<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT
------------------------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
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)
<TABLE>
<S> <C>
CALIFORNIA 22-3059110
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1999 AVENUE OF THE STARS, LOS ANGELES, LOS ANGELES 90067
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 788-1999
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K (SEC. 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]
AS OF FEBRUARY 28, 1998, THERE WERE 35,818,122 SHARES OF COMMON STOCK, NO
PAR VALUE, OUTSTANDING.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
================================================================================
<PAGE> 2
INTERNATIONAL LEASE FINANCE CORPORATION
1997 FORM 10-K ANNUAL REPORT
------------------------
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 6
Item 3. Legal Proceedings........................................... 8
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 8
Item 6. Selected Financial Data..................................... 8
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 9
Item 8. Financial Statements and Supplementary Data................. 12
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 12
</TABLE>
<PAGE> 3
PART I
ITEM 1. BUSINESS
GENERAL
International Lease Finance Corporation (the "Company") is primarily
engaged in the acquisition of new and used commercial jet aircraft and the
leasing and sale of such aircraft to domestic and foreign airlines. The Company,
in terms of the number and value of transactions concluded, is a major
owner-lessor of commercial jet aircraft. In addition, the Company is engaged in
the remarketing of commercial jets for its own account, for airlines and for
financial institutions. As well, the Company provides fleet management services
for third party operating lessors.
As of December 31, 1997, the Company owned 299 aircraft and managed an
additional 62 aircraft. See "Item 2. Properties -- Flight Equipment." At
December 31, 1997, the Company had committed to purchase 328 aircraft
deliverable through 2006 at an estimated aggregate purchase price of $17.7
billion. See "Item 2. Properties -- Commitments."
The Company maintains the mix of flight equipment to meet its customers'
needs by purchasing those models of new and used aircraft which it believes will
have the greatest airline demand and operational longevity and minimize the time
that its aircraft are not leased to customers.
The Company purchases, and finances the purchase of, aircraft on terms
intended to permit the Company to lease or resell such aircraft at a profit. The
Company typically finances the purchase of aircraft with borrowed funds and
internally generated cash flow. The Company accesses the capital markets for
such funds at times and on terms and conditions it considers appropriate. The
Company may, but does not necessarily, engage in financing transactions for
specific aircraft. The Company relies significantly on short- and medium-term
financing, and thereby attempts to manage interest rate exposure. To date, the
Company has been able to purchase aircraft on terms which have permitted it to
lease the aircraft at a profit and has not experienced any difficulty in
obtaining financing.
The Company's aircraft are usually leased on terms under which the Company
does not fully recover the acquisition cost of such aircraft. Thus, at the
termination of a lease, the Company bears the risk of selling or releasing the
aircraft on terms which will cover its remaining cost.
The airline industry is cyclical, economically sensitive and highly
competitive. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations." The Company's revenue and income may be
affected by political or economic instability abroad, changes in national
policy, competitive pressures on certain air carriers, fuel shortages, labor
stoppages, recessions, and other political or economic events adversely
affecting world or regional trading markets or impacting a particular customer.
The Company's continued success is partly dependent on management's ability in
the future to develop customer relationships for leasing, sales, remarketing and
management services with those airlines and other customers best able to
maintain their economic viability and survive in a deregulated environment.
The Company is incorporated in the State of California and its principal
executive offices are located at 1999 Avenue of the Stars, Los Angeles,
California 90067. The Company's telephone, telecopier and telex numbers are
(310) 788-1999, (310) 788-1990 and 69-1400, respectively. The Company is an
indirect wholly owned subsidiary of American International Group, Inc. ("AIG").
AIG is a holding company which through its subsidiaries is primarily engaged in
a broad range of insurance and insurance-related activities and financial
services in the United States and abroad. The Common Stock of AIG is listed on,
among others, the New York Stock Exchange.
AIRCRAFT LEASING
The initial term of the Company's current leases range in length from one
year to 15 years. See "Item 2. Properties -- Flight Equipment" for information
regarding scheduled lease terminations. Most of the Company's leases are
operating leases under which the Company does not fully recover its aircraft
cost and retains the benefit and assumes the risk of the residual value of the
aircraft. The Company on occasion also
1
<PAGE> 4
enters into finance and sales-type leases where the full cost of the aircraft is
substantially recovered over the term of the lease. At December 31, 1997, four
of the Company's leases were accounted for as finance leases. The aircraft under
operating leases are included as assets on the Company's balance sheet and
depreciation is charged to income over the estimated useful lives of the
aircraft. In accordance with generally accepted accounting principles, rentals
are reported ratably as revenue over the lease term as they become due and are
earned. The Company attempts to maintain a mix of short- and medium-term leases
to balance the benefits and risks associated with different lease terms. Varying
lease terms mitigate the effects of changes in prevailing market conditions at
the time aircraft become eligible for re-lease or sale and the uncertainty
associated with estimating residual value of the aircraft at the termination of
the lease.
All leases are on a "net" basis with the lessee responsible for all
operating expenses, which customarily include fuel, crews, airport and
navigation charges, taxes, licenses, registration and insurance. Normal
maintenance and repairs; airframe and engine overhauls; and compliance with
return conditions of flight equipment on lease are provided by and paid for by
the lessee. Under the provisions of most leases, for certain airframe and engine
overhauls, the lessee is reimbursed by the Company for costs incurred up to but
not exceeding related contingent rentals paid to the Company by the lessee. Such
rentals are included in the caption Rental of flight equipment. The Company
provides a charge to operations for such reimbursements based on the estimated
reimbursements expected during the life of the lease, which amount is included
in overhaul reserves. The lessee is responsible for compliance with all
applicable laws and regulations with respect to the aircraft. The Company
requires its lessees to comply with the most restrictive standards of either the
Federal Aviation Administration (the "FAA") or its foreign equivalent. The
Company makes periodic inspections of the condition of its leased aircraft.
Generally, the Company requires a deposit which is security for the condition of
aircraft upon return to the Company, the rental payment by the lessee and the
performance of other obligations by the lessee under the lease. In addition, the
leases contain extensive provisions regarding the remedies and rights of the
Company in the event of a default thereunder by the lessee and specific
provisions regarding the condition of the aircraft upon redelivery to the
Company. The lessee is required to continue lease payments under all
circumstances, including periods during which the aircraft is not in operation
for maintenance, grounding or any other reason whatsoever.
The Company obtains and reviews relevant business materials from all
prospective lessees and purchasers before entering into a lease or extending
credit. Under certain circumstances, the Company may require the lessee to
obtain guarantees or other financial support from an acceptable financial
institution or other third party.
FLIGHT EQUIPMENT MARKETING
The Company also regularly disposes of its leased aircraft at or before the
expiration of their leases. The buyers include the aircraft's lessee, another
airline or a third party lessor. Any gain or loss on disposition of leased
aircraft is reflected as revenues from flight equipment marketing.
From time to time, the Company also engages in transactions to buy aircraft
for resale. In some cases, the Company assists its customers in acquiring or
disposing of aircraft through consulting services and procurement of financing
from third parties.
In addition to its leasing and sales operations, the Company is engaged,
from time to time, as an agent for airlines in the disposition of their surplus
aircraft. The Company generally acts as an agent under an exclusive remarketing
contract whereby it agrees to sell aircraft on a "best efforts" basis within a
fixed time period. These activities generally augment the Company's primary
activities and also serve to promote relationships with prospective sellers and
buyers of aircraft.
The Company plans to continue its remarketing services on a selective basis
involving specific situations where these activities will not conflict or
compete with, but rather will be complementary to, its leasing and selling
activities.
In connection with the sale of aircraft, the Company has guaranteed certain
obligations for entities in which it has an investment, which aggregate
approximately $62,256,000. Additionally, the Company
2
<PAGE> 5
guaranteed three loans, secured by flight equipment, of customers which
aggregated $12,850,000. See Note K of Notes to Consolidated Financial
Statements.
FLEET MANAGEMENT SERVICES
The Company provides fleet management services to third party operating
lessors who are unable or unwilling to perform this service as part of their own
operation. The Company typically provides the same services that it performs for
its own fleet. Specifically, the Company provides leasing, releasing and sales
services on behalf of the lessor for which the Company receives a fee.
FINANCING/SOURCE OF FUNDS
The Company purchases new aircraft directly from manufacturers and used
aircraft from airlines for lease or sale to other airlines. The Company finances
the purchase price of flight equipment from internally generated funds, secured
and unsecured commercial bank financings and the issuance of commercial paper,
public and private debt and preferred stock. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
CUSTOMERS
At December 31, 1997, lessees of the Company included: (domestic) Alaska
Airlines, American Trans Air, Continental Airlines, Frontier Airlines, North
American Airlines, Pan American Airways Corp, Southwest Airlines, Tower Air,
Trans World Airlines (TWA) and World Airways; (foreign) Aer Lingus, Aerocancun,
Aero Lloyd Flugreisen, Aeromexico, Aeroperu, Air 2000, Air Afrique, Air Alfa,
Air Canada, Air Espana, Air Europe SpA, Air France, Air Liberte, Air Macau, Air
Madagascar, Air Mauritius, Air New Zealand, Air Seychelles, Air Transat, Air UK,
Air World, Ansett, Asiana, Avianca, Braathens S.A.F.E., Britannia Airways,
British Airways, British Midland Airways, Canada 3000, Cathay Pacific, China
Airlines, China Hainan Airlines, China Southern Airlines, China Southwest
Airlines, Constellation, Emirates, El Al, Estonian Air, Far Eastern Air
Transport, Finnair, Flying Colours, Garuda Indonesia, GB Airways, Hapag-Lloyd
Flug, Hong Kong Dragon Airlines (Dragonair), Icelandair, Kenya Airways, KLM
Royal Dutch Airlines, Korean Airlines, L'Aeropostale, LACSA, Lineas Aereas
Privadas Argentinas, S.A. (LAPA), Lloyd Aero Boliviano (LAB), LAN Chile, LTU
Luftransport-Unternehmen, Lufthansa, Malaysian Airline System, Malev Hungarian
Airlines, Martinair Holland, Mexicana, Middle East Airlines Airliban, Monarch
Airways, ONUR Air, Pegasus, Polynesian Airways, QANTAS Airways, Rio Sul, Sabena,
SAETA, Sahara India Airlines, Shenzhen, Sichuan Airlines, Skyservice Airlines
Inc., Surinam, Swissair, TACA International Airlines, TACV Cabo Verde, TAP Air
Portugal, TEA Basel, THY, TransAer, Transaero Airlines, Transavia, Transbrasil,
Varig, Virgin Atlantic Airways, VIVA Airways, Wuhan Airlines, Xiamen and
Xinjiang. No single customer accounted for more than 10% of total revenues in
any of the last three years.
Revenues include rentals of flight equipment to foreign airlines of
$1,472,075,000 (1997), $1,202,651,000 (1996) and $1,002,251,000 (1995)
comprising 85.0%, 83.3% and 80.0%, respectively, of total rentals of flight
equipment. See Note J of Notes to Consolidated Financial Statements.
The following table sets forth the dollar amount and percentage of total
rental revenues attributable to the indicated geographic areas for the years
indicated:
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ ------------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe............................. $ 705,128 40.7% $ 551,703 38.2% $ 462,252 36.9%
Asia/Pacific....................... 358,687 20.7 332,159 23.0 255,163 20.4
United States and Canada........... 345,143 19.9 304,801 21.1 304,784 24.3
Central, South America and
Mexico........................... 211,152 12.2 165,819 11.5 166,443 13.2
Africa and the Middle East......... 112,557 6.5 89,957 6.2 65,378 5.2
---------- ----- ---------- ----- ---------- -----
$1,732,667 100.0% $1,444,439 100.0% $1,254,020 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
3
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Many foreign countries have currency and exchange laws regulating the
international transfer of currencies. The Company attempts to minimize its
currency and exchange risks by negotiating substantially all of its aircraft
lease and sales transactions in U.S. dollars and all guarantees obtained to
support various lease agreements are denominated for payment in U.S. dollars.
The Company requires, as a condition to any foreign transaction, that the lessee
or purchaser in a foreign country first obtain, if required, written approval of
the appropriate government agency, finance ministry or central bank for the
remittance of all funds contractually owed to the Company in U.S. dollars. As a
result, foreign currency risk is immaterial to the Company.
The Company has restructured leases with both foreign and domestic lessees.
Such restructurings have involved the voluntary termination of leases prior to
lease expiration, the replacement of leased aircraft with smaller, less
expensive leased aircraft, the arrangement of subleases from the primary lessee
to another airline and the rescheduling of lease payments. In 1995, the Company
repossessed one Airbus A320 from a lessee and terminated early the lease of
another A320. Both aircraft were promptly released to other customers. In 1996,
the Company repossessed one aircraft that was promptly released. In addition,
the Company terminated early the leases of four aircraft. In this case, two of
the aircraft were sold and two were promptly released. No aircraft were
repossessed in 1997.
In some situations where the Company repossesses an aircraft, it may decide
to export the aircraft from the lessee's jurisdiction. To date, the Company has
been able to export all repossessed aircraft which it desired to export. In
addition, in connection with the repossession of an aircraft, the Company may be
required to pay outstanding mechanic's, airport and other operating liens on the
repossessed aircraft, which could include charges relating to other aircraft
operated by the lessee.
The Company's revenues and income may be affected by political or economic
instability abroad, changes in national policy, competitive pressures on certain
air carriers, fuel shortages, labor stoppages, recessions and other political or
economic events adversely affecting world or regional trading markets or
impacting a particular customer.
COMPETITION
The leasing and sale of jet aircraft is highly competitive. Aircraft
manufacturers and the airlines sell new and used jet aircraft. Furthermore, the
Company faces competition in leasing aircraft from aircraft manufacturers,
banks, other financial institutions and leasing companies. There is also
competition with respect to its remarketing activities from many sources,
including, but not limited to, aircraft brokers.
GOVERNMENT REGULATION
The FAA and the U.S. Departments of Transportation and State exercise
regulatory authority over the air transportation in the United States.
The U.S. Departments of Transportation and State, in general, have
jurisdiction over the economic regulation of air transportation, including the
negotiation with foreign governments of the rights of U.S. carriers to fly to
other countries and the rights of foreign carriers to fly to and within the
United States.
The FAA has regulatory jurisdiction over the maintenance and operation of
U.S. air carriers, the operation of aircraft in the United States by foreign
carriers and the registration of aircraft in the United States. The FAA can
suspend or revoke the authority of U.S. air carriers or their licensed personnel
and can similarly revoke the authority of foreign air carriers to operate within
the United States for failure to comply with FAA regulations. The FAA can also
ground aircraft if their airworthiness is in question.
In every foreign country, similar government agencies regulate such
country's air carriers, the operations of foreign airlines in such country and
the registration of aircraft. Like the FAA, the civil aviation authority in a
foreign country can suspend or revoke the operating authority of an airline and
ground aircraft for safety reasons.
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<PAGE> 7
Since the Company does not itself operate its aircraft for public
transportation of passengers and property, the Company is not directly subject
to the regulatory jurisdiction of the U.S. Departments of Transportation and
State or their counterpart organizations in foreign countries.
