<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K
                                 ANNUAL REPORT
                            ------------------------

(MARK ONE)
    [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

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

       FOR THE TRANSITION PERIOD FROM --------------- TO ---------------
                         COMMISSION FILE NUMBER 0-11350

                    INTERNATIONAL LEASE FINANCE CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                  CALIFORNIA                                     22-3059110
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

 1999 AVENUE OF THE STARS, LOS ANGELES, CALIFORNIA                  90067
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 788-1999

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      NONE
                                (TITLE OF CLASS)

     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 IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K (SEC. 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]

     AS OF MARCH 9, 2000, THERE WERE 35,818,122 SHARES OF COMMON STOCK, NO PAR
VALUE, OUTSTANDING.

     REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.

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<PAGE>   2

                    INTERNATIONAL LEASE FINANCE CORPORATION

                          1999 FORM 10-K ANNUAL REPORT

                            ------------------------

                               TABLE OF CONTENTS

                                     PART I

<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>         <C>                                                           <C>
Item  1.    Business....................................................    1
Item  2.    Properties..................................................    6
Item  3.    Legal Proceedings...........................................    8

                                   PART II
Item  5.    Market for Registrant's Common Equity and Related
              Stockholder Matters.......................................    9
Item  6.    Selected Financial Data.....................................    9
Item  7.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations.................................   10
Item  7A.   Quantitative and Qualitative Disclosures About Market
              Risk......................................................   14
Item  8.    Financial Statements and Supplementary Data.................   14
Item  9.    Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure..................................   14

                                   PART IV
Item 14.    Exhibits, Financial Statement Schedules and Reports on Form
              8-K.......................................................   14
</TABLE>
<PAGE>   3

                                     PART I

ITEM 1. BUSINESS

GENERAL

     International Lease Finance Corporation (the "Company") is primarily
engaged in the acquisition of new and used commercial jet aircraft and the
leasing of those aircraft to airlines throughout the world. In addition to its
leasing activity, the Company regularly sells aircraft from its leased aircraft
fleet and aircraft owned by others to third party lessors and airlines and in
some cases provides fleet management services to these buyers. The Company, in
terms of the number and value of transactions concluded, is a major owner-
lessor of commercial jet aircraft.

     As of December 31, 1999, the Company's lease portfolio consisted of 357
aircraft under operating lease and two aircraft under finance lease.
Additionally, the Company provided fleet management services for 89 aircraft.
See "Item 2. Properties -- Flight Equipment." At December 31, 1999, the Company
had committed to purchase 331 aircraft deliverable through 2007 at an estimated
aggregate purchase price of $16.4 billion. It also had options to purchase an
additional 83 aircraft deliverable through 2007 at an estimated aggregate
purchase price of $3.9 billion. See "Item 2. Properties -- Commitments."

     The Company maintains the mix of flight equipment to meet its customers'
needs and to minimize the time that its aircraft are not leased to customers by
purchasing those models of new and used aircraft which it believes will have the
greatest airline demand and operational longevity.

     The Company purchases, and finances the purchase of, aircraft on terms
intended to permit the Company to lease or resell such aircraft at a profit. The
Company typically finances the purchase of aircraft with borrowed funds and
internally generated cash flow. The Company accesses the capital markets for
such funds at times and on terms and conditions it considers appropriate. The
Company may, but does not necessarily, engage in financing transactions for
specific aircraft. The Company relies significantly on short- and medium-term
financing, and thereby attempts to manage interest rate exposure. To date, the
Company has been able to purchase aircraft on terms which have permitted it to
lease the aircraft at a profit and has not experienced any difficulty in
obtaining financing.

     The Company's aircraft are usually leased on terms under which the Company
does not fully recover the acquisition cost of such aircraft. Thus, at the
termination of a lease, the Company bears the risk of selling or re-leasing the
aircraft on terms which will cover its remaining cost.

     The airline industry is cyclical, economically sensitive and highly
competitive. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company's revenue and income may be
affected by political or economic instability abroad, changes in national
policy, competitive pressures on certain air carriers, fuel shortages, labor
stoppages, recessions, and other political or economic events adversely
affecting world or regional trading markets or impacting a particular customer.
The Company's continued success is partly dependent on management's ability in
the future to develop customer relationships for leasing, sales, remarketing and
management services with those airlines and other customers best able to
maintain their economic viability and survive in a deregulated environment.

     The Company is incorporated in the State of California and its principal
executive offices are located at 1999 Avenue of the Stars, Los Angeles,
California 90067. The Company's telephone and telecopier numbers are (310)
788-1999 and (310) 788-1990, respectively. The Company is an indirect wholly
owned subsidiary of American International Group, Inc. ("AIG"). AIG is a holding
company which through its subsidiaries is primarily engaged in a broad range of
insurance and insurance-related activities and financial services in the United
States and abroad. The Common Stock of AIG is listed on, among others, the New
York Stock Exchange.

AIRCRAFT LEASING

     The initial term of the Company's current leases range in length from one
year to 15 years. See "Item 2. Properties -- Flight Equipment" for information
regarding scheduled lease terminations. Most of the Company's leases are
operating leases under which the Company does not fully recover its aircraft
cost and
                                        1
<PAGE>   4

retains the benefit and assumes the risk of the residual value of the aircraft.
The Company on occasion also enters into finance and sales-type leases where the
full cost of the aircraft is substantially recovered over the term of the lease.
At December 31, 1999, two of the Company's leases were accounted for as finance
leases. The aircraft under operating leases are included as assets on the
Company's balance sheet and depreciation is charged to income over the estimated
useful lives of the aircraft. In accordance with generally accepted accounting
principles, rentals are reported ratably as revenue over the lease term as they
become due and are earned. The Company attempts to maintain a mix of short- and
medium-term leases to balance the benefits and risks associated with different
lease terms. Varying lease terms mitigate the effects of changes in prevailing
market conditions at the time aircraft become eligible for re-lease or sale and
the uncertainty associated with the estimated residual value of the aircraft at
the end of the lease term.

     All leases are on a "net" basis with the lessee responsible for all
operating expenses, which customarily include fuel, crews, airport and
navigation charges, taxes, licenses, registration and insurance. Normal
maintenance and repairs; airframe and engine overhauls; and compliance with
return conditions of flight equipment on lease are provided by and paid for by
the lessee. Under the provisions of most leases, for certain airframe and engine
overhauls, the lessee is reimbursed by the Company for costs incurred up to but
not exceeding related hourly rentals paid to the Company by the lessee. Such
rentals are included in the caption Rental of flight equipment. The Company
provides a charge to operations for such reimbursements based on the estimated
reimbursements during the life of the lease, which amount is included in
overhaul reserves. The lessee is responsible for compliance with all applicable
laws and regulations with respect to the aircraft. The Company requires its
lessees to comply with the most restrictive standards of either the Federal
Aviation Administration (the "FAA") or its foreign equivalent. The Company makes
periodic inspections of the condition of its leased aircraft. Generally, the
Company requires a deposit which is security for the condition of aircraft upon
return to the Company, the rental payments by the lessee and the performance of
other obligations by the lessee under the lease. In addition, the leases contain
extensive provisions regarding the remedies and rights of the Company in the
event of a default thereunder by the lessee and specific provisions regarding
the condition of the aircraft upon redelivery to the Company. The lessee is
required to continue to make lease payments under all circumstances, including
periods during which the aircraft is not in operation due to maintenance or
grounding.

     The Company obtains and reviews relevant business materials from all
prospective lessees and purchasers before entering into a lease or extending
credit. Under certain circumstances, the Company may require the lessee to
obtain guarantees or other financial support from an acceptable financial
institution or other third party.

FLIGHT EQUIPMENT MARKETING

     The Company also regularly disposes of its leased aircraft at or before the
expiration of their leases. The buyers include the aircraft's lessee, another
airline or a third party lessor. Any gain or loss on disposition of leased
aircraft is included in the caption Flight equipment marketing.

     From time to time, the Company also engages in transactions to buy aircraft
for resale. In some cases, the Company assists its customers in acquiring or
disposing of aircraft through consulting services and procurement of financing
from third parties.

     In addition to its leasing and sales operations, the Company is engaged,
from time to time, as an agent for airlines in the disposition of their surplus
aircraft. The Company generally acts as an agent under an exclusive remarketing
contract whereby it agrees to sell aircraft on a "best efforts" basis within a
fixed time period. These activities generally augment the Company's primary
activities and also serve to promote relationships with prospective sellers and
buyers of aircraft.

     The Company plans to continue its remarketing services on a selective basis
involving specific situations where these activities will not conflict or
compete with, but rather will be complementary to, its leasing and selling
activities.

                                        2
<PAGE>   5

FLEET MANAGEMENT SERVICES

     The Company provides fleet management services to third party operating
lessors who are unable or unwilling to perform this service as part of their own
operation. The Company typically provides the same services that it performs for
its own fleet. Specifically, the Company provides leasing, re-leasing and sales
services on behalf of the lessor for which the Company receives a fee.

FINANCING/SOURCE OF FUNDS

     The Company purchases new aircraft directly from manufacturers and used
aircraft from airlines and other owners for lease or sale to other airlines. The
Company finances the purchase price of flight equipment from internally
generated funds, secured and unsecured commercial bank financings and the
issuance of commercial paper, public and private debt and preferred stock. See
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations."

CUSTOMERS

     At December 31, 1999, the Company leased aircraft, and managed aircraft
leased, to the following airlines: (domestic) Alaska Airlines, America West,
Continental Airlines, Frontier Airlines, Jet Blue, National Airlines, North
American Airlines, Pro Air, Southwest Airlines, Trans World Airlines (TWA),
Transmeridian and World Airways; (foreign) Aer Lingus, Aeris, Aero Continente,
Aeroflot, Aero Lloyd Flugreisen, Aeromexico, Air 2000, Air Afrique, Air Alfa,
Air Anatolia, Air Atlanta Icelandic, Air Canada, Air Europa (Air Espana SPA),
Air Europe SpA, Air France, Air Jamaica, Air Liberte, Air Macau, Air Madagascar,
Air Malta, Air Mauritius, Air New Zealand, Air One, Air Pacific, Air Seychelles,
Air Transat, Air Vanuatu, Alitalia, Ansett Australia, Asiana Airlines, Austrian
Airlines, Avianca, Brussels International Airline, BRA Transportes, Braathens
S.A.F.E., Britannia Airways, British Airways, British Midland Airways, Blue
Panorama, BWIA, Caledonian, Canada 3000, Canadian Airlines, Cathay Pacific,
China Airlines, China Eastern, China Hainan Airlines, China Northwest, China
Southern Airlines, China Southwest Airlines, China Xinjiang, Easy Jet, El Al
Israel Airlines, Emirates, Estonian Air, Far Eastern Air Transport, Finnair,
Flying Colours, Garuda Indonesia, GB Airways, Hapag-Lloyd Flug, Heliopolis, Hong
Kong Dragon Airlines (Dragonair), Iberia, Icelandair, Kenya Airways, KLM Royal
Dutch Airlines, KLM City Hoppers, L'Aeropostale, Lineas Aereas Privadas
Argentinas, S.A. (LAPA), Lithuanian, Lloyd Aero Boliviano (LAB), Linea Aerea
Nacional Chile, Lotus Air, LTU Luftransport-Unternehmen, Lufthansa, Malev,
Mandarin Airlines, Martinair Holland, Meridiana, Mexicana, Middle East Airlines
Airliban, Monarch Airlines, Olympic Airways, Oman Aviation, Pegasus, Pharoah,
Polynesian Airlines, QANTAS, Rio Sul, Royal Jordanian, Sabena, Sabre Airways,
Sahara India Airlines, Shanghai, Shenzhen, Sichuan Airlines, Skymark, Skyservice
Airlines, Spanair, Star, Sterling European, Swissair, TACV Cabo Verde, TAP Air
Portugal, Turk Hava Yollari (THY), TransAer, Transavia, Transbrasil, Varig,
VASP, Virgin Atlantic Airways, VIVA Airways, Volare, Wuhan Airlines, Xiamen
Airlines and Yemenia. No single customer accounted for more than 10% of total
revenues in any of the last three years.

