##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C. 20549
    FORM 10-K/A
 ANNUAL REPORT
 (Amendment No. 1)
    (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, 2005
  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 1-316161
  INTERNATIONAL LEASE FINANCE
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  California

22-3059110(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)10250 Constellation Blvd.,
    Suite 3400,
    Los Angeles, California(Address of principal
    executive offices)

90067(Zip Code)       Title of each class

Name of each exchange on which registered6.375% Notes due March 15,
    2009

New York Stock Exchange      x o
  o x
  x o
  Regulation S-K Form 10-K Form 10-K. x
  Rule 12b-2 o x
  12b-2
 Large accelerated
    filer o  Accelerated
    filer o  Non-accelerated
    filer x
  o x
    Form 10-K




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##### Table of Contents



Explanatory
    Note
  10-K/A Restatement,
    Business, Selected Financial Data, Managements Discussion
    and Analysis of Financial Condition and Results of Operations,
    Controls and Procedures Consolidated Financial
    Statements, Notes to
    Consolidated Financial Statements,
  Notes to
    Consolidated Financial Statements




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION
  2005
    FORM 10-K/A
    ANNUAL REPORT
    TABLE OF CONTENTS
  PageRestatement


1PART
    IItem 1.

Business


2Item 1A.

Risk
    Factors


8Item 1B.

Unresolved Staff
    Comments


10Item 2.

Properties


10Item 3.

Legal
    Proceedings


12PART
    IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


13Item 6.

Selected Financial
    Data


14Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


16Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


43Item 8.

Financial
    Statements and Supplementary Data


43Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


44Item 9A.

Controls and
    Procedures


44Item 9B.

Other
    Information


45PART
    IIIItem 10.

Directors and
    Executive Officers of the Registrant


46Item 14.

Principal
    Accountant Fees and Services


46PART
    IVItem 15.

Exhibits and
    Financial Statement Schedules


46Exhibit 12Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



Restatement
  Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  Form 10-K Form 10-Q.
      For the YearFor Quarters Ended and At


Ended and AtMarch 31,


June 30,


September 30,


December 31,


December 31,Increase (Decrease)

2005


2005


2005


2005


2005(Dollars in thousands)Consolidated Statements of
    Income:Rental of flight equipment

$
18,661


$
2,394


$
11,576


$
(50,756
)

$
(18,125
)Flight equipment marketing,
    interest and other


(7,707
)


6,447







1,207



(53
)Interest expense


(36,536
)


46,045



(33,030
)


(15,424
)


(38,945
)Depreciation










(8,725
)


8,725



Provision for overhauls


16,274



2,859



6,903



(26,036
)


Selling, general and
    administrative expense


(2,377
)


2,756



(210
)


(3,179
)


(3,010
)Income before taxes


33,593



(42,819
)


46,638



(13,635
)


23,777Net income

$
21,742


$
(27,712
)

$
30,185


$
(8,826
)

$
15,389Shareholders
    Equity:Accumulated other comprehensive
    income (loss)

$
(23,748
)

$
6,180


$
(15,288
)





$
(25,314
)Retained earnings


21,742



(5,969
)


24,211







15,389Total shareholders equity

$
(2,006
)

$
211


$
8,923






$
(9,925
)  1




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##### Table of Contents



PART
    I  Item
    1.  Business  General
    Properties 
    Commitments.
      Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.
  (310) 788-1999, (310) 788-1990,
    Aircraft
    Leasing
   2




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##### Table of Contents



Properties  Flight Equipment
             3




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##### Table of Contents



Flight
    Equipment Marketing
  Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Results of
    Operations
      Fleet
    Management Services
    Financing/Source
    of Funds
  Managements Discussion and Analysis
    of Financial Condition and Results of Operations.
 4




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##### Table of Contents



Customers
    Customers by Region2005


2004


2003Number





Number





Numberof





of





ofRegion

Customers


%


Customers


%


Customers


%Europe


66



45.2
%


66



47.2
%


65



47.1
%Asia and the Pacific


33



22.6



31



22.1



32



23.1United States and Canada


24



16.5



19



13.6



20



14.5Central and South America and
    Mexico


10



6.8



10



7.1



11



8.0Africa and Middle East


13



8.9



14



10.0



10



7.3146



100
%


140



100
%


138



100
%     Notes to Consolidated Financial
    Statements
    2005


2004


2003Amount


%


Amount


%


Amount


%(Restated)(Dollars in thousands)Europe

$
1,693,235



48.5
%

$
1,432,441



48.5
%

$
1,315,851



46.9
%Asia and the Pacific


761,673



21.9



689,201



23.3



661,956



23.6United States and Canada


479,219



13.8



382,090



12.9



424,457



15.0Central and South America and
    Mexico


253,667



7.3



208,622



7.1



221,067



7.9Africa and the Middle East


294,416



8.5



243,170



8.2



183,880



6.6$
3,482,210



100
%

$
2,955,524



100
%

$
2,807,211



100
%     2005


2004


2003Amount


%


Amount


%


Amount


%(Restated)(Dollars in thousands)France

$
442,272



12.7
%

$
351,394



11.9
%

$
326,010



11.6
%China


410,310



11.8



357,512



12.1



308,204



11.0United States


386,598



11.1



236,353



8.0



310,126



11.0   Competition
   5




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##### Table of Contents



Government
    Regulation
                  Employees
    Insurance
   6




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##### Table of Contents



co-insurance
        Forward-Looking
    Statements
  Form 10-K/A Form 10-K/A
 7




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##### Table of Contents



Item
    1A.  Risk Factors  Risk
    Factors Affecting International Lease Finance
    Corporation
  Quantitative and Qualitative Disclosures about Market
    Risk
  Overall
    Airline Industry Risk
    
    Demand for air travel
    Competition between carriers
    Fuel prices and availability
    Labor costs and stoppages
    Maintenance costs
    Employee labor contracts
    Air traffic control infrastructure constraints
    Airport access
    Insurance costs and coverage
    Security, terrorism and war
    Worldwide health concerns
    Equity and borrowing capacity
    Environmental concerns
    Government regulation
    Interest rates
    Overcapacity    
    a downward pressure on demand for the aircraft in our fleet and
    reduced market lease rates and lease margins;
    a higher incident of lessee defaults, lease restructurings and
    repossessions resulting in lower lease margins due to
    maintenance, consulting and legal costs associated with the
    repossession, as well as lost revenue for the time the aircraft
    are off lease and possibly lower lease rates from the new
    lessees;
    a higher incident of situations where we engage in restructuring
    lease rates for our troubled customers which reduces overall
    lease margins; and
    an inability to immediately place new and used aircraft when
    they become available through our purchase commitments and
    regular lease terminations on commercially acceptable terms,
    resulting in lower lease margins due to aircraft not earning
    revenue and resulting in storage, insurance and maintenance
    costs.
    a loss if our aircraft is damaged or destroyed by an event
    specifically excluded from the insurance policy such as dirty
    bombs, bio-hazardous materials and electromagnetic pulsing.  Airframe,
    Engine and Other Manufacturer Risks
    
    missed or late delivery of aircraft ordered by us and an
    inability to meet our contractual obligations to our customers,
    resulting in lost or delayed revenues, lower growth rates and
    strained customer relationships; 8




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##### Table of Contents




    an inability to acquire aircraft and related components on terms
    which will allow us to lease those aircraft to customers at a
    profit, resulting in lower growth rates or a contraction in our
    fleet;
    a market place with too many aircraft available, creating
    downward pressure on demand for the aircraft in our fleet and
    reduced market lease rates;
    poor customer support from the manufacturers of aircraft and
    components resulting in reduced demand for a particular
    manufacturers product, creating downward pressure on
    demand for those aircraft in our fleet and reduced market lease
    rates for those aircraft; and
    reduction in our competitiveness due to deep discounting by the
    manufacturers, which may lead to reduced market lease rates and
    may impact our ability to remarket or sell some of the aircraft
    in our fleet.  Borrowing
    Risks
  Liquidity
  
    an inability to acquire aircraft, for which we have signed
    contracts, resulting in lower growth, lost revenue and strained
    manufacturer and customer relationships; and
    an inability to meet our debt maturities as they become due,
    resulting in payment defaults, non-compliance with debt
    covenants, reduced credit ratings and an inability to access
    certain debt markets.  Interest Rate Risks
  Other
    Risks
  Failure to Remedy Material Weakness Controls and
    Procedures Form 10-K/A,
  Residual Value Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Critical Accounting Polices and
    Estimates  Flight Equipment.
  Obsolescence Risk long-lived
 9




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##### Table of Contents



Key Personnel
  Foreign currency exchange rate risk
  Relationship with AIG  A-1+, (A1/Stable/P-1)
 Item
    1B.  Unresolved Staff Comments   Item
    2.  Properties  Flight
    Equipment
     10




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##### Table of Contents



Aircraft Type

2006


2007


2008


2009


2010


2011


2012


2013


2014


2015


2016


2017


2018


2019


2020


2021


Total737-300/
    400/500


8



11



25



9











4







































57737-600/
    700/800


10



19



14



4



11



29



21



13



1



7



1







9



2



2



1



144757-200


3



25



11



15



9



















1



























64767-200










2







1















































3767-300


8



15



16



6



1



2



4



1



































53777-200






5



4



2



3



5



8



6



































33777-300






2



1







3



6



1



















4



















17747-300














1



1















































2747-400










4



7



1



4



1







































17MD-82/83


1































































1MD-11






1



3



3



1















































8A300-600R


1



2



2







1















































6A310


1



1



5























































7A319


1



4



10



10



4



2



3



10



10



8



6



18



















86A320


3



9



17



20



14



9



13



8



6



1



6























106A321


4



8



3



18



6



6







4



2











2



















53A330-200






5



11



13



6



2



5



6



2































50A330-300


1



4







2



1



4



3







































15A340-300


2



8



1



2











2







































15A340-600






2



1



















1







2



1



2



















9Total


43



121



130



112



63



69



65



49



21



19



14



26



9



2



2



1



746      Commitments
    Aircraft Type

2006


2007


2008


2009


2010


2011


2012


2013


2014


2015


Total737-600/700/800(a)


24



24



21































69747-400(b)


2







































2777-200ER


6



3



































9777-300ER


5



7



3































15787-800


















10



10



















20A319-100(a)


21



16



14



10



























61A320-200(a)


19



17



22



13



























71A321-200(a)


10



6



10



5



























31A330-200/300(a)


8



9



7



4



























28A340-600


3



1



2































6A350-800


























2



6



4



4



16A380-800






2



3



3



2























10Total


98



85



82



35



12



10



2



6



4



4



338    (a)
    We have the right to designate the size of the aircraft within
    the specific model type at specific dates prior to contractual
    delivery.  (b)
    We are acquiring the aircraft used and they are committed to
    sale.   11




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##### Table of Contents



Aircraft Type

2007


2008


2009


Thereafter


Total737-700/800(a)


3







6







9777-200ER/300ER(a)










3







3787-800














4



4Total


3



0



9



4



16    (a)
    We have the right to designate the size of the aircraft within
    the specific model type at specific dates prior to contractual
    delivery.  Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations.
  non-refundable
      Number of


NumberDelivery Year

Aircraft


Leased


% Leased2006


96



96



100
%2007


85



65



76
%2008


82



11



13
%Thereafter


73



0



0
%     Facilities
    Item 3.
    Legal
    Proceedings  737-300
 12




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##### Table of Contents



PART II  Item
    5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities     13