The Company's interface with the FAA consists of the registration with the
FAA of those aircraft which are leased by the Company to U.S. carriers and to a
number of foreign carriers where, by agreement, the aircraft are to be
registered in the United States. In limited circumstances, the Company also
obtains from the FAA or its designated representatives a U.S. Certificate of
Airworthiness for a particular aircraft or a ferry flight permit.
The Company's involvement with the civil aviation authorities of foreign
jurisdictions consists largely of requests to register and deregister Company
aircraft on lease to carriers in those countries.
The Company also works with U.S. Customs with respect to the import and
export of Company aircraft into and from the United States for maintenance or
lease.
EMPLOYEES
The Company is in a capital intensive rather than a labor intensive
business. As of December 31, 1997, the Company had 74 full-time employees, which
it considered adequate for its business operations. The Company will expand its
management and administrative personnel, as necessary, to meet future growth.
None of the Company's employees is covered by a collective bargaining agreement
and the Company believes that it has maintained excellent employee relations.
The Company provides certain employee benefits, including retirement plans and
health, life, disability and accident insurance.
INSURANCE
The Company requires its lessees to carry those types of insurance which
are customary in the air transportation industry, including comprehensive
liability insurance and aircraft hull insurance. In general, the Company is an
additional insured on liability policies carried by the lessees. All policies
contain a breach of warranty endorsement so that the interests of the Company
are not prejudiced by any act or omission of the operator-lessee.
Insurance premiums are prepaid by the lessee, with payment acknowledged by
the insurance carrier. The territorial coverage is, in each case, suitable for
the lessee's area of operations and the policies contain, among other
provisions, a "no co-insurance" clause and a provision prohibiting cancellation
or material change without at least 30 days advance written notice to the
Company. Furthermore, the insurance is primary and not contributory and all
insurance carriers are required to waive rights of subrogation against the
Company.
The stipulated loss value schedule under aircraft hull insurance policies
is on an agreed value basis acceptable to the Company, which usually exceeds the
book value of the aircraft. In cases where the Company believes that the agreed
value stated in the lease is not sufficient, the Company purchases additional
Total Loss Only coverage for the deficiency. Additionally, all aircraft in the
Company's fleet are covered by Contingent Liability insurance. Aircraft hull
policies contain standard clauses covering aircraft engines with deductibles
required to be paid by the lessee. Furthermore, the aircraft hull policies
contain full war risk endorsements, including, but not limited to, confiscation,
seizure, hijacking and similar forms of retention or terrorist acts. All losses
under such policies are payable in U.S. dollars.
The comprehensive liability insurance policies include provisions for
bodily injury, property damage, passenger liability, cargo liability and such
other provisions reasonably necessary in commercial passenger and cargo airline
operations with minimal deductibles. Such policies generally have combined
comprehensive single liability limits of not less than $250 million and all
losses are payable in U.S. dollars, U.K. pounds or German marks.
The Company also maintains other insurance covering the specific needs of
its business operations. Insurance policies are generally placed or reinsured
through AIG subsidiaries, with costs allocated back to the Company. The Company
believes that its insurance is adequate both as to coverage and amount.
5
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RECENT EVENTS
On February 26, 1998 Pan American Airways, Corp ("Pan Am") filed a
voluntary petition under Chapter 11 of the United States Bankruptcy Code
("Code") and suspended operations. The Company leases five Boeing 737 aircraft
and manages two other Boeing 737 aircraft leased to Pan Am. Under the Code, Pan
Am has 60 days from the date of the bankruptcy filing in which to affirm or
reject the leases of such aircraft. The Company has not received any indication
from Pan Am as to their intentions with respect to the above aircraft.
ITEM 2. PROPERTIES
FLIGHT EQUIPMENT
The Company's management frequently reviews opportunities to acquire
suitable commercial jet aircraft based not only on market demand and customer
airline requirements, but also on the Company's fleet portfolio mix criteria and
planning strategies for leasing. Before committing to purchase specific
aircraft, the Company takes into consideration factors such as estimates of
future values, potential for remarketing, trends in supply and demand for the
particular type, make and model of aircraft and engines and anticipated
obsolescence. As a result, certain types and vintages of aircraft do not
necessarily fit the profile for inclusion in the Company's portfolio of aircraft
owned and used in its leasing operations.
At December 31, 1997, all of the Company's fleet was Stage III compliant,
meaning that the aircraft hold or are capable of holding a noise certificate
issued under Chapter 3 of Volume 1, Part II of Annex 16 of the Chicago
Convention or have been shown to comply with the Stage III noise levels set out
in Section 36.5 of Appendix C of Part 36 of the Federal Aviation Regulations of
the United States. At December 31, 1997, the average age of the Company's flight
equipment was 3.86 years.
\The following table shows the scheduled lease terminations (for the minimum
noncancelable period) by aircraft type for the Company's lease portfolio at
December 31, 1997 as adjusted for aircraft sold through March 9, 1998:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL
------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300........................... 3 7 7 8 6 4 2 4 41
737-400........................... 4 10 11 5 4 11 5 1 1 52
737-500........................... 3 2 3 3 4 1 1 17
757-200........................... 6 7 5 3 6 2 9 3 7 48
767-200........................... 1 2 3
767-300........................... 1 3 2 7 8 6 3 1 31
747-200........................... 2 1 3
747-300........................... 2 2
747-400........................... 1 1 1 4 1 1 9
MD-83............................. 1 2 3 1 7
MD-87............................. 1 1
MD-11............................. 1 3 2 6
A300-600R......................... 1 3 1 1 1 7
A310-300.......................... 1 7 8
A319.............................. 4 4
A320.............................. 5 7 6 1 5 8 4 1 37
A321.............................. 2 4 4 1 1 1 13
A330.............................. 2 5 1 2 1 11
A340.............................. 2 6 1 9
-- -- -- -- -- -- -- -- -- -- ---
Total............................. 21 61 56 37 36 44 18 18 9 9 309
</TABLE>
- ---------------
This schedule does not include three Boeing 737-300, two 737-400, one
757-200, one A310-200 and one A310-300 aircraft sold through March 9, 1998. In
addition, the schedule does not include two A310-200 committed for sale in 1998.
This schedule includes 20 aircraft leased by the Company and subleased to
others.
6
<PAGE> 9
COMMITMENTS
At December 31, 1997, the Company had committed to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $17.7 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1998 1999 2000 2001 2002 2003 2004 2005 2006 TOTAL
------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300/400/500(a)............. 4 4
737-600/700/800(a)............. 11 8 9 10 10 10 10 9 9 86
757-200........................ 7 6 2 1 1 17
767-300........................ 7 3 2 1 1 1 1 16
767-400........................ 2 2 1 5
777-200/300(a)................. 5 3 4 4 4 4 4 3 3 34
747-400........................ 1 2 1 4
A319........................... 2 5 7 6 6 6 6 6 44
A320-200....................... 9 6 5 4 4 3 3 2 36
A321-100/200(a)................ 8 9 7 4 3 2 2 2 37
A330-200/300(a)................ 4 9 5 4 4 4 4 1 35
A340........................... 2 1 1 2 3 1 10
-- -- -- -- -- -- -- -- -- ---
Total................ 60 52 43 38 38 32 30 23 12 328
</TABLE>
- ---------------
(a) The Company has the right to designate the size of the aircraft within the
specific model type at specific dates prior to contractual delivery.
Management anticipates that a significant portion of such aggregate
purchase price will be funded by incurring additional debt. The exact amount of
the indebtedness to be incurred will depend upon the actual purchase price of
the aircraft, which can vary due to a number of factors, including inflation,
and the percentage of the purchase price of the aircraft which must be financed.
All of the purchase commitments set forth above are based upon master
arrangements with each of The Boeing Company ("Boeing") and AVSA, S.A.R.L., the
sales subsidiary of Airbus Industrie ("Airbus").
The aircraft listed above are being purchased pursuant to agreements
executed by the Company and either Boeing or Airbus. These agreements establish
the pricing formulas (which include certain price adjustments based upon
inflation and other factors) and various other terms with respect to the
purchase of aircraft. Under certain circumstances, the Company has the right to
alter the mix of aircraft type ultimately acquired. As of December 31, 1997, the
Company had made non-refundable deposits (exclusive of capitalized interest)
with respect to the aircraft which the Company has committed to purchase of
approximately $553,749,000 and $359,873,000 with Boeing and Airbus,
respectively.
As of March 9, 1998, the Company had entered into contracts for the lease
of all of the 60 aircraft to be delivered in 1998, 46 of the 52 aircraft to be
delivered in 1999, 17 of the 43 aircraft to be delivered in 2000, 9 of the 38
aircraft to be delivered in 2001 and 12 of the 135 aircraft to be delivered
subsequent to 2001. The Company will need to find customers for aircraft
presently on order and any new aircraft ordered and arrange financing for
portions of the purchase price of such equipment. Although the Company has been
successful to date in placing its new aircraft on lease or sales contracts, and
has obtained adequate financing in the past, there can be no assurance as to the
future continued availability of lessees or purchasers, or of sufficient amounts
of financing on terms acceptable to the Company.
FACILITIES
The Company's principal offices are located at 1999 Avenue of the Stars,
Los Angeles, California. The Company occupies space under leases which expire in
2000. The leases cover approximately 30,000 square feet of office space, provide
for annual rentals of approximately $1,627,000, and the rental payments
thereunder are subject to certain indexed escalation provisions.
7
<PAGE> 10
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company is indirectly wholly owned by AIG and the Company's Common
Stock is not listed on any national exchange or traded in any established
market. During the years ended December 31, 1995, 1996 and 1997, the Company
paid cash dividends to its parent company of $21,150,000, $20,600,000 and
$19,700,000, respectively. It is the intent of the Company to pay its parent
company an annual dividend of at least 7% of net income subject to the dividend
preference of any preferred stock outstanding. Under the most restrictive
provisions of the Company's borrowing arrangements, consolidated retained
earnings at December 31, 1997 in the amount of $438,335,000 were unrestricted as
to the payment of dividends.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected consolidated financial data and
certain operating information of the Company. The selected consolidated
financial data should be read in conjunction with the Consolidated Financial
Statements and notes thereto and "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ----------- ----------- ----------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Rentals of flight equipment...... $ 795,437 $ 993,596 $ 1,254,020 $ 1,444,439 $ 1,732,667
Flight equipment marketing....... 53,680 76,193 119,078 136,099 176,005
Interest and other income........ 62,515 40,267 49,390 51,976 49,335
Total revenues................... 911,632 1,110,056 1,422,488 1,632,514 1,958,007
Expenses......................... 633,992 798,049 1,084,142 1,237,575 1,431,848
Income before income taxes....... 277,640 312,007 338,346 394,939 526,159
Net income....................... 168,565 201,943 196,437 251,774 338,684
RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS(1): 1.68x 1.59x 1.43x 1.47x 1.58x
BALANCE SHEET DATA:
Flight equipment under operating
leases (net of accumulated
depreciation).................. $6,515,837 $ 8,851,079 $10,762,870 $12,182,774 $12,792,531
Net investment in finance and
sales-type leases.............. 290,269 92,233 86,237 103,629 98,026
Total assets..................... 8,139,821 10,386,256 12,329,182 13,725,596 14,551,954
Total debt....................... 5,819,481 7,583,006 8,892,634 9,794,260 9,954,362
Shareholders' equity............. 1,409,181 1,640,772 2,000,107 2,214,552 2,517,188
OTHER DATA:
Aircraft owned at period
end(2)......................... 230 270 278 296 299
Aircraft sold or remarketed
during the period.............. 9 24 41 37 57
</TABLE>
- ---------------
(1) See Exhibit 12.
(2) See "Item 2. Properties -- Flight Equipment."
8
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
INDUSTRY CONDITION
From time to time, certain of the Company's customers have experienced
economic difficulties resulting in the Company's participation in customer
restructurings. Such restructurings have involved the voluntary early
termination of leases and the rescheduling of payments. In addition, in certain
circumstances, the Company has been required to repossess aircraft. No aircraft
were repossessed in 1997. See "Item 1. Business -- Customers."
FINANCIAL CONDITION
The Company borrows funds to purchase flight equipment, including funds for
progress payments during the construction phase, principally on an unsecured
basis from various sources. At December 31, 1997, 1996 and 1995, the Company's
debt financing and capital lease obligations were comprised of the following:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Public term debt with single
maturities........................... $3,950,000 $3,500,000 $3,550,000
Public medium-term notes with varying
maturities........................... 2,896,865 2,563,720 2,403,770
Capital lease obligations.............. 903,320 995,872 1,088,424
Bank and other term debt............... -- -- 22,502
---------- ---------- ----------
Total term debt and
capital lease
obligations................ 7,750,185 7,059,592 7,064,696
Commercial paper....................... 2,212,601 2,757,417 1,843,630
Less: Deferred debt discount........... (8,424) (22,749) (15,692)
---------- ---------- ----------
Debt financing and capital
lease obligations.......... $9,954,362 $9,794,260 $8,892,634
========== ========== ==========
Composite interest rate................ 6.44% 6.23% 6.47%
Percentage of total debt at fixed
rate................................. 76.49% 68.95% 75.59%
Composite interest rate on fixed
debt................................. 6.63% 6.58% 6.66%
Bank prime rate........................ 8.50% 8.25% 8.50%
</TABLE>
The interest on substantially all the public debt (exclusive of the
commercial paper) is fixed for the term of the note. As of December 31, 1997,
the Company had committed credit agreements with 48 commercial banks aggregating
$2.65 billion and uncommitted lines of credit with three banks for varying
amounts. Bank debt principally provides for interest rates that vary according
to the pricing option in effect at the time of borrowing and range from prime to
.20% over LIBOR at the Company's option. Bank financings are subject to facility
fees of up to .08% of amounts available. Bank financing is used primarily as
backup for the Company's Commercial Paper program.
On January 16, 1998, the Company replaced $1.25 billion of the committed
revolving loans and lines of credit with a new, expanded facility for $1.35
billion. The facility is a 364 day tranche with a 5.5 basis point annual
facility fee. The pricing options range from prime to .20% over LIBOR.
As of December 31, 1997, the Company had an effective registration
statement with respect to $2.09 billion of debt securities, under which $700
million of notes were sold through 1997. Additionally, a $990 million
Medium-Term Note program was implemented under the shelf registration statement,
under which $780 million was sold through 1997. Through February 1998, the
Company sold an additional $300 million of notes and $80 million of Medium-Term
Notes.
In March 1998, a new registration statement of the Company with respect to
$2.13 billion of debt securities was declared effective.
9
<PAGE> 12
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 financing available is 6.55% and the interest rate on
22.5% of the original financing available varies between 6.18% and 6.89%. The
remaining 15% of the original financing available provides for LIBOR based
pricing.
In 1995, 1996 and 1997, the Company, through unrestricted 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 for one year operating leases, each with six one
year extension options for a total of seven years for each aircraft. 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 December 31, 1997, the Company had repurchased
one aircraft which was sold to a third party in January, 1998.
In each of February and November 1995, the Company sold $100 million of
Market Auction Preferred Stock.
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.
In the normal course of business, the Company employs a variety of
off-balance sheet financial instruments and other 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 its optimal mix of variable and fixed rate interest obligations. The
Company only enters into derivative transactions to hedge interest rate risk and
not to speculate on interest rates. These derivative products include interest
rate swap agreements, interest rate spreadlocks, interest rate swaptions and
interest rate floors.
