”):

Lease rental income - managed fleet	2020				2019				2018			
	$	62,448		$	101,901		$	111,342			
Less: distribution expense to managed fleet container investors		(57,311)		(93,858)			(102,992)		
Less: depreciation and interest expense on managed containers purchased on or after												
January 1, 2019		(730)		(394)			—		
Management fees from leasing		4,407			7,649				8,350			
Management fees from non-leasing services		5,271			7,590				8,529			
Total management fees	$	9,678		$	15,239		$	16,879			

The Company’s consolidated balance sheets also include the accounts receivable from the lessees of the managed fleet which are uncollected lease billings related to the containers managed by the Company for the Container Investors. Amounts billed under leases for the managed fleet (“sub-leases”) are recorded in accounts receivable with a corresponding credit to due to container investors. As sub-lessor, the Company is required to remit accounts receivable from lessees of the managed fleet to the Container Investors once paid in accordance with the terms of the management agreements. The Company’s consolidated balance sheets also include the prepaid expenses and accounts payable and accrued expenses related to the containers managed by the Company for the Container Investors.

The following table provides a reconciliation of the balance sheet accounts from the managed fleet to the total amount as of December 31, 2020 and 2019 in the consolidated balance sheets (also, see Note 4 “Transactions with Affiliates and Container Investors”). Accounts receivable related to the owned fleet pertains to the Company’s uncollected lease billings related to the containers owned by the Company. Prepaid expenses and other current assets and accounts payable and accrued expenses related to the owned fleet represents the Company’s general and administrative costs and operating costs arising from the containers owned by the Company.

			2020				2019			
	Accounts receivable - owned fleet	$	97,950	$	96,158			
Accounts receivable - managed fleet			10,628			13,226			
	Total accounts receivable									
		$	108,578	$	109,384			

	Prepaid expenses and other current assets - owned fleet	$	13,614	$	14,627			
Prepaid expenses and other current assets - managed fleet			99			189			
	Total prepaid expenses and other current assets									
		$	13,713	$	14,816			

	Accounts payable and accrued expenses - owned fleet	$	23,198	$	21,451			
Accounts payable and accrued expenses - managed fleet			1,187			1,953			
	Total accounts payable and accrued expenses									
		$	24,385	$	23,404			

	Container contracts payable - owned fleet	$	231,647	$	9,394			
	Total container contracts payable									
		$	231,647	$	9,394			
										
		F-28							

(4) Transactions with Affiliates and Container Investors

Due from affiliates, net of $1,509 and $1,880, as of December 31, 2020 and 2019, respectively, represents lease rentals on tank containers collected on behalf of and payable to the Company from the Company’s tank container manager, net of direct container expenses and management fees.

Total management fees earned from the Company’s managed fleet, including acquisition fees and sales commissions during 2020, 2019 and 2018 were as follows:

		2020			2019				2018		
Fees from affiliated Container Investors	$	—	$	3,527	$	3,575		
Fees from unaffiliated Container Investors			9,678			11,374			11,334		
Fees from Container Investors			9,678			14,901			14,909		
Other fees			—			338			1,970		
Total management fees	$	9,678	$	15,239	$	16,879		

The following table provides a summary of due to container investors, net at December 31, 2020 and 2019:

				2020			2019		
	Accounts receivable - managed fleet	$	10,628		$	13,226		
Prepaid expenses and other current assets - managed fleet			99			189		
	Accounts payable and accrued expenses - managed fleet			(1,187)		(1,953)	
				9,540			11,462		
	Distributions due to container investors on lease rentals collected, net of								
	container expenses paid and management fees			9,157			10,516		
	Due to container investors, net	$	18,697		$	21,978		

There is no due to affiliated Container Investors as of December 31, 2020 and 2019.

(5)	Leases

(a)	Lessor

The Company’s lease rental income for the years ended December 31, 2020 and 2019 were as follows:

						2020										2019					
			Owned			Managed			Total				Owned			Managed			Total		
Lease rental income - operating leases	$	469,109	$	58,175	$	527,284		$	470,722	$	96,227	$	566,949		
Interest income on net investment																					
in finance leases			30,121			—			30,121				15,356			—			15,356		
Interest income on container leaseback																					
financing receivable			17,243			—			17,243				10,313			—			10,313		
Variable lease revenue			21,952			4,273			26,225				21,468			5,674			27,142		
Total lease rental income	$	538,425	$	62,448	$	600,873		$	517,859	$	101,901	$	619,760		

Variable lease revenue includes other charges set forth in the leases, such as handling fees, pick-up and drop-off charges and charges for damage protection plan.

For finance leases, the net selling loss recognized at lease commencement, representing the difference between the estimated fair value of containers placed on these leases and their net book value, in the amount of $144 and $1,027 for the years ended December 31, 2020 and 2019, respectively, are included in “gain on sale of owned fleet containers, net” in the consolidated statements of operations.

F-29

Operating Leases

The following is a schedule, by year, of future minimum lease payments receivable under the long-term leases for the owned and managed container fleet as of December 31, 2020:

			Owned			Managed			Total	
Year ending December 31:											
2021			361,495			32,769			394,264		
2022			302,704			19,173			321,877		
2023			258,275			16,081			274,356		
2024			198,781			12,119			210,900		
2025 and thereafter			314,207			19,380			333,587		
Total future minimum lease payments receivable	$	1,435,462	$	99,522	$	1,534,984		

Container Leaseback Financing Receivable

The Company’s container leaseback financing receivable pertains to containers purchased that were leased back to the seller-lessees through a sales-type leaseback arrangement. Under the provisions of Topic 842, these transactions from an accounting perspective are accounted for as financing transactions.

The following table represents the components of the container leaseback financing receivable as of December 31, 2020 and 2019:

Future minimum payments receivable		2020					2019			
	$	505,473		$	377,917			
Less: unearned income			(141,181)			(106,259)		
Container leaseback financing receivable (1)			364,292			$	271,658			
Less: Allowance for credit losses			(424)			—		
Container leaseback financing receivable, net		$	363,868			$	271,658			
Amounts due within one year			27,076				20,547			
Amounts due beyond one year			336,792				251,111			
Container leaseback financing receivable, net	$	363,868		$	271,658			

(1)	As of December 31, 2020, two customers represented 89.7% and 10.3% of the Company’s container leaseback financing receivable portfolio. As of December 31, 2019, two customers represented 82.9% and 17.1% of the Company’s container leaseback financing receivable portfolio.

F-30

Net Investment in Finance Leases

The following table represents the components of the net investment in finance leases as of December 31, 2020 and 2019:

			2020					2019			
	Future minimum lease payments receivable	$	1,216,086		$	385,589			
Residual value of containers			12,601				11,143			
	Less: unearned income			(347,394)			(101,429)		
	Net investment in finance leases (1)										
		$	881,293		$	295,303			
	Less: Allowance for credit losses			(1,333)			—		
	Net investment in finance leases, net										
		$	879,960		$	295,303			
	Amounts due within one year										
		$	78,459		$	40,940			
Amounts due beyond one year			801,501				254,363			
	Net investment in finance leases, net										
		$	879,960		$	295,303			

(1)	As of December 31, 2020, two major customers represented 80.1% and 8.6% of the Company’s finance lease portfolio. As of December 31,

2019, two major customers represented 44.3% and 16.1% of the Company’s finance lease portfolio. No other customer represented more than 10% of the Company’s finance leases portfolio as of December 31, 2020 and 2019.

The following is a schedule by year of future minimum lease payments receivable under container leaseback financing receivable and net investment in finance leases as of December 31, 2020:

Year ending December 31:			Container Leaseback			Net Investment in		Total			
		Financing Receivable			Finance Leases						
2021	$	47,819	$	126,661		$	174,480			
2022			47,819			109,333			157,152			
2023			47,819			103,757			151,576			
2024			43,723			97,527			141,250			
2025 and thereafter			318,293			778,808			1,097,101			
Total future minimum lease payments receivable	$	505,473	$	1,216,086		$	1,721,559			

(b)	Lessee

Right-of-use (“ROU”) lease assets and lease liability are recognized for the Company’s office space leases at the commencement date based on the present value of lease payments over the lease term. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company does not recognize a related ROU asset and lease liability for short-term leases having a lease term of twelve months or less.

As of December 31, 2020 and 2019, operating leases included in ROU lease assets amounted to $10,331 and $11,276, respectively, which were reported in “other assets” in the consolidated balance sheets. As of December 31, 2020 and 2019, total lease liabilities amounted to $12,636 and $13,736, respectively, of which amounts due within one year of $1,779 and $1,706, respectively, were reported in “other liabilities – current.” Long-term lease obligations that are due beyond one year of $10,857 and $12,030, respectively, were reported in “other liabilities – non-current” in the consolidated balance sheets.