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##### Table of Contents



Item 6. Selected
    Financial Data  Managements Discussion and Analysis
    of Financial Condition and Results of Operations Form 10-K/A.
  Years Ended December 31,2005


2004


2003


2002


2001(Restated)(Dollar amounts in thousands)Operating Data:Rentals of flight equipment

$
3,482,210


$
2,955,524


$
2,807,211


$
2,546,142


$
2,411,576Flight equipment marketing


66,737



77,664



28,988



48,454



31,840Flight equipment
    marketing  securitization






32,854



23,245







Interest and other income


61,426



93,844



17,907



64,655



108,809Total revenues


3,610,373



3,159,886



2,877,351



2,659,251



2,552,225Expenses


2,936,190



2,491,779



2,236,545



2,037,784



1,859,054Income before income taxes and
    cumulative effect of accounting change


674,183



668,107



640,806



621,467



693,171Net income


438,349



462,006



435,481



417,406



471,058Lease margin(a)(b)


17.66%



18.22%



20.32%



19.96%



22.91%Profit margin(b)(c)


18.67%



21.14%



22.27%



23.37%



27.16%Ratio of Earnings to Fixed
    Charges and Preferred Stock Dividends(d):


1.52x



1.62x



1.58x



1.55x



1.65xBalance Sheet Data:Flight equipment under operating
    leases (net of accumulated depreciation)

$
34,748,932


$
30,505,422


$
28,190,689


$
24,864,055


$
20,613,524Net investment in finance and
    sales-type
    leases


308,471



307,466



303,373



150,611



142,013Total assets


37,530,327



34,007,900



31,291,562



27,148,615



22,940,830Total debt(e)


26,104,165



23,175,596



21,852,743



18,977,268



15,826,296Shareholders equity


6,172,562



5,329,937



4,856,504



4,414,071



3,889,916Other Data:Aircraft lease portfolio at period
    end(f):Owned


746



667



611



543



453Leased in














13



18Subject to finance and sales-type
    leases


17



9



9



5



4Aircraft sold or remarketed during
    the period


29



49



39



8



7    14




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##### Table of Contents



(a)
    Lease margin is a non-GAAP measure. It is defined as
    Rentals of flight equipment less
    Expenses, adjusted for expenses related to variable
    interest entities and other expenses we consider not related to
    our core business operations, divided by Rentals of flight
    equipment. (See Item 7, Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Non-GAAP Financial Measures.)(b)
    Includes the unrealized gain (loss) attributable to economic
    hedges not qualifying for hedge accounting treatment under
    SFAS 133. This will increase the inter-period volatility in
    the operating and lease margin percentages.(c)
    Income before income taxes and cumulative effect of
    accounting change divided by Total revenues.    (e)
    Includes subordinated debt, capital lease obligations and
    synthetic lease obligations when applicable and does not include
    foreign currency adjustment.  Properties 
    Flight Equipment.
 15




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##### Table of Contents



Item
    7.  Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Restatement
    Form 10-K Form 10-Q.
  paid-in-capital),
 16




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##### Table of Contents



For the YearFor Quarters Ended and At


Ended and AtMarch 31,


June 30,


September 30,


December 31,


December 31,Increase (Decrease)

2005


2005


2005


2005


2005(Dollars in thousands)Consolidated Statements of
    Income:Rental of flight equipment

$
18,661


$
2,394


$
11,576


$
(50,756
)

$
(18,125
)Flight equipment marketing,
    interest and other


(7,707
)


6,447







1,207



(53
)Interest expense


(36,536
)


46,045



(33,030
)


(15,424
)


(38,945
)Depreciation










(8,725
)


8,725



Provision for overhauls


16,274



2,859



6,903



(26,036
)


Selling, general and
    administrative expense


(2,377
)


2,756



(210
)


(3,179
)


(3,010
)Income before taxes


33,593



(42,819
)


46,638



(13,635
)


23,777Net income

$
21,742


$
(27,712
)

$
30,185


$
(8,826
)

$
15,389Shareholders
    Equity:Accumulated other comprehensive
    income (loss)

$
(23,748
)

$
6,180


$
(15,288
)





$
(25,314
)Retained earnings


21,742



(5,969
)


24,211







15,389Total shareholders equity

$
(2,006
)

$
211


$
8,923






$
(9,925
)    17




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##### Table of Contents



CONDENSED
    CONSOLIDATED BALANCE SHEET
    March 31, 2005
    (Dollars in thousands except share and per share
    amounts)
  As PreviouslyReported

Adjustment

As RestatedASSETSCash, including interest bearing
    accounts of $66,283

$
66,687


$



$
66,687Current income taxes


57,338







57,338Notes receivable, net of
    allowance, and net investment in finance and sales-type leases


515,398







515,398Flight equipment under operating
    leases


38,665,498



(2,829
)


38,662,669Less accumulated depreciation


6,388,484







6,388,48432,277,014



(2,829
)


32,274,185Deposits on flight equipment
    purchases


1,383,773







1,383,773Other assets


275,275



33,668



308,943Derivative assets


976,076







976,076Investments


25,676







25,676Variable interest entities assets


148,359







148,359Deferred debt issue
    costs  less accumulated amortization of $79,104


65,831







65,831$
35,791,427


$
30,839


$
35,822,266LIABILITIES AND
    SHAREHOLDERS EQUITYAccrued interest and other
    payables

$
341,510


$
17,508


$
359,018Current income taxesTax benefit sharing payable to AIG


245,000







245,000Debt financing, net of deferred
    debt discount of $37,425


24,709,139







24,709,139Foreign currency translation
    adjustment related to foreign currency denominated debt


932,474







932,474Derivative liabilities


31,262







31,262Capital lease obligations


20,497







20,497Security and other deposits on
    flight equipment


1,004,941



16,274



1,021,215Rentals received in advance


172,872







172,872Deferred income taxes


2,768,110



(937
)


2,767,173Variable interest entities
    liabilities


67,245







67,245SHAREHOLDERS
    EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and B
    each having 500 shares issued and outstanding


100,000







100,000Common stock  no par
    value; 100,000,000 authorized shares, 42,198,119 issued and
    outstanding


653,582







653,582Paid-in capital


585,416







585,416Accumulated other comprehensive
    income (loss)


73,038



(23,748
)


49,290Retained earnings


4,086,341



21,742



4,108,083Total shareholders equity


5,498,377



(2,006
)


5,496,371$
35,791,427


$
30,839


$
35,822,266  18




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##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENT OF INCOME
    AND COMPREHENSIVE INCOME
    Three Months Ended March 31, 2005
    (Dollars in thousands)
  As PreviouslyReported


Adjustment


As RestatedREVENUESRental of flight equipment

$
798,101


$
18,661


$
816,762Flight equipment marketing


15,561



(5,987
)


9,574Interest and other


15,162



(1,720
)


13,442828,824



10,954



839,778EXPENSESInterest


240,406



(36,536
)


203,870Depreciation of flight equipment


318,891







318,891Provision for overhauls


44,143



16,274



60,417Selling, general and administrative


36,366



(2,377
)


33,989639,806



(22,639
)


617,167INCOME BEFORE INCOME
    TAXES


189,018



33,593



222,611Provision for income taxes


60,096



11,851



71,947NET INCOME

$
128,922


$
21,742


$
150,664OTHER COMPREHENSIVE INCOME,
    (LOSS) NET OF TAXNet changes in cash flow hedges


50,358



(23,749
)


26,609Change in unrealized appreciation
    on securities available for sale


(145
)






(145
)50,213



(23,749
)


26,464COMPREHENSIVE INCOME

$
179,135


$
(2,007
)

$
177,128  19




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##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
    Three Months Ended March 31, 2005
    (Dollars in thousands)
  As PreviouslyReported

Adjustment

As RestatedOPERATING
    ACTIVITIESNet income

$
128,922


$
21,742


$
150,664Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation of flight equipment


318,891







318,891Deferred income taxes


110,954



11,851



122,805Change in fair value of derivative
    instruments


65,945



182,972



248,917Foreign currency adjustment of
    cash and non-US$ denominated debt


(63,827
)


(219,506
)


(283,333
)Amortization of deferred debt
    issue costs


8,507







8,507Changes in operating assets and
    liabilities:Other assets


22,139



(30,840
)


(8,701
)(Decrease) increase in current
    income taxes payable


(50,831
)






(50,831
)Increase in accrued interest and
    other payables


73,594



17,507



91,101Increase in rentals received in
    advance


11,994







11,994Change in unamortized debt discount


(7,923
)






(7,923
)Other


5,426







5,426Net cash provided by operating
    activities


623,791



(16,274
)


607,517INVESTING ACTIVITIESAcquisition of flight equipment
    for operating leases


(2,209,516
)






(2,209,516
)(Increase) decrease in deposits
    and progress payments


(133,605
)






(133,605
)Proceeds from disposal of flight
    equipment  net of gain


20,975







20,975Advances on notes receivable


(6,500
)






(6,500
)Collections on notes receivable
    and finance leases


11,874







11,874Other


(2,557
)






(2,557
)Net cash used in investing
    activities


(2,319,329
)






(2,319,329
)FINANCING ACTIVITIESNet change in commercial paper


1,785,319







1,785,319Proceeds from debt financing


973,146







973,146Payments in reduction of debt
    financing and capital lease obligations


(1,196,501
)






(1,196,501
)Debt issue costs


(14,672
)






(14,672
)Increase (decrease) in customer
    deposits


128,351



16,274



144,625Payment of common and preferred
    dividends


(10,976
)






(10,976
)Net cash provided by financing
    activities


1,664,667



16,274



1,680,941Net (decrease) increase in cash


(30,871
)






(30,871
)Effect of exchange rate changes on
    cash


(2,189
)






(2,189
)Cash at beginning of period


99,747







99,747Cash at end of period

$
66,687


$



$
66,687  20




---



##### Table of Contents



CONDENSED
    CONSOLIDATED BALANCE SHEET
 June 30, 2005
 (Dollars in thousands except share and per share amounts)
  As PreviouslyReported


Adjustment


As RestatedASSETSCash, including interest bearing
    accounts of $85,849

$
96,553


$



$
96,553Current income taxes


118,835







118,835Notes receivable, net of
    allowance, and net investment in finance and sales-type leases


499,574







499,574Flight equipment under operating
    leases


40,979,790



(902
)


40,978,888Less accumulated depreciation


6,695,397







6,695,39734,284,393



(902
)


34,283,491Deposits on flight equipment
    purchases


1,177,114







1,177,114Other assets


290,151



38,184



328,335Derivative assets


428,998







428,998Investments


20,052







20,052Variable interest entities assets


144,955







144,955Deferred debt issue
    costs  less accumulated amortization of $77,655


83,833







83,833$
37,144,458


$
37,282


$
37,181,740LIABILITIES AND
    SHAREHOLDERS EQUITYAccrued interest and other payables

$
328,734


$
17,866


$
346,600Current income taxesTax benefit sharing payable to AIG


245,000







245,000Debt financing, net of deferred
    debt discount of $46,188


26,559,654







26,559,654Foreign currency translation
    adjustment related to foreign currency denominated debt


