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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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 12 preceding 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 continued, to the best of registrant's knowledge, in definitive proxy or information statements incorporate by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   (X)

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
         Yes  (    )   No  (X)

As of August 31, 2004, all outstanding shares of common stock of the registrant were held by affiliates of the registrant.

As of June 14, 2005, there were 10,054,749 outstanding shares of no par value common stock of the registrant.

TABLE OF CONTENTS

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Table of Contents

PART I

Forward-Looking Statements

              This Annual Report on Form 10-K contains statements which, to the extent they are not recitations of historical fact, constitute "forward-looking statements" as defined in Section 21E of the Securities Exchange Act of 1934, as amended. Statements and assumptions with respect to future revenues, income and cash flows, program performance, the outcome of litigation, and planned dispositions of assets are examples of forward-looking statements. Wherever possible, we have identified these forward-looking statements by words such as “anticipates”, “believes”, “could”, “may”, “intends”, “estimates”, “expects”, “projects”, and similar phrases.

        Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. Such risks and uncertainties include, but are not limited to, those set forth under "Risk Factors" in Item 1 below. We assume no obligation to publicly update or revise our forward-looking statements included in this report, whether as a result of new information future events or otherwise, except as required by law.

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GENERAL DESCRIPTION

        Evergreen Holdings, Inc. ("Holdings") is the parent company of Evergreen International Aviation, Inc. ("Aviation"), a leading provider of integrated air cargo transportation and aviation support services. Holdings, Aviation, and their consolidated subsidiaries (collectively, "the Company", "we", "us", or "our") provide global air cargo shipping, ground handling and logistics services, helicopter transportation services, small aircraft charters, and aircraft maintenance and repair services. Our diverse fleet of commercial aircraft and helicopters gives us the capability and flexibility to provide a wide array of air cargo and transportation services to our customers.

        We provide services to a broad base of long-standing customers, including the United States Air Force Air Mobility Command ("USAF Air Mobility Command"), the United States Postal Service ("U.S. Postal Service"), other government agencies, freight forwarders, domestic and foreign airlines, and industrial manufacturers. We are the largest commercial provider of Boeing 747 wide-body air cargo services to the United States military based on entitlement for the military fiscal year beginning October 1, 2004. Our diversified customer base, our commitment to the United States military, and our ability to deploy aircraft to match changing market conditions give us the agility to provide a broad range of services within different economic sectors.

        Holdings and Aviation are both incorporated under the laws of the State of Oregon - Holdings in 1997 and Aviation in 1978, and our corporate headquarters is located in McMinnville, Oregon. Our Internet address is www.evergreenaviation.com. Information on our website is not incorporated into this Form 10-K or our other securities filings, and is not a part of such filings.

BUSINESS SEGMENTS

        We conduct business in six major business segments through our wholly-owned subsidiaries:

        For financial information about each of our business segments, please see "Note 4 - Business Segments" in Item 8 of this Annual Report.

Airlines

        Airlines is a leading provider of international air cargo services with a fleet capacity of ten Boeing 747 aircraft and five McDonnell Douglas DC-9 ("DC-9") aircraft. Airlines' primary customers include governmental entities and other transportation companies. In fiscal years 2005, 2004 and 2003, the USAF Air Mobility Command was our principal customer, accounting for approximately 48.7%, 57.4%, and 48.2%, respectively, of our consolidated operating revenues and 75.6%, 87.8%, and 73.9%, respectively, of total revenue in our Airlines segment.

        Airlines' range of services includes, but is not limited to:

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        Airlines operates international air cargo flights from the United States to Europe and Asia, and from Asia to the United States. During fiscal years 2005, 2004, and 2003, flight revenue from foreign customers (primarily commercial customers in China) accounted for approximately 21.2%, 17.8%, and 17.1%, respectively, of total revenue in our Airlines segment.

EAGLE

        EAGLE provides ground handling, logistics, and other support services at 36 U.S. airports in 25 states. EAGLE primary customer is the U.S. Postal Service. During fiscal years 2005, 2004, and 2003, revenue from EAGLE's contracts with the U.S. Postal Service represented approximately 56.6%, 61.2%, and 71.3%, respectively, of EAGLE's segment revenues. EAGLE's customer base also includes international airlines such as British Airways and Lufthansa and air cargo carriers such as United Parcel Service and Kittyhawk Airlines.

        The range of services provided by EAGLE includes:

Helicopters

        Helicopters provides air-lift and air transportation services throughout the United States and in various foreign countries. The broad range of customers served by Helicopters includes the U.S. Forest Service, the U.S. Department of Interior, the U.S. Department of Defense, the United Nations, the World Health Organization, state forestry agencies, and major petroleum and timber companies. Helicopters' diverse fleet of helicopters and small fixed-wing aircraft allows it not only to match the aircraft to the mission, but also to fly missions into remote or otherwise inaccessible locations. Helicopters' scope of services includes:

Air Center

        The Air Center operates a full-service aircraft maintenance and storage facility in the non-corrosive desert environment near Marana, Arizona. Air Center serves a broad range of customers which includes NASA and other air transportation companies.

        The Air Center is certified by the Federal Aviation Administration ("FAA") as an unlimited Class IV airframe maintenance and repair station. The Class IV rating permits Air Center to perform maintenance services on large aircraft over 12,500 lbs. In addition, the Air Center holds a number of foreign certifications, including i) a registration certificate from the International Organization for Standardization (ISO 9002) for aircraft repair and storage, ii) maintenance certificates from the European Joint Aviation Authorities, and iii) a certificate from the Civil Aviation Authority of China.

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        The range of services provided by the Air Center includes:

EASL

        EASL buys, sells, leases, and brokers commercial aircraft, helicopter engines, and spare parts. EASL also buys aircraft and engines for part-out and resale. EASL's customer base of over 1,200 accounts includes both domestic and international air transportation companies, helicopter companies, and aircraft repair facilities.

         Within the Company, EASL supports Airlines and Helicopters by facilitating the acquisition and disposition of aircraft and spare parts. EASL's ability to locate, acquire, and manage various aircraft types and spare parts allows Airlines and Helicopter to transition between missions in a timely and cost-effective manner.

Agriculture

        Comprised of three operational divisions, Agriculture is a diversified farming operation located in the heart of Oregon's Willamette Valley. The Evergreen Farms division cultivates over 4,700 acres of grape vineyards, Christmas trees, grass seed, and cereal grains. Evergreen Nursery produces over 175 different varieties of landscape ornamental plants, including a line of specialized topiary, which are primarily sold on the wholesale market to the nursery industry. The Specialty Products division sells various food and horticulture products that are processed from, or derived from, crops grown by Agriculture.

OTHER

        Aviation also holds an approximate two-thirds beneficial interest in the Trust Created February 25, 1986 ("Trust"). The Trust was created pursuant to the Trust Agreement, dated as of February 25, 1986, as amended and restated pursuant to the Amended and Restated Trust Agreement, dated as of August 31, 1987, as amended on August 31, 1988, and as amended and restated pursuant to the Second Amended and Restated Trust Agreement, dated as of September 29, 1995, as amended by the First Amendment thereto as of May 8, 2003, as amended by the Second Amendment thereto as of January 14, 2004, and as amended by the Third Amendment thereto as of May 10, 2004, among Evergreen International Aviation, Inc. (an assignee of Evergreen Holdings, Inc., as successor to B-747, Inc. and King Christian, Inc.) and Mr. Delford M. Smith, as Beneficiaries, and Wilmington Trust Company, not in its individual capacity, but solely as Owner Trustee. The Trust assets consist primarily of one Boeing 747 aircraft and three DC-9 aircraft. The Trust leases these aircraft to Airlines.

        Holdings also owns all of the outstanding common stock of Evergreen Vintage Aircraft, Inc. ("Vintage"). Vintage owns the 120,000 square foot Evergreen Aviation Museum Building which is located on approximately 84.2 acres near our headquarters in McMinnville, Oregon (the "Evergreen Museum Land"). In addition to show-casing Howard Hughes' Spruce Goose, the Evergreen Aviation Museum Building houses and displays a unique collection of vintage aircraft, most of which are owned by Vintage. Vintage leases the Evergreen Aviation Museum Building and Evergreen Museum Land to The Captain Michael King Smith Evergreen Aviation Educational Institute, a non-profit corporation.

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Related Parties and Affiliated Entities

        Mr. Delford M. Smith, our founder and the chairman of our board of directors, has control over, either directly or indirectly, approximately 85.1% of the outstanding shares of Holdings common stock. In addition, Mr. Smith owns or controls other entities, or does business under other trade names, including, but not limited to, the following:

        From time to time, we enter into leases and other transactions with Mr. Smith and the entities owned by, or controlled by, him. Further information regarding such leases and transactions may be found in Item 13 of this Annual Report.

PRICING FOR SERVICES AND PRODUCTS

        Airlines – Pricing for Airlines' air cargo contracts is based upon whether the contract is an all-in contract, a contract for the USAF Air Mobility Command/Civil Reserve Air Fleet program, a block space agreement, or an ACMI or "wet lease" contract.

        Pricing for All Other Segments – Pricing for service contracts in our Helicopters, EAGLE, and Air Center segments are based upon factors such as the type of service provided, duration of the contract, and where the services will be performed. External factors, such as labor rates established by the U.S. Department of Labor, may also affect the pricing of our contracts with government agencies.

        Within our EASL and Agriculture business segments, our goods are competitively priced with respect to the goods being sold, the markets in which we do business, and our underlying cost structures.

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SEASONALITY

        Certain aspects of our business are seasonal in nature. Flight revenue generated from contracts with commercial airlines and freight forwarders has historically been higher from September through December of each year as the levels of flight activity increase with the build-up of inventories by retailers in anticipation of the holiday season. Revenues in our EAGLE segment also reflect similar seasonal fluctuations, predominantly as a result of increased volumes of mail and packages being processed by the U.S. Postal Service and United Parcel Service in the lead-up to the holiday season. In comparison, our Helicopters segment experiences higher revenues during the summer months as a result of increased fire-fighting activities, while our Agriculture segment generates higher revenues during the peak shipping periods for nursery products and Christmas trees.

COMPETITION

        All of our business segments operate in markets that are both highly competitive and sensitive to price and service.

        Airlines – Airlines competes with other large international and domestic air freight carriers and, on a limited basis, with freight operations of passenger airlines. In the international air cargo markets, competition is based upon the availability of aircraft with required performance characteristics, pricing, and reliable service. In the domestic air cargo market, Airlines competes with smaller air carriers and surface transportation. Competition in domestic markets is intense due to the ability of smaller air carriers to provide cost-effective service with smaller aircraft. Our ability to successfully compete in international and domestic air cargo markets could be adversely affected by the entry of additional carriers with greater financial resources or lower cost structures.

        EAGLE – EAGLE competes with nationally-operated ground handling service providers as well as regional companies that operate at individual airports. EAGLE also indirectly competes with various airlines that perform their own ground handling services in-house. In order to remain competitive within this industry, EAGLE must continually focus on providing quality services at competitive prices, while maintaining a flexible, cost-effective structure.

