##### Table of Contents



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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q/A

(Amendment No. 1)


QUARTERLY REPORT

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


For the quarterly period ended March 31, 2003

OR

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


For the transition period from ________________________ to _________________________

Commission file number 0-11350

INTERNATIONAL LEASE FINANCE CORPORATION

(Exact name of registrant as specified in its charter)


California
    
    22-3059110(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)10250 Constellation Blvd., Los Angeles, California
    
    90067(Address of principal executive offices)
    
    (Zip Code)


Registrants telephone number, including area code: (310) 788-1999

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes o No x

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

As of April 30, 2003, there were 42,198,119 shares of Common Stock, no par
value, outstanding.



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TABLE OF CONTENTS



|                                                           |                                                                                                          |                                                                                                               |  |  |  |  |  | 
|---------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                             
|                                                           | ITEM 1. FINANCIAL STATEMENTS                                                                            
|                                                           |                                                                                                          | CONDENSED CONSOLIDATED BALANCE SHEETS                                                                        
|                                                           |                                                                                                          | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS            FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
|                                                           |                                                                                                          | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS            FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
|                                                           |                                                                                                          | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                         
|CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
|                                                           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF            FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                           | ITEM 4. CONTROLS AND PROCEDURES                                                                         
|PART II. OTHER INFORMATION                                
|                                                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                                
|SIGNATURES                                                
|INDEX TO EXHIBITS                                         
|EXHIBIT 12                                                
|EXHIBIT 31.1                                              
|EXHIBIT 31.2                                              
|EXHIBIT 32.1                                              



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Explanatory Note

The Company has historically provided for California state income taxes by
using a rate based on a calculation of its stand-alone apportionment rate. For
federal tax purposes, and in recognition of its tax payment allocation
agreement with American International Group, Inc. (AIG), the Company had
historically adjusted its provision to reflect charges and credits allocated to
the Company by AIG. For state tax purposes, the current provision was adjusted
to reflect the AIG unitary tax rate for California but the deferred provision
was not adjusted. The Company has concluded that generally accepted accounting
principles require that its federal and state tax methodologies should be
consistent. As a result, the Company has restated its financial position and
results of operations to reflect the AIG California unitary tax rate in its
calculation of California state income taxes. The revision generally reduces
state income tax expense in previously reported periods.

This Form 10-Q/A restates the previously issued Condensed Consolidated
Financial Statements. See Managements Discussion and Analysis of Financial
Condition and Results of Operations, and the Condensed Consolidated Financial
Statements, including Note C to the Condensed Consolidated Financial
Statements for the impact of the restatement on each period presented.

This amendment to the Companys Quarterly Report on Form 10-Q for the
three months ended March 31, 2003 amends and restates only those items of the
previously filed Form 10-Q which have been affected by the restatement,
although all items of the Form 10-Q are reproduced in this amendment. In order
to preserve the nature and character of the disclosures set forth in such items
as originally filed, no attempt has been made in this amendment to modify or
update such disclosures except as required to reflect the effects of the
restatement. For additional information regarding the restatement, see Note C
to Condensed Consolidated Financial Statements included in Part I, Item 1.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS

PagePart I. Financial InformationItem 1. Financial Statements (Unaudited) (as restated)Condensed Consolidated Balance Sheets
March 31, 2003 and December 31, 2002
    
    
    4Condensed
Consolidated Statements of Income and Comprehensive Income
Three Months Ended March 31, 2003 and 2002
    
    
    5Condensed
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2003 and 2002
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Cautionary Statement Regarding Forward Looking Statements
    
    
    10Item 2. Managements Discussion and Analysis of the Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4. Controls and
Procedures
    
    
    18Part II. Other InformationItem 6. Exhibits and Reports on Form 8-K
    
    
    19Signatures
    
    
    20


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PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




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

Restated
    
    RestatedMarch 31,
    
    December 31,2003
    
    2002(Unaudited)ASSETSCash, including interest bearing accounts
of $85,273 (2003) and $65,693 (2002)
    
    $
    86,665
    
    
    $
    66,049Current income taxes receivable
    
    
    252,268
    
    
    
    179,030Notes receivable and net investment in finance leases
    
    
    463,859
    
    
    
    372,577Flight equipment under operating leases
    
    
    31,376,024
    
    
    
    29,631,150Less
accumulated depreciation
    
    
    4,607,555
    
    
    
    4,343,40326,768,469
    
    
    
    25,287,747Deposits on flight equipment purchases
    
    
    1,169,735
    
    
    
    1,157,864Accrued interest, other receivables and other assets
    
    
    166,491
    
    
    
    142,817Derivative assets
    
    
    238,738
    
    
    
    170,395Investments
    
    
    63,441
    
    
    
    64,067Deferred debt issue costs  less accumulated
amortization of $73,237 (2003) and $68,516 (2002)
    
    
    40,216
    
    
    
    35,571$
    29,249,882
    
    
    $
    27,476,117LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    320,593
    