The counterparties to the Company's derivative instruments are all
recognized U.S. derivative dealers. The counterparties to the majority of the
notional amounts of the Company's derivative instruments are "AAA" rated and all
have at least an "A" credit rating. 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 establish a cash
collateral account. Any failure of the instruments or counterparties to perform
under the derivative contracts would have an immaterial impact on the Company's
earnings.
RESULTS OF OPERATIONS
The increase in revenues from rentals of flight equipment from $1,254.0
million in 1995 to $1,444.4 million in 1996 to $1,732.7 million in 1997 is due
to the increase in the volume of flight equipment available for operating lease
from 282 in 1995 to 308 in 1996 and 319 in 1997. The increase is also
attributable to the increase in the relative cost of the fleet, from $12.0
billion in 1995 to $13.7 billion in 1996 and $14.4 billion in 1997 exclusive of
aircraft subject to sale-leaseback transactions from which rental income is
earned.
In addition to its leasing operations, the Company engages in the marketing
of flight equipment on a principal and commission basis as well as the
disposition of flight equipment at the end of, or during, the lease term.
Revenue from such flight equipment marketing increased from $119.1 million in
1995 to $136.1 million in 1996 to $176.0 million in 1997 as a result of the type
and the number of the flight equipment marketed in each period which fluctuated
from 41 aircraft in 1995 to 36 aircraft in 1996 and 57 aircraft in 1997.
In addition, the Company sold 11 engines (1997), seven engines (1996) and
19 engines (1995).
Expenses as a percentage of total revenues were 76.2% for 1995, 75.8% for
1996 and 73.1% for 1997. Interest expense increased from $541.4 million in 1995
to $573.6 million in 1996 to $642.3 million in 1997, primarily as a result of an
increase in debt outstanding, excluding the effect of debt discount, from $8.908
billion in 1995 to $9.817 billion in 1996 to $9.963 billion in 1997, to finance
aircraft acquisitions, as
10
<PAGE> 13
affected by changes in interest rates during the periods. These interest rate
changes caused the Company's composite borrowing rate to fluctuate as follows:
<TABLE>
<S> <C>
December 31, 1994........................................... 6.41%
March 31, 1995.............................................. 6.69
June 30, 1995............................................... 6.59
September 30, 1995.......................................... 6.50
December 31, 1995........................................... 6.47
March 31, 1996.............................................. 6.31
June 30, 1996............................................... 6.22
September 30, 1996.......................................... 6.28
December 31, 1996........................................... 6.23
March 31, 1997.............................................. 6.20
June 30, 1997............................................... 6.32
September 30, 1997.......................................... 6.34
December 31, 1997........................................... 6.44
</TABLE>
Depreciation of flight equipment increased from $431.9 million in 1995 to
$485.1 million in 1996 to $546.2 million in 1997 due to the addition of
aircraft. Provisions for overhauls also increased from $71.1 million in 1995 to
$85.1 million in 1996 to $99.5 million in 1997 due to an increase in the number
of aircraft on which the Company collects overhaul reserves resulting in an
increase in the aggregate number of hours flown for which overhaul reserves are
provided.
Rent expense increased from $51.8 million in 1996 to $103.9 million in 1997
due to the increase in the number of sale-leaseback transactions from 14
aircraft in 1996 to 20 in 1997.
The effective tax rate decreased from 41.9% in 1995 to 36.2% in 1996 and
35.7% in 1997. The higher percentage in 1995 was due principally to the impact
of losses of subsidiaries for which the Company did not receive a current or
future tax benefit. During the fourth quarter of 1995, two of these corporations
were restructured.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. This could result in
a system failure or miscalculations in the year 2000 causing disruptions of
operations of the Company, its lessees, manufacturers or business partners.
The Company has already reviewed and identified its computer systems that
are subject to Year 2000 risk. Accordingly, the Company has commenced the
remediation of all systems not Year 2000 compliant. Remediation and testing of
such systems will be completed in advance of Year 2000. The costs of such
remediation are expensed as incurred and are not material to the Company's
consolidated financial position or consolidated results of operations.
The Company has also initiated formal communication with lessees,
manufacturers and business partners to determine the extent to which the Company
is vulnerable to those third parties' failures to remediate their own Year 2000
issues. The Company has not yet completed its review of responses from its
lessees, manufacturers and business partners. As a result, the Company can not
determine at this time the extent, if any, to which the Company may be exposed
to financial risk from the inability of the Company's lessees, manufacturers and
business partners to remediate their own Year 2000 issues.
NEW ACCOUNTING PRONOUNCEMENTS, ISSUED BUT NOT YET EFFECTIVE
In June 1997, the FASB issued SFAS No. 130 Reporting Comprehensive Income.
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income is defined as the change in equity of
a business enterprise during a period from transactions and other events and
circumstances from nonowner sources. The Company does not expect this
pronouncement to materially impact the Company's results of operations.
11
<PAGE> 14
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. SFAS No. 131 establishes standards for
disclosure about operating segments in annual financial statements and selected
information in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. This statement supersedes SFAS No. 14, Financial Reporting for
Segments of a Business Enterprise. The new standard becomes effective for the
Company for the year ending December 31, 1998, and requires that comparative
information from earlier years be restated to conform to the requirements of
this standard. The Company does not expect this pronouncement to materially
change the Company's current reporting and disclosures.
In February 1997, the Securities and Exchange Commission (SEC) issued
Financial Reporting Release No. 48 "Disclosure of Accounting Policies for
Derivative Financial Instruments and Derivative Commodity Instruments and
Disclosure of Quantitative and Qualitative Information about Market Risk
Inherent in Derivative Financial Instruments, Other Financial Instruments, and
Derivative Commodity Instruments" (FRR No. 48). These disclosures will be
effective with the Company's reporting during 1998.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Registrant changed its independent auditors from Ernst & Young LLP on
April 17, 1997 due to the desire to have the accounts of the Registrant and its
ultimate parent corporation, American International Group, Inc., and its
consolidated subsidiaries audited by the same independent auditors, Coopers &
Lybrand L.L.P. On April 17, 1997, the Registrant engaged Coopers & Lybrand
L.L.P. as the Registrant's independent auditors.
Neither of the reports of Ernst & Young LLP for the years ended December
31, 1996 or 1995 contained an adverse opinion or a disclaimer of opinion, or was
qualified or modified as to uncertainty, audit scope, or accounting principles.
The decision to change independent auditors was approved by the Board of
Directors of Registrant.
Since January 1, 1995, there were no disagreements with Ernst & Young LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, and none of the events set forth in
paragraphs (a)(2)(v)(A) through (D) of Item 304 of Regulation S-K occurred.
From January 1, 1995 through April 17, 1997, neither the Registrant nor
anyone acting on its behalf has consulted Coopers & Lybrand L.L.P. regarding (i)
either the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Registrant's financial statements, and either a written report
was provided to the Registrant or oral advice was provided that Coopers &
Lybrand L.L.P. concluded was an important factor considered by the Registrant in
reaching a decision as to the accounting, auditing or financial reporting issue;
or (ii) any matter that was either the subject of a disagreement (as defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions to that Item)
or a reportable event (as described in Item 304(a)(1)(iv) of Regulation S-K).
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2): Financial Statements and Financial Statement Schedule: The
response to this portion of Item 14 is submitted as a separate section of this
report beginning on page 14.
(a)(3) and (c): Exhibits: The response to this portion of Item 14 is
submitted as a separate section on this report beginning on page 13.
(b) Reports on Form 8-K: None.
12
<PAGE> 15
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-K
ITEMS 8, 14(a), AND 14(c)
INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
The following consolidated financial statements of the Company and its
subsidiaries required to be included in Item 8 are listed below:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports of Independent Auditors............................. 15-16
Consolidated Financial Statements:
Balance Sheets at December 31, 1996 and 1997.............. 17
Statements of Income for the years ended December 31,
1995, 1996 and 1997.................................... 18
Statements of Shareholders' Equity for the years ended
December 31, 1995, 1996 and 1997....................... 19
Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997.................................... 20-21
Notes to Consolidated Financial Statements................ 22
</TABLE>
The following financial statement schedule of the Company and its
subsidiaries is included in Item 14(a)(2):
<TABLE>
<CAPTION>
SCHEDULE NUMBER DESCRIPTION PAGE
- --------------- ----------- ----
<C> <S> <C>
II Valuation and Qualifying Accounts........................... 36
</TABLE>
All other financial statements and schedules not listed have been omitted
since the required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.
The following exhibits of the Company and its subsidiaries are included in
Item 14(c):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
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 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).
3.3 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).
3.4 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).
3.5 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).
3.6 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).
3.7 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).
3.8 By-Laws of the Company, including amendment thereto dated
August 31, 1990 (filed as an exhibit to Registration
Statement No. 33-37600 and incorporated herein by
reference).
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Indenture dated as of November 1, 1991, between the Company
and First Trust National Association (successor to
Continental Bank, National Association), as Trustee (filed
as an exhibit to Registration Statement No. 33-43698 and
incorporated herein by reference).
4.2 The Company agrees to furnish to the Commission upon request
a copy of each instrument with respect to issues of
long-term debt of the Company and its subsidiaries, the
authorized principal amount of which does not exceed 10% of
the consolidated assets of the Company and its subsidiaries.
10.1 Purchase Agreement No. 1916, dated as of June 24, 1996,
between the Company and The Boeing Company, including Letter
Agreements relating thereto (filed as an exhibit to Form
10-Q for the fiscal quarter ended June 30, 1996 and
incorporated herein by reference).
10.2 Revolving Credit Agreement, dated as of January 17, 1997,
among the Company, Union Bank of Switzerland, New York
Branch, and the other banks listed therein providing up to
$1,250,000,000 (five year facility) (filed as an exhibit to
Form 10-K for the year ended March 31, 1996 and incorporated
herein by reference).
10.3 Revolving Credit Agreement, dated as of January 17, 1997,
among the Company, Union Bank of Switzerland, New York
Branch, and the other banks listed therein providing up to
$1,250,000,000 (364 day facility) (filed as an exhibit to
Form 10-K for the year ended March 31, 1996 and incorporated
herein by reference).
10.4 Amendment to Revolving Credit Agreement, dated as of January
16, 1998, among the Company, Union Bank of Switzerland, New
York Branch and the other banks listed therein providing up
to $1,350,000,000 (364 day facility).
12. Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends.
23.1 Consent of Coopers and Lybrand L.L.P.
23.2 Consent of Ernst and Young LLP.
27. Financial Data Schedule.
</TABLE>
14
<PAGE> 17
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
International Lease Finance Corporation
Los Angeles, California
We have audited the accompanying consolidated balance sheet of
International Lease Finance Corporation and subsidiaries as of December 31,
1997, and the related consolidated statements of income, shareholders' equity,
and cash flows for the year ended December 31, 1997 and the related financial
statement schedule. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
International Lease Finance Corporation and subsidiaries at December 31, 1997,
and the consolidated results of their operations and their cash flows for the
year ended December 31, 1997, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information required to be included
therein.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
February 3, 1998
15
<PAGE> 18
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
International Lease Finance Corporation
Los Angeles, California
We have audited the accompanying consolidated balance sheet of
International Lease Finance Corporation and subsidiaries as of December 31, 1996
and the related consolidated statements of income, shareholders' equity, and
cash flows for each of the two years in the period ended December 31, 1996. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
International Lease Finance Corporation and subsidiaries at December 31, 1996,
and the consolidated results of their operations and their cash flows for each
of the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Century City,
Los Angeles, California
February 19, 1997
16
<PAGE> 19
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash, including interest bearing accounts of
$35,113 (1997) and $31,704 (1996)......................... $ 63,754 $ 36,558
Current income taxes........................................ -- 16,420
Notes receivable............................................ 467,688 429,146
Net investment in finance and sales-type leases............. 98,026 103,629
Flight equipment under operating leases..................... 14,425,091 13,674,996
Less accumulated depreciation............................. 1,632,560 1,492,222
----------- -----------
12,792,531 12,182,774
Deposits on flight equipment purchases...................... 1,017,628 861,355
Accrued interest, other receivables and other assets........ 60,416 50,895
Investments................................................. 18,731 18,099
Deferred debt issue costs -- less accumulated amortization
of
$52,444 (1997) and $43,537 (1996)......................... 33,180 26,720
----------- -----------
$14,551,954 $13,725,596
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables......................... $ 214,106 $ 219,111
Current income taxes........................................ 64,891 --
Debt financing, net of deferred debt discount of
$8,424 (1997) and $22,749 (1996).......................... 9,051,042 8,798,388
Capital lease obligations................................... 903,320 995,872
Security and other deposits on flight equipment............. 744,800 611,272
Rentals received in advance................................. 129,586 77,107
Deferred income taxes....................................... 927,021 809,294
Commitments and contingencies -- Note K
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
(1997 and 1996), each having
500 shares issued and outstanding...................... 400,000 400,000
Common stock -- no par value; 100,000,000 authorized
shares, 35,818,122 shares (1997 and 1996) issued and
outstanding............................................ 3,582 3,582
Paid-in capital........................................... 579,955 579,955
Retained earnings......................................... 1,533,651 1,231,015
----------- -----------
2,517,188 2,214,552
----------- -----------
$14,551,954 $13,725,596
=========== ===========
</TABLE>
See accompanying notes.
17
<PAGE> 20
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental of flight equipment............................... $1,732,667 $1,444,439 $1,254,020
Flight equipment marketing............................... 176,005 136,099 119,078
Interest and other....................................... 49,335 51,976 49,390
---------- ---------- ----------
1,958,007 1,632,514 1,422,488
Expenses:
Interest................................................. 642,321 573,599 541,428
Depreciation of flight equipment......................... 546,226 485,102 431,947
Provision for overhaul................................... 99,458 85,083 71,113
Flight equipment rent expense............................ 103,883 51,809 --
Selling, general and administrative...................... 39,960 41,982 39,654
---------- ---------- ----------
1,431,848 1,237,575 1,084,142
---------- ---------- ----------
INCOME BEFORE INCOME TAXES............................ 526,159 394,939 338,346
Provision for income taxes................................. 187,475 143,165 141,909
---------- ---------- ----------
NET INCOME............................................ $ 338,684 $ 251,774 $ 196,437
========== ========== ==========
</TABLE>
See accompanying notes.
18
<PAGE> 21
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARKET AUCTION
PREFERRED STOCK COMMON STOCK
--------------------- --------------------
NUMBER OF NUMBER OF PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- -------- ---------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994........ 2,000 $200,000 35,818,122 $3,582 $582,941 $ 854,249 $1,640,772
Sale of MAPS preferred............ 2,000 200,000 (2,856) 197,144
Dividend to AIG................... (21,150) (21,150)
Preferred stock dividends......... (13,096) (13,096)
Net income........................ 196,437 196,437
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31, 1995........ 4,000 $400,000 35,818,122 $3,582 $580,085 $1,016,440 $2,000,107
Sale of MAPS preferred............ (130) (130)
Dividend to AIG................... (20,600) (20,600)
Preferred stock dividends......... (16,599) (16,599)
Net income........................ 251,774 251,774
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31, 1996........ 4,000 $400,000 35,818,122 $3,582 $579,955 $1,231,015 $2,214,552
Dividends to AIG.................. (19,700) (19,700)
Preferred stock dividends......... (16,348) (16,348)
Net income........................ 338,684 338,684
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31, 1997...... 4,000 $400,000 35,818,122 $3,582 $579,955 $1,533,651 $2,517,188
===== ======== ========== ====== ======== ========== ==========
</TABLE>
See accompanying notes.