        Helicopters – Helicopters competes with national and regional aviation companies who provide helicopter services for logging, heavy lift construction, aerial spraying, and fire suppression. Helicopters also competes with the in-house operations of oil and gas companies who can service their own off-shore petroleum support requirements. Helicopters' ability to remain competitive in the markets it serves is largely dependent upon providing quality services that are safe and reliable, at a competitive price.

        Air Center – The Air Center competes primarily with the internal maintenance units of major airlines and other aircraft maintenance providers within the United States and abroad. Several of these competitors have maintenance facilities and financial resources that are as large or larger than the resources possessed by the Air Center. In addition, the Air Center competes with certain aircraft manufacturers and corporate aircraft owners who operate their own maintenance facilities. Competition for aircraft maintenance and repair services is based primarily upon price and quality of the services provided.

        EASL – EASL competes with other i) aircraft parts suppliers and brokers and ii) other aircraft sales and leasing companies. Competition is based upon i) the availability and quality of aircraft, parts and supplies, and ii) pricing.

        Agriculture – Agriculture competes with other nurseries and crop producers. Competition is based upon i) the availability and quality of horticultural and agricultural products, and ii) pricing.

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CIVIL RESERVE AIR FLEET PROGRAM

        We participate in the Civil Reserve Air Fleet ("CRAF") program, which permits the U.S. military to use the aircraft and crew resources of participating U.S. air carriers during airlift emergencies, national emergencies, or times of war. Under the CRAF program, we have agreed to make available to the U.S. military all ten of our Boeing 747 aircraft in the event of a declared need. We are compensated for the operation of any aircraft requisitioned under the CRAF program at standard contract rates that are established each year. Through our participation in the CRAF Program, we are also entitled to bid on peace-time military cargo charter business.

EMPLOYEES

        As of February 28, 2005, we had 1,733 full-time and 2,832 part-time employees, of which approximately 9% are employed at our corporate headquarters in McMinnville, Oregon. Approximately .01% of our employees are located outside of the United States. The majority of our part-time employees are employed by EAGLE, which had 2,749 part-time employees as of February 28, 2005.

        The pilots and flight engineers employed by Airlines are represented by The Aviators Group ("TAG"), but are not affiliated with any national or international unions. Until December 31, 2004, Airlines was a party to a collective bargaining agreement with TAG, which covered compensation and benefits matters. The collective bargaining agreement did not expire, but became amendable on December 31, 2004. Negotiations with TAG to reach an amended collective agreement began in December 2004 and are still underway. We will continue to operate under our current agreement while we negotiate with our pilots and flight engineers. None of our other employees belong to a union or are a party to any collective bargaining or similar agreement.

        Attempts by other labor organizations to organize certain other groups of employees occur from time to time. Although these organizing attempts have not resulted in any certification of a U.S. domestic collective bargaining representative (other than TAG), we cannot predict the outcome of these labor activities or their effect if any, on us or our employees.

REGULATION

        We are subject to regulation under the laws of the United States and the various countries in which we operate or fly our aircraft. We are also subject to various international bilateral and multi-lateral air service agreements between the United States and the foreign countries in which we provide cargo services.

        Domestic Air Transportation – The U.S. Department of Transportation ("DOT") and the Federal Aviation Administration ("FAA") exercise regulatory authority over air transportation in the United States. The DOT has authority to issue certificates of public convenience and necessity which allow air carriers to engage in domestic air transportation. These certificates may be altered, amended, modified, or suspended by the DOT if public convenience and necessity so require. The DOT may also revoke a certificate for intentional failure by the air carrier to comply with the terms and conditions of the certificate. We currently hold various DOT certificates which allow us to engage in domestic air transportation of cargo on both a scheduled and charter basis.

        The FAA has primary regulatory authority over matters relating to flight operations, aircraft certification and maintenance, ground facilities, and other matters affecting air safety. FAA regulations are designed to ensure the continuous maintenance and safe operation of all aircraft. Pursuant to these regulations, we have established an FAA-approved maintenance program that provides for the ongoing maintenance of our aircraft, ranging from frequent routine inspections to major overhauls.

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        The Transportation Security Administration ("TSA"), a division of the Department of Homeland Security, is responsible for aviation security. The TSA has adopted, and may in the future adopt additional, security-related regulations, including new requirements for cargo security, which could impact our air cargo operations or otherwise increase our costs.

        Air carriers are also subject to various other federal, state, local, and foreign laws and regulations, as enforced by government agencies:

        International Air Transportation – International air transportation by U.S. air carriers is regulated by treaties and related agreements between the United States and foreign governments. The United States typically encourages foreign governments to authorize air service by U.S. air carriers, but many bilateral agreements between the United States and foreign governments often include restrictions on the number of U.S. air carriers, extent of operations, or destinations served in the foreign country. However, in recent years, there has been a trend by foreign countries to adopt "open skies" policies which liberalize or eliminate restrictions on international routes. Due to the intense competition for international routes, any future changes in governmental regulation of international routes could have a significant impact on our operations.

        Environmental – Many aspects of our operations are subject to increasingly stringent laws protecting the environment. Under the Airport Noise and Capacity Act of 1990, both the FAA and the DOT have authority to monitor and regulate aircraft engine noise. Our aircraft fleet is in current compliance with the FAA regulations for "Stage III" standards of aircraft engine noise. Our aircraft are also subject to, and are in compliance with, the regulations governing engine emissions.

        The FAA also has jurisdiction over the transportation of hazardous materials. Shippers and air carriers generally share responsibility for compliance with regulations pertaining to the packaging, labeling, and handling of hazardous materials. Substantial monetary penalties, as well as possible criminal penalties, can be imposed on both shippers and air carriers for violations of these regulations.

        Future actions taken by the United States and foreign governments regarding regulation of environmental matters could adversely affect our operations and increase our operating costs.

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RISK FACTORS

Risk Factors Relating to the Company

        The terms of our debt instruments, in particular the Indenture Notes and the Secured Credit Facility (as defined in "Note 16 - Long-Term Debt Obligations" in Item 8 below; see also "Capital Resources" in Item 7 below) restrict our ability to, among other things:

        The Secured Credit Facility also contains covenants that require us to meet certain financial tests in order to continue to borrow under the Secured Credit Facility. See "Capital Resources - Secured Credit Facility" in Item 7 below. If we are not able to comply with these covenants, our outstanding obligations under these credit facilities could be accelerated and become immediately due and payable. Any such acceleration of these obligations would have a materially adverse effect on our results of operations and financial condition. As of February 28, 2005, we were in compliance with these covenants.

        The terms of our existing financing agreements restrict our ability to incur additional indebtedness except for refinancing of certain existing debt agreements and permitted operating leases. These restrictions reduce our flexibility in planning for, or responding to, changing business and economic conditions.

        We have historically relied upon the market value of our aircraft as a source of additional capital. However, the market values for used aircraft are volatile and can be negatively affected by excess availability due to factors such as the potential bankruptcy of existing airlines. As a result, the value of aircraft reflected on our balance sheet does not necessarily reflect the fair market value or appraised value of these aircraft. Accordingly, if we sell our aircraft or obtain financing secured by our aircraft, or are involved in a bankruptcy, liquidation, reorganization, or other winding up, we cannot be assured that our aircraft would receive a favorable valuation at such time. A valuation of our aircraft that is less than the amount reflected on our balance sheet could have an adverse effect on our ability to obtain additional capital.

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        Our fleet of fixed-wing aircraft consists of ten Boeing 747 aircraft and five DC-9 aircraft, all manufactured between 1967 and 1975. As of February 28, 2005, the average age of our fixed-wing aircraft was approximately 38 years. The age of our aircraft increases the likelihood that in the future we will need significant capital resources to repair or replace our aircraft. The age of our aircraft also increases the risk that we may be unable to fulfill our contractual obligations due to decreased utilization of the aircraft.

        Older aircraft tend to have higher maintenance and operational costs than newer aircraft for a number of reasons. Under FAA regulations, older aircraft components, which otherwise would be repairable, must be replaced after a specified number of flight hours or take-off/landing cycles. In addition, older aircraft may need to be refitted with newer aviation technology. Also, our older aircraft tend to be less fuel-efficient than newer aircraft, causing our operating costs to be comparatively higher than for airlines with newer aircraft.

        The incurrence of substantial maintenance expenses for our aircraft, or the incurrence of significant capital expenditures to replace an aircraft, could have a materially adverse effect on our results of operations and financial condition.

        In the event that one or more of our Boeing 747 aircraft are out of service for an extended period of time, we may have difficulty in fulfilling our obligations under our existing contracts. In order to mitigate a loss of aircraft capacity, we may have to lease or purchase replacement aircraft or, if necessary, convert an aircraft from passenger to freighter configuration. Because we do not carry insurance against losses due to business interruption, the loss of revenue resulting from reduced aircraft capacity could have a materially adverse effect on our results of operations and financial condition.

        Our operating results are significantly impacted by fluctuations in the price or availability of aircraft fuel. During fiscal years 2005, 2004, and 2003, fuel costs comprised approximately 22.5%, 19.1%, and 20.3%, respectively, of our total operating expenses. The cost and availability of fuel are subject to worldwide economic and political factors and events, most of which are beyond our control. The price we pay for fuel varies directly with market conditions. We have no guaranteed long-term sources of supply and we do not regularly enter into hedging arrangements. Even if we would elect to enter into futures contracts or other hedging arrangements, there can be no assurance that we will be able to successfully control our fuel costs. Also, our older aircraft tend to be less fuel-efficient than newer aircraft, causing our fuel costs to be comparatively higher than for airlines with newer aircraft.

        Although many of our customer contracts contain fuel adjustment clauses which allow us to increase the contract price in relation to increases in fuel prices, our ability to pass on increased fuel costs may be limited by then-existing economic and competitive conditions. If fuel costs continue to increase significantly, our customers may reduce the volume and frequency of cargo shipments or find less costly alternatives for cargo delivery, such as land and sea carriers. In addition, any significant disruption of oil imports could negatively effect the availability of aviation fuel. Continued periods of record high fuel costs or significant disruptions in the supply of aircraft fuel could have a materially adverse affect on our results of operations and financial condition.

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        As of February 28, 2005, we had $307.1 million of outstanding debt. Our operating cash flow continues to face pressure from high fuel prices, highly competitive contract pricing, slow collection of receivables and servicing of our long-term debt. A substantial portion of our operating cash flow goes toward the payment of principal and interest on our indebtedness, thereby reducing the funds available for other purposes.

        Our ability to sustain sufficient operating cash flow is directly related to our ability to maintain operating revenues and promptly collect accounts receivable. Historically, our ability to collect accounts receivable has fluctuated due to various issues such as amendments and changes to existing contracts, interpretations of existing contracts, and the commencement of operations under new agreements. If we cannot maintain a consistent program for collecting accounts receivable in a timely manner, our operating cash flow will significantly deteriorate.

        From time to time, we have been in default under our debt agreements. As a result of this and other matters, our audited financial statements have been subject to "going concern" qualifications by our independent registered public accounting firm ("our auditors") in fiscal years 2003 and 2004. A going concern comment indicates that our auditors are not certain that we will be able to pay our obligations as they come due.