    
    $
    235,827Debt financing, net of deferred debt discount of $23,271
(2003) and
$31,928 (2002)
    
    
    20,099,045
    
    
    
    18,716,644Foreign currency adjustment
    
    
    330,040
    
    
    
    264,880Derivative liabilities
    
    
    112,833
    
    
    
    135,853Capital lease obligations
    
    
    242,203
    
    
    
    260,623Security and other deposits on flight equipment
    
    
    880,420
    
    
    
    864,053Rentals received in advance
    
    
    138,311
    
    
    
    129,244Deferred income taxes
    
    
    2,389,900
    
    
    
    2,250,314SHAREHOLDERS 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
    
    
    579,955
    
    
    
    579,955Accumulated other comprehensive loss
    
    
    (119,044
    )
    
    
    (138,620
    )Retained earnings
    
    
    3,522,044
    
    
    
    3,423,762Total shareholders equity
    
    
    4,736,537
    
    
    
    4,618,679$
    29,249,882
    
    
    $
    27,476,117


See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Dollars in thousands)

Restated
    
    Restated2003
    
    2002(Unaudited)REVENUESRental of flight equipment
    
    $
    701,495
    
    
    $
    609,009Flight equipment marketing
    
    
    7,950
    
    
    
    13,260Interest and other
    
    
    12,899
    
    
    
    20,265722,344
    
    
    
    642,534EXPENSESInterest
    
    
    219,110
    
    
    
    188,186Depreciation of flight equipment
    
    
    264,147
    
    
    
    216,767Flight equipment rent
    
    
    13,482
    
    
    
    19,400Provision for overhauls
    
    
    28,223
    
    
    
    21,294Selling, general and administrative
    
    
    20,577
    
    
    
    21,523545,539
    
    
    
    467,170INCOME BEFORE INCOME TAXES
    
    
    176,805
    
    
    
    175,364Provision for income taxes
    
    
    57,504
    
    
    
    59,437NET INCOME
    
    
    119,301
    
    
    
    115,927COMPREHENSIVE INCOME (NET OF TAX)Net changes in cash flow hedges
    
    
    61,930
    
    
    
    26,889Foreign currency adjustment
    
    
    (42,354
    )
    
    
    7,21219,576
    
    
    
    34,101COMPREHENSIVE INCOME
    
    $
    138,877
    
    
    $
    150,028


See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Dollars in thousands)

Restated
    
    Restated2003
    
    2002(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    119,301
    
    
    $
    115,927Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation of flight equipment
    
    
    264,147
    
    
    
    216,767Deferred income taxes
    
    
    129,045
    
    
    
    109,076Foreign exchange adjustment
    
    
    65,160
    
    
    
    (2,356
    )Change in derivative instruments
    
    
    (67,611
    )
    
    
    2,519Amortization of deferred debt issue costs
    
    
    4,721
    
    
    
    3,726Equity in net loss (income) of affiliates
    
    
    238
    
    
    
    (686
    )Change in unamortized debt discount
    
    
    8,657
    
    
    
    (9,789
    )Changes in operating assets and liabilities:Increase in notes receivable and finance leases
    
    
    (6,992
    )
    
    
    (1,228
    )Increase in accrued interest, other receivables and other
assets
    
    
    (23,675
    )
    
    
    (6,788
    )Increase in current income taxes receivable
    
    
    (73,238
    )
    
    
    (51,705
    )Increase in accrued interest and other payables
    
    
    91,138
    
    
    
    81,338Increase in rentals received in advance
    
    
    9,067
    
    
    
    8,423Net cash provided by operating activities
    
    
    519,958
    
    
    
    465,224INVESTING ACTIVITIESAcquisition of flight equipment for operating leases
    
    
    (1,744,874
    )
    
    
    (1,705,703
    )Increase in notes receivable and finance leases
    
    
    (94,194
    )
    
    
    Increase in deposits and progress payments
    
    
    (11,871
    )
    
    
    (36,890
    )Proceeds from disposal of flight equipment  net of gain
    
    
    
    
    
    
    36,215Collections on notes receivable and finance leases
    
    
    9,904
    
    
    
    7,760Other
    
    
    388
    
    
    
    289Net cash used in investing activities
    
    
    (1,840,647
    )
    
    
    (1,698,329
    )FINANCING ACTIVITIESRepurchase of preferred stock
    
    
    
    
    
    
    (33,500
    )Net change in commercial paper
    
    
    (213,789
    )
    
    
    (20,793
    )Proceeds from debt financing
    
    
    2,876,000
    
    
    
    2,169,000Payments in reduction of debt financing and capital lease obligations
    
    
    (1,306,886
    )
    
    
    (840,728
    )Debt issue costs
    
    
    (9,366
    )
    
    
    (11,594
    )Increase (decrease) in customer deposits
    
    
    16,367
    
    
    
    (7,120
    )Payment of common and preferred dividends
    
    
    (21,021
    )
    