     Revenues include rentals of flight equipment to foreign airlines of
$1,842,126,000 (1999), $1,623,891,000 (1998) and $1,472,075,000 (1997)
comprising 88.5%, 87.6% and 85.0%, respectively, of total rentals of flight
equipment. See Note J of Notes to Consolidated Financial Statements.

                                        3
<PAGE>   6

     The following table sets forth the dollar amount and percentage of total
rental revenues attributable to the indicated geographic areas for the years
indicated:

<TABLE>
<CAPTION>
                                            1999                  1998                  1997
                                     ------------------    ------------------    ------------------
                                       AMOUNT       %        AMOUNT       %        AMOUNT       %
                                     ----------   -----    ----------   -----    ----------   -----
                                                         (DOLLARS IN THOUSANDS)
<S>                                  <C>          <C>      <C>          <C>      <C>          <C>
Europe.............................  $  946,335    45.5%   $  798,773    43.1%   $  705,128    40.7%
Asia/Pacific.......................     421,337    20.3       410,600    22.1       358,687    20.7
United States and Canada...........     389,593    18.7       333,472    18.0       345,143    19.9
Central and South America and
  Mexico...........................     201,405     9.7       190,572    10.3       211,152    12.2
Africa and the Middle East.........     121,885     5.8       120,566     6.5       112,557     6.5
                                     ----------   -----    ----------   -----    ----------   -----
                                     $2,080,555   100.0%   $1,853,983   100.0%   $1,732,667   100.0%
                                     ==========   =====    ==========   =====    ==========   =====
</TABLE>

     Many foreign countries have currency and exchange laws regulating the
international transfer of currencies. The Company attempts to minimize its
currency and exchange risks by negotiating most of its aircraft lease and all of
its sales transactions in U.S. dollars and all guarantees obtained to support
various lease agreements are denominated for payment in the same currency. The
Company requires, as a condition to any foreign transaction, that the lessee or
purchaser in a foreign country first obtain, if required, written approval of
the appropriate government agency, finance ministry or central bank for the
remittance of all funds contractually owed to the Company in U.S. dollars. Some
of the Company's leases are negotiated in Euros to meet the needs of a growing
number of airlines. These Euro denominated leases are primarily used as a hedge
against Euro denominated debt obligations of the Company. As a result, foreign
currency risk is immaterial to the Company.

     The Company has restructured leases with both foreign and domestic lessees.
Such restructurings have involved the voluntary termination of leases prior to
lease expiration, the replacement of leased aircraft with smaller, less
expensive leased aircraft, the arrangement of subleases from the primary lessee
to another airline and the rescheduling of lease payments. In some situations
where the Company repossesses an aircraft, it may decide to export the aircraft
from the lessee's jurisdiction. To date, the Company has been able to export all
repossessed aircraft which it desired to export. In addition, in connection with
the repossession of an aircraft, the Company may be required to pay outstanding
mechanic's, airport and other operating liens on the repossessed aircraft, which
could include charges relating to other aircraft operated by the lessee.

     The Company's revenues and income may be affected by political or economic
instability abroad, changes in national policy, competitive pressures on certain
air carriers, fuel shortages, labor stoppages, recessions and other political or
economic events adversely affecting world or regional trading markets or
impacting a particular customer.

COMPETITION

     The leasing and sale of jet aircraft is highly competitive. Aircraft
manufacturers and the airlines sell new and used jet aircraft. Furthermore, the
Company faces competition in leasing aircraft from aircraft manufacturers,
banks, financial institutions and other leasing companies. There is also
competition with respect to its remarketing activities from many sources,
including, but not limited to, aircraft brokers.

GOVERNMENT REGULATION

     The FAA and the U.S. Departments of Transportation and State exercise
regulatory authority over the air transportation in the United States.

     The U.S. Departments of Transportation and State, in general, have
jurisdiction over the economic regulation of air transportation, including the
negotiation with foreign governments of the rights of U.S. carriers to fly to
other countries and the rights of foreign carriers to fly to and within the
United States.

     The FAA has regulatory jurisdiction over the maintenance and operation of
U.S. air carriers, the operation of aircraft in the United States by foreign
carriers and the registration of aircraft in the United

                                        4
<PAGE>   7

States. The FAA can suspend or revoke the authority of U.S. air carriers or
their licensed personnel and can similarly revoke the authority of foreign air
carriers to operate within the United States for failure to comply with FAA
regulations. The FAA can also ground aircraft if their airworthiness is in
question.

     In every foreign country, similar government agencies regulate the
country's air carriers, the operations of foreign airlines in the country and
the registration of aircraft. Like the FAA, the civil aviation authority in a
foreign country can suspend or revoke the operating authority of an airline and
ground aircraft for safety reasons.

     Since the Company does not itself operate its aircraft for public
transportation of passengers and property, the Company is not directly subject
to the regulatory jurisdiction of the U.S. Departments of Transportation and
State or their counterpart organizations in foreign countries.

     The Company's interface with the FAA consists of the registration with the
FAA of those aircraft which are leased by the Company to U.S. carriers and to a
number of foreign carriers where, by agreement, the aircraft are to be
registered in the United States. In limited circumstances, the Company also
obtains from the FAA or its designated representatives a U.S. Certificate of
Airworthiness for a particular aircraft or a ferry flight permit.

     The Company's involvement with the civil aviation authorities of foreign
jurisdictions consists largely of requests to register and deregister the
Company's aircraft on lease to carriers in those countries.

     The Company also works with U.S. Customs with respect to the import and
export of the Company's aircraft into and from the United States for maintenance
or lease.

EMPLOYEES

     The Company is in a capital intensive rather than a labor intensive
business. As of December 31, 1999, the Company had 95 full-time employees, which
it considered adequate for its business operations. The Company will expand its
management and administrative personnel, as necessary, to meet future growth.
None of the Company's employees is covered by a collective bargaining agreement
and the Company believes that it has maintained excellent employee relations.
The Company provides certain employee benefits, including retirement plans and
health, life, disability and accident insurance.

INSURANCE

     The Company requires its lessees to carry those types of insurance which
are customary in the air transportation industry, including comprehensive
liability insurance and aircraft hull insurance. In general, the Company is an
additional insured on liability policies carried by the lessees. All policies
contain a breach of warranty endorsement so that the interests of the Company
are not prejudiced by any act or omission of the operator-lessee.

     Insurance premiums are paid by the lessee, with coverage acknowledged by
the broker or carrier. The territorial coverage is, in each case, suitable for
the lessee's area of operations and the policies contain, among other
provisions, a "no co-insurance" clause and a provision prohibiting cancellation
or material change without at least 30 days advance written notice to the
Company. Furthermore, the insurance is primary and not contributory and all
insurance carriers are required to waive rights of subrogation against the
Company.

     The stipulated loss value schedule under aircraft hull insurance policies
is on an agreed value basis acceptable to the Company, which usually exceeds the
book value of the aircraft. In cases where the Company believes that the agreed
value stated in the lease is not sufficient, the Company purchases additional
Total Loss Only coverage for the deficiency. Aircraft hull policies contain
standard clauses covering aircraft engines. All deductibles are required to be
paid by the lessee. Furthermore, the aircraft hull policies contain full war
risk endorsements, including, but not limited to, confiscation, seizure,
hijacking and similar forms of retention or terrorist acts. All losses under
such policies are payable in U.S. dollars.

     The comprehensive liability insurance policies include provisions for
bodily injury, property damage, passenger liability, cargo liability and such
other provisions reasonably necessary in commercial passenger and
                                        5
<PAGE>   8

cargo airline operations with minimal deductibles. Such policies generally have
combined comprehensive single liability limits of not less than $250 million.
Additionally, all aircraft in the Company's fleet are covered by Contingent
Liability insurance.

     The Company also maintains other insurance covering the specific needs of
its business operations. Insurance policies are generally placed or reinsured
through AIG subsidiaries, with costs allocated back to the Company. The Company
believes that its insurance is adequate both as to coverage and amount.

FORWARD-LOOKING STATEMENTS

     This annual report on Form 10-K contains or incorporates statements that
constitute forward-looking statements. Those statements appear in a number of
places in this Form 10-K and include statements regarding, among other matters,
the Company's growth and acquisition opportunities, the Company's acquisition
strategy, regulatory matters pertaining to compliance with governmental
regulations and other factors affecting the Company's financial condition or
results of operations. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," and "should" and variations of these
words and similar expressions, are used in many cases to identify these
forward-looking statements. Any such forward-looking statements are not
guarantees of future performance and involve risks, uncertainties and other
factors that may cause actual results, performance or achievements of the
Company or industry results to vary materially from the Company's future
results, performance or achievements, or those of the industry, expressed or
implied in such forward-looking statements. Such factors include, among others,
general industry economic and business conditions, which will, among other
things, affect demand for aircraft, availability and creditworthiness of current
and prospective lessees, lease rents, availability and cost of financing and
operating expenses; governmental actions and initiatives, environmental and
safety requirements and Year 2000 compliance issues of the Company and third
parties and related service interruptions or payment delays. The Company will
not update any forward-looking information to reflect actual results or changes
in the factors affecting the forward-looking information.

ITEM 2. PROPERTIES

FLIGHT EQUIPMENT

     The Company's management frequently reviews opportunities to acquire
suitable commercial jet aircraft based not only on market demand and customer
airline requirements, but also on the Company's fleet portfolio mix criteria and
planning strategies for leasing. Before committing to purchase specific
aircraft, the Company takes into consideration factors such as estimates of
future values, potential for remarketing, trends in supply and demand for the
particular type, make and model of aircraft and engines and anticipated
obsolescence. As a result, certain types and vintages of aircraft do not
necessarily fit the profile for inclusion in the Company's portfolio of aircraft
owned and used in its leasing operations.

     At December 31, 1999, all of the Company's fleet was Stage III compliant,
meaning that the aircraft hold or are capable of holding a noise certificate
issued under Chapter 3 of Volume 1, Part II of Annex 16 of the Chicago
Convention or have been shown to comply with the Stage III noise levels set out
in Section 36.5 of Appendix C of Part 36 of the Federal Aviation Regulations of
the United States. At December 31, 1999, the average age of the Company's
aircraft was 3.84 years.

                                        6
<PAGE>   9

     The following table shows the scheduled lease terminations (for the minimum
noncancelable period) by aircraft type for the Company's operating lease
portfolio at December 31, 1999:

<TABLE>
<CAPTION>
     AIRCRAFT TYPE        2000   2001   2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   TOTAL
     -------------        ----   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----   -----
<S>                       <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
737-300/400/500.........   10     14     17     18      9      8     2      4                                   82
737-700/800.............    1                                  3     5      4      1              1     2       17
757-200.................    2      9      3      3      5     10     6      9      4       2                    53
767-200.................           2                           1                                                 3
767-300.................    2      7      8      7      7      3     2      1      2              1             40
777-200.................           2                           2     3                     2                     9
747-300.................           2                                                                             2
747-400.................           1      6      2                                         2                    11
MD-83...................                                1                                                        1
DC10-30.................    2                                                                                    2
MD-11...................                                       3     3                                           6
A300-600R...............           3      1      1             1                                                 6
A310-300................           4      1      1      1                                                        7
A319....................                  2      2             3     4                                          11
A320....................    1      1      2     19      8      2     5      3              2            1       44
A321....................    1      4      3      5      6      2     2      3      3                            29
A330-200................                                2            2      8      1                            13
A330-300................           3      2      2      1      1     1                                          10
A340....................           3      6      1             1                                                11
                           --     --     --     --     --     --     --     --     --     --     --     --     ---
Total...................   19     55     51     61     40     40    35     32     11       8      2     3      357
</TABLE>

---------------

     This schedule includes 19 aircraft leased by the Company and subleased to
others and two aircraft which were not subject to lease at December 31, 1999,
but subsequently were leased.

