<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended...September 30, 1996...
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 22-3059110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1999 AVENUE OF THE STARS LOS ANGELES, CALIFORNIA 90067
(Address of principal executive (Zip Code)
offices)
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.
Class Outstanding at October 30, 1996
----- -------------------------------
Common Stock, no par value 35,818,122
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
INDEX
Part I. Financial Information: Page No.
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income
Three Months Ended September 30, 1996
and 1995 4
Condensed Consolidated Statements of Income
Nine Months Ended September 30, 1996
and 1995 5
Condensed Consolidated Statements of Cash
Flows Nine Months Ended September 30,
1996 and 1995 6
Note to Condensed Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis
of the Financial Condition and Results
of Operations 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<S> <C> <C>
September 30, December 31,
1996 1995
------------- -------------
(Unaudited)
ASSETS
Cash, including interest bearing accounts
of $25,640 (1996) and $59,624 (1995) $ 39,159 $ 87,097
Current income taxes receivable 50,108 30,803
Notes receivable 490,684 423,799
Net investment in finance and sales-
type leases 81,416 86,237
Flight equipment under operating leases 13,202,625 12,015,308
Less accumulated depreciation 1,415,341 1,252,438
---------- ----------
11,787,284 10,762,870
---------- ----------
Deposits on flight equipment purchases 888,960 805,570
Accrued interest, other receivables
and other assets 66,697 87,991
Investments 18,061 17,311
Deferred debt issue costs-less
accumulated amortization of $39,992
(1996) and $30,778 (1995) 24,681 27,504
---------- ----------
$13,447,050 $12,329,182
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables $ 230,029 $ 196,676
Debt financing, net of deferred debt
discount of $18,673 (1996) and $15,692
(1995) 8,571,795 7,804,210
Capital lease obligations 1,025,872 1,088,424
Security & other deposits on flight
equipment 597,333 498,016
Rentals received in advance 86,366 80,811
Deferred income taxes 778,397 660,938
SHAREHOLDERS' EQUITY
Preferred stock--no par value; 20,000,000
authorized shares
Market Auction Preferred Stock, $100,000 per
share liquidation value; Series A,B,C,D,E
F,G and H (1996 and 1995) each having 500
shares issued and outstanding 400,000 400,000
Common stock--no par value; 100,000,000
authorized shares, 35,818,122 (1996
and 1995) issued and outstanding 3,582 3,582
Additional paid-in capital 579,988 580,085
Retained earnings 1,173,688 1,016,440
---------- ----------
2,157,258 2,000,107
---------- ----------
$13,447,050 $12,329,182
=========== ===========
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
1996 1995
----- -----
(Unaudited)
REVENUES:
Rentals of flight equipment $375,474 $331,229
Flight equipment marketing 33,003 20,574
Interest and other 14,817 12,537
------- -------
423,294 364,340
------- -------
EXPENSES:
Interest 146,731 144,537
Depreciation 127,812 116,152
Rent expense 10,606 934
Provision for overhaul 23,808 19,781
Selling, general & administrative 9,482 9,086
------- -------
318,439 290,490
------- -------
INCOME BEFORE INCOME TAXES 104,855 73,850
Provision for income taxes 39,080 26,875
------- -------
NET INCOME $ 65,775 $ 46,975
======== ========
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
1996 1995
-------- --------
(Unaudited)
REVENUES:
Rentals of flight equipment $1,069,345 $917,141
Flight equipment marketing 102,621 83,076
Interest and other 38,157 35,360
--------- ---------
1,210,123 1,035,577
--------- ---------
EXPENSES:
Interest 427,282 398,364
Depreciation 361,646 318,328
Rent expense 31,434 3,959
Provision for overhaul 63,131 51,102
Selling, general & administrative 28,592 25,532
------- -------
912,085 797,285
------- -------
INCOME BEFORE INCOME TAXES 298,038 238,292
Provision for income taxes 110,764 90,226
-------- -------
NET INCOME $ 187,274 $148,066
========= ========
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
1996 1995
--------- ---------
(Unaudited)
OPERATING ACTIVITIES:
Net Income $ 187,274 $ 148,066