        Because of the various cross-default provisions that are contained in our long-term debt obligations, a failure by us to comply with the covenants of our long-term debt obligations could result in an acceleration of substantially all of our outstanding debt obligations. Due to our historical difficulty in meeting our debt covenants, we cannot be assured that we will be able to comply with these covenants or, in instances of non-compliance, that we will be able to obtain waivers of, or amendments to, these covenants. If we are not able to comply with these covenants or obtain waivers of or amendments to these covenants, the holders of the notes and the lenders under our long-term debt obligations may be able to declare a default and accelerate the indebtedness. If acceleration of our long-term debt obligations were to occur, we cannot be assured that we would be able to obtain alternative financing or that our assets would be sufficient to repay in full our obligations under the Indenture Notes, the Secured Credit Facility, and our other debt instruments.

        We generate a large portion of our revenues from contractual arrangements which either i) have a term of one year or less, ii) are ad hoc arrangements, or iii) are "on call when needed" contracts. Furthermore, the portion of our revenues that we generate from USAF Air Mobility Command expansion business is not fixed by contract and is solely dependent on then-existing military requirements.

        With respect to any contractual arrangement that we enter into, there is a risk that our customers may choose to i) allow the contract to expire without renewal, ii) terminate the contract on short notice, or iii) reduce the level of services requested thereunder. In the past, several of our larger contracts have not been renewed due to reasons unrelated to our performance, such as the financial position of our customers or a decision by our customers to move the services in-house. In addition, some of our contractual arrangements are not in writing, which may allow our customers to cancel the contracts on short notice. Accordingly, we cannot be assured that we will be able to generate future revenues at the same levels as in the past.

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        In fiscal years 2005, 2004 and 2003, the USAF Air Mobility Command was our principal customer, accounting for approximately 48.7%, 57.4%, and 48.2%, respectively, of our consolidated operating revenues and 75.6%, 87.8%, and 73.9%, respectively, of total revenue in our Airlines segment. A significant decline in demand by the USAF Air Mobility Command for our airfreight services, or restrictions on our ability to fly into politically unstable regions or areas in which military operations are being conducted, could have a materially adverse effect on our income from operations.

         During January and February of fiscal year 2004, our flight revenues and income from operations were adversely affected by a decrease in USAF Air Mobility Command business. This decrease in business was caused by a decision by the USAF Air Mobility Command to shift away from the use of commercial aircraft in favor of organic military transport aircraft for movements of cargo directly into Iraq. In addition, the FAA currently prohibits U.S. commercial aircraft from operating in Iraq. We may experience another decline in our flight revenues if the USAF Air Mobility Command further decreases its demand for our services.

        We expect that business from the USAF Air Mobility Command will continue to be the primary source of our revenue for the foreseeable future. However, our revenues from the USAF Air Mobility Command are derived from one-year contracts that USAF Air Mobility Command is not obligated to renew. In addition, the USAF Air Mobility Command can terminate or modify its contract with us for convenience if we fail to perform or if we fail to pass bi-annual inspections. Any such termination could expose us to liability and hinder our ability to compete for future contracts. Even if USAF Air Mobility Command continues to award business to us, we cannot be assured that we will continue to generate the same level of revenues we currently derive from USAF Air Mobility Command business. If our USAF Air Mobility Command business declines significantly, it would have a materially adverse effect on our results of operations and financial condition.

        In fiscal years 2005, 2004, and 2003, the U.S. Postal Service accounted for approximately 10.8%, 12.5%, and 18.3%, respectively, of our total operating revenues. Most of these revenues are derived from ground handling services provided by EAGLE at various locations throughout the United States. During fiscal years 2005, 2004, and 2003, revenue from EAGLE's contracts with the U.S. Postal Service represented approximately 56.6%, 61.2%, and 71.3%, respectively, of EAGLE's segment revenues.

        EAGLE's U.S. Postal Service account consists of five separate contracts which range in original duration from one to five years. The largest contract expires in 2006, but may be extended for three successive one-year extensions at the sole option of the U.S. Postal Service. We cannot be assured that any of these agreements will remain in effect for their scheduled terms or that they will be renewed upon expiration. Any termination or non-renewal of our U.S. Postal Service contracts, or any significant decline in our revenues from such contracts, could have a materially adverse effect on our results of operations and financial condition.

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        In order to do business with U.S. government agencies, we must comply with and are affected by many laws and regulations relating to the formation, administration, and performance of U.S. government contracts. These laws and regulations, among other things:

        There laws and regulations affect how we do business with our customers and, in some instances, impose added costs on our business. A violation of these laws and regulations could result in the imposition of fines and penalties or the termination of our contracts. In addition, the violation of certain other generally applicable laws and regulations could result in our suspension or debarment as a government contractor.

        The commercial air freight industry is highly sensitive to changes in economic and political conditions which affect not only foreign demand for air freight services, but also U.S. demand for foreign products. Any negative change in the economic or political climates of the overseas markets in which we operate could increase our security costs, increase our insurance costs, or reduce our capacity utilization. Changes in any of the following areas of risk that could disrupt or adversely affect our operations in overseas markets are:

        Volatility in international currency markets may adversely affect overseas demand for our services. Any significant devaluation in such foreign currencies relative to the U.S. dollar could adversely impact our customers' demand for our services or their ability to pay us.

         We provide services to numerous foreign customers that experience significant fluctuations in their business cycles as a result of unstable economic conditions within their countries. Downturns in the businesses of our foreign customers could adversely impact their demand for our services. Conversely, a significant decline in the value of the U.S. dollar against foreign currencies could adversely affect domestic demand for some of the foreign-sourced products we currently transport.

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        Many of our missions are conducted under dangerous conditions that could result in damage to our aircraft, or death or injury to our personnel. These conditions include:

        From time to time, our independent registered public accounting firm (our "auditors") have noted "reportable conditions" and "material weaknesses" with respect to our financial reporting controls. Reportable conditions involve significant deficiencies in the design or operation of a company's financial reporting controls that could adversely affect the company's ability to record, process, summarize and report financial data. In fiscal year 2002, our auditors noted reportable conditions in our internal controls. In fiscal year 2004, our auditors noted material weaknesses relating to our failure to ensure that i) all transactions were recorded properly and ii) all accounts were reconciled on a consistent and timely basis.

        In May 2004, the Company's principal executive officer and principal financial officer, with the assistance of our then independent registered public accounting firm, analyzed the facts and circumstances surrounding the quantity and magnitude of the adjusting journal entries within certain subsidiaries at year end. After reviewing the adjustments and restatement entries and performing an evaluation of the internal controls within our reporting entities we concluded that, as of the end of such period, the Company's controls and procedures required further enhancements to ensure that the Company's disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. The enhancements proposed by management to the Company's internal controls included i) the establishment of policies and procedures regarding capitalization and amortization of balances, ii) the establishment of policies and procedures for recording and processing transactions, and iii) the establishment of standards to review journal entries, account balances and financial statements. If we fail to successfully implement these enhancements, we may not be able to provide accurate and timely financial statements.

        We are dependent on the experience and knowledge of certain executive officers. The primary executive leadership of the Company comes from Mr. Delford M. Smith, our founder and chairman of the board of directors, who is currently 75 years old. In addition to providing the Company with executive leadership, Mr. Smith and certain entities owned or controlled by Mr. Smith provide significant financing to the Company and serve as guarantors for most of the Company's debt. In the event of Mr. Smith's departure from the Company, we may be forced to restructure a significant portion of our financing agreements on terms which could be significantly less favorable than those currently existing.

        Extensive industry experience and knowledge of our operations is also held by key members of our senior management. The loss of Mr. Smith, or a substantial turnover or loss our other senior managers, could have a materially adverse effect on our results of operations and financial condition.

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        Mr. Delford M. Smith, our founder and the chairman of the board of directors, has control over, either directly or indirectly, approximately 85.1% of the outstanding shares of Holdings common stock. A trust controlled by, and for the benefit of, Mr. Delford M. Smith owns 75.1% of the outstanding shares and 10.0% is held by Mr. Delford M. Smith, as trustee, for the benefit of Mr. Mark C. Smith. Approximately 11.9% of the outstanding shares are held by Wells Fargo Bank, N.A., as trustee, for the benefit of Mr. Mark C. Smith, the son of Mr. Delford M. Smith, and the remaining 3.0% is owned by Mr. Mark C. Smith. Due to this stock ownership and subject to certain limitations imposed by our debt instruments, Mr. Delford M. Smith is able to control, subject to limitations imposed by our debt instruments, the corporate affairs of Holdings and Aviation, such as the election of directors, changes in corporate structure, mergers or sales of substantially all corporate assets, and approval of certain related party transactions.

Risk Factors Relating to the Air Transportation Services Industry

        The air transportation services industry is highly competitive, fragmented, and capital intensive. Successful competition in the industry depends on price, quality, safety, and reliability of service. Greater financial resources, newer aircraft, larger facilities, or lower cost structures provide air carriers with financial and operating advantages over their competitors.

        The air transportation services industry is also characterized by substantial price competition and volatility of demand due to changes in economic conditions. Due to excess capacity within the industry, the pricing structures of the market participants have dramatically changed, and such changes are expected to continue. During periods of slack demand, the various competitors within the industry utilize more efficient pricing in order to generate cash flow and maintain market share. In addition, some of our airline customers, particularly our customers for whom we perform ground handling and logistics services, may decide during periods of economic downturns to reduce their operating expense by establishing "in-house" operations. Our inability to effectively compete within the air transportation services industry would have a materially adverse effect upon our results of operations and financial condition.

        The air transportation services industry is subject to extensive regulation, both domestically and abroad. The enactment of government regulation often results in increased operating costs or reduced revenues. From time to time, the FAA issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures. We expect to continue incurring expenses to comply with the FAA's regulations.

        Pursuant to the provisions of the Aviation and Transportation Security Act, the TSA has implemented security measures that negatively affect operations and costs of the air transportation industry. Adoption by TSA of stricter requirements for the screening of cargo could have a materially adverse impact on our ability to efficiently process cargo, resulting in increased costs. In addition, foreign governments have instituted, and may continue to institute, additional security measures at airports within their own countries, either out of concern for internal security or in response to measures imposed by the United States. Our compliance with any additional security measures imposed by the TSA is expected to result in additional operating costs, some of which may be material.

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        Many aspects of the air transportation services industry are subject to increasingly stringent laws protecting the environment. Future developments in the area of environmental regulation by the United States and foreign countries could adversely affect operations and increase operating costs in the air transportation services industry. For example, potential future actions that may be taken to limit the emission of greenhouse gases by the aviation section could significantly impact to the air transportation services industry. Any such developments could have a materially adverse effect upon our results of operations and financial condition.

        As a result of the September 11 terrorist attacks, aviation insurers have significantly reduced the maximum amount of insurance coverage available to commercial air carriers for claims resulting from acts of terrorism, war, or similar events. At the same time, the insurers have significantly increased the premiums for such coverage and for aviation insurance in general. Future terrorist attacks involving aircraft, or the threat of such attacks, as well as other factors, could result in further increases in our costs for aviation insurance, and could further reduce the availability of such coverage.

         We cannot be assured that: i) we will be able to maintain our existing coverage on terms favorable to us; ii) the premiums for such coverage will not increase substantially; or iii) we will not bear substantial losses and lost revenues from accidents. If our liability from an incident exceeds the amount of our insurance coverage, we would be required to pay any such excess liability from our own assets. In addition, substantial claims resulting from an accident in excess of related insurance coverage or a significant increase in our current insurance expense could have a materially adverse effect on our results of operations and financial condition.