324,604







324,604Derivative liabilities


53,316







53,316Security and other deposits on
    flight equipment


904,062



19,133



923,195Rentals received in advance


185,161







185,161Deferred income taxes


2,880,231



72



2,880,303Variable interest entities
    liabilities


64,689







64,689SHAREHOLDERS
    EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and B
    each having 500 shares issued and outstanding


100,000







100,000Common stock  no par
    value; 100,000,000 authorized shares, 42,198,119 issued and
    outstanding


653,582







653,582Paid-in capital


585,913







585,913Accumulated other comprehensive
    income (loss)


59,574



6,180



65,754Retained earnings


4,199,938



(5,969
)


4,193,969Total shareholders equity


5,599,007



211



5,599,218$
37,144,458


$
37,282


$
37,181,740  21




---



##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENTS OF INCOME
 AND COMPREHENSIVE INCOME
 June 30, 2005
 (Dollars in thousands)
  Three Months Ended


Six Months EndedAs Previously








As PreviouslyReported


Adjustment


As Restated


Reported


Adjustment


As RestatedREVENUESRental of flight equipment

$
857,420


$
2,394


$
859,814


$
1,655,521


$
21,056


$
1,676,577Flight equipment marketing


21,439



4,727



26,166



37,000



(1,261
)


35,739Interest and other


14,827



1,720



16,547



29,989







29,989893,686



8,841



902,527



1,722,510



19,795



1,742,305EXPENSESInterest


286,414



46,045



332,459



526,820



9,509



536,329Depreciation of flight equipment


343,549







343,549



662,440







662,440Provision for overhauls


49,826



2,859



52,685



93,969



19,133



113,102Selling, general and administrative


29,980



2,756



32,736



66,346



378



66,724709,769



51,660



761,429



1,349,575



29,020



1,378,595INCOME BEFORE INCOME
    TAXES


183,917



(42,819
)


141,098



372,935



(9,225
)


363,710Provision for income taxes


60,360



(15,107
)


45,253



120,456



(3,256
)


117,200NET INCOME

$
123,557


$
(27,712
)

$
95,845


$
252,479


$
(5,969
)

$
246,510OTHER COMPREHENSIVE INCOME
    (LOSS), NET OF TAXNet changes in cash flow hedges


(11,343
)


29,930



18,587



39,017



6,180



45,197Change in unrealized appreciation
    on securities available for sale


(2,122
)






(2,122
)


(2,268
)






(2,268
)(13,465
)


29,930



16,465



36,749



6,180



42,929COMPREHENSIVE INCOME

$
110,092


$
2,219


$
112,310


$
289,228


$
211


$
289,439  22




---



##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
 Six Months Ended June 30, 2005
 (Dollars in thousands)
  As PreviouslyReported


Adjustment


As RestatedOPERATING ACTIVITIESNet income

$
252,479


$
(5,969
)

$
246,510Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation of flight equipment


662,440







622,440Deferred income taxes


230,326



(3,256
)


227,070Change in fair value of derivative
    instruments


388,262



458,378



846,640Foreign currency adjustment of
    cash and non-US$ denominated debt


(442,333
)


(441,601
)


(883,934
)Amortization of deferred debt
    issue costs


17,332







17,332Other


9,550



(7,271
)


2,279Changes in operating assets and
    liabilities:(Increase) decrease in other assets


51,785



(37,281
)


14,504(Decrease) increase in current
    income taxes payable


(112,328
)






(112,328
)Increase in accrued interest and
    other payables


58,262



17,867



76,129Increase in rentals received in
    advance


24,283







24,283Change in unamortized debt discount


(16,686
)






(16,686
)Net cash provided by operating
    activities


1,123,372



(19,133
)


1,104,239INVESTING ACTIVITIESAcquisition of flight equipment
    for operating leases


(4,822,093
)






(4,822,093
)Acquisition of flight equipment
    for finance leases


Decrease in deposits and progress
    payments


73,054







73,054Proceeds from disposal of flight
    equipment  net of gain


231,749







231,749Advances on notes receivable


(6,500
)






(6,500
)Collections on notes receivable
    and finance leases


35,333







35,333Other


3,381







3,381Net cash used in investing
    activities


(4,485,076
)






(4,485,076
)FINANCING ACTIVITIESNet change in commercial paper


2,064,395







2,064,395Proceeds from debt financing


3,766,218







3,766,218Payments in reduction of debt
    financing and capital lease obligations


(2,429,869
)






(2,429,869
)Debt issue costs


(41,499
)






(41,499
)Increase in customer deposits


27,472



19,133



46,605Payment of common and preferred
    dividends


(20,936
)






(20,936
)Net cash provided by financing
    activities


3,365,781



19,133



3,384,914Net (decrease) increase in cash


4,077







4,077Effect of exchange rate changes on
    cash


(7,271
)






(7,271
)Cash at beginning of period


99,747







99,747Cash at end of period

$
96,553


$



$
96,553  23




---



##### Table of Contents



CONDENSED
    CONSOLIDATED BALANCE SHEET
 September 30, 2005
 (Dollars in thousands except share and per share amounts)
  As PreviouslyReported


Adjustment


As RestatedASSETSCash, including interest bearing
    accounts of $119,458

$
119,604


$



$
119,604Current income taxes


148,739







148,739Notes receivable, net of
    allowance, and net investment in finance and sales-type leases


471,050







471,050Flight equipment under operating
    leases


41,024,379



(902
)


41,023,477Less accumulated depreciation


7,047,027



(8,726
)


7,038,30133,977,352



7,824



33,985,176Deposits on flight equipment
    purchases


1,334,859







1,334,859Other assets


284,731



53,051



337,782Derivative assets


420,681







420,681Investments


18,866







18,866Variable interest entities assets


142,210







142,210Deferred debt issue
    costs  less accumulated amortization of $58,210


79,362







79,362$
36,997,454


$
60,875


$
37,058,329LIABILITIES AND
    SHAREHOLDERS EQUITYAccrued interest and other payables

$
403,721


$
20,951


$
424,672Tax benefit sharing payable to AIG


245,000







245,000Debt financing, net of deferred
    debt discount of $44,674


25,703,224







25,703,224Foreign currency translation
    adjustment related to foreign currency denominated debt


295,991







295,991Derivative liabilities


25,546







25,546Security and other deposits on
    flight equipment


960,784



26,035



986,819Rentals received in advance


184,026







184,026Deferred income taxes


2,976,990



4,966



2,981,956Variable interest entities
    liabilities


65,614







65,614SHAREHOLDERS
    EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and B
    each having 500 shares issued and outstanding


100,000







100,000Common stock  no par
    value; 100,000,000 authorized shares, 45,267,723 issued and
    outstanding


1,053,582







1,053,582Paid-in capital


586,556







586,556Accumulated other comprehensive
    income (loss)


85,949



(15,288
)


70,661Retained earnings


4,310,471



24,211



4,334,682Total shareholders equity


6,136,558



8,923



6,145,481$
36,997,454


$
60,875


$
37,058,329  24




---



##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENTS OF INCOME
 AND COMPREHENSIVE INCOME
 September 30, 2005
 (Dollars in thousands)
  Three Months Ended

Nine Months EndedAs Previously





As PreviouslyReported

Adjustment

As Restated

Reported

Adjustment

As RestatedREVENUESRental of flight equipment

$
920,451


$
11,576


$
932,027


$
2,575,973


$
32,630


$
2,608,603Flight equipment marketing


13,637







13,637



50,636



(1,260
)


49,376Interest and other


13,481







13,481



43,471







43,471947,569



11,576



959,145



2,670,080



31,370



2,701,450EXPENSESInterest


300,155



(33,030
)


267,125



826,975



(23,521
)


803,454Depreciation of flight equipment


358,245



(8,725
)


349,520



1,020,685



(8,725
)


1,011,960Provision for overhauls


68,856



6,903



75,759



162,825



26,036



188,861Selling, general and administrative


46,082



(210
)


45,872



112,425



171



112,596773,338



(35,062
)


738,276



2,122,910



(6,039
)


2,116,871INCOME BEFORE INCOME
    TAXES


174,231



46,638



220,869



547,170



37,409



584,579Provision for income taxes


53,312



16,453



69,765



173,767



13,198



186,965NET INCOME

$
120,919


$
30,185


$
151,104


$
373,403


$
24,211


$
397,614OTHER COMPREHENSIVE  INCOME
    (LOSS), NET OF TAXNet changes in cash flow hedges


26,774



(21,468
)


5,306



65,791



(15,288
)


50,503Change in unrealized appreciation
    on securities available for sale


(399
)






(399
)


(2,667
)






(2667
)26,375



(21,468
)


4,907



63,124



(15,288
)


47,836COMPREHENSIVE INCOME

$
147,294


$
8,717


$
156,011


$
436,527


$
8,923


$
445,450  25




---



##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
 Nine Months Ended September 30, 2005
 (Dollars in thousands)
  As PreviouslyReported


Adjustment


As RestatedOPERATING ACTIVITIESNet income

$
373,403


$
24,211


$
397,614Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation of flight equipment


1,020,685



(8,725
)


1,011,960Deferred income taxes


312,882



13,197



326,079Change in fair value of derivative
    instruments


858,874



(23,520
)


835,354Foreign currency adjustment of
    cash and non-US$ denominated debt


(907,212
)






(907,212
)Amortization of deferred debt
    issue costs


33,724







33,724Other


(6,262
)






(6,262
)Changes in operating assets and
    liabilities:Decrease (increase) in notes
    receivable


14,235







14,235Decrease in receivables and other
    assets


103,549



(52,150
)


51,399Change in current income taxes


(142,232
)






(142,232
)Increase in accrued interest and
    other payables


134,172



20,952



155,124Increase in rentals received in
    advance


23,148







23,148Change in unamortized debt discount


(15,172
)






(15,172
)Net cash provided by operating
    activities


1,803,794



(26,035
)


1,777,759INVESTING ACTIVITIESAcquisition of flight equipment
    for operating leases


(4,953,601
)






(4,953,601
)Acquisition of flight equipment
    for finance leases


Decrease in deposits and progress
    payments


(84,691
)






(84,691
)Proceeds from disposal of flight
    equipment  net of gain


280,220







280,220Advances on notes receivable


(6,500
)






(6,500
)Collections on notes receivable
    and finance leases


47,320







47,320Other


3,674







3,674Net cash used in investing
    activities


(4,713,578
)






(4,713,578
)FINANCING ACTIVITIESNet change in commercial paper


1,420,065







1,420,065Proceeds from debt financing


4,780,181







4,780,181Payments in reduction of debt
    financing and capital lease obligations


(3,657,444
)






(3,657,444
)Debt issue costs


(53,420
)






(53,420
)Increase in customer deposits


84,194



26,035



110,229Issuance of common stock


400,000







400,000Payment of common and preferred
    dividends


(31,328
)






(31,328
)Net cash provided by financing
    activities


2,942,248



26,035



2,968,283Net increase (decrease) in cash


32,464







32,464Effect of exchange rate changes on
    cash


(12,607
)






(12,607
)Cash at beginning of period


99,747







99,747Cash at end of period

$
119,604


$



$
119,604  26




---



##### Table of Contents



CONDENSED
    CONSOLIDATED BALANCE SHEET
    December 31, 2005
    (Dollars in thousands except share and per share
    amounts)
  As PreviouslyReported


Adjustment


As RestatedASSETSCash, including interest bearing
    accounts of $155,953

$
157,960


$



$
157,960Current income taxes


148,399







148,399Notes receivable, net of
    allowance, net investment in finance leases and sales-type leases