F-31

Operating lease expense is recognized on a straight-line basis over the lease term and is reported in “general and administrative expense” in the consolidated statements of operations. Rent expense amounted to $2,231, $2,233 and $2,049 during 2020, 2019 and 2018, respectively. Other information related to the Company's operating leases are as follows:

		2020				2019	
Operating lease cost	$	2,103	$	2,095	
Short-term and variable lease cost			128			138	
Total rent expense	$	2,231	$	2,233	

Cash paid for amounts included in the measurement of lease liabilities	$	2,221	$	2,098	
							
	2020				2019	
Weighted-average remaining lease term		4.8 years				5.4 years	
Weighted-average discount rate	4.6%				4.2%	

Future minimum lease payment obligations under the Company’s noncancelable operating leases at December 31, 2020 were as follows:

		Operating		
		leasing		
Year ending December 31:					
2021		2,273			
2022		2,253			
2023		2,328			
2024		2,305			
2025 and thereafter		5,236			
Total minimum lease payments		14,395			
Less imputed interest		(1,759)		
				
Total present value of operating lease liabilities	$	12,636			

(6) Allowance for Credit Losses

The Company’s allowance for credit losses is estimated based on historical losses, current economic conditions, and ongoing review of the credit worthiness, but not limited to, each lessee’s payment history, lessee credit ratings, management’s current assessment of each lessee’s financial condition and the recoverability.

Accounts Receivable

The Company maintains allowances, if necessary, for doubtful accounts against accounts receivables resulting from the inability of its lessees to make required payments related to billed amounts under the operating leases, finance leases, container leaseback financing receivable, sales of owned fleet containers and trading containers. The allowance for credit losses included in accounts receivable, net, amounted to $2,663 and $6,299 as of December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019, the Company does not have an allowance for credit losses related to the billed amounts under the container leaseback financing receivable and does not have any past due balances relating to such transactions. As of December 31, 2020 and 2019, the allowance for credit losses related to the billed amounts under the finance leases and included in accounts receivable, net, amounted to $735 and $675, respectively.

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Net Investment in Finance Leases and Container Leaseback Financing Receivable

The Company maintains allowances for credit losses against net investment in finance leases and container leaseback financing receivable related to unbilled amounts under the finance leases and the sales-type leaseback arrangements accounted for as financing receivable. The allowance for credit losses related to unbilled amounts under finance leases and included in net investment in finance leases, net, amounted to $1,333 as of December 31, 2020. The allowance for credit losses related to unbilled amounts under the financing arrangements and included in container leaseback financing receivable, net, amounted to $424 as of December 31, 2020.

The Company evaluates its exposure by portfolio with similar risk characteristics based on the credit worthiness, external credit data and overall credit quality of its lessees. As of December 31, 2020, the Company’s net investment in finance leases and container leaseback financing receivable are primarily comprised of the largest shipping lines under “Tier 1” risk rating which represented 86.4% and 89.7%, respectively, of the Company’s portfolio (see Note (f) “Nature of Business and Summary of Significant Accounting Policies” for description of internal risk ratings).

The following table presents the net investment in finance leases and container leaseback financing receivable by internal credit rating category and year of origination as of December 31, 2020:

			Year Ended																				
			December 31,		2019			2018			2017			2016			Prior			Total			
			2020																					
Tier 1	$	571,226		$	111,206		$	35,580		$	7,221		$	—	$	36,625		$	761,858			
Tier 2			40,657			37,176			21,164			53			5,153			3,505			107,708			
Tier 3			2,624			7,145			1,132			—			42			784			11,727			
Net investment in finance leases	$	614,507		$	155,527		$	57,876		$	7,274		$	5,195		$	40,914		$	881,293			

Tier 1	$	113,383		$	213,386		$	—	$	—	$	—	$	—	$	326,769			
Tier 2			—		37,523			—		—		—		—		37,523			
Tier 3			—			—			—			—			—			—			—			
Container leaseback financing receivable	$	113,383		$	250,909		$	—	$	—	$	—	$	—	$	364,292			

Allowance for Credit Losses

Subsequent changes in the estimated allowance for credit losses are recognized in “bad debt expense, net” in the consolidated statements of operations. Subsequent changes in the estimated allowance for credit losses relating to the accounts receivable from managed container fleet are recognized in “distribution expense to managed fleet container investors” in the consolidated statements of operations (See Note 3 “Managed Container Fleet” for further information). The changes in the carrying amount of the allowance for credit losses during the year ended December 31, 2020 are as follows:

		Accounts Receivable			Net Investment in		Container Leaseback		Total Allowance for		
					Finance Leases			Financing Receivable			Credit Losses			
Balance as of December 31, 2019	$	6,299		$	—	$	—	$	6,299			
Impact of adopting ASU 2016-13 on January 1, 2020		—		636			256			892			
Additions charged to expense (recovery), net		(3,149)		697			168			(2,284)		
Write-offs		(487)		—		—		(487)		
Balance as of December 31, 2020	$	2,663		$	1,333		$	424		$	4,420			

(7) Income Taxes

The Company is not subject to taxation in its country of incorporation; however, the Company is subject to taxation in certain other jurisdictions due to the nature of the Company’s operations. The Company estimates its tax liability based upon its understanding of the tax laws of the various countries in which it operates. Income tax expense for 2020, 2019 and 2018 consisted of the following:

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		2020				2019			2018		
Current										
Bermuda	—	$	—	$	—	
Foreign	446				499			1,407		
		446				499			1,407		
Deferred										
Bermuda	—			—			—	
Foreign		(819)			1,449			618		
											
		(819)			1,449			618		
											
$	(374)	$	1,948	$	2,025		

The components of income before income taxes and noncontrolling interest were as follows:

			2020			2019			2018		
Bermuda sources	$	—	$	—	$	—	
Foreign sources			73,299			58,504			56,275		
	$	73,299	$	58,504	$	56,275		

A reconciliation of the differences between the Bermuda statutory income tax rate and the effective tax rate as provided in the consolidated statements of operations is as follows:

			2020					2019					2018			
Bermuda tax rate	$	—	0.00%	$	—	0.00%	$	—	0.00%	
Foreign tax rate			(1,291)		(1.76)%			188			0.32%			(142)		(0.25)%	
Tax uncertainties			917			1.25%			1,760			3.01%			2,167			3.85%	
																						
	$	(374)		(0.51)%	$	1,948			3.33%	$	2,025			3.60%	

The components of income tax expense and effective tax rate were as follows:

			2020					2019					2018			
Income before income tax and noncontrolling																			
interests	$	73,299				$	58,504				$	56,275				

Tax uncertainties	$	917		1.25%	$	1,760		3.01%	$	2,167		3.85%	
Foreign taxes																			
Stock base compensation			8		0.01%			405		0.69%			128		0.23%	
Adjustment for prior years			47		0.06%			270		0.46%			367		0.65%	
Foreign derived intangible income			(112)	(0.15)%			(77)	(0.13)%			(199)	(0.35)%	
Valuation allowance			67		0.09%			315		0.54%			272		0.48%	
Foreign rate difference			(1,333)	(1.82)%			(778)	(1.33)%			(758)	(1.35)%	
Other			32		0.04%			53		0.09%			48		0.09%	
																			
			(1,291)	(1.76)%			188		0.32%			(142)	(0.25)%	
																			
	$	(374)	(0.51)%	$	1,948		3.33%	$	2,025		3.60%	

F-34

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019 are presented below:

			2020				2019		
Deferred tax assets									
Net operating loss carryforwards	$	19,284		$	19,410		
Other			1,457				1,568		
			20,741				20,978		
Valuation allowance			(382)			(707)	
Deferred tax assets			20,359				20,271		
Deferred tax liabilities									
Containers, net			25,043				25,975		
Other			654				697		
Deferred tax liabilities			25,697				26,672		
Net deferred tax liabilities	$	5,338		$	6,401		

In assessing the extent to which deferred tax assets are realizable, the Company’s management considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company’s management considers the projected future reversal of taxable temporary items for making this assessment. Based upon the projections for the reversal of taxable temporary items over the periods in which the deferred tax assets are deductible, the Company’s management believes it is more likely than not the Company will not realize a portion of the benefits of these deductible differences, thus a valuation allowance has been provided.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The enactment of the CARES Act does not result in any material adjustments to the Company’s provision for income taxes.

The Company has U.S. federal net operating loss carry-forwards of $106,151 that will begin to expire from December 31, 2021 through December 31, 2037 if not utilized and $25,279 with no expiration date. The Company expects to utilize the net operating loss carry-forwards prior to their expiration, net of the valuation allowance. In the United States, utilization of net operating loss carry-forwards for federal income tax purposes may be subject to a substantial annual limitation if there is an ownership change within the meaning of Section 382 of the Internal Revenue Code. In general, an ownership change within the meaning of Section 382 occurs if a transaction or series of transactions over a three-year period result in a cumulative change of more than 50% in the beneficial ownership of a company’s stock. The Company’s management does not believe the Company has a limitation on the ability to utilize its net operating loss carry-forwards under Section 382 as of December 31, 2020. However, issuances, sales and/or exchanges of the Company’s stock (including, potentially, relatively small transactions and transactions beyond the Company’s control) occurring after December 31, 2020, taken together with prior transactions with respect to the Company’s stock over a three-year period, could trigger an ownership change under Section 382 in the future and therefore a limitation on the Company’s ability to utilize its net operating loss carryforwards. Any such limitation could cause some loss carryforwards to expire before the Company would be able to utilize them to reduce taxable income in future periods, possibly resulting in a substantial income tax expense or write down of the Company’s tax assets or both.