COMMITMENTS

     At December 31, 1999, the Company had committed to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $16.4 billion for delivery as shown:

<TABLE>
<CAPTION>
           AIRCRAFT TYPE              2000   2001   2002   2003   2004   2005   2006   2007   TOTAL
           -------------              ----   ----   ----   ----   ----   ----   ----   ----   -----
<S>                                   <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
737-600/700/800(a)..................   12     23     24     25     25     16      9            134
757-200.............................    6      3      2      1                                  12
767-300.............................    4      3      1      1      1                           10
777-200.............................    3      5      3      3      3      3      3             23
A318................................                  2      5      6      6      6     5       30
A319................................   10      2      3      7      8      8                    38
A320-200............................    6     13      4      5      3      4      2             37
A321-200............................    4      1      2      3      3      5                    18
A330-200............................    5      2      4      3      3      1                    18
A340/300/500/600(a).................    1      2      2      2             2      2             11
                                       --     --     --     --     --     --     --     --     ---
          Total.....................   51     54     47     55     52     45     22     5      331
</TABLE>

---------------

(a) The Company has the right to designate the size of the aircraft within the
    specific model type at specific dates prior to contractual delivery.

                                        7
<PAGE>   10

     At December 31, 1999, the Company had options to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $3.9 billion for delivery as shown:

<TABLE>
<CAPTION>
           AIRCRAFT TYPE              2000   2001   2002   2003   2004   2005   2006   2007   TOTAL
           -------------              ----   ----   ----   ----   ----   ----   ----   ----   -----
<S>                                   <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
B737-600/700/800....................                 1      1              9     16     25     52
B777-200............................                        1      1                            2
A319................................                 3      1      1       1      4      3     13
A320-200............................                 1      1                                   2
A321-200............................                 1      2      1              2             6
A330-200............................          1      1      1      1                            4
A340-300/500/600....................                 1      1      2                            4
                                       --     --     --     --     --     --     --     --     --
                                       0      1      8      8      6      10     22     28     83
</TABLE>

     Management anticipates that a significant portion of such aggregate
purchase price will be funded by incurring additional debt. The exact amount of
the indebtedness to be incurred will depend upon the actual purchase price of
the aircraft, which can vary due to a number of factors, including inflation,
and the percentage of the purchase price of the aircraft which must be financed.

     The aircraft listed above are being purchased pursuant to master agreements
with each of The Boeing Company ("Boeing") and AVSA, S.A.R.L., the sales
subsidiary of Airbus Industrie ("Airbus"). These agreements establish the
pricing formulas (which include certain price adjustments based upon inflation
and other factors) and various other terms with respect to the purchase of
aircraft. Under certain circumstances, the Company has the right to alter the
mix of aircraft type ultimately acquired. As of December 31, 1999, the Company
had made non-refundable deposits (exclusive of capitalized interest) with
respect to the aircraft which the Company has committed to purchase of
approximately $434,560,000 and $334,556,000 with Boeing and Airbus,
respectively.

     As of March 8, 2000, the Company had entered into contracts for the lease
of all of the 51 aircraft to be delivered in 2000, 52 of the 54 aircraft to be
delivered in 2001, 26 of the 47 aircraft to be delivered in 2002, 18 of the 55
aircraft to be delivered in 2003 and 4 of the 124 aircraft to be delivered
subsequent to 2003. The Company will need to find customers for aircraft
presently on order and any new aircraft ordered and arrange financing for
portions of the purchase price of such equipment. Although the Company has been
successful to date in placing its new aircraft on lease or sales contracts, and
has obtained adequate financing in the past, there can be no assurance as to the
future continued availability of lessees or purchasers, or of sufficient amounts
of financing on terms acceptable to the Company.

FACILITIES

     The Company's principal offices are located at 1999 Avenue of the Stars,
Los Angeles, California. The Company occupies space under leases which expire in
2005. As of December 31, 1999, the Company occupied approximately 30,000 square
feet of office space with a signed agreement to obtain an additional 20,000
square feet during 2000. The leases provide for annual rentals of approximately
$3,000,000, and the rental payments thereunder are subject to certain indexed
escalation provisions.

ITEM 3. LEGAL PROCEEDINGS

     The Company is not a party to any significant legal proceedings.

                                        8
<PAGE>   11

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company is indirectly wholly owned by AIG and the Company's Common
Stock is not listed on any national exchange or traded in any established
market. During the years ended December 31, 1999, 1998, and 1997, the Company
paid cash dividends to its parent company of $69,500,000, $25,200,000 and
$19,700,000, respectively. It is the intent of the Company to pay its parent
company an annual dividend of at least 7% of net income subject to the dividend
preference of any preferred stock outstanding. Under the most restrictive
provisions of the Company's borrowing arrangements, consolidated retained
earnings at December 31, 1999 in the amount of $718,820,000 were unrestricted as
to the payment of dividends.

ITEM 6. SELECTED FINANCIAL DATA

     The following table summarizes selected consolidated financial data and
certain operating information of the Company. The selected consolidated
financial data should be read in conjunction with the Consolidated Financial
Statements and notes thereto and "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Form 10-K.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                  -------------------------------------------------------------------
                                     1999          1998          1997          1996          1995
                                  -----------   -----------   -----------   -----------   -----------
                                                     (DOLLAR AMOUNTS IN THOUSANDS)
<S>                               <C>           <C>           <C>           <C>           <C>
OPERATING DATA:
Rentals of flight equipment.....  $ 2,080,555   $ 1,853,983   $ 1,732,667   $ 1,444,439   $ 1,254,020
Flight equipment marketing......      147,216       118,183       176,005       136,099       119,078
Interest and other income.......       72,317        73,500        49,335        51,976        49,390
Total revenues..................    2,300,088     2,045,666     1,958,007     1,632,514     1,422,488
Expenses........................    1,596,683     1,483,392     1,431,848     1,237,575     1,084,142
Income before income taxes......      703,405       562,274       526,159       394,939       338,346
Net income......................      453,447       369,352       338,684       251,774       196,437
RATIO OF EARNINGS TO FIXED
  CHARGES AND PREFERRED STOCK
  DIVIDENDS(1):                         1.75x         1.60x         1.58x         1.47x         1.43x
BALANCE SHEET DATA:
Flight equipment under operating
  leases (net of accumulated
  depreciation).................  $16,096,053   $14,872,430   $12,792,531   $12,182,774   $10,762,870
Net investment in finance and
  sales-type leases.............       56,555        89,904        98,026       103,629        86,237
Total assets....................   17,507,124    16,379,632    14,551,954    13,725,596    12,329,182
Total debt......................   11,861,796    11,184,010     9,954,362     9,794,260     8,892,634
Shareholders' equity............    3,210,192     2,844,375     2,517,188     2,214,552     2,000,107
OTHER DATA:
Aircraft owned at period
  end(2)........................          338           329           299           296           278
Aircraft sold or remarketed
  during the period.............           51            31            57            37            41
</TABLE>

---------------

(1) See Exhibit 12.

(2) See "Item 2. Properties -- Flight Equipment."

                                        9
<PAGE>   12

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

INDUSTRY CONDITION

     From time to time, certain of the Company's customers have experienced
economic difficulties resulting in the Company's participation in customer
restructurings. Such restructurings have involved the voluntary early
termination of leases and the rescheduling of payments. In addition, in certain
circumstances, the Company has been required to repossess aircraft. See "Item
1. Business -- Customers."

FINANCIAL CONDITION

     The Company borrows funds to purchase flight equipment, including funds for
progress payments during the construction phase, principally on an unsecured
basis from various sources. At December 31, 1999, 1998 and 1997, the Company's
debt financing and capital lease obligations were comprised of the following:

<TABLE>
<CAPTION>
                                          1999           1998           1997
                                       -----------    -----------    ----------
                                                (DOLLARS IN THOUSANDS)
<S>                                    <C>            <C>            <C>
Public term debt with single
  maturities.........................  $ 3,721,330    $ 3,825,000    $3,950,000
Public medium-term notes with varying
  maturities.........................    3,225,500      3,348,350     2,896,865
Capital lease obligations............      669,576        810,768       903,320
Bank term debt.......................    1,295,038             --            --
                                       -----------    -----------    ----------
          Total term debt, bank debt
            and
            capital lease
            obligations..............    8,911,444      7,984,118     7,750,185
Commercial paper.....................    2,978,353      3,214,744     2,212,601
Less: Deferred debt discount.........      (28,001)       (14,852)       (8,424)
                                       -----------    -----------    ----------
          Debt financing and capital
            lease obligations........  $11,861,796    $11,184,010    $9,954,362
                                       ===========    ===========    ==========
Composite interest rate..............        6.14%          6.03%         6.44%
Percentage of total debt at fixed
  rate...............................       69.28%         64.20%        76.49%
Composite interest rate on fixed
  debt...............................        6.06%          6.41%         6.63%
Bank prime rate......................        8.50%          7.75%         8.50%
</TABLE>

Public Debt

     The interest on substantially all of the public debt (exclusive of the
commercial paper) is fixed for the term of the note. As of December 31, 1999,
the Company had an effective shelf registration statement with respect to $2.0
billion of debt securities, under which $275 million of notes were sold through
December 31, 1999. Additionally, a $750 million Medium-Term Note program was
implemented under the shelf registration statement, under which $45 million was
sold through December 31, 1999. In addition, the Company established a Euro
Medium Term Note Program for $2 billion, under which $771 million in notes were
sold through December 31, 1999.

Capital Lease Obligations

     The Company has Export Credit Lease financings which provide ten year,
amortizing loans in the form of capital lease obligations. The interest rate on
62.5% of the original financing available is 6.55% and the interest rate on
22.5% of the original financing available is fixed at rates varying between
6.18% and 6.89%. These two tranches are guaranteed by various European Export
Credit Agencies. The remaining 15% of the original financing available provides
for LIBOR based pricing.

Bank Term Debt

     In January 1999, the Company entered into a new Export Credit Facility, up
to a maximum of $4.3 billion, for approximately 75 aircraft to be delivered from
1999 through 2001. The Company has the right, but is not required, to use the
facility to fund 85% of each aircraft's purchase price. This facility is
guaranteed
                                       10
<PAGE>   13

by various European Export Credit Agencies. The interest rate varies from 5.753%
to 5.898% on the first 75 aircraft depending on the delivery date of the
aircraft. Through March 8, 2000, the Company borrowed $1.5 billion under this
facility.

Bank Commitments

     As of December 31, 1999, the Company had committed revolving loans and
lines of credit with 53 commercial banks aggregating $2.9 billion. Bank debt
principally provides for interest rates that vary according to the pricing
option in effect at the time of borrowing. Pricing options include prime, a
range from .22% over LIBOR to .32% over LIBOR based upon utilization, or a rate
determined by a competitive bid process with the banks. The revolving loans and
lines of credit are subject to facility fees of up to .08% of amounts available.
Such financing is used primarily as backup for the Company's Commercial Paper
program. In November 1999, the Company replaced $1.5 billion of the committed
revolving loans with a new 364 day facility for $1.5 billion at the same
pricing.

Other

     In 1995, 1996 and 1997, the Company, through subsidiaries, entered into
sale-leaseback transactions providing proceeds to the Company in the amounts of
$413.0 million, $507.6 million and $601.9 million, respectively, each relating
to seven aircraft. The transactions resulted in the sale and leaseback of these
aircraft for one year operating leases, each with six one year extension options
for a total of seven years for each aircraft. The Company has the option to
either buy back the aircraft or redeliver the aircraft for a fee to the lessor
at the end of any lease period. The lease rates equate to fixed principal
amortization and floating interest payments based on LIBOR or commercial paper
pricing. As of December 31, 1999, the Company had repurchased two aircraft which
were sold to third parties.

     The Company believes that the combination of internally generated funds and
debt financing currently available to the Company will allow the Company to meet
its capital requirements for at least the next 12 months.