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation of flight equipment 361,646 318,328
Deferred income taxes 117,459 127,865
Amortization of deferred debt
issue costs 6,940 8,197
Gain on sale of flight equipment
included in amount financed (3,772) (27,107)
Increase in notes receivable (66,721) (8,553)
Equity in net (income) loss of affiliates (750) 5
Changes in operating assets and liabilities:
(Increase) decrease in accrued interest,
other receivables and other assets 21,295 (27,589)
(Increase) in current income taxes
receivable (19,305) (41,350)
Increase in accrued interest and
other payables 33,353 51,904
Increase in rentals received in advance 5,555 11,352
------- -------
Net cash provided by operating activities 642,974 561,118
------- -------
INVESTING ACTIVITIES:
Acquisition of flight equipment
for operating leases (2,470,977) (2,905,844)
(Increase) decrease in deposits and
progress payments (83,390) 110,383
Proceeds from disposal of flight
equipment-net of gain 1,047,339 279,210
Collections on notes receivable 41,186 51,021
Advances on notes receivable (3,300)
Collections on finance and sales-type leases 4,822 4,195
----------- -----------
Net cash used in investing activities (1,461,020) (2,464,335)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing 3,141,327 4,993,739
Payments in reduction of debt financing (2,433,313) (3,163,552)
Proceeds from sale of MAPS preferred stock
(net of issue costs) 98,476
Debt issue costs (4,215) (15,967)
Change in unamortized debt discount (2,982) 1,111
Increase in customer deposits 99,317 4,630
Payment of common and preferred dividends (30,026) (20,333)
--------- ---------
Net cash provided by financing activities 770,108 1,898,104
--------- ---------
Decrease in cash (47,938) (5,113)
Cash at beginning of period 87,097 52,891
----------- -----------
Cash at end of period $ 39,159 $ 47,778
=========== ===========
</TABLE>
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<PAGE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<S> <C> <C>
1996 1995
-------- --------
(Dollars in thousands)
(Unaudited)
Cash paid (received) during the period for:
Interest (net of amount capitalized
$37,359 (1996)and $38,985 (1995)) $ 374,158 $ 323,112
Income taxes 12,609 (27,295)
</TABLE>
1996:
Notes in the amount of $87,658 were received as partial payment in
exchange for flight equipment sold with a book value of $83,886.
Flight Equipment was received in exchange for notes receivable in the
amount of $46,307.
1995:
Notes in the amount of $139,600 were received as partial payment in
exchange for flight equipment sold with a book value of $112,493.
Flight equipment was received in exchange for notes receivable in the
amount of $64,576.
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
A. 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 1995 condensed consolidated financial
statements to conform to the 1996 presentation. Operating
results for the three and nine month periods ended
September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31,
1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended
December 31, 1995.
<PAGE>
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
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 the making of progress payments during the construction
phase, principally on an unsecured basis from various sources.
The Company's debt financing was comprised of the following at
the following dates:
<TABLE>
<S> <C> <C>
December 31, September 30,
1995 1996
------------ -------------
(Dollars in thousands)
Public term debt with single
maturities $ 3,550,000 $ 3,550,000
Public medium-term notes with
varying maturities 2,403,770 2,461,820
Capital lease obligations 1,088,424 1,025,872
Bank and other term debt 22,502
---------- ----------
Total term debt 7,064,696 7,037,692
Commercial paper 1,843,630 2,578,648
Less: Deferred debt discount (15,692) (18,673)
---------- ----------
Total Debt Financing $ 8,892,634 $ 9,597,667
========== ==========
Composite interest rate 6.47% 6.28%
Percentage of total debt at fixed rates 75.59% 70.10%
Composite interest rate on fixed rate
debt 6.66% 6.63%
Bank prime rate 8.50% 8.25%
</TABLE>
The interest on substantially all the public debt (exclusive
of the commercial paper) is fixed for the term of the note.