    
    (13,138
    )Net cash provided by financing activities
    
    
    1,341,305
    
    
    
    1,242,127Increase in cash
    
    
    20,616
    
    
    
    9,022Cash at beginning of period
    
    
    66,049
    
    
    
    79,383Cash at end of period
    
    $
    86,665
    
    
    $
    88,405


(Table continued on following page)

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Dollars in thousands)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Restated
    
    Restated2003
    
    2002(Unaudited)Cash paid during the period for:Interest (net of amount
capitalized of $13,100 (2003) and$15,634 (2002))
    
    $
    120,551
    
    
    $
    100,513Income taxes (net of refunds)
    
    
    1,698
    
    
    
    2,065


See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Dollars in thousands)
(Unaudited)



|A. |  | Basis of Preparation
|-- |  | --------------------

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
All adjustments considered necessary for a fair presentation have been
included. Except for the restatement of the previous financial statements as
described below, the adjustments made were of a normal recurring nature.
Certain reclassifications have been made to the 2002 unaudited condensed
consolidated financial statements to conform to the 2003 presentation.
Operating results for the three months ended March 31, 2003 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2003. These statements should be read in conjunction
with the consolidated financial statements and footnotes thereto included in
the Companys annual report on Form 10-K/A for the year ended December 31,
2002.

As further discussed in Note C, in 2004 the Company restated its
consolidated financial statements for the year ended December 31, 2002, and
for all quarterly periods during the year ended December 31, 2002. The
Company also restated its condensed consolidated financial statements for
the interim period ended March 31, 2003.



|B. |  | Hedging Activities
|-- |  | ------------------

The Company uses derivatives to manage exposures to interest rate and
foreign currency risks. During the three months ended March 31, 2003, the
Company recorded the following in earnings in accordance with Statement of
Financial Accounting Standards No. 133  Accounting for Certain Derivative
Instruments and Certain Hedging Activities, as amended by Statement of
Financial Accounting Standards No. 138 and related implementation guidance.

Related to derivative instruments:Fair value of non-hedging instruments
    
    $
    2,541Ineffectiveness related to cash flow hedges
    
    
    (91
    )Total effect on earnings
    
    $
    2,450


During the three months ended March 31, 2003, $32,840 (net) was
reclassified from accumulated other comprehensive income to interest expense
when interest was paid or received on the Companys cash flow hedges. The
Company estimates that within the next twelve months it will amortize into
earnings approximately $100,000 of the pre-tax balance in other
comprehensive income under cash flow hedge accounting in connection with the
Companys program to convert debt from floating to fixed rates.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Dollars in thousands)
(Unaudited)



|C. |  | Restatement
|-- |  | -----------

The Company has historically provided for California state income taxes
by using a rate based on a calculation of its stand-alone apportionment
rate. For federal tax purposes, and in recognition of its tax sharing
agreement with AIG, the Company had historically adjusted its provision to
reflect charges and credits allocated to the Company by AIG. For state tax
purposes, the current provision was adjusted to reflect the AIG Unitary tax
rate for California but the deferred provision was not adjusted. The Company
has concluded that generally accepted accounting principles require that its
federal and state tax methodologies should be consistent. As a result, the
Company has restated its financial position and results of operations to
reflect the AIG California Unitary tax rate. The revision generally reduces
state income tax expense in previously reported periods. The effect on the
condensed consolidated financial statements is as follows:

March 31, 2003
    
    December 31, 2002As Reported
    
    As Restated
    
    As Reported
    
    As RestatedConsolidated balance sheets:Current income
taxes
    
    $
    263,503
    
    
    $
    252,268
    
    
    $
    193,526
    
    
    $
    179,030Total assets
    
    
    29,261,117
    
    
    
    29,249,882
    
    
    
    27,490,613
    
    
    
    27,476,117Deferred income taxes
    
    
    2,460,772
    
    
    
    2,389,900
    
    
    
    2,322,327
    
    
    
    2,250,314Retained earnings
    
    
    3,462,407
    
    
    
    3,522,044
    
    
    
    3,366,245
    
    
    
    3,423,762Shareholders equity
    
    
    4,676,900
    
    
    
    4,736,537
    
    
    
    4,561,162
    
    
    
    4,618,679


Three Months Ended
    
    Three Months EndedMarch 31, 2003
    
    March 31, 2002As Reported
    
    As Restated
    
    As Reported
    
    As RestatedConsolidated statements of income:Provision for income taxes
    
    $
    59,624
    
    
    $
    57,504
    
    
    $
    62,059
    
    
    $
    59,437Net income
    
    
    117,181
    
    
    
    119,301
    
    
    
    113,305
    
    
    
    115,927


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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION



| |  | Forward Looking Statements
| |  | --------------------------

Certain of the statements in this document contain estimates and
assumptions regarding cash flows and debt financing to support future
capital requirements. While these statements are made in good faith, future
operating, market, competitive, economic and other conditions and events
could cause actual results to differ materially from those in the
statements. The Company undertakes no obligation to release publicly any
revisions to these statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of anticipated or unanticipated
events.