The accompanying consolidated financial statements do not reflect the income taxes that would be payable to foreign taxing jurisdictions if the earnings of a group of corporations operating in those jurisdictions were to be transferred out of such jurisdictions, because such earnings are intended to be permanently reinvested in those countries. At December 31, 2020, cumulative earnings of approximately $41,441 would be subject to income taxes of approximately $12,432 if such earnings of foreign corporations were transferred out of such jurisdictions in the form of dividends.

The Company’s foreign tax returns, including the United States, State of California, State of New Jersey, State of Texas, Malaysia, Singapore, and United Kingdom, are subject to examination by the various tax authorities. The Company’s foreign tax returns are no longer subject to examinations by taxing authorities for years

F-35

before 2015, except for its United States and State of California tax returns which are no longer subject to examinations for years before 2011 and 2008, respectively.

A reconciliation of the beginning and ending unrecognized tax benefit amounts for 2020 and 2019 are as follows:

Balance at December 31, 2018	$	18,145			
Decreases related to prior year tax positions			(82)		
Increases related to current year tax positions			2,922			
Lapse of statute of limitations			(1,343)		
Balance at December 31, 2019						
	$	19,642			
Increases related to prior year tax positions			19			
Increases related to current year tax positions			2,357			
Lapse of statute of limitations			(1,444)		
Balance at December 31, 2020						
	$	20,575			

If the unrecognized tax benefits of $20,575 at December 31, 20120 were recognized, tax benefits in the amount of $20,511 would reduce our annual effective tax rate. The Company believes the total amount of unrecognized tax benefit as of December 31, 2020 will decrease by $1,457 in the next twelve months due to expiration of the statute of limitations, which would reduce our annual effective tax rate.

Interest and penalty expense recorded during 2020, 2019 and 2018 amounted to $(11), $182 and $180, respectively. Total accrued interest and penalties as of December 31, 2020 and 2019 were $1,460 and $1,470, respectively, and were included in non-current income taxes payable.

(8) Debt

The following represents the Company’s debt obligations as of December 31, 2020 and 2019:

		2020			2019				
		Outstanding		Average Interest			Outstanding		Average Interest			Final Maturity	
TL Revolving Credit Facility	$	1,433,919	1.65%		$	1,280,037	3.29%		September 2023	
TL 2019 Term Loan		148,131	3.50%			158,371	3.50%		December 2026	
TMCL II Secured Debt Facility (1)		646,551	1.91%			689,658	3.49%		July 2026	
TMCL VI Term Loan		223,630	4.29%			249,421	4.30%		February 2038	
TMCL VII 2019-1 Bonds		300,305	4.02%			327,563	4.02%		April 2044	
TMCL VII 2020-1 Bonds		429,600	3.07%			—	0.00%		August 2045	
TMCL VII 2020-2 Bonds		587,183	2.26%			—	0.00%		September 2045	
TMCL VII 2020-3 Bonds		214,168	2.15%			—	0.00%		September 2045	
TAP Funding Revolving Credit Facility		131,857	2.11%			152,824	3.69%		December 2021	
TMCL V 2017-1 Bonds		—	0.00%			316,395	3.91%		May 2042	
TMCL V 2017-2 Bonds		—	0.00%			395,836	3.73%		June 2042	
TMCL VII 2018-1 Bonds		—	0.00%			227,624	4.14%		July 2043	
Total debt obligations	$	4,115,344				$	3,797,729						
Amount due within one year	$	408,365				$	242,433						
													
Amounts due beyond one year	$	3,706,979				$	3,555,296						

(1)	Final maturity of the TMCL II Secured Debt Facility is based on the assumption that the facility will not be extended on its scheduled conversion date.

F-36

The Company’s debt facilities are secured by specific pools of containers and related assets owned by the Company. The Company’s debt agreements contain various restrictive financial and other covenants related to leverage, interest coverage, fixed charge coverage, container sales proceeds ratio, net income and debt levels and consolidated tangible net worth, including limitations on certain liens, indebtedness and investments. All of the Company’s debt facilities contain restrictive covenants on borrowing base minimums.

Under the terms of the debt agreements, the total outstanding principal may not exceed an amount that is calculated as the total of the eligible containers designated to the respective facility times a certain advance rate, then plus the restricted cash amount (the “Asset Base”). For secured debt and revolving credit facilities, the total outstanding principal may not exceed the lesser of the commitment amount or the Asset Base. TGH and its subsidiaries were in full compliance with these restrictive covenants as of December 31, 2020.

Secured Debt Facilities

(a)	TMCL II

TMCL II has a securitization facility (the “TMCL II Secured Debt Facility”) that provides for an aggregate commitment amount of up to $1,200,000.

There is a commitment fee on the unused amount of the total commitment, payable monthly in arrears. The interest rate, payable monthly in arrears, is one-month LIBOR plus spread of 1.75% during the revolving period prior to the conversion date.

Credit Facilities

(a)	TL

TL has a revolving credit facility (the “TL Revolving Credit Facility”) that provides for an aggregate commitment amount of up to $1,500,000 (which includes a $25,000 letter of credit facility). There is a commitment fee on the unused amount of the total commitment, payable quarterly in arrears. The TL Revolving Credit Facility provides for payments of interest only during its term beginning on its inception date through September 2023 when all borrowings are due in full. Interest on the outstanding amount due under the TL Revolving Credit Facility is based either on the base rate for Base Rate loans plus a spread between 1.5% and 2.0% or LIBOR for Eurodollar rate loans plus a spread between 2.0% and 2.5%, as defined in the credit agreement, which varied based on TGH’s leverage. Interest payments on Base Rate loans and Eurodollar rate loans are payable in arrears on the last day of each calendar month and on the last day of each interest period, respectively. In July 2020, TL entered into an amendment of the TL Revolving Credit Facility which revised certain of the covenants and restrictions.

The TL Revolving Credit Facility contains cross default provisions that may result in an acceleration of principal repayment under the debt facility if an uncured default condition were to exist. TGH acts as an unconditional guarantor of the TL Revolving Credit Facility.

(b)	TAP Funding

TAP Funding had a credit agreement, that provides for a revolving credit facility with an aggregate commitment amount of up to $155,000 (the “TAP Funding Revolving Credit Facility”). There was a commitment fee on the unused amount of the total commitment, payable monthly in arrears. Interest on the outstanding amount due under the TAP Funding Revolving Credit Facility was based on one-month LIBOR plus 1.95%, payable monthly in arrears. In February 2020, the Company entered into an amendment of the TAP Funding Revolving Credit Facility which decreased the aggregate commitment amount from $190,000 to $155,000, reduced the advance rate from 80% to 78%, and revised certain of the covenants and restrictions.

In February 2021, the Company fully repaid and terminated the TAP Funding Revolving Credit Facility (see Note 14 “Subsequent Event” for further information).

Term Loan

(a)	TL

TL has a $160,000 fixed rate term loan (the “TL 2019 Term Loan”) with a group of financial institutions. Interest on the outstanding amount due under the TL 2019 Term Loan is based on a fixed rate of 3.50% per annum, payable monthly in arrears. In July 2020, TL entered into an amendment of the TL 2019 Term Loan which revised

F-37

certain of the covenants and restrictions. The TL 2019 Term Loan also contains cross default provisions that may result in an acceleration of principal repayment under the debt facility if an uncured default condition were to exist.

(b)	TMCL VI

TMCL VI has a $300,000 fixed rate term loan (the “TMCL VI Term Loan”) with a lender group comprised of a financial institution and one institutional investor. Under the terms of the TMCL VI Term Loan, both principal and interest incurred are payable monthly.

Bonds Payable

(a)	TMCL V

TMCL V 2017-1 Bonds. TMCL V issued the Series 2017-1 Fixed Rate Asset Backed Notes (the “TMCL V 2017-1 Bonds”), $350,000 aggregate Class A principal amount and $70,000 aggregate Class B principal amount of TMCL V 2017-1 Bonds. Under the terms of the TMCL V 2017-1 Bonds, both principal and interest incurred were payable monthly. In August 2020, TMCL V 2017-1 Bonds was terminated and fully repaid by proceeds from the TMCL VII 2020-1 Bonds.

TMCL V 2017-2 Bonds. TMCL V also issued the Series 2017-2 Fixed Rate Asset Backed Notes (the “TMCL V 2017-2 Bonds”), $416,000 aggregate Class A principal amount and $84,000 aggregate Class B principal amount of TMCL V 2017-2 Bonds. Under the terms of the TMCL VII 2020-2 Bonds, both principal and interest incurred were payable monthly. In September 2020, TMCL V 2017-2 Bonds was terminated and fully repaid by proceeds from the TMCL VII 2020-2 Bonds.