AVAILABLE INFORMATION

        General information about us can be found at www.evergreenaviation.com/invr.html. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge on our website at www.evergreenaviation.com/invr.html, as soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission ("SEC"). Information on our website is not incorporated into this Form 10-K or our other securities filings, and is not a part of such filings.

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FLIGHT EQUIPMENT

        As of the date of this Annual Report, our aircraft fleet consisted of the following:

        An inventory of spare engines and parts is maintained for each aircraft.

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Encumbrances on Owned Aircraft

        One of the Boeing 747 aircraft and three of the DC-9 aircraft are encumbered by a first priority security interest granted to FINOVA Capital Corporation ("FINOVA") in connection with a $30.0 million secured loan agreement (the "FINOVA Note") that was executed in May 1997. See "Capital Resources" in Item 7 below and "Note 16 - Long-Term Debt Obligations" in Item 8 below. As of February 28, 2005, the outstanding principal balance of the FINOVA Note was $3.4 million.

        Substantially all of the remaining owned aircraft are encumbered by a first priority security interest granted to the Wells Fargo Lenders in connection with the Secured Credit Facility. See "Capital Resources" in Item 7 below and "Note 16 - Long-Term Debt Obligations" in Item 8 below. As of February 28, 2005, the outstanding principal balance of the Secured Credit Facility was $79.3 million.

         In addition, substantially all of our owned aircraft are encumbered by a second senior security interest granted under the Indenture Notes. See "Capital Resources" in Item 7 below and "Note 16 - Long-Term Debt Obligations" in Item 8 below. As of February 28, 2005, the outstanding principal balance of the Indenture Notes was $215.0 million.

Aircraft Purchase Commitments

        In order to create additional flexibility in our operating fleet, we engage in strategic acquisitions of fixed-wing and rotor aircraft, primarily through operating lease agreements. We acquire aircraft that can increase our operating fleet capacity and, if necessary at some point in time, be either sold or leased profitably. As of the date of this report, we have entered into agreements to purchase the following aircraft:

        Subject to finalization of financing or leasing arrangements, we expect to take delivery of all of the above-listed aircraft during fiscal year 2006. In addition, we anticipate that upon taking delivery, we will simultaneously sell and lease back the aircraft under operating lease agreements for lease terms not greater than three years.

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Leased Aircraft

        We lease aircraft and engines under various agreements with both third parties and affiliates. Five of our small fixed-wing aircraft and 23 of our helicopters are leased under operating leases which have remaining lease terms ranging from six years to less than one year. Under many of these leases, we would be liable for a stipulated loss value if an event of default occurs and, in the event we prematurely terminate the lease, we would be liable for a lease termination fee. As of
February 28, 2005, the aggregate stipulated loss values for our aircraft leases was approximately $28.0 million, and the aggregate amount of lease termination fees was approximately $22.7 million.

        A number of our small fixed-wing aircraft and helicopter leases include options to purchase the aircraft either at the expiration of the lease or on certain lease anniversary dates ranging from two to four years. Although most of the purchase options are based upon the fair market value of the aircraft as of the purchase date, some of the leases provide for a guaranteed purchase option price. As of February 28, 2005, the aggregate amount of the guaranteed purchase option prices for our leased aircraft was approximately $13.8 million.

GROUND FACILITIES

        We own the campus of our corporate headquarters located in McMinnville, Oregon. In addition, we lease warehouse, office space, hangar, and maintenance facilities throughout the United States. The terms of these leases generally range from one month to five years, and often contain provisions for periodic adjustments of lease rates upon notification from the lessor. Historically, we have not experienced any difficulty in renewing our leases. We believe that our facilities are adequate for our current and near-term future needs.

        The Air Center leases its aircraft maintenance and storage facilities located at Pinal Air Park in Marana, Arizona. The facilities consist of 20 million square feet of ramp and storage area, a 6,850-foot runway capable of handling any commercial aircraft, and over 350,000 square feet of buildings and improvements. The 60,000 square foot main hangar can accommodate one Boeing 747 or four Boeing 737 aircraft at one time. A technologically advanced "aircraft strip, paint, and polish" facility, and a fuel depot are also located at the Air Center.

        We also lease land and buildings under various lease agreements with third parties and affiliates. In particular, EAGLE leases warehouse, office, and ramp space at the various airport locations served by EAGLE. In addition, we also lease corporate office space in McMinnville, Oregon from DMS Properties and Ventures Holdings.

        EAGLE provides ground handling and logistics services at 36 locations throughout the United States. At most of these locations, EAGLE leases the warehouse and office space utilized in its operations. Many of these lease agreements also allow non-exclusive use of ramp access and apron space.

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        At February 28, 2005, our major leased ground facilities consisted of the following:

Other

        Vintage, a subsidiary of Holdings, owns a collection of vintage aircraft and the 120,000 square foot Evergreen Aviation Museum Building located on the Evergreen Museum Land in McMinnville, Oregon. Vintage leases the Evergreen Aviation Museum Building and Evergreen Museum Land to The Captain Michael King Smith Evergreen Aviation Educational Institute, a non-profit corporation. See "Other" in Item 1 above.

        In addition, we lease office space and guest facilities in buildings that are owned by Mr. Smith or entities owned by, or controlled by, Mr. Smith. See "Lease Transactions" in Item 13 below.

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        The Company is currently involved in certain legal proceedings as discussed below. We plan to vigorously defend against these lawsuits, however, because of uncertainties related to both the potential amount and range of loss from pending litigation, management is unable to make a reasonable estimate of the liability that could result if there were an unfavorable outcome in any of these legal proceedings. As additional information becomes available, we will re-assess the potential liability related to pending litigation and revise our estimates accordingly. Revisions of our estimates of such potential liability could materially impact its results of operations, financial condition or cash flows. While we are party to other claims and actions arising in the ordinary course of business, we do not believe that these claims and actions to be materially adverse to our financial condition or operations.

Banc of America

        We are a defendant in Banc of America Securities LLC v. Evergreen International Aviation, Inc. et al., which was filed on May 22, 2003 in the Superior Court of the County of Meeklenburg in the State of North Carolina. Banc of America has alleged claims for breach of contract and quantum meruit, arising out of agreements in which Banc of America agreed to act as our financial agent in exchange for the payment of certain fees. The plaintiff has not yet specified an amount for damages.

        We filed a motion to dismiss for lack of jurisdiction, but the motion has been denied by both the trial court and the North Carolina Court of Appeals. We are currently evaluating further appellate and trial options.

Asiana Airlines

        On January 28, 2000, we entered into a contract with Asiana Airlines (“Asiana”) whereby we agreed to provide air freight services to Asiana in exchange for minimum payments to be made by Asiana throughout the term of the contract. The minimum payments were based on guaranteed block hour utilization and the contract was to continue through February 28, 2003. On August 28, 2001, Asiana notified us that Asiana would not make any further payments under the contract.

        On September 19, 2001, we filed proceedings in the United States District Court for the District of Oregon against Asiana to recover amounts owed by Asiana to us pursuant to the contract. On February 28, 2003, a jury returned a verdict in our favor and on April 28, 2003, the court entered a judgment for damages in the amount of $16.6 million in our favor. Asiana subsequently filed an appeal of the judgment with the Ninth Circuit Court of Appeals, and oral appellate arguments were held on May 2, 2005. As of the date of this Annual Report, we have not yet received notice of a ruling on the appeal.

Tridair Repair and Manufacturing

        On February 11, 2003, Tridair Repair and Manufacturing, Inc. (“Tridair”) filed a complaint against us in the United States District Court for the Central District of California (the “California Court”) alleging fraud and breach of contract. The allegations relate to an aircraft salvage contract under which we agreed to perform aircraft salvage services for Tridair in return for payments to be made by Tridair to us. Tridair subsequently transferred its litigation rights to Diversified Aero Asset Management, Inc. (“Diversified”), which had previously filed a complaint against the Air Center for similar claims. Diversified amended its complaint in order to seek $10.6 million in damages for fraud and breach of contract. Upon motion, the matter was transferred to the federal district court in Arizona and a jury trial was scheduled to begin on October 18, 2005.

        Subsequently, on May 6, 2005, the parties entered into a Settlement Agreement and Release whereby each party agreed to dismiss all claims, with prejudice, in exchange for the release of such party's equipment and property held by the other party, with each party bearing its own fees and costs. The Settlement Agreement and Release was executed by all parties on May 15, 2005.

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Ducor Express Airlines

        On February 25, 2005, Ducor Express Airlines, Inc. ("Ducor") filed a claim against Airlines for breach of contract (the "Action") in the Supreme Court of New York, County of Queens. Ducor seeks damages of $41.7 million against Airlines in regard to certain agreements between the parties for Airlines to provide charter cargo flights from Hong Kong, China to Los Angeles, California during September 2004 through November 2004 (collectively, the "Charter Agreements"). On March 21, 2005, Airlines filed a counterclaim against Ducor in regard to the Charter Agreements. Subsequently, the parties have entered into negotiations for a Settlement Agreement whereby Ducor and Airlines i) will agree to file a stipulation of discontinuance of the Action with prejudice and ii) will agree to release and discharge the other from any and all claims and liabilities with respect to the Action.

        None.
 

PART II

        There is no established public trading market for Holdings common stock. All of the Holdings common stock is beneficially owned by two individuals. For a description of the beneficial ownership of Holdings common stock, see Item 12 of this Annual Report.

        Holdings has not declared cash dividends on its common stock for the three most recent fiscal years. In addition, the Company's Secured Credit Facility and Indenture Notes restrict the ability of Aviation and its subsidiaries to pay dividends on common stock. For a description of such restrictions, see "Note 16 - Long-Term Debt" in Item 8 of this Annual Report.

        There are no outstanding options, warrants or rights for Holdings common stock. In addition, Holdings does not have an equity compensation plan.

        During fiscal year 2005, Holdings did not sell any securities which were not registered under the Securities Act of 1933, as amended. Holdings did not repurchase any shares of its common stock during the fourth quarter of the fiscal year covered by this Annual Report.

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        The selected financial data presented below has been derived from our consolidated financial statements. For comparability of results, this information should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7, and the consolidated financial statements and related notes included in Item 8 of this Annual Report.

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Financial Section Highlights

        The financial section of our Annual Report describes our ongoing operations, including discussions about our business segments, our ability to finance our operating activities, and trends and uncertainties in our industry that might affect our future operations. Our disclosures regarding the following items may be found within this section as follows:

INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

        We are a leading provider of integrated air cargo transportation and aviation support services. We provide global air cargo shipping, ground handling and logistics services, helicopter transportation services, small aircraft charters, and aircraft maintenance and repair services. Our diverse fleet of commercial aircraft and helicopters gives us the capability and flexibility to provide a wide array of air transportation services to our customers.

        Our fiscal year ends on the last of February. During fiscal year 2005, we recorded a net loss of $5.3 million, as compared to a net loss of $6.5 million and net income of $31.8 million for fiscal years 2004 and 2003, respectively.