19
<PAGE> 22
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ $ 338,684 $ 251,774 $ 196,437
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of flight equipment........................ 546,226 485,102 431,947
Deferred income taxes................................... 117,727 148,356 173,528
Amortization of deferred debt issue costs............... 9,505 8,841 11,554
Gain on sale of flight equipment included in amount
financed.............................................. (30,369) (16,063) (46,260)
Increase in notes receivable............................ (712) (66,721) (9,053)
Equity in net (income) loss of affiliates............... (632) (788) 517
Change in unamortized debt discount..................... 14,325 (7,057) 3,336
Changes in operating assets and liabilities:
(Increase) decrease in accrued interest, other
receivables and other assets.......................... (9,521) 37,096 (16,753)
(Decrease) increase in accrued interest and other
payables.............................................. (5,005) 22,435 72,651
Increase in current income taxes payable................ 81,311 14,383 2,321
Increase (decrease) in rentals received in advance...... 52,479 (3,704) 8,254
----------- ----------- -----------
Net cash provided by operating activities................... 1,114,018 873,654 828,479
----------- ----------- -----------
INVESTING ACTIVITIES:
Acquisition of flight equipment for operating leases...... (3,289,744) (3,210,986) (3,364,496)
(Increase) decrease in deposits and progress payments..... (156,273) (55,785) 85,141
Proceeds from disposal of flight equipment -- net of
gain.................................................... 2,038,390 1,194,946 862,935
Advances on notes receivable.............................. -- -- (5,606)
Collections on notes receivable........................... 82,464 163,298 150,093
Collections on finance and sales-type leases.............. 11,049 7,781 5,996
Purchase of investments................................... -- -- (845)
Sale of investments -- net of gain........................ -- -- 2,000
----------- ----------- -----------
Net cash used in investing activities....................... (1,314,114) (1,900,746) (2,264,782)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing and capital lease
obligations............................................. 6,084,081 5,042,064 6,309,304
Payments in reduction of debt financing and capital lease
obligations............................................. (5,938,304) (4,133,381) (5,003,012)
Proceeds from sale of MAPS preferred stock (net of issue
costs).................................................. -- (130) 197,144
Debt issue costs.......................................... (15,966) (8,057) (18,211)
Payment of common and preferred dividends................. (36,048) (37,199) (34,246)
Increase in customer deposits............................. 133,529 113,256 19,530
----------- ----------- -----------
Net cash provided by financing activities................... 227,292 976,553 1,470,509
----------- ----------- -----------
Net increase (decrease) in cash............................. 27,196 (50,539) 34,206
Cash at beginning of year................................... 36,558 87,097 52,891
----------- ----------- -----------
Cash at end of year..................................... $ 63,754 $ 36,558 $ 87,097
=========== =========== ===========
(Table continued on next page)
</TABLE>
20
<PAGE> 23
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest (net of amount capitalized $48,818 (1997),
$50,368 (1996), and $51,091 (1995))................... $ 617,906 $ 559,437 $ 503,023
Income taxes (net of amounts paid)...................... (11,563) (19,574) (33,940)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
1997
Notes and finance and sales-type leases in the amount of $125,741 were received as partial
payment in exchange for flight equipment sold with a book value of $95,372.
1996
Notes and finance and sale-type leases in the amount of $173,404 were received as partial payment
in exchange for flight equipment sold with a book value of $157,340.
Flight equipment was received in exchange for notes receivable in the amount of $46,307.
1995
Notes in the amount of $268,660 were received as partial payments in exchange for flight
equipment sold with a book value of $222,400.
Flight equipment was received in exchange for notes receivable in the amount of $64,576.
</TABLE>
See accompanying notes.
21
<PAGE> 24
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: The Company is primarily engaged in the acquisition of new
and used commercial jet aircraft and the leasing and sale of such aircraft to
charter and scheduled airlines throughout the world. In addition, the Company is
engaged in the remarketing of commercial jets for its own account, for airlines
and for financial institutions.
Parent Company: International Lease Finance Corporation (the "Company") is
an indirect wholly owned subsidiary of American International Group, Inc.
("AIG"). AIG is a holding company which through its subsidiaries is primarily
engaged in a broad range of insurance and insurance-related activities and
financial services in the United States and abroad.
Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. Investments of less than 20% in other entities are carried at
cost. Investments of between 20% and 50% in other entities are carried under the
equity method. All significant intercompany balances and transactions have been
eliminated in consolidation.
Intercompany Allocations: The Company is party to cost sharing agreements
with AIG. Generally, these agreements provide for the allocation of costs upon
either a specific identification basis or a proportional cost allocation basis.
The charges aggregated $4,526 (1997), $5,595 (1996) and $6,439 (1995).
Rentals: The Company, as lessor, leases flight equipment principally under
operating leases. Accordingly, income is reported over the life of the lease as
rentals become receivable under the provisions of the lease or, in the case of
leases with varying payments, under the straight-line method over the
noncancelable term of the lease. In certain cases, leases provide for additional
rentals based on usage.
Flight Equipment Marketing: The Company is a marketer of flight equipment.
Marketing revenues include all revenues from such operations consisting of net
gains on sales of flight equipment and commissions.
Flight Equipment: Flight equipment is stated at cost. Major additions and
modifications are capitalized. Normal maintenance and repairs; airframe and
engine overhauls; and compliance with return conditions of flight equipment on
lease are provided by and paid for by the lessee. Under the provisions of most
leases, for certain airframe and engine overhauls, the lessee is reimbursed for
costs incurred up to but not exceeding related contingent rentals paid to the
Company by the lessee. Such rentals are included in the caption Rental of flight
equipment. The Company provides a charge to operations for such reimbursements
based on the estimated reimbursements expected during the life of the lease,
which amount is included in overhaul reserves.
Generally, all aircraft, including aircraft acquired under capital leases,
are depreciated using the straight-line method over a 25 year life from the date
of manufacture to a 15% residual value.
At the time assets are retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the related accounts and the
difference, net of proceeds, is recorded as a gain or loss.
The Company regularly reviews its flight equipment to determine that its
carrying value is not impaired.
Capitalized Interest: The Company borrows certain funds to finance progress
payments for the construction of flight equipment ordered. The interest incurred
on such borrowings is capitalized and included in the cost of the equipment.
Deferred Debt Issue Costs: Deferred debt issue costs incurred in connection
with debt financing are amortized over the life of the debt using the interest
rate method and are charged to interest expense.
Financial Instruments: The Company has granted certain parties the right
but not the obligation to effectively convert certain of the Company's fixed
rate obligations to floating rate obligations based on an established notional
amount. The proceeds of such option agreements are initially recorded as a
liability.
22
<PAGE> 25
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When swap agreements are effective in modifying the terms of actual debt
agreements, such swaps are accounted for by the accrual method. Periodic
payments as well as the amortization (by a level yield method) of the initial
value are treated as adjustments to interest expense of the related debt.
Income Taxes: The Company and its U.S. subsidiaries are included in the
consolidated federal income tax return of AIG. The Company and its subsidiaries
are included in the combined California unitary tax return of AIG. The provision
for income taxes is calculated on a separate return basis. Income tax payments
are made pursuant to a tax payment allocation agreement whereby AIG credits or
charges the Company for the corresponding increase or decrease (not to exceed
the separate return basis calculation) in AIG's current taxes resulting from the
inclusion of the Company in AIG's consolidated tax return. Intercompany payments
are made when such taxes are due or tax benefits are realized by AIG.
The deferred tax liability is determined based on the difference between
the financial statement and tax basis of assets and liabilities and is measured
at the enacted tax rates that will be in effect when these differences reverse.
Deferred tax expense is determined by the change in the liability for deferred
taxes ("Liability Method").
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Reclassifications: Certain amounts have been reclassified in the 1996 and
1995 financial statements to conform to the Company's 1997 presentation.
NOTE B -- NOTES RECEIVABLE
Notes receivable are primarily from the sale of flight equipment and are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Fixed rate notes receivable due in varying
installments to 2008:
Less than 6%..................................... $ 3,691 $ 3,873
6% to 7.99%...................................... 306,053 240,754
8% to 9.99%...................................... 94,788 140,455
10% to 13%....................................... 6,126 8,302
LIBOR plus 1.1% to LIBOR plus 1.5% notes receivable
in varying installments to 2002.................. 57,030 35,762
-------- --------
$467,688 $429,146
======== ========
</TABLE>
Included above, the Company had notes receivable of $4,374 (1997) and
$10,694 (1996) representing restructured lease payments.
23
<PAGE> 26
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE B -- NOTES RECEIVABLE (CONTINUED)
At December 31, 1997, the minimum future notes receivable payments to be
received are as follows:
<TABLE>
<S> <C>
1998................................................... $126,221
1999................................................... 111,276
2000................................................... 34,555
2001................................................... 37,787
2002................................................... 25,831
Thereafter............................................. 132,018
--------
$467,688
========
</TABLE>
The Company sold notes receivable with certain limited recourse provisions
to a related party of the Company. The notes were sold at face value including
accrued interest and aggregated $116,235 in 1996 and $56,413 in 1995. The
Company continues to collect payments from the notes and transfers to the
related party the amounts received less a servicing fee. The Company recorded no
gain or loss on the sale. The Company recorded servicing fee income of $112
(1997) and $16 (1996) related to the notes sold. The Company's maximum exposure
under recourse provisions was $0 at December 31, 1997 and $23,205 at December
31, 1996. During 1997 the Company repurchased one note sold in 1996 and during
1996, the Company repurchased one note sold in 1995. Neither of the notes were
repurchased under the recourse provisions.
NOTE C -- NET INVESTMENT IN FINANCE AND SALES-TYPE LEASES
The following lists the components of the net investment in finance and
sales-type leases:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Total minimum lease payments to be received............ $109,615 $122,559
Estimated residual values of leased flight equipment... 19,993 18,483
Less: Unearned income.................................. (31,582) (37,413)
-------- --------
Net investment in finance and sales-type leases........ $ 98,026 $103,629
======== ========
</TABLE>
Minimum future lease payments to be received for flight equipment on
finance and sales-type leases at December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998................................................... $ 15,783
1999................................................... 14,682
2000................................................... 16,095
2001................................................... 16,095
2002................................................... 16,035
Thereafter............................................. 30,925
--------
Total minimum lease payments to be received............ $109,615
========
</TABLE>
24
<PAGE> 27
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE D -- INVESTMENTS
Investments consist of the following:
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
PERCENT PERCENT
OWNED AMOUNT OWNED AMOUNT
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cost method:
Air Liberte......................... (A) $ 4,792 10.8% $ 4,792
International Aircraft Investors.... 1.5%(B) 300 6.2% 300
Others.............................. 850 845
Equity method:
Pacific Ocean Leasing Ltd........... 50.0% 5,995 50.0% 5,848
Pacific Asia Leasing Ltd............ 25.0% 6,794 25.0% 6,314
------- -------
$18,731 $18,099
======= =======
</TABLE>
- ---------------
(A) During 1997, Air Liberte was acquired by British Airways. As a result of the
acquisition, ILFC's percentage ownership will be reduced. Until the
acquisition is complete, ILFC's percentage ownership is not determinable.
(B) During 1997, International Aircraft Investors ("IAI") consummated an initial
public offering which raised $23,380 in equity. As a result, the Company's
investment has been diluted to 1.5%.
At December 31, 1997, the Company had one aircraft on lease to Air Liberte.
This lease is similar in terms to those of unaffiliated customers.
The Company has sold used aircraft and engines to IAI on terms similar to
those of unaffiliated customers. In exchange for these sales the Company has
received notes aggregating $36,675 (1997) and $8,763 (1996), which are included
in Notes Receivable in the accompanying consolidated balance sheets (see Note
B). In addition, the Company has guaranteed certain obligations of IAI related
to such sales (see Note K).
The Company has a 50% interest in Pacific Ocean Leasing Ltd. ("POL"), a
Bermuda corporation. POL presently owns one Boeing 767-200 aircraft and one
spare engine, both of which are on lease to an airline. POL also owns an
inventory of spare parts. Additionally, the Company has guaranteed the bank loan
to POL (see Note K).
The Company has a 25% interest in Pacific Asia Leasing Ltd. ("PAL"), a
Bermuda corporation. PAL presently owns one Boeing 767-300ER aircraft on lease
to an airline. The Company has a demand note, which bears interest at
Libor+1 5/8%, with PAL of $26,751.
25
<PAGE> 28
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS
Debt financing and capital lease obligations are comprised of the
following:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Commercial Paper (weighted average interest rate at
December 31, 5.89% (1997) and 5.48% (1996))....... $2,212,601 $2,757,417
Term Notes.......................................... 3,950,000 3,500,000
Medium-Term Notes................................... 2,896,865 2,563,720
Capital Lease Obligations........................... 903,320 995,872
Less: Deferred debt discount........................ (8,424) (22,749)
---------- ----------
$9,954,362 $9,794,260
========== ==========
</TABLE>
Bank Financing:
As of December 31, 1997, the Company had committed credit agreements with
48 commercial banks aggregating $2,650,000 and uncommitted lines of credit with
three banks for varying amounts. Bank debt principally provides for interest
rates that vary according to the pricing option in effect at the time of
borrowing and range from prime to .20% over LIBOR at the option of the Company.
Bank financings are subject to facility fees of up to .08% of amounts available.
Bank financing is used primarily as backup for the Company's Commercial Paper
program.