490,422







490,422Flight equipment under operating
    leases


42,067,504







42,067,504Less accumulated depreciation


7,318,572







7,318,57234,748,932







34,748,932Deposits on flight equipment
    purchases


1,148,462







1,148,462Other assets


289,979



456



290,435Derivative assets


293,576







293,576Investments


20,313







20,313Variable interest entities assets


138,277







138,277Deferred debt issue
    costs  less accumulated amortization of $65,377


93,551







93,551$
37,529,871


$
456


$
37,530,327LIABILITIES AND
    SHAREHOLDERS EQUITYAccrued interest and other payables

$
351,221


$
15,624


$
366,845Tax benefit sharing payable to AIG


245,000







245,000Debt financing, net of deferred
    debt discount of $38,882


25,104,165







25,104,165Subordinated debt


1,000,000







1,000,000Foreign currency adjustment


197,074







197,074Derivative liabilities


49,549







49,549Security and other deposits on
    flight equipment


1,071,676







1,071,676Rentals received in advance


187,957







187,957Deferred income taxes


3,075,545



(5,243
)


3,070,302Variable interest entities
    liabilities


65,197







65,197SHAREHOLDERS
    EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and B
    each having 500 shares issued and outstanding


100,000







100,000Common stock  no par
    value; 100,000,000 authorized shares, 45,267,723 issued and
    outstanding


1,053,582







1,053,582Paid-in capital


587,484







587,484Accumulated other comprehensive
    income (loss)


91,715



(25,314
)


66,401Retained earnings


4,349,706



15,389



4,365,095Total shareholders equity


6,182,487



(9,925
)


6,172,562$
37,529,871


$
456


$
37,530,327  27




---



##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENTS OF INCOME
 AND COMPREHENSIVE INCOME
 December 31, 2005
 (Dollars in thousands)
  Three Months Ended


Year EndedAs Previously








As PreviouslyReported


Adjustment


As Restated


Reported


Adjustment


As RestatedREVENUESRental of flight equipment

$
924,363


$
(50,756
)

$
873,607


$
3,500,335


$
(18,125
)

$
3,482,210Flight equipment marketing


16,153



1,207



17,360



66,790



(53
)


66,737Interest and other


17,956







17,956



61,426







61,426958,472



(49,549
)


908,923



3,628,551



(18,178
)


3,610,373EXPENSESInterest


330,307



(15,424
)


314,883



1,157,282



(38,945
)


1,118,337Depreciation of flight equipment


351,418



8,725



360,143



1,372,103







1,372,103Provision for overhauls


97,183



(26,036
)


71,147



260,008







260,008Selling, general and administrative


26,339



(3,179
)


23,160



138,767



(3,010
)


135,757Other expenses


49,985







49,985



49,985







49,985855,232



(35,914
)


819,318



2,978,145



(41,955
)


2,936,190INCOME BEFORE INCOME
    TAXES


103,240



(13,635
)


89,605



650,406



23,777



674,183Provision for income taxes


53,678



(4,809
)


48,869



227,446



8,388



235,834NET INCOME

$
49,562


$
(8,826
)

$
40,736


$
422,960


$
15,389


$
438,349OTHER COMPREHENSIVE INCOME
    (LOSS), NET OF TAXNet changes in cash flow hedges


4,694



(10,025
)


(5,331
)


70,486



(25,314
)


45,172Change in unrealized appreciation
    on securities available for sale


1,071







1,071



(1,596
)






(1,596
)5,765



(10,025
)


(4,260
)


68,890



(25,314
)


43,576COMPREHENSIVE INCOME

$
55,327


$
(18,851
)

$
36,476


$
491,850


$
(9,925
)

$
481,925  28




---



##### Table of Contents



CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
    Year Ended December 31, 2005
    (Dollars in thousands)
  As PreviouslyReported


Adjustment


As RestatedOPERATING ACTIVITIESNet income

$
422,960


$
15,389


$
438,349Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation of flight equipment


1,372,103







1,372,103Deferred income taxes


408,333



8,388



416,721Change in fair value of derivative
    instruments


1,017,204



(38,945
)


978,259Foreign currency adjustment of
    cash and non-US$ denominated debt


(1,006,631
)






(1,006,631
)Amortization of deferred debt
    issue costs


22,692







22,692Other


6,118







6,118Changes in operating assets and
    liabilities:Decrease (increase) in notes
    receivable


20,585







20,585Decrease (increase) in accrued
    interest, other receivables and other assets


112,478



(456
)


112,022Increase in accrued interest and
    other payables


81,256



15,624



96,880(Increase) decrease in current
    income taxes


(141,892
)






(141,892
)Increase in rentals received in
    advance


27,079







27,079Change in unamortized debt discount


(9,380
)






(9,380
)Net cash provided by operating
    activities


2,332,905







2,332,905INVESTING ACTIVITIESAcquisition of flight equipment
    for operating leases


(6,276,420
)






(6,276,420
)Decrease (increase) in deposits
    and progress payments


101,706







101,706Proceeds from disposal of flight
    equipment  net of gain


454,512







454,512Advances on notes receivable


(39,100
)






(39,100
)Collections on notes receivable


25,035







25,035Collections on finance and
    sales-type leases (net of income amortized)


29,163







29,163Other


7,709







7,709Net cash used in investing
    activities


(5,697,395
)






(5,697,395
)FINANCING ACTIVITIESIssuance of common stock


400,000







400,000Net change in commercial paper


(49,839
)






(49,839
)Proceeds from debt financing


7,421,098







7,421,098Payments in reduction of debt
    financing and capital lease obligations


(4,433,311
)






(4,433,311
)Debt issue costs


(56,577
)






(56,577
)Payment of common and preferred
    dividends


(41,650
)






(41,650
)Increase (decrease) in customer
    deposits


195,086







195,086Net cash provided by financing
    activities


3,434,807







3,434,807Net increase (decrease) in cash


70,317







70,317Effect of exchange rate changes on
    cash


(12,104
)






(12,104
)Cash at beginning of year


99,747







99,747Cash at end of year

$
157,960


$



$
157,960  29




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##### Table of Contents



Overview
    and Industry Condition
          Managements Discussion and
    Analysis  Non-GAAP Financial Measures) Risk Factors.
     30




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Lease Revenue Past-due take-off
    Flight Equipment Marketing
 31




---



##### Table of Contents



Flight Equipment
        Risk Factors
  Capitalized Interest
  Provision for Overhauls
   32




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##### Table of Contents



Derivative Financial Instruments:
  Financial
    Condition
  Properties 
    Commitments
  December 31,


December 31,


December 31,2005


2004


2003(Dollars in thousands)Public term debt with single
    maturities

$
13,813,700


$
11,544,575


$
10,663,275Public medium-term notes with
    varying maturities


4,689,365



5,972,171



5,960,236Capital lease obligations






39,580



143,254Synthetic lease obligations










464,222Bank term debt


4,014,573



2,973,525



3,070,120Junior subordinated debt


1,000,000







Subtotal


23,517,638



20,529,851



20,301,107Commercial paper


2,625,409



2,675,247



1,575,957Less: Deferred debt discount


(38,882
)


(29,502
)


(24,321
)Total debt financing

$
26,104,165


$
23,175,596


$
21,852,743Composite interest rate


5.00%



4.34%



4.53%Percentage of total debt at fixed
    rate


79.03%



66.21%



77.07%Composite interest rate on fixed
    debt


5.03%



5.07%



5.29%Bank prime rate


7.25%



5.25%



4.00%  33




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##### Table of Contents



Public
    Debt
    Maximum


Sold as of


Sold as ofOffering


December 31, 2005


March 10, 2006(Dollars in millions)Registration statement dated
    December 20, 2002 (including $2.88 billion Medium-Term
    Note program and $1.0 billion Retail Medium-Term Note
    Program)

$
6,080
(a)

$
5,710


$
5,710Registration statement dated
    December 28, 2004 (including $2.0 billion Medium-Term
    Note program)


7,045
(b)


2,950



3,250Euro Medium-Term Note Programme
    dated May 2004(c)(d)


7,000



4,979



4,979    (a)
    Includes $1.08 billion, which was incorporated into the
    registration statement from a prior registration statement,
    increasing the maximum offering from $5.0 billion to
    $6.08 billion.  (b)
    Includes $2.045 billion, which was incorporated into the
    registration statement from a prior registration statement,
    increasing the maximum offering from $5.0 billion to
    $7.045 billion.  (c)
    We have hedged the foreign currency risk of the notes through
    derivatives or through the offset provided by operating lease
    payments denominated in the related currency.  (d)
    This is a perpetual program. As a bond issue matures, the
    principal amount of that bond becomes available for new
    issuances under the program.  Capital
    Lease Obligations
    Bank Term
    Debt
     34




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##### Table of Contents



Junior
    Subordinated Debt
  (ii) 10-year (iii) 30-year
  Commercial
    Paper
  Bank Commitments
  Bank
    Commitments
  364-day
  Other
    Variable Interest Entities
   35




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##### Table of Contents



Notes to
    Consolidated Financial Statements
  Notes to Consolidated Financial Statements
    Derivatives
    
    Contracts entered into with the intention of fixing the interest
    rate on part of our commercial paper program, and our bank term
    debt and interest rate and currency on our Euro denominated
    debt, which do not qualify because our documentation on how to
    calculate ineffectiveness was deemed insufficient.
    A contract entered into with the intention to hedge the interest
    rate on our capital lease obligations, where the debt and the
    contract dates were slightly different and the hedge thereby
    fell outside of the hedge ineffectiveness range, as defined by
    SFAS 133.
    One contract we obtained as a result of an exercise of a
    guarantee that has no hedged item.        Common
    Stock
    Market
    Liquidity Risks
   36




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##### Table of Contents



Existing
    Commitments
  Commitments Due by YearTotal


2006


2007


2008


2009


2010


Thereafter(Dollars in thousands)Medium Term and Long Term Debt

$
23,517,638


$
4,018,942


$
3,799,466


$
4,311,619


$
3,832,951


$
3,298,522


$
4,256,138Commercial Paper


2,625,409



2,625,409



















Interest Payments on Debt
    Outstanding(a)(b)


7,177,609



1,102,692



908,630



723,186



513,740



315,239



3,614,122Operating Leases


94,027



8,635



8,952



9,303



9,594



9,969



47,574Pension Obligations(c)


12,515



1,939



2,209



2,160



2,112



2,064



2,031Tax Benefit Sharing Agreement Due
    to AIG


245,000







160,000







85,000







Purchase Commitments(d)


23,319,600



6,037,100



5,599,400



4,924,100



2,134,200



1,641,200



2,983,600Total

$
56,991,798


$
13,794,717


$
10,478,657


$
9,970,368


$
6,577,597


$
5,266,994


$
10,903,465   Contingent
    Commitments
  Contingency Expiration by YearTotal


2006


2007


2008


2009


2010


Thereafter(Dollars in thousands)Purchase Options on New Aircraft(d)

$
1,539,700


$



$
131,400


$



$
867,900


$



$
540,400Put Options(e)


343,550























343,550Asset Value Guarantees(e)


58,889



2,626



5,341



8,178











42,744Loan Guarantees(e)


