##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ________________________ to _________________________
 Commission file number 001-31616
 INTERNATIONAL LEASE FINANCE CORPORATION
  California
    
    22-3059110(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)10250 Constellation Blvd., Los Angeles, California
    
    90067(Address of principal executive offices)
    
    (Zip Code)
 (310) 788-1999
 þ o
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##### Table of Contents



EXPLANATORY NOTE
  RESTATEMENT
  -1-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 FORM 10-Q QUARTERLY REPORT
 
 TABLE OF CONTENTS
 PagePart I. Financial InformationItem 1. Financial Statements (Unaudited and Restated as to 2004)Condensed Consolidated Balance Sheets June 30, 2005 and December 31, 2004
    
    
    3Condensed Consolidated Statements of Income Three Months Ended June 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Income Six Months Ended June 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Comprehensive Income Three Months Ended June 30, 2005 and 2004
    
    
    5Condensed Consolidated Statements of Comprehensive Income Six Months Ended June 30, 2005 and 2004
    
    
    5Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2005 and 2004
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Cautionary Statement Regarding Forward Looking Information
    
    
    12Item 2. Managements Discussion and Analysis of the Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    25Part II. Other InformationItem 1. Legal Proceedings
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 6. Exhibits
    
    
    28Signatures
    
    
    29EXHIBIT 12EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
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##### 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)
 Restated
    
    RestatedJune 30,
    
    December 31,
    
    June 30,2005
    
    2004
    
    2004(Unaudited)ASSETSCash, including interest bearing accounts
of $85,849 (June 30, 2005), $97,682 (December 31, 2004) and $214,600
(June 30, 2004)
    
    $
    96,553
    
    
    $
    99,747
    
    
    $
    223,498Current income taxes
    
    
    118,835
    
    
    
    6,507
    
    
    
    Notes receivable and net investment in finance and sales-type leases
    
    
    499,574
    
    
    
    519,739
    
    
    
    501,909Flight equipment under operating leases
    
    
    40,979,790
    
    
    
    36,580,296
    
    
    
    35,439,433Less accumulated depreciation
    
    
    6,695,397
    
    
    
    6,074,874
    
    
    
    5,495,84334,284,393
    
    
    
    30,505,422
    
    
    
    29,943,590Deposits on flight equipment purchases
    
    
    1,177,114
    
    
    
    1,250,168
    
    
    
    1,096,428Other assets
    
    
    290,151
    
    
    
    199,653
    
    
    
    368,810Derivative assets
    
    
    428,998
    
    
    
    1,191,602
    
    
    
    698,165Investments
    
    
    20,052
    
    
    
    22,979
    
    
    
    48,652Variable interest entities assets
    
    
    144,955
    
    
    
    152,417
    
    
    
    157,454Deferred debt issue costs  less accumulated amortization of
$77,655 (June 30, 2005), $77,112 (December 31, 2004) and $71,012
(June 30, 2004)
    
    
    83,833
    
    
    
    59,666
    
    
    
    59,064$
    37,144,458
    
    
    $
    34,007,900
    
    
    $
    33,097,570LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    328,734
    
    
    $
    264,276
    
    
    $
    290,994Current income taxes
    
    
    
    
    
    
    
    
    
    
    51,904Tax benefit sharing payable to AIG
    
    
    245,000
    
    
    
    245,000
    
    
    
    Debt financing, net of deferred debt discount of $46,188
(June 30, 2005),
$29,502 (December 31, 2004) and $26,352 (June
30, 2004)
    
    
    26,559,654
    
    
    
    23,136,016
    
    
    
    23,283,308Foreign currency translation adjustment related to foreign
currency denominated debt
    
    
    324,604
    
    
    
    1,215,809
    
    
    
    712,610Derivative liabilities
    
    
    53,316
    
    
    
    38,810
    
    
    
    25,184Capital lease obligations
    
    
    
    
    
    
    39,580
    
    
    
    82,147Security and other deposits on flight equipment
    
    
    904,062
    
    
    
    876,590
    
    
    
    862,008Rentals received in advance
    
    
    185,161
    
    
    
    160,878
    
    
    
    157,426Deferred income taxes
    
    
    2,880,231
    
    
    
    2,630,118
    
    
    
    2,444,106Variable interest entities liabilities
    
    
    64,689
    
    
    
    70,886
    
    
    