26
<PAGE> 29
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Term Notes:
The Company has issued the following Notes which provide for a single
principal payment at maturity and cannot be redeemed prior to maturity:
<TABLE>
<CAPTION>
INITIAL
TERM 1997 1996
--------- ---------- ----------
<S> <C> <C> <C>
4 3/4% Notes due January 15, 1997..................... 3 years $ 100,000
5 7/8% Notes due February 1, 1997..................... 4 years 100,000
5 1/2% Notes due April 1, 1997........................ 4 years 100,000
6 1/2% Notes due July 15, 1997........................ 5 years 150,000
6 3/4% Notes due August 1, 1997....................... 3 years 100,000
4 1/2
Floating Rate Notes due October 15, 1997.............. years 100,000
8 1/8% Notes due January 15, 1998..................... 3 years $ 150,000 150,000
5 5/8% Notes due March 1, 1998........................ 4 years 100,000 100,000
5 3/4% Notes due March 15, 1998....................... 5 years 100,000 100,000
7% Notes due June 1, 1998............................. 4 years 100,000 100,000
6 1/4% Notes due June 15, 1998........................ 3 years 100,000 100,000
Floating Rate Notes due June 19, 1998 (swapped to
6.50%).............................................. 2 years 100,000 100,000
5 3/4% Notes due July 1, 1998......................... 5 years 100,000 100,000
8.35% Notes due October 1, 1998....................... 7 years 100,000 100,000
Floating Rate Notes due November 2, 1998 (swapped to
6.0725%)............................................ 2 years 100,000 100,000
5 3/4% Notes due January 15, 1999..................... 5 years 150,000 150,000
5 1/2% Notes due January 15, 1999..................... 3 years 150,000 150,000
7 1/2% Notes due March 1, 1999........................ 4 years 100,000 100,000
6 5/8% Notes due April 1, 1999 (swapped to a floating
rate(1))............................................ 5 years 100,000 100,000
6.70% Notes due April 30, 1999........................ 2 years 100,000
Floating Rate Notes due June 2, 1999 (swapped to
6.64%).............................................. 4 years 100,000 100,000
Floating Rate Notes due July 15, 1999 (swapped to
6.235%)............................................. 4 years 100,000 100,000
6 1/2% Notes due August 15, 1999...................... 7 years 100,000 100,000
6 1/8% Notes due November 1, 1999..................... 4 years 100,000 100,000
5 3/4% Notes due December 15, 1999.................... 4 years 150,000 150,000
8 1/4% Notes due January 15, 2000..................... 5 years 100,000 100,000
6 3/8% Notes due January 18, 2000..................... 3 years 200,000
6.65% Notes due April 1, 2000......................... 3 years 100,000
6.20% Notes due May 1, 2000........................... 7 years 100,000 100,000
7% Notes due May 15, 2000............................. 5 years 100,000 100,000
6 5/8% Notes due June 1, 2000......................... 3 years 100,000
6 5/8% Notes due August 15, 2000...................... 4 years 100,000 100,000
6 1/4% Notes due October 15, 2000..................... 5 years 100,000 100,000
Floating Rate Notes due February 1, 2001 (swapped to
6.53%) 4 years 100,000
8 7/8% Notes due April 15, 2001....................... 10 years 150,000 150,000
6 7/8% Notes due May 1, 2001.......................... 4 years 100,000
6 1/2% Notes due July 1, 2001......................... 4 years 100,000
6 3/8% Notes due August 1, 2001....................... 4 years 100,000
6 1/2% Notes due October 15, 2001..................... 5 years 100,000 100,000
6 3/8% Notes due February 15, 2002.................... 5 years 100,000
6 3/8% Notes due August 1, 2002....................... 5 years 100,000
8 3/8% Notes due December 15, 2004.................... 10 years 100,000 100,000
---------- ----------
$3,950,000 $3,500,000
========== ==========
</TABLE>
- ---------------
See Note L -- Financial Instruments.
(1) Floating rate swap expired April 1, 1997.
27
<PAGE> 30
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Medium-Term Notes:
The Company's Medium-Term Notes have an average notional amount of $11
million, bear interest at rates varying between 5.05% and 9.88%, inclusive, with
maturities from 1998 through 2005. The Medium-Term Notes provide for a single
principal payment at the maturity of the respective note. They cannot be
redeemed by the Company prior to maturity.
Capital Lease Obligations:
The Company's Capital Lease Obligations provide 10 year, fully amortizing
debt in three interest rate tranches. The first 62.5% of the original debt is at
a fixed rate of 6.55%. The second 22.5% of the original debt is at fixed rates
varying between 6.18% and 6.89%. The final 15% of the original debt is at a
floating LIBOR based rate. The debt matures through 2005. The flight equipment
associated with the obligations, and included in flight equipment under
operating leases in the balance sheet, had a net book value of $1,147,514 (1997)
and $1,174,845 (1996).
The following is a schedule by years of future minimum lease payments under
capitalized leases together with the present value of the net minimum lease
payments as of December 31, 1997:
<TABLE>
<S> <C>
1998..................................................... $ 151,105
1999..................................................... 144,978
2000..................................................... 138,907
2001..................................................... 132,656
2002..................................................... 126,569
Thereafter............................................... 495,230
----------
Total minimum lease payments............................. 1,189,445
Less amount representing interest........................ (286,125)
----------
Present value of net minimum lease payments.............. 903,320
==========
</TABLE>
Maturities of debt financing and capital lease obligations (excluding
commercial paper and deferred debt discount) at December 31, 1997 are as
follows:
<TABLE>
<S> <C>
1998..................................................... $1,810,667
1999..................................................... 1,915,802
2000..................................................... 1,960,052
2001..................................................... 1,008,552
2002..................................................... 408,552
Thereafter............................................... 646,560
----------
$7,750,185
==========
</TABLE>
Under the most restrictive provisions of the related borrowings,
consolidated retained earnings at December 31, 1997, in the amount of $438,335,
are unrestricted as to payment of dividends based on consolidated tangible net
worth requirements.
NOTE F -- SHAREHOLDERS' EQUITY
Preferred Stock:
In February and November 1995, 500 shares each of Series E and F and G and
H, respectively, of Market Auction Preferred Stock ("MAPS") were issued in
connection with public offerings at $100 per
28
<PAGE> 31
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE F -- SHAREHOLDERS' EQUITY (CONTINUED)
share. Proceeds, net of issuance costs, to the Company were $197,144. In
addition, issuance costs of $130 for Series G and H were incurred in 1996. The
MAPS have a liquidation value of $100 per share and are not convertible. The
dividend rate, other than the initial rate, for each dividend period for each
series is reset approximately every 7 weeks (49 days) on the basis of orders
placed in an auction. At December 31, 1997, the dividend rates for Series A
through H ranged from 4.125% to 4.50%.
Stock Appreciation Rights:
Stock Appreciation Rights ("SARs") were granted to certain employees of the
Company during 1990. The SARs granted generally vest over a nine year period
from the effective date and are exercisable immediately upon vesting. SARs
initially have no value but can gain a cash value based upon the difference
between a Benchmark Price and a Formula Price (based on adjusted pre-tax cash
flow of the Company), but not in excess of an aggregate of $150,000, to be
accrued and paid over the period of the plan. The SAR plan became effective on
January 1, 1991. No value has been earned or accrued under the SAR plan as of
December 31, 1997.
NOTE G -- RENTAL INCOME
Minimum future rentals on noncancelable operating leases and subleases of
flight equipment which have been delivered at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------
<S> <C>
1998..................................................... $1,460,145
1999..................................................... 1,248,816
2000..................................................... 962,415
2001..................................................... 722,347
2002..................................................... 552,554
Thereafter............................................... 792,066
----------
$5,738,343
==========
</TABLE>
Additional rentals earned by the Company based on the lessees' usage
aggregated $219,380 (1997), $194,741 (1996) and $168,121 (1995). Flight
equipment is leased, under operating leases, with remaining terms ranging from
one to 10 years.
NOTE H -- RENTAL EXPENSE
During 1995, 1996 and 1997, the Company entered into sale-leaseback
transactions providing proceeds to the Company in the amounts of $412,626,
$507,600 and $601,860, respectively, relating to seven aircraft for each
transaction. The transactions resulted in the sale and leaseback of these
aircraft under one year operating leases, each with six one year extension
options, maturing on December 22, 1998, September 20, 1998 and September 11,
1998, respectively. During 1997 one aircraft was repurchased. The lease rates
equate to fixed principal amortization and floating interest payments based on
LIBOR or commercial paper pricing.
Minimum future rental expense for 1998 is $44,227 at December 31, 1997.
29
<PAGE> 32
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE I -- INCOME TAXES
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal(1)........................................... $ 60,003 $(16,700) $(32,962)
State................................................ 8,280 1,957 1,427
Foreign.............................................. 1,465 9,381 --
-------- -------- --------
69,748 (5,362) (31,535)
Deferred:
Federal.............................................. 111,120 138,750 162,129
State................................................ 6,607 9,777 11,315
-------- -------- --------
117,727 148,527 173,444
-------- -------- --------
$187,475 $143,165 $141,909
======== ======== ========
</TABLE>
- ---------------
(1) Including U.S. tax on foreign income
The provision for deferred income taxes is comprised of the following
temporary differences:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Accelerated depreciation on flight equipment........... $123,486 $132,101 $182,125
Excess of state income taxes not currently deductible
for Federal income tax purposes...................... (2,312) (3,422) (3,960)
Tax versus book lease differences...................... 18,568 35,933 779
Provision for overhauls................................ (2,873) (7,726) (4,370)
Rentals received in advance............................ (18,270) (5,855) (308)
Straight line rents.................................... 778 (3,020) (606)
Other.................................................. (1,650) 516 (216)
-------- -------- --------
$117,727 $148,527 $173,444
======== ======== ========
</TABLE>
The deferred tax liability consists of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Accelerated depreciation on flight equipment........... $942,861 $819,375
Excess of state income taxes not currently deductible
for Federal income tax purposes...................... (19,783) (17,471)
Tax versus book lease differences...................... 86,465 67,897
Provision for overhauls................................ (41,646) (38,773)
Rentals received in advance............................ (54,747) (36,477)
Straight line rents.................................... 15,186 14,408
Other.................................................. (1,315) 335
-------- --------
$927,021 $809,294
======== ========
</TABLE>
30
<PAGE> 33
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE I -- INCOME TAXES (CONTINUED)
A reconciliation of computed expected total provision for income taxes to
the amount recorded is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Computed expected provision based upon a federal rate
of 35%............................................... $184,156 $138,229 $118,421
State income taxes, net of Federal income taxes........ 9,676 7,628 8,282
Foreign sales corporation benefit...................... (6,920) (6,160) (7,305)
Subsidiary losses without tax benefit.................. -- -- 17,169
Other.................................................. 563 (1,818) 5,342
Foreign taxes.......................................... -- 5,286 --
-------- -------- --------
$187,475 $143,165 $141,909
======== ======== ========
</TABLE>
NOTE J -- OTHER INFORMATION
Concentration of Credit Risk
The Company leases and sells aircraft to airlines. All of the lease
receivables and the majority of notes receivable are from airlines located
throughout the world. The Company generally obtains deposits on leases and
obtains collateral in flight equipment on notes receivable. The Company has no
single customer which accounts for 10% or more of revenues.
Segment Information
The Company operates within one industry; the leasing, sales and management
of flight equipment.
Revenues include rentals of flight equipment to foreign airlines of
$1,472,075 (1997), $1,202,651 (1996) and $1,002,251 (1995).
The following table sets forth the dollar amount and percentage of total
rental revenues attributable to the indicated geographic areas for the years
indicated:
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ ------------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe............................. $ 705,128 40.7% $ 551,703 38.2% $ 462,252 36.9%
Asia/Pacific....................... 358,687 20.7 332,159 23.0 255,163 20.4
United States and Canada........... 345,143 19.9 304,801 21.2 304,784 24.3
Central, South America and
Mexico........................... 211,152 12.2 165,819 11.5 166,443 13.2
Africa and the Middle East......... 112,557 6.5 89,957 6.2 65,378 5.2
---------- ----- ---------- ----- ---------- -----
$1,732,667 100.0% $1,444,439 100.0% $1,254,020 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
Employee Benefit Plans
The Company's employees participate in various benefit plans sponsored by
AIG, including a noncontributory qualified defined benefit retirement plan,
various stock option and purchase plans and a voluntary savings plan (401(k)
plan).
31
<PAGE> 34
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE J -- OTHER INFORMATION (CONTINUED)
AIG's U.S. plans do not separately identify projected benefit obligations
and plan assets attributable to employees of participating affiliates. AIG's
projected benefit obligations exceeded the plan assets at December 31, 1997 by
$39,569.
NOTE K -- COMMITMENTS AND CONTINGENCIES
Aircraft orders
At December 31, 1997, the Company had committed to purchase 328 aircraft
deliverable from 1998 through 2006 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $17.7 billion.
Most of these purchase commitments and options are based upon master
arrangements with each of The Boeing Company ("Boeing") and AVSA, S.A.R.L., the
sales subsidiary of Airbus Industrie ("Airbus").
The Boeing aircraft (models 737, 747, 757, 767 and 777), and the Airbus
aircraft (models A319, A320, A321, A330 and A340) are being purchased pursuant
to agreements executed by the Company and Boeing or Airbus. These agreements
establish the pricing formulas (which include certain price adjustments based
upon inflation and other factors) and various other terms with respect to the
purchase of aircraft. Under certain circumstances, the Company has the right to
alter the mix of aircraft type ultimately acquired. As of December 31, 1997, the
Company had made non-refundable deposits (exclusive of capitalized interest)
with respect to the aircraft which the Company has committed to purchase of
approximately $553,749 and $359,873 with Boeing and Airbus, respectively.
Management anticipates that a significant portion of such aggregate
purchase price will be funded by incurring additional debt. The exact amount of
the indebtedness to be incurred will depend upon the actual purchase price of
the aircraft, which can vary due to a number of factors, including inflation,
and the percentage of the purchase price of the aircraft which must be financed.
Asset Value Guarantees
The Company has guaranteed a portion of the residual value of 28 aircraft
to financial institutions expiring at various dates through 2006. The guarantees
generally provide for the Company to pay the difference between the fair market
value of the aircraft and the guaranteed value up to certain specified amounts,
or, at the option of the Company, purchase the aircraft for the guaranteed
value. At December 31, 1997, the maximum exposure if the Company were to pay
under such guarantees was $145,733.
Other Guarantees
In connection with the sale of aircraft, the Company has guaranteed certain
obligations for entities in which it has an investment. At December 31, 1997,
the Company guaranteed nine loans secured by aircraft aggregating $62,256.
The Company guaranteed three loans, collateralized by flight equipment, of
customers which, at December 31, 1997, aggregated $12,850.
Impact of the Year 2000 Issue
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. This could result in
a system failure or miscalculations in the year 2000 causing disruptions of
operations of the Company, its lessees, manufacturers or business partners.
32
<PAGE> 35
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE K -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has already reviewed and identified its computer systems that
are subject to Year 2000 risk. Accordingly, the Company has commenced the
remediation of all systems not Year 2000 compliant. Remediation and testing of
such systems will be completed in advance of Year 2000. The costs of such
remediation are expensed as incurred and are not material to the Company's
consolidated financial position or consolidated results of operations.
The Company has also initiated formal communication with lessees,
manufacturers and business partners to determine the extent to which the Company
is vulnerable to those third parties' failures to remediate their own Year 2000
issues. The Company has not yet completed its review of responses from its
lessees, manufacturers and business partners. As a result, the Company can not
determine at this time the extent, if any, to which the Company may be exposed
to financial risk from the inability of the Company's lessees, manufacturers and
business partners to remediate their own Year 2000 issues.
NOTE L -- FINANCIAL INSTRUMENTS
In the normal course of business, the Company employs a variety of
off-balance sheet derivative transactions with the objective to lower its
overall borrowing cost and to maintain its optimal mix of variable and fixed
rate interest obligations. These derivative products include interest rate swap
agreements, swaptions and interest rate floors (off-balance sheet derivative
transactions).
The Company accounts for its off-balance sheet derivative transactions on
an accrual basis. As such, accrued future payments or receipts are reflected in
operating income in the period incurred or earned. Credit risk exposure arises
from the potential that the counterparty may not perform under these agreements
with respect to the off-balance sheet derivative transactions. The Company
minimizes such exposure through transacting with recognized U.S. derivative
dealers assigned at least an "A" rating by a recognized statistical rating
organization. The counterparties to the majority of the off-balance sheet
derivative transactions are assigned an "AAA" rating. One of the counterparties
is a related party of the Company. The Company monitors each counterparty's
assigned credit rating throughout the life of the off-balance sheet derivative
transaction. The Company currently does not require, nor is it required by, its
counterparties to provide security for its positions with the Company although
it can in certain circumstances.