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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS


As more fully described in the Explanatory Note and in Note C to the
Condensed Consolidated Financial Statements, in 2004, the Company restated
its consolidated financial statements for the year ended December 31, 2002
and the interim periods within that year. The Company also restated its
condensed consolidated financial statements for the interim period ended
March 31, 2003.

Managements Discussion and Analysis of Financial Condition and Results
of Operations presented below reflects certain restatements to our operating
results for the three months ended March 31, 2002 and 2003.



| |  | Financial Condition
| |  | -------------------

The Company borrows funds to purchase new and used flight equipment,
including funds for progress payments during the construction phase, and to
pay off existing debt obligations as they mature. Theses funds are borrowed
principally on an unsecured basis from various sources. During the first
quarter of 2003, the Company borrowed $2.9 billion (excluding commercial
paper) and $520.0 million was provided by operating activities to meet those
needs. As of March 31, 2003, the Company had committed to purchase 487
aircraft from Airbus and Boeing at an estimated aggregated purchase price of
$27.9 billion for delivery through 2010 and options to purchase 18
additional aircraft at an estimated aggregate purchase price of
approximately $1.3 billion. The Company currently expects to fund
expenditures for aircraft as well as liquidity needs from a combination of
available cash balances, internally generated funds and financing
arrangements. The Companys debt financing and capital lease obligations
were comprised of the following at the following dates:

March 31,
    
    December 31,2003
    
    2002(Dollars in thousands)Public term debt with single maturities
    
    $
    8,000,775
    
    
    $
    7,475,775Public medium-term notes with varying maturities
    
    
    5,560,500
    
    
    
    4,969,500Capital lease obligations
    
    
    242,203
    
    
    
    260,623Bank and other term debt
    
    
    2,556,326
    
    
    
    2,084,793Total term debt, bank debt, and capital lease obligations
    
    
    16,359,804
    
    
    
    14,790,691Commercial paper
    
    
    4,004,715
    
    
    
    4,218,504Deferred debt discount
    
    
    (23,271
    )
    
    
    (31,928
    )Total debt financing and capital lease obligations
    
    $
    20,341,248
    
    
    $
    18,977,267Selected interest rates and ratio:Composite interest rate
    
    
    4.57
    %
    
    
    4.73
    %Percentage of total debt at fixed rates
    
    
    73.75
    %
    
    
    76.67
    %Composite interest rate on fixed rate debt
    
    
    5.58
    %
    
    
    5.69
    %Bank prime rate
    
    
    4.25
    %
    
    
    4.25
    %


The above amounts represent the Companys anticipated settlement of its
currently outstanding debt obligations. Certain adjustments required to
present currently outstanding debt obligations have been recorded and
presented separately on the face of the balance sheet, including adjustments
related to foreign currency and interest rate hedging activities. The
Company has eliminated the currency exposure arising from foreign currency
denominated notes by either hedging the notes through swaps or through the
offset provided by operating lease payments. The Company translates the debt
into US dollars using current exchange rates. The foreign exchange
adjustment for the foreign currency denominated debt was $330,040 (2003) and
$264,880 (2002). Composite interest rates and percentages of total debt at
fixed rate reflect the effect of derivative instruments.

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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)




| |  | Public Debt
| |  | -----------

The interest on substantially all of the public debt (exclusive of the
Commercial Paper Program) is effectively fixed for the terms of the notes.
The Company has the ability to borrow under various public debt financing
arrangements as follows:

Maximum
    
    Sold as of
    
    Sold as of
    
    Sold as ofOffering
    
    December 31, 2002
    
    March 31, 2003
    
    April 30 , 2003(Dollars in millions)Registration statement dated December 31, 2002
(including $2.0 billion Medium-Term Note program
and $1.0 billion Retail Medium-Term Note Program)
    
    $
    6,080
    (a)
    
    $
    
    
    
    $
    2,346
    
    
    $
    3,701Euro Medium-Term Note
Programme dated May
2002
    
    
    4,000
    
    
    
    2,314
    (b)
    
    
    2,314
    (b)
    
    
    2,314
    (b)




---

|(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) |  | The Company has hedged the foreign currency risk of the notes
through operating lease payments or derivatives.                                                                         



| |  | Capital Lease Obligations
| |  | -------------------------

The Company has Export Credit Lease financings which provided ten year,
amortizing loans in the form of capital lease obligations. The interest rate
on 62.5% of the original financed amount is 6.55% and the interest rate on
22.5% of the original financed amount is fixed at rates varying between
6.18% and 6.89%. These two tranches are guaranteed by various European
Export Credit Agencies. The remaining 15% of the original financed amount
was prepaid by the Company.



| |  | Bank Term Debt
| |  | --------------

In January 1999, the Company entered into an Export Credit Facility, up
to a maximum of $4.3 billion, for aircraft to be delivered through 2001. The
Company used the facility to fund 85% of each aircrafts purchase price.
This facility is guaranteed by various European Export Credit Agencies. The
Company financed 62 aircraft with $2.8 billion under this facility over ten
years with interest rates from 5.753% to 5.898%. The debt is collaterized by
a pledge of the shares of a subsidiary of the Company which holds title to
the aircraft financed under the facility.

