0001388430-21-000010 | 10-Q | XBRL Viewer

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Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2021	Jul. 29, 2021
Entity Listings [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-33388
Entity Registrant Name	CAI International, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3109229
Entity Address, Address Line One	Steuart Tower, 1 Market Plaza
Entity Address, Address Line Two	Suite 2400
Entity Address, City or Town	San Francisco
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94105
City Area Code	415
Local Phone Number	788-0100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		17,357,549
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Amendment Flag	false
Entity Central Index Key	0001388430
Common Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	CAI
Security Exchange Name	NYSE
Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share
Trading Symbol	CAI-PA
Security Exchange Name	NYSE
Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	8.50% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock, par value $0.0001 per share
Trading Symbol	CAI-PB
Security Exchange Name	NYSE

CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Jun. 30, 2021

Dec. 31, 2020

Current assets

Current portion of restricted cash

$ 600

Accounts receivable, net of allowance for doubtful accounts of $418 and $393 at June 30, 2021 and December 31, 2020, respectively

63,917

65,310

Current portion of net investment in finance leases

87,830

78,992

Current portion of financing receivable

14,354

9,550

Prepaid expenses and other current assets

5,405

6,663

Total current assets

210,916

214,662

Restricted cash

11,819

12,355

Rental equipment, net of accumulated depreciation of $715,911 and $669,360 at June 30, 2021 and December 31, 2020, respectively

1,944,221

1,781,321

Net investment in finance leases

728,971

550,573

Financing receivable

47,798

48,888

Derivative instruments

7,830

Other non-current assets

3,793

4,833

Total assets

^[1]

2,955,348

2,612,632

Current liabilities

Accounts payable

4,380

3,666

Accrued expenses and other current liabilities

31,921

29,598

Unearned revenue

2,438

3,029

Current portion of debt

116,433

183,448

Rental equipment payable

311,871

100,509

Total current liabilities

467,043

320,250

Debt

1,706,731

1,562,283

Derivative instruments

Net deferred income tax liability

22,324

24,442

Other non-current liabilities

2,989

3,337

Total liabilities

^[2]

2,199,087

1,910,392

Stockholders' equity

Common stock, par value $0.0001 per share; authorized 84,000,000 shares; issued and outstanding 17,357,549 and 17,562,779 shares at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

90,098

100,795

Accumulated other comprehensive loss

(5,743)

Retained earnings

562,200

503,321

Total stockholders' equity

756,261

702,240

Total liabilities and stockholders' equity

2,955,348

2,612,632

Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock [Member]

Stockholders' equity

Preferred stock, par value $0.0001 per share; authorized 10,000,000

54,990

Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock [Member]

Stockholders' equity

Preferred stock, par value $0.0001 per share; authorized 10,000,000

48,875

Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]

Current assets

Cash

17,554

26,691

Variable Interest Entity, Primary Beneficiary [Member]

Current assets

Cash

21,256

26,856

Rental equipment, net of accumulated depreciation of $715,911 and $669,360 at June 30, 2021 and December 31, 2020, respectively

68,579

77,907

Net investment in finance leases

1,813

2,683

Current liabilities

Current portion of debt

42,542

41,344

Debt

$ 40,407

$ 59,519

[1]	Total assets at June 30, 2021 and December 31, 2020 include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash, $21,256 and $26,856; Net investment in finance leases, $1,813 and $2,683; and Rental equipment, net of accumulated depreciation, $68,579, and $77,907, respectively.
[2]	Total liabilities at June 30, 2021 and December 31, 2020 include the following VIE liabilities for which the VIE creditors do not have recourse to CAI International, Inc.: Current portion of debt, $42,542 and $41,344; Debt, $40,407 and $59,519, respectively.

