##### Table of Contents



---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---



FORM 10-Q

QUARTERLY REPORT




---





|[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2002

OR



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

For the transition period from __________________ to __________________

Commission file number 0-11350

INTERNATIONAL LEASE FINANCE CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                          |  |                                                
|------------------------------------------------------------------------- |  | -----------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization) |  | 22-3059110
(I.R.S. Employer
Identification No.)

|                                                                                           |  |                 
|------------------------------------------------------------------------------------------ |  | ----------------
|1999 Avenue of the Stars, Los Angeles, California
(Address of principal executive offices) |  | 90067
(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 [   ]

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

As of November 12, 2002, there were 39,769,520 shares of Common Stock, no par value, outstanding.



---

---





---

TABLE OF CONTENTS



|                                                           |                                                                                               |                                                                                                                             |  |  |  |  |  | 
|---------------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                             
|                                                           | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                           |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                      
|                                                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
|                                                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 
|                                                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                            
|                                                           |                                                                                               | 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                           | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                                
|                                                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                                
|CERTIFICATIONS                                            
|INDEX TO EXHIBITS                                         
|EXHIBIT 12                                                



---



##### Table of Contents



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



---



TABLE OF CONTENTS

|                                                          |  |                                                                                           |   |                                                                                                                     |    |      |    | 
|--------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                                                          |  |                                                                                           |   |                                                                                                                     |    | Page
|                                                          |  |                                                                                           |   |                                                                                                                     |    |     
|                                                         
|Part I.                                                   |  | Financial Information:                                                                    |   |                                                                                                                     |    |     
|                                                         
|Item 1.                                                   |  | Financial Statements (Unaudited)                                                          |   |                                                                                                                     |    |     
|                                                         
|                                                          |  |                                                                                           |   | Condensed Consolidated Balance Sheets
September 30, 2002 and December 31, 2001                                      |    |      | 3  | 
|                                                         
|                                                          |  |                                                                                           |   | Condensed Consolidated Statements of Income and Comprehensive Income
Three Months Ended September 30, 2002 and 2001 |    |      | 4  | 
|                                                         
|                                                          |  |                                                                                           |   | Condensed Consolidated Statements of Income and Comprehensive Income
Nine Months Ended September 30, 2002 and 2001  |    |      | 5  | 
|                                                         
|                                                          |  |                                                                                           |   | Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2002 and 2001                       |    |      | 6  | 
|                                                         
|                                                          |  |                                                                                           |   | Notes to Condensed Consolidated Financial Statements                                                                |    |      | 8  | 
|                                                         
|Cautionary Statement Regarding Forward Looking Statements |  |                                                                                           | 9 |                                                                                                                    
|                                                         
|Item 2.                                                   |  | Managements Discussion and Analysis of the Financial Condition and Results of Operations |   |                                                                                                                     | 10 |     
|                                                         
|Item 3.                                                   |  | Quantitative and Qualitative Disclosures about Market Risk                                |   |                                                                                                                     | 17 |     
|                                                         
|Item 4.                                                   |  | Controls and Procedures                                                                   |   |                                                                                                                     | 18 |     
|                                                         
|Part II.                                                  |  | Other Information                                                                         |   |                                                                                                                     |    |     
|                                                         
|Item 6.                                                   |  | Exhibits and Reports on Form 8-K                                                          |   |                                                                                                                     | 19 |     
|                                                         
|                                                          |  |                                                                                           |   | Signatures                                                                                                          |    |      | 20 | 
|                                                         
|                                                          |  |                                                                                           |   | Certifications                                                                                                      |    |      | 21 | 

-2-



---



##### Table of Contents






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)