In 2003, the Company entered into various bank financings for a total
funded amount of $530.0 million. The financings mature through 2009. The
interest rates are LIBOR based and ranged from 2.465% to 2.935% at March 31,
2003.



| |  | Commercial Paper
| |  | ----------------

The Company currently has a $4.8 billion Commercial Paper Program.
Under this program, the Company may borrow in minimum increments of $100,000
for a period from one day to 270 days. Notwithstanding the programs size,
it is the Companys intention to sell commercial paper not to exceed 150% of
the aggregate amount of the backup facilities available (see Bank
Commitments). The weighted average interest rate of the Companys Commercial
Paper Program was 1.26% at March 31, 2003 and 1.46% at December 31, 2002.

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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)




| |  | Bank Commitments
| |  | ----------------

As of March 31, 2003, the Company had committed revolving loans and
lines of credit with 20 commercial banks aggregating $3.15 billion. These
revolving loans and lines of credit provide for interest rates that vary
according to the pricing option in effect at the time of borrowing. Pricing
options include prime, a range from .25% to .35% over LIBOR based upon
utilization, or a rate determined by a competitive bid process with the
banks. The revolving loans and lines of credit are subject to facility fees
of up to .10% of amounts available. This financing is used primarily as
backup for the Companys Commercial Paper Program. The Company had not drawn
on its revolving loans and lines of credit as of March 31, 2003.



| |  | Off Balance Sheet Arrangements
| |  | ------------------------------

In 1995, 1996 and 1997, the Company, through subsidiaries, entered into
sale-leaseback transactions providing proceeds to the Company in the amounts
of $413.0 million, $507.6 million and $601.9 million, respectively, each
relating to seven aircraft. The transactions resulted in the sale and
leaseback of these aircraft under one year operating leases, each with six
one year extension options for a total of seven years for each aircraft. The
Company has not recorded any gains related to the transactions. The Company
has the option to either buy back the aircraft or redeliver the aircraft for
a fee to the lessor at the end of any lease period. The lease rates equate
to fixed principal amortization and floating interest payments based on
LIBOR or commercial paper pricing. The Company had repurchased three
aircraft before the lease termination, which were sold to third parties, and
the remaining five aircraft from the 1995 sale-leaseback transaction when
the leases expired in December 2002. If the Company does not negotiate
extensions of the one-year operating lease terms as they expire in September
2003 and 2004, it will be required to borrow additional funds to terminate
the transactions and reacquire the assets. The estimated remaining minimum
lease payments (exclusive of the interest component of rent) and buy-back
amounts, assuming the current contractual end of the transactions, are
$381.0 million (2003) and $462.4 million (2004). The Companys
implementation of FASB Interpretation No. 46 (FIN 46) may require the
Company to consolidate these entities, starting in the third quarter of
2003. If the Company is required to consolidate these entities, it expects
to record assets and liabilities of approximately $840.0 million and will
cease to record rent expense for the operating lessees.

The Company does not have any other relationships with unconsolidated
entities, which have been established for the purpose of facilitating
off-balance sheet arrangements or for other contractually narrow or limited
purposes. The Company has, however, from time to time established
subsidiaries, entered into joint ventures or created other partnership
arrangements with the limited purpose of leasing aircraft or facilitating
borrowing arrangements. The Company is in the process of reviewing all
entities that may be considered Variable Interest Entities and in which the
Company may have a variable interest as defined by FIN 46. The Company has
not yet determined the possible impact of consolidation of these entities,
due to the analysis and data collection effort required to apply FIN 46.



| |  | Derivatives
| |  | -----------

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

The counterparty to the Companys derivative instruments is AIG
Financial Products Corp., a related party with the highest ratings available
from the credit rating agencies, which enters into identical transactions
with independent third parties. The derivatives are subject to a bilateral
security agreement, which, in certain circumstances, may allow one party to
the agreement to require the second party to the agreement to provide
collateral. Failure of the instruments or counterparty to perform under the
derivative contracts could have a material impact on the Companys results
of operations.

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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Market Liquidity Risk

The Company is in compliance with all covenants and other requirements
set forth in its credit agreements. Further, the Company does not have any
rating downgrade triggers that would automatically accelerate the maturity
dates of its debt. However, a downgrade in the Companys credit rating could
adversely affect the Companys ability to renew existing, or obtain access
to new financing arrangements and would increase the cost of such financing
arrangements. For example, a downgrade in credit rating could preclude the
Company from issuing commercial paper under its current program.