87,676



48,444



















39,232Lines of Credit


50,000























50,000Total

$
2,079,815


$
51,070


$
136,741


$
8,178


$
867,900


$



$
1,015,926    (a)
    Future interest payments on floating rate debt are estimated
    using floating interest rates in effect at December 31, 2005  (b)
    Includes the effect of interest rate derivative instruments.  (c)
    Our pension obligations are a part of intercompany expenses,
    which AIG allocates to us on an annual basis. The amount is an
    estimate of such allocation. The column Thereafter
    consists of the 2011 estimated allocation. The amount allocated
    has not been material to date.  (d)
    The recorded basis of aircraft may be adjusted to reflect
    notional credits provided by the manufacturers in connection
    with the leasing of aircraft.  (e)
    From time to time we participate with airlines, banks, and other
    financial institutions to assist in financing aircraft by
    providing asset guarantees, put options or loan guarantees
    collateralized by aircraft. As a result, 37




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##### Table of Contents



should we be called upon to fulfill our obligations, we would
    have recourse to the value of the underlying aircraft. To the
    extent that the value of the underlying aircraft is less than
    the guarantee, we would record a contingent loss. Guarantees
    entered into after December 31, 2002, are recorded at fair
    value in accordance with FIN No. 45 Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees at Indebtedness of Others. See
    Note A of Notes to Consolidated Financial Statements.  Non-GAAP
    Financial Measures
  Lease
    Margin
    2005


2004


2003


2002


2001(Restated)(Dollars in millions)Total revenues (A)

$
3,610.3


$
3,159.9


$
2,877.4


$
2,659.3


$
2,552.2Flight equipment marketing


(66.7
)


(77.7
)


(29.0
)


(48.5
)


(31.8
)Flight equipment
    marketing  securitization






(32.9
)


(23.2
)






Interest and other


(61.4
)


(93.8
)


(17.9
)


(64.7
)


(108.8
)Rental of flight equipment (B)


3,482.2



2,955.5



2,807.3



2,546.1



2,411.6Total expenses (C)


2,936.2



2,491.8



2,236.5



2,037.8



1,859.1VIE expenses


(19.1
)


(20.8
)


0.4







Other expenses


(50.0
)


(53.9
)










Adjusted total expenses (D)


2,867.1



2,417.1



2,236.9



2,037.8



1,859.1Profit Margin
    (A)(C)=(E)

$
674.1


$
668.1


$
640.9


$
621.5


$
693.1Lease Margin
    (B)(D)=(F)

$
615.1


$
538.4


$
570.4


$
508.3


$
552.5Profit Margin % (E) divided by (A)


18.67
%


21.14
%


22.27
%


23.37
%


27.16
%Lease Margin % (F) divided by (B)


17.66
%


18.22
%


20.32
%


19.96
%


22.91
%      38




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##### Table of Contents



Results
    of Operations
  2005
    Compared to 2004 (Restated)
  and/or
      Notes to Consolidated Financial
    Statements
     39




---



##### Table of Contents



ILFC
    Composite Interest Rates and Prime Rates
  
  Notes to Consolidated
    Financial Statements
          
    (2005) $38.3 million related to the restructuring of
    ownership of aircraft in certain lease transactions in
    Australia. See Note L of Notes to Consolidated Financial
    Statements. $11.7 million related to a write-down of
    notes receivable.
    (2004) In connection with a global aircraft lease transaction
    entered into in 2000 for a total of 14 aircraft, we acquired
    certain securities and assumed certain obligations of ATA. On
    October 26, 2004, ATA filed for bankruptcy protection and we
    recorded impairment losses in the amount of $28.9 million on our
    investment in ATA non-voting preferred stock and a $25.0 million
    charge for the assumed liabilities. 40




---



##### Table of Contents



Notes to the Consolidated Financial Statements
    2004
    Compared to 2003
  and/or
      Notes to Consolidated Financial Statements
     41




---



##### Table of Contents



Notes to Consolidated
    Financial Statements
          Notes to Consolidated Financial
    Statements.
  Notes to the
    Consolidated Financial Statements.
  New
    Accounting Pronouncements
   42




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##### Table of Contents



Item
    7A. Quantitative and Qualitative Disclosures About
    Market Risk        re-pricing re-priced.
  ILFC
    Market Risk
  December 31, 2005


December 31, 2004Average


High


Low


Average


High


Low(Dollars in millions)Combined

$
135.0



238.7



84.2


$
69.6


$
86.3


$
34.6Interest Rate


135.4



240.3



83.9



69.7



86.4



35.0Currency


2.1



4.2



0.5



0.3



0.5



0.2    Item
    8.  Financial Statements and Supplementary
    Data   43




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##### Table of Contents



Item
    9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   Item 9A.  Controls
    and Procedures  (A) Evaluation
    of Disclosure Controls and Procedures
          Variable
    Interest Entities
    (B) Changes
    in Internal Control Over Financial Reporting
    44




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##### Table of Contents



(C) Remediation
    of Material Weaknesses in Internal Control Over Financial
    Reporting
      Form 10-K/A,
 Item
    9B. Other Information   45




---



##### Table of Contents



PART
    III  Item
    10.  Directors and Executive Officers of the
    Registrant  Code of
    Ethics and Conduct
  www.aigcorporate.com
 Item
    14.  Principal Accountant Fees and
    Services    2005


2004Audit Fees(a)

$
1,892,500


$
1,792,600Audit-Related Fees(b)






215,400Tax Fees(c)


362,309



473,226Total Fees

$
2,254,809


$
2,481,226      (a)
    
    Audit Fees consist of fees for professional services provided in
    connection with the audits of our financial statements, services
    rendered in connection with our registration statements filed
    with the Securities and Exchange Commission, the delivery of
    consents and the issuance of comfort letters. This also includes
    Sarbanes-Oxley Section 404 work performed at ILFC for
    AIGs 2005 and 2004 assessment.(b)
    
    Audit-Related Fees consist of fees for consulting on various
    accounting issues.(c)
    
    Tax Fees consist of the aggregate fees for services rendered for
    tax compliance, tax planning and tax advice.   PART
    IV  Item
    15.  Exhibits and Financial Statement
    Schedules     46




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  FORM 10-K/A
 Items 8, 15(a), and 15(b)
  INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
    PageReport of Independent Registered
    Public Accounting Firm


50Consolidated Financial Statements:Balance Sheets at
    December 31, 2005 and 2004


51Statements of Income for the years
    ended December 31, 2005, 2004 and 2003


52Statements of Shareholders
    Equity for the years ended December 31, 2005, 2004 and 2003


53Statements of Cash Flows for the
    years ended December 31, 2005, 2004 and 2003


54Notes to Consolidated Financial
    Statements


56     Report of Independent Registered
    Public Accounting Firm on Financial Statements Schedule


80   Schedule Number


Description

PageII


Valuation and Qualifying Accounts


81       ExhibitNumber


Description3.1


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 A Market Auction Preferred Stock
    (filed December 9, 1992 as an exhibit to Registration
    Statement
    No. 33-54294
    and incorporated herein by reference).3.3


Certificate of Determination of
    Preferences of Series B Market Auction Preferred Stock
    (filed December 9, 1992 as an exhibit to Registration
    Statement
    33-54294 and
    incorporated herein by reference).3.4


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).3.5


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).3.6


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).3.7


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).3.8


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).3.9


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).3.10


Certificate of Determination of
    Preferences of Preferred Stock of the Company (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2001 and incorporated
    herein by reference).3.11


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). 47




---



##### Table of Contents



ExhibitNumber


Description3.12


Unanimous Written Consent of Sole
    Stockholder of the Company, dated January 2, 2002, amending
    the By-Laws
    of the Company (filed as an exhibit to Form 10-Q for the
    quarter ended June 30, 2003 and incorporated herein by
    reference).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


First supplemental indenture,
    dated as of November 1, 2000, to the Indenture between the
    Company and U.S. Bank Trust National Association (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2000 and incorporated
    herein by reference).4.3


Second Supplemental Indenture,
    dated as of February 28, 2001, to the Indenture between the
    Company and U.S. Bank Trust National Association. (filed as
    an exhibit to
    Form 10-Q
    for the quarter ended March 31, 2001 and incorporated
    herein by reference).4.4


Third Supplemental Indenture,
    dated as of September 26, 2001, to the Indenture between
    the Company and U.S. Bank Trust National Association.
    (filed as an exhibit to
    Form 10-Q
    for the quarter ended September 30, 2000 and incorporated
    herein by reference).4.5


Indenture dated as of
    November 1, 2000, between the Company and the Bank of New
    York, as Trustee (filed as an exhibit to Registration
    No. 33-49566
    and incorporated herein by reference).4.6


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.4.7


First Supplemental Indenture,
    dated as of August 16, 2002 to the indenture between the
    Company and the Bank of New York (filed as Exhibit 4.2 to
    Registration Statement
    No. 333-100340
    and incorporated herein by reference).4.8


Fourth Supplemental Indenture,
    dated as of November 6, 2002, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2002 and incorporated
    herein by reference).4.9


Fifth Supplemental Indenture,
    dated as of December 27, 2002, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2002 and incorporated
    herein by reference).4.10


Sixth Supplemental Indenture,
    dated as of June 2, 2003, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to Form 10-Q for the quarter ended
    September 30, 2003 and incorporated herein by reference).4.12


Seventh Supplemental Indenture,
    dated as of October 8, 2004, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to
    Form 8-K
    dated October 14, 2004 and incorporated herein by
    reference).4.13


Eighth Supplemental Indenture,
    dated as of October 5, 2005, to the indenture between the
    Company and U.S. Bank National Association.4.14


Agency Agreement (amended and
    restated), dated as of September 15, 2005, among the
    Company, Citibank, N.A., and Dexia Banque Internationale A
    Luxembourg, Societe Anonyme (filed as an exhibit to
    Form 8-K, event date September 15, 2005, and
    incorporated herein by reference).10.1


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).10.2


Aircraft Facility Agreement, dated
    as of May 18, 2004, among Whitney Leasing Limited, as
    borrower, the Company, as guarantor and the Bank of Scotland and
    the other banks listed therein providing up to $2,643,550,000
    (plus related premiums) for the financing of aircraft (filed as
    an exhibit to
    Form 10-Q
    for the quarter ended June 30, 2004 and incorporated herein
    by reference). 48




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##### Table of Contents



ExhibitNumber


Description10.3


$2,000,000,000 Five-Year Revolving
    Credit Agreement, dated as of October 15, 2004, among the
    Company, CitiCorp USA, Inc., as Administrative Agent, and the
    other financial institutions listed therein (filed as an exhibit
    to
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference).10.4


$2,000,000,000 Five-Year Revolving
    Credit Agreement dated as of October 14, 2005, among the
    Company, CitiCorp USA, Inc as Administrative Agent, and the
    other financial institutions listed therein (filed as an exhibit
    to Form 8-K, event date October 14, 2005, and
    incorporated herein by reference).10.5


$2,000,000,000
    364-Day
    Revolving Credit Agreement, dated as of October 14, 2005,
    among the Company, CitiCorp USA, Inc., as Administrative Agent,
    and the other financial institutions listed therein (filed as an
    exhibit to
    Form 8-K
    event date October 14, 2005 and incorporated herein by
    reference).12


Computation of Ratio of Earnings
    to Fixed Charges and Preferred Stock Dividends.23


Consent of PricewaterhouseCoopers
    LLP.31.1


Rule 13a-14(a)/15d-14(a)
    Certification of Chairman of the Board and Chief Executive
    Officer.31.2