|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |           |           |           | 
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------- | ------------- | --------- | ------------ | --------- | --------- | --------- | 
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           | September 30, |           | December 31,
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           | 2002          |           | 2001        
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |             
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           | (Unaudited)   |           |              |           |          
|ASSETS                                                                                        
|Cash, including interest bearing accounts
of $74,998 (2002) and $78,295 (2001)                 |                                                                                                                           | $                             | 77,054                                                                                                                                                                                                                                                                   |           |               | $         | 79,383       |          
|Current income taxes receivable                                                                |                                                                                                                           |                               | 161,592                                                                                                                                                                                                                                                                  |           |               |           | 173,280      |          
|Notes receivable and net investment in finance leases                                          |                                                                                                                           |                               | 409,000                                                                                                                                                                                                                                                                  |           |               |           | 394,277      |          
|Flight equipment under operating leases                                                        |                                                                                                                           |                               | 28,307,680                                                                                                                                                                                                                                                               |           |               |           | 24,400,217   |          
|                                                                                               |                                                                                                                           | Less accumulated depreciation |                                                                                                                                                                                                                                                                          |           | 4,102,717     |           |              |           | 3,417,020 |          
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          
|                                                                                               |                                                                                                                           |                               | 24,204,963                                                                                                                                                                                                                                                               |           |               |           | 20,983,197   |          
|Deposits on flight equipment purchases                                                         |                                                                                                                           |                               | 1,282,842                                                                                                                                                                                                                                                                |           |               |           | 1,321,699    |          
|Accrued interest, other receivables and other assets                                           |                                                                                                                           |                               | 278,807                                                                                                                                                                                                                                                                  |           |               |           | 130,471      |          
|Investments                                                                                    |                                                                                                                           |                               | 51,146                                                                                                                                                                                                                                                                   |           |               |           | 56,236       |          
|Deferred debt issue costs - less accumulated amortization of $63,919
(2002) and $59,056 (2001) |                                                                                                                           |                               | 36,323                                                                                                                                                                                                                                                                   |           |               |           | 28,747       |          
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          
|                                                                                               |                                                                                                                           | $                             | 26,501,727                                                                                                                                                                                                                                                               |           |               | $         | 23,167,290   |          
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          
|LIABILITIES AND SHAREHOLDERS EQUITY                                                          
|Accrued interest and other payables                                                            |                                                                                                                           | $                             | 414,342                                                                                                                                                                                                                                                                  |           |               | $         | 265,107      |          
|Debt financing, net of deferred debt discount of $36,048 (2002) and
$15,157 (2001)             |                                                                                                                           |                               | 18,269,223                                                                                                                                                                                                                                                               |           |               |           | 15,368,877   |          
|Capital lease obligations                                                                      |                                                                                                                           |                               | 295,910                                                                                                                                                                                                                                                                  |           |               |           | 365,289      |          
|Security & other deposits on flight equipment                                                  |                                                                                                                           |                               | 861,311                                                                                                                                                                                                                                                                  |           |               |           | 966,213      |          
|Rentals received in advance                                                                    |                                                                                                                           |                               | 128,889                                                                                                                                                                                                                                                                  |           |               |           | 114,874      |          
|Deferred income taxes                                                                          |                                                                                                                           |                               | 2,233,240                                                                                                                                                                                                                                                                |           |               |           | 1,937,396    |          
|Derivative instruments                                                                         |                                                                                                                           |                               | 105,084                                                                                                                                                                                                                                                                  |           |               |           | 185,859      |          
|SHAREHOLDERS EQUITY                                                                           |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          
|                                                                                               | Preferred stock no par value; 20,000,000 authorized shares                                                               |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |           |          
|                                                                                               |                                                                                                                           |                               | Series A Preferred Stock; $10,000,000 per share liquidation value;
40 shares issued and outstanding (2001)                                                                                                                                                               |           |               |          |              |           |           | 400,000   | 
|                                                                                               |                                                                                                                           |                               | Market Auction Preferred Stock, $100,000 per share liquidation
value; Series A, B, and E (2002 and 2001) each having 500 shares
issued. Series A and B each having 500 (2002 and 2001) shares
outstanding and Series E having 0 (2002) and 500 (2001) shares
outstanding |           |               | 100,000   |              |           |           | 150,000   | 
|                                                                                               | Common stock no par value; 100,000,000 authorized shares, 39,769,520
(2002) and 35,818,122 (2001) issued and outstanding |                               |                                                                                                                                                                                                                                                                          | 403,582   |               |           |              | 3,582     |          
|                                                                                               | Additional paid-in capital                                                                                                |                               |                                                                                                                                                                                                                                                                          | 579,955   |               |           |              | 579,955   |          
|                                                                                               | Accumulated other comprehensive loss                                                                                      |                               |                                                                                                                                                                                                                                                                          | (115,564  | )             |           |              | (50,629   | )        
|                                                                                               | Retained earnings                                                                                                         |                               |                                                                                                                                                                                                                                                                          | 3,225,755 |               |           |              | 2,880,767 |          
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          
|                                                                                               |                                                                                                                           |                               | Total Shareholders Equity                                                                                                                                                                                                                                               |           |               | 4,193,728 |              |           |           | 3,963,675 | 
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          
|                                                                                               |                                                                                                                           | $                             | 26,501,727                                                                                                                                                                                                                                                               |           |               | $         | 23,167,290   |          
|                                                                                               |                                                                                                                           |                               |                                                                                                                                                                                                                                                                          |           |               |           |              |          

See notes to condensed consolidated financial statements.

-3-



---



##### Table of Contents






INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Dollars in thousands)

|                                  |                                         |   |             |         |      |   |         |         |  
|--------------------------------- | --------------------------------------- | - | ----------- | ------- | ---- | - | ------- | ------- | -
|                                  |                                         |   | 2002        |         | 2001
|                                  |                                         |   |             |         |     
|                                  |                                         |   | (Unaudited)
|REVENUES                          |                                         |   |             |         |      |   |         |        
|                                  | Rental of flight equipment              |   | $           | 686,833 |      |   | $       | 633,712 |  
|                                  | Flight equipment marketing              |   |             | 15,256  |      |   |         | 14,267  |  
|                                  | Interest and other                      |   |             | 28,089  |      |   |         | 12,826  |  
|                                  |                                         |   |             |         |      |   |         |        
|                                  |                                         |   | 730,178     |         |      |   | 660,805 |        
|                                  |                                         |   |             |         |      |   |         |        
|EXPENSES                          |                                         |   |             |         |      |   |         |        
|                                  | Interest                                |   |             | 218,410 |      |   |         | 188,929 |  
|                                  | Depreciation of flight equipment        |   |             | 247,580 |      |   |         | 207,891 |  
|                                  | Flight equipment rent                   |   |             | 19,343  |      |   |         | 25,585  |  
|                                  | Provision for overhauls                 |   |             | 28,548  |      |   |         | 32,144  |  
|                                  | Selling, general and administrative     |   |             | 23,562  |      |   |         | 15,623  |  
|                                  |                                         |   |             |         |      |   |         |        
|                                  |                                         |   | 537,443     |         |      |   | 470,172 |        
|                                  |                                         |   |             |         |      |   |         |        
|INCOME BEFORE INCOME TAXES        |                                         |   | 192,735     |         |      |   | 190,633 |        
|                                  | Provision for income taxes              |   |             | 51,499  |      |   |         | 63,069  |  
|                                  |                                         |   |             |         |      |   |         |        
|NET INCOME                        |                                         |   | 141,236     |         |      |   | 127,564 |        
|                                  |                                         |   |             |         |      |   |         |        
|COMPREHENSIVE INCOME (NET OF TAX) |                                         |   |             |         |      |   |         |        
|                                  | Net changes in cash flow hedges         |   |             | (49,651 | )    |   |         | (28,590 | )
|                                  | Foreign currency translation adjustment |   |             | (8,531  | )    |   |         | (22,236 | )
|                                  |                                         |   |             |         |      |   |         |        
|                                  |                                         |   | (58,182     | )       |      |   | (50,826 | )      
|                                  |                                         |   |             |         |      |   |         |        
|COMPREHENSIVE INCOME              |                                         | $ | 83,054      |         |      | $ | 76,738  |        
|                                  |                                         |   |             |         |      |   |         |        

See notes to condensed consolidated financial statements.