Turmoil in the airline industry, continued global political unrest, and
worldwide health issues have led to increased uncertainty in the debt
markets in which the Company borrows funds. While the Company has been able
to borrow the funds necessary to finance operations in the current market
environment, additional turmoil in the airline industry or political
environment could limit the Companys ability to borrow funds from its
current funding sources. Should this occur the Company would seek
alternative sources of funding, including securitizations, manufacturers
financings, drawings upon its revolving loans and lines of credit facilities
or additional short-term borrowings. If the Company were unable to obtain
sufficient funding, it would negotiate with manufacturers to defer
deliveries of aircraft.

The following summarizes the Companys contractual obligations at March
31, 2003, and the possible effect of such obligations on the Companys
liquidity and cash flows in future periods.

Existing Commitments (Exclusive of Interest)

Commitments Due by Fiscal YearTotal
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    Thereafter(Dollars in thousands)Public and Bank
Term Debt
    
    $
    16,117,601
    
    
    $
    2,402,706
    
    
    $
    3,509,624
    
    
    $
    2,802,549
    
    
    $
    1,823,174
    
    
    $
    2,622,424
    
    
    $
    2,957,124Capital Lease
Obligations
    
    
    242,203
    
    
    
    93,326
    
    
    
    105,194
    
    
    
    43,683
    
    
    
    
    
    
    
    
    
    
    
    Commercial Paper
    
    
    4,004,715
    
    
    
    4,004,715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Leases
    
    
    127,230
    
    
    
    4,595
    
    
    
    11,336
    
    
    
    11,485
    
    
    
    8,575
    
    
    
    8,918
    
    
    
    82,321Operating Leases
under
Sales-Lease-Back
Transactions (a)
    
    
    843,407
    
    
    
    381,016
    
    
    
    462,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase Commitments
    
    
    27,873,900
    
    
    
    2,907,000
    
    
    
    4,655,000
    
    
    
    4,682,700
    
    
    
    5,013,700
    
    
    
    4,332,100
    
    
    
    6,283,400Total
    
    $
    49,209,056
    
    
    $
    9,793,358
    
    
    $
    8,743,545
    
    
    $
    7,540,417
    
    
    $
    6,845,449
    
    
    $
    6,963,442
    
    
    $
    9,322,845




---

|(a) |  | Includes the repurchase of six aircraft in 2003 and seven aircraft in
2004.
|--- |  | ---------------------------------------------------------------------------

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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Contingent Commitments

Contingency Expiration by Fiscal YearTotal
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    Thereafter(Dollars in thousands)Purchase Options on New
Aircraft
    
    $
    1,287,200
    
    
    $
    
    
    
    $
    36,600
    
    
    $
    295,100
    
    
    $
    248,400
    
    
    $
    567,000
    
    
    $
    140,100Put Options (a)
    
    
    769,995
    
    
    
    231,614
    
    
    
    67,422
    
    
    
    256,658
    
    
    
    
    
    
    
    
    
    
    
    214,301Asset Value Guarantees (a)
    
    
    153,189
    
    
    
    63,000
    
    
    
    4,726
    
    
    
    11,041
    
    
    
    8,178
    
    
    
    
    
    
    
    66,244Loan Guarantees (a)
    
    
    85,673
    
    
    
    13,500
    
    
    
    3,456
    
    
    
    5,000
    
    
    
    6,000
    
    
    
    
    
    
    
    57,717Lines of Credit
    
    
    20,000
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,316,057
    
    
    $
    328,114
    
    
    $
    112,204
    
    
    $
    567,799
    
    
    $
    262,578
    
    
    $
    567,000
    
    
    $
    478,362




---

|(a) |  | From time to time, the Company participates 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, should the Company be called
upon to fulfill its obligations, the Company would have recourse to the
value of the underlying aircraft.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Industry Condition

The Companys sources of revenue are principally from scheduled and
charter airlines and companies associated with the airline industry. The
Companys revenues and results of operation are therefore affected by how
its customers cope with the economic environment in which airlines operate.
In the past two years, the airline industry has been negatively affected by
a number of factors, including acts of terrorism and related lingering
fears, the war in Iraq, a sluggish worldwide economy, the cost of fuel, the
cost of insurance and most recently the outbreak of Severe Acute Respiratory
Syndrome (SARS). The Companys revenues and results of operations have
been negatively affected in 2002 and 2003 by participation in customer
restructurings and requirements to re-lease aircraft repossessed from
airlines which have ceased operations. During 2003, two of the Companys
customers, Avianca (1 aircraft) and Hawaiian Airlines (4 aircraft), filed
for protection under Chapter 11 of the United States Bankruptcy Code and one
of the Companys customers, Air Canada (11 owned and one managed aircraft),
filed for bankruptcy under Canadas Companies Creditors Arrangement Act. At
April 30, 2003, these airlines continue to operate the aircraft under the
protection of the bankruptcy proceedings.