Related Party Transactions

        Mr. Delford M. Smith, our founder and the chairman of our board of directors, has control over, either directly or indirectly, approximately 85.1% of the outstanding shares of Holdings common stock. In addition, Mr. Smith owns or controls other entities, or does business under other trade names, including, but not limited to, Ventures Acquisition Company, Ventures Holding, DMS Properties; and Greenpatch Farms. From time to time, we enter into leases and other transactions with Mr. Smith and the entities owned by, or controlled by, him. Further information regarding such leases and transaction may be found in Item 13 of this Annual Report.

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TRENDS AND UNCERTAINTIES

        We pay close attention to, and monitor various trends and uncertainties in the markets we serve. Among the material trends and uncertainties that impact our operations are the following:

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        See "Risk Factors" in Item 1 of this Annual Report for a further discussion of the risks and uncertainties that impact us and the air transportation services industry.

CRITICAL ACCOUNTING POLICIES

        The discussion and analysis of our results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

        Critical accounting policies are defined as those that are most important to the portrayal of a company's financial condition and results and which require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that our critical accounting policies are limited to those described below. For a detailed discussion on the application of these and other significant accounting policies, see "Note 2 - Significant Accounting Policies" in Item 8 of this Annual Report.

Depreciation of Aircraft

        We record our aircraft at acquisition cost upon delivery, and depreciate each aircraft, over its estimated remaining economic life, to its estimated residual value. We determine the estimated economic life and residual values of our aircraft by analyzing the current operating conditions for the aircraft, evaluating our economic expectations, and examining the estimated lives utilized by other airlines operating similar fleets.

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         Estimates of the economic lives of our aircraft are based both on our experience and the experience of other airlines with respect to similar aircraft. Based upon these estimates, we are depreciating our DC-9 aircraft through 2023 and our Boeing 747 aircraft through points in time ranging from 2020 until 2028, depending upon the aircraft model. Estimated residual values of aircraft are based on our historical experience regarding the sale of both aircraft and spare parts. We annually review and, if necessary, revise the estimated residual values and economic lives of our aircraft to reflect changes in our fleet plans, aircraft technology, and other economic conditions. For example, in September 2003, we changed the estimated economic life of our helicopter fleet from 10 years to 20 years in order to more accurately reflect current operating conditions and economic expectations.

        We capitalize all costs of major renewals, modifications, and overhauls (such as "C" and "D" checks) of our aircraft. We amortize the costs of such major overhaul components as follows:

Impairment of Long-Lived Assets

         We evaluate the recoverability of our long-lived assets, primarily our aircraft and other property and equipment, in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We evaluate recoverability when events and circumstances indicate that the net carrying value of our long-lived assets may not be recoverable. We recognize an impairment loss when the sum of the undiscounted cash flows estimated to be generated by our long-lived assets is less than the assets' net carrying value. Our cash flow estimates are based on historical results, as adjusted to reflect our best estimates of future market and operating conditions. The net carrying value of our long-lived assets determined to be not recoverable is reduced to fair value. During fiscal year 2005, we incurred $1.3 million of impairment charges on aircraft.

Leased Aircraft - Overhauls and Lease Return Condition Costs

        We account for the overhaul and lease return condition costs of our leased aircraft in accordance with the applicable lease agreements. Generally, we capitalize the costs of the required major maintenance and inspection of engines and airframes for our leased aircraft. We then amortize such capitalized costs over the lesser of i) number of years until the next scheduled overhaul, generally a period of ten years or less, or ii) the termination of the lease.

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Revenue Recognition

        The revenue recognition policies for each of our business segments are stated below:

        Airlines – Airlines generates most of its flight revenue under one of four types of contracts: an "all-in contract," a contract for the USAF Air Mobility Command/Civil Reserve Air Fleet program, a block space agreement, or an "ACMI" or "wet lease" agreement.

        Regardless of the type of contract, Airlines records revenue for each completed flight segment and, at the end of each reporting period, for each flight segment in process.

        EAGLE – EAGLE generates revenue by providing ground handling and logistics services to the U.S. Postal Service, passenger and cargo airlines, and express delivery customers. EAGLE typically provides these services under contracts that range in term from one to five years. Revenue is recorded when the services are rendered.

        Helicopters – Helicopters generates flight revenue under service contracts that range in term from less than one year to five years. Helicopters typically charges by the number of hours flown, with a minimum number of hours per day, plus a monthly availability fee. Helicopters frequently modifies its general pricing structure in order to more closely match the characteristics of the mission. The various types of pricing methods utilized by Helicopters includes pricing by weight for transport of goods, pricing by acre for aerial spraying, and pricing by number of pickups for construction work. Revenue is recorded when services are rendered.

        Air Center – The Air Center provides a range of support services to the air transportation industry. The types of support service revenues generated by the Air Center include aircraft maintenance and repair revenue, aircraft storage, and other support services. Revenue is recorded when services are rendered.

        EASL – EASL generates revenue by:

        Revenue is recorded when the sale is closed.

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        Agriculture – Agriculture generates revenue through sales of crops, processed agricultural products, and nursery products. Revenue is recorded when the product is shipped.

Allowance for Doubtful Accounts

        We maintain allowances for losses that may result from the inability of our customers to make required payments or from contract disputes. We also periodically record an allowance for the general collectibility of all other accounts receivable based upon factors such as the aging of receivables and historical collection experience. The February 28, 2005 and February 29, 2004 accounts receivable balances of $62.4 million and $39.4 million, respectively, are reported net of allowances for doubtful accounts of $1.7 million and $2.0 million, respectively.

        We periodically evaluate the collectibility of our accounts receivable balances based upon information currently available. If we determine that a customer will be unable to meet its financial obligations to us, or if we determine that collectibility of an account is unlikely, we record a specific write-off in order to reduce the related receivable to the expected recovery amount. During fiscal year 2004, EAGLE reduced its allowance for doubtful accounts by $6.1 million due to a write-off of receivables related to U.S. Postal Service contracts.

        In September 2001, we instituted proceedings against Asiana to recover certain amounts owed to us pursuant to a freighter service agreement with Asiana. See "Asiana Airlines" in Item 3 above. The freighter service agreement was in force until February 28, 2003 and we believe that we are entitled to the full amount that we would have earned if Asiana had continued to meet its contractual obligation. As of February 28, 2003, we had recorded an account receivable of
$27.2 million from Asiana, which was fully reserved on our books. We did not record any additional income after Asiana ceased making payments. Subsequently, during fiscal year 2004, the $27.2 million account receivable was written off against the fully reserved balance, resulting in no change to the net receivable and no income effect. Further information regarding the Asiana claim may be found in Item 3 of this Annual Report.

Goodwill

        Two of our business segments, EAGLE and Helicopters, have a combined goodwill of $5.5 million. In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, we evaluate the recoverability of the goodwill when events and circumstances indicate that the cash flows estimated to be generated by the reporting unit the goodwill is associated with are less than the goodwill's net carrying value. Our cash flow assumptions are based on historical experience with respect to capacity, expected revenue, operating costs, and other relevant factors. The net carrying value of goodwill determined to be not recoverable is reduced to fair value. During the last three fiscal years, we have not made any reductions to goodwill.

Income Taxes

         We account for income taxes in accordance with Statement of Financial Standards No. 109 Accounting for Income Taxes ("SFAS No. 109"). We record provisions for deferred income tax assets and liabilities in order to reflect the net tax effects of temporary differences between i) the tax basis of assets and liabilities and ii) their reported amounts in our consolidated financial statements. Such provisions are based upon enacted tax laws and rates in effect for the years in which the differences are expected to affect taxable income. We establish valuation allowances when necessary to reduce deferred income tax assets to the amounts expected to be realized.

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RECENT ACCOUNTING PRONOUNCEMENTS

Current Fiscal Year

        Although a number of new accounting pronouncements were enacted during our fiscal year 2005, none of these pronouncements had, or is expected to have, a material effect on our consolidated financial statements.

Prior Fiscal Years

        In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities - An Interpretation of ARB No. 51” (“FIN 46-R”). FIN 46-R addresses how a company should apply the provisions of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain variable interest entities. In particular, FIN 46-R will apply in those situations in which i) the company does not have a controlling financial interest in the variable interest entity or ii) the variable interest entity does not have sufficient equity at risk for the variable interest entity to finance its activities without additional subordinated financial support. In those situations, FIN 46-R requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the variable interest entities do not effectively disperse risks among the parties involved.

        The Company is required to adopt FIN 46-R as of the period ending May 31, 2005. Although management has not completed a final assessment of the impact of FIN 46-R on the Company, preliminary assessments have indicated that the Company may be the primary beneficiary of certain related party variable interest entities including, but not limited to, Ventures Holding and Ventures Acquisition Company. The Company leases certain assets consisting primarily of buildings and aircraft from these entities. Upon the Company’s adoption of FIN 46-R, management’s assessment may indicate that the financial statements of these entities should be included in the Company’s financial statements in the period of adoption and beyond. Such inclusion is not expected to have a material impact on the Company’s consolidated financial statements.

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RESULTS OF OPERATIONS FOR FISCAL YEAR 2005 AS COMPARED TO FISCAL YEAR 2004

        The following information is derived from the audited consolidated financial statements of Evergreen Holdings, Inc. for fiscal years 2005 and 2004, which are included in Item 8 of this Annual Report.

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Operating Revenue

        Total operating revenues for fiscal year 2005 were $580.9 million, which was a $45.3 million, or 8.5%, increase from total operating revenues of $535.6 million for fiscal year 2004.

        Flight Revenue — Flight revenue accounted for $411.1 million, or approximately 70.8%, of our total operating revenues for fiscal year 2005. Compared to fiscal year 2004, we experienced a $33.4 million, or 8.8%, increase in our flight revenue.

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        Sales of Aircraft, Parts, and Other Property and Equipment — Revenue from sales of aircraft, parts, and other property and equipment was $13.3 million during fiscal year 2005 as compared to $17.3 million for fiscal year 2004, resulting in a $4.0 million, or 23.1%, decrease in sales revenue.

        Ground Handling and Logistics Services Revenue — EAGLE generated $111.1 million of revenue from ground handling and logistics services during fiscal year 2005 as compared $99.8 million during fiscal year 2004, resulting in a
$11.3 million, or 11.3%, increase in revenue.

        During fiscal year 2005, EAGLE expanded the volume of ground handling and logistics services provided to British Airways, resulting in a $5.9 million increase in revenue. EAGLE also increased the volume of ground handling and logistics services provided to its other domestic and foreign commercial customers, resulting in a $3.7 million increase in revenue.

         In addition, we recognized a $1.7 million increase in revenues from our U.S. Postal Service contract. The increase was primarily attributable to a $4.1 million increase in the applicable labor rates for our Shared Network ("SNET") contracts with the U.S. Postal Service. See "Operating Expenses - Cost of Ground Handling and Logistics Services" below. This increase was partially offset by a $2.4 million decrease in volume of services provided.

        Support Services and Other Revenue — Support services and other revenue was $45.4 million for fiscal year 2005, as compared to $40.8 million for fiscal year 2004, resulting in a $4.6 million, or 11.3%, increase in revenue.

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Operating Expenses

        Total operating expenses for fiscal year 2005 were $549.3 million, which was a $37.5 million, or 7.3%, increase from $512.6 million of expenses during fiscal year 2004.