Rule 13a-14(a)/15d-14(a)
    Certification of Vice Chairman, Chief Financial Officer and
    Chief Accounting Officer.32.1


Certification under
    18 U.S.C., Section 1350.  49




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  To The
    Shareholders and Board of Directors
               50




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except share and per share amounts)
  December 31,2005


2004(Restated)ASSETSCash, including interest bearing
    accounts of
    $155,953 (2005) and $97,682 (2004)

$
157,960


$
99,747Current income taxes


148,399



6,507Notes receivable, net of allowance


181,951



212,273Net investment in finance and
    sales-type leases


308,471



307,466Flight equipment under operating
    leases


42,067,504



36,580,296Less accumulated depreciation


7,318,572



6,074,87434,748,932



30,505,422Deposits on flight equipment
    purchases


1,148,462



1,250,168Accrued interest, other
    receivables and other assets


290,435



199,653Derivative assets


293,576



1,191,602Investments


20,313



22,979Variable interest entities assets


138,277



152,417Deferred debt issue costs 
    less accumulated amortization of
    $65,377 (2005) and $77,112 (2004)


93,551



59,666$
37,530,327


$
34,007,900LIABILITIESAccrued interest and other payables

$
366,845


$
264,276Tax benefit sharing payable to AIG


245,000



245,000Debt financing, net of deferred
    debt discount of
    $38,882 (2005) and $29,502 (2004)


25,104,165



23,136,016Subordinated debt


1,000,000



Foreign currency adjustment


197,074



1,215,809Derivative liabilities


49,549



38,810Capital lease obligations






39,580Security and other deposits on
    flight equipment


1,071,676



876,590Rentals received in advance


187,957



160,878Deferred income taxes


3,070,302



2,630,118Variable interest entities
    liabilities


65,197



70,886Commitments and contingencies
     Note LSHAREHOLDERS EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and  B (2005
    and 2004), each series having 500 shares issued and
    outstanding


100,000



100,000Common stock  no par value;
    100,000,000 authorized shares, 45,267,723 shares (2005) and
    42,198,119 (2004) issued and outstanding


1,053,582



653,582Paid-in capital


587,484



579,955Accumulated other comprehensive
    income (loss)


66,401



22,825Retained earnings


4,365,095



3,973,575Total shareholders equity


6,172,562



5,329,937$
37,530,327


$
34,007,900    51




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in thousands)
  Years Ended December 31,2005


2004


2003(Restated)REVENUES:Rental of flight equipment

$
3,482,210


$
2,955,524


$
2,807,211Flight equipment marketing


66,737



77,664



28,988Flight equipment
    marketing  securitization






32,854



23,245Interest and other


61,426



93,844



17,9073,610,373



3,159,886



2,877,351EXPENSES:Interest


1,118,337



942,527



919,961Depreciation of flight equipment


1,372,103



1,214,048



1,083,909Provision for overhauls


260,008



164,322



112,581Flight equipment rent










43,314Selling, general and administrative


135,757



116,956



76,780Other expenses


49,985



53,926



2,936,190



2,491,779



2,236,545INCOME BEFORE INCOME TAXES AND
    CUMULATIVE EFFECT OF ACCOUNTING CHANGE


674,183



668,107



640,806Provision for income taxes


235,834



206,101



196,683INCOME BEFORE CUMULATIVE EFFECT OF
    ACCOUNTING CHANGE


438,349



462,006



444,123Cumulative effect of accounting
    change (net of tax)










(8,642
)NET INCOME

$
438,349


$
462,006


$
435,481    52




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (Dollars in thousands)
  Market Auction











AccumulatedPreferred Stock


Common Stock





OtherNumber





Number








Comprehensiveof





of





Paid-in


Income


RetainedShares


Amount


Shares


Amount


Capital


(Loss)


Earnings


TotalBalance at December 31, 2002


1,000


$
100,000



42,198,119


$
653,582


$
579,955


$
(87,771
)

$
3,168,305


$
4,414,071Common stock dividends


























(49,000
)


(49,000
)Preferred stock dividends


























(3,891
)


(3,891
)Comprehensive Income:Net income


























435,481



435,481Other comprehensive income:Cash flow derivative transactions
    (net of tax of $32,223)






















59,843







59,843Comprehensive Income






























495,324Balance at December 31, 2003


1,000



100,000



42,198,119



653,582



579,955



(27,928
)


3,550,895



4,856,504Common stock dividends


























(35,500
)


(35,500
)Preferred stock dividends


























(3,826
)


(3,826
)Comprehensive Income:Net income


























462,006



462,006Other comprehensive income:Cash flow derivative transactions
    (net of tax of $25,786)






















47,887







47,887Change in unrealized appreciation
    securities available-for-sale (net of tax of $1,543)






















2,866







2,866Comprehensive Income






























512,759Balance at December 31, 2004


1,000



100,000



42,198,119



653,582



579,955



22,825



3,973,575



5,329,937Issuance of common stock










3,069,604



400,000















400,000Common stock dividends


























(37,000
)


(37,000
)Preferred stock dividends


























(4,650
)


(4,650
)Comprehensive income (restated):Net income


























438,349



438,349Other comprehensive incomeCash flow derivative transactions
    (net of tax of $24,323)






















45,172







45,172Change in unrealized appreciation
    securities available-for-sale (net of tax of ($859))






















(1,596
)






(1,596
)Comprehensive income (restated)






























481,925Other(a)


















7,529







(5,179
)


2,350Balance at December 31, 2005
    (restated)


1,000


$
100,000



45,267,723


$
1,053,582


$
587,484


$
66,401


$
4,365,095


$
6,172,562     (a)
    In March 2005, we adjusted Retained Earnings and Paid-in Capital
    by $5,179 for certain prior period compensation costs related to
    an incentive plan of AIG. See Note B of Notes to
    Consolidated Financial Statements. We also recorded $2,350
    in Paid-in Capital during the year for compensation expense
    related to the same incentive plan.   53




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
  Years Ended December 31,2005


2004


2003(Restated)OPERATING ACTIVITIES:Net income

$
438,349


$
462,006


$
435,481Adjustments to reconcile net income
    to net cash provided by operating activities:Depreciation of flight equipment


1,372,103



1,214,048



1,083,909Deferred income taxes


416,721



249,331



195,813Change in fair value of derivative
    instruments


978,259



(443,174
)


(534,362
)Foreign currency adjustment of cash
    and non-US$ denominated debt


(1,006,631
)


393,902



538,024Amortization of deferred debt issue
    costs


22,692



26,162



36,645Losses related to customer
    bankruptcy






53,926



Other


6,118



(10,724
)


(6,992
)Changes in operating assets and
    liabilities:Decrease (increase) in notes
    receivable


20,585



(32,104
)


47,713Decrease (increase) in accrued
    interest, other receivables and other assets


112,022



253,852



(31,703
)Increase in accrued interest and
    other payables


96,880



11,961



104,317(Increase) decrease in current
    income taxes


(141,892
)


(24,474
)


184,260Increase in tax benefit sharing
    payable to AIG






245,000



Increase in rentals received in
    advance


27,079



14,007



17,627Change in unamortized debt discount


(9,380
)


(5,181
)


7,607Net cash provided by operating
    activities


2,332,905



2,408,538



2,078,339INVESTING ACTIVITIES:Acquisition of flight equipment for
    operating leases


(6,276,420
)


(5,007,201
)


(5,053,712
)Acquisition of flight equipment for
    finance leases






(43,247
)


(165,202
)Decrease (increase) in deposits and
    progress payments


101,706



4,906



(97,210
)Proceeds from disposal of flight
    equipment  net of gain


454,512



1,355,422



953,897Advance on notes receivable


(39,100
)


(80,750
)


(30,198
)Collections on notes receivable


25,035



46,793



42,570Collections on finance and
    sales-type leases (net of income amortized)


29,163



14,393



13,670Other


7,709



1,188



1,432Net cash used in investing
    activities


(5,697,395
)


(3,708,496
)


(4,334,753
)FINANCING ACTIVITIES:Issuance of common stock


400,000







Net change in commercial paper


(49,839
)


1,099,290



(2,642,547
)Proceeds from debt financing


7,421,098



4,311,742



8,654,736Payments in reduction of debt
    financing and capital lease obligations


(4,433,311
)


(4,082,998
)


(3,608,543
)Debt issue costs


(56,577
)


(33,964
)


(52,939
)Payment of common and preferred
    dividends


(41,650
)


(39,326
)


(52,892
)Increase (decrease) in customer
    deposits


195,086



32,676



(20,139
)Net cash provided by financing
    activities


3,434,807



1,287,420



2,277,676Net increase (decrease) in cash


70,317



(12,538
)


21,262Effect of exchange rate changes on
    cash


(12,104
)


10,044



9,284Cash at beginning of year


99,747



102,241



71,695Cash at end of year

$
157,960


$
99,747


$
102,241  54




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##### Table of Contents



Years Ended December 31,2005


2004


2003(Restated)SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW  INFORMATION:Cash paid (received) during the
    year for:Interest (net of amount capitalized
    $54,097 (2005) $48,390 (2004) and $49,679 (2003))

$
1,101,409


$
945,991


$
926,274Income taxes, net


(38,994
)


(263,757
)


(189,690
)   2005Accounts receivable in the amount
    of $29,706 were received as a payment for flight equipment sold.
    Full cash payment was subsequently received.Notes receivable in the amount of
    $23,802 were used as payment for the acquisition of aircraft
    ($19,765) and investments ($4,037).Aircraft previously accounted for
    as operating leases were converted into finance and sales-type
    leases in the amount of $30,168.$5,179 was adjusted in Retained
    earnings and Paid-in capital as a result of an adjustment for
    certain prior period compensation costs related to an incentive
    plan of ILFCs parent, AIG.Certain payments from aircraft and
    engine manufacturers in the amount of $161,648 reduced the basis
    of Flight equipment under operating leases and increased Other
    assets.2004:One aircraft was received for
    investment in finance leases and notes receivables in the amount
    of $23,456.Notes in the amount of $2,700 were
    received as partial payment in exchange for flight equipment
    sold with a net book value of $30,000.A note in the amount of $4,500 was
    used towards a purchase of an aircraft.Certain payments from aircraft and
    engine manufacturers in the amount of $147,065 reduced the basis
    of Flight equipment for operating leases and increased Accrued
    interest, other receivables and other assets.2003:Progress payments in the amount of
    $6,700 were exchanged for an aircraft with net book value at
    $4,043.Flight equipment increased in the
    amount of $462,705 and synthetic lease obligations increased in
    the amount of $464,222 as a result of consolidation of
    sale-leaseback transaction related to seven aircraft in
    connection with the Companys adoption of FIN 46R.Variable interest entity assets in
    the amount of $164,481 and liabilities in the amount of $79,211
    were received in exchange for notes receivables in the amount of
    $82,493 and preferred stock in the amount of $11,706 in
    connection with the Companys adoption of FIN 46R.Variable interest entity assets in
    the amount of $13,731 were received as partial payment in
    exchange for flight equipment with a net book value of $14,043.One aircraft was received in
    exchange for notes receivable in the amount of $28,715 and
    preferred stock in the amount of $2,202.Notes in the amount of $72,281 were
    received as partial payment for flight equipment sold with a net
    book value of $75,630.Certain payments from aircraft and
    engine manufacturers in the amount of $90,506 reduced the basis
    of Flight equipment for operating leases and increased Accrued
    interest, other receivables and other assets.    55