    76,726SHAREHOLDERS EQUITYMarket Auction Preferred Stock, $100,000 per share
liquidation value; Series A and B
each having 500 shares issued and outstanding
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Common stockno par value; 100,000,000 authorized shares,
42,198,119 issued and outstanding
    
    
    653,582
    
    
    
    653,582
    
    
    
    653,582Paid-in capital
    
    
    585,913
    
    
    
    579,955
    
    
    
    579,955Accumulated other comprehensive (loss) income
    
    
    59,574
    
    
    
    22,825
    
    
    
    (3,766
    )Retained earnings
    
    
    4,199,938
    
    
    
    3,973,575
    
    
    
    3,781,386Total shareholders equity
    
    
    5,599,007
    
    
    
    5,329,937
    
    
    
    5,111,157$
    37,144,458
    
    
    $
    34,007,900
    
    
    $
    33,097,570
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(Dollars in thousands)
 Restated2005
    
    2004(Unaudited)REVENUESRental of flight equipment
    
    $
    857,420
    
    
    $
    733,395Flight equipment marketing
    
    
    21,439
    
    
    
    27,389Interest and other
    
    
    14,827
    
    
    
    18,740893,686
    
    
    
    779,524EXPENSESInterest
    
    
    286,414
    
    
    
    235,915Depreciation of flight equipment
    
    
    343,549
    
    
    
    302,116Provision for overhauls
    
    
    49,826
    
    
    
    37,574Selling, general and administrative
    
    
    29,980
    
    
    
    30,302709,769
    
    
    
    605,907INCOME BEFORE INCOME TAXES
    
    
    183,917
    
    
    
    173,617Provision for income taxes
    
    
    60,360
    
    
    
    54,880NET INCOME
    
    $
    123,557
    
    
    $
    118,737
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Dollars in thousands)
 Restated2005
    
    2004(Unaudited)REVENUESRental of flight equipment
    
    $
    1,655,521
    
    
    $
    1,431,355Flight equipment marketing
    
    
    37,000
    
    
    
    35,193Flight equipment marketing  securitization (Note D)
    
    
    
    
    
    
    34,117Interest and other
    
    
    29,989
    
    
    
    41,7541,722,510
    
    
    
    1,542,419EXPENSESInterest
    
    
    526,820
    
    
    
    464,425Depreciation of flight equipment
    
    
    662,440
    
    
    
    586,896Provision for overhauls
    
    
    93,969
    
    
    
    72,475Selling, general and administrative
    
    
    66,346
    
    
    
    55,2611,349,575
    
    
    
    1,179,057INCOME BEFORE INCOME TAXES
    
    
    372,935
    
    
    
    363,362Provision for income taxes
    
    
    120,456
    
    
    
    115,516NET INCOME
    
    $
    252,479
    
    
    $
    247,846
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(Dollars in thousands)
 Restated2005
    
    2004(Unaudited)NET INCOME
    
    $
    123,557
    
    
    $
    118,737OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAXNet changes in cash flow hedges
    
    
    (11,343
    )
    
    
    31,816Change in unrealized appreciation on securities available for sale
    
    
    (2,122
    )
    
    
    (13,465
    )
    
    
    31,816COMPREHENSIVE INCOME
    
    $
    110,092
    
    
    $
    150,553
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Dollars in thousands)
 Restated2005
    
    2004(Unaudited)NET INCOME
    
    $
    252,479
    
    
    $
    247,846OTHER COMPREHENSIVE INCOME, NET OF TAXNet changes in cash flow hedges
    
    
    39,017
    
    
    
    24,162Change in unrealized appreciation on securities available for sale
    
    
    (2,268
    )
    
    
    36,749
    
    
    
    24,162COMPREHENSIVE INCOME
    
    $
    289,228
    
    
    $
    272,008
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Dollars in thousands)
 Restated2005
    
    2004(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    252,479
    
    
    $
    247,846Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation of flight equipment
    
    
    662,440
    
    
    
    586,896Deferred income taxes
    
    
    230,326
    
    
    
    77,637Change in derivative instruments
    
    
    388,262
    
    
    
    2,309Foreign currency adjustment of non-US$ denominated debt
    
    
    (442,333
    )
    
    
    ( 76,401
    )Amortization of deferred debt issue costs
    
    
    17,332
    
    
    
    12,455Change in unamortized debt discount
    
    
    (16,686
    )
    
    
    (2,031
    )Other
    
    
    9,550
    
    
    
    (6,296
    )Changes in operating assets and liabilities:(Increase) decrease in other assets
    
    
    51,785
    
    
    