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Current assets
Accounts receivable, allowance for doubtful accounts	$ 418	$ 393
Rental equipment net of accumulated depreciation	1,944,221	1,781,321
Rental equipment, accumulated depreciation	715,911	669,360
Net investment in direct finance leases	728,971	550,573
Current liabilities
Current portion of debt	116,433	183,448
Debt	$ 1,706,731	$ 1,562,283
Stockholders' equity
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	84,000,000	84,000,000
Common stock, shares issued	17,357,549	17,562,779
Common stock, shares outstanding	17,357,549	17,562,779
Variable Interest Entity, Primary Beneficiary [Member]
Current assets
Cash	$ 21,256	$ 26,856
Rental equipment net of accumulated depreciation	68,579	77,907
Net investment in direct finance leases	1,813	2,683
Current liabilities
Current portion of debt	42,542	41,344
Debt	$ 40,407	$ 59,519
Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock [Member]
Stockholders' equity
Preferred stock, dividend rate	8.50%	8.50%
Preferred stock, shares issued	2,199,610	2,199,610
Preferred stock, shares outstanding	2,199,610	2,199,610
Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Stock [Member]
Stockholders' equity
Preferred stock, dividend rate	8.50%	8.50%
Preferred stock, shares issued	1,955,000	1,955,000
Preferred stock, shares outstanding	1,955,000	1,955,000

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue
Total leasing revenue	$ 85,695	$ 69,443	$ 166,495	$ 138,556
Operating expenses
Depreciation of rental equipment	29,270	26,750	57,821	53,798
Storage, handling and other expenses	2,444	5,163	4,933	9,592
Gain on sale of rental equipment	(7,026)	(1,788)	(13,769)	(3,435)
Administrative expenses	10,168	6,825	17,908	13,720
Total operating expenses	34,856	36,950	66,893	73,675
Operating income	50,839	32,493	99,602	64,881
Other expenses
Net interest expense	11,114	15,702	22,286	33,976
Write-off of debt issuance costs		432		432
Other (income) expense	(74)	(97)	336	149
Total other expenses	11,040	16,037	22,622	34,557
Income before income taxes	39,799	16,456	76,980	30,324
Income tax expense	1,856	904	4,360	2,103
Income from continuing operations	37,943	15,552	72,620	28,221
Income (loss) from discontinued operations, net of income taxes		(16,178)	1,063	(30,177)
Net income (loss)	37,943	(626)	73,683	(1,956)
Preferred stock dividends	2,207	2,207	4,414	4,414
Net income (loss) attributable to CAI common stockholders	35,736	(2,833)	69,269	(6,370)
Amounts attributable to CAI common stockholders
Net income from continuing operations	$ 35,736	13,345	68,206	23,807
Net (loss) income from discontinued operations		$ (16,178)	$ 1,063	$ (30,177)
Basic
Continuing operations	$ 2.07	$ 0.76	$ 3.95	$ 1.36
Discontinued operations		(0.92)	0.06	(1.73)
Total basic	2.07	(0.16)	4.01	(0.37)
Diluted
Continuing operations	2.04	0.76	3.90	1.35
Discontinued operations		(0.92)	0.06	(1.71)
Total diluted	$ 2.04	$ (0.16)	$ 3.96	$ (0.36)
Weighted average shares outstanding
Basic	17,281	17,470	17,276	17,451
Diluted	17,479	17,601	17,504	17,641
Operating Leases [Member]
Revenue
Total leasing revenue	$ 65,821	$ 54,750	$ 129,688	$ 109,378
Finance Leases [Member]
Revenue
Total leasing revenue	14,259	11,260	27,504	22,850
Operating expenses
Gain on sale of rental equipment			(200)
Other Revenue [Member]
Revenue
Total leasing revenue	$ 5,615	$ 3,433	$ 9,303	$ 6,328