        Flight Costs — Flight costs were $75.9 million for fiscal year 2005, as compared to $73.8 million for fiscal year 2004, resulting in a $2.1 million, or 2.8% increase in expense.

        Fuel — Fuel expense was $123.8 million for fiscal year 2005, as compared to $96.8 million for fiscal year 2004, resulting in a $27.0 million, or 27.9%, increase in fuel expense.

        Maintenance — Aircraft maintenance expense was $76.5 million for fiscal year 2005, as compared to $73.3 million for fiscal year 2004, resulting in a $3.2 million, or 4.4%, increase in expense.

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        Aircraft and Equipment Expense — Aircraft and equipment expense was $49.2 million for fiscal year 2005, as compared to $49.8 million for fiscal year 2004, resulting in a $0.6 million, or 1.2%, decrease in expense.

        Cost of Sales of Aircraft, Parts, and Other Property and Equipment — Cost of sales of aircraft, parts, and other property and equipment was $8.3 million for fiscal year 2005, as compared to $13.7 million for fiscal year 2004, resulting in a $5.4 million, or 39.4%, decrease in cost of sales.

        These decreases were partially offset by a $1.8 million increase in EASL's cost of sales because, during fiscal year 2005, EASL assumed responsibility for sales of aircraft and engine part-outs.

        Cost of Ground Handling and Logistics Services — Cost of ground handling and logistics services was $99.8 million for fiscal year 2005, as compared to $89.1 million for fiscal year 2004, resulting in a $10.7 million, or 12.0%, increase in expense. The increase was primarily attributable to:

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        Cost of Support Services and Other Revenue — Cost of support services and other revenue was $52.1 million for fiscal year 2005, as compared to $39.0 million for fiscal year 2004, resulting in a $13.1 million, or 33.6%, increase in support costs. Cost of support services increased in the following areas during fiscal year 2005:

        Selling, General, and Administrative — Total selling, general, and administrative expense for fiscal year 2005 was $64.3 million, as compared to $77.1 million for fiscal year 2004, resulting in an $12.8 million, or 16.6% decrease in expense. The decrease was primarily attributable to the following factors:

Interest Expense

         Interest expense for fiscal year 2005 was $35.9 million, which was a $1.1 million, or 3.2%, increase from $34.8 million in fiscal year 2004. The increase was primarily attributable to higher interest rates being charged by the Company's lenders during fiscal year 2005, as partially offset by approximately $0.5 million of interest charges and other fees incurred by us in connection with the restructuring of our long-term debt and issuance of the Indenture Notes during fiscal year 2004.

Other Non-Operating Expense and Income

        During fiscal year 2005, we recognized $0.8 million of other non-operating expense, which was a $5.2 million increase in expense from $4.4 million of other non-operating income during fiscal year 2004.

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        During fiscal year 2005, we incurred $3.8 million of non-operating expense that was primarily attributable to loan prepayment penalties, legal fees, and the write-off of unamortized loan acquisition costs which were incurred in conjunction with the full repayment and termination of our revolving line of credit with PNC Bank, N.A. (“PNC Bank”) in May 2004. The expense was partially offset by i) a $1.9 million gain recorded by Airlines on insurance proceeds received from a bird strike incident (as discussed below) and ii) a $0.9 million gain realized on the sale of land and farming equipment in Agriculture.

        Gains from Insurance Settlements – During fiscal year 2005, we received a $3.1 million settlement on an insurance claim related to damages sustained by a Boeing 747 engine as the result of a bird strike incident. After application of engine repair costs of $1.2 million, we realized a gain from insurance proceeds of $1.9 million.

        In comparison, in fiscal year 2004, we settled an insurance claim related to damages to an aircraft and four engines (at the time, we were leasing two of the engines under operating leases). After application of a $1.0 million deductible and repair costs of $3.2 million, we realized net insurance proceeds of $8.2 million from the claim. We then expensed $4.1 million of the net insurance proceeds for a buy-out of the two leased engines, resulting in a $4.1 million gain on the insurance settlement.

        In both of the settlements, the insurance company agreed to release the gross settlement amount of the insurance proceeds to us in exchange for a right of subrogation to all of our legal and equitable rights and remedies against any third party adjudged liable for the incident. Therefore, the insurance company has no right to proceed against us with respect to either settlement.

Income Tax Expense

        Our income tax benefit for fiscal year 2005 was $1.7 million, as compared to an income tax benefit of $2.0 million for fiscal year 2004. The decrease in the income tax benefit was due primarily to a pre-tax loss of $7.0 million for fiscal year 2005, as compared to a pre-tax loss of $8.5 million for fiscal year 2004. The tax benefits in fiscal years 2005 and 2004 were computed at the statutory rates of 34.0% for federal tax and a blended rate of approximately 4.0% for state taxes.

        The following table sets forth the calculation of our income tax benefit (expense) for fiscal years 2005 and 2004:

        At February 28, 2005 and February 29, 2004, we had federal income tax net operating loss carryforwards of $96.0 million and $88.8 million, respectively. At February 28, 2005 and February 29, 2004, we had state income tax net operating loss carryforwards of $73.8 million and $34.5 million, respectively. These net operating loss carryforwards expire in the years 2007 through 2024. During fiscal years 2005 and 2004, we reduced our taxes currently payable by $0.9 million and $0, respectively, from the utilization of net operating loss carryforwards. At February 28, 2005 and February 29, 2004, we had an alternative minimum tax (AMT) credit available of $10.5 million which is available to offset future regular taxes that are in excess of future alternative minimum taxes. Under current tax law, the carryforward period for the AMT credit is unlimited.

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RESULTS OF OPERATIONS FOR FISCAL YEAR 2004 AS COMPARED TO FISCAL YEAR 2003

        The following information is derived from the audited consolidated financial statements of Evergreen Holdings, Inc. for fiscal years 2004 and 2003, which are included in Item 8 of this Annual Report.

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Operating Revenue

        Total operating revenues for fiscal year 2004 were $535.6 million, which was a $38.7 million, or 6.7%, decrease from total operating revenues of $574.3 million for fiscal year 2003.

        Flight Revenue — Flight revenue accounted for $377.7 million, or approximately 70.5%, of our total operating revenues for fiscal year 2004. Compared to fiscal year 2003, we experienced a $22.9 million or 5.7% decrease in our flight revenue.

        Sales of Aircraft, Parts, and Other Property and Equipment — Revenue from sales of aircraft, parts, and other property and equipment was $17.3 million during fiscal year 2004, as compared to $12.1 million for fiscal year 2003, resulting in a $5.2 million, or 43.0%, increase in sales revenue. The increased sales revenue was primarily attributable to the following transactions during fiscal year 2004:

        Ground Handling and Logistics Services Revenue — EAGLE generated $99.8 million of revenue from ground handing and logistics services during fiscal year 2004 as compared $129.7 million during fiscal year 2003, resulting in a
$29.9 million, or 23.1%, decrease in revenue. The decrease was primarily driven by the elimination of a $14.3 million U.S. Postal Service Christmas Network contract and a $13.8 million reduction in volume under a U.S. Postal Service Shared Network contract.

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        Support Services and Other Revenue — Support services and other revenue was $40.8 million for fiscal year 2004, as compared to $31.9 million for fiscal year 2003, resulting in a $8.9 million, or 27.9%, increase in revenue. Approximately $7.5 million of the increase was primarily attributable to an increase in the level of aircraft heavy maintenance, aircraft storage, and other support services provided by us to third parties.

        During fiscal year 2004, revenues from our agricultural operations also increased by approximately $1.3 million, as compared to fiscal year 2003. The increased revenues during fiscal year 2004 were primarily due to increased Christmas tree sales, brokered sales of the hazelnut crop of Greenpatch Farms, and increased agricultural sales generated by reduced margins on excess inventory.

Operating Expenses

        Total operating expenses for fiscal year 2004 were $512.6 million, which was a $19.9 million, or 4.0%, increase from $492.7 million during fiscal year 2003.

        Flight Costs — Flight costs were $73.8 million for fiscal year 2004, as compared to $69.8 million for fiscal year 2003, resulting in a $4.0 million, or 5.7%, increase in expense.

        Fuel — Fuel expense was $96.8 million for fiscal year 2004, as compared to $100.2 million for fiscal year 2003, resulting in a $3.4 million, or 3.4%, decrease in fuel expense.

        Maintenance — Aircraft maintenance expense was $73.3 million for fiscal year 2004, as compared to $69.7 million for fiscal year 2003, resulting in a $3.6 million, or 5.2%, increase in expense.

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        Aircraft and Equipment — Aircraft and equipment expense was $49.8 million for fiscal year 2004, as compared to $44.1 million for fiscal year 2003, resulting in a $5.7 million, or 12.9%, increase in expense.

        Cost of Sales of Aircraft, Parts, and Other Property and Equipment — Cost of sales of aircraft, parts, and other property and equipment was $13.7 million for fiscal year 2004, as compared to $8.9 million for fiscal year 2003, resulting in a $4.8 million, or 53.9%, increase in cost of sales. The increase was primarily attributable to:

        These increases were partially offset by:

        Cost of Ground Handling and Logistics Services — Cost of ground handling and logistics services was $89.1 million for fiscal year 2004, as compared to $104.6 million for fiscal year 2003, resulting in a $15.5 million, or 14.8%, decrease in expense. The decrease in expenses was primarily attributable to reduced revenue activities which resulted in decreased expenses for labor, travel, equipment, and outside services.

        Cost of Support Services and Other Revenue — Cost of support services and other revenues was $39.0 million for fiscal year 2004, as compared to $32.6 million for fiscal year 2003, resulting in a $6.4 million, or 19.6%, increase in support costs. The increase was primarily attributable to a $4.2 million increase in support costs at the Air Center and a $2.5 million increase in the cost of agricultural goods sold due to increased brokered sales of hazelnuts. These increases were partially offset by a reduction of approximately $0.3 million in landing fees and other flight support costs for Airlines due to a shift of flight activity from commercial flight contracts to military contracts under which a higher percentage of such support costs were passed through to the USAF Air Mobility Command.

        Selling, General, and Administrative — Total selling, general, and administrative expense for fiscal year 2004 was $77.1 million, as compared to $62.8 million for fiscal year 2003, resulting in a $14.3 million, or 22.8%, increase in expense. The increase was primarily attributable to the following:

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Interest Expense

         Interest expense for fiscal year 2004 was $34.8 million, which was a $4.2 million, or 13.7%, increase from $30.6 million in fiscal year 2003. The $4.2 million increase in interest expense was primarily attributable to:

Other Non-Operating Expense and Income

        Income from non-recurring transactions increased $2.9 million, or 193.3%, to $4.4 million in income for fiscal year 2004 from $1.5 million in income for fiscal year 2003. The increase was primarily attributable to a $4.1 million gain on an insurance settlement in fiscal year 2004, as partially offset by approximately $1.5 million of land sales which occurred in fiscal year 2003.

        Gain from Insurance Settlement – In fiscal year 2004, we settled an insurance claim related to damages to an aircraft and four engines (at the time, we were leasing two of the engines under operating leases). After application of a $1.0 million deductible and repair costs of $3.2 million, we realized net insurance proceeds of $8.2 million from the claim. We then expensed $4.1 million of the net insurance proceeds for a buy-out of the two leased engines, resulting in a $4.1 million gain on the insurance settlement.