(b)	TMCL VII

TMCL VII 2018-1 Bonds. TMCL VII issued the Series 2018-1 Bonds, $250,000 aggregate Class A principal amount and $9,100 aggregate Class B principal amount of Series 2018-1 Fixed Rate Asset Backed Notes (the “TMCL VII 2018-1 Bonds”). Under the terms of the TMCL VII 2018-1 Bonds, both principal and interest incurred were payable monthly. In September 2020, TMCL VII 2018-1 Bonds was terminated and fully repaid by proceeds from the TMCL VII 2020-3 Bonds.

TMCL VII 2019-1 Bonds. TMCL VII issued the Series 2019-1 Fixed Rate Asset Backed Notes (the “TMCL VII 2019-1 Bonds”), $328,900 of aggregate Class A principal amount and $21,100 of aggregate Class B principal amount of TMCL VII 2019-1 Bonds. Under the terms of the TMCL VII 2019-1 Bonds, both principal and interest incurred are payable monthly.

TMCL VII 2020-1 Bonds. In August 2020, TMCL VII issued $380,800 of aggregate Class A principal amount and $69,200 of aggregate Class B principal amount of the Series 2020-1 Fixed Rate Asset Backed Notes (the “TMCL VII 2020-1 Bonds”). Under the terms of the TMCL VII 2020-1 Bonds, both principal and interest incurred are payable monthly. Proceeds from the TMCL VII 2020-1 Bonds were primarily used to pay off the TMCL V 2017-1 Bonds and pay down debt in our secured debt facility and revolving credit facility.

TMCL VII 2020-2 Bonds. In September 2020, TMCL VII issued $531,600 of aggregate Class A principal amount and $76,200 of aggregate Class B principal amount of the Series 2020-2 Fixed Rate Asset Backed Notes (“the TMCL VII 2020-2 Bonds”). Under the terms of the TMCL VII 2020-2 Bonds, both principal and interest incurred are payable monthly. Proceeds from the TMCL VII 2020-2 Bonds were primarily used to pay off the TMCL V 2017-2 Bonds and pay down debt in our secured debt facility and revolving credit facility.

TMCL VII 2020-3 Bonds. In September 2020, TMCL VII issued $213,000 of aggregate Class A principal amount and $8,000 of aggregate Class B principal amount of the Series 2020-3 Fixed Rate Asset Backed Notes (“the TMCL VII 2020-3 Bonds”). Under the terms of the TMCL VII 2020-3 Bonds, both principal and interest incurred are payable monthly. Proceeds from the TMCL VII 2020-3 Bonds were primarily used to pay off the TMCL VII 2018-1 Bonds.

F-38

Estimated Future Principal Payments

The following is a schedule of future scheduled repayments, by year, and borrowing capacities, as of December 31, 2020:

																							Current		
						Twelve months ending December 31,							Available	and Available		
													borrowing,		Borrowing,		
																						as limited by		
														2025 and		Total			as limited by		the		
		2021			2022			2023			2024								the		Borrowing		
														thereafter			Borrowing		Borrowing Base			Base			
TL Revolving Credit Facility	$	31,316		$	135,245	$	1,271,939		$	—	$	—	$	1,438,500	$	61,500		$	1,500,000			
TL 2019 Term Loan		10,898			11,285			11,686			12,102			103,506			149,477			—		—		
																								
TMCL II Secured Debt Facility (1)		51,964			56,707			56,439			56,439			427,981			649,531			4,906			654,437			
TMCL VI Term Loan		25,206			25,206			25,206			25,206			124,300			225,123			—		—		
																								
TMCL VII 2019-1 Bonds (2)		28,000			28,000			28,000			28,000			191,333			303,333			—		—		
TMCL VII 2020-1 Bonds (2)		52,906			56,170			56,925			57,669			210,617			434,288			—		—		
																								
TMCL VII 2020-2 Bonds (2)		63,858			60,569			66,179			68,745			334,301			593,652			—		—		
TMCL VII 2020-3 Bonds (2)		20,111			20,111			20,111			20,111			135,528			215,972			—		—		
																								
TAP Funding Revolving Credit Facility		132,150			—			—		—			—		132,150			3,686			135,836			
Total (3)																										
	$	416,408		$	393,294		$	1,536,486		$	268,272	$	1,527,566		$	4,142,026	$	70,091		$	2,290,272			

(1)	The estimated future repayments for TMCL II Secured Debt Facility is based on the assumption that the facility will not be extended on its associated conversion date.

(2)	Amounts on the TMCL VII 2019-1 Bonds, TMCL VII 2020-1 Bonds, TMCL VII 2020-2 Bonds, TMCL VII 2020-3 Bonds, exclude an unamortized discount of $81, $79, $157 and $82, respectively.

(3)	Future scheduled payments for all debts exclude unamortized prepaid debt issuance costs in an aggregate amount of $26,283.

(9) Derivative Instruments

The Company has entered into several derivative agreements with several banks to reduce the impact of changes in interest rates associated with its debt obligations. The counterparties to the Company’s interest rate swap agreements are highly rated financial institutions. In the unlikely event that the counterparties fail to meet the terms of the interest rate swap agreements, the Company’s exposure is limited to the interest rate differential on the notional amount at each monthly settlement period over the life of the agreements. The Company monitors its counterparties’ credit ratings on an on-going basis and does not anticipate any non-performance by the counterparties. The Company does not have any master netting arrangements with its counterparties.

The following is a summary of the Company’s derivative instruments as of December 31, 2020:

	Notional	
Derivative instruments	amount	

Interest rate swap contracts with several banks, with fixed rates between 1.73% and 2.94% per annum, amortizing notional amounts, with termination dates through January 15, 2023, non-designated

$	536,000

Interest rate swap contracts with several banks, with fixed rates between 0.17% and 1.58% per annum, amortizing notional amounts, with termination dates through April 30, 2027, designated

768,250

Interest rate cap contract at 3.00% fixed rate with a termination date of December 31, 2021

30,000

Total notional amount as of December 31, 2020	$	1,334,250

F-39

The Company has utilized the income approach to measure at each balance sheet date the fair value of its derivative instruments on a recurring basis using observable (Level 2) market inputs. This approach represents the present value of future cash flows based upon current market expectations. The valuation also reflects the credit standing of the Company and the counterparties to the derivative agreements. The credit valuation adjustment was determined to be $247 and $167 (both of which were additions to the net fair value) as of December 31, 2020 and 2019, respectively.

Derivative instruments are designated or non-designated for hedge accounting purposes. The following table summarizes the notional amount and fair value of derivative instruments, which are inclusive of counterparty risk, on the consolidated balance sheets as of December 31, 2020 and 2019:

			2020					2019			
			Notional			Derivative Amount			Notional			Derivative Amount	
Assets														
Interest rate swaps - designated as hedges	$	75,000	$	47	$	—	$	—	
Interest rate swaps - not designated as hedges			—			—			168,000			135		
Total	$	75,000	$	47	$	168,000	$	135		
Liabilities														
Interest rate swaps - designated as hedges	$	693,250	$	9,665	$	110,000	$	117		
Interest rate swaps - not designated as hedges			536,000			19,570			628,500			13,661		
Total	$	1,229,250	$	29,235	$	738,500	$	13,778		

Designated Derivative Instruments

Derivative instruments that are designated as cash flow hedge for accounting purposes are considered effective hedges and are recorded using hedge accounting. Under cash flow hedging, the entire gain or loss on the derivative is initially reported as a component of accumulated other comprehensive income. Amounts are deferred in accumulated other comprehensive income and reclassified into earnings in interest expense when the hedged item affects earnings. The Company performs quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and determining that forecasted transactions have not changed significantly.

The change in fair value of cash flow hedging instruments during the years ended December 31, 2020 and 2019 of pre-tax losses of $12,307 and $110, respectively, were recorded on the consolidated balance sheets in “accumulated other comprehensive income” and pre-tax loss of $2,806 and pre-tax gain of $7 were reclassified to “interest expense, net” when realized. As of December 31, 2018, none of the derivative instruments are designated by the Company for hedge accounting.

Non-Designated Derivative Instruments

Derivative instruments that are not designated as cash flow hedges for accounting purposes are economic hedges. The fair value of the non-designated derivative instruments is measured at each balance sheet date and the change in fair value during 2020, 2019 and 2018 of $6,044, $15,442 and $5,790, respectively, was recorded in the consolidated statements of operations as “unrealized loss on derivative instruments, net.” The differentials between the fixed and variable rate payments under these agreements are recognized in “realized gain (loss) on derivative instruments, net” in the consolidated statements of operations when realized.