     In the normal course of business, the Company employs a variety of
off-balance sheet financial instruments and other derivative products to manage
its exposure to interest rates and the resulting impact of changes in interest
rates on earnings, with the objective to lower its overall borrowing cost and to
maintain its optimal mix of variable and fixed rate interest obligations. The
Company only enters into derivative transactions to hedge interest rate risk and
currency risk and not to speculate on interest rates or currency fluctuations.
These derivative products include interest rate swap agreements, currency swap
agreements, interest rate swaptions and interest rate floors.

     The counterparties to the Company's derivative instruments are all U.S.
derivative dealers. The counterparties to the majority of the notional amounts
of the Company's derivative instruments are "AAA" rated and all have at least an
"A" credit rating. The derivatives are subject to a bilateral security agreement
which, in certain circumstances, may allow one party to the agreement to require
the second party to the agreement to establish a cash collateral account. Any
failure of the instruments or counterparties to perform under the derivative
contracts would have an immaterial impact on the Company's earnings.

     Measuring potential losses in fair values has recently become the focus of
risk management efforts by many companies. Such measurements are performed
through the application of various statistical techniques. One such technique is
Value at Risk (VaR), a summary statistical measure that uses historical interest
rates and estimates the volatility and correlation of these rates to calculate
the maximum loss that could occur over a defined period of time given a certain
probability.

     ILFC believes that statistical models alone do not provide a reliable
method of monitoring and controlling market risk. While VaR models are
relatively sophisticated, the quantitative market risk information generated is
limited by the assumptions and parameters established in creating the related
models. Therefore, such models are tools and do not substitute for the
experience or judgment of senior management.

                                       11
<PAGE>   14

     ILFC is exposed to market risk and the risk of loss of fair value resulting
from adverse fluctuations in interest rates. As of December 31, 1999, ILFC
statistically measured the loss of fair value through the application of a VaR
model. In this analysis the net fair value of ILFC was determined using the
financial instrument assets, which included the tax adjusted future flight
equipment lease revenue, and the financial instrument liabilities, which
included the future servicing of the current debt. The estimated impact of the
current derivative positions was also taken into account.

     ILFC calculated the VaR with respect to the net fair value using the
variance-covariance (delta-normal) methodology. This calculation also used daily
historical interest rates for the two years ending December 31, 1999. The VaR
model estimated the volatility of each of these interest rates and the
correlation among them. The yield curve was constructed using eleven key points
on the curve to model possible curve movements. Thus, the VaR measured the
sensitivity of the assets and liabilities to the calculated interest rate
exposures. These sensitivities were then applied to a database, which contained
the historical ranges of movements in interest rates and the correlation among
them. The results were aggregated to provide a single amount that depicts the
maximum potential loss in fair value of a confidence level of 95 percent for a
time period of one month. As December 31, 1999, the VaR of ILFC with respect to
its aforementioned net fair value was $50 million.

RESULTS OF OPERATIONS

     The increase in revenues from rentals of flight equipment from $1,732.7
million in 1997 to $1,854.0 million in 1998 to $2,080.6 million in 1999 is due
to the increase in the number of aircraft available for operating lease from 319
in 1997 to 349 in 1998, to 357 in 1999. The increase is also attributable to the
increase in the cost of the leased fleet, which includes aircraft subject to
sale-leaseback transactions from which rental income is earned, from $15.9
billion in 1997 to $18.3 billion in 1998 and $19.7 billion in 1999.
Additionally, the percentage of widebodies, for which higher lease payments are
typically received, has increased from 28% to 30% to 33% of the fleet in 1997,
1998 and 1999, respectively.

     In addition to its leasing operations, the Company engages in the marketing
of flight equipment at the end of, or during, the lease term, as well as the
sales of flight equipment on a principal and commission basis. Revenue from such
flight equipment marketing decreased from $176.0 million in 1997, to $118.2
million in 1998 and increased to $147.2 million in 1999 as a result of the type
and the number of the flight equipment marketed in each period which fluctuated
from 57 aircraft in 1997 to 31 aircraft in 1998 and to 51 aircraft in 1999. In
addition, the Company sold 11 engines (1997), 15 engines (1998) and 13 engines
(1999).

     Interest expense fluctuated from $642.3 million in 1997, to $640.0 million
in 1998, to $686.8 million in 1999, as a result of an increase in debt
outstanding, excluding the effect of debt discount, from $10.0 billion in 1997
to $11.2 billion in 1998 to $11.9 billion in 1999, to finance aircraft
acquisitions, offset in part by lower composite borrowing rates in 1998 and
1999. The Company's composite borrowing rate fluctuated as follows:

<TABLE>
<S>                                                           <C>
December 31, 1996...........................................  6.23%
March 31, 1997..............................................  6.20
June 30, 1997...............................................  6.32
September 30, 1997..........................................  6.34
December 31, 1997...........................................  6.44
March 31, 1998..............................................  6.29
June 30, 1998...............................................  6.22
September 30, 1998..........................................  6.18
December 31, 1998...........................................  6.03
March 31, 1999..............................................  5.90
June 30, 1999...............................................  5.85
September 30, 1999..........................................  6.03
December 31, 1999...........................................  6.14
</TABLE>

                                       12
<PAGE>   15

     Depreciation of flight equipment increased from $546.2 million in 1997 to
$556.1 million in 1998 to $637.3 million in 1999 due to the increased cost of
the fleet. The cost of flight equipment during the same periods increased from
$14.4 billion at December 31, 1997 to $16.9 billion at December 31, 1998 to
$18.2 billion at December 31, 1999. The increase in depreciation expense due to
increased flight equipment cost from 1997 to 1998 was partially offset by
depreciation taken in 1997 on older aircraft, which were acquired used, that
were either sold or fully depreciated prior to the end of 1997.

     Provisions for overhauls increased from $99.5 million in 1997 to $102.5
million in 1998 and decreased to $94.5 million in 1999 due to changes in the
number of aircraft on which the Company collects overhaul revenue. An increase
or decrease in the number of aircraft will result in a corresponding increase or
decrease in the aggregate number of hours flown, for which overhaul reserves are
provided.

     Rent expense increased from $103.9 million in 1997 to $138.4 million in
1998 and decreased to $130.0 million in 1999 due to corresponding changes in the
number of sale-leaseback transactions.

     The effective tax rate decreased from 35.6% in 1997 to 34.3% in 1998 and
increased to 35.5% in 1999.

IMPACT OF THE YEAR 2000 ISSUE

     The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. This could
result in a failure of the information technology systems ("IT systems") and
other operating equipment containing imbedded technology ("non-IT systems") in
the year 2000, causing disruption of operations of the Company, its lessees,
vendors, or business partners.

     The Company developed and executed a plan to address the Year 2000 issue as
it affected the Company's internal IT and non-IT systems, and to assess Year
2000 issues related to third parties on which the Company has critical
dependencies. The development and execution of the plan was overseen by a
steering committee made up of executives of member companies of American
International Group, Inc. ("AIG"), the Company's parent.

     The Company has not experienced any interruption of operations as a result
of Year 2000 related issued related to internal IT and non-IT systems. The
Company has not experienced any impact on the operations of the Company's
lessees, vendors or business partners as a result of Year 2000 related issues.

     As a result of long production lead times and other factors, a disruption
of the Company's operations from a Year 2000 issue may not become evident until
some time in the future. Therefore, the Company continues, to monitor, through
its normal business practices, its lessees' insurance coverages and payment
histories, vendors delivery dates and business partners' services for Year 2000
issues. The Company believes that its lessees, vendors and business partners are
Year 2000 ready and will not experience business disruptions as a result of Year
2000 related issues.

     The costs associated with addressing the Year 2000 issue, including
developing and executing the above plan and remediating affected systems and
equipment, have been nominal and were expensed as incurred. Such costs did not
include normal system upgrades and replacements. The Company does not expect to
incur any significant future costs relating to internal IT and non-IT systems as
a result of the Year 2000 issue.

NEW ACCOUNTING PRONOUNCEMENTS, ISSUED BUT NOT YET EFFECTIVE

     On June 23, 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133. (SFAS 137). SFAS 137 is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000 (January 1, 2001 for the
Company). SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company has not yet determined
the impact that the adoption of SFAS 133 will have on its earnings or statement
of financial position.

                                       13
<PAGE>   16

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Financial Condition

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The response to this Item is submitted as a separate section of this
report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)(1) and (2): Financial Statements and Financial Statement Schedule: The
response to this portion of Item 14 is submitted as a separate section of this
report beginning on page 15.

     (a)(3) and (c): Exhibits: The response to this portion of Item 14 is
submitted as a separate section of this report beginning on page 15.

     (b) Reports on Form 8-K: None.

                                       14
<PAGE>   17

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                                   FORM 10-K
                           ITEMS 8, 14(a), AND 14(c)

            INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

     The following consolidated financial statements of the Company and its
subsidiaries required to be included in Item 8 are listed below:

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Accountants...........................     17
Consolidated Financial Statements:
  Balance Sheets at December 31, 1999 and 1998..............     18
  Statements of Income for the years ended December 31,
     1999, 1998 and 1997....................................     19
  Statements of Shareholders' Equity for the years ended
     December 31, 1999, 1998 and 1997.......................     20
  Statements of Cash Flows for the years ended December 31,
     1999, 1998 and 1997....................................  21-22
  Notes to Consolidated Financial Statements................     23
</TABLE>

     The following financial statement schedule of the Company and its
subsidiaries is included in Item 14(a)(2):

<TABLE>
<CAPTION>
SCHEDULE NUMBER                           DESCRIPTION                           PAGE
---------------                           -----------                           ----
<C>               <S>                                                           <C>
      II          Valuation and Qualifying Accounts...........................   36
</TABLE>

     All other financial statements and schedules not listed have been omitted
since the required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.

     The following exhibits of the Company and its subsidiaries are included in
Item 14(c):

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
  3.1      Restated Articles of Incorporation of the Company, as
           amended through December 9, 1992, filed November 3, 1993
           (filed as an exhibit to Registration Statement No. 33-50913
           and incorporated herein by reference).
  3.2      Certificate of Determination of Preferences of Series C
           Market Auction Preferred Stock (filed as an exhibit to Form
           10-K for the year ended December 31, 1994 and incorporated
           herein by reference).
  3.3      Certificate of Determination of Preferences of Series D
           Market Auction Preferred Stock (filed as an exhibit to Form
           10-K for the year ended December 31, 1994 and incorporated
           herein by reference).
  3.4      Certificate of Determination of Preferences of Series E
           Market Auction Preferred Stock (filed as an exhibit to Form
           10-K for the year ended December 31, 1994 and incorporated
           herein by reference).
  3.5      Certificate of Determination of Preferences of Series F
           Market Auction Preferred Stock (filed as an exhibit to Form
           10-K for the year ended December 31, 1994 and incorporated
           herein by reference).
  3.6      Certificate of Determination of Preferences of Series G
           Market Auction Preferred Stock (filed as an exhibit to Form
           10-K for the year ended December 31, 1995 and incorporated
           herein by reference).
  3.7      Certificate of Determination of Preferences of Series H
           Market Auction Preferred Stock (filed as an exhibit to Form
           10-K for the year ended December 31, 1995 and incorporated
           herein by reference).
  3.8      By-Laws of the Company, including amendment thereto dated
           August 31, 1990 (filed as an exhibit to Registration
           Statement No. 33-37600 and incorporated herein by
           reference).
</TABLE>