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Note A
     Summary of Significant Accounting Policies
  Organization:
  Parent Company:
  Principles of Consolidation:
  Intercompany Allocations and Fees:
  Lease Revenue:
        Initial Direct Costs:
 56




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
    Flight Equipment Marketing:
  Provision for Overhauls:
    Cash:
    Flight Equipment:
         57




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
    Capitalized Interest:
  Deferred Debt Issue Costs:
  Derivative Financial Instruments:
        Marketable Securities:
 58




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
     Variable Interest Entities:
  Other Comprehensive Income (Loss):
  Guarantees:
  Income Taxes:
      Use of Estimates:
 59




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
     Reclassifications:
  New Accounting Pronouncement: Stock-Based share-based
    Note
    B  Restatement
        paid-in-capital),
 60




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands except share and per share amounts)
  Note B  Restatement (Continued)
      CONSOLIDATED
    BALANCE SHEET
 December 31, 2005
   As PreviouslyReported


Adjustment


As RestatedASSETSCash, including interest bearing
    accounts of $155,953

$
157,960


$



$
157,960Current income taxes


148,399







148,399Notes receivable, net of allowance


181,951







181,951Net investment in finance leases


308,471







308,471Flight equipment under operating
    leases


42,067,504







42,067,504Less accumulated depreciation


7,318,572







7,318,57234,748,932







34,748,932Deposits on flight equipment
    purchases


1,148,462







1,148,462Other assets


289,979



456



290,435Derivative assets


293,576







293,576Investments


20,313







20,313Variable interest entities assets


138,277







138,277Deferred debt issue
    costs  less accumulated amortization of $65,377


93,551







93,551$
37,529,871


$
456


$
37,530,327LIABILITIES AND
    SHAREHOLDERS EQUITYAccrued interest and other payables

$
351,221


$
15,624


$
366,845Tax benefit sharing payable to AIG


245,000







245,000Debt financing, net of deferred
    debt discount of $38,882


25,104,165







25,104,165Subordinated debt


1,000,000







1,000,000Foreign currency adjustment


197,074







197,074Derivative liabilities


49,549







49,549Security and other deposits on
    flight equipment


1,071,676







1,071,676Rentals received in advance


187,957







187,957Deferred income taxes


3,075,545



(5,243
)


3,070,302Variable interest entities
    liabilities


65,197







65,197SHAREHOLDERS
    EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and B
    each having 500 shares issued and outstanding


100,000







100,000Common stock  no par
    value; 100,000,000 authorized shares, 45,267,723 issued and
    outstanding


1,053,582







1,053,582Paid-in capital


587,484







587,484Accumulated other comprehensive
    income (loss)


91,715



(25,314
)


66,401Retained earnings


4,349,706



15,389



4,365,095Total shareholders equity


6,182,487



(9,925
)


6,172,562$
37,529,871


$
456


$
37,530,327  61




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note B  Restatement (Continued)
    CONSOLIDATED
    STATEMENT OF INCOME
    AND COMPREHENSIVE INCOME
 Year Ended December 31, 2005
  As PreviouslyReported


Adjustment


As RestatedREVENUESRental of flight equipment

$
3,500,335


$
(18,125
)

$
3,482,210Flight equipment marketing


66,790



(53
)


66,737Interest and other


61,426







61,4263,628,551



(18,178
)


3,610,373EXPENSESInterest


1,157,282



(38,945
)


1,118,337Depreciation of flight equipment


1,372,103







1,372,103Provision for overhauls


260,008







260,008Selling, general and administrative


138,767



(3,010
)


135,757Other expenses


49,985







49,9852,978,145



(41,955
)


2,936,190INCOME BEFORE INCOME
    TAXES


650,406



23,777



674,183Provision for income taxes


227,446



8,388



235,834NET INCOME

$
422,960


$
15,389


$
438,349OTHER COMPREHENSIVE INCOME
    (LOSS), NET OF TAXNet changes in cash flow hedges


70,486



(25,314
)


45,172Change in unrealized appreciation
    on securities available for sale


(1,596
)






(1,596
)68,890



(25,314
)


43,576COMPREHENSIVE INCOME

$
491,850


$
(9,925
)

$
481,925  62




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note B  Restatement (Continued)
    CONDENSED
    CONSOLIDATED STATEMENT OF CASH FLOWS
    Year Ended December 31, 2005
  As PreviouslyReported


Adjustment


As RestatedOPERATING ACTIVITIESNet income

$
422,960


$
15,389


$
438,349Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation of flight equipment


1,372,103







1,372,103Deferred income taxes


408,333



8,388



416,721Change in fair value of derivative
    instruments


1,017,204



(38,945
)


978,259Foreign currency adjustment of
    cash and non-US$ denominated debt


(1,006,631
)






(1,006,631
)Amortization of deferred debt
    issue costs


22,692







22,692Other


6,118







6,118Changes in operating assets and
    liabilities:Decrease (increase) in notes
    receivable


20,585







20,585Decrease (increase) in accrued
    interest, other receivables and other assets


112,478



(456
)


112,022Increase in accrued interest and
    other payables


81,256



15,624



96,880(Increase) decrease in current
    income taxes


(141,892
)






(141,892
)Increase in rentals received in
    advance


27,079







27,079Change in unamortized debt discount


(9,380
)






(9,380
)Net cash provided by operating
    activities


2,332,905







2,332,905INVESTING ACTIVITIESAcquisition of flight equipment
    for operating leases


(6,276,420
)






(6,276,420
)Decrease (increase) in deposits
    and progress payments


101,706







101,706Proceeds from disposal of flight
    equipment  net of gain


454,512







454,512Advances on notes receivable


(39,100
)






(39,100
)Collections on notes receivable


25,035







25,035Collections on finance and
    sales-type leases (net of income amortized)


29,163







29,163Other


7,709







7,709Net cash used in investing
    activities


(5,697,395
)






(5,697,395
)FINANCING ACTIVITIESIssuance of common stock


400,000







400,000Net change in commercial paper


(49,839
)






(49,839
)Proceeds from debt financing


7,421,098







7,421,098Payments in reduction of debt
    financing and capital lease obligations


(4,433,311
)






(4,433,311
)Debt issue costs


(56,577
)






(56,577
)Payment of common and preferred
    dividends


(41,650
)






(41,650
)Increase (decrease) in customer
    deposits


195,086







195,086Net cash provided by financing
    activities


3,434,807







3,434,807Net increase (decrease) in cash


70,317







70,317Effect of exchange rate changes on
    cash


(12,104
)






(12,104
)Cash at beginning of year


99,747







99,747Cash at end of year

$
157,960


$



$
157,960   63




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note
    C  Notes Receivable
    2005


2004Fixed rate notes receivable due in
    varying installments to 2025:Below 6.00%

$
130,491


$
150,9276% to 7.99%


33,698



25,0928% to 9.99%


17,762



36,254$
181,951


$
212,273       2006

$
22,4052007(a)


74,3862008


22,7872009


10,0902010


8,415Thereafter


43,868$
181,951     (a)
    Includes a balloon payment for a note related to a sale of
    flight equipment.  Note
    D  Net Investment in Finance Leases
    December 31,


December 31,2005


2004Total lease payments to be received

$
414,283


$
406,112Estimated residual values of
    leased flight equipment (unguaranteed)


135,028



132,558Less: Unearned income


(240,840
)


(231,204
)Net investment in finance leases

$
308,471


$
307,466     2006

$
43,2802007


35,6672008


35,8222009


31,9042010


30,404Thereafter


237,206Total minimum lease payments to be
    received

$
414,283    64




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note
    E  Investments
   December 31,


December 31,2005


2004Marketable securities; at value

$
8,248


$
9,223Other securities


12,065



13,756$
20,313


$
22,979     FIN-46R,
  Note
    F  Debt Financing and Capital Lease
    Obligations
    2005


2004Commercial Paper

$
2,625,409


$
2,675,247Public Term Debt with Single
    Maturities


13,813,700



11,544,575Public Medium-Term Notes with
    Varying Maturities


4,689,365



5,972,171Bank Term Debt


4,014,573



2,973,525Junior Subordinated Debt


1,000,000



Capital Lease Obligations






39,580Less: Deferred Debt Discount


(38,882
)


(29,502
)$
26,104,165


$
23,175,596     Commercial
    Paper
   65




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note F  Debt Financing and Capital Lease
    Obligations (Continued)
    Bank
    Commitments
  364-day
  Public
    Debt
    Maximum


Sold as ofOffering


December 31, 2005Registration statement dated
    December 20, 2002 (including $2.88 billion Medium-Term
    Note program and $1.0 billion Retail Medium-Term Note
    Program)

$
6,080,000
(a)

$
5,710,000Registration statement dated
    December 28, 2004 (including $2.0 billion Medium-Term
    Note program)


7,045,000
(b)


2,950,000Euro Medium-Term Note Programme
    dated May 2004(c)(d)


7,000,000



4,979,000    (a)
    Includes $1,080,000, which was incorporated into the
    registration statement from a prior registration statement,
    increasing the maximum offering from $5,000,000 to $6,080,000.  (b)
    Includes $2,045,000, which was incorporated into the
    registration statement from a prior registration statement,
    increasing the maximum offering from $5,000,000 to $7,045,000.  (c)
    We have hedged the foreign currency risk of the notes through
    derivatives or through the offset provided by operating lease
    payments denominated in the related currency.  (d)
    This is a perpetual program. As a bond issue matures, the
    principal amount of that bond becomes available for new
    issuances under the program. 66




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note F  Debt Financing and Capital Lease
    Obligations (Continued)
    Public
    Term Debt with Single Maturities
   InitialTerm

2005


2004Floating Rate Notes due
    January 13, 2005

2 years

$



$
625,0004.375% Notes due December 15,
    2005

3 years






160,0002.95% Notes due May 23, 2006

3 years


325,000



325,0005.75% Notes due October 15, 2006

5 years


700,000



700,0005.75% Notes due February 15,
    2007

5 years


500,000



500,0005.625% Notes due June 1, 2007

5 years


900,000



900,0003.75% Notes due Aug 1, 2007

4 years


250,000



250,0005.491% Notes due November 30,
    2007

5 years


110,000



110,0004.75% Notes due February 15,
    2008

5 years


250,000



250,0004.50% Notes due May 1, 2008

5 years


400,000



400,0004.35% Notes due September 15,
    2008

5 years


400,000



400,00063/8%
    Notes due March 15, 2009

7 years


750,000



750,0003.50% Notes due April 1, 2009

5 years


600,000



600,0004.75% Notes due July 1, 2009

5 years


500,000



500,0005.00% Notes due April 15, 2010

5 years


800,000



4.875% Notes due September 1,
    2010

5 years


600,000



5.125% Notes due November 1,
    2010

5 years


350,000



4.75% Notes due January 13,
    2012

7 years


500,000



5.00% Notes due September 15,
    2012

7 years


300,000



5.875% Notes due May 13, 2013

10 years


600,000



600,000Foreign Currency Denominated Medium
    Term Notes:4.00% Euro Notes due April 25,
    2005 (swapped to US$ at 5.4714%)

3 years






666,375Floating Rate Euro Notes due
    June 26, 2006 (swapped to US$)