The following table provides the notional amounts of the Company's
off-balance sheet derivative transactions at December 31, 1997. The notional
amounts used to express the extent of the Company's involvement in swap
transactions represent a standard measurement of the volume of the Company's
swap transactions. Notional amount is not a quantification of market risk or
credit risk and is not recorded on the balance sheet. Notional amounts represent
those amounts used to calculate contractual cash flows to be exchanged and are
not paid or received. The timing and the amount of cash flows relating to
swaption and other interest rate option contracts are determined by each of the
respective contractual agreements.
It is management's belief that any failure of a counterparty to perform
under the agreement with respect to these off-balance sheet transactions would
have an immaterial effect on the Company's results of operations, financial
condition and liquidity.
33
<PAGE> 36
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L -- FINANCIAL INSTRUMENTS (CONTINUED)
The following table presents the notional amounts of the Company's interest
rate swap agreements, swaptions and interest rate floors by maturity at December
31, 1997.
<TABLE>
<CAPTION>
REMAINING LIFE
------------------------------------
TWO TO AFTER FIVE TOTAL TOTAL
TYPE ONE YEAR FIVE YEARS YEARS 1997 1996
---- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest Rate:
Swaps........................... $365,806 $ 659,931 $261,790 $1,287,527 $1,349,234
Swaptions(1).................... 100,000 100,000 100,000
Floors.......................... 33,409 440,221 393,435 867,065 900,434
-------- ---------- -------- ---------- ----------
Total........................... $399,215 $1,200,152 $655,225 $2,254,592 $2,349,668
======== ========== ======== ========== ==========
</TABLE>
- ---------------
(1) Swaptions obligate the Company to convert certain fixed rate obligations to
floating rate obligations if the option purchaser chooses to exercise. These
amounts do not represent credit exposure.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying value reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Notes receivable: The fair values for notes receivable are estimated
using discounted cash flow analyses, using interest rates currently being
offered for similar loans to borrowers with similar credit ratings.
Investments: It was not practicable to estimate the fair value of most
of the Company's investments in the common and preferred stocks of other
companies because of the lack of a quoted market price and the inability to
estimate fair value without incurring excessive costs due to their short
maturities. The carrying amount of these investments at December 31, 1997
represents the original cost or original cost plus the Company's share of
earnings of the investment. For investments held by the Company that had a
quoted market price at December 31, 1997, the Company used such quoted
market price in estimating the fair value of such investments.
Debt financing: The carrying value of the Company's commercial paper
and term debt maturing within one year approximates its fair value. The
fair value of the Company's long-term debt is estimated using discounted
cash flow analyses, based on the Company's spread to U.S. Treasury bonds
for similar debt at year-end.
Off-balance-sheet instruments: Fair values for the Company's
off-balance-sheet instruments are based on pricing models or formulas using
current assumptions (swaps, swaptions and interest rate floors) and the
amount of the guarantee which would not be covered by the fair value of the
underlying collateral (loan guarantees and asset value guarantees).
34
<PAGE> 37
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L -- FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------- -------------------------------------
CARRYING CARRYING
AMOUNT OF FAIR VALUE OF AMOUNT OF FAIR VALUE OF
ASSET (LIABILITY) ASSET (LIABILITY) ASSET (LIABILITY) ASSET (LIABILITY)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash and cash equivalents............ $ 63,754 $ 63,754 $ 36,558 $ 36,558
Notes receivable..................... 467,688 456,592 429,146 418,520
Investments.......................... 18,731 19,056 18,099 18,099
Debt financing....................... (9,051,042) (9,211,790) (8,798,388) (8,951,593)
Off-balance-sheet financial
instruments:
Swaps........................... (6,030) 4,386 (7,422) (6,386)
Swaptions....................... (2,936) (294) (3,371) (1,821)
Interest rate floors............ (1,927) (2,122) (4,487) (4,487)
</TABLE>
35
<PAGE> 38
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
------ ------------ ----------------------------- ------------ -------------
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER ACCOUNTS-- DEDUCTIONS-- BALANCE AT
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE(1) END OF PERIOD
----------- ------------ ---------- ---------------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Reserve for overhaul:
Year ended December 31, 1997...... $102,492 $99,458 $91,128 $110,822
Year ended December 31, 1996...... 83,857 85,083 783(2) 67,231 102,492
Year ended December 31, 1995...... 71,554 71,113 4,191(2) 63,001 83,857
</TABLE>
- ---------------
(1) Reimbursements to lessees for overhauls performed and amounts transferred to
buyers for aircraft sold.
(2) Payments received from lessees in lieu of compliance with return conditions.
36
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 9, 1998
INTERNATIONAL LEASE FINANCE
CORPORATION
By /s/ LESLIE L. GONDA
------------------------------------
Leslie L. Gonda
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ LESLIE L. GONDA Director March 9, 1998
- ------------------------------------------------
Leslie L. Gonda
/s/ STEVEN F. UDVAR-HAZY Chief Executive Officer and March 9, 1998
- ------------------------------------------------ Director
Steven F. Udvar-Hazy
/s/ LOUIS L. GONDA Director March 9, 1998
- ------------------------------------------------
Louis L. Gonda
/s/ M. R. GREENBERG Director March 9, 1998
- ------------------------------------------------
M. R. Greenberg
Director
- ------------------------------------------------
Edward E. Matthews
/s/ WILLIAM N. DOOLEY Director March 9, 1998
- ------------------------------------------------
William N. Dooley
/s/ HOWARD I. SMITH Director March 9, 1998
- ------------------------------------------------
Howard I. Smith
/s/ ALAN H. LUND Chief Financial Officer and March 9, 1998
- ------------------------------------------------ Chief Accounting Officer
Alan H. Lund
</TABLE>
37
<PAGE> 40
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
Since the Registrant is an indirect wholly owned subsidiary of AIG, no
annual report to security holders for the year ended December 31, 1997 or proxy
statement, form of proxy or other proxy soliciting materials have been sent to
securities holders since January 1, 1990.
38
<PAGE> 1
EXHIBIT 10.4
AMENDMENT TO
364-Day REVOLVING CREDIT AGREEMENT
AMENDMENT AGREEMENT, dated as of January 16, 1998, among
INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation (herein called
the "Company"), the financial institutions listed on the signature pages hereof
(herein, together with their respective successors and assigns, collectively
called the "Banks" and individually each called a "Bank") and UNION BANK OF
SWITZERLAND, acting through its New York Branch, as agent for the Banks (herein,
in such capacity, together with its successors and assigns in such capacity,
called the "Agent").
W I T N E S S E T H:
WHEREAS, the Company, the Banks listed on Schedule I hereto (the
"Original Banks") and the Agent are parties to a 364-Day Revolving Credit
Agreement dated as of January 17, 1997 (the "Credit Agreement") pursuant to
which the Original Banks agreed to lend up to $1,250,000,000 to the Company on a
364 day revolving basis to enable the Company to support its commercial paper
program and for other general corporate purposes;
WHEREAS, the Company has requested the Banks to increase the
Aggregate Commitment to $1,350,000,000 and to extend the Termination Date under
the Credit Agreement for an additional 364 days;
WHEREAS, the Banks listed on Schedule II hereto (the "Additional
Banks") have agreed to become Banks parties to the Credit Agreement;
WHEREAS, the Original Banks listed on Schedule III hereto (the
"Terminating Banks") have elected not to participate in the Credit Agreement as
so extended;
WHEREAS, the Original Banks, other than the Terminating Banks, and
the Additional Banks (together, the "Continuing Banks") have agreed so to
increase the Aggregate Commitment and to extend the Termination Date; and
WHEREAS, capitalized terms used herein which are defined in the
Credit Agreement have the meanings herein ascribed to them in the Credit
Agreement;
-1-
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. The definitions of the terms "Aggregate
Commitment", "Bid Note", "Commitments", "Committed Note" and
"Termination Date" in Section 1.2 of the Credit Agreement
are hereby amended to read as follows:
"Aggregate Commitment" means $1,350,000,000, as reduced by any
reduction in the Commitments made from time to time pursuant to Section
5.1 or 13.8."
. . .
"Bid Note means a promissory note of the Company, substantially in
the form of Exhibit A to the Amendment Agreement dated as of January 16,
1998 among the Company, the Banks and the Agent, duly completed,
evidencing Bid Loans made to the Company, as such note may be amended,
modified or supplemented or supplanted pursuant to Section 13.4.1 from
time to time."
. . .
"Commitments means the Banks' commitments to make Committed Loans
hereunder; and Commitment as to any Bank means the amount set forth
opposite such Bank's name on Schedules I and II to the Amendment Agreement
dated as of January 16, 1998 among the Company, the Banks and the Agent
(as reduced in accordance with Section 5.1, or as periodically revised in
accordance with Section 13.4 or Section 13.8)."
. . .
"Committed Note means a promissory note of the Company,
substantially in the form of Exhibit B to the Amendment Agreement dated as
of January 16, 1998 among the Company, the Banks and the Agent, duly
completed, evidencing Committed Loans to the Company, as such note may be
amended, modified or supplemented or supplanted pursuant to Section 13.4.1
from time to time."
. . .
-2-
<PAGE> 3
"Termination Date means, with respect to any Bank, the earliest to
occur of (i) January 15, 1999 or such later date as may be agreed to by
such Bank pursuant to Section 13.8(a), (ii) the date on which the
Commitments shall terminate pursuant to Section 11.2 or the Commitments
shall be reduced to zero pursuant to Section 5.1 and (iii) the date
specified as such Bank's Termination Date pursuant to Section 13.8(b), or,
if in any case (other than clause (ii) above) such day is not a Business
Day, the next succeeding Business Day; in all cases, subject to the
provisions of Section 13.8(d)."
2. Each of the Continuing Banks hereby consents to the increase of
the Aggregate Commitment and the extension of the Termination Date as herein
provided and agrees to continue as a Bank under the Credit Agreement with the
Commitment set forth opposite its name on Schedule I hereto.
3. Each of the Additional Banks hereby adopts the Credit Agreement,
as amended hereby and assumes the obligations of, and agrees to become, a Bank
thereunder with the Commitment set forth opposite its name on Schedule II
hereto, as of the date hereof, and with the address to which notices to it may
be delivered pursuant to Section 13.2 of the Credit Agreement set forth for it
on the signature pages hereof.
4. Each of the Terminating Banks shall automatically cease being a
Bank under the Credit Agreement as of the date hereof (which shall be the
Termination Date for each of the Terminating Banks), their Commitments shall
thereupon be terminated and they shall not thereafter have any further
obligations under the Credit Agreement. The Company shall forthwith pay to each
Terminating Bank its facility fee pursuant to Section 4.4 of the Credit
Agreement accrued to the date hereof.
5. The Company represents and warrants to the Agent and the Banks
that the representations and warranties of the Company set forth in Section 8 of
the Credit Agreement are true and correct on the date of this Amendment
Agreement as though made on such date.
6. The obligations of the Continuing Banks hereunder are subject to
the satisfaction of the following conditions precedent:
-3-
<PAGE> 4
(a) The Agent shall have received this Amendment Agreement duly
executed and delivered by each of the Banks and the Company and each of
the Continuing Banks shall have received a fully executed Committed Note
and a fully executed Bid Note.
(b) The Agent shall have received certified copies of all corporate
actions taken by the Company to authorize this Amendment Agreement.
(c) The Agent shall have received favorable written opinions of
O'Melveny & Myers, counsel for the Company, in substantially the form of
Exhibit C, and the Corporate Counsel of the Company, in substantially the
form of Exhibit D.
(d) The Agent shall have received a certificate of the Company's
chief financial officer confirming that since the date of the audited
financial statements most recently delivered to the Agent pursuant to
Section 9.1.1 of the Credit Agreement, there shall not have occurred any
material adverse change in the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries taken as a
whole.
7. Except as amended hereby, the Credit Agreement shall remain in
full force and effect and is hereby ratified and conformed.
8. THIS AMENDMENT AGREEMENT SHALL BE A CONTRACT MADE UNDER, GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES.
9. This Amendment Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same agreement. When counterparts of this
Amendment Agreement executed by each party shall have been lodged with the Agent
(or, in the case of any Bank as to which an executed counterpart shall not have
been so lodged, the Agent shall have received telegraphic, telex or other
written confirmation of execution of a counterpart hereof by such Bank), this
Amendment Agreement shall become effective as of the date
-4-
<PAGE> 5
hereof and the Agent shall so inform all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
Agreement as of the day and year first above written.