                                       15
<PAGE>   18

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
  4.1      Indenture dated as of November 1, 1991, between the Company
           and U.S. Bank Trust National Association (successor to
           Continental Bank, National Association), as Trustee (filed
           as an exhibit to Registration Statement No. 33-43698 and
           incorporated herein by reference).
  4.2      The Company agrees to furnish to the Commission upon request
           a copy of each instrument with respect to issues of
           long-term debt of the Company and its subsidiaries, the
           authorized principal amount of which does not exceed 10% of
           the consolidated assets of the Company and its subsidiaries.
 10.1      Revolving Credit Agreement, dated as of January 17, 1997,
           among the Company, Union Bank of Switzerland, New York
           Branch, and the other banks listed therein providing up to
           $1,250,000,000 (five year facility) (filed as an exhibit to
           Form 10-K for the year ended March 31, 1996 and incorporated
           herein by reference).
 10.2      Revolving Credit Agreement, dated as of November 17, 1999,
           among the Company, Citicorp USA, Inc., and the other banks
           listed therein providing up to $1,500,000,000 (364 day
           facility).
 10.3      Aircraft Facility Agreement, dated as of January 19, 1999,
           among the Company, Halifax PLC and the other banks listed
           therein providing up to $4,327,260,000 for the financing of
           approximately seventy-five Airbus aircraft (filed as an
           exhibit to Form 10-K for the year ended December 31, 1998
           and incorporated herein by reference).
 10.4      Boeing Purchase Agreement No. 2241 and related letter
           agreements, all dated July 30, 1999, between the Company and
           the Boeing Company (filed as an exhibit to Form 10-Q for the
           quarter ended September 30, 1999) (confidential treatment
           granted).
   12      Computation of Ratio of Earnings to Fixed Charges and
           Preferred Stock Dividends.
   23      Consent of PricewaterhouseCoopers LLP.
   27      Financial Data Schedule.
</TABLE>

                                       16
<PAGE>   19

                       REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholder and Board of Directors
International Lease Finance Corporation
Los Angeles, California

     In our opinion, the consolidated financial statements listed in the
accompanying index appearing under Items 14(a)(1) and (2) on page 15 present
fairly, in all material respects, the financial position of International Lease
Finance Corporation and its subsidiaries (the "Company") at December 31, 1999
and December 31, 1998, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the Untied States. In addition,
in our opinion, the financial statement schedule listed in the accompanying
index presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and the financial statement schedule are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PricewaterhouseCoopers LLP
Los Angeles, California
February 11, 2000

                                       17
<PAGE>   20

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
           (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                --------------------------
                                                                   1999           1998
                                                                -----------    -----------
<S>                                                             <C>            <C>
Cash, including interest bearing accounts of
  $112,372 (1999) and $33,716 (1998)........................    $   123,109    $    52,723
Current income taxes........................................             --         16,007
Notes receivable............................................        270,436        340,344
Net investment in finance and sales-type leases.............         56,555         89,904
Flight equipment under operating leases.....................     18,246,253     16,860,789
  Less accumulated depreciation.............................      2,150,200      1,988,359
                                                                -----------    -----------
                                                                 16,096,053     14,872,430
Deposits on flight equipment purchases......................        848,730        906,197
Accrued interest, other receivables and other assets........         77,825         60,754
Investments.................................................          6,067         11,771
Deferred debt issue costs -- less accumulated amortization
  of
  $70,375 (1999) and $62,115 (1998).........................         28,349         29,502
                                                                -----------    -----------
                                                                $17,507,124    $16,379,632
                                                                ===========    ===========

                           LIABILITIES AND SHAREHOLDERS' EQUITY

Accrued interest and other payables.........................    $   280,933    $   235,046
Current income taxes........................................         14,370             --
Debt financing, net of deferred debt discount of
  $28,001 (1999) and $14,852 (1998).........................     11,192,220     10,373,242
Capital lease obligations...................................        669,576        810,768
Security and other deposits on flight equipment.............        801,313        863,832
Rentals received in advance.................................        110,435        119,682
Deferred income taxes.......................................      1,228,085      1,132,687
Commitments and contingencies -- Note K

SHAREHOLDERS' EQUITY
  Preferred stock -- no par value; 20,000,000 authorized
     shares
  Market Auction Preferred Stock, $100,000 per share
     liquidation value; Series A, B, C, D, E, F, G and H
     (1999 and 1998), each having
     500 shares issued and outstanding......................        400,000        400,000
  Common stock -- no par value; 100,000,000 authorized
     shares, 35,818,122 shares (1999 and 1998) issued and
     outstanding............................................          3,582          3,582
  Paid-in capital...........................................        579,955        579,955
  Retained earnings.........................................      2,226,655      1,860,838
                                                                -----------    -----------
                                                                  3,210,192      2,844,375
                                                                -----------    -----------
                                                                $17,507,124    $16,379,632
                                                                ===========    ===========
</TABLE>

                            See accompanying notes.
                                       18
<PAGE>   21

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                             ------------------------------------
                                                                1999         1998         1997
                                                             ----------   ----------   ----------
<S>                                                          <C>          <C>          <C>
Revenues:
  Rental of flight equipment...............................  $2,080,555   $1,853,983   $1,732,667
  Flight equipment marketing...............................     147,216      118,183      176,005
  Interest and other.......................................      72,317       73,500       49,335
                                                             ----------   ----------   ----------
                                                              2,300,088    2,045,666    1,958,007
Expenses:
  Interest.................................................     686,767      639,964      642,321
  Depreciation of flight equipment.........................     637,256      556,082      546,226
  Provision for overhaul...................................      94,535      102,508       99,458
  Flight equipment rent....................................     130,026      138,392      103,883
  Selling, general and administrative......................      48,099       46,446       39,960
                                                             ----------   ----------   ----------
                                                              1,596,683    1,483,392    1,431,848
                                                             ----------   ----------   ----------
     INCOME BEFORE INCOME TAXES............................     703,405      562,274      526,159
Provision for income taxes.................................     249,958      192,922      187,475
                                                             ----------   ----------   ----------
     NET INCOME............................................  $  453,447   $  369,352   $  338,684
                                                             ==========   ==========   ==========
</TABLE>

                            See accompanying notes.
                                       19
<PAGE>   22

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                         MARKET AUCTION
                                         PREFERRED STOCK           COMMON STOCK
                                      ---------------------    --------------------
                                      NUMBER OF                NUMBER OF               PAID-IN      RETAINED
                                       SHARES       AMOUNT       SHARES      AMOUNT    CAPITAL      EARNINGS       TOTAL
                                      ---------    --------    ----------    ------    --------    ----------    ----------
<S>                                   <C>          <C>         <C>           <C>       <C>         <C>           <C>
Balance at December 31, 1996........    4,000      $400,000    35,818,122    $3,582    $579,955    $1,231,015    $2,214,552
  Dividends to AIG..................                                                                  (19,700)      (19,700)
  Preferred stock dividends.........                                                                  (16,348)      (16,348)
  Net income........................                                                                  338,684       338,684
                                        -----      --------    ----------    ------    --------    ----------    ----------
Balance at December 31, 1997........    4,000      $400,000    35,818,122    $3,582    $579,955    $1,533,651    $2,517,188
  Dividends to AIG..................                                                                  (25,200)      (25,200)
  Preferred stock dividends.........                                                                  (16,965)      (16,965)
  Net income........................                                                                  369,352       369,352
                                        -----      --------    ----------    ------    --------    ----------    ----------
Balance at December 31, 1998........    4,000      $400,000    35,818,122    $3,582    $579,955    $1,860,838    $2,844,375
  Dividends to AIG..................                                                                  (69,500)      (69,500)
  Preferred stock dividends.........                                                                  (18,130)      (18,130)
  Net income........................                                                                  453,447       453,447
                                        -----      --------    ----------    ------    --------    ----------    ----------
Balance at December 31, 1999........    4,000      $400,000    35,818,122    $3,582    $579,955    $2,226,655    $3,210,192
                                        =====      ========    ==========    ======    ========    ==========    ==========
</TABLE>

                            See accompanying notes.
                                       20
<PAGE>   23

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                              ---------------------------------------
                                                                 1999          1998          1997
                                                              -----------   -----------   -----------
<S>                                                           <C>           <C>           <C>
OPERATING ACTIVITIES:
  Net income................................................  $   453,447   $   369,352   $   338,684
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation of flight equipment........................      637,256       556,082       546,226
    Deferred income taxes...................................       95,398       205,666       117,727
    Amortization of deferred debt issue costs...............        8,260        10,242         9,505
    Gain on sale of flight equipment included in amount
      financed..............................................       (7,631)      (10,747)      (30,369)
    Increase in notes receivable............................      (67,867)      (18,591)         (712)
    Equity in net loss (income) of affiliates...............          705        (1,165)         (632)
    Change in unamortized debt discount.....................      (13,148)       (6,428)       14,325
  Changes in operating assets and liabilities:
    Increase in accrued interest, other receivables and
      other assets..........................................      (21,521)         (338)       (9,521)
    Increase (decrease) in accrued interest and other
      payables..............................................       45,887        20,940        (5,005)
    Decrease (increase) in current income taxes
      receivable............................................       30,377       (80,898)       81,311
    (Decrease) increase in rentals received in advance......       (9,247)       (9,904)       52,479
                                                              -----------   -----------   -----------
Net cash provided by operating activities...................    1,151,916     1,034,211     1,114,018
                                                              -----------   -----------   -----------
INVESTING ACTIVITIES:
  Acquisition of flight equipment for operating leases......   (3,446,630)   (3,274,247)   (3,289,744)
  Decrease (increase) in deposits and progress payments.....       57,466       111,431      (156,273)
  Proceeds from disposal of flight equipment -- net of
    gain....................................................    1,486,893       587,882     2,038,390
  Advances on notes receivable..............................           --        (7,000)           --
  Collections on notes receivable...........................      248,713       214,067        82,464
  Collections on finance and sales-type leases (net of
    income amortized).......................................       33,350         8,122        11,049
  Dividend from unconsolidated subsidiary...................        5,000         8,125            --
                                                              -----------   -----------   -----------
Net cash used in investing activities.......................   (1,615,208)   (2,351,620)   (1,314,114)
                                                              -----------   -----------   -----------
FINANCING ACTIVITIES:
  Proceeds from debt financing and capital lease
    obligations.............................................    6,855,019     5,772,791     6,084,081
  Payments in reduction of debt financing and capital lease
    obligations.............................................   (6,164,085)   (4,536,715)   (5,938,304)
  Debt issue costs..........................................       (7,107)       (6,565)      (15,966)
  Payment of common and preferred dividends.................      (87,630)      (42,165)      (36,048)
  (Decrease) increase in customer deposits..................      (62,519)      119,032       133,529
                                                              -----------   -----------   -----------
Net cash provided by financing activities...................      533,678     1,306,378       227,292
                                                              -----------   -----------   -----------
Net increase (decrease) in cash.............................       70,386       (11,031)       27,196
Cash at beginning of year...................................       52,723        63,754        36,558
                                                              -----------   -----------   -----------
    Cash at end of year.....................................  $   123,109   $    52,723   $    63,754
                                                              ===========   ===========   ===========
(Table continued on next page)
</TABLE>

                                       21
<PAGE>   24
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                              ---------------------------------------
                                                                 1999          1998          1997
                                                              -----------   -----------   -----------
<S>                                                           <C>           <C>           <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid (received) during the year for:
    Interest (net of amount capitalized $45,235 (1999),
      $54,297 (1998),
      and $48,818 (1997)....................................  $   482,186   $   628,819   $   619,274
    Income taxes (net)......................................      124,183        68,154       (11,563)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES:

  1999
    Notes in the amount of $110,940 were received as partial payment in exchange for flight equipment
     sold with a book value of $103,308.
  1998
    Notes and finance and sales-type leases in the amount of $107,155 were received as partial
     payment in exchange for flight equipment sold with a book value of $96,407.
    Flight equipment was received in exchange for notes receivable in the amount of $46,023.
  1997
    Notes and finance and sales-type leases in the amount of $125,741 were received as partial
     payment in exchange for flight equipment sold with a book value of $95,372.
</TABLE>

                            See accompanying notes.
                                       22
<PAGE>   25

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization: International Lease Finance Corporation (the "Company") is
primarily engaged in the acquisition of new and used commercial jet aircraft and
the leasing of those aircraft to airlines throughout the world. In addition to
its leasing activities, the Company regularly sells aircraft from its leased
aircraft fleet and aircraft owned by others to third party lessors and airlines
and in some cases provides fleet management services to these buyers. The
Company, in terms of the number and value of transactions concluded, is a major
owner-lessor of commercial jet aircraft.