-4-



---



##### Table of Contents






INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Dollars in thousands)

|                                                                      |                                                                     |   |             |           |      |   |           |           |  
|--------------------------------------------------------------------- | ------------------------------------------------------------------- | - | ----------- | --------- | ---- | - | --------- | --------- | -
|                                                                      |                                                                     |   | 2002        |           | 2001
|                                                                      |                                                                     |   |             |           |     
|                                                                      |                                                                     |   | (Unaudited)
|REVENUES                                                              |                                                                     |   |             |           |      |   |           |          
|                                                                      | Rental of flight equipment                                          |   | $           | 1,976,166 |      |   | $         | 1,836,915 |  
|                                                                      | Flight equipment marketing                                          |   |             | 34,896    |      |   |           | 53,183    |  
|                                                                      | Interest and other                                                  |   |             | 88,132    |      |   |           | 50,685    |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|                                                                      |                                                                     |   | 2,099,194   |           |      |   | 1,940,783 |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|EXPENSES                                                              |                                                                     |   |             |           |      |   |           |          
|                                                                      | Interest                                                            |   |             | 625,488   |      |   |           | 594,567   |  
|                                                                      | Depreciation of flight equipment                                    |   |             | 700,038   |      |   |           | 590,610   |  
|                                                                      | Flight equipment rent                                               |   |             | 58,097    |      |   |           | 86,513    |  
|                                                                      | Provision for overhauls                                             |   |             | 68,605    |      |   |           | 78,233    |  
|                                                                      | Selling, general and administrative                                 |   |             | 67,294    |      |   |           | 50,419    |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|                                                                      |                                                                     |   | 1,519,522   |           |      |   | 1,400,342 |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE |                                                                     |   | 579,672     |           |      |   | 540,441   |          
|                                                                      | Provision for income taxes                                          |   |             | 190,048   |      |   |           | 187,409   |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                  |                                                                     |   | 389,624     |           |      |   | 353,032   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|Cumulative effect of accounting change (net of taxes)                 |                                                                     |   |            |           |      |   | 15,191    |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|NET INCOME                                                            |                                                                     |   | 389,624     |           |      |   | 368,223   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|COMPREHENSIVE INCOME (NET OF TAX)                                     |                                                                     |   |             |           |      |   |           |          
|                                                                      | Cumulative effect of accounting change                              |   |             |          |      |   |           | (20,473   | )
|                                                                      | Net changes in cash flow hedges                                     |   |             | 38,463    |      |   |           | (48,590   | )
|                                                                      | Foreign currency translation adjustment                             |   |             | (103,398  | )    |   |           | (7,169    | )
|                                                                      |                                                                     |   |             |           |      |   |           |          
|                                                                      |                                                                     |   | (64,935     | )         |      |   | (76,232   | )        
|                                                                      |                                                                     |   |             |           |      |   |           |          
|COMPREHENSIVE INCOME                                                  |                                                                     | $ | 324,689     |           |      | $ | 291,991   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|SUPPLEMENTAL COMPREHENSIVE INCOME INFORMATION                         |                                                                     |   |             |           |      |   |           |          
|                                                                      | Cumulative foreign currency translation gain adjustment, net of tax |   | $           | (22,523   | )    |   | $         | 3,458     |  
|                                                                      | Cumulative cash flow hedge loss adjustment, net of tax              |   |             | (93,041   | )    |   |           | (70,432   | )

See notes to condensed consolidated financial statements.

-5-



---



##### Table of Contents






INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Dollars in thousands)