    130,306(Decrease) increase in current income taxes payable
    
    
    (112,328
    )
    
    
    33,937Increase in accrued interest and other payables
    
    
    58,262
    
    
    
    44,520Increase in rentals received in advance
    
    
    24,283
    
    
    
    10,555Net cash provided by operating activities
    
    
    1,123,372
    
    
    
    1,061,733INVESTING ACTIVITIESAcquisition of flight equipment for operating leases
    
    
    (4,822,093
    )
    
    
    (3,567,892
    )Acquisition of flight equipment for finance leases
    
    
    
    
    
    
    (43,247
    )Decrease in deposits and progress payments
    
    
    73,054
    
    
    
    158,646Proceeds from disposal of flight equipment  net of gain
    
    
    231,749
    
    
    
    1,045,796Advances on notes receivable
    
    
    (6,500
    )
    
    
    (65,492
    )Collections on notes receivable and finance leases
    
    
    35,333
    
    
    
    33,660Other
    
    
    3,381
    
    
    
    604Net cash used in investing activities
    
    
    (4,485,076
    )
    
    
    (2,437,925
    )FINANCING ACTIVITIESNet change in commercial paper
    
    
    2,064,395
    
    
    
    801,619Proceeds from debt financing
    
    
    3,766,218
    
    
    
    2,907,308Payments in reduction of debt financing, capital lease obligations
and synthetic lease obligations
    
    
    (2,429,869
    )
    
    
    (2,194,185
    )Debt issue costs
    
    
    (41,499
    )
    
    
    (19,654
    )Increase in customer deposits
    
    
    27,472
    
    
    
    18,094Payment of common and preferred dividends
    
    
    (20,936
    )
    
    
    (17,354
    )Net cash provided by financing activities
    
    
    3,365,781
    
    
    
    1,495,828Effect of exchange rate changes on cash
    
    
    (7,271
    )
    
    
    1,621Net (decrease) increase in cash
    
    
    (3,194
    )
    
    
    121,257Cash at beginning of period
    
    
    99,747
    
    
    
    102,241Cash at end of period
    
    $
    96,553
    
    
    $
    223,498
 (Table continued on following page)
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(Dollars in thousands)
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 Restated2005
    
    2004(Unaudited)Cash paid (received) during the period for:Interest (net of amount capitalized
of $14,507 (2005) and $12,712
(2004))
    
    $
    510,623
    
    
    $
    472,559Income taxes, net
    
    
    2,459
    
    
    
    3,941
  Notes receivable in the amount of $13,286 were used as partial payment for the acquisition of
seven aircraft.Aircraft previously accounted for as operating leases were converted into sales-type leases in
the amount of $30,168.$5,179 was reclassed from Retained earnings to Paid-in capital as a result of an adjustment for
certain prior period compensation costs related to an incentive plan of ILFCs parent, AIG.Certain payments from aircraft and engine manufacturers in the amount of $129,628 reduced the
basis of Flight equipment under operating leases and increased Other assets.
  One aircraft was received in exchange for investment in finance leases and notes receivables in
the amount of $23,456.Notes in the amount of $2,910 were received as partial payment in exchange for flight equipment
sold with a net book value of $23,727.Other assets in the amount of $110,651 were received in exchange for aircraft sold into a
securitization, but not yet novated, with a net book value of $107,274.Certain payments from aircraft and engine manufacturers in the amount of $92,194 reduced the
basis of Flight equipment under operating leases and increased Other assets.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
(Unaudited)
 Basis of Preparation
  Restatement of Previously Issued Financial Statements
  Derivative Instruments
 Accounting for Derivative Instruments and Hedging Activities
 
    
    Documentation deficiencies related to portions of Euro denominated debt that ILFC had
designated as a hedge against future operating lease payments receivable denominated in
Euros. The review revealed that the documentation related to these hedges was
insufficient to meet the documentation criteria under SFAS 133 and it was concluded that
ILFC could not apply hedge accounting to the transactions. The economics of the
transactions are not affected.
    
    Certain Euro denominated cash accounts associated with the aforementioned operating
lease payments and certain foreign currency denominated debt required mark-to-spot treatment under Statement of Financial
Accounting Standards No. 52, Foreign Currency Translation, which were not properly
accounted for at the end of each quarter during the years 2004, 2003, 2002 and 2001.
    