        In exchange for the insurance company's agreement to release the gross settlement amount of the insurance proceeds to us, the insurance company was granted a right of subrogation to all of our legal and equitable rights and remedies against any third party adjudged liable for the incident. Therefore, the insurance company has no right to proceed against us with respect to the settlement.

Income Tax Expense

        Our income tax benefit for fiscal year 2004 was $2.0 million, as compared to an income tax expense of $19.8 million for fiscal year 2003. The income tax benefit was due primarily to a pre-tax loss of $8.5 million for fiscal year 2004, as compared to pre-tax income of $51.6 million for fiscal year 2003. The effective tax rate, on an annualized basis, was 23.7% for fiscal year 2004 and 38.4% for fiscal year 2003. The change in the effective tax rate is primarily due to the effect of permanent differences in proportion to the applicable taxable income for the periods presented.

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LIQUIDITY

         At February 28, 2005, we had cash and cash equivalents of $2.7 million, as compared to cash and cash equivalents of $4.1 million and $5.6 million at February 29, 2004 and February 28, 2003, respectively.

Cash Flows from Operating Activities

         During fiscal year 2005, we generated $70.6 million of cash from our operating activities, as compared to $53.1 million and $100.3 million during fiscal years 2004 and 2003, respectively.

         Non-cash depreciation and amortization expenses of $70.9 million, and a $35.2 million increase in accounts payable balances accounted for most of our positive cash flow from operating activities during fiscal year 2005. Accounts payable balances increased primarily due to stricter management of cash disbursements. Payments received on accounts receivable from affiliates, decreases in prepaid expense accounts, non-cash impairment charges for two aircraft, and a non-cash write-off of unamortized loan acquisition costs also increased cash flow by approximately $10.8 million.

        The positive cash flow from operating activities was partially reduced primarily as a result of i) our $5.3 million net loss for fiscal year 2005, ii) a $23.0 million increase in outstanding accounts receivable balances, primarily due to an increase in accounts receivable from U.S. Postal Service contracts, and iii) a $13.9 million increase in inventories due to increased purchases of aircraft spare parts by our EASL segment and increased purchases of agricultural products in anticipation of increased customer demand.

Cash Flows from Investing Activities

         During fiscal year 2005, we used $67.6 million of cash for investing activities, as compared to uses of $62.3 million and $52.2 million during fiscal years 2004 and 2003, respectively.

         Purchases of aircraft parts and airframes, scheduled overhauls of engines, and upgrades and enhancements for our aircraft resulted in a $69.8 million use of cash for capital expenditures. We also used approximately $2.4 million of cash for payment of deposits on aircraft purchase agreements and other non-fixed assets.

         Disposals of aircraft parts, agricultural equipment and land resulted in $2.8 million of cash proceeds during fiscal year 2005. In addition, we received $3.1 million of insurance proceeds from an incident involving a bird strike on a Boeing 747 engine. See "Results of Operations for Fiscal Year 2005 as Compared to Fiscal Year 2004 - Other Non-Operating Expense and Income" above. We utilized $1.2 million of the insurance proceeds for repairs on the engine, resulting in net cash proceeds from the insurance settlement of $1.9 million.

         As of the date of this report, we have entered into agreements to purchase two Boeing 747 aircraft and four helicopters. See "Flight Equipment - Aircraft Purchase Commitments" in Item 2 above.

Cash Flows from Financing Activities

         During fiscal year 2005, we used $4.3 million of cash in financing activities, as compared to $7.6 million of cash provided from financing activities in fiscal year 2004, and a $51.4 million use of cash during fiscal year 2003.

        During fiscal year 2005, we received approximately $222.4 million of cash proceeds from long-term financing, and used approximately $216.7 million of cash for payments on those long-term debt obligations. In addition, we also made cash payments of approximately $10.0 million on various other long-term instruments, which consisted primarily of equipment purchase notes.

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CAPITAL RESOURCES

        At February 28, 2005, our total long-term debt balance was $307.1 million. Our long-term debt is comprised of a $215.0 million outstanding balance on the Indenture Notes, a $79.3 million outstanding balance on the Secured Credit Facility, and outstanding balances of $12.8 million on various equipment purchase notes.

Indenture Notes

        The Indenture Notes were issued by Aviation on May 16, 2003, pursuant to an Indenture agreement which was executed by Aviation, as issuer, by Holdings and substantially all of the subsidiaries of Aviation, as guarantors, and by J.P. Morgan Trust Company, N.A., as successor trustee to Bank One, N.A., as trustee. The Indenture Notes are 12% senior second secured notes and were issued for their face value of $215.0 million.

        The Indenture Notes are secured by a second priority lien, subject to certain permitted liens, on substantially all of the assets of Aviation and its domestic subsidiaries, excluding the assets of Agriculture. The Indenture Notes are designated as senior second secured obligations. As a result, the Indenture Notes rank equally with all of Aviation’s existing senior, or unsubordinated, debt, and are senior to any of Aviation’s future senior subordinated or unsubordinated debt.

        To the extent of assets securing both the Indenture Notes and the Secured Credit Facility (see "Secured Credit Facility" below), the Indenture Notes are effectively second in priority to our indebtedness under the Secured Credit Facility. However, to the extent of the assets securing the Indenture Notes, the Indenture Notes are senior to our unsecured debt obligations. In addition, the Indenture Notes are fully and unconditionally guaranteed, both jointly and severally, by Holdings, substantially all of Aviation’s subsidiaries, and the Trust. The only subsidiaries and affiliated entities that are not obligated as guarantors under the Indenture Notes are Evergreen Agricultural Enterprises, Inc., Evergreen Vintage Aircraft Inc., and the foreign subsidiaries of the Company.

        Interest Rate. The Indenture Notes bear interest at an annual fixed rate of 12%. Payments of interest are due semi-annually on May 15th and November 15th of each year. On May 13, 2005, we made the semi-annual payment of accrued interest on the Indenture Notes in the amount of $12.9 million. We intend to fund payment of the accrued interest from our operations. The next semi-annual payment of accrued interest on the Indenture Notes, in the amount of $12.9 million, is due and payable on November 15, 2005. Payment of the accrued interest will be funded from our operations.

        Optional Redemption. The Indenture Notes will mature on May 15, 2010, at which time the outstanding principal of the Indenture Notes, plus all accrued and unpaid interest, will become due. However, we may elect to redeem the Indenture Notes prior to the maturity date. The Indenture Notes are redeemable after the dates and at the prices (expressed in percentages of principal amount on the redemption date) as set forth below:

        In addition, at any time prior to May 15, 2006, we may redeem, on one or more occasions, up to 35% of the principal amount of the Indenture Notes with the net cash proceeds from sales of certain kinds of capital stock at a redemption price of 112%, plus accrued and unpaid interest at the redemption date.

        Repurchase of Notes Upon a Change in Control. If a Change of Control (as defined in the Indenture Notes) occurs, each holder of Indenture Notes will have the right to require us to repurchase all or part of the holder's Indenture Notes at a price equal to 101% of the Indenture Notes' principal amount, plus any accrued and unpaid interest to the date of repurchase.

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Secured Credit Facility

        On May 13, 2004, we entered into the Secured Credit Facility with the Wells Fargo Foothill, Inc. and Ableco Finance LLC (collectively, "the Wells Fargo Lenders"). The Secured Credit Facility is a three-year senior secured credit facility that consists of two loans – a $50.0 million term loan and a $50.0 million revolving loan, as further described in "Term Loan Advances" and "Revolving Loan Advances" below. The Secured Credit Facility is collateralized by substantially all of the assets of Aviation and its domestic subsidiaries, excluding the assets of Agriculture.

        At the closing of the Secured Credit Facility, approximately $83.0 million of the loan was funded. We utilized $80.8 million of the funds to fully repay and terminate a revolving credit obligation owed by Aviation to PNC Bank, while the remaining $2.2 million of the proceeds was used to pay for part of the legal fees and other transaction costs incurred by us in connection with the closing of the Secured Credit Facility. We incurred a total of $2.4 million of legal and professional fees in connection with the closing of the Secured Credit Facility. We capitalized those legal and professional fees as loan acquisition costs and are amortizing the costs over the term of the Secured Credit Facility.

        The Secured Credit Facility terminates in May 2007, at which time all outstanding amounts of principal, accrued and unpaid interest, and any other fees and expenses owed under the Secured Credit Facility will be due and payable in full.

        Interest Rates.The term loan bears interest at an annual rate of either LIBOR plus 5.5% or prime plus 3.0%, and the revolving loan bears interest at an annual rate of either LIBOR plus 3.0% or prime plus 0.5%. So long as we are not in default under the Secured Credit Facility, we may elect at any time to have interest on all or a portion of the advances on the revolving loan or the term loan calculated under the applicable LIBOR interest rate option. LIBOR interest rate elections are available for LIBOR periods of 1, 2, 3, or 6 months. Interest on a LIBOR rate loan is payable on the last day of the LIBOR period (if the elected LIBOR period is less than three months) or on the last day of each three month interval (if the elected LIBOR period is six months). For any portion of the term loan or revolving loan which is not covered by a LIBOR interest rate election, monthly payments of accrued interest are due on the first day of each month.

        Term Loan Advances. The $50.0 million term loan was fully funded at the closing of the Secured Credit Facility. No additional advances are permitted under the term loan at any time, and any principal amount of the term loan which is repaid or prepaid may not be reborrowed. We are required to make payments of principal on the term loan in monthly installments of $0.5 million. Payment of the monthly principal installments commenced on June 1, 2004 and will continue on the first day of each succeeding calendar month throughout the term of the Secured Credit Facility. Then, unless paid in full earlier, all outstanding principal and accrued and unpaid interest of the term loan will be due and payable in full when the Secured Credit Facility terminates in May 2007.

        Revolving Loan Advances. During the term of the Secured Credit Facility, we may receive advances of principal on the revolving loan at any time. However, the outstanding principal of the revolving loan may not at any time be greater than an amount which is determined by reference to certain eligible receivables and eligible inventory of the Company. See “Loan Balance and Availability” below. We may also make payments of principal on the revolving loan at any time. All outstanding principal and all accrued and unpaid interest of the revolving loan will be due and payable in full when the Secured Credit Facility terminates in May 2007.

        Loan Balance and Availability. As of February 28, 2005, the outstanding balance of the Secured Credit Facility was $79.3 million. Taking into consideration the limitations on our ability to obtain additional advances of principal from the revolving loan (see “Revolving Loan Advances” above) and the Minimum Availability Requirement (see "Covenant Compliance" below), as of February 28, 2005, our availability under the Secured Credit Facility was $4.9 million.

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        Covenant Compliance. We are subject to certain financial and non-financial covenants under the Secured Credit Facility. For example, as defined in the Senior Credit Facility, we must maintain: i) either a qualified cash reserve balance or an undrawn availability on the revolving loan of not less than $5.0 million (the "Minimum Availability Requirement"), ii) minimum thresholds with respect to certain consolidated and non-consolidated EBITDA, and iii) a minimum ratio with respect to fixed charge coverages.