|                                          |                                                                                   |                                                                             |            |             |         |      |            |            |         |  
|----------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ---------- | ----------- | ------- | ---- | ---------- | ---------- | ------- | -
|                                          |                                                                                   |                                                                             |            | 2002        |         | 2001
|                                          |                                                                                   |                                                                             |            |             |         |     
|                                          |                                                                                   |                                                                             |            | (Unaudited)
|OPERATING ACTIVITIES                      |                                                                                   |                                                                             |            |             |         |      |            |           
|                                          | Net income                                                                        |                                                                             | $          | 389,624     |         |      | $          | 368,223    |        
|                                          | Adjustments to reconcile net income to net cash provided by operating
activities: |                                                                             |            |             |         |      |            |            |        
|                                          |                                                                                   | Depreciation of flight equipment                                            |            |             | 700,038 |      |            |            | 590,610 |  
|                                          |                                                                                   | Deferred income taxes                                                       |            |             | 330,809 |      |            |            | 286,793 |  
|                                          |                                                                                   | Foreign exchange adjustment of Euro denominated debt                        |            |             | 26,874  |      |            |            | (75,739 | )
|                                          |                                                                                   | Change in derivative instruments                                            |            |             | (20,719 | )    |            |            | 68,659  |  
|                                          |                                                                                   | Amortization of deferred debt issue costs                                   |            |             | 4,863   |      |            |            | 9,858   |  
|                                          |                                                                                   | Gain on sale of flight equipment included in amount financed                |            |             | (5,823  | )    |            |            | (5,405  | )
|                                          |                                                                                   | Equity in net loss (income) of affiliates                                   |            |             | 4,217   |      |            |            | (1,634  | )
|                                          |                                                                                   | Change in unamortized debt discount                                         |            |             | (20,891 | )    |            |            | 23,459  |  
|                                          | Changes in operating assets and liabilities:                                      |                                                                             |            |             |         |      |            |            |        
|                                          |                                                                                   | Increase in notes receivable and finance leases                             |            |             | (40,507 | )    |            |            | (22,768 | )
|                                          |                                                                                   | (Increase) decrease in accrued interest, other receivables and other
assets |            |             | (99,899 | )    |            |            | 1,700   |  
|                                          |                                                                                   | Decrease (increase) in current income taxes receivable                      |            |             | 11,688  |      |            |            | (96,409 | )
|                                          |                                                                                   | Increase in accrued interest and other payables                             |            |             | 149,234 |      |            |            | 58,713  |  
|                                          |                                                                                   | Increase in rentals received in advance                                     |            |             | 14,015  |      |            |            | 7,525   |  
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|Net cash provided by operating activities |                                                                                   |                                                                             | 1,443,523  |             |         |      | 1,213,585  |           
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|INVESTING ACTIVITIES                      |                                                                                   |                                                                             |            |             |         |      |            |           
|                                          | Acquisition of flight equipment for operating leases                              |                                                                             |            | (3,993,075  | )       |      |            | (3,268,104 | )      
|                                          | Acquisition of flight equipment for finance leases                                |                                                                             |            | (12,886     | )       |      |            | (39,207    | )      
|                                          | Decrease (increase) in deposits and progress payments                             |                                                                             |            | 38,857      |         |      |            | (204,887   | )      
|                                          | Proceeds from disposal of flight equipment  net of gain                          |                                                                             |            | 88,281      |         |      |            | 181,022    |        
|                                          | Collections on notes receivable and finance leases                                |                                                                             |            | 27,484      |         |      |            | 34,231     |        
|                                          | Other                                                                             |                                                                             |            | 873         |         |      |            | (462       | )      
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|Net cash used in investing activities     |                                                                                   |                                                                             | (3,850,466 | )           |         |      | (3,297,407 | )         
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|FINANCING ACTIVITIES                      |                                                                                   |                                                                             |            |             |         |      |            |           
|                                          | Repurchase of preferred stock                                                     |                                                                             |            | (50,000     | )       |      |            |           |        
|                                          | Proceeds from debt financing                                                      |                                                                             |            | 10,810,044  |         |      |            | 7,981,760  |        
|                                          | Payments in reduction of debt financing                                           |                                                                             |            | (8,193,454  | )       |      |            | (5,933,625 | )      
|                                          | Debt issue costs                                                                  |                                                                             |            | (12,439     | )       |      |            | (11,257    | )      
|                                          | (Decrease) increase in customer deposits                                          |                                                                             |            | (104,902    | )       |      |            | 140,238    |        
|                                          | Payment of common and preferred dividends                                         |                                                                             |            | (44,635     | )       |      |            | (86,137    | )      
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|Net cash provided by financing activities |                                                                                   |                                                                             | 2,404,614  |             |         |      | 2,090,979  |           
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|(Decrease) increase in cash               |                                                                                   |                                                                             | (2,329     | )           |         |      | 7,157      |           
|Cash at beginning of period               |                                                                                   |                                                                             | 79,383     |             |         |      | 134,653    |           
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           
|                                          | Cash at end of period                                                             |                                                                             | $          | 77,054      |         |      | $          | 141,810    |        
|                                          |                                                                                   |                                                                             |            |             |         |      |            |           

-6-



---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(Dollars in thousands)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

|                                            |                                                                           |  |             |          |      |  |   |         | 
|------------------------------------------- | ------------------------------------------------------------------------- |  | ----------- | -------- | ---- |  | - | ------- | 
|                                            |                                                                           |  | 2002        |          | 2001
|                                            |                                                                           |  |             |          |     
|                                            |                                                                           |  | (Unaudited)
|Cash paid (received) during the period for: |                                                                           |  |             |          |      |  |   |        
|                                            | Interest (net of amount capitalized of
$44,968 (2002) and $44,220 (2001)) |  | $           | 465,809  |      |  | $ | 499,725 | 
|                                            | Income taxes (net of refunds)                                             |  |             | (152,450 | )    |  |   | 5,204   | 

2002:



| |  | Notes in the amount of $28,775 were received as partial payment in exchange
for flight equipment sold with a net book value of $46,242.                        
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | One aircraft was received in exchange for notes receivable in the amount of
$10,968.                                                                           
|
| |  | Pursuant to an agreement with the holder, the Company cancelled the
outstanding shares of Series A Preferred Stock and issued 3,951,398 shares
of common stock.

2001:



| |  | One aircraft was received in exchange for notes receivable in the amount of
$18,136.
| |  | ------------------------------------------------------------------------------------
|
| |  | One aircraft with net book value of $11,372 was contributed to a joint
venture.     

See notes to condensed consolidated financial statements.

-7-



---



##### Table of Contents






INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(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.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain reclassifications have been made to the 2001 unaudited
condensed consolidated financial statements to conform to the 2002
presentation. Operating results for the nine months ended September 30,
2002 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2002. 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 for the year ended
December 31, 2001.



|B. |  | Derivative Activities
|-- |  | ---------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company uses derivatives to manage exposures to interest rate and
foreign currency risks. During the nine months ended September 30, 2002, 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 non-hedging instruments:                              |                                                  |   |       |        
|                                                                 | Fair value of non-hedging instruments            |   | $     | 7,267   |  
|Related to previous designated fair value hedging relationships: |                                                  |   |       |        
|                                                                 | Fair value of hedging instruments                |   |       | (18,133 | )
|                                                                 | Offsetting changes in fair value of hedged items |   |       | 19,093  |  
|                                                                 | Ineffectiveness related to cash flow hedges      |   |       | (255    | )
|                                                                 |                                                  |   |       |        
|Total effect on earnings                                         |                                                  | $ | 7,972 |        
|                                                                 |                                                  |   |       |        



| |  | During the nine months ended September 30, 2002, $49,152 (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 $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.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-8-



---



##### Table of Contents






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.