     Parent Company: International Lease Finance Corporation (the "Company") is
an indirect wholly owned subsidiary of American International Group, Inc.
("AIG"). AIG is a holding company which through its subsidiaries is primarily
engaged in a broad range of insurance and insurance-related activities and
financial services in the United States and abroad.

     Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. Investments of less than 20% in other entities are carried at
cost. Investments of between 20% and 50% in other entities are carried under the
equity method. All significant intercompany balances and transactions have been
eliminated in consolidation.

     Intercompany Allocations: The Company is party to cost sharing agreements
with AIG. Generally, these agreements provide for the allocation of costs upon
either a specific identification basis or a proportional cost allocation basis.
The charges aggregated $2,896 (1999), $3,828 (1998) and $4,526 (1997).

     Rentals: The Company, as lessor, leases flight equipment principally under
operating leases. Accordingly, income is reported over the life of the lease as
rentals become receivable under the provisions of the lease or, in the case of
leases with varying payments, under the straight-line method over the
noncancelable term of the lease. In certain cases, leases provide for additional
rentals based on usage.

     Flight Equipment Marketing: The Company is a marketer of flight equipment.
Marketing revenues include all revenues from such operations consisting of net
gains on sales of flight equipment and commissions.

     Flight Equipment: Flight equipment is stated at cost. Major additions and
modifications are capitalized. Normal maintenance and repairs; airframe and
engine overhauls; and compliance with return conditions of flight equipment on
lease are provided by and paid for by the lessee. Under the provisions of many
leases, for certain airframe and engine overhauls, the lessee is reimbursed for
costs incurred up to but not exceeding related hourly rentals paid to the
Company by the lessee. Such rentals are included in the caption Rental of flight
equipment. The Company provides a charge to operations for such reimbursements
based on the estimated reimbursements during the life of the lease, which amount
is included in overhaul reserves.

     Generally, all aircraft, including aircraft acquired under capital leases,
are depreciated using the straight-line method over a 25 year life from the date
of manufacture to a 15% residual value.

     At the time assets are retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and the
difference, net of proceeds, is recorded as a gain or loss.

     The Company regularly reviews its flight equipment to determine that its
carrying value is not impaired.

     Capitalized Interest: The Company borrows certain funds to finance progress
payments for the construction of flight equipment ordered. The interest incurred
on such borrowings is capitalized and included in the cost of the equipment.

     Deferred Debt Issue Costs: Deferred debt issue costs incurred in connection
with debt financing are amortized over the life of the debt using the interest
rate method and are charged to interest expense.

                                       23
<PAGE>   26
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     Financial Instruments: When swap agreements are effective in modifying the
terms of actual debt agreements, such swaps are accounted for by the accrual
method. Periodic payments as well as the amortization (by a level yield method)
of the initial value are treated as adjustments to interest expense of the
related debt.

     The Company has granted certain parties the right but not the obligation to
effectively convert certain of the Company's fixed rate obligations to floating
rate obligations based on an established notional amount. The proceeds of such
option agreements are initially recorded as a liability.

     Income Taxes: The Company and its U.S. subsidiaries are included in the
consolidated federal income tax return and the combined California unitary tax
return of AIG. The provision for income taxes is calculated on a separate return
basis. Income tax payments are made pursuant to a tax payment allocation
agreement whereby AIG credits or charges the Company for the corresponding
increase or decrease (not to exceed the separate return basis calculation) in
AIG's current taxes resulting from the inclusion of the Company in AIG's
consolidated tax return. Intercompany payments are made when such taxes are due
or tax benefits are realized by AIG.

     The deferred tax liability is determined based on the difference between
the financial statement and tax basis of assets and liabilities and is measured
at the enacted tax rates that will be in effect when these differences reverse.
Deferred tax expense is determined by the change in the liability for deferred
taxes ("Liability Method").

     Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

     Reclassifications: Certain amounts have been reclassified in the 1998 and
1997 financial statements to conform to the Company's 1999 presentation.

NOTE B -- NOTES RECEIVABLE

     Notes receivable are primarily from the sale of and collaterized by flight
equipment and are summarized as follows:

<TABLE>
<CAPTION>
                                                         1999          1998
                                                       --------      --------
<S>                                                    <C>           <C>
Fixed rate notes receivable due in varying
  installments to 2008:
  Less than 6%.....................................    $     --      $  3,504
  6% to 7.99%......................................     209,255       219,493
  8% to 9.99%......................................      32,135        83,711
  10% to 12.99%....................................       6,902        11,199
  13% to 15%.......................................       4,221            --
LIBOR plus 1.1% to LIBOR plus 1.5% notes receivable
  in varying installments to 2002..................      17,923        22,437
                                                       --------      --------
                                                       $270,436      $340,344
                                                       ========      ========
</TABLE>

     Included above, the Company had notes receivable of $12,585 (1999) and
$10,328 (1998) representing restructured lease payments.

                                       24
<PAGE>   27
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE B -- NOTES RECEIVABLE (CONTINUED)
     At December 31, 1999, the minimum future notes receivable payments to be
received are as follows:

<TABLE>
<S>                                                      <C>         <C>
2000...................................................  $120,890
2001...................................................    29,955
2002...................................................    20,245
2003...................................................    15,044
2004...................................................    31,618
Thereafter.............................................    52,684
                                                         --------
                                                         $270,436
                                                         ========
</TABLE>

     In 1998 and prior years, the Company sold notes receivable with certain
limited recourse provisions to a related party of the Company. The notes sold in
1998 aggregated $68,694 and were sold at face value including accrued interest.
The Company continues to collect payments on the notes, transfers the payments
to the related party and receives a servicing fee. The Company recorded no gain
or loss on the sale. The Company recorded servicing fee income of $50 (1999), $1
(1998) and $112 (1997) related to the notes sold. The Company's maximum exposure
under recourse provisions was $13,739 at December 31, 1999. During 1999 the
Company repurchased two notes sold in 1998. The notes were not repurchased under
the recourse provisions.

NOTE C -- NET INVESTMENT IN FINANCE AND SALES-TYPE LEASES

     The following lists the components of the net investment in finance and
sales-type leases:

<TABLE>
<CAPTION>
                                                           1999        1998
                                                         --------    --------
<S>                                                      <C>         <C>
Total minimum lease payments to be received............  $ 69,675    $ 93,832
Estimated residual values of leased flight equipment...     7,070      19,949
Less: Unearned income..................................   (20,190)    (23,877)
                                                         --------    --------
Net investment in finance and sales-type leases........  $ 56,555    $ 89,904
                                                         ========    ========
</TABLE>

     Minimum future lease payments to be received on finance and sales-type
leases at December 31, 1999 are as follows:

<TABLE>
<S>                                                       <C>        <C>
2000....................................................  $12,615
2001....................................................   12,615
2002....................................................   12,636
2003....................................................   13,017
2004....................................................   11,565
Thereafter..............................................    7,227
                                                          -------
Total minimum lease payments to be received.............  $69,675
                                                          =======
</TABLE>

                                       25
<PAGE>   28
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE D -- INVESTMENTS

     Investments consist of the following:

<TABLE>
<CAPTION>
                                               1999                  1998
                                         -----------------    ------------------
                                         PERCENT              PERCENT
                                          OWNED     AMOUNT     OWNED     AMOUNT
                                         -------    ------    -------    -------
<S>                                      <C>        <C>       <C>        <C>
Cost method:
  Air Liberte..........................    (A)      $4,792      (A)      $ 4,792
  Others...............................              1,167                 1,158
Equity method:
  Pacific Ocean Leasing Ltd............   50.0%        127     50.0%       5,219
  Pacific Asia Leasing Ltd.............   25.0%        (19)    25.0%         602
                                                    ------               -------
                                                    $6,067               $11,771
                                                    ======               =======
</TABLE>

---------------

(A) During 1997, Air Liberte was acquired by British Airways. As a result of the
    acquisition, ILFC's percentage ownership will be reduced. ILFC's percentage
    ownership is not yet determinable.

     The Company has a 50% interest in Pacific Ocean Leasing Ltd. ("POL"), a
Bermuda corporation. POL owned one Boeing 767-200 aircraft and one spare engine,
both of which were on lease to an airline. The aircraft and spare engine were
sold in January 1999. POL owns an inventory of spare parts. Additionally, the
Company had guaranteed the bank loan to POL (see Note K). The Company received a
dividend of $5,000 in 1999.

     The Company has a 25% interest in Pacific Asia Leasing Ltd. ("PAL"), a
Bermuda corporation. PAL owned one Boeing 767-300ER aircraft on lease to an
airline. The aircraft was sold in 1998. The Company received a dividend of
$8,125 in 1998.

                                       26
<PAGE>   29
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS

     Debt financing and capital lease obligations are comprised of the
following:

<TABLE>
<CAPTION>
                                                       1999           1998
                                                    -----------    -----------
<S>                                                 <C>            <C>
Commercial Paper (weighted average interest rate
  at December 31, 5.87% (1999) and 5.30%
  (1998)).........................................  $ 2,978,353    $ 3,214,744
Public Term Debt with Single Maturities...........    3,721,330      3,825,000
Public Medium-Term Notes with Varying
  Maturities......................................    3,225,500      3,348,350
Bank Term Debt....................................    1,295,038             --
Capital Lease Obligations.........................      669,576        810,768
Less: Deferred debt discount......................      (28,001)       (14,852)
                                                    -----------    -----------
                                                    $11,861,796    $11,184,010
                                                    ===========    ===========
</TABLE>

     The interest on substantially all of the public debt (exclusive of the
commercial paper) is fixed for the term of the note.

  Bank Commitments:

     As of December 31, 1999, the Company had committed revolving loans and
lines of credit with 53 commercial banks aggregating $2.9 billion. Bank debt
principally provides for interest rates that vary according to the pricing
option in effect at the time of borrowing. Pricing options include prime, a
range from .22% over LIBOR to .32% over LIBOR based upon utilization, or a rate
determined by a competitive bid process with the banks. The revolving loans and
lines of credit are subject to facility fees of up to .08% of amounts available.
Such financing is used primarily as backup for the Company's Commercial Paper
program.

  Public Debt

     As of December 31, 1999 the Company had an effective shelf registration
statement with respect to $2.0 billion in debt securities, under which $275
million of notes were sold through December 31, 1999. Additionally, a $750
million Medium-Term Note program was implemented under the shelf registration
statement, under which $45 million was sold through December 31, 1999.