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net income (loss)	$ 37,943	$ (626)	$ 73,683	$ (1,956)
Other comprehensive income (loss), net of tax:
Change in fair value of derivative instruments designated as cash flow hedges	(1,990)		7,519
Reclassification of realized loss on derivative instruments designated as cash flow hedges	234		391
Foreign currency translation adjustments	113	101	(409)	(36)
Comprehensive income (loss) before tax	36,300	(525)	81,184	(1,992)
Income tax benefit (expense) related to items of other comprehensive income (loss)	369		(1,662)
Comprehensive income (loss) before preferred stock dividends, net of tax	36,669	(525)	79,522	(1,992)
Dividends on preferred stock	(2,207)	(2,207)	(4,414)	(4,414)
Comprehensive income (loss) available to CAI common stockholders	$ 34,462	$ (2,732)	$ 75,108	$ (6,406)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Total
Balances at Dec. 31, 2019	$ 103,865	$ 2	$ 102,709	$ (6,630)	$ 493,294	$ 693,240
Balances, Shares at Dec. 31, 2019	4,155	17,479
Net income (loss)					(1,330)	(1,330)
Preferred stock dividends, $0.53125/share					(2,207)	(2,207)
Foreign currency translation adjustment				(137)		(137)
Exercise of stock options			113			113
Exercise of stock options, Shares		8
Stock-based compensation, net of taxes			468			468
Stock-based compensation, net of taxes, Shares		19
Balances at Mar. 31, 2020	$ 103,865	$ 2	103,290	(6,767)	489,757	690,147
Balances, Shares at Mar. 31, 2020	4,155	17,506
Balances at Dec. 31, 2019	$ 103,865	$ 2	102,709	(6,630)	493,294	693,240
Balances, Shares at Dec. 31, 2019	4,155	17,479
Net income (loss)						(1,956)
Preferred stock dividends, $0.53125/share						(4,414)
Balances at Jun. 30, 2020	$ 103,865	$ 2	103,342	(6,666)	486,924	687,467
Balances, Shares at Jun. 30, 2020	4,155	17,553
Balances at Mar. 31, 2020	$ 103,865	$ 2	103,290	(6,767)	489,757	690,147
Balances, Shares at Mar. 31, 2020	4,155	17,506
Net income (loss)					(626)	(626)
Preferred stock dividends, $0.53125/share					(2,207)	(2,207)
Foreign currency translation adjustment				101		101
Exercise of stock options, Shares		3
Stock-based compensation, net of taxes			52			52
Stock-based compensation, net of taxes, Shares		44
Balances at Jun. 30, 2020	$ 103,865	$ 2	103,342	(6,666)	486,924	687,467
Balances, Shares at Jun. 30, 2020	4,155	17,553
Balances at Dec. 31, 2020	$ 103,865	$ 2	100,795	(5,743)	503,321	702,240
Balances, Shares at Dec. 31, 2020	4,155	17,563
Net income (loss)					35,740	35,740
Common stock dividend declared, $0.30/share					(5,192)	(5,192)
Preferred stock dividends, $0.53125/share					(2,207)	(2,207)
Change in fair value of derivative instruments designated as cash flow hedges				9,509		9,509
Reclassification of realized loss on derivative instruments designated as cash flow hedges				157		157
Foreign currency translation adjustment				(522)		(522)
Income tax expense related to items of other comprehensive income				(2,031)		(2,031)
Repurchase of common stock			(12,788)			(12,788)
Repurchase of common stock, Shares		(390)
Exercise of stock options			1,499			1,499
Exercise of stock options, Shares		107
Stock-based compensation, net of taxes			(198)			(198)
Stock-based compensation, net of taxes, Shares		24
Balances at Mar. 31, 2021	$ 103,865	$ 2	89,308	1,370	531,662	726,207
Balances, Shares at Mar. 31, 2021	4,155	17,304
Balances at Dec. 31, 2020	$ 103,865	$ 2	100,795	(5,743)	503,321	702,240
Balances, Shares at Dec. 31, 2020	4,155	17,563
Net income (loss)						73,683
Preferred stock dividends, $0.53125/share						(4,414)
Income tax expense related to items of other comprehensive income						(1,662)
Repurchase of common stock						$ (12,800)
Repurchase of common stock, Shares						(400)
Balances at Jun. 30, 2021	$ 103,865	$ 2	90,098	96	562,200	$ 756,261
Balances, Shares at Jun. 30, 2021	4,155	17,358
Balances at Mar. 31, 2021	$ 103,865	$ 2	89,308	1,370	531,662	726,207
Balances, Shares at Mar. 31, 2021	4,155	17,304
Net income (loss)					37,943	37,943
Common stock dividend declared, $0.30/share					(5,198)	(5,198)
Preferred stock dividends, $0.53125/share					(2,207)	(2,207)
Change in fair value of derivative instruments designated as cash flow hedges				(1,990)		(1,990)
Reclassification of realized loss on derivative instruments designated as cash flow hedges				234		234
Foreign currency translation adjustment				113		113
Income tax expense related to items of other comprehensive income				369		369
Exercise of stock options			145			145
Exercise of stock options, Shares		21
Stock-based compensation, net of taxes			645			645
Stock-based compensation, net of taxes, Shares		33
Balances at Jun. 30, 2021	$ 103,865	$ 2	$ 90,098	$ 96	$ 562,200	$ 756,261
Balances, Shares at Jun. 30, 2021	4,155	17,358