The Company has committed revolving loans and lines of credit
with 46 banks aggregating $2.4 billion and uncommitted lines
of credit with three banks aggregating $200 million. Bank
debt principally provides for interest rates that vary
according to the pricing option then in effect and range
from prime, .25% to .30% over LIBOR or .395% over CD rates,
at the Company's option. Bank financings are subject to
facility fees of up to .10% of amounts available.
The Company has an effective shelf registration with respect
to $2.11 billion of debt securities, under which $600 million
of notes were sold through September 30, 1996. Additionally,
a $750 million Medium Term Note Program has been implemented
under the shelf registration, under which $499 million has
been sold through September 30, 1996.
The Company believes that the combination of internally
generated funds and debt financing currently available to
the Company will allow the Company to meet its capital
requirements for at least the next 12 months.
<PAGE>
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-Three months ended September 30,
1996 versus 1995.
The increase in revenues from the rentals of flight
equipment from $331.2 million in 1995 to $375.5 million
in 1996, a 13% increase, is attributable, in part, to
the increase in the size of the fleet of leased flight
equipment subject to operating leases from 287 at
September 30, 1995 to 301 at September 30, 1996, a 5%
increase. The increase is also attributable to the
increase in the relative cost of the fleet.
In addition to its leasing operations, the Company
actively engages in the marketing of flight equipment
from its own portfolio as well as on a principal and
commission basis. Revenue from such flight equipment
marketing increased from $20.6 million in 1995 to
$33.0 million in 1996 as a result of the nature of
the related flight equipment marketed. Flight
equipment marketing revenue consisted of the following
number of transactions in each period:
1996 1995
----- -----
Sales of flight equipment - 2
Commissions 4 2
Disposition of leased flight equipment 10 9
Expenses as a percentage of total revenues decreased to
75.2% in the third quarter of 1996 compared to 79.7% in the
third quarter of 1995. Interest expense increased from
$144.5 million in 1995 to $146.7 million in 1996 primarily
as a result of an increase in gross debt outstanding at
quarter end from $9.4 billion at 1995 to $9.6 billion at
1996 to finance aircraft acquisitions. In addition, the
Company's composite borrowing rate fluctuated as follows:
1996 1995 (Decrease)
------ ------ ----------
Beginning of Quarter 6.22% 6.59% (.37%)
End of Quarter 6.28% 6.50% (.22%)
----- ----- -------
Average 6.25% 6.55% (.30%)
Depreciation of flight equipment increased from $116.2
million in 1995 to $127.8 million in 1996 due to the
addition of aircraft.
Rent expense increased from $.9 million in 1995 to
$10.6 million in 1996 as a result of a sale-leaseback
transaction for seven aircraft completed in December 1995.
Provision for overhauls increased from $19.8 million
in 1995 to $23.8 million in 1996 due to an increase in
the number of aircraft from which the Company collects
overhaul reserves and, therefore, an increase in the
total number of hours flown for which an overhaul
reserve is provided.
<PAGE>
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-Nine months ended September 30, 1996
versus 1995.
The increase in revenues from the rentals of flight
equipment from $917.1 million in 1995 to $1,069.3 million
in 1996, a 17% increase, is attributable, in part, to the
increase in the size of the fleet of leased flight
equipment subject to operating lease from 287 at
September 30, 1995 to 301 at September 30, 1996, a 5%
increase. The increase is also attributable to the
increase in the relative cost of the fleet.