    Documentation deficiencies related to four commercial paper swaps where portions of
ILFCs commercial paper program were swapped from floating into fixed interest rates.
The review revealed that the documentation related to these hedges was insufficient to
meet the documentation criteria under SFAS 133 and it was concluded that ILFC could not
apply hedge accounting to the transactions. The economics of the transactions are not
affected.
    
    Minor errors under SFAS 133 with respect to derivative instruments related to the
reclassification to income from Accumulated other comprehensive income. The corrections will also affect
derivative assets and liabilities and accrued interest.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005
(Unaudited)
  Certain Payments from Aircraft and Engine Manufacturers
    December 31, 2004
    
    June 30, 2004As Reported
    
    As Restated
    
    As Reported
    
    As RestatedConsolidated balance sheets:Cash
    
    $
    101,653
    
    
    $
    99,747
    
    
    $
    220,758
    
    
    $
    223,498Flight equipment under operating leases
    
    
    37,380,712
    
    
    
    36,580,296
    
    
    
    36,185,565
    
    
    
    35,439,433Accumulated depreciation
    
    
    (6,300,071
    )
    
    
    (6,074,874
    )
    
    
    (5,698,565
    )
    
    
    (5,495,843
    )Other assets
    
    
    119,415
    
    
    
    199,653
    
    
    
    278,901
    
    
    
    368,810Derivative assets
    
    
    1,210,908
    
    
    
    1,191,602
    
    
    
    730,341
    
    
    
    698,165Current income taxes receivable
    
    
    19,522
    
    
    
    6,507
    
    
    
    
    
    
    
    Total assets
    
    
    34,537,108
    
    
    
    34,007,900
    
    
    
    33,580,507
    
    
    
    33,097,570Current income taxes payable
    
    
    
    
    
    
    
    
    
    
    38,930
    
    
    
    51,904Foreign currency adjustment
    
    
    
    
    
    
    
    
    
    
    725,688
    
    
    
    712,610Deferred income taxes
    
    
    2,825,661
    
    
    
    2,630,118
    
    
    
    2,623,225
    
    
    
    2,444,106Accumulated other comprehensive income
(loss)
    
    
    (9,650
    )
    
    
    22,825
    
    
    
    (34,025
    )
    
    
    (3,766
    )Retained earnings
    
    
    4,339,715
    
    
    
    3,973,575
    
    
    
    4,115,361
    
    
    
    3,781,386Total shareholders equity
    
    
    5,663,602
    
    
    
    5,329,937
    
    
    
    5,414,873
    
    
    
    5,111,157
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005
(Unaudited)
  Three Months Ended
    
    Six Months EndedJune 30, 2004
    
    June 30, 2004As Reported
    
    As Restated
    
    As Reported
    
    As RestatedConsolidated statements of income:Rental of Flight Equipment
    
    $
    766,520
    
    
    $
    733,395
    
    
    $
    1,489,458
    
    
    $
    1,431,355Flight Equipment Marketing
    
    
    26,213
    
    
    
    27,389
    
    
    
    36,163
    
    
    
    35,193Flight Equipment Marketing -
Securitization
    
    
    
    
    
    
    
    
    
    
    25,402
    
    
    
    34,117Interest and Other
    
    
    17,757
    
    
    
    18,740
    
    
    
    39,295
    
    
    
    41,754Total revenues
    
    
    810,490
    
    
    
    779,524
    
    
    
    1,590,318
    
    
    
    1,542,419Interest Expense
    
    
    243,600
    
    
    
    235,915
    
    
    
    477,402
    
    
    
    464,425Depreciation
    
    
    313,400
    
    
    
    302,116
    
    
    
    609,009
    
    
    
    586,896Selling, general and administrative
    
    
    30,489
    
    
    
    30,302
    
    
    
    56,113
    
    
    
    55,262Total expenses
    
    
    625,063
    
    
    
    605,907
    
    
    
    1,214,999
    
    
    
    1,179,059Income before income taxes
    
    
    185,427
    
    
    
    173,617
    
    
    
    375,319
    
    
    
    363,360Provision for income taxes
    
    
    59,053
    
    
    
    54,880
    
    
    
    119,741
    
    
    
    115,516Net income (a)
    
    
    126,374
    
    
    
    118,737
    
    
    
    255,578
    
    
    
    247,844
 
 (a)
    
    The increase (decrease) in net income for the quarter and six months ended June 30,
2004 as a result of the restatement for the derivative instruments was $5,676 and $10,449,
respectively, and for the manufacturers payments was $(13,312) and $(18,181),
respectively. Hedging Activities
  (Dollars in thousands)(Income) loss related to derivative instruments:Changes in fair value of non-hedging instruments
    