-9-



---



##### Table of Contents








|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Financial Condition

The Company borrows funds for the purchase of flight equipment,
including funds for progress payments during the construction phase,
principally on an unsecured basis from various sources. As of September 30,
2002, the Company had committed to purchase 493 aircraft from Airbus and
Boeing at an estimated aggregated purchase price of $29.4 billion for
delivery through 2010 and options to purchase 38 additional aircraft at an
estimated aggregate purchase price of approximately $2.4 billion. The
Company currently expects to fund expenditures for capital requirements as
well as liquidity needs from a combination of available cash balances,
internally generated funds and proceeds from financing arrangements. The
Companys debt financing and capital lease obligations were comprised of the
following at the following dates:

|                                                 |                                                           |   |                        |            |              |   |           |            |  
|------------------------------------------------ | --------------------------------------------------------- | - | ---------------------- | ---------- | ------------ | - | --------- | ---------- | -
|                                                 |                                                           |   | September 30,          |            | December 31,
|                                                 |                                                           |   | 2002                   |            | 2001        
|                                                 |                                                           |   |                        |            |             
|                                                 |                                                           |   | (Dollars in thousands)
|Public term debt with single maturities          |                                                           | $ | 7,355,775              |            |              | $ | 4,796,330 |           
|Foreign Currency Adjustment                      |                                                           |   | 143,140                |            |              |   | (92,129   | )         
|Public medium-term notes with varying maturities |                                                           |   | 4,907,600              |            |              |   | 4,809,000 |           
|Capital lease obligations                        |                                                           |   | 295,910                |            |              |   | 365,289   |           
|Bank and other term debt                         |                                                           |   | 2,168,413              |            |              |   | 2,368,968 |           
|                                                 |                                                           |   |                        |            |              |   |           |           
|                                                 | Total term debt, bank debt, and capital lease obligations |   |                        | 14,870,838 |              |   |           | 12,247,458 |  
|Commercial paper                                 |                                                           |   | 3,730,343              |            |              |   | 3,501,865 |           
|Deferred debt discount                           |                                                           |   | (36,048                | )          |              |   | (15,157   | )         
|                                                 |                                                           |   |                        |            |              |   |           |           
|                                                 | Total debt financing and capital lease obligations        |   | $                      | 18,565,133 |              |   | $         | 15,734,166 |  
|                                                 |                                                           |   |                        |            |              |   |           |           
|Selected interest rates and ratio:               |                                                           |   |                        |            |              |   |           |           
|                                                 | Composite interest rate                                   |   |                        | 4.95       | %            |   |           | 5.07       | %
|                                                 | Percentage of total debt at fixed rates                   |   |                        | 79.13      | %            |   |           | 78.81      | %
|                                                 | Composite interest rate on fixed rate debt                |   |                        | 5.74       | %            |   |           | 5.78       | %
|                                                 | Bank prime rate                                           |   |                        | 4.75       | %            |   |           | 4.75       | %

-10-



---



##### Table of Contents





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

Public Debt

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

|                                                                                                |  |                       |       |                       |  |                        |       |                      |  |   |       |     |  |   |       |    
|----------------------------------------------------------------------------------------------- |  | --------------------- | ----- | --------------------- |  | ---------------------- | ----- | -------------------- |  | - | ----- | --- |  | - | ----- | ---
|                                                                                                |  | Maximum               |       | Sold as of            |  | Sold as of             |       | Sold as of          
|                                                                                                |  | Offering              |       | December 31, 2001 (a) |  | September 30, 2002 (a) |       | October 31, 2002 (a)
|                                                                                                |  |                       |       |                       |  |                        |       |                     
|                                                                                                |  | (Dollars in millions)
|Registration
statement dated
May 10, 2001
(including
$2.350 billion
Medium-Term Note
program)   |  | $                     | 3,500 | (f)                   |  | $                      | 3,100 |                      |  | $ | 3,500 | (f) |  | $ | 3,500 | (f)
|Registration
statement dated
January 28, 2002
(including $1.0
billion
Medium-Term Note
program) |  |                       | 4,500 | (f)                   |  |                        |      |                      |  |   | 2,780 |     |  |   | 2,905 |    
|Euro Medium-Term
Note Programme
dated May 2002                                                  |  |                       | 4,000 | (b)                   |  |                        | 771   | (c)                  |  |   | 2,314 | (c) |  |   | 2,314 | (c)



---

|(a) |  | Includes amounts outstanding under Medium-Term Note programs
implemented under each of the registration statements.                                                                                                                   
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | The Company increased its Euro Medium-Term Note Programme during
the second quarter in 2002 from $2.0 billion to $4.0 billion under
which an additional 1.25 billion and £300 million in notes were sold
as of September 30, 2002.   
|   
|   
|   
|   
|(c) |  | The Company has hedged the foreign currency risk of the notes
through operating lease payments or derivatives.                                                                                                                        
|   
|   
|   
|   
|(d) |  | Excludes shelf registrations for which the maximum offering had
been sold as of December 31, 2001.                                                                                                                                    
|   
|   
|   
|   
|(e) |  | The Company has filed a new registration statement in the amount of
$4.0 billion with the Securities and Exchange Commission.                                                                                                         
|   
|   
|   
|   
|(f) |  | The Company closed the registration statement dated May 10, 2001
with $0.5 billion unsold, which was rolled into the registration
statement dated January 28, 2002, increasing the maximum offering from
$4.0 billion to $4.5 billion.

Capital Lease Obligations

The Company has Export Credit Lease financings which provide ten year,
amortizing loans in the form of capital lease obligations. The interest rate
on 62.5% of the original 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.

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
from 1999 through 2001. The Company had the right, but was not required, to
use the facility to fund 85% of each aircrafts purchase price. This
facility is guaranteed by various European Export Credit Agencies.
The 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.

Commercial Paper

The Company 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. It is the Companys intention to sell
commercial paper not to exceed one and one half times the aggregate amount
of the backup facilities available (see Bank Commitments). The weighted
average interest rate of the Companys Commercial Paper Program was 1.80%
for the nine months ended September 30, 2002 and 4.10% for the year ended
December 31, 2001. The composite commercial paper rate was 1.80% and 2.24%
at September 30, 2002 and December 31, 2001, respectively.