In addition to its leasing operations, the Company
actively engages in the marketing of flight equipment from
its own portfolio as well as on a principal and commission
basis. Revenue from such flight equipment marketing
increased from $83.1 million in 1995 to $102.6 million
in 1996 as a result of the nature of the related flight
equipment marketed. Flight equipment marketing revenue
consisted of the following number of transactions in
each period:
1996 1995
----- -----
Sales of flight equipment 1 4
Commissions 12 2
Disposition of leased flight equipment 31 38
Expenses as a percentage of total revenues decreased to
75.4% in the first nine months of 1996 compared to 77.0% in
the first nine months of 1995. Interest expense increased
from $398.4 million in 1995 to $427.3 million in 1996,
primarily as a result of an increase in gross debt outstanding
at the nine months ended from $9.4 billion at 1995 to $9.6
billion at 1996 to finance aircraft acquisitions. In addition,
the Company's composite borrowing rate fluctuated as follows:
Increase/
1996 1995 (Decrease)
------ ------ ----------
Beginning of Nine months 6.47% 6.41% .06%
End of Nine months 6.28% 6.50% (.22%)
------ ----- ------
Average 6.38% 6.46% (.08%)
Depreciation of flight equipment increased from $318.3 million
in 1995 to $361.6 million in 1996 due to the addition of aircraft.
Rent expense increased from $4.0 million in 1995 to $31.4
million in 1996 as a result of a sale-leaseback transaction for
seven aircraft completed in December 1995.
Provision for overhauls increased from $51.1 million in 1995
to $63.1 million in 1996 due to an increase in the number of
aircraft on which the Company collects overhaul reserves and
therefore an increase in the number of hours flown for which
an overhaul reserve is provided.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
12. Computation of Ratios of Earnings
27. Financial Data Schedule
b) Reports on Form 8-K:
1. Form 8-K, event date August 1, 1996 (Item 7)
<PAGE>
<PAGE>
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 8, 1996 ___/S/ Leslie L. Gonda____
LESLIE L. GONDA
Chairman of the Board
November 8, 1996 ___/S/ Alan H. Lund____
ALAN H. LUND
Executive Vice President,
Co-Chief Operating Officer and
Chief Financial Officer
<PAGE>
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No.
12 Computation of Ratios of Earnings
27 Financial Data Schedule
<PAGE>
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
1996 1995
---------- ----------
(Unaudited)
Earnings:
Net Income $ 187,274 $ 148,066
Add:
Provision for income taxes 110,764 90,226
Fixed charges 482,803 437,349
Less:
Capitalized interest 37,359 38,985
--------- ---------
Earnings as adjusted (A) $ 743,482 $ 636,656
========== ==========
Preferred dividend requirements $ 12,576 $ 9,633
Ratio of income before provision
for income taxes to net income 159% 161%
--------- ---------
Preferred dividend factor on pretax
basis 19,996 15,509
--------- ---------
Fixed Charges:
Interest expense 427,282 398,364
Capitalized interest 37,359 38,985
Interest factor of rents 18,162 -
--------- ---------
Fixed charges as adjusted (B) 482,803 437,349
--------- ---------
Fixed charges and preferred stock
dividends (C) $ 502,799 $ 452,858
======== ========
Ratio of earnings to fixed charges
(A) divided by (B) 1.54x 1.46x
===== =====
Ratio of earnings to fixed charges
and preferred stock dividends
(A) divided by (C) 1.48x 1.41x
===== =====
</TABLE>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS INCLUDED IN
THE REGISTRANT'S QUARTERLY REPORT ON FORM 10Q FOR THE
QUARTER ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEPT-30-1996
<CASH> 39,159
<SECURITIES> 0
<RECEIVABLES> 490,684
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,202,625
<DEPRECIATION> 1,415,341
<TOTAL-ASSETS> 13,447,050
<CURRENT-LIABILITIES> 0
<BONDS> 8,571,795
<COMMON> 3,582
0
400,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,447,050
<SALES> 1,069,345
<TOTAL-REVENUES> 1,210,123
<CGS> 0
<TOTAL-COSTS> 484,803
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 427,282
<INCOME-PRETAX> 298,038
<INCOME-TAX> 110,764
<INCOME-CONTINUING> 187,274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187,274
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