The Company expects to reclassify an estimated net loss amount of $4,399 related to the designated interest rate swap agreements from accumulated other comprehensive income to interest expense in the consolidated statements of operations over the next twelve months. The following table summarizes the pre-tax impact of derivative instruments on the consolidated statements of operations and comprehensive income during the years ended December 31, 2020, 2019 and 2018:

F-40

Derivative instruments

Non-designated derivative instruments

Non-designated derivative instruments

Designated derivative instruments

Designated derivative instruments

(10) Segment Information

Financial Statement Caption			2020				2019				2018			
		$	(12,295)	$	1,939		$	5,238			
Realized (loss) gain on derivative instruments, net										
Unrealized loss on derivative instruments, net	$	(6,044)	$	(15,442)	$	(5,790)		
Other comprehensive loss	$	(12,307)	$	(110)	$	—		
Interest expense, net	$	(2,806)	$	7		$	—		

The Company operates in three reportable segments: Container Ownership, Container Management and Container Resale.

The following tables show segment information for 2020, 2019 and 2018, reconciled to the Company’s income before income tax and noncontrolling interests as shown in its consolidated statements of operations:

				Container		Container		Container										
2020			Ownership	Management		Resale		Other		Eliminations		Totals		
																					
Lease rental income - owned fleet	$	537,534		$	891		$	—	$	—	$	—	$	538,425		
Lease rental income - managed fleet			—			62,448			—			—			—			62,448		
Lease rental income	$	537,534		$	63,339		$	—	$	—	$	—	$	600,873		
Management fees - non-leasing from external																				
																				
customers		$	392		$	129		$	4,750		$	—	$	—	$	5,271		
Inter-segment management fees																				
		$	—		$	54,899		$	12,575		$	—	$	(67,474)	$	—		
Trading container margin																				
		$	—		$	—	$	3,532		$	—	$	—	$	3,532		
Gain on sale of owned fleet containers, net																				
		$	27,230		$	—	$	—	$	—	$	—	$	27,230		
Depreciation expense																				
		$	268,401		$	939		$	—	$	—	$	(7,675)	$	261,665		
Container lessee default recovery, net																				
		$	1,675		$	—	$	—	$	—	$	—	$	1,675		
Interest expense																				
	$	122,863		$	367		$	—	$	—	$	—	$	123,230		
Write-off of unamortized deferred debt issuance																				
costs and bond discounts		$	8,750		$	—	$	—	$	—	$	—	$	8,750		
Realized loss on derivative instruments, net																				
		$	12,295		$	—	$	—	$	—	$	—	$	12,295		
Unrealized loss on derivative instruments, net																				
		$	6,044		$	—	$	—	$	—	$	—	$	6,044		
Segment income (loss) before income tax and																				
																				
noncontrolling interests (1)		$	41,831		$	23,641		$	16,433		$	(3,254)	$	(5,352)	$	73,299		
Total assets																				
		$	5,641,866		$	180,933		$	12,050		$	13,691		$	(107,164)	$	5,741,376		
Purchase of containers and fixed assets																				
	$	968,204		$	194		$	—	$	—	$	—	$	968,398		
Payments on container leaseback financing																				
receivable	$	116,263		$	—	$	—	$	—	$	—	$	116,263		
																					
				F-41																

				Container			Container			Container																				
2019			Ownership			Management		Resale			Other			Eliminations				Totals			
																																				
Lease rental income - owned fleet	$	516,307	$				1,552	$		—	$			—	$				—	$			517,859		
Lease rental income - managed fleet					—				101,901				—					—							—					101,901		
Lease rental income	$	516,307	$		103,453	$		—	$			—	$				—	$			619,760		
Management fees - non-leasing from external																																			
																																			
customers	$			219	$				1,646	$	5,725	$			—	$				—	$			7,590		
Inter-segment management fees																																	
	$			—	$		48,215	$	12,323	$			—	$		(60,538)		$			—		
Trading container margin																																			
	$			—	$				—	$	7,398	$			—	$				—	$			7,398		
Gain on sale of owned fleet containers, net																																		
	$	21,397	$				—	$		—	$			—	$				—	$			21,397		
Depreciation expense																																	
	$	266,832	$				916	$		—	$			—	$		(7,376)		$			260,372		
Container lessee default expense, net																																		
	$	7,867	$				—	$		—	$			—	$				—	$			7,867		
Interest expense																																		
	$	152,914	$				271	$		—	$			—	$				—	$			153,185		
Realized gain on derivative instruments, net																																		
	$	1,946	$				—	$		—	$			—	$				—	$			1,946		
Unrealized loss on derivative instruments, net																																		
	$	15,442	$				—	$		—	$			—	$				—	$			15,442		
Segment income (loss) before income tax and																																			
noncontrolling interests (1)	$	14,296	$		27,747	$	21,036	$	(4,089)  $		(486)		$			58,504		
Total assets																																
	$	5,101,301	$		184,215	$	19,573	$		7,206	$	(109,678)		$			5,202,617		
Purchase of containers and fixed assets																																	
	$	420,971	$		12,706	$		—	$			—	$				—	$			433,677		
Payments on container leaseback financing																																			
																																			
receivable	$	281,445	$				—	$		—	$			—	$				—	$			281,445		
																																			
						Container			Container		Container																	
2018					Ownership			Management		Resale			Other		Eliminations		Totals		
																																				
Lease rental income - owned fleet			$		498,414		$		2,948	$			—	$				—	$				—	$	501,362		
Lease rental income - managed fleet							—				111,342					—						—						—			111,342		
Lease rental income			$		498,414		$	114,290	$			—	$				—	$				—	$	612,704		
Management fees - non-leasing from external																																			
																																			
customers			$		235		$		2,752	$	5,542	$				—	$				—	$	8,529		
Inter-segment management fees																													
			$			—	$		48,646	$	12,132	$				—	$	(60,778)	$	—		
Trading container margin																																	
			$			—	$			—	$	3,450	$				—	$				—	$	3,450		
Gain on sale of owned fleet containers, net																																		
			$		36,071		$			—	$			—	$				—	$				—	$	36,071		
Depreciation expense																														
			$		255,442		$		794	$			—	$				—	$	(6,736)	$	249,500		
Container lessee default expense, net																																		
			$		17,948		$			—	$			—	$				—	$				—	$	17,948		
Interest expense																																		
			$		138,427		$			—	$			—	$				—	$				—	$	138,427		
Write-off of unamortized deferred debt																																			
issuance costs and bond discounts			$		881		$			—	$			—	$				—	$				—	$	881		
Realized gain on derivative instruments, net																																		
			$		5,238		$			—	$			—	$				—	$				—	$	5,238		
Unrealized loss on derivative instruments, net																																		
			$		5,790		$			—	$			—	$				—	$				—	$	5,790		
Segment income (loss) before income tax and																																			
																																			
noncontrolling interests (1)			$		26,166		$		20,322	$	16,128	$	(4,083)	$	(2,258)	$	56,275		
Total assets																							
			$	4,648,938		$	152,801	$	45,110	$	10,653	$	(88,733)	$	4,768,769		
Purchase of containers and fixed assets																																	
			$		765,297		$		709	$			—	$				—	$				—	$	766,006		
																																				
								F-42																											

(1)	Container Ownership segment income (loss) before income tax and noncontrolling interests includes unrealized loss on derivative instruments, net of $6,044, $15,442 and $5,790 for the years ended December 31, 2020, 2019 and 2018, respectively, and write-off of unamortized deferred debt issuance costs and bond discounts of $8,750, $0 and $881 for the years ended December 31, 2020, 2019 and 2018, respectively.

General and administrative expenses are allocated to the reportable business segments based on direct overhead costs incurred by those segments. Amounts reported in the “Other” column represent activity unrelated to the active reportable business segments. Amounts reported in the “Eliminations” column represent inter-segment management fees between the Container Management and the Container Resale segments and the Container Ownership segment.

Geographic Segment Information

The Company’s container lessees use containers for their global trade utilizing many worldwide trade routes. The Company earns its revenue from international carriers when the containers are on hire. Substantially all of the Company’s leasing related revenue is denominated in U.S. dollars. As all of the Company’s containers are used internationally, where no single container is domiciled in one particular place for a prolonged period of time, all of the Company’s long-lived assets are considered to be international with no single country of use.

