<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.........March 31, 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 offices) (Zip Code)
Registrant's telephone number, including area code
(310) 788-1999
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ___X___ No____________
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 April 30, 1996
----- -------------------------------
Common Stock, no par value 35,818,122
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
INDEX
Part I. Financial Information: Page No.
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995. . . . . . . . . 3
Condensed Consolidated Statements of Income
Three Months Ended March 31, 1996 and 1995. . . . 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995. . . . 5
Note to Condensed Consolidated Financial Statements. . . 7
Item 2. Management's Discussion and Analysis of the
Financial Condition and Results of Operations . . 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 10
Signatures. . . . . . . . . . . . . . . . . . . . . . . 11
Index to Exhibits . . . . . . . . . . . . . . . . . . . 12
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<S> <C> <C>
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Cash, including interest bearing accounts
of $52,534 (1996) and $59,624 (1995) $ 47,143 $ 87,097
Current income taxes receivable 52,881 30,803
Notes receivable 422,902 423,799
Net investment in finance and sales-
type leases 84,987 86,237
Flight equipment under operating leases 12,671,522 12,015,308
Less accumulated depreciation 1,340,415 1,252,438
----------- -----------
11,331,107 10,762,870
----------- -----------
Deposits on flight equipment purchases 870,073 805,570
Accrued interest, other receivables
and other assets 88,596 87,991
Investments 17,550 17,311
Deferred debt issue costs-less
accumulated amortization of $34,817
(1996) and $30,778 (1995) 27,352 27,504
----------- -----------
$12,942,591 $12,329,182
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables $ 218,563 $ 196,676
Debt financing, net of deferred debt
discount of $15,644 (1996) and $15,692
(1995) 8,246,781 7,804,210
Capital lease obligations 1,072,148 1,088,424
Security & other deposits on flight
equipment 574,619 498,016
Rentals received in advance 81,001 80,811
Deferred income taxes 711,398 660,938
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 1,054,511 1,016,440
--------- ---------
2,038,081 2,000,107
--------- ---------
$12,942,591 $12,329,182
========== ==========
</TABLE>
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
1996 1995
-------- --------
(Unaudited)
REVENUES:
Rentals of flight equipment $337,174 $280,415
Flight equipment marketing 23,164 12,444
Interest and other 10,873 11,047
------- -------
371,211 303,906
------- -------
EXPENSES:
Interest 135,090 117,316
Depreciation 112,903 98,287
Rent expense 10,514 790
Provision for overhaul 19,276 13,452
Selling, general & administrative 9,978 8,176
------- -------
287,761 238,021
------- -------
INCOME BEFORE INCOME TAXES 83,450 65,885
Provision for income taxes 30,546 24,233
------- -------
NET INCOME $ 52,904 $ 41,652
======= =======
</TABLE>
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C> <C>
1996 1995
---------- -----------
(Unaudited)
OPERATING ACTIVITIES:
Net Income $ 52,904 $ 41,652
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation of flight equipment 112,903 98,287
Deferred income taxes 50,460 56,152
Amortization of deferred debt
issue costs 2,259 1,335
Gain on sale of flight equipment
included in amount financed (310) (6,607)
Increase in notes receivable (13,529) (6,539)
Equity in net (income) loss of affiliates (238) 106
Changes in operating assets and liabilities:
(Increase) decrease in accrued interest,
other receivables and other assets (605) (16,310)
Increase in current income taxes receivable (22,708) (33,858)
Increase in accrued interest and
other payables 21,887 46,154
Increase in rentals received in advance 190 8,378
----------- -----------
Net cash provided by operating activities 203,843 188,750
----------- -----------
INVESTING ACTIVITIES:
Acquisition of flight equipment
for operating leases (813,544) (1,074,840)
(Increase) decrease in deposits and
progress payments (64,503) 14,816
Proceeds from disposal of flight
equipment-net of gain 131,162 6,792
Collections on notes receivable 15,977 16,122
Collections on finance and sales-type leases 1,250 1,428
----------- -----------
Net cash used in investing activities (729,658) (1,035,682)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing 1,282,752 2,217,389
Payments in reduction of debt financing (856,505) (1,446,194)
Proceeds from sale of MAPS preferred stock
(net of issue costs) 98,486
Debt issue costs (2,204) (5,338)
Change in unamortized debt discount 48 (6,316)
Increase in customer deposits 76,603 24,758
Payment of common and preferred dividends (14,833) (6,682)
---------- ---------
Net cash provided by financing activities 485,861 876,103
---------- ---------
Increase (Decrease) in cash (39,954) 29,171
Cash at beginning of period 87,097 52,891
----------- -----------
Cash at end of period $ 47,143 $ 82,062
=========== ===========
</TABLE>
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<S> <C> <C>
1996 1995
---------- -----------
(Dollars in thousands)
(Unaudited)
Cash paid during the period for:
Interest (net of amount capitalized
$11,982 (1996)and $14,118 (1995)) $ 84,494 $ 65,809
Income taxes 2,164 1,873
</TABLE>
1996:
Notes in the amount of $1,552 were received as payment in exchange
for flight equipment sold with a book value of $1,242.
1995:
Notes in the amount of $30,500 were received as partial payment
in exchange for flight equipment sold with a book value of $23,893.