INTERNATIONAL LEASE FINANCE
CORPORATION
By: /s/ ALAN H. LUND
-------------------------------------
Name: ALAN H. LUND
Title: EXECUTIVE VICE PRESIDENT
By: /s/ PAMELA S. HENDRY
----------------------------------
Name: PAMELA S. HENDRY
Title: VICE PRESIDENT AND TREASURER
1999 Avenue of the Stars
39th Floor
Los Angeles, California 90067
Attention: Pamela S. Hendry
Telephone: (310) 788-1999
Facsimile: (310) 788-1990
Telex: 69-1400 INTERLEAS BVHL
-5-
<PAGE> 6
The Continuing Banks:
UNION BANK OF SWITZERLAND,
acting through its New York
Branch, in its individual
corporate capacity and as Agent
By: /s/ ROBERT MENDELES
----------------------------------
Name: ROBERT MENDELES
Title: DIRECTOR
By: /s/ GREGORY H. RAUE
----------------------------------
Name: GREGORY H. RAUE
Title: FDBK
299 Park Avenue
New York, New York 10171-0026
Attention: Robert Mendeles
Telephone: (212) 821-3020
Facsimile: (212) 821-4541
Telex: 426239 Answerback UI
THE CHASE MANHATTAN BANK
By:
----------------------------------
Name:
Title:
270 Park Avenue
New York, New York 10017
Attention: Sherwood E. Exum, Jr./
Richard Smith
Telephone: (212) 270-5435
Facsimile: (212) 270-5144
Telex: 62910
-6-
<PAGE> 7
The Continuing Banks:
UNION BANK OF SWITZERLAND,
acting through its New York
Branch, in its individual
corporate capacity and as Agent
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
299 Park Avenue
New York, New York 10171-0026
Attention: Robert Mendeles
Telephone: (212) 821-3020
Facsimile: (212) 821-4541
Telex: 426239 Answerback UI
THE CHASE MANHATTAN BANK
By: /s/ MATTHEW H. MASSIE
----------------------------------
Name: MATTHEW H. MASSIE
Title: VICE PRESIDENT
270 Park Avenue
New York, New York 10017
Attention: Sherwood E. Exum, Jr./
Richard Smith
Telephone: (212) 270-5435
Facsimile: (212) 270-5144
Telex: 62910
-6-
<PAGE> 8
COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By: /s/ CHRISTIAN JAGENBERG
----------------------------------
Name: Christian Jagenberg
Title: SVP and Manager
By: /s/ KARLA WIRTH
----------------------------------
Name: Karla Wirth
Title: Assistant Treasurer
633 West Fifth Street, Suite 6600
Los Angeles, California 90071
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
THE FUJI BANK, LIMITED
By:
----------------------------------
Name:
Title:
333 South Hope Street
Suite 3900
Los Angeles, California 90071
Attention: Yoshizumi Takata
Telephone: (213) 253-4176
Facsimile: (213) 253-4198
-7-
<PAGE> 9
COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
633 West Fifth Street, Suite 6600
Los Angeles, California 90071
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
THE FUJI BANK, LIMITED
By: /s/ MASAHITO FUKUDA
----------------------------------
Name: MASAHITO FUKUDA
Title: JOINT GENERAL MANAGER
333 South Hope Street
Suite 3900
Los Angeles, California 90071
Attention: Yoshizumi Takata
Telephone: (213) 253-4176
Facsimile: (213) 253-4198
-7-
<PAGE> 10
ROYAL BANK OF CANADA
By: /s/ BRIAN BOLOTIN
----------------------------------
Name: BRIAN BOLOTIN
Title: MANAGER
New York Branch
Financial Square, 23rd Floor
32 Old Slip
New York, New York 10005-3531
Attention: Manager, Credit
Administration
Telephone: (212) 428-6204
Facsimile: (212) 428-2372
with a copy to:
Royal Bank of Canada
Financial Square, 24th Floor
32 Old Slip
New York, New York 10005-3531
Attention: D.G. Calancie
Telephone: (212) 428-6445
Facsimile: (212) 428-6459
THE SAKURA BANK, LTD.,
LOS ANGELES AGENCY
By:
----------------------------------
Name:
Title:
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: Michael Ross
Telephone: (213) 489-6456
Facsimile: (213) 623-8692
Telex: 67-7185
-8-
<PAGE> 11
ROYAL BANK OF CANADA
By:
----------------------------------
Name:
Title:
New York Branch
Financial Square, 23rd Floor
32 Old Slip
New York, New York 10005-3531
Attention: Manager, Credit
Administration
Telephone: (212) 428-6204
Facsimile: (212) 428-2372
THE SAKURA BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ OFUSA SATO
----------------------------------
Name: Ofusa Sato
Title: Senior Vice President &
Assistant General Manager
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: Michael Ross
Telephone: (213) 489-6456
Facsimile: (213) 623-8692
Telex: 67-7185
-8-
<PAGE> 12
SOCIETE GENERALE
By: /s/ MAUREEN KELLY
----------------------------------
Name: Maureen Kelly
Title: Vice President
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Attention: Maureen Kelly,
Su Fei Koo
Telephone: (310) 788-7110,
788-7107
Facsimile: (310) 551-1537
Telex: 188273
THE BANK OF NOVA SCOTIA
By:
----------------------------------
Name:
Title:
580 California Street
21st Floor
San Francisco, California 94104
Attention: Alan Pendergast
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
Telex: 00340602
-9-
<PAGE> 13
SOCIETE GENERALE
By:
----------------------------------
Name:
Title:
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Attention: Maureen Kelly,
Su Fei Koo
Telephone: (310) 788-7110,
788-7107
Facsimile: (310) 551-1537
Telex: 188273
THE BANK OF NOVA SCOTIA
By: /s/ A. PENDERGAST
----------------------------------
Name: A. Pendergast
Title: RM
580 California Street
21st Floor
San Francisco, California 94104
Attention: Alan Pendergast
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
Telex: 00340602
-9-
<PAGE> 14
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ MICHAEL C. IRWIN
----------------------------------
Name: MICHAEL C. IRWIN
Title: Vice President
1251 Avenue of the Americas
New York, New York 10116-3138
Attention: Michael Irwin
Telephone: (212) 782-4316
Facsimile: (212) 782-6445
DRESDNER BANK AG, NEW YORK
& GRAND CAYMAN BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
75 Wall Street
29th Floor
New York, New York 10005
Attention: Lloyd Stevens
Telephone: (212) 429-2229
Facsimile: (212) 429-2524
-10-
<PAGE> 15
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By:
----------------------------------
Name:
Title:
1251 Avenue of the Americas
New York, New York 10116-3138
Attention: Michael Irwin
Telephone: (212) 782-4316
Facsimile: (212) 782-6445
DRESDNER BANK AG, NEW YORK
& GRAND CAYMAN BRANCH
By: /s/ ROBERT P. DONOHUE
----------------------------------
Name: ROBERT P. DONOHUE
Title: VICE PRESIDENT
By: /s/ LLOYD C. STEVENS
----------------------------------
Name: Lloyd C. Stevens
Title: Vice President
75 Wall Street
29th Floor
New York, New York 10005
Attention: Lloyd Stevens
Telephone: (212) 429-2229
Facsimile: (212) 429-2524
-10-
<PAGE> 16
THE BANK OF NEW YORK
By: /s/ REBECCA K. LEVINE
----------------------------------
Name: REBECCA K. LEVINE
Title: VICE PRESIDENT
10990 Wilshire Boulevard
Suite 1125
Los Angeles, California 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
609 Fifth Avenue
New York, New York 10017-1021
Attention: Stefanie Gaensslen
Telephone: (212) 745-1583
Facsimile: (212) 745-1556
Telex: 234476/666755 MCI
-11-
<PAGE> 17
THE BANK OF NEW YORK
By:
----------------------------------
Name:
Title:
10990 Wilshire Boulevard
Suite 1125
Los Angeles, California 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By: /s/ STEFANIE GAENSSLEN
----------------------------------
Name: STEFANIE GAENSSLEN
Title: Asst. Vice President
By: /s/ KAREN A. BRINKMAN
----------------------------------
Name: KAREN A. BRINKMAN
Title: Vice President
609 Fifth Avenue
New York, New York 10017-1021
Attention: Stefanie Gaensslen
Telephone: (212) 745-1583
Facsimile: (212) 745-1556
Telex: 234476/666755 MCI
-11-
<PAGE> 18
BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT,
CAYMAN ISLANDS BRANCH
By: /s/ STEVEN ATWELL
----------------------------------
Name: Steven Atwell
Title: Vice President
By: /s/ YORAM DANKNER
----------------------------------
Name: Yoram Dankner
Title: Senior Vice President
Financial Square
32 Old Slip, 32nd Floor
New York, New York 10005
Attention: Steven Atwell
Telephone: (212) 440-0768
Facsimile: (212) 440-0741
Telex: 175850
THE SANWA BANK, LIMITED
By:
----------------------------------
Name:
Title:
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Stephen C. Small
Telephone: (212) 339-6201
Facsimile: (212) 754-1304
Telex: 232423 RCA
-12-
<PAGE> 19
BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT,
CAYMAN ISLANDS BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
Financial Square
32 Old Slip, 32nd Floor
New York, New York 10005
Attention: Steven Atwell
Telephone: (212) 440-0768
Facsimile: (212) 440-0741
Telex: 175850
THE SANWA BANK, LIMITED
By: /s/ STEPHEN C. SMALL
----------------------------------
Name: Stephen C. Small
Title: Vice President & Area Mgr.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Stephen C. Small
Telephone: (212) 339-6201
Facsimile: (212) 754-1304
Telex: 232423 RCA
-12-
<PAGE> 20
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: /s/ RAYMOND K. MILLER
----------------------------------
Name: Raymond K. Miller
Title: Vice President
By: /s/ LAURA SPICHIGER
----------------------------------
Name: Laura Spichiger
Title: Associate
1211 Avenue of the Americas
24th Floor
New York, New York 10036
Attention: Laura Spichiger
Telephone: (212) 852-6012
Facsimile: (212) 852-6148
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
31 W. 52nd Street
New York, New York 10019
Attention: Robert Landis
Telephone: (212) 469-8214
Facsimile: (212) 469-8212
-13-
<PAGE> 21
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
1211 Avenue of the Americas
24th Floor
New York, New York 10036
Attention: Laura Spichiger
Telephone: (212) 852-6012
Facsimile: (212) 852-6148
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ GAYMA Z. SHIVNARAIN
----------------------------------
Name: Gayma Z. Shivnarain
Title: Vice President
By: /s/ ECKHARD OSENBERG
----------------------------------
Name: Eckhard Osenberg
Title: Vice President
31 W. 52nd Street
New York, New York 10019
Attention: Robert Landis
Telephone: (212) 469-8214
Facsimile: (212) 469-8212
-13-
<PAGE> 22
THE ASAHI BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ MUNEO NISHIMURA
----------------------------------
Name: MUNEO NISHIMURA
Title: Senior Deputy General Manager
350 So. Grand Avenue, Suite 3800
Los Angeles, California 90071
Attention: Jeffrey K. Bordley
Telephone: (213) 473-3334
Facsimile: (213) 624-0172
BANCA COMMERCIALE ITALIANA,
LOS ANGELES FOREIGN BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
555 So. Flower Street, 43rd Flr.
Los Angeles, California 90071
Attention: Rick Iwanicki
Telephone: (213) 624-0440
Facsimile: (213) 624-0457
-14-
<PAGE> 23
THE ASAHI BANK, LTD.,
LOS ANGELES AGENCY
By:
----------------------------------
Name:
Title:
350 So. Grand Avenue, Suite 3800
Los Angeles, California 90071
Attention: Jeffrey K. Bordley
Telephone: (213) 473-3334
Facsimile: (213) 624-0172
BANCA COMMERCIALE ITALIANA,
LOS ANGELES FOREIGN BRANCH
By: /s/ RICHARD E. IWANICKI
----------------------------------
Name: Richard E. Iwanicki
Title: Vice President
By: /s/ EDUARD BOMBERI
----------------------------------
Name: Eduard Bomberi
Title: Vice President & Manager
555 So. Flower Street, 43rd Flr.
Los Angeles, California 90071
Attention: Rick Iwanicki
Telephone: (213) 624-0440
Facsimile: (213) 624-0457
-14-
<PAGE> 24
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By: /s/ PETER OBERMANN
----------------------------------
Name: Peter Obermann
Title: Senior Vice President
Manager Lending Division
By: /s/ ALEXANDER KOHNERT
----------------------------------
Name: Alexander Kohnert
Title: Vice President
560 Lexington Avenue
17th Floor
New York, New York 10022
Attention: James Boyle
Telephone: (212) 310-9817
Facsimile: (212) 310-9868
Telex: TRT 177130
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By:
----------------------------------
Name:
Title:
555 West 5th Street
Fifth Floor
Los Angeles, California 90013
Attention: Israel Carmeli
Telephone: (213) 243-4760
Facsimile: (213) 624-5258
Telex: 67-4 516/DKB-LSA
-15-
<PAGE> 25
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
560 Lexington Avenue
17th Floor
New York, New York 10022
Attention: James Boyle
Telephone: (212) 310-9817
Facsimile: (212) 310-9868
Telex: TRT 177130
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ MASATSUGU MORISHITA
----------------------------------
Name: Masatsugu Morishita
Title: Sr. Vice President &
Joint General Manager
555 West 5th Street
Fifth Floor
Los Angeles, California 90013
Attention: Israel Carmeli
Telephone: (213) 243-4760
Facsimile: (213) 624-5258
Telex: 67-4 516/DKB-LSA
-15-
<PAGE> 26
WELLS FARGO BANK, N.A.
By: /s/ DAVID B. HOLLINGSWORTH
----------------------------------
Name: David B. Hollingsworth
Title: Vice President
707 Wilshire Blvd.
U.S. Bank - 16th Flr.
Los Angeles, California 90017
Attention: David Hollingsworth
Telephone: (213) 614-7602
Facsimile: (213) 614-2305
BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
25 West 51st Street
New York, New York 10019
Attention: Miguel J. Medida/
Giulo Giovine
Telephone: (212) 314-0239
Facsimile: (212) 789-9088
Telex: 62840
-16-
<PAGE> 27
WELLS FARGO BANK, N.A.
By:
----------------------------------
Name:
Title:
707 Wilshire Blvd.
U.S. Bank - 16th Flr.
Los Angeles, California 90017
Attention: David Hollingsworth
Telephone: (213) 614-7602
Facsimile: (213) 614-2305
BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: /s/ LEONARDO VALENTINI
----------------------------------
Name: Leonardo Valentini
Title: First Vice President
By: /s/ GIULIO GIOVINE
----------------------------------
Name: Giulio Giovine
Title: Vice President
25 West 51st Street
New York, New York 10019
Attention: Miguel J. Medida/
Giulo Giovine
Telephone: (212) 314-0239
Facsimile: (212) 789-9088
Telex: 62840
-16-
<PAGE> 28
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: /s/ ROBERT WURSTER
----------------------------------
Name: Robert Wurster
Title: First Vice President
By: /s/ ETTORE VIAZZO
----------------------------------
Name: Ettore Viazzo
Title: Vice President
444 South Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Donald W. Brown
Telephone: (213) 489-3105
Facsimile: (213) 622-2514
Telex: 220045
BANQUE NATIONALE DE PARIS
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attention: Tjalling Terpstra
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
Telex: 6734168 BNPLA
-17-
<PAGE> 29
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
444 South Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Donald W. Brown
Telephone: (213) 489-3105
Facsimile: (213) 622-2514
Telex: 220045
BANQUE NATIONALE DE PARIS
By: /s/ C. BETTLES
----------------------------------
Name: C. Bettles
Title: Sr. Vice President & Manager
By: /s/ TJALLING TERPSTRA
----------------------------------
Name: Tjalling Terpstra
Title: Vice President
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attention: Tjalling Terpstra
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
Telex: 6734168 BNPLA
-17-
<PAGE> 30
BANK OF HAWAII
By: /s/ ROBERT M. WHEELER III
----------------------------------
Name: Robert M. Wheeler III
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: David Ward
Telephone: (808) 537-8016
Facsimile: (808) 537-8301
Telex: 7238434
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By:
----------------------------------
Name:
Title:
100 Pine Street, Suite 2950
San Francisco, California 94111
Attention: Fernando Laseca
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 470598 CENT SF
-18-
<PAGE> 31
BANK OF HAWAII
By:
----------------------------------
Name:
Title:
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: David Ward
Telephone: (808) 537-8016
Facsimile: (808) 537-8301
Telex: 7238434
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: /s/ FERNANDO LASECA
----------------------------------
Name: Fernando Laseca
Title: SVP and General Manager
100 Pine Street, Suite 2950
San Francisco, California 94111
Attention: Fernando Laseca
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 470598 CENT SF
-18-
<PAGE> 32
FIRST HAWAIIAN BANK
By: /s/ TRAVIS RUETENIK
----------------------------------
Name: Travis Ruetenik
Title: Corporate Banking Officer
999 Bishop Street
Honolulu, Hawaii 96813
Attention: Travis Ruetenik
Telephone: (808) 525-7074
Facsimile: (808) 525-6372
Telex: 7238329
BARCLAYS BANK PLC
By:
----------------------------------
Name:
Title:
222 Broadway
New York, New York 10038
Attention: Karen Wagner
Telephone: (212) 412-7682
Facsimile: (212) 412-5610
-19-
<PAGE> 33
FIRST HAWAIIAN BANK
By:
----------------------------------
Name:
Title:
999 Bishop Street
Honolulu, Hawaii 96813
Attention: Travis Ruetenik
Telephone: (808) 525-7074
Facsimile: (808) 525-6372
Telex: 7238329
BARCLAYS BANK PLC
By: /s/ KAREN M. WAGNER
----------------------------------
Name: Karen M. Wagner
Title: Associate Director
222 Broadway
New York, New York 10038
Attention: Karen Wagner
Telephone: (212) 412-7682
Facsimile: (212) 412-5610
-19-
<PAGE> 34
CITICORP USA, INC.