-11-



---



##### Table of Contents





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

Bank Commitments

As of September 30, 2002, the Company had committed revolving loans and
lines of credit with 20 commercial banks aggregating $2.85 billion. These
revolving loans and lines of credit principally 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% over
LIBOR 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. As of October 18, 2002, the Company replaced $1.85 billion of its
committed credit agreements with a new 364 day facility
with a one year term-out option in the amount of $2.15 billion. This brings the
total available credit agreements to $3.15 billion.

Other

In 1995, 1996 and 1997, the Company, through subsidiaries, entered into
sale-leaseback transactions providing proceeds to the Company in the amounts
of $413.0 million, $507.6 million and $601.9 million, respectively, each
relating to seven aircraft. The transactions resulted in the sale and
leaseback of these aircraft 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. As of September 30, 2002, the Company had
repurchased three aircraft which were sold to third parties. If the Company
decides not to negotiate extensions of the one year operating lease options
as they terminate in December 2002 and September 2003 and 2004, it will be
required to borrow additional funds to reacquire the assets. The estimated
remaining minimum lease payments (exclusive of the interest component of
rent) and buy-back amounts, assuming the transactions mature as scheduled,
are $266.5 million (2002), $390.8 million (2003) and $462.4 million (2004).

The Company does not have any other relationships with unconsolidated
entities, which would 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.

In the normal course of business, the Company employs a variety of
derivative products to manage its exposure to interest rates and the
resulting impact of changes in interest rates on earnings, with the
objective to lower its overall borrowing cost and to maintain 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, who 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. It is managements belief that any failure of the instruments or
counterparty to perform under the derivative contracts would have an
immaterial impact on the Companys financial condition and results of
operations.

-12-



---



##### Table of Contents





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

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 borrow on, 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. Should this occur the Company would seek alternative sources of
funding, including issuance of bonds under its existing shelf registration
statements. In addition, the Company has the ability, at its option, to draw
upon its revolving loans and lines of credit. The Company may also, from
time to time, enter into additional short term borrowings.

The Company repurchased $50.0 million of its Market Auction Preferred
Stock, cancelled $400.0 million of its Series A Preferred Stock and issued
3,951,398 shares of its common stock during the nine months ended September
30, 2002.

The following summarizes the Companys contractual obligations at
September 30, 2002, 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 Year
|                                                     |  |                               
|                                                     |  | Total                          |            | 2002 |  | 2003 |           | 2004 |  | 2005 |           | 2006 |  | Thereafter
|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |           
|                                                     |  | (Dollars in thousands)        
|Public and Bank
Term Debt                            |  | $                              | 14,431,788 |      |  | $    | 616,720   |      |  | $    | 3,505,674 |      |  | $          | 3,200,623 |  |  | $ | 1,800,549 |  |  | $ | 1,234,174 |  |  | $ | 4,074,048  | 
|Capital Lease
Obligations                            |  |                                | 295,910    |      |  |      | 35,288    |      |  |      | 111,745   |      |  |            | 105,194   |  |  |   | 43,683    |  |  |   |          |  |  |   |           | 
|Commercial Paper                                     |  |                                | 3,730,343  |      |  |      | 2,884,093 |      |  |      | 846,250   |      |  |            |          |  |  |   |          |  |  |   |          |  |  |   |           | 
|Operating Leases                                     |  |                                | 128,670    |      |  |      | 796       |      |  |      | 3,276     |      |  |            | 11,257    |  |  |   | 11,404    |  |  |   | 8,491     |  |  |   | 93,446     | 
|Operating Leases
under
Sales-Lease-Back
Transactions |  |                                | 1,119,658  |      |  |      | 266,457   |      |  |      | 390,810   |      |  |            | 462,391   |  |  |   |          |  |  |   |          |  |  |   |           | 
|Purchase
Commitments                                 |  |                                | 29,414,100 |      |  |      | 1,142,700 |      |  |      | 4,739,100 |      |  |            | 4,206,600 |  |  |   | 4,988,600 |  |  |   | 4,412,400 |  |  |   | 9,924,700  | 
|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |            |           |  |  |   |           |  |  |   |           |  |  |   |            | 
|Total                                                |  | $                              | 49,120,469 |      |  | $    | 4,946,054 |      |  | $    | 9,596,855 |      |  | $          | 7,986,065 |  |  | $ | 6,844,236 |  |  | $ | 5,655,065 |  |  | $ | 14,092,194 | 
|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |            |           |  |  |   |           |  |  |   |           |  |  |   |            | 

-13-



---



##### Table of Contents





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

Contingent Commitments

|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |           | 
|-------------------------------- |  | ------------------------------------- | --------- | ---- |  | ---- | ------ | ---- |  | ---- | ------- | ---- |  | ---------- | ------- |  |  | - | ------- |  |  | - | ------- |  |  | - | --------- | 
|                                 |  | Contingency Expiration by Fiscal Year
|                                 |  |                                      
|                                 |  | Total                                 |           | 2002 |  | 2003 |        | 2004 |  | 2005 |         | 2006 |  | Thereafter
|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |           
|                                 |  | (Dollars in thousands)               
|Purchase Options on
New Aircraft |  | $                                     | 2,367,800 |      |  |      |       |      |  |      |        |      |  | $          | 357,100 |  |  | $ | 474,000 |  |  | $ | 726,400 |  |  | $ | 810,300   | 
|Put Options (a)                  |  |                                       | 679,110   |      |  |      |       |      |  | $    | 231,614 |      |  |            | 67,422  |  |  |   | 256,658 |  |  |   |        |  |  |   | 123,416   | 
|Asset Value
Guarantees (a)       |  |                                       | 208,609   |      |  | $    | 55,420 |      |  |      | 63,000  |      |  |            | 4,726   |  |  |   | 11,041  |  |  |   | 8,178   |  |  |   | 66,244    | 
|Loan Guarantees (a)              |  |                                       | 52,740    |      |  |      | 471    |      |  |      | 26,184  |      |  |            | 12,193  |  |  |   | 3,000   |  |  |   | 6,000   |  |  |   | 4,892     | 
|Lines of Credit                  |  |                                       | 10,607    |      |  |      | 10,607 |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |          | 
|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |           | 
|Total                            |  | $                                     | 3,318,866 |      |  | $    | 66,498 |      |  | $    | 320,798 |      |  | $          | 441,441 |  |  | $ | 744,699 |  |  | $ | 740,578 |  |  | $ | 1,004,852 | 
|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |           | 



---

|(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.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-14-



---



##### Table of Contents





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

Results of Operations- Three months ended September 30, 2002 versus 2001.