The following table represents the geographic allocation of total fleet lease rental income and management fees from non-leasing services during the years ended December 31, 2020, 2019 and 2018 based on customers’ and Container Investors’ primary domicile:

								Years ended December 31,							
			2020		Percent		2019		Percent		2018		Percent			
					of Total				of Total				of Total		
Lease rental income:																		
Asia	$	302,709		50.4%	$	329,567		53.2%	$	319,286		52.1%		
Europe			266,431		44.3%		255,495		41.2%		255,753		41.7%		
North / South America			29,391		4.9%		31,786		5.1%		34,053		5.6%		
All other international			2,342		0.4%		2,912		0.5%		3,612		0.6%		
																		
	$	600,873		100.0%	$	619,760		100.0%	$	612,704		100.0%		
Management fees, non-leasing:																		
Bermuda	$	2,797		53.1%	$	4,576		60.2%	$	4,418		51.8%		
Europe			2,397		45.5%		2,334		30.8%		2,089		24.5%		
Asia			11		0.2%		28		0.4%		7		0.1%		
North / South America			9		0.2%		342		4.5%		1,970		23.1%		
All other international			57		1.0%		310		4.1%		45		0.5%		
																		
	$	5,271		100.0%	$	7,590		100.0%	$	8,529		100.0%		
																		
					F-43												

The following table represents the geographic allocation of trading container sales proceeds and gain on sale of owned fleet containers, net during the years ended December 31, 2020, 2019 and 2018 based on the location of sale:

								Years ended December 31,							
			2020		Percent		2019		Percent		2018		Percent			
					of Total				of Total				of Total		
Trading container sales proceeds:																		
Asia	$	14,896		46.6%	$	39,519		67.3%	$	13,117		67.0%		
North / South America			13,045		40.9%		12,788		21.8%		2,893		14.8%		
Europe			3,991		12.5%		6,411		10.9%		3,487		17.8%		
All other international			9		0.0%		16		0.0%		71		0.4%		
																		
	$	31,941		100.0%	$	58,734		100.0%	$	19,568		100.0%		
Gain on sale of owned fleet containers, net:																		
Asia	$	13,082		48.1%	$	7,714		36.0%	$	18,593		51.5%		
North / South America			8,610		31.6%		6,809		31.8%		7,043		19.5%		
Europe			5,538		20.3%		5,577		26.1%		9,622		26.7%		
Bermuda			—	—		—	0.0%		—	—		
All other international			—		—			1,297		6.1%		813		2.3%		
																		
	$	27,230		100.0%	$	21,397		100.0%	$	36,071		100.0%		

(11)	Commitments and Contingencies

(a)	Restricted Cash

Restricted interest-bearing cash accounts were established by the Company as additional collateral for outstanding borrowings under certain of the

Company’s debt facilities. Restricted cash at December 31, 2020 and 2019 consisted of the following:

	2020				2019		
Trust accounts	$	17,054	$	12,822		
Other restricted cash accounts		57,093			84,531		
Total restricted cash	$	74,147	$	97,353		

Trust accounts

The Company maintains certain interest-bearing bank accounts (“Trust Accounts”) pursuant to certain debt agreements for the deposits of net cash proceeds collected from leasing and containers disposition after certain expenses. The cash in the Trust Accounts can only be used to pay the Company’s debt, interest and other certain related expenses. After such payments, any remaining cash in the Trust Accounts is transferred to certain unrestricted bank accounts of the Company and is included in cash and cash equivalents on the consolidated balance sheets.

Other restricted cash accounts

The Company established certain interest-bearing bank accounts pursuant to certain debt agreements to maintain an amount equal to certain outstanding debt balance and a projected interest expense for a specified number of months.

(b)	Container Commitments

At December 31, 2020, the Company had commitments to purchase containers to be delivered subsequent to December 31, 2020 in the total amount of $795,891. The Company also had commitments to purchase or fund containers under a sales-type leaseback financing arrangement with a lessee in the amount of $6,425.

F-44

(c)	Distribution Expense to Managed Fleet Container Investors

The amounts distributed to the Container Investors are variable payments based upon the net operating income for each managed container (see Note 3 “Managed Container Fleet”). There are no future minimum lease payment obligations under the Company’s management agreements.

(12) Share-Based Compensation

As of December 31, 2020, the Company maintained one active share option and restricted share unit plan, the 2019 Share Incentive Plan (“2019 Plan”). The 2019 Plan provided for the grant of share options, restricted share units, performance restricted share units, restricted shares, share appreciation rights and dividend equivalent rights. The 2019 Plan provided for grants of incentive share options only to the Company’s employees or employees of subsidiary of TGH. Awards other than incentive share options could be granted to the Company’s employees, directors and consultants or the employees, directors and consultants of subsidiaries of TGH. At December 31, 2020, 2,238,360 shares were available for future issuance under the 2019 Plan.

Share Options

Share options are granted at exercise prices equal to the fair market value of the shares on the grant date. Each employee’s options vest in increments of 25% per year beginning approximately one year after an option’s grant date. Unless terminated pursuant to certain provisions within the share option plans, including discontinuance of employment with the Company, all unexercised options expire ten years from the date of grant.

The following tables summarizes the activity of stock options in the 2019 Plan for the years ended December 31, 2020, 2019, and 2018:
	Share options			Weighted		
	(common share			average		
	equivalents)				exercise price			
Balances, December 31, 2017	1,524,677		$	22.88			
Options granted during the period	241,500		$	11.15			
Options exercised during the period	(15,259)	$	8.49			
Options expired during the period	(9,552)	$	25.77			
Options forfeited during the period	(37,458)	$	17.61			
Balances, December 31, 2018	1,703,908			$	21.44			
Options granted during the period	250,000		$	9.14			
Options exercised during the period	(13,014)	$	9.70			
Options expired during the period	(113,917)	$	23.73			
Options forfeited during the period	(19,312)	$	14.08			
Balances, December 31, 2019	1,807,665			$	19.76			
Options exercised during the period	(113,960)	$	11.36			
Options expired during the period	(130,711)	$	26.14			
Options forfeited during the period	(33,968)	$	12.40			
Balances, December 31, 2020	1,529,026			$	19.90			
Options exercisable at December 31, 2020								
	1,189,058			$	22.21			
Options vested and expected to vest at December 31, 2020	1,510,274		$	20.01			

As of December 31, 2020, $1,674 of total compensation cost related to non-vested share option not yet recognized is expected to be recognized over a weighted average period of 2 years. The aggregate intrinsic value of all options exercisable and outstanding, which represents the total pre-tax intrinsic value, based on the Company’s closing common share price of $19.18 per share as of December 31, 2020 was $4,107. The aggregate intrinsic value is calculated as the difference between the exercise prices of the Company’s share options that were in-the-money and the market value of the common shares that would have been issued if those share options were exercised as of December 31, 2020. The aggregate intrinsic value of all options exercised during 2020, 2019 and 2018, based on the closing share price on the date each option was exercised was $710, $4 and $83, respectively.

F-45

The following table summarizes information about share options exercisable and outstanding at December 31, 2020:

	Share options exercisable	Share options outstanding		
				Weighted					Weighted		
	Number of shares			average	Number of shares		average		
				exercise price			exercise price		
Range of per-share exercise prices:											
$9.13	50,067	$	9.13		226,874		$	9.13		
$9.46	2,500	$	9.46		5,000		$	9.46		
$9.70	210,359	$	9.70		210,359		$	9.70		
$9.75	2,813	$	9.75		3,750		$	9.75		
$11.15	92,946	$	11.15		202,560		$	11.15		
$12.23 - $14.17	158,254	$	14.05		158,254		$	14.05		
$22.95	150,391	$	22.95		200,501		$	22.95		
$28.05 - $28.54	215,514	$	28.27		215,514		$	28.27		
$34.14	162,639	$	34.14		162,639		$	34.14		
$ 38.36	143,575	$	38.36		143,575		$	38.36		
											
	1,189,058	$	22.21		1,529,026		$	19.90		

The weighted average contractual life of options exercisable and outstanding as of December 31, 2020 was 4.7 years and 4.9 years, respectively.

The Company did not grant any stock options during the year ended December 31, 2020. The estimated weighted average grant date fair value of share options granted during 2019 and 2018 was $4.47 and $5.40 per share, respectively, and was estimated using the Black-Scholes option pricing model for the years ended December 31, 2019 and 2018 with the following assumptions.:

	2019			2018		
Risk-free interest rates	1.7%	2.9%	
Expected terms (in years)	5.5		5.5		
Expected common share price volatilities	52.9%	49.8%	
Expected dividends	0.0%	0.0%	
Expected forfeitures	3.4%	4.3%	

The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the share option life. The expected term is calculated based on historical exercises. The expected common share price volatility is based on the historical average volatility of the Company’s stock over a period approximating the expected term of the options. The dividend yield reflects the estimated future yield on the date of grant.

Restricted Share Units (“RSU”) and Performance Restricted Share Units (“PSU”)

RSU awards granted to employees prior to 2020 have a vesting period of four years or vest in increments of 25% per year on each anniversary of the grant date. RSU awards granted to employees during 2020 have a vesting period of three years or vest in increments of 33.33% per year on each anniversary of the grant date. RSU awards granted to directors fully vest one year after their grant date.

The Company granted PSU awards to certain executives during the year ended December 31, 2020, which are subject to both service and market vesting conditions. The PSU awards will vest at the end of a 3-year performance cycle if the market conditions are met. The market-based conditions will be satisfied if certain milestones based on the Company’s common stock price or relative total shareholder return (“TSR”) are achieved.