    $
    (7,990
    )Changes in fair value of hedging instruments
    
    
    130,817Offsetting changes in fair value of hedged items
    
    
    (128,913
    )Ineffectiveness related to cash flow hedges
    
    
    (525
    )$
    (6,611
    )
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2005
(Unaudited)
  Flight Equipment Marketing  Securitization
 Flight Equipment Marketing
- Securitization
 Subsequent Event
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
 Forward-Looking Statements
 Managements Discussion and Analysis of Financial Condition
and Results of Operations  Recent Developments Risk Factors Affecting International
Lease Finance
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
  Restatement
  Managements Discussion and Analysis  Non-GAAP
Financial Measures"
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Restatement of Previously Issued Financial Statements and Recent Developments
 Restatement
   Risk Factors Affecting International Lease Finance Corporation
 Quantitative and Qualitative Disclosures about Market Risk.
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  
    
    Overall Airline Industry Risk
 Ø
    
    Demand for air travelØ
    
    Competition between carriersØ
    
    Fuel prices and availabilityØ
    
    Labor costs and stoppagesØ
    
    Maintenance costsØ
    
    Employee labor contractsØ
    
    Air traffic control infrastructure
constraintsØ
    
    Insurance costsØ
    
    Security, terrorism and warØ
    
    Health concernsØ
    
    Equity and borrowing capacityØ
    
    Environmental concernsØ
    
    Government regulationØ
    
    Interest rates
 
    
    Manufacturer Risk
    
    Borrowing Risks
 Ø
    
    LiquidityØ
    
    Interest rates
 
    
    Other Risks
 Ø
    
    Residual valueØ
    
    ObsolescenceØ
    
    Key personnelØ
    
    Foreign currency exchange rate risk
 " Managements
Discussion and Analysis of Financial Condition and Results of Operations
 Critical Accounting Policies and Estimates
   
    
    Lease Revenue
    
    Flight Equipment Marketing
    
    Flight Equipment
    
    Capitalized Interest
    
    Provision for Overhauls
 Managements Discussion and Analysis of Financial Condition and Results of Operations
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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Financial Condition
   June 30,
    
    December 31,2005
    
    2004(Dollars in thousands)Public term debt with single maturities
    
    $
    11,528,062
    
    
    $
    11,544,575Public medium-term notes with varying maturities
    
    
    5,486,048
    
    
    
    5,972,171Capital lease obligations
    
    
    
    
    
    
    39,580Bank and other term debt
    
    
    4,852,090
    
    
    
    2,973,525Total term debt, bank debt, and capital lease obligations
    
    
    21,866,200
    
    
    
    20,529,851Commercial paper
    
    
    4,739,642
    
    
    
    2,675,247Deferred debt discount
    
    
    (46,188
    )
    
    
    (29,502
    )Total debt financing and capital lease obligations
    
    $
    26,559,654
    
    
    $
    23,175,596Selected interest rates and ratio:Composite interest rate
    
    
    4.52
    %
    
    
    4.34
    %Percentage of total debt at fixed rates
    
    
    65.45
    %
    
    
    66.21
    %Composite interest rate on fixed rate debt
    
    
    4.94
    %
    
    
    5.07
    %Bank prime rate
    
    
    6.25
    %
    
    
    5.25
    %
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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Public Debt ( Exclusive of the Commercial Paper Program )
  Maximum
    
    Sold as of
    
    Sold as of
    
    Sold as ofOffering
    
    December 31, 2004
    
    June 30, 2005
    
    August 1, 2005(Dollars in millions)Registration
statement dated
December 20, 2002
(including $2.88
billion Medium-Term
Note Program and $1.0
billion Retail
Medium-Term Note
Program)
    
    $
    6,080
    (a)
    
    $
    5,593
    
    
    $
    5,632
    
    
    $
    5,632Registration
statement dated
December 28, 2004
(including $2.0
billion Medium Term
Note Program)
    
    
    7,045
    (b)
    
    
    
    
    
    
    1,700
    
    
    
    1,700Euro Medium-Term Note
Programme dated
May 2004 (c)(d)
    
    
    7,000
    
    
    
    4,475
    
    
    
    3,808
    
    
    
    3,808
 
 (a)
    
    Includes $1.08 billion, which was incorporated into the registration statement from
a prior registration statement, increasing the maximum offering from $5.0 billion to
$6.08 billion.(b)
    