By: /s/ STEPHEN P. ZWICK
----------------------------------
Name: Stephen P. Zwick
Title: Vice President
399 Park Avenue, 12th Floor
New York, New York 10043
Attention: Peter Bickford
Telephone: (212) 559-8146
Facsimile: (212) 935-4285
COMERICA BANK
By:
----------------------------------
Name:
Title:
1920 Main Street, Suite 1150
Irvine, California 92714
Attention: Emmanuel Skevofilax
Telephone: (714) 476-1933
Facsimile: (714) 476-1222
-20-
<PAGE> 35
CITICORP USA, INC.
By:
----------------------------------
Name:
Title:
399 Park Avenue, 12th Floor
New York, New York 10043
Attention: Peter Bickford
Telephone: (212) 559-8146
Facsimile: (212) 935-4285
COMERICA BANK
By: /s/ EMMANUEL SKEVOFILAX
----------------------------------
Name: Emmanuel Skevofilax
Title: Assistant Vice President
1920 Main Street, Suite 1150
Irvine, California 92714
Attention: Emmanuel Skevofilax
Telephone: (714) 476-1933
Facsimile: (714) 476-1222
-20-
<PAGE> 36
KREDIETBANK NV
By: /s/ ROBERT SNAUFFER
----------------------------------
Name: Robert Snauffer
Title: Vice President
By: /s/ RAYMOND F. MURRAY
----------------------------------
Name: Raymond F. Murray
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Robert Snauffer
Telephone: (212) 541-0700
Facsimile: (212) 956-5580
PNC BANK, NATIONAL ASSOCIATION
By:
----------------------------------
Name:
Title:
1600 Market Street, 21st Floor
Philadelphia, PA 19103
Attention: Robert E. Bjonhus, Jr.
Telephone: (215) 585-6872
Facsimile: (215) 585-7615
-21-
<PAGE> 37
KREDIETBANK NV
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Robert Snauffer
Telephone: (212) 541-0700
Facsimile: (212) 956-5580
PNC BANK, NATIONAL ASSOCIATION
By: /s/ ROBERT E. BJONHUS, JR.
----------------------------------
Name: Robert E. Bjonhus, Jr.
Title: Vice President
1600 Market Street, 21st Floor
Philadelphia, PA 19103
Attention: Robert E. Bjonhus, Jr.
Telephone: (215) 585-6872
Facsimile: (215) 585-7615
-21-
<PAGE> 38
STANDARD CHARTERED BANK
By: /s/ PAUL S. KNOX
----------------------------------
Name: Paul S. Knox
Title: Sr. Vice President
By: /s/ KATRINA MCDAVID
----------------------------------
Name: Katrina McDavid
Title: Vice President
7 World Trade Center
New York, New York 10048
Attention: Robert Gilbert
Telephone: (212) 667-0493
Facsimile: (212) 667-0251
Telex: 420117
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By:
----------------------------------
Name:
Title:
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Craig Papayanis
Telephone: (213) 893-6441
Facsimile: (213) 488-9840
Telex: 6831123
-22-
<PAGE> 39
STANDARD CHARTERED BANK
By:
----------------------------------
Name:
Title:
7 World Trade Center
New York, New York 10048
Attention: Robert Gilbert
Telephone: (212) 667-0493
Facsimile: (212) 667-0251
Telex: 420117
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ CRAIG PAPAYANIS
----------------------------------
Name: Craig Papayanis
Title: Vice President
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Craig Papayanis
Telephone: (213) 893-6441
Facsimile: (213) 488-9840
Telex: 6831123
-22-
<PAGE> 40
THE TOYO TRUST & BANKING CO., LTD.,
LOS ANGELES AGENCY
By: /s/ TATSUYA MIYAMOTO
----------------------------------
Name: Tatsuya Miyamoto
Title: Deputy General Manager
444 South Flower Street, Suite 1550
Los Angeles, California 90071
Attention: Steven K. Rubinstein
Telephone: (213) 624-2424
Facsimile: (213) 624-5874
Telex: 215288
UNIBANK A/S
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
13-15 West 54th Street
New York, New York 10019
Attention: Tom Hickey
Telephone: (212) 603-6924
Facsimile: (212) 603-1685
Telex: 668776
-23-
<PAGE> 41
THE TOYO TRUST & BANKING CO., LTD.,
LOS ANGELES AGENCY
By:
----------------------------------
Name:
Title:
444 South Flower Street, Suite 1550
Los Angeles, California 90071
Attention: Steven K. Rubinstein
Telephone: (213) 624-2424
Facsimile: (213) 624-5874
Telex: 215288
UNIBANK A/S
By: /s/ THOMAS P. HICKEY
----------------------------------
Name: Thomas P. Hickey
Title: Vice President
By: /s/ HENRIK M. STEFFENSEN
----------------------------------
Name: Henrik M. Steffensen
Title: First Vice President
13-15 West 54th Street
New York, New York 10019
Attention: Tom Hickey
Telephone: (212) 603-6924
Facsimile: (212) 603-1685
Telex: 668776
-23-
<PAGE> 42
BANCO DI NAPOLI S.p.A.
By: /s/ VITO SPADA
----------------------------------
Name: Vito Spada
Title: Executive Vice President
By: /s/ CLAUDE P. MAPES
----------------------------------
Name: Claude P. Mapes
Title: First Vice President
4 East 54th Street
New York, New York 10022
Attention: Clemente Imperiale
Telephone: (212) 872-2417
Facsimile: (212) 872-2426
Telex: 420634
PT. BANK NEGARA INDONESIA (PERSERO), Tbk.,
NEW YORK AGENCY
By:
----------------------------------
Name:
Title:
55 Broadway, 5th Floor
New York, New York 10006
Attention: Monica Baccari
Telephone: (212) 943-4750
Facsimile: (212) 344-5723
-24-
<PAGE> 43
BANCO DI NAPOLI S.p.A.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
4 East 54th Street
New York, New York 10022
Attention: Clemente Imperiale
Telephone: (212) 872-2417
Facsimile: (212) 872-2426
Telex: 420634
PT. BANK NEGARA INDONESIA (PERSERO), Tbk.,
NEW YORK AGENCY
By: /s/ MARULI POHAN
----------------------------------
Name: Maruli Pohan
Title: General Manager
55 Broadway, 5th Floor
New York, New York 10006
Attention: Monica Baccari
Telephone: (212) 943-4750
Facsimile: (212) 344-5723
-24-
<PAGE> 44
THE INTERNATIONAL COMMERCIAL BANK
OF CHINA, NEW YORK AGENCY
By: /s/ ROBIN C. C. LIN
----------------------------------
Name: Robin C. C. Lin
Title: Vice President &
Deputy General Manager
65 Liberty Street
New York, New York 10005
Attention: Mong-Shyr Wu/Tony Wu
Telephone: (212) 815-9113
Facsimile: (212) 766-5006
Telex: 420062 IGBC UI
ARAB BANK PLC - GRAND CAYMAN
By:
----------------------------------
Name:
Title:
520 Madison Avenue
New York, New York 10022
Attention: Kahn Vuong
Telephone: (212) 715-9717
Facsimile: (212) 593-4632
-25-
<PAGE> 45
THE INTERNATIONAL COMMERCIAL BANK
OF CHINA, NEW YORK AGENCY
By:
----------------------------------
Name:
Title:
65 Liberty Street
New York, New York 10005
Attention: Mong-Shyr Wu/Tony Wu
Telephone: (212) 815-9113
Facsimile: (212) 766-5006
Telex: 420062 IGBC UI
ARAB BANK PLC - GRAND CAYMAN
By: [SIG]
-------------------------------------
Name:
Title:
520 Madison Avenue
New York, New York 10022
Attention: Kahn Vuong
Telephone: (212) 715-9717
Facsimile: (212) 593-4632
-25-
<PAGE> 46
The Additional Banks:
ABN AMRO BANK N.V.
By: /s/ CLAUDIA C. HELDRING
----------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ LUKAS VAN DER HOEF
----------------------------------
Name: Lukas van der Hoef
Title: Vice President
135 S. LaSalle Street
Suite 625
Chicago, Illinois 60603
Attention: Claudia Hildring
Telephone: (312) 904-8835
Facsimile: (312) 904-8840
Telex: 6732700
BANK OF MONTREAL
By:
----------------------------------
Name:
Title:
115 S. LaSalle Street, 12th Floor
Chicago, Illinois 60603
Attention: Charles Reed
Telephone: (312) 750-5912
Facsimile: (312) 845-2199
-26-
<PAGE> 47
The Additional Banks:
ABN AMRO BANK N.V.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
135 S. LaSalle Street
Suite 625
Chicago, Illinois 60603
Attention: Claudia Hildring
Telephone: (312) 904-8835
Facsimile: (312) 904-8840
Telex: 6732700
BANK OF MONTREAL
By: /s/ CHARLES W. REED
----------------------------------
Name: CHARLES W. REED
Title: DIRECTOR
115 S. LaSalle Street, 12th Floor
Chicago, Illinois 60603
Attention: Charles Reed
Telephone: (312) 750-5912
Facsimile: (312) 845-2199
-26-
<PAGE> 48
MELLON BANK, N.A.
By: /s/ DEAN G. PACE
----------------------------------------
Name: Dean G. Pace
Title: Vice President
One Mellon Bank Center, Room 4525
Pittsburgh, Pennsylvania 15258-0001
Attention: Dean G. Pace
Telephone: (412) 236-1643
Facsimile: (412) 2364-9047
CARIPLO-CASSA DI RISPARMIO
DELLE PROVINCIE LOMBARDE
S.p.A., GRAND CAYMAN BRANCH
By:
----------------------------------------
Name:
Title:
10 East 53rd Street
New York, New York 10022
Attention: Anthony Giobbi
Telephone:
Telecopy:
-27-
<PAGE> 49
MELLON BANK, N.A.
By:
----------------------------------------
Name:
Title:
One Mellon Bank Center, Room 4525
Pittsburgh, Pennsylvania 15258-0001
Attention: Dean G. Pace
Telephone: (412) 236-1643
Facsimile: (412) 2364-9047
CARIPLO-CASSA DI RISPARMIO
DELLE PROVINCIE LOMBARDE
S.p.A., GRAND CAYMAN BRANCH
By: /s/ ANTHONY F. GIOBBI
----------------------------------------
Name: Anthony F. Giobbi
Title: FVP
By: /s/ LUIGI COMINATTI
----------------------------------------
Name: Luigi Cominatti
Title: SVP
10 East 53rd Street
New York, New York 10022
Attention: Anthony Giobbi
Telephone:
Telecopy:
-27-
<PAGE> 50
The Terminating Banks:
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, NY BRANCH
By: /s/ EIICHI AKAMA
----------------------------------------
Name: Eiichi Akama
Title: Vice President
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By:
----------------------------------------
Name:
Title:
CIBC, INC.
By:
----------------------------------------
Name:
Title:
THE YASUDA TRUST & BANKING CO., LTD.
By:
----------------------------------------
Name:
Title:
-28-
<PAGE> 51
The Terminating Banks:
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, NY BRANCH
By:
----------------------------------------
Name:
Title:
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: /s/ MASAHITO SAITO
----------------------------------------
Name: Masahito Saito
Title: Senior Vice President and
Assistant General Manager
CIBC, INC.
By:
----------------------------------------
Name:
Title:
THE YASUDA TRUST & BANKING CO., LTD.
By:
----------------------------------------
Name:
Title:
-28-
<PAGE> 52
The Terminating Banks:
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, NY BRANCH
By:
----------------------------------------
Name:
Title:
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By:
----------------------------------------
Name:
Title:
CIBC, INC.
By: /S/ WILLIAM KOSLO
----------------------------------------
Name: WILLIAM KOSLO
Title: EXECUTIVE DIRECTOR
C??C Oppenheimer Corp., AS AGENT
THE YASUDA TRUST & BANKING CO., LTD.
By:
----------------------------------------
Name:
Title:
-28-
<PAGE> 53
The Terminating Banks:
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, NY BRANCH
By:
----------------------------------------
Name:
Title:
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By:
----------------------------------------
Name:
Title:
CIBC, INC.
By:
----------------------------------------
Name:
Title:
THE YASUDA TRUST & BANKING CO., LTD.
By: /s/ ROHN M. LAUDENSCHLAGER
----------------------------------------
Name: Rohn Laudenschlager
Title: Senior Vice President
-28-
<PAGE> 1
EXHIBIT 12
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earnings
Net income......................... $168,565 $201,943 $196,437 $ 251,774 $ 338,684
Add:
Provision for income taxes...... 109,075 110,064 141,909 143,165 187,475
Fixed charges................... 340,568 421,170 592,519 655,958 754,246
Less:
Capitalized interest............ 39,363 44,610 51,091 50,368 48,818
-------- -------- -------- ---------- ----------
Earnings as adjusted (A)........... $578,845 $688,567 $879,774 $1,000,529 $1,231,587
======== ======== ======== ========== ==========
Preferred dividend requirements.... $ 2,692 $ 6,890 $ 13,096 $ 16,599 $ 16,348
Ratio of income before provision
for income taxes to net
income........................ 165% 155% 172% 157% 155%
-------- -------- -------- ---------- ----------
Preferred dividend factor on
pretax basis.................. 4,442 10,680 22,525 26,060 25,339
-------- -------- -------- ---------- ----------
Fixed charges
Interest expense................ 301,205 376,560 541,428 573,599 642,321
Capitalized interest............ 39,363 44,610 51,091 50,368 48,818
Interest factor of rents........ -- -- -- 31,991 63,107
-------- -------- -------- ---------- ----------
Fixed charges as adjusted (B)...... 340,568 421,170 592,519 655,958 754,246
-------- -------- -------- ---------- ----------
Fixed charges and preferred stock
dividends (C)................... $345,010 $431,850 $615,044 $ 682,018 $ 779,585
======== ======== ======== ========== ==========
Ratio of earnings to fixed charges
((A) divided by (B))............... 1.70x 1.63x 1.48x 1.53x 1.63x
======== ======== ======== ========== ==========
Ratio of earnings to fixed charges
and preferred stock dividends ((A)
divided by (C)).................... 1.68x 1.59x 1.43x 1.47x 1.58x
======== ======== ======== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-45101) of International Lease Finance Corporation and in the
related Prospectus of our report dated February 3, 1998, with respect to the
consolidated financial statements and schedule of International Lease Finance
Corporation included in this Annual Report (Form 10-K) for the year ended
December 31, 1997.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 9, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-45101) of International Lease Finance Corporation and in the
related Prospectus of our report dated February 19, 1997, with respect to the
consolidated financial statements and schedule of International Lease Finance
Corporation included in this Annual Report (Form 10-K) for the year ended
December 31, 1997.
ERNST & YOUNG LLP
Century City,
Los Angeles, California
March 9, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANT'S ANNUAL REPORT ON FORM 10-K 405
FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 63,754
<SECURITIES> 0
<RECEIVABLES> 467,688
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 14,425,091
<DEPRECIATION> 1,632,560
<TOTAL-ASSETS> 14,551,954
<CURRENT-LIABILITIES> 0
<BONDS> 9,051,042
0
400,000
<COMMON> 3,582
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 14,551,954
<SALES> 1,732,667
<TOTAL-REVENUES> 1,958,007
<CGS> 0
<TOTAL-COSTS> 789,527
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 642,321
<INCOME-PRETAX> 526,159
<INCOME-TAX> 187,475
<INCOME-CONTINUING> 338,684
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 338,684
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