The Company generates approximately 20% of its revenues from customers
based in Asia and the Pacific region, and has numerous other customers who
operate flights to and from those areas. Travel between Asia and the rest
of the world has been impacted by the outbreak of SARS. Many airlines in
Asia and those traveling to Asia have curtailed flights in response to the
reluctance of people willing to travel to Asia. What additional negative
impact SARS will have on the Companys revenues and results of operations
for the year ending December 31, 2003, as of yet, is still unknown.

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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


Results of Operations- Three months ended March 31, 2003 versus 2002.

Revenues from the rentals of flight equipment increased 15.2% to $701.5
million in 2003 compared to $609.0 million in 2002, due to an increase in
the number of aircraft available for operating lease, partially offset by an
increase in the number of aircraft being reconfigured and redelivered and
therefore not earning revenue for the entire period. At March 31, 2003, the
Company had one aircraft off-lease (not subject to a signed lease agreement
or a signed letter of intent), which had been off-lease for less than three
months. Revenues were also negatively impacted by lower lease rates and
restructured rents, as a result of a slowdown of the airline industry.

Lease Margin (Rentals of flight equipment less total expense, divided
by Rentals of flight equipment) is a measure by which the Company evaluates
the overall profitability of its leasing operations. The Companys lease
margin decreased to 22.23% in 2003 compared to 23.29% in 2002. The Company
expects factors described in Industry Conditionsto further negatively
impact revenues in 2003 and beyond as airlines continue to experience
financial difficulties. At March 31, 2003 the Companys fleet, on which it
earns rental revenue, consisted of 590 aircraft compared to a fleet of 481
aircraft at March 31, 2002. The cost of the leased fleet, which includes
aircraft subject to sale-lease back transactions from which rental income is
earned, increased to $32.5 billion at March 31, 2003 compared to $27.2
billion at March 31, 2002.

In addition to its leasing operations, the Company engages in the
marketing of flight equipment throughout the lease term, as well as the
sales of third party owned flight equipment on a principal and commission
basis. Revenues from flight equipment marketing decreased to $8.0 million
in 2003 compared to $13.3 million in 2002 as a result of the type of
equipment marketed in each of the quarters and net book value of the company
owned equipment sold. The Company did not sell any company owned equipment
in 2003, but earned third party marketing commissions and sold two company
owned aircraft in 2002.

Interest and other revenue decreased to $12.9 million in 2003 compared
to $20.3 million in 2002 primarily due to a decrease in forfeitures of
security and other deposits and contract termination fees resulting from
nonperformance by customers and manufacturers.

Interest expense increased to $219.1 million in 2003 compared to $188.2
million in 2002 as a result of an increase in average debt outstanding,
which is borrowed to finance aircraft acquisitions (excluding the effect of
debt discount and foreign exchange adjustments), to $19.7 billion in 2003
compared to $16.5 billion in 2002. This increase was partially offset by a
decrease in the average composite borrowing rate to 4.65% in 2003 compared
to 5.00% in 2002. The Companys composite borrowing rate decreased as
follows:

2003
    
    2002
    
    DecreaseBeginning of Quarter
    
    
    4.73
    %
    
    
    5.07
    %
    
    
    0.34
    %End of Quarter
    
    
    4.57
    %
    
    
    4.93
    %
    
    
    0.36
    %Average
    
    
    4.65
    %
    
    
    5.00
    %
    
    
    0.35
    %


Interest expense for the three months ended March 31, 2003 includes a
$2.5 million benefit related to derivative activities.

Depreciation of flight equipment increased 21.8% to $264.1 million in
2003 compared to $216.8 million in 2002 due to the increased cost of the
fleet.

The Company, in prior periods, had entered into sale-leaseback
transactions. Currently 13 aircraft are accounted for under these
transactions. Flight equipment rent decreased to $13.5 million in 2003
compared to $19.4 million in 2002 due to buy back of five aircraft in
connection with the maturity of one facility in 2002, principal amortization
and a decrease in the lease rates, resulting from a decrease in interest
rates, affecting the floating rate component of the lease rates.

Provision for overhauls increased to $28.2 million in 2003 compared to
$21.3 million in 2002 due to an increase in collections and an increase in
aggregate number of hours flown on which the Company collects overhaul
revenue.

The provision for income taxes decreased to $57.5 million in 2003
compared to $59.4 million in 2002. The effective tax rate decreased to 32.5%
from 33.9% in the first quarter 2003 compared to 2002. The decrease resulted
from the increased impact of the Extraterritorial Income regime due to new
deliveries in 2003.

The Company has historically re-leased aircraft returning at the end of
the lease before the end of the lease term. For aircraft returning before
the end of the lease term, the Company has generally been able to re-lease
aircraft within two to three months of its return. The Company has not
recognized any impairment related to its fleet, as the existing service
potential of the aircraft in the Companys portfolio has not been
diminished. Further, the Company has been able to re-lease aircraft without
diminution in lease rates to an extent that would warrant an impairment
write down.