                                       27
<PAGE>   30
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
  Public Term Notes:

     The Company has issued the following Notes which provide for a single
principal payment at maturity and cannot be redeemed prior to maturity:

<TABLE>
<CAPTION>
                                                             INITIAL
                                                               TERM        1999         1998
                                                             --------   ----------   ----------
<S>                                                          <C>        <C>          <C>
5 3/4% Notes due January 15, 1999...........................  5 years                   150,000
5 1/2% Notes due January 15, 1999...........................  3 years                   150,000
7 1/2% Notes due March 1, 1999..............................  4 years                   100,000
6 5/8% Notes due April 1, 1999..............................  5 years                   100,000
6.70% Notes due April 30, 1999..............................  2 years                   100,000
Floating Rate Notes due June 2, 1999 (swapped to 6.64%).....  4 years                   100,000
Floating Rate Notes due July 15, 1999 (swapped to 6.235%)...  4 years                   100,000
6 1/2% Notes due August 15, 1999............................  7 years                   100,000
6 1/8% Notes due November 1, 1999...........................  4 years                   100,000
5 3/4% Notes due December 15, 1999..........................  4 years                   150,000
8 1/4% Notes due January 15, 2000...........................  5 years      100,000      100,000
6 3/8% Notes due January 18, 2000...........................  3 years      200,000      200,000
6.65% Notes due April 1, 2000...............................  3 years      100,000      100,000
6.20% Notes due May 1, 2000.................................  7 years      100,000      100,000
7% Notes due May 15, 2000...................................  5 years      100,000      100,000
6 5/8% Notes due June 1, 2000...............................  3 years      100,000      100,000
6 5/8% Notes due August 15, 2000............................  4 years      100,000      100,000
6 1/4% Notes due October 15, 2000...........................  5 years      100,000      100,000
Floating Rate Notes due February 1, 2001 (swapped to
  6.53%)....................................................  4 years      100,000      100,000
8 7/8% Notes due April 15, 2001............................. 10 years      150,000      150,000
5 7/8% Notes due January 15, 2001...........................  3 years      200,000      200,000
6 7/8% Notes due May 1, 2001................................  4 years      100,000      100,000
5.95% Notes due June 1, 2001................................  3 years      100,000      100,000
6 1/2% Notes due July 1, 2001...............................  4 years      100,000      100,000
5 7/8% Notes due July 1, 2001...............................  3 years      125,000      125,000
6 3/8% Notes due August 1, 2001.............................  4 years      100,000      100,000
6 1/2% Notes due October 15, 2001...........................  5 years      100,000      100,000
6 3/8% Notes due February 15, 2002..........................  5 years      100,000      100,000
5.90% Notes due April 15, 2002..............................  4 years      100,000      100,000
5 5/6% Notes due April 15, 2002.............................  3 years      100,000
5 5/8% Notes due May 1, 2002................................  3 years      175,000
6.00% Notes due May 15, 2002................................  4 years      100,000      100,000
6 3/8% Notes due August 1, 2002.............................  5 years      100,000      100,000
5 3/4% Notes due January 15, 2003...........................  5 years      100,000      100,000
6.00% Notes due June 15, 2003...............................  5 years      100,000      100,000
8 3/8% Notes due December 15, 2004.......................... 10 years      100,000      100,000
Euro Denominated Medium Term Notes
3.625% Notes due July 1, 2002 (swapped to $US at 5.80%).....  3 years      207,880           --
4.125% Notes due July 12, 2004..............................  5 years      563,450           --
                                                                        ----------   ----------
                                                                        $3,721,330   $3,825,000
                                                                        ==========   ==========
</TABLE>

     The Company established a Euro Medium-Term Note Program for $2.0 billion,
under which $771 million in Notes were sold through December 31, 1999. The
Company has hedged the notes through operating lease payments or through swaps
to transfer the currency exposure to third parties.

                                       28
<PAGE>   31
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
  Bank Term Debt

     In January 1999, the Company entered into a new Export Credit Facility for
up to a maximum of $4.3 billion, for approximately 75 aircraft to be delivered
from 1999 through 2001. The Company has the right, but is not required, to use
the facility to fund 85% of each aircraft's purchase price. This facility is
guaranteed by various European Export Credit Agencies. The interest rate varies
from 5.753% to 5.898% depending on the delivery date of the aircraft.

See Note L -- Financial Instruments.

  Capital Lease Obligations:

     The Company's Capital Lease Obligations provide 10 year, fully amortizing
debt in three interest rate tranches. The first 62.5% of the original debt is at
a fixed rate of 6.55%. The second 22.5% of the original debt is at fixed rates
varying between 6.18% and 6.89%. These two tranches are guaranteed by various
European Export Credit Agencies. The remaining 15% of the original debt is at a
floating LIBOR based rate. The debt matures through 2005. The flight equipment
associated with the obligations, and included in flight equipment under
operating leases in the balance sheet, had a net book value of $1,049,447 (1999)
and $1,104,413 (1998).

     The following is a schedule by years of future minimum lease payments under
capitalized leases together with the present value of the net minimum lease
payments as of December 31, 1999:

<TABLE>
<S>                                                         <C>
2000......................................................  $134,224
2001......................................................   128,227
2002......................................................   122,360
2003......................................................   116,437
2004......................................................   162,316
Thereafter................................................   199,336
                                                            --------
Total minimum lease payments..............................   862,900
Less amount representing interest.........................   193,324
                                                            --------
Present value of net minimum lease payments...............  $669,576
                                                            ========
</TABLE>

     Maturities of debt financing and capital lease obligations (excluding
commercial paper and deferred debt discount) at December 31, 1999 are as
follows:

<TABLE>
<S>                                                        <C>
2000.....................................................  $2,176,670
2001.....................................................   2,208,170
2002.....................................................   1,832,550
2003.....................................................     825,670
2004.....................................................   1,058,020
Thereafter...............................................     810,363
                                                           ----------
                                                           $8,911,443
                                                           ==========
</TABLE>

     Under the most restrictive provisions of the related borrowings,
consolidated retained earnings at December 31, 1999, in the amount of $718,820,
are unrestricted as to payment of dividends based on consolidated tangible net
worth requirements.

                                       29
<PAGE>   32
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
     The Company has entered into various debt and derivative transactions with
several broker-dealers, including a related party broker-dealer. The Company has
executed $757,480 and $3,264,223 notional amount of derivative instruments with
the related party during 1999 and 1998, respectively.

NOTE F -- SHAREHOLDERS' EQUITY

  Preferred Stock:

     The Market Auction Preferred Stock (MAPS) have a liquidation value of $100
per share and are not convertible. The dividend rate, other than the initial
rate, for each dividend period for each series is reset approximately every 7
weeks (49 days) on the basis of orders placed in an auction. At December 31,
1999, the dividend rates for Series A through H ranged from 4.800% to 5.180%.

  Stock Appreciation Rights:

     Stock Appreciation Rights ("SARs") were granted to certain employees of the
Company during 1990. The SARs granted generally vest over a nine year period
from the effective date and are exercisable immediately upon vesting. SARs
initially have no value but can gain a cash value based upon the difference
between a Benchmark Price and a Formula Price (based on adjusted pre-tax cash
flow of the Company), but not in excess of an aggregate of $150,000, to be
accrued and paid over the period of the plan. The SAR plan became effective on
January 1, 1991. No value has been earned or accrued under the SAR plan as of
December 31, 1999.

NOTE G -- RENTAL INCOME

     Minimum future rentals on noncancelable operating leases and subleases of
flight equipment which have been delivered at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                       YEAR ENDED
                       ----------
<S>                                                        <C>
2000.....................................................  $1,662,866
2001.....................................................   1,553,955
2002.....................................................   1,385,110
2003.....................................................   1,161,863
2004.....................................................     940,129
Thereafter...............................................   1,699,743
                                                           ----------
                                                           $8,403,666
                                                           ==========
</TABLE>

     Additional rentals earned by the Company based on the lessees' usage
aggregated $202,976 (1999), $202,425 (1998), and $219,380 (1997). Flight
equipment is leased, under operating leases, with remaining terms ranging from
one to 12 years.

NOTE H -- RENTAL EXPENSE

     During 1995, 1996 and 1997, the Company entered into sale-leaseback
transactions providing proceeds to the Company in the amounts of $412,626,
$507,600 and $601,860, respectively, relating to seven aircraft for each
transaction. The transactions resulted in the sale and leaseback of these
aircraft under one year operating leases, each with six one year extension
options, maturing on December 22, 2000, September 20, 2000 and September 12,
2000, respectively. One aircraft was repurchased in 1997 and 1999. The lease
rates equate to fixed principal amortization and floating interest payments
based on LIBOR or commercial paper pricing.

                                       30
<PAGE>   33
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE H -- RENTAL EXPENSE (CONTINUED)
     Minimum future rental expense for 2000 is $110,400 at December 31, 1999.

NOTE I -- INCOME TAXES

     The provision (benefit) for income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                           1999       1998       1997
                                                         --------   --------   --------
<S>                                                      <C>        <C>        <C>
Current:
  Federal(1)...........................................  $141,585   $(10,033)  $ 60,003
  State................................................    12,013     (2,938)     8,280
  Foreign..............................................       961        227      1,465
                                                         --------   --------   --------
                                                          154,559    (12,744)    69,748
Deferred:
  Federal..............................................    87,865    191,633    111,120
  State................................................     7,534     14,033      6,607
                                                         --------   --------   --------
                                                           95,399    205,666    117,727
                                                         --------   --------   --------
                                                         $249,958   $192,922   $187,475
                                                         ========   ========   ========
</TABLE>

---------------
(1) Including U.S. tax on foreign income

     The provision for deferred income taxes is comprised of the following
temporary differences:

<TABLE>
<CAPTION>
                                                           1999       1998       1997
                                                          -------   --------   --------
<S>                                                       <C>       <C>        <C>
Accelerated depreciation on flight equipment............  $72,577   $194,352   $123,486
Excess of state income taxes not currently deductible
  for Federal income tax purposes.......................   (6,213)    (3,015)    (4,127)
Tax versus book lease differences.......................   17,721     23,341     18,568
Provision for overhauls.................................    6,394    (15,616)    (2,873)
Rentals received in advance.............................    4,027      3,464    (18,270)
Straight line rents.....................................    3,542        829        778
Other...................................................   (2,649)     2,311        165
                                                          -------   --------   --------
                                                          $95,399   $205,666   $117,727
                                                          =======   ========   ========
</TABLE>

     The deferred tax liability consists of the following:

<TABLE>
<CAPTION>
                                                                 1999         1998
                                                              ----------   ----------
<S>                                                           <C>          <C>
Accelerated depreciation on flight equipment................  $1,209,790   $1,137,213
Excess of state income taxes not currently deductible
  for Federal income tax purposes...........................     (31,643)     (25,430)
Tax versus book lease differences...........................     127,527      109,806
Provision for overhauls.....................................     (50,868)     (57,262)
Rentals received in advance.................................     (47,256)     (51,283)
Straight line rents.........................................      19,557       16,015
Other.......................................................         979        3,628
                                                              ----------   ----------
                                                              $1,228,086   $1,132,687
                                                              ==========   ==========
</TABLE>

                                       31
<PAGE>   34
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE I -- INCOME TAXES (CONTINUED)
     A reconciliation of computed expected total provision for income taxes to
the amount recorded is as follows:

<TABLE>
<CAPTION>
                                                           1999       1998       1997
                                                         --------   --------   --------
<S>                                                      <C>        <C>        <C>
Computed expected provision based upon a federal rate
  of 35%...............................................  $246,192   $196,796   $184,156
State income taxes, net of Federal income taxes........    12,706      7,211      9,676
Foreign sales corporation benefit......................   (10,041)    (8,719)    (6,920)
Foreign taxes..........................................       586     (3,194)        --
Other..................................................       515        828        563
                                                         --------   --------   --------
                                                         $249,958   $192,922   $187,475
                                                         ========   ========   ========
</TABLE>

NOTE J -- OTHER INFORMATION

  Concentration of Credit Risk

     The Company leases and sells aircraft to airlines and others throughout the
world. All of the lease receivables and the majority of notes receivable are
from entities located throughout the world. The Company generally obtains
deposits on leases and obtains collateral in flight equipment on notes
receivable. The Company has no single customer which accounts for 10% or more of
revenues.

  Segment Information

     The Company operates within one industry: the leasing, sales and management
of flight equipment.

     Revenues include rentals of flight equipment to foreign airlines of
$1,842,126 (1999), $1,623,891 (1998) and $1,472,075 (1997).

     The following table sets forth the dollar amount and percentage of total
rental revenues attributable to the indicated geographic areas for the years
indicated:

<TABLE>
<CAPTION>
                                            1999                  1998                  1997
                                     ------------------    ------------------    ------------------
                                       AMOUNT       %        AMOUNT       %        AMOUNT       %
                                     ----------   -----    ----------   -----    ----------   -----
                                                         (DOLLARS IN THOUSANDS)
<S>                                  <C>          <C>      <C>          <C>      <C>          <C>
Europe.............................  $  946,335    45.5%   $  798,773    43.1%   $  705,128    40.7%
Asia/Pacific.......................     421,337    20.3       410,600    22.1       358,687    20.7
United States and Canada...........     389,593    18.7       333,472    18.0       345,143    19.9
Central, South America and
  Mexico...........................     201,405     9.7       190,572    10.3       211,152    12.2
Africa and the Middle East.........     121,885     5.8       120,566     6.5       112,557     6.5
                                     ----------   -----    ----------   -----    ----------   -----
                                     $2,080,555   100.0%   $1,853,983   100.0%   $1,732,667   100.0%
                                     ==========   =====    ==========   =====    ==========   =====
</TABLE>

  Currency Risk

     The Company attempts to minimize its currency and exchange risks by
negotiating most of its aircraft lease in US dollars. Some of the Company's
leases, however, are negotiated in Euros to meet the needs of a growing number
of airlines. These Euro denominated leases are primarily used as a hedge against
Euro denominated debt obligations of the Company.