3 years


702,600



702,6006.00% Euro Notes due
    October 24, 2007 (partially swapped to US$ at 6.398%)

5 years


444,250



444,2504.125% Euro Notes due
    October 9, 2008 (swapped to US$ at 4.225%)

5 years


584,900



584,900Floating Rate Euro Notes due
    November 12, 2008 (swapped to US$ at 4.370%)

5.5 years


912,750



912,7506.625% Sterling Notes due
    December 7, 2009 (swapped to US$ at 6.9326%)

7 years


431,700



431,700Floating Rate Euro Notes due
    July 6, 2010 (swapped to US$ at 4.615%)

6 years


732,000



732,000Floating Rate Euro Notes due
    August 15, 2011 (swapped to US$ at 5.367%)

6 years


876,375



Floating Rate Euro Notes due
    August 15, 2011 (swapped to US$ at 5.355%)

6 years


294,125



$
13,813,700


$
11,544,575  67




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note F  Debt Financing and Capital Lease
    Obligations (Continued)
      Public
    Medium-Term Notes with Varying Maturities
    Bank
    Term Debt
        Junior
    Subordinated Debt
  (ii) 10-year (iii) 30-year
 68




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note F  Debt Financing and Capital Lease
    Obligations (Continued)
    Capital
    Lease Obligations
      2006

$
4,018,9422007


3,799,4662008


4,311,6192009


3,832,9512010


3,298,522Thereafter


4,256,138$
23,517,638   Other
      Note
    G  Shareholders Equity
  Preferred
    Stock
    Market
    Auction Preferred Stock
    Common
    Stock
   69




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note G  Shareholders Equity (Continued)
    Accumulated
    Other Comprehensive Income
  broker-dealer.
  Note
    H  Rental Income
    Year Ended2006


3,226,9882007


2,813,1892008


2,295,7932009


1,820,2752010


1,489,679Thereafter


3,740,564$
15,386,488     Note
    I  Flight Equipment Rent and Off Balance Sheet
    Arrangements
   70




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note
    J  Income Taxes (Restated)
    2005


2004


2003(Restated)Current:Federal(a)

$
(180,243
)

$
(43,912
)

$
(5,521
)State


(1,461
)


7



746Foreign


818



675



993(180,886
)


(43,230
)


(3,782
)Deferred(b):Federal


417,344



244,212



196,276State(c)


(624
)


5,119



4,189416,720



249,331



200,465$
235,834


$
206,101


$
196,683    (a)
    Including U.S. tax on foreign income  (b)
    Deferred taxes were also provided (charged) to other
    comprehensive income of $(23,463) (2005), $(27,329) (2004), and
    $(32,223) (2003) and for cumulative effect of accounting change
    of $4,653 (2003).  (c)
    Includes a benefit of $6,027 (2005) and a charge of $564 (2004)
    for revaluation of state deferred taxes as a result of a change
    in our California apportionment factor.    2005


2004(Restated)Deferred Tax LiabilitiesAccelerated depreciation on flight
    equipment

$
3,207,552


$
2,758,768Indirect payment from manufacturers


30,107



15,414Straight line rents


20,474



20,486Other comprehensive income


35,755



12,291Total Deferred Tax Liabilities

$
3,293,888


$
2,806,959Deferred Tax AssetsExcess of state income taxes not
    currently deductible

$
(11,419
)

$
(12,114
)Provision for overhauls


(50,326
)


(24,097
)Capitalized overhauls


(32,615
)


(32,360
)Rent received in advance


(74,334
)


(61,931
)Investments


(5,316
)


(6,965
)Derivatives


(11,272
)


(24,307
)Accruals and reserves


(31,792
)


(6,665
)Other


(6,512
)


(8,402
)Total Deferred Tax Assets


(223,586
)


(176,841
)Net Deferred Tax Liability

$
3,070,302


$
2,630,118  71




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note J  Income Taxes (Restated) (Continued)
       2005


2004


2003(Restated)Computed expected provision @ 35%

$
235,964


$
233,838


$
224,282State income tax, net of Federal


(1,355
)


3,332



3,208FSC & ETI


(36,338
)


(30,979
)


(29,598
)Foreign Taxes


976



721



(1,242
)Audit Adjustments (a)


24,770







Other


11,817



(811
)


33Provision for Income Taxes

$
235,834


$
206,101


$
196,683   (a)
    During the fourth quarter of 2005, we were advised of certain
    IRS and other adjustments identified in the U.S. Consolidated
    AIG tax return which were attributable to our operations. Under
    our tax sharing arrangement, we were charged for the effect of
    the adjustments and the related interest attributable to our
    operations.        Note
    K  Other Information (Restated)
  Concentration
    of Credit Risk
     72




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note K  Other Information (Restated)
    (Continued)
    Segment
    Information
        2005


2004


2003Amount


%


Amount


%


Amount


%(Restated)Europe

$
1,693,235



48.5
%

$
1,432,441



48.5
%

$
1,315,851



46.9
%Asia/Pacific


761,673



21.9



689,201



23.3



661,956



23.6United States and Canada


479,219



13.8



382,090



12.9



424,457



15.0Central, South America and Mexico


253,667



7.3



208,622



7.1



221,067



7.9Africa and the Middle East


294,416



8.5



243,170



8.2



183,880



6.6$
3,482,210



100
%

$
2,955,524



100
%

$
2,807,211



100
%     2005


2004


2003Amount


%


Amount


%


Amount


%(Restated)France

$
442,272



12.7
%

$
351,394



11.9
%

$
326,010



11.6
%China


410,310



11.8



357,512



12.1



308,204



11.0United States


386,598



11.1



236,353



8.0



310,126



11.0   Currency
    Risk
    Employee
    Benefit Plans
   73




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note K  Other Information (Restated)
    (Continued)
      Note
    L  Commitments and Contingencies
  Aircraft
    Orders
        Asset
    Value Guarantees
    Other
    Guarantees
   74




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note L  Commitments and Contingencies
    (Continued)
      Stand
    by Lines of Credit
    Leases
    2006

$
8,6352007


8,9522008


9,3032009


9,5942010


9,969Thereafter


47,574Total

$
94,027   Contingencies
     75




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note L  Commitments and Contingencies
    (Continued)
       Note M
     Derivative Financial Instruments (Restated)
           2005


2004


2003(Restated)Related to non-hedging instruments:Changes in fair value of
    non-hedging instruments

$
(208,495
)

$
(369,371
)

$
(29,020
)Offsetting changes in fair value
    of the previously designated hedged item


240,343



374,866



Related to designated fair value
    hedging relationships:Changes in fair value of hedging
    instruments


(175,297
)






152,969Offsetting changes in fair value
    of hedged items


172,203







(153,685
)Ineffectiveness of cash flow hedges


(48
)


515



Total effect on earnings

$
28,706


$
6,010


$
(29,736
)     2005


2004(Restated)Cumulative cash flow hedge loss
    adjustment, net of tax

$
65,131


$
19,959Mark-to-market of securities held
    for sale, net of tax


1,270



2,866Total accumulated other
    comprehensive income (loss)

$
66,401


$
22,825  76




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note M  Derivative Financial Instruments
    (Restated) (Continued)
          Note
    N  Fair Value Disclosures
    Cash:
  Notes receivable:
  Investments:
  Debt financing:
  Derivatives:
  Guarantees:
 77




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note N  Fair Value Disclosures (Continued)
      2005


2004Carrying Amount


Fair Value


Carrying Amount


Fair Valueof Asset


of Asset


of Asset


of Asset(Liability)


(Liability)


(Liability)


(Liability)Cash

$
157,960


$
157,960


$
99,747


$
99,747Notes receivable


181,951



153,829



212,273



211,692Investments


20,313



20,313



22,979



22,979Debt financing (including foreign
    currency adjustment and capital lease obligations (2004) and
    excluding debt discount)


(26,340,121
)


(26,650,800
)


(24,420,907
)


(24,750,855
)Derivative assets


293,576



293,576



1,191,602



1,191,602Derivative liabilities


(49,549
)


(49,549
)


(38,810
)


(38,810
)Guarantees


(10,037
)


(10,037
)


(5,507
)


(5,507
)    Note
    O  Flight Equipment Marketing 
    Securitization
        Note
    P  Quarterly Financial Information (Restated)
    (Unaudited)
   78




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars
    in thousands)
  Note P  Quarterly Financial Information (Restated)
    (Unaudited) (Continued)
    Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Form-10K/A
   QuarterFirst


Second


Third


Fourth


TotalYear Ended December 31,
    2005 (Restated)Total Revenues

$
839,778


$
902,527


$
959,145


$
908,923


$
3,610,373Pre-tax Income


222,611



141,098



220,869



89,605
(a)


674,183Net Income


150,664



95,845



151,104



40,736
(b)


438,349Year Ended December 31,
    2004Total Revenues

$
762,895


$
779,524


$
806,427


$
811,040


$
3,159,886Pre-tax Income


189,744



173,617



187,996



116,750



668,107Net Income


129,108



118,737



127,386



86,775



462,006     (a)
    As discussed in Note L, in the fourth quarter of 2005, we
    recorded a charge of $38,275 to settle the Australian Tax Office
    assessment.  (b)
    As discussed in Note J, in the fourth quarter we recorded
    additional tax expense of $36,587 related to tax examinations
    and other adjustments.  79




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    on
    Financial Statement Schedule
  To the
    Shareholders and Board of Directors
    of International Lease Finance Corporation:
  Form 10-K/A Form 10-K/A.
      80




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
  COL. A

COL. B


COL. C


COL. D


COL. EADDITIONSCharged toBalance at


Charged to


OtherBeginning of


Costs and


Accounts 


Deductions 


Balance atDescription

Period


Expenses


Describe


Describe(a)


End of Period(Dollars in thousands)Reserve for overhaul:Year ended December 31, 2005

$
67,849


$
260,008






$
185,804


$
142,053Year ended December 31, 2004

$
68,900


$
164,322






$
165,373


$
67,849Year ended December 31, 2003

$
118,244


$
112,581






$
161,925


$
68,900     (a)
    Reimbursements to lessees for overhauls performed and amounts
    transferred to buyers for aircraft sold. 81




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##### Table of Contents



SIGNATURES
      INTERNATIONAL LEASE FINANCE CORPORATION
  By
    /s/ALAN
    H. LUND         Signature

Title

Date/s/  STEVEN
    F.
    UDVAR-HAZYSteven
    F. Udvar-Hazy

Chairman of the Board and Chief
    Executive Officer

August 11, 2006/s/  LESLIE
    L. GONDALeslie
    L. Gonda

Director, Chairman of the
    Executive Committee

August 11, 2006/s/  JOHN
    L. PLUEGERJohn
    L. Plueger

Director, President and Chief
    Operating Officer

August 11, 2006/s/  LOUIS
    L. GONDALouis
    L. Gonda

Director

August 11, 2006/s/  MARTIN
    J. SULLIVANMartin
    J. Sullivan

Director

August 11, 2006/s/  WILLIAM
    N. DOOLEYWilliam
    N. Dooley

Director

August 11, 2006/s/  STEVEN
    J.
    BENSINGERSteven
    J. Bensinger

Director

August 11, 2006/s/  ALAN
    H. LUNDAlan
    H. Lund

Director, Vice Chairman,
    Chief Financial Officer and Chief Accounting Officer

August 11, 2006  82