Revenues from the rentals of flight equipment increased 8.4% to $686.8
million in 2002 compared to $633.7 million in 2001, 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. Revenues were also
negatively impacted by lower lease rates and restructured rents, as a result of
a slowdown of the airline industry that was exacerbated after the September 11,
2001 terrorist attacks. The Companys lease margin (lease revenue
less total expenses as a percentage of lease revenue) decreased to 21.8% in
2002 compared to 25.8% in 2001. The Company expects these factors to further
negatively impact revenues in the fourth quarter of 2002 and beyond. At
September 30, 2002 the Companys leased fleet consisted of 542 aircraft
compared to a fleet of 455 aircraft at September 30, 2001. The cost of the
leased fleet, which includes aircraft subject to sale-lease back transactions
from which rental income is earned, increased to $29.7 billion in 2002 compared
to $24.9 billion in 2001.

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 flight equipment on a principal and commission basis. Revenues from flight
equipment marketing increased to $15.3 million in 2002 compared to $14.3
million in 2001 as a result of the type and net book value of the company owned
equipment sold in each of the quarters. The Company sold two aircraft and one
engine during the third quarter of 2002, compared to five aircraft during the
third quarter of 2001.

Interest and other revenue increased to $28.1 million in 2002 compared to
$12.8 million in 2001 primarily due to forfeitures of security and other
deposits and contract termination fees resulting from nonperformance by
customers and manufacturers.

Interest expense increased to $218.4 million in 2002 compared to $188.9
million in 2001 as a result of an increase in average debt outstanding, to
finance aircraft acquisitions (excluding the effect of debt discount and
foreign exchange adjustments), to $17.8 billion in 2002 compared to $14.8
billion in 2001. This increase was partially offset by a decrease in the
average composite borrowing rate to 4.99% in 2002 compared to 5.35% in 2001.
The Companys composite borrowing rate fluctuated as follows:

|                     |  |      |      |      |  |        |      |   |  |  |       |   
|-------------------- |  | ---- | ---- | ---- |  | ------ | ---- | - |  |  | ----- | --
|                     |  | 2002 |      | 2001 |  | Change
|                     |  |      |      |      |  |       
|Beginning of Quarter |  |      | 5.03 | %    |  |        | 5.49 | % |  |  | (0.46 | )%
|End of Quarter       |  |      | 4.95 | %    |  |        | 5.21 | % |  |  | (0.26 | )%
|Average              |  |      | 4.99 | %    |  |        | 5.35 | % |  |  | (0.36 | )%

Interest expense for the three months ended September 30, 2002 includes a $5.3
million benefit related to hedging activities.

Depreciation of flight equipment increased 19.1% to $247.6 million in 2002
compared to $207.9 million in 2001 due to the increased cost of the fleet.

The Company, in prior periods, has entered into sale-leaseback
transactions. Currently 18 aircraft are accounted for under these
transactions. Flight equipment rent decreased to $19.3 million in 2002
compared to $25.6 million in 2001 due to 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 decreased to $28.5 million in 2002 compared to
$32.1 million in 2001. The cumulative effect of favorable payout factors
realized in the third quarter resulted in a reduction in the reserve rate used
in calculating the provision for overhauls. Further, the Company experienced
lower overhaul revenue collections as a result of an increase in restructured
overhaul payments, a slowdown in the economy and the September 11, 2001
terrorist attacks.

Selling, general and administrative expenses increased to $23.6 million in
2002 compared to $15.6 million in 2001 primarily due to an increase in costs
related to the reconfiguration and re-delivery of aircraft from one lessee to
another.

The provision for income taxes decreased to $51.5 million in 2002 compared
to $63.1 million in 2001. The effective tax rate decreased to 26.7% from 33.1%
in the third quarter 2001 compared to 2002. The decrease arose from the
periodic reevaluation of deferred taxes and was attributable to a reduction in
the apportionment factor used in filing AIGs unitary return. The impact on the
provision for income taxes from adjustment to deferred taxes was $13.9 million
in the third quarter, net of the effect of federal taxes.

-15-



---



##### Table of Contents





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

Results of Operations- Nine months ended September 30, 2002 versus 2001.

Revenues from the rentals of flight equipment increased 7.6% to $1,976.2
million in 2002 compared to $1,836.9 million in 2001, 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. Revenues were also
negatively impacted by lower lease rates and restructured rents, as a result of
a slowdown of the airline industry that was exacerbated after the September 11,
2001 terrorist attacks. The Companys lease margin (lease revenue
less total expenses as a percentage of lease revenue) decreased to 23.1% in
2002 compared to 23.8% in 2001. The Company expects these factors to further
negatively impact revenues in the fourth quarter of 2002 and beyond. At
September 30, 2002 the Companys leased fleet consisted of 542 aircraft
compared to a fleet of 455 aircraft at September 30, 2001. The cost of the
leased fleet, which includes aircraft subject to sale-lease back transactions
from which rental income is earned, increased to $29.7 billion in 2002 compared
to $24.9 billion in 2001.

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 flight equipment on a principal and commission basis. Revenues from flight
equipment marketing decreased to $34.9 million in 2002 compared to $53.2
million in 2001 primarily as a result of a decrease in third party flight
equipment marketing commissions.