    Includes $2.045 billion, which was incorporated into the registration statement
from a prior registration statement, increasing the maximum offering from $5.0 billion to
$7.045 billion.(c)
    
    We have hedged the foreign currency risk of the notes through operating lease
payments or derivatives.(d)
    
    As of July 1, 2005, this program expired and will be reestablished once new
language that is compliant with the Prospectus Directive has been approved. Capital Lease Obligations
  Bank Term Debt
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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Commercial Paper
 Bank Commitments
 Bank Commitments
   Other Variable Interest Entities
    Derivatives
  - 18 -




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Note B  Restatement
   Market Liquidity Risk
    - 19 -




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Existing Commitments (Exclusive of Interest)
 Commitments Due by Fiscal YearTotal
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    Thereafter(Dollars in thousands)Public and Bank
Term Debt
    
    $
    21,866,200
    
    
    $
    2,202,387
    
    
    $
    3,806,411
    
    
    $
    3,722,537
    
    
    $
    4,299,158
    
    
    $
    3,809,914
    
    
    $
    4,025,793Commercial Paper
    
    
    4,739,642
    
    
    
    4,739,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Leases
    
    
    98,185
    
    
    
    4,165
    
    
    
    8,629
    
    
    
    8,951
    
    
    
    9,303
    
    
    
    9,594
    
    
    
    57,543Purchase
Commitments (b)
    
    
    20,267,600
    
    
    
    1,550,600
    
    
    
    6,275,200
    
    
    
    5,430,200
    
    
    
    5,091,700
    
    
    
    1,552,700
    
    
    
    367,200Total
    
    $
    49,971,627
    
    
    $
    8,496,794
    
    
    $
    10,090,240
    
    
    $
    9,161,688
    
    
    $
    9,400,161
    
    
    $
    5,372,208
    
    
    $
    4,450,536
 Contingent Commitments
 Contingency Expiration by Fiscal YearTotal
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009
    
    Thereafter(Dollars in thousands)Purchase Options on New
Aircraft (b)
    
    $
    987,600
    
    
    $
    
    
    
    $
    
    
    
    $
    125,700
    
    
    $
    
    
    
    $
    861,900
    
    
    $
    Put Options (a)
    
    
    343,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343,550Asset Value Guarantees (a)
    
    
    63,689
    
    
    
    
    
    
    
    3,226
    
    
    
    9,541
    
    
    
    8,178
    
    
    
    
    
    
    
    42,744Loan Guarantees (a)
    
    
    142,480
    
    
    
    
    
    
    
    97,246
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,234Lines of Credit
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Total
    
    $
    1,587,319
    
    
    $
    
    
    
    $
    100,472
    
    
    $
    135,241
    
    
    $
    8,178
    
    
    $
    861,900
    
    
    $
    481,528
 
 (a)
    
    From time to time, we participate with airlines, banks and other financial
institutions to assist in financing aircraft by providing asset guarantees, put options,
or loan guarantees collateralized by aircraft. As a result, should we be called upon to
fulfill our obligations, we would have recourse to the value of the underlying aircraft.(b)
    
    The recorded basis of aircraft may be adjusted to reflect notional credits given by
the manufacturers in connection with the leasing of aircraft. Non-GAAP Financial Measures
 Lease Margin
 Other Variable Interest Entities
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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Six Months Ended
    
    Three Months EndedJune 30
    
    June 30(Dollars in millions)Restated
    
    
    
    
    
    Restated2005
    
    2004
    
    2005
    
    2004Total revenues
(A)
    
    $
    1,722.5
    
    
    $
    1,542.4
    
    
    $
    893.7
    
    
    $
    779.5Flight equipment
marketing
    
    
    (37.0
    )
    
    
    (69.3
    )
    
    
    (21.4
    )
    
    
    (27.4
    )Interest and
other
    
    
    (30.0
    )
    
    
    (41.8
    )
    
    
    (14.8
    )
    
    
    (18.7
    )Rental of flight
equipment (B)
    
    
    1,655.5
    
    
    
    1,431.3
    
    
    
    857.5
    
    
    
    733.4Total expenses
(C)
    
    
    1,349.6
    
    
    
    1,179.1
    
    
    
    709.8
    
    
    
    605.9VIE
expenses
    
    
    (9.8
    )
    
    
    (10.7
    )
    
    
    (4.6
    )
    
    
    (5.9
    )Adjusted total
expenses (D)
    