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 months
ended March 31, 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>
INTERNATIONAL LEASE FINANCE CORPORATION
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>
Dec. 31, March 31,
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 2,502,770
Capital lease obligations 1,088,424 1,072,148
Bank and other term debt 22,502
--------- ---------
Total term debt 7,064,696 7,124,918
Commercial paper 1,843,630 2,209,655
Less: Deferred debt discount (15,692) (15,644)
--------- ---------
Total Debt Financing $ 8,892,634 $ 9,318,929
========= =========
Composite interest rate 6.47% 6.31%
Percentage of total debt at fixed rates 75.59% 73.06%
Composite interest rate on fixed rate
debt 6.66% 6.64%
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 43 banks aggregating
$2.4 billion and uncommitted lines of credit with two banks aggregating
$175 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 $400 million of notes were sold
through March 31, 1996. Additionally, a $750 million Medium Term Note
Program has been implemented under the shelf registration, under which
$209 million has been sold through March 31, 1996.
The Company has an option to enter into an export credit lease
facility in the amount of $480 million which provides ten year,
amortizing loans in the form of capital lease obligations. The interest
rate on 62.5% of the financing available is 6.55%, the interest rate on
22.5% of the financing available varies between 6.18% and 6.89%. The
remaining 15% of the financing available provides for LIBOR based
pricing.
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>
INTERNATIONAL LEASE FINANCE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS-Three months ended March 31, 1996 versus 1995.
The increase in revenues from the rentals of flight equipment from
$280.4 million in 1995 to $337.2 million in 1996, a 20% increase, is
attributable, in part, to the increase in the size of the fleet of
leased flight equipment subject to operating leases from 277 at March
31, 1995 to 298 at March 31, 1996, an 8% increase. The increase is also
attributable to the increase in the relative cost of the fleet from
$10.9 billion in 1995 to $12.7 billion in 1996, a 17% increase.
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 $12.4 million in 1995 to $23.2 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 - -
Commissions 6 2
Disposition of leased flight equipment 6 9
Expenses as a percentage of total revenues decreased to 77.5% in the
first quarter of 1996 compared to 78.3% in the first quarter of 1995.
Interest expense increased from $117.3 million in 1995 to $135.1 million
in 1996 primarily as a result of an increase in gross debt outstanding
at quarter end from $8.4 billion at 1995 to $9.3 billion at 1996 to
finance aircraft acquisitions. In addition, the Company's composite
borrowing rate fluctuated as follows:
1996 1995 Increase/
(Decrease)
---- ---- ----------
Beginning of Quarter 6.47% 6.41% .06%
End of Quarter 6.31% 6.69% (.38%)
---- ---- --------
Average 6.39% 6.55% (.16%)
Depreciation of flight equipment increased from $98.3 million in 1995
to $112.9 million in 1996 due to the addition of aircraft.
Rent expense increased from $.8 million in 1995 to $10.0 million in
1996 as a result of a sale-leaseback transaction for seven aircraft
completed in December 1995.
Provision for overhauls increased from $13.5 million in 1995 to $19.3
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>
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 January 4, 1996 (Item 7)
<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
May 10, 1996 __/s/ Leslie L. Gonda__
LESLIE L. GONDA
Chairman of the Board
May 10, 1996 __/s/ Alan H. Lund__
ALAN H. LUND
Executive Vice President
Co-Chief Operating Officer
and Chief Financial Officer
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No.
12 Computation of Ratios of Earnings
27 Financial Data Schedule
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1996 1995
-------- --------
(Unaudited)
Earnings:
Net Income $ 52,904 $ 41,652
Add:
Provision for income taxes 30,546 24,233
Fixed charges 153,440 131,434
Less:
Capitalized interest 11,982 14,118
------- -------
Earnings as adjusted (A) $ 224,908 $ 183,201
======= =======
Preferred dividend requirements $ 4,383 $ 2,552
Ratio of income before provision
for income taxes to net income 158% 158%
------- -------
Preferred dividend factor on pretax
basis 6,925 4,032
------- -------
Fixed Charges:
Interest expense 135,090 117,316
Capitalized interest 11,982 14,118
Interest factor of rents 6,368 -
------- -------
Fixed charges as adjusted (B) 153,440 131,434
------- -------
Fixed charges and preferred stock
dividends (C) $ 160,365 $ 135,466
======= =======
Ratio of earnings to fixed charges
(A) divided by (B) 1.47x 1.40x
======= =======
Ratio of earnings to fixed charges
and preferred stock dividends
(A) divided by (C) 1.40x 1.35x
======= =======
</TABLE>
<PAGE>
<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 MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 47,143
<SECURITIES> 0
<RECEIVABLES> 422,902
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,671,522
<DEPRECIATION> 1,340,415
<TOTAL-ASSETS> 12,942,591
<CURRENT-LIABILITIES> 0
<BONDS> 8,246,781
<COMMON> 3,582
0
400,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,942,591
<SALES> 337,174
<TOTAL-REVENUES> 371,211
<CGS> 0
<TOTAL-COSTS> 287,761
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135,090
<INCOME-PRETAX> 83,450
<INCOME-TAX> 30,546
<INCOME-CONTINUING> 52,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,904
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