Interest and other
revenue increased to $88.1 million in 2002 compared to
$50.7 million in 2001 primarily due to forfeitures of security deposits and
contract termination fees resulting from nonperformance by customers and
manufacturers.

Interest expense increased to $625.5 million in 2002 compared to $594.6
million in 2001 as a result of an increase in average debt outstanding, to
finance aircraft acquisitions (excluding the effect of debt discount and
foreign exchange adjustments), to $17.1 billion in 2002 compared to $14.4
billion in 2001. This increase was partially offset by a decrease in the
average composite borrowing rate to 5.01% in 2002 compared to 5.79% in 2001.
The Companys composite borrowing rate fluctuated as follows:

|                         |  |      |      |      |  |        |      |   |  |  |       |   
|------------------------ |  | ---- | ---- | ---- |  | ------ | ---- | - |  |  | ----- | --
|                         |  | 2002 |      | 2001 |  | Change
|                         |  |      |      |      |  |       
|Beginning of nine months |  |      | 5.07 | %    |  |        | 6.37 | % |  |  | (1.30 | )%
|End of nine months       |  |      | 4.95 | %    |  |        | 5.21 | % |  |  | (0.26 | %)
|Average                  |  |      | 5.01 | %    |  |        | 5.79 | % |  |  | (0.78 | )%

Interest expense for the nine months ended September 30, 2002 includes an $8.0
million benefit related to hedging activities.

Depreciation of flight equipment increased 18.5% to $700.0 million in 2002
compared to $590.6 million in 2001 due to the increased cost of the fleet.

The Company, in prior periods, has entered into sale-leaseback
transactions. Currently 18 aircraft are accounted for under these
transactions. Flight equipment rent decreased to $58.1 million in 2002
compared to $86.5 million in 2001 due to principal amortization,
a decrease in the lease rates
resulting from a decrease in interest rates affecting the floating rate
component of the lease rates, and the repurchase of one aircraft in
the third quarter of 2001.

Provision for overhauls decreased to $68.6 million in 2002 compared to
$78.2 million in 2001. The cumulative effect of favorable payout factors
realized in the second and third quarters resulted in a reduction in the
reserve rate used in calculating the provision for overhauls. Further, the
Company experienced lower overhaul revenue collections as a result of an
increase in restructured overhaul payments, a slowdown in the economy and the
September 11, 2001 terrorist attacks.

Selling, general and administrative expenses increased to $67.3 million in
2002 compared to $50.4 million in 2001 primarily due to an increase in costs
related to the reconfiguration and re-delivery of aircraft from one lessee to
another.

The provision for income taxes increased to $190.0 million in 2002
compared to $187.4 million in 2001. The effective tax rate decreased to 32.7%
from 34.7% for the nine months of 2001 compared to 2002. The decrease arose
from the periodic reevaluation of deferred taxes and was attributable to a
reduction in the apportionment factor used in filing AIGs unitary return. The
impact on the provision for income taxes from adjustment to deferred taxes was
$13.9 million in the third quarter, net of the effect of federal taxes.

-16-



---



##### 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, aircraft residual values at maturity of the lease
contracts 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 September 30, 2002 and December 31, 2001
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 as of September 30, 2002 and December
31, 2001:

|              |  |                       |      |                   |  |     |      |         |  |      |      |     |  |   |     |  |  |   |      |  |  |   |     | 
|------------- |  | --------------------- | ---- | ----------------- |  | --- | ---- | ------- |  | ---- | ---- | --- |  | - | --- |  |  | - | ---- |  |  | - | --- | 
|              |  | ILFC Market Risk     
|              |  |                      
|              |  | September 30, 2002    |      | December 31, 2001
|              |  |                       |      |                  
|              |  | (Dollars in millions)
|              |  | Average               |      | High              |  | Low |      | Average |  | High |      | Low
|              |  |                       |      |                   |  |     |      |         |  |      |      |    
|Combined      |  | $                     | 23.2 |                   |  | $   | 42.8 |         |  | $    | 10.1 |     |  | $ | 9.8 |  |  | $ | 13.3 |  |  | $ | 6.8 | 
|Interest Rate |  |                       | 23.1 |                   |  |     | 42.8 |         |  |      | 10.1 |     |  |   | 9.8 |  |  |   | 13.3 |  |  |   | 6.8 | 
|Currency      |  |                       | 0.3  |                   |  |     | 1.1  |         |  |      | 0.0  |     |  |   | 0.0 |  |  |   | 0.1  |  |  |   | 0.0 | 

-17-



---



##### Table of Contents






ITEM 4.     CONTROLS AND
PROCEDURES

During the 90 day period before the filing of 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.

-18-



---



##### 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.
|
| | b) |  | Reports on Form 8-K:                                                                     
|
| |    |  | None.                                                                                    

-19-



---



##### 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 CORPORATION



|November 12, 2002 | /S/ Steven F. Udvar-HazySTEVEN F. UDVAR-HAZY
Chairman of the Board and
Chief Executive Officer
|----------------- | ----------------------------------------------------------------------------------------------



|November 12, 2002 | /S/ Alan H. LundALAN H. LUND
Vice Chairman, Chief Financial Officer
and Chief Accounting Officer
|----------------- | ------------------------------------------------------------------------------------------------

-20-



---



##### Table of Contents






CERTIFICATIONS

I, Steven F. Udvar-Hazy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of International Lease
Finance Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6. The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

/S/ Steven F. Udvar-Hazy

---

STEVEN F. UDVAR-HAZY
Chairman of the Board andChief Executive Officer


-21-



---



##### Table of Contents



CERTIFICATIONS

I, Alan H. Lund, certify that:

1. I have reviewed this quarterly report on Form 10-Q of International Lease
Finance Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6. The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002

/S/ Alan H. Lund

---

ALAN H. LUND
Vice Chairman, Chief Financial Officerand Chief Accounting Officer


-22-



---



##### 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 Dividends

-23-