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Abstract]
Common Stock, Dividends, Per Share, Declared	$ 0.30	$ 0.30
Preferred Stock, Dividends Per Share	$ 0.53125	$ 0.53125	$ 0.53125	$ 0.53125

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands

6 Months Ended

Jun. 30, 2021

Jun. 30, 2020

Cash flows from operating activities

Net income (loss)

$ 73,683

$ (1,956)

Income (loss) from discontinued operations, net of income taxes

1,063

(30,177)

Income from continuing operations

72,620

28,221

Adjustments to reconcile income from continuing operations to net cash provided by operating activities:

Depreciation

58,241

54,203

Amortization of debt issuance costs

1,618

2,122

Stock-based compensation expense

1,133

667

Unrealized loss on foreign exchange

278

Gain on sale of rental equipment

(13,769)

(3,435)

Deferred income taxes

(3,205)

1,173

Bad debt expense (recovery)

(3,505)

Changes in other operating assets and liabilities:

Accounts receivable

(2,390)

4,100

Prepaid expenses and other assets

1,756

295

Net investment in finance leases

46,861

35,724

Accounts payable, accrued expenses and other liabilities

2,400

(968)

Unearned revenue

(175)

(432)

Net cash provided by operating activities of continuing operations

165,376

118,228

Net cash (used in) provided by operating activities of discontinued operations

(3,312)

7,398

Net cash provided by operating activities

162,064

125,626

Cash flows from investing activities

Purchase of rental equipment

(276,639)

(32,620)

Purchase of financing receivable

(8,774)

(30,846)

Proceeds from sale of rental equipment

51,380

48,286

Receipt of principal payments from financing receivable

5,297

2,225

Purchase of furniture, fixtures and equipment

(87)

(310)

Net cash used in investing activities of continuing operations

(228,823)

(13,265)

Net cash provided by investing activities of discontinued operations

1,252

10,180

Net cash used in investing activities

(227,571)

(3,085)

Cash flows from financing activities

Proceeds from debt

260,000

227,000

Principal payments on debt

(183,743)

(346,200)

Debt issuance costs

(25)

Proceeds from issuance of common stock

116

Repurchase of common stock

(12,788)

Dividends paid to common stockholders

(10,391)

Dividends paid to preferred stockholders

(4,414)

Exercise of stock options

1,644

113

Net cash provided by (used in) financing activities of continuing operations

50,361

(123,410)

Net cash used in financing activities of discontinued operations

(2,131)

Net cash provided by (used in) financing activities

50,361

(125,541)

Effect on cash of foreign currency translation

(127)

(189)

Net decrease in cash and restricted cash

(15,273)

(3,189)

Cash and restricted cash at beginning of the period

^[1]

66,502

73,239

Cash and restricted cash at end of the period

^[2]

51,229

70,050

Cash paid during the period for:

Income taxes

3,321

225

Interest

19,187

35,167

Lease liabilities arising from obtaining right-of-use assets

262

Supplemental disclosure of non-cash investing and financing activity

Transfer of rental equipment to finance lease

233,471

7,748

Rental equipment payable

$ 311,870

$ 3,356

[1]	Includes cash of $26,691 and $19,870, cash held by variable interest entities of $26,856 and $26,594, and restricted cash of $12,955 and $26,775 at December 31, 2020 and 2019, respectively.
[2]	Includes cash of $17,554 and $20,159, cash held by variable interest entities of $21,256 and $27,703, and restricted cash of $12,419 and $22,188 at June 30, 2021 and 2020, respectively.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Restricted cash	$ 12,419	$ 12,955	$ 22,188	$ 26,775
Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Cash	17,554	26,691	20,159	19,870
Variable Interest Entity, Primary Beneficiary [Member]
Cash	$ 21,256	$ 26,856	$ 27,703	$ 26,594