F-46

The following tables summarizes the activity of RSU and PSU awards under the 2019 Plan for the years ended December 31, 2020, 2019, and 2018:

				Weighted		
	RSU and PSU		average grant		
			date fair value		
Balances, December 31, 2017	693,048		$	16.03			
Share units granted during the period	274,845		$	11.92			
Share units vested during the period	(289,685)	$	16.15			
Share units forfeited during the period	(37,458)	$	17.27			
Balances, December 31, 2018	640,750		$	14.20			
Share units granted during the period	309,192		$	9.20			
Share units vested during the period	(281,377)	$	13.97			
Share units forfeited during the period	(10,945)	$	14.32			
Balances, December 31, 2019	657,620		$	11.95			
Share units granted during the period (1)	384,428		$	16.96			
Share units vested during the period	(300,404)	$	12.08			
Share units forfeited during the period	(19,743)	$	12.62			
Balances, December 31, 2020	721,901		$	14.55			
Share units outstanding and expected to vest at December 31, 2020							
	677,055		$	14.48			

(1)	Share units granted during the year ended December 31, 2020 includes 183,560 shares of PSU awards with a grant date fair value of $22.06 per share. On the settlement date for each measurement period of market-based awards, grantees may receive shares equal to 0% to 200% of the awards granted depending upon the achievement of certain market criteria based on the Company’s TSR relative to the peer group during the three-year performance period. There were no PSU awards granted during the years ended December 31, 2019 and 2018.

As of December 31, 2020, $8,833 of total compensation cost related to non-vested time-based RSU and market-based PSU awards not yet recognized is expected to be recognized over a weighted average period of 2 years. The grant date fair value of the market-based PSU awards is recognized as expense ratably over the vesting period and is not adjusted in future periods for the success or failure to achieve the specified market condition.

There were no PSU awards granted during the years ended December 31, 2019 and 2018. The fair value of PSU awards granted during the year ended December 31, 2020 was determined using the Monte Carlo simulation valuation model that incorporated multiple valuation assumptions, including the probability of achieving the specified market condition and the following assumptions.:

	2020	
Risk-free interest rates	0.16%	
Expected common share price volatilities	57.4%	
Expected dividends	0.0%	

(13) Share Repurchase Program

In August 2019, the Company’s board of directors approved a share repurchase program to repurchase up to $25,000 of the Company’s common shares, in March 2020 the board of directors approved an increase by another $25,000 to this program and in September 2020 the program was further increased by $50,000. Under the program, the Company may purchase its common shares from time to time in the open market, in privately negotiated transactions or such other manner as will comply with applicable laws and regulations. The

F-47

authorization did not obligate the Company to acquire a specific number of shares during any period, but it may be modified, suspended or terminated at any time at the discretion of the Company’s board of directors.

During the year ended December 31, 2019, the Company repurchased 878,637 shares at an average price of $9.75 and for a total amount of $8,597, including commission paid. During the year ended December 31, 2020, the Company repurchased 6,736,493 shares at an average price of $10.17 for a total amount of $68,493, including commissions paid. As of December 31, 2020, approximately $23,202 remained available for repurchases under the share repurchase program.

.

(14) Subsequent Event

On January 19, 2021, the Company completed the acquisition of 49.9% of the common shares of TAP Funding from TAP Ltd. for a total purchase price consideration of $21,500. Following the acquisition, the Company owns 100% of TAP Funding and became a wholly-owned subsidiary of the. On February 10, 2021, the Company fully paid and terminated its TAP Funding Revolving Credit Facility.

On February 10, 2021, TMCL VII issued $523,500 of aggregate Class A and $26,500 of aggregate Class B Series 2021-1 Fixed Rate Asset Backed Notes (“the TMCL VII 2021-1 Bonds”) to qualified institutional investors pursuant to Rule 144A under the Securities Act and to non-U.S. persons in accordance with Regulation S promulgated under the Securities Act. The TMCL VII 2021-1 Bonds totaling $550,000 represent partially amortizing notes payable over an expected payment term of 7.5 years. Proceeds from the TMCL VII 2021-1 Bonds were primarily used to pay down the Company’s revolving credit facilities to create additional borrowing capacity for future container investments. The TMCL VII 2021-1 Bonds are secured by a pledge of TMCL VII’s assets.

On February 19, 2021, TL completed a $70,270 seven-year term loan with a group of financial institutions that represents a partially amortizing term loan based on defined repayment schedules until February 2028. Interest on the outstanding amount due under this term loan is based on a fixed rate of 2.65% per annum, payable monthly in arrears. Proceeds from this term loan were used to pay down TL’s revolving credit facility.

F-48

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

SCHEDULE I - CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Parent Company Information

Years Ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands)

	2020			2019				2018		
Operating expenses:										
General and administrative expense	$	3,988		$	4,089		$	4,083		
Total operating expenses		3,988			4,089			4,083		
Loss from operations		(3,988)		(4,089)		(4,083)	
Other income:										
Equity in net income of subsidiaries		76,076			60,813			54,461		
Interest income		80			—		—	
Other, net		654			—		—	
Net other income		76,810			60,813			54,461		
Income before income tax		72,822			56,724			50,378		
Income tax benefit		—		—		—	
Net income attributable to Textainer Group Holdings										
Limited common shareholders	$	72,822		$	56,724		$	50,378		
Net income attributable to Textainer Group Holdings Limited common										
shareholders per share:										
Basic	$	1.37		$	0.99		$	0.88		
Diluted	$	1.36		$	0.99		$	0.88		
Weighted average shares outstanding (in thousands):										
Basic		53,271			57,349			57,200		
Diluted		53,481			57,459			57,487		
Other comprehensive income (loss), before tax:										
Change in derivative instruments designated as cash flow hedges		(12,307)		(110)		—	
Reclassification of realized loss (gain) on derivative instruments										
designated as cash flow hedges		2,806			(7)		—	
Foreign currency translation adjustments		177			42			(127)	
Comprehensive income, before tax		63,498			56,649			50,251		
Income tax benefit related to items of other comprehensive										
income (loss)		91			—		—	
Comprehensive income attributable to Textainer Group Holdings										
Limited common shareholders	$	63,589		$	56,649		$	50,251		

F-49

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

SCHEDULE I - CONDENSED BALANCE SHEETS

Parent Company Information

December 31, 2020 and 2019

(All currency expressed in United States dollars in thousands)

		2020			2019		
Assets							
Current assets:							
Cash and cash equivalents	$	12,372		$	5,956		
Prepaid expenses and other current assets		336			310		
Due from affiliates, net		2,679			638		
Total current assets		15,387			6,904		
Investments in subsidiaries		1,245,427			1,253,763		
Total assets	$	1,260,814		$	1,260,667		
Liabilities and Shareholders’ Equity							
Current liabilities:							
Accounts payable and accrued expenses	$	394		$	476		
Total current liabilities		394			476		
Shareholders’ equity:							
Common shares		587			583		
Treasury shares		(86,239)		(17,746)	
Additional paid-in capital		417,421			411,407		
Accumulated other comprehensive loss		(9,744)		(511)	
Retained earnings		938,395			866,458		
Total shareholders’ equity		1,260,420			1,260,191		
Total liabilities and shareholders’ equity	$	1,260,814		$	1,260,667		

F-50

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

SCHEDULE I - CONDENSED STATEMENTS OF CASH FLOWS

Parent Company Information

Years ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands)

			2020			2019				2018			
Cash flows from operating activities:													
Net income attributable to Textainer Group Holdings Limited													
common shareholders	$	72,822		$	56,724		$	50,378			
Adjustments to reconcile net income to net cash provided by													
operating activities:													
Equity in net income of subsidiaries			(76,076)		(60,813)			(54,461)		
Dividends received from subsidiaries			76,167			46,823				—		
Share-based compensation			4,723			4,388				7,355			
Decrease (increase) in:													
Prepaid expenses and other current assets			(26)		(128)			34			
Increase (decrease) in:													
Accounts payable and accrued expenses			(82)		(237)			145			
Total adjustments													
			4,706			(9,967)			(46,927)		
Net cash provided by operating activities			77,528			46,757				3,451			
Cash flows from investing activities:													
(Decrease) increase in investments in subsidiaries, net			(2,050)		(41,865)			127			
Net cash (used in) provided by investing activities													
			(2,050)		(41,865)			127			
Cash flows from financing activities:													
Purchase of treasury shares			(68,493)		(8,597)			—		
Issuance of common shares upon exercise of share options			1,295			126				130			
Due (from) to affiliates, net			(2,041)		49				333			
Net cash (used in) provided by financing activities													
			(69,239)		(8,422)			463			
Effect of exchange rate changes													
			177			42				(127)		
Net increase (decrease) in cash and cash equivalents													
			6,416			(3,488)			3,914			
Cash and cash equivalents, beginning of the year			5,956			9,444				5,530			
Cash and cash equivalents, end of the year	$	12,372		$	5,956		$	9,444			
													
	F-51											

Schedule II

TEXTAINER GROUP HOLDINGS LIMITED AND SUBSIDIARIES

Valuation Accounts

Years ended December 31, 2020, 2019 and 2018

(All currency expressed in United States dollars in thousands)

					Additions								
		Balance at			Charged to						Balance at	
		Beginning of			Expense						End of	
		Year			(Recovery)		Deductions			Year	
December 31, 2018														
Accounts receivable, allowance for doubtful accounts	$	7,632	$	3,574		$	(5,477)	$	5,729		
December 31, 2019														
Accounts receivable, allowance for doubtful accounts	$	5,729	$	2,096		$	(1,526)	$	6,299		
December 31, 2020														
Accounts receivable, allowance for doubtful accounts	$	6,299	$	(3,149)	$	(487)	$	2,663		