    
    1,339.8
    
    
    
    1,168.4
    
    
    
    705.2
    
    
    
    600.0Profit margin (A) 
(C) = (E)
    
    $
    372.9
    
    
    $
    363.3
    
    
    $
    183.9
    
    
    $
    173.6Lease margin (B) 
(D) = (F)
    
    $
    315.7
    
    
    $
    262.9
    
    
    $
    152.3
    
    
    $
    133.4Profit margin % (E)
divided by (A)
    
    
    21.6
    %
    
    
    23.6
    %
    
    
    20.6
    %
    
    
    22.3
    %Lease margin % (F)
divided by (B)
    
    
    19.1
    %
    
    
    18.4
    %
    
    
    17.8
    %
    
    
    18.2
    %
 Results
of Operations
  Overview
   - 21 -




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Increase2005
    
    2004
    
    (decrease)Beginning of Quarter
    
    
    4.49
    %
    
    
    4.34
    %
    
    
    0.15
    %End of Quarter
    
    
    4.52
    %
    
    
    4.15
    %
    
    
    0.37
    %Average
    
    
    4.51
    %
    
    
    4.25
    %
    
    
    0.26
    %
       Results
of Operations
  Overview
  Notes to
Condensed Consolidated Financial Statements Flight Equipment Marketing  Securitization
  - 22 -




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Increase2005
    
    2004
    
    (decrease)Beginning of Six Months
    
    
    4.34
    %
    
    
    4.53
    %
    
    
    (0.19
    )%End of Six Months
    
    
    4.52
    %
    
    
    4.15
    %
    
    
    0.37
    %Average
    
    
    4.43
    %
    
    
    4.34
    %
    
    
    0.09
    %
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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Value at Risk
     ILFC Market RiskSix months ended
    
    Year EndedJune 30, 2005
    
    December 31, 2004(Dollars in millions)Average
    
    High
    
    Low
    
    Average
    
    High
    
    LowCombined
    
    $
    91.0
    
    
    $
    111.7
    
    
    $
    65.0
    
    
    $
    69.6
    
    
    $
    86.3
    
    
    $
    34.6Interest Rate
    
    
    91.0
    
    
    
    112.4
    
    
    
    65.0
    
    
    
    69.7
    
    
    
    86.4
    
    
    
    35.0Currency
    
    
    0.8
    
    
    
    2.0
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    0.2
 - 24 -




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
  Derivative Instruments
 Accounting for Derivative Instruments and
Hedging Activities Foreign Currency Translation
 
    
    Documentation deficiencies related to portions of Euro denominated debt that
ILFC had designated as a hedge against future operating lease payments
receivable denominated in Euros. The review revealed that the documentation
related to these hedges was insufficient to meet the documentation criteria
under SFAS 133 and it was concluded that ILFC could not apply hedge accounting
to the transactions. The economics of the transactions are not affected.
    
    Certain Euro denominated cash accounts associated with the aforementioned
operating lease payments and certain foreign currency denominated debt required mark-to-spot treatment under SFAS
52, which were not properly accounted for at the end of each quarter during the
years 2004, 2003, 2002 and 2001.
    
    Documentation deficiencies related to four commercial paper swaps where
portions of ILFCs commercial paper program were swapped from floating into
fixed interest rates. The review revealed that the documentation related to
these hedges was insufficient to meet the documentation criteria under SFAS 133
and it was concluded that ILFC could not apply hedge accounting to the
transactions. The economics of the transactions are not affected.
    
    Minor errors under SFAS 133 with respect to derivative instruments related
to the reclasification to income from Accumulated other comprehensive income. The corrections
will also affect derivative assets and liabilities and accrued interest.
 Certain Payments from Aircraft and Engine from Manufacturers
   - 25 -




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
(CONTINUED)
    
    
    The Company did not maintain effective controls over the valuation and
presentation and disclosure of derivative transactions entered into prior to
the existence of SFAS 133. Specifically, we did not maintain adequate
documentation regarding the effectiveness of certain derivative transactions
used to hedge interest rate and foreign currency exchange rate risk. This
control deficiency resulted in the restatement of our consolidated financial
statements for the years 2004, 2003, 2002, 2001 and 2000 and the quarters of
2004 and 2003, as well as the six months ended June 30, 2005. Additionally,
this control deficiency could result in a misstatement to the financial
statement line items (Derivative assets, Derivative liabilities, Accumulated
other comprehensive income, and Interest expense) that would cause a material
misstatement to the annual or interim financial statements. Accordingly,
management concluded this control deficiency constitutes a material weakness.
    