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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Value at Risk

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

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

The Company is exposed to market risk and the risk of loss of fair
value and possible liquidity strain resulting from adverse fluctuations in
interest rates and foreign exchange prices. The Company statistically
measures the loss of fair value through the application of a VaR model on a
quarterly basis. In this analysis the net fair value of the Company is
determined using the financial instrument and other assets. This includes
tax adjusted future flight equipment lease revenues, and financial
instrument liabilities, which includes future servicing of current debt. The
estimated impact of current derivative positions is also taken into account.

The Company calculates the VaR with respect to the net fair value by
using historical scenarios. This methodology entails re-pricing all assets
and liabilities under explicit changes in market rates within a specific
historical time period. In this case, the most recent three years of
historical information for interest rates and foreign exchange rates were
used to construct the historical scenarios at March 31, 2003 and December
31, 2002 respectively. For each scenario, each financial instrument is
re-priced. Scenario values for the Company are then calculated by netting
the values of all the underlying assets and liabilities. The final VaR
number represents the maximum adverse deviation in fair market value
incurred by these scenarios with 95% confidence (i.e. only 5% of historical
scenarios show losses greater than the VaR figure). A one month holding
period is assumed in computing the VaR figure. The following table presents
the average, high and low VaRs for the Company with respect to its fair
value for the periods ended March 31, 2003 and December 31, 2002:

ILFC Market RiskThree Months Ended
    
    Year EndedMarch 31, 2003
    
    December 31, 2002(Dollars in millions)Average
    
    High
    
    Low
    
    Average
    
    High
    
    LowCombined
    
    $
    7.8
    
    
    $
    7.8
    
    
    $
    7.8
    
    
    $
    20.1
    
    
    $
    42.8
    
    
    $
    7.8Interest Rate
    
    
    7.9
    
    
    
    7.9
    
    
    
    7.8
    
    
    
    20.0
    
    
    
    42.8
    
    
    
    7.8Currency
    
    
    1.2
    
    
    
    1.3
    
    
    
    1.2
    
    
    
    0.5
    
    
    
    1.2
    
    
    
    0.0


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##### Table of Contents






ITEM 4.
    
    CONTROLS AND PROCEDURES


As of the end of the period covered by this report, the Chairman of the
Board and Chief Executive Officer and the Vice Chairman, Chief Financial
Officer and Chief Accounting Officer of the Company (collectively, the
Certifying Officers) have evaluated the effectiveness of the Companys
disclosure controls and procedures. These disclosure controls and
procedures are those controls and procedures which are designed to insure
that all of the information required to be disclosed by the Company in its
periodic reports filed with the Securities and Exchange Commission (the
Commission) is recorded, processed, summarized and reported within the
time periods specified by the Commission rules and forms, and that the
information is communicated to the Certifying Officers on a timely basis.

The Certifying Officers concluded, based on their evaluation, that the
Companys disclosure controls and procedures are effective for the Company,
taking into consideration the size and nature of the Companys business and
operations. No significant deficiencies or material weaknesses in the
controls or procedures were detected; therefore, no corrective actions were
needed to be taken. Subsequent to the date when the disclosure controls and
procedures were evaluated, there have not been any significant changes in
the Companys disclosure controls or procedures or in other factors that
could significantly affect such controls or procedures.

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##### Table of Contents






PART II. OTHER INFORMATION




ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K




| | a) |  | Exhibits
| | -- |  | --------



| | 12. |  | Computation of Ratios of Earnings to Fixed Charges and Preferred Stock Dividends.
| | --- |  | ---------------------------------------------------------------------------------



| | 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
| | ---- |  | -------------------------------------------



| | b) |  | Reports on Form 8-K:
| | -- |  | --------------------



| |  |  | Form 8-K, event date January 8, 2003 (Item 7)
| |  |  | ---------------------------------------------



| |  |  | Form 8-K, event date January 24, 2003 (Item 7)
| |  |  | ----------------------------------------------



| |  |  | Form 8-K, event date February 5, 2003 (Item 7)
| |  |  | ----------------------------------------------



| |  |  | Form 8-K, event date March 14, 2003 (Item 7)
| |  |  | --------------------------------------------

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

INTERNATIONAL LEASE FINANCE CORPORATIONFebruary 19, 2004
    
    /S/ Steven F. Udvar-HazySTEVEN F. UDVAR-HAZYChairman of the Board and
Chief Executive OfficerFebruary 19, 2004
    
    /S/ Alan H. LundALAN H. LUNDVice Chairman,
Chief Financial Officer
and Chief Accounting Officer


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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES




INDEX TO EXHIBITS

Exhibit No.12
    
    Computation of Ratios of Earnings to Fixed Charges and Preferred
Stock Dividends31.1
    
    Rule 13a-14 (a) / 15d-14 (a) Certification of Chairman of the Board
and Chief Executive Officer31.2
    
    Rule 13a-14 (a) / 15d-14 (a) Certification of Vice Chairman, Chief
Financial Officer and Chief Accounting Officer32.1
    
    Certification under 18 U.S.C., Section 1350


-21-