Description Of Business And Significant Accounting Policies	6 Months Ended
	Jun. 30, 2021
Description Of Business And Significant Accounting Policies [Abstract]
Description Of Business And Significant Accounting Policies	(1) Description of Business and Significant Accounting Policies Organization CAI International, Inc., together with its subsidiaries (collectively, CAI or the Company), is a transportation finance company. The Company purchases equipment, primarily intermodal shipping containers, which it leases to its customers. The Company also manages equipment for third-party investors. In operating its fleet, the Company leases, re-leases and disposes of equipment and contracts for the repair, repositioning and storage of equipment. The Company’s common stock, 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock (Series A Preferred Stock) and 8.50% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Stock (Series B Preferred Stock) are traded on the New York Stock Exchange under the symbols “CAI,” “CAI-PA” and “CAI-PB,” respectively. The Company’s corporate headquarters are located in San Francisco, California. Basis of Presentation The accompanying unaudited consolidated financial statements include the financial statements of CAI International, Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal, recurring adjustments necessary to present fairly the Company’s financial position as of June 30, 2021 and December 31, 2020, the Company’s results of operations for the three and six months ended June 30, 2021 and 2020, and the Company’s cash flows for the six months ended June 30, 2021 and 2020. Certain reclassifications have been made to prior year financial statements to conform to the current presentation. The results of operations and cash flows for the periods presented are not necessarily indicative of the results of operations or cash flows which may be reported for the remainder of 2021 or in any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 1, 2021. Merger Agreement with Mitsubishi HC Capital Inc. On June 17, 2021, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Mitsubishi HC Capital Inc., a Japanese corporation (Parent), and Cattleya Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Parent (Merger Sub), relating to the proposed acquisition of the Company by Parent. Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into the Company (the Merger), with the Company continuing as the surviving corporation in the Merger as a wholly-owned subsidiary of Parent. Upon completion of the Merger, the Company will cease to be a publicly traded company and at the effective time of the Merger (the Effective Time): (i) each share of the Company’s common stock that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares (as defined in the Merger Agreement)) will cease to be outstanding and will be converted into the right to receive $56.00, in cash, without interest, subject to deductions of any applicable withholding taxes; (ii) each share of the Company’s Series A Preferred Stock that is issued and outstanding immediately prior to the Effective Time, other than Excluded Shares, will be converted into the right to receive an amount equal to the sum of: (a) the liquidation preference of $25.00 per share, plus (b) the aggregate amount of all accrued and unpaid dividends on such Series A Preferred Stock as of the Effective Time, in cash, without interest, subject to deductions of any applicable withholding taxes; and (iii) each share of the Company’s Series B Preferred Stock that is issued and outstanding immediately prior to the Effective Time, other than Excluded Shares, will be converted into the right to receive an amount equal to the sum of: (a) the liquidation preference of $25.00 per share, plus (b) the aggregate amount of all accrued and unpaid dividends on such Series B Preferred Stock as of the Effective Time, in cash, without interest, subject to deductions of any applicable withholding taxes. The closing of the Merger is subject to various closing conditions, each of which is more fully described in the Company’s Current Report on Form 8-K, filed with the SEC on June 21, 2021, the Company’s preliminary proxy statement on Schedule 14A relating to the Merger, filed with the SEC on July 12, 2021 (the Preliminary Proxy Statement), and the Company’s definitive proxy statement on Schedule 14A relating to the Merger to be filed with the SEC. The closing of the Merger is subject to, among other things, adoption of the Merger Agreement by the affirmative vote of the holders of at least a majority of the outstanding shares of common stock entitled to vote at a special meeting of the common stockholders of the Company to be held on a date to be announced, the completion of the Migration (as defined the Preliminary Proxy Statement) and receipt of regulatory approval. The Merger is expected to be completed in the late third quarter or early fourth quarter of 2021. However, the exact timing of completion of the Merger cannot be predicted because the Merger is subject to the satisfaction or (to the extent permitted by applicable law) waiver of the conditions to the completion of the Merger more fully described in the Preliminary Proxy Statement. Discontinued Operations On August 14, 2020, the Company sold substantially all of the assets and liabilities of its logistics business to NFI, a North American logistics provider, for cash proceeds of $6.2 million. On December 29, 2020, the Company sold its remaining railcar fleet to affiliates of Infinity Transportation for cash proceeds of $228.1 million. As a result, the operating results of the logistics and rail businesses have been classified as discontinued operations in the accompanying unaudited consolidated statements of income and cash flows. All prior periods presented in these consolidated financial statements have been restated to reflect the classification of the logistics and rail leasing businesses as discontinued operations. See Note 2 – Discontinued Operations for more information. Concentration of Credit Risk The Company’s equipment leases and trade receivables subject it to potential credit risk. The Company extends credit to its customers based upon an evaluation of each customer’s financial condition and credit history. Evaluations of the financial condition and associated credit risk of customers are performed an on ongoing basis. The Company’s largest customer and second largest customer accounted for 21% and 10%, respectively, of the Company’s total billings during the three months ended June 30, 2021, and 20% and 10%, respectively, of the Company’s total billings during the six months ended June 30, 2021. Accounting Policy Updates There were no changes to the Company’s accounting policies during the six months ended June 30, 2021. See Note 2 to the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 1, 2021, for a description of the Company’s significant accounting policies.