    The Company did not maintain effective controls over the valuation and
presentation and disclosure of certain payments received from manufacturers.
This control deficiency resulted in the restatement of our consolidated
financial statements for the years 2004, 2003, 2002, 2001 and 2000 and the
quarters of 2004 and 2003, as well as the six months ended June 30, 2005.
Additionally, this control deficiency could result in a misstatement to the
revenue accounts that would cause a material misstatement to the annual or
interim financial statements. Accordingly, management concluded this control
deficiency constitutes a material weakness.
  Variable Interest Entities
  - 26 -




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##### Table of Contents



ITEM
4. CONTROLS AND PROCEDURES (CONTINUED)
  (C)
    
    Changes in Internal Control Over Financial Reporting
  (D)
    
    Remediation of Material Weaknesses in Internal Control Over Financial Reporting
  
    
    Improving training, education, accounting reviews and adding additional
staff as necessary, all designed to ensure that all relevant personnel involved
in derivatives transactions understand and apply hedge accounting in compliance
with SFAS 133.
    
    Improving training, education, accounting reviews and adding additional
staff as necessary, all designed to ensure that all relevant personnel involved
in the purchase of aircraft from the manufacturers understand the appropriate
accounting treatment for the funds received from the manufacturers, for the
related purchase of aircraft and engines and the subsequent lease of the
manufacturers aircraft.
    - 27 -




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 6. EXHIBITS
 a)
    
    Exhibits
 3.1
    
    Restated Articles of Incorporation of the Company, as
amended through December 9, 1992, filed November 3, 1993 (filed as an
exhibit to Registration Statement No. 33-50913 and incorporated herein by
reference).3.2
    
    Certificate of Determination of Preferences of
Series A Market Auction Preferred Stock (filed December 9, 1992 as an
exhibit to Registration Statement No. 33-54294 and incorporated herein by
reference).3.3
    
    Certificate of Determination of Preferences of
Series B Market Auction Preferred Stock (filed December 9, 1992 as an
exhibit to Registration Statement 33-54294 and incorporated herein by
reference).3.4
    
    Certificate of Determination of Preferences of
Series C Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.5
    
    Certificate of Determination of Preferences of
Series D Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.6
    
    Certificate of Determination of Preferences of
Series E Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.7
    
    Certificate of Determination of Preferences of
Series F Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.8
    
    Certificate of Determination of Preferences of
Series G Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference).3.9
    
    Certificate of Determination of Preferences of
Series H Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference).3.10
    
    Certificate of Determination of Preferences of
Preferred Stock of the Company (filed as an exhibit to Form 10-K for the
year ended December 31, 2001 and incorporated herein by reference).3.11
    
    By-Laws of the Company, including amendment thereto
dated August 31, 1990 (filed as an exhibit to Form 10-K for the year
ended December 31, 2003 and incorporated herein by reference).3.12
    
    Unanimous Written Consent of Sole Stockholder of
the Company, dated January 2, 2002, amending the Bylaws of the Company
(filed as an exhibit to Form 10-Q for the quarter ended June 30, 2003 and
incorporated herein by reference).10.1
    
    Agreement, dated as of October 28, 2004 among the
Company, Barclays Bank PLC and Export-Import Bank of the United States
(filed as an exhibit to the original Form 10-Q for the quarter ended
March 31, 2005 and incorporated herein by reference).12.
    
    Computation of Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends31.1
    
    Certification of Chairman of the Board and Chief
Executive Officer31.2
    
    Certification of Vice Chairman, Chief Financial
Officer and Chief Accounting Officer32.1
    
    Certification under 18 U.S.C., Section 1350
 - 28 -




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##### Table of Contents



SIGNATURES
   August 15, 2005
    
    /S/ Steven F. Udvar-HazySTEVEN F. UDVAR-HAZY
Chairman of the Board and
Chief Executive OfficerAugust 15, 2005
    
    /S/ Alan H. LundALAN H. LUND
Vice Chairman,
Chief Financial Officer
and Chief Accounting Officer
 - 29 -




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
   12.
    
    Computation of Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends31.1
    
    Certification of Chairman of the Board and Chief
Executive Officer31.2
    
    Certification of Vice Chairman, Chief Financial
Officer and Chief Accounting Officer32.1
    
    Certification under 18 U.S.C., Section 1350
 - 30 -