        The following are the required covenant thresholds under the Secured Credit Facility for the twelve-month period ending February 28, 2005:

        In addition, the amount of capital expenditures that we may make in any fiscal year is limited to $75.0 million, of which at least $10.0 million must be financed from sources other than the Secured Credit Facility. As of February 28, 2005, we were in compliance with this covenant.

        If Aviation or any of its restricted subsidiaries violates any of these covenants and are unable to obtain waivers from the Wells Fargo Lenders, we would be in default under the Secured Credit Facility and the debt could be accelerated.

        On June 1, 2005, the Wells Fargo Lenders notified us that the Wells Fargo Lenders believed that we were in violation of certain covenants of the Secured Credit Facility (the "Specified Events of Default"), as follows:

          The Wells Fargo Lenders further notified us that, as a result of the Specified Events of Default, the Wells Fargo Lenders had elected to charge the default rate of interest, which, as set forth in the Secured Credit Facility, is a per annum rate equal to 2 percentage points above the per annum rate otherwise applicable. The default rate of interest will be charged retroactive to April 29, 2005, the date on which the Wells Fargo Lenders asserted a default occurred under the FINOVA Loan. At April 29, 2005, the per annum rates of interest on the Secured Credit Facility ranged from 6.09% to 8.75%.

         Based upon the facts and circumstances, we do not believe that the Specified Events of Default constituted actual Events of Default, as defined under the Secured Credit Facility.

         On June 14, 2005, we entered into an Amendment Number Two and Waiver to Loan and Security Agreement (the "Amendment Number Two") with the Wells Fargo Lenders whereby the Wells Fargo Lenders agreed to waive the Specified Events of Default, and both parties agreed to amend the Secured Credit Facility to allow the Company to maintain only all-risk ground insurance coverage for aircraft that the Company has grounded and taken out of service.

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WCMA Loan Agreement to EASL

        On August 12, 2003, EASL entered into Working Capital Management Account Loan Agreement No. 54F-07164 (the “WCMA Loan”) with Merrill Lynch Business Financial Services, Inc. (“MLBFS”) for the purpose of obtaining a
$8.0 million reducing revolver credit facility. The WCMA Loan provides for a reducing revolver loan which is funded from a line of credit. EASL may repay the loan balance in whole or in part at any time without penalty, and may request a re-borrowing of amounts repaid on a revolving basis. The WCMA Loan does not require monthly payments of principal. However, on the last business day of each calendar month, the maximum amount of the line of credit will be reduced by an amount equal to 1/60th of the loan amount. The WCMA Loan bears interest at the variable rate of LIBOR plus 3.00% and monthly payments of accrued interest are due and payable on the first business day of each calendar month. The WCMA Loan shall terminate on August 31, 2008, at which time all outstanding unpaid principal and all accrued and unpaid interest shall be due and payable in full.

        On May 12, 2004, EASL and MLBFS executed an amendment letter to the WCMA Loan. The amendment letter establishes certain financial covenants for the WCMA Loan that are consistent with the financial covenants contained in the Secured Credit Facility. The amendment letter establishes i) a schedule for fixed charge coverage ratios, to be measured on a quarter-end basis, ii) a $75.0 million maximum limit on capital expenditures, of which, at least $10.0 million must be funded by indebtedness, and iii) a minimum EBITDA consolidated that must be achieved by the Company on a quarter-end basis. Specifically, the amendment letter adjusted the fixed charge coverage ratios and minimum consolidated EBITDA requirements of the WCMA Loan to correspond with the fixed charge coverage ratios and consolidated EBITDA requirements of the Secured Credit Facility. See “Capital Resources – Secured Credit Facility” above.

        Covenant Compliance. As of February 28, 2005, we were in compliance with the covenants of the WCMA Loan. See "Capital Resources – Secured Credit Facility" above.

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FINOVA Note

        In May 1997, the Trust entered into a $30.0 million Secured Loan Agreement with FINOVA Capital Corporation (the "FINOVA Note"), with interest at the annual rate of 10.44%. Monthly installments of principal and interest were payable through April 2005, at which time the FINOVA Note matured with a final payment of approximately $2.5 million in principal, plus accrued interest, due upon maturity.

         Effective as of April 29, 2005, the Trust and FINOVA have executed a Third Amendment Agreement to amend and extend the FINOVA Note (the "Third Amendment"). The Third Amendment extends the maturity date of the FINOVA Note to September 29, 2005, with the annual rate of interest remaining at 10.44%. Monthly installments of principal and interest in the amount of $471,650 are scheduled through the extended maturity date, resulting in a full amortization of the remaining outstanding principal balance. All outstanding principal and accrued, but unpaid interest, will be due upon maturity, as extended.

        The FINOVA Note is secured by means of a first priority security interest granted to FINOVA in the one Boeing 747 aircraft and three DC-9 aircraft owned by the Trust.

Intervest Note

          On December 30, 2004, Vintage entered into a Construction Loan Agreement with Intervest-Mortgage Investment Company ("Intervest") whereby Intervest agreed to loan to Vintage a sum total of $9.0 million for the purpose of financing Vintage's construction of an IMAX theater on the Evergreen Museum Land. The Construction Loan Agreement is further evidenced by a Promissory Note from Vintage to Intervest in the principal sum of $9.0 million (the "Intervest Note").

         The Intervest Note provides for an annual rate of interest equal to 1.00% in excess of the rate established for a Bank Prime Loan, as published in the Federal Reserve Statistical Release H.15 (the "Index"). The interest rate on all sums advanced under the Intervest Note shall be adjusted on the first day of each month following the date that the Bank Prime Loan rate changes in the Index, with such interest rate to be equal to 1.00% in excess of the week-ending average rate established for the Bank Prime Loan, as published in the Index. However, the interest rate shall never be less than 5.75% per annum. Accrued interest on the outstanding balance of sums advanced under the Intervest Note shall be due and payable on the first day of each month. In addition, following any default in the payment of interest under the Intervest Note, or any default under any of the other documents executed in connection with or to secure the Intervest Note (the "Loan Documents") and expiration of the applicable cure period, Intervest may elect to (i) declare the Intervest Note due and payable, and/or (ii) increase the rate of interest payable under the Intervest Note by three percent (3.00%) per annum.

         The entire principal balance and any accrued, but unpaid, interest on the Intervest Note shall be due and payable on January 1, 2006. However, so long as Vintage is not in default under the provisions of the Construction Loan Agreement, Vintage may elect to extend the maturity date of the Intervest Note to July 1, 2006. Vintage may exercise its right to extend the maturity date by providing Intervest with at least 30 days prior written notice and paying to Intervest the amount of $67,500 in consideration for the extension period. In addition, Vintage may, at any time, prepay the whole or any part of the Intervest Note without penalty.

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           Intervest has agreed, subject to certain conditions, to provide permanent financing for the theater following the completion of the theatre's construction.

Risk of Default on Debt Obligations

        Substantially all of our assets are pledged as collateral under the Company’s various debt agreements. Furthermore, the Indenture Notes and the Secured Credit Facility both contain cross-default provisions whereby an event of default under one or more debt obligations of either Aviation or its restricted subsidiaries would also result in an event of default under either, or both, the Indenture Notes and the Secured Credit Facility. In the event that we are unable to cure such defaults or obtain waivers with respect to such defaults, we are at risk that our payment obligations under either, or both, the Indenture Notes and the Secured Credit Facility will be accelerated, thereby forcing us to either obtain alternative financing or seek legal protection from our creditors.

Off-Balance Sheet Arrangements

        We do not have any off-balance sheet arrangements.

Table of Contractual Obligations

        The following table summarizes our contractual obligations as of February 28, 2005:

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Interest Rate Risk

        As of February 28, 2005, we had fixed rate debt of $220.9 million and variable rate debt of $86.2 million. Based on the outstanding balances at February 28, 2005, each 1% increase or decrease in the interest rate of our variable rate debt would increase or decrease our annual interest expense by approximately $0.9 million. A 1% increase in interest rates would decrease the fair market value of our Indenture Notes by approximately $2.2 million. We have not entered into any obligations for trading purposes.

        The table below presents principal cash flows and related weighted average interest rate by year for our debt obligations.

Foreign Currency Exchange Rate Risks

        Although some of our revenues are derived from foreign customers, substantially all of our revenues and expenses are denominated in U.S. dollars. We maintain minimal balances in foreign bank accounts to facilitate payments of expenses.

Commodity Price Risks

        We are exposed to commodity price risk with respect to the purchase of aviation fuel. However, fluctuations in the price of fuel have not had a significant impact on our results of operations in recent years because, in general, the fuel price adjustment clauses in our customer contracts limit our exposure to increases in fuel prices. We do not enter into, or purchase any fuel under, long-term fuel contracts, nor do we enter into futures or swap contracts.

        We are not exposed to any other commodity price risk.

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PART II

        The following financial statements are the consolidated financial statements of Evergreen Holdings, Inc., the parent company of Evergreen International Aviation, Inc., and its subsidiaries.

        Aviation is the issuer of the Indenture Notes, as defined in "Note 16 - Long-Term Debt Obligations" of the Notes to Consolidated Financial Statements below. The Indenture Notes are fully and unconditionally guaranteed on a joint and several, senior basis by Holdings, the Trust, and substantially all of the subsidiaries of Aviation.

        Condensed consolidating financial statements which separately present the financial information for Holdings, Aviation, the subsidiary guarantors on a combined basis, the non-guarantor subsidiaries on a combined basis, consolidating adjustments, and total consolidated amounts are included in "Note 22 - Supplemental Financial Information for Guarantor Subsidiaries and Non-Guarantor Subsidiaries" below.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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REPORT OF GHP HORWATH, P.C.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Evergreen Holdings, Inc

We have audited the accompanying consolidated balance sheet of Evergreen Holdings, Inc. and subsidiaries (the "Company") as of February 28, 2005 and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 financial position of Evergreen Holdings, Inc. and subsidiaries as of February 28, 2005, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audit referred to above includes an audit of the 2005 financial statement schedule II. In our opinion, this 2005 financial statement schedule presents fairly, in all material respects, in relation to the 2005 consolidated financial statements taken as a whole, the information required to be stated therein

/s/ GHP HORWATH, P.C.
Denver, Colorado
June 6, 2005, except for Note 23, as to which the date is June 14, 2005

53

REPORT OF PRICEWATERHOUSE COOPERS LLP
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Evergreen Holdings, Inc. and Subsidiaries:

        In our opinion, the consolidated financial statements listed in the accompanying index, present fairly, in all material respects, the financial position of Evergreen Holdings, Inc. and its subsidiaries (the Company) at February 29, 2004, and the results of their operations and their cash flows for each of the two years in the period ended February 29, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index as of February 29, 2004 and for the two years in the period ended February 29, 2004, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has historically had violations of certain of its debt covenants. The Company's failure to comply with existing covenants would make debt callable. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP
Portland, Oregon
June 11, 2004

54

CONSOLIDATED BALANCE SHEETS
At February 28, 2005 and February 29, 2004
(in thousands, except share data)

(continued on the next page)

55

CONSOLIDATED BALANCE SHEETS — continued
At February 28, 2005 and February 29, 2004
(in thousands, except share data)