Discontinued Operations

6 Months Ended

Jun. 30, 2021

Discontinued Operations [Abstract]

Discontinued Operations

(2) Discontinued Operations

As discussed in Note 1, the Company sold substantially all of the assets of its logistics business for proceeds of $6.2 million and its remaining railcar assets for proceeds of $228.1 million during the quarters ended September 30, 2020 and December 31, 2020, respectively. The logistics and rail leasing businesses have been classified as discontinued operations in the accompanying unaudited consolidated statements of income and cash flows for the three and six months ended June 30, 2021 and 2020.

The Company recognized an impairment charge of $19.7 million during the six months ended June 30, 2020 to reduce the book value of its railcar portfolio, on an individual basis, to its estimated fair value, or to its net book value had the assets not been classified as held for sale. To assist in the Company’s assessment of fair value, a third-party appraisal was carried out on the railcar fleet using a combination of cost and market approaches. The cost approach utilized the current replacement cost for a particular car type and calculated an estimated depreciation based on a railcar having a 40-year life and residual value being 10% of the estimated purchase price. The market approach estimated value based on recent market transactions involving similar railcars. The railcars were classified within Level 3 of the fair value hierarchy.

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The following tables summarize the components of net income (loss) from discontinued operations in the accompanying unaudited consolidated statements of income for the three months ended June 30, 2020 and the six months ended June 30, 2021 and 2020 (in thousands). There was no income or expense arising from discontinued operations for the three months ended June 30, 2021. Revenue and operating expenses for the six months ended June 30, 2021 were a result of immaterial differences in the actual transactions from the amounts accrued prior to the sale of the logistics and railcar businesses in 2020.


	Three Months Ended June 30, 2020
	Rail		Logistics		Total
Revenue
Rail lease revenue	$	6,282	$	-	$	6,282
Logistics revenue		-		22,648		22,648
Total revenue		6,282		22,648		28,930

Operating expenses
Depreciation of rental equipment		2,096		-		2,096
Impairment of rental equipment		557		-		557
Storage, handling and other expenses		1,311		-		1,311
Logistics transportation costs		-		19,533		19,533
Gain on sale of rental equipment		(320)		-		(320)
Administrative expenses		564		22,584		23,148
Total operating expenses		4,208		42,117		46,325

Operating income (loss)		2,074		(19,469)		(17,395)

Interest expense (income)		1,461		(3)		1,458
Income (loss) before income taxes		613		(19,466)		(18,853)
Income tax expense (benefit)		209		(2,884)		(2,675)
Net income (loss) from discontinued operations	$	404	$	(16,582)	$	(16,178)


	Six Months Ended June 30, 2021
	Rail		Logistics		Total
Revenue
Rail lease revenue	$	293	$	-	$	293
Total revenue		293		-		293

Operating expenses
Storage, handling and other expenses		(142)		-		(142)
Gain on sale of rental equipment		(33)		-		(33)
Administrative expenses		91		(240)		(149)
Total operating expenses		(84)		(240)		(324)

Operating income		377		240		617

Income before income taxes		377		240		617
Income tax (benefit) expense		(496)		50		(446)
Net income from discontinued operations	$	873	$	190	$	1,063

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	Six Months Ended June 30, 2020
	Rail		Logistics		Total
Revenue
Rail lease revenue	$	12,085	$	-	$	12,085
Logistics revenue		-		52,754		52,754
Total revenue		12,085		52,754		64,839

Operating expenses
Depreciation of rental equipment		2,096		-		2,096
Impairment of rental equipment		19,724		-		19,724
Storage, handling and other expenses		2,630		-		2,630
Logistics transportation costs		-		46,348		46,348
Gain on sale of rental equipment		(287)		-		(287)
Administrative expenses		1,333