                                       32
<PAGE>   35
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE J -- OTHER INFORMATION (CONTINUED)
  Employee Benefit Plans

     The Company's employees participate in various benefit plans sponsored by
AIG, including a noncontributory qualified defined benefit retirement plan,
various stock option and purchase plans and a voluntary savings plan (401(k)
plan).

     AIG's U.S. plans do not separately identify projected benefit obligations
and plan assets attributable to employees of participating affiliates. AIG's
projected benefit obligations exceeded the plan assets at December 31, 1999 by
$35,601.

NOTE K -- COMMITMENTS AND CONTINGENCIES

  Aircraft orders

     At December 31, 1999, the Company had committed to purchase 331 aircraft
deliverable from 2000 through 2007 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $16.4 billion.

     The Company also had options to purchase an additional 83 aircraft
deliverable through 2007 at an estimated aggregate purchase price of $3.9
billion.

     Most of these purchase commitments and options are based upon master
agreements with each of The Boeing Company ("Boeing") and AVSA, S.A.R.L., the
sales subsidiary of Airbus Industrie ("Airbus").

     The Boeing aircraft (models 737, 757, 767 and 777), and the Airbus aircraft
(models A318, A319, A320, A321, A330 and A340) are being purchased pursuant to
agreements executed by the Company and Boeing or Airbus. These agreements
establish the pricing formulas (which include certain price adjustments based
upon inflation and other factors) and various other terms with respect to the
purchase of aircraft. Under certain circumstances, the Company has the right to
alter the mix of aircraft type ultimately acquired. As of December 31, 1999, the
Company had made non-refundable deposits (exclusive of capitalized interest) on
the aircraft which the Company has committed to purchase of approximately
$434,560 and $334,556 with Boeing and Airbus, respectively.

     Management anticipates that a significant portion of the aggregate purchase
price will be funded by incurring additional debt. The exact amount of the
indebtedness to be incurred will depend upon the actual purchase price of the
aircraft, which can vary due to a number of factors, including inflation, and
the percentage of the purchase price of the aircraft which must be financed.

  Asset Value Guarantees

     The Company has guaranteed a portion of the residual value of 29 aircraft
to financial institutions expiring at various dates through 2009. The guarantees
generally provide for the Company to pay the difference between the fair market
value of the aircraft and the guaranteed value up to certain specified amounts,
or, at the option of the Company, purchase the aircraft for the guaranteed
value. At December 31, 1999 and 1998, the maximum exposure if the Company were
to pay under such guarantees was $136,669 and $155,656, respectively.

  Other Guarantees

     The Company has guaranteed certain obligations for entities in which it has
an investment. At December 31, 1999 and 1998, the Company guaranteed nine loans
collateralized by aircraft aggregating $30,824 and $57,088, respectively.

                                       33
<PAGE>   36
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE L -- FINANCIAL INSTRUMENTS

     In the normal course of business, the Company employs a variety of
off-balance sheet derivative transactions with the objective lowering its
overall borrowing cost and maintaining its optimal mix of variable and fixed
rate interest obligations. These derivative products include interest rate swap
agreements, currency swap agreements, swaptions and interest rate floors
(off-balance sheet derivative transactions). The Company only enters into
derivative transactions to hedge interest rate and currency risk and not to
speculate on interest rates or currency fluctuation.

     The Company accounts for its off-balance sheet derivative transactions on
an accrual basis. As such, accrued future payments or receipts are reflected in
operating income in the period incurred or earned. Credit risk exposure arises
from the potential that the counterparty may not perform under these agreements
with respect to the off-balance sheet derivative transactions. The Company
minimizes credit risk through transacting with U.S. derivative dealers assigned
at least an "A" rating by a recognized statistical rating organization. The
counterparties to the majority of the off-balance sheet derivative transactions
are assigned an "AAA" rating. One of the counterparties is a related party of
the Company. The Company monitors each counterparty's assigned credit rating
throughout the life of the off-balance sheet derivative transaction. The Company
currently does not require, nor is it required by, its counterparties to provide
collateral for its positions with the Company although it can in certain
circumstances.

     The following table provides the notional amounts of the Company's
off-balance sheet derivative transactions at December 31, 1999. The notional
amounts used to express the extent of the Company's involvement in swap
transactions represent a standard measurement of the volume of the Company's
swap transactions. Notional amount is not a quantification of market risk or
credit risk and is not recorded on the balance sheet. Notional amounts represent
those amounts used to calculate contractual cash flows to be exchanged and are
not paid or received. The timing and the amount of cash flows relating to
swaption and other interest rate option contracts are determined by each of the
respective contractual agreements.

     It is management's belief that any failure of a counterparty to perform
under the agreement with respect to these off-balance sheet transactions would
have an immaterial effect on the Company's results of operations, financial
condition and liquidity.

     The following table presents the notional amounts of the Company's interest
rate swap agreements, swaptions and interest rate floors by maturity at December
31, 1999 and 1998.

<TABLE>
<CAPTION>
                                           REMAINING LIFE
                                ------------------------------------
                                              TWO TO      AFTER FIVE      TOTAL         TOTAL
             TYPE               ONE YEAR    FIVE YEARS      YEARS          1999          1998
             ----               --------    ----------    ----------    ----------    ----------
<S>                             <C>         <C>           <C>           <C>           <C>
Interest Rate:
Swaps.........................  $148,234    $2,139,228    $1,484,481    $3,771,943    $4,185,945
Swaptions(1)..................                                                           100,000
Floors........................    33,451       766,794            --       800,245       830,655
                                --------    ----------    ----------    ----------    ----------
Total.........................  $181,685    $2,906,022    $1,484,481    $4,572,188    $5,116,600
                                ========    ==========    ==========    ==========    ==========
</TABLE>

---------------

(1) Swaptions obligate the Company to convert certain fixed rate obligations to
    floating rate obligations if the option purchaser chooses to exercise. These
    amounts do not represent credit exposure.

     The Company has entered into various derivative transactions with several
broker-dealers, including a related party broker-dealer. The Company has
executed $775,480 and $3,264,223 notional amount of derivative instruments with
the related party during 1999 and 1998, respectively.

                                       34
<PAGE>   37
            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             (DOLLARS IN THOUSANDS)

NOTE L -- FINANCIAL INSTRUMENTS (CONTINUED)
     The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

          Cash and cash equivalents: The carrying value reported in the balance
     sheet for cash and cash equivalents approximates its fair value.

          Notes receivable: The fair values for notes receivable are estimated
     using discounted cash flow analyses, using interest rates currently being
     offered for similar loans to borrowers with similar credit ratings.

          Investments: It was not practicable to determine the fair value of
     most of the Company's investments in the common and preferred stocks of
     other companies because of the lack of a quoted market price and the
     inability to determine fair value without incurring excessive costs due to
     their short maturities. The carrying amount of these investments at
     December 31, 1999 represents the original cost or original cost plus the
     Company's share of earnings of the investment. For investments held by the
     Company that had a quoted market price at December 31, 1999, the Company
     used such quoted market price in determining the fair value of such
     investments.

          Debt financing: The carrying value of the Company's commercial paper
     and term debt maturing within one year approximates its fair value. The
     fair value of the Company's long-term debt is estimated using discounted
     cash flow analyses, based on the Company's spread to U.S. Treasury bonds
     for similar debt at year-end.

          Off-balance-sheet instruments: Fair values for the Company's
     off-balance-sheet instruments are based on pricing models or formulas using
     assumptions about future interest rates, interest volatility and other
     factors (swaps, swaptions and interest rate floors).

          Guarantees: It is not practical to determine the fair value of the
     Company's guarantees and the value is not significant to the Company.

     The carrying amounts and fair values of the Company's financial instruments
at December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                       1999                                    1998
                                       -------------------------------------   -------------------------------------
                                           CARRYING                                CARRYING
                                           AMOUNT OF         FAIR VALUE OF         AMOUNT OF         FAIR VALUE OF
                                       ASSET (LIABILITY)   ASSET (LIABILITY)   ASSET (LIABILITY)   ASSET (LIABILITY)
                                       -----------------   -----------------   -----------------   -----------------
<S>                                    <C>                 <C>                 <C>                 <C>
Cash and cash equivalents............    $    123,109        $    123,109         $    52,723         $    52,723
Notes receivable.....................         270,436             247,475             340,344             334,452
Investments..........................           6,067               6,067              11,771              11,879
Debt financing.......................     (11,192,220)        (11,045,875)        (10,373,242)        (10,607,696)
Off-balance-sheet financial
  instruments:
     Swaps (interest and currency)...         (34,793)             (9,925)            (36,260)            (36,384)
     Swaptions.......................          (2,066)                 --              (2,501)                 --
     Interest rate floors............          (1,210)              3,205              (1,568)            (10,824)
</TABLE>

                                       35
<PAGE>   38

            INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
              COL. A                   COL. B                 COL. C                  COL. D         COL. E
              ------                ------------   -----------------------------   ------------   -------------
                                                             ADDITIONS
                                     BALANCE AT    CHARGED TO      CHARGED TO
                                    BEGINNING OF   COSTS AND    OTHER ACCOUNTS--   DEDUCTIONS--    BALANCE AT
           DESCRIPTION                 PERIOD       EXPENSES        DESCRIBE       DESCRIBE(1)    END OF PERIOD
           -----------              ------------   ----------   ----------------   ------------   -------------
                                                              (DOLLARS IN THOUSANDS)
<S>                                 <C>            <C>          <C>                <C>            <C>
Reserve for overhaul:
Year ended December 31, 1999......    $152,764      $101,302                         $117,615       $136,451
Year ended December 31, 1998......    $110,822      $102,508                         $ 60,566       $152,764
Year ended December 31, 1997......    $102,492      $ 99,458                         $ 91,128       $110,822
</TABLE>

---------------

(1) Reimbursements to lessees for overhauls performed and amounts transferred to
    buyers for aircraft sold.

                                       36
<PAGE>   39

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: March 9, 2000

                                          INTERNATIONAL LEASE FINANCE
                                          CORPORATION

                                          By       /s/ LESLIE L. GONDA
                                            ------------------------------------
                                                      Leslie L. Gonda
                                                   Chairman of the Board

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>
                   SIGNATURE                                     TITLE                       DATE
                   ---------                                     -----                       ----
<C>                                                 <S>                                 <C>

              /s/ LESLIE L. GONDA                   Director                            March 9, 2000
------------------------------------------------
                Leslie L. Gonda

            /s/ STEVEN F. UDVAR-HAZY                Chief Executive Officer and         March 9, 2000
------------------------------------------------      Director
              Steven F. Udvar-Hazy

                                                    Director
------------------------------------------------
                 Louis L. Gonda

                                                    Director
------------------------------------------------
                M. R. Greenberg

                                                    Director
------------------------------------------------
               Edward E. Matthews

             /s/ WILLIAM N. DOOLEY                  Director                            March 9, 2000
------------------------------------------------
               William N. Dooley

              /s/ HOWARD I. SMITH                   Director                            March 9, 2000
------------------------------------------------
                Howard I. Smith

                /s/ ALAN H. LUND                    Chief Financial Officer and         March 9, 2000
------------------------------------------------      Chief Accounting Officer
                  Alan H. Lund
</TABLE>

                                       37
<PAGE>   40

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

     Since the Registrant is an indirect wholly owned subsidiary of AIG, no
annual report to security holders or proxy statement, form of proxy or other
proxy soliciting materials have been sent to security holders since January 1,
1990.

                                       38