F-52

ITEM 19.	EXHIBITS

The following exhibits are filed as part of this Annual Report on Form 20-F:

Exhibit														Description of Document		
Number																
1.1		Memorandum of Association of Textainer Group Holdings Limited (1)		
1.2		Bye-laws of Textainer Group Holdings Limited (2)			
2.1		Form of Common Share Certificate (3)				
4.1		Office Lease, dated August 8, 2001, by and between Pivotal 650 California St., LLC and Textainer Equipment Management (U.S.) Limited (the		
		“Office Lease”) (4)			
																												
4.2		First Amendment to the Office Lease, dated as of December 23, 2008, by and between A – 650 California Street, LLC and Textainer			
		Equipment Management (U.S.) Limited (5)			
4.3		Second Amendment to the Office Lease, dated as of April 23, 2015, by and between Columbia REIT – 650 California Street, LLC and			
		Textainer Equipment Management (U.S.) Limited (6)			
4.4*		Employment Agreement, dated August 13, 2018 by and between Textainer Equipment Management (U.S.) Limited and Olivier Ghesquiere (7)		
																							
4.5*		Employment Agreement, dated September 13, 2018 by and between Textainer Equipment Management (U.S.) Limited and Michael Chan (8)		
4.6*		2019 Share Incentive Plan (as amended and restated effective May 23, 2019) (9)			
4.7*		2008 Bonus Plan (10)			
																					
4.8*		Form of Indemnification Agreement (11)			
4.9		Amended and Restated Credit Agreement, dated September 26, 2018, by and among, Textainer Limited, as borrower, Textainer Group			
		Holdings Limited, as guarantor, Wells Fargo Bank, N.A., as agent and the lenders party thereto (“TL Credit Agreement”) (12)		
																		
4.10		Second Amended and Restated Indenture, dated August 31, 2017, by and between Textainer Marine Containers Limited II, as issuer and Wells		
		Fargo Bank, National Association, as indenture trustee (“TMCL II Indenture”) (13)			
																
4.11		Second Amended and Restated Textainer Marine Containers Limited II Series 2012-1 Supplement, dated August 31, 2017 to the TMCL II		
		Indenture (the “Series 2012-1 Supplement”) (14)			
														
4.12		Amendment No. 1 to TMCL II Indenture, dated July 24, 2019, by and among, Textainer Marine Containers Limited II, as issuer and Wells			
		Fargo Bank, National Association, as indenture trustee) (15)		
												
4.13		Amendment No. 1 to the Series 2012-1 Supplement, dated July 24, 2019 (16)		
											
4.14		Container Management Services Agreement, dated as of December 1, 2016, by and between Maccarone Container Fund, LLC and Textainer		
		Equipment Management Limited (17)				
8.1†		Subsidiaries of the Registrant			
12.1†		Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as			
		amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		
						
12.2†		Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as			
		amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		
		111																			

Exhibit				Description of Document		
Number						
13.1†			Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code,			
		as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			
13.2†		Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code, as		
		adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		
15.1†		Consent of KPMG LLP				
101.INS†		Inline XBRL Instance Document		
101.SCH†		Inline XBRL Taxonomy Extension Schema Document		
101.CAL†		Inline XBRL Taxonomy Extension Calculation Linkbase Document		
101.DEF†		Inline XBRL Taxonomy Definition Linkbase Document		
101.LAB†		Inline XBRL Taxonomy Extension Label Linkbase Document		
101.PRE†		Inline XBRL Taxonomy Extension Presentation Linkbase Document		
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)		

†	Filed herewith.

*	Indicates management contract or compensatory plan.

(1)	Incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form F-1 (File No. 333-146304) filed with the SEC on September 26, 2007.

(2)	Incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form F-1 (File No. 333-146304) filed with the SEC on September 26, 2007.

(3)	Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form F-1 (File No. 333-146304) filed with the SEC on September 26, 2007.

(4)	Incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form F-1 (File No. 333-146304) filed with the SEC on September 26, 2007.

(5)	Incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 16, 2009.

(6)	Incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 20-F (File No. 001- 33725) filed with the SEC on March 11, 2016.

(7)	Incorporated by reference to Exhibit 4.4 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 25, 2019.

(8)	Incorporated by reference to Exhibit 4.5 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 25, 2019.

(9)	Incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 (File No. 333-233323) filed with the SEC on August 16, 2019.

(10)	Incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form F-1 (File No. 333-146304) filed with the SEC on September 26, 2007.

(11)	Incorporated by reference to Exhibit 4.10 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 15, 2012.

(12)	Incorporated by reference to Exhibit 4.9 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 25, 2019.

(13)	Incorporated by reference to Exhibit 4.10 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 25, 2019.

(14)	Incorporated by reference to Exhibit 4.11 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 25, 2019.

(15)	Incorporated by reference to Exhibit 4.12 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 30, 2020.

(16)	Incorporated by reference to Exhibit 4.13 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 30, 2020.

112

(17)	Incorporated by reference to Exhibit 4.21 to the Registrant’s Annual Report on Form 20-F (File No. 001-33725) filed with the SEC on March 27, 2017.

113

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

Textainer Group Holdings Limited

/s/ Olivier Ghesquiere

Olivier Ghesquiere

President and Chief Executive Officer

/s/ Michael K. Chan

Michael K. Chan

Executive Vice President and Chief Financial Officer

March 18, 2021

114

					Exhibit 8.1	
		LIST OF SUBSIDIARIES		
			Jurisdiction of		
Name of Subsidiary		Organization	Name under which Subsidiary does Business	
						
Textainer Limited		Bermuda	Textainer Limited	
Textainer Equipment Management Limited		Bermuda	Textainer Equipment Management Limited	
Textainer Equipment Management (S) Pte Ltd.		Singapore	Textainer Equipment Management (S) Pte Ltd	
Textainer Equipment Management (U.S.) Limited		Deleware	Textainer Equipment Management (U.S.) Limited	
Textainer Equipment Management (U.K.) Limited		United Kingdom	Textainer Equipment Management (U.K.) Limited	
Textainer Equipment Management (U.S.) II LLC		Deleware	Textainer Equipment Management (U.S.) II LLC	
Textainer Marine Containers II Limited		Bermuda	Textainer Marine Containers II Limited	
Textainer Marine Containers V Limited		Bermuda	Textainer Marine Containers V Limited	
Textainer Marine Containers VI Limited		Bermuda	Textainer Marine Containers VI Limited	
Textainer Marine Containers VII Limited		Bermuda	Textainer Marine Containers VII Limited	
TAP Funding Ltd.		Bermuda	TAP Funding Ltd.	

Exhibit 12.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER REQUIRED BY RULE 13A-14(A) OR RULE 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Olivier Ghesquiere, certify that:

1.	I have reviewed this annual report on Form 20-F of Textainer Group Holdings Limited;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.	The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.	The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 18, 2021

/s/ OLIVIER GHESQUIERE

Olivier Ghesquiere

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 12.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER REQUIRED BY RULE 13A-14(A) OR RULE 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael K. Chan, certify that:

1.	I have reviewed this annual report on Form 20-F of Textainer Group Holdings Limited;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4.	The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5.	The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 18, 2021

/s/ MICHAEL K. CHAN

Michael K. Chan

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Exhibit 13.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER REQUIRED BY RULE 13A-14(B) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Textainer Group Holdings Limited (the “Company”), hereby certifies, to such officer’s knowledge, that:

1.	The Annual Report on Form 20-F for the year ended December 31, 2020 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 18, 2021

/s/ OLIVIER GHESQUIERE

Olivier Ghesquiere

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 13.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER REQUIRED BY RULE 13A-14(B) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350 of Chapter 63 of Title 18 of the United States Code), the undersigned officer of Textainer Group Holdings Limited (the “Company”), hereby certifies, to such officer’s knowledge, that:

1.	The Annual Report on Form 20-F for the year ended December 31, 2020 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 18, 2021

/s/ MICHAEL K. CHAN

Michael K. Chan

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Exhibit 15.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Textainer Group Holdings Limited:

We consent to the incorporation by reference in the registration statement (No. 333-146304) on Form F-1, registration statements (Nos. 333-147961, 333-171409, 333-211290 and 333-233323) on Form S-8, and registration statements (Nos. 333-171410, 333-223657 and 333-234444) on Form F-3 of Textainer Group Holdings Limited and subsidiaries of our report dated March 18, 2021, with respect to the consolidated balance sheets of Textainer Group Holdings Limited and subsidiaries as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedules I and II, and the effectiveness of internal control over financial reporting as of December 31, 2020, which reports appear in the December 31, 2020 annual report on Form 20-F of Textainer Group Holdings Limited and subsidiaries.

Our report dated March 18, 2021, on the consolidated financial statements, refers to a change in the method of accounting for leases.

/s/ KPMG LLP

San Francisco, California

March 18, 2021