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

FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended May 31, 2005 Commission File Number: 333-109667-04 EVERGREEN HOLDINGS, INC. (Exact name of registrant as specified in its charter)

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Oregon	91-1797880
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

For the quarterly period ended November 30, 2004

3850 Three Mile Lane, McMinnville, Oregon	97128-9496
(Address of principal executive offices)	(Zip Code)

ORRegistrant's telephone number, including area code: (503) 472-9361

(Indicate by check mark whether the registrant (1) ~~TRANSITION~~has ~~REPORT~~filed ~~PURSUANT~~all TOreports ~~SECTION~~required to be filed by Section 13 ORor 15(d) OFof ~~THE~~the ~~SECURITIES~~Securities ~~EXCHANGE~~Exchange ~~ACT~~Act OFof 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 ( )

~~For~~Indicate by check mark whether the ~~transition~~registrant ~~period~~is ~~from~~an ~~_______~~accelerated tofiler ~~________~~(as defined in Rule 12b-2 of the Exchange Act). Yes ( ) No (X)

~~Commission~~As ~~File~~of ~~Number:~~July ~~333-109667-04~~15, 2005, there were 10,054,749 outstanding shares of no par value common stock of the registrant.

EVERGREEN HOLDINGS, INC.(Exact name of registrant as specified in its charter)

OREGON	91-1797880
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

3850 THREE MILE LANE, McMINNVILLE, OREGON	97128-9496
(Address of principal executive offices)	(Zip Code)

503-472-9361(Registrant’s telephone number, including area code)

NONE(Former name, former address and former fiscal year,if changed since last report)

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

Indicate the number of shares of outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

CLASS	OUTSTANDING AS OF JANUARY 18, 2005
Common stock, no par value	10,054,749 shares

EVERGREEN HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-QFOR THE QUARTER ENDED NOVEMBER 30, 2004

PAGE

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements 3

Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51

Consolidated Balance Sheets 3

Consolidated Statements of Operations (Unaudited) 5

Consolidated Statements of Cash Flows (Unaudited) 6

Condensed Notes to Unaudited Consolidated Financial Statements 7

Item 2. Management’s Discussion and Analysis of Financial Condition 33

and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk 57

Item 4. Controls and Procedures 58

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings 62

	Item 1.	Legal Proceedings	52
	Item 6.	Exhibits	53

~~Item~~SIGNATURES ~~6. Exhibits 64~~54

~~SIGNATURES~~EXHIBIT 65INDEX 55

~~EXHIBIT INDEX 66~~-2-

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2PART I - FINANCIAL INFORMATION

~~PART~~ITEM I1. - FINANCIAL ~~INFORMATION~~STATEMENTS.

~~ITEM~~CONSOLIDATED 1.BALANCE ~~FINANCIAL~~SHEETS(in ~~STATEMENTS.~~thousands, except share data)

EVERGREEN HOLDINGS, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share data)

					May 31, 2005
					(unaudited)		February 28, 2005


ASSETS
Current assets:
	Cash and cash equivalents			$	1,144	$	2,718
	Accounts receivable, less allowance of $1,661 for				70,074		62,355
		doubtful accounts
	Accounts receivable from affiliates, net				496		447
	Inventories				20,877		29,060
	Prepaid expenses and other				2,997		2,612
	Current portion notes receivable from affiliates				2,022		1,473
	Deferred tax asset and income taxes receivable				4,173		4,294

		Total current assets			101,783		102,959

Property and equipment, net					548,396		543,562
Assets held for sale					6,797		6,831
Notes receivable from affiliates					11,653		14,093
Capitalized loan acquisition costs					10,112		11,015
Other assets					13,677		11,757
Goodwill					5,494		5,494

			Total assets	$	697,912	$	695,711

				November 30,
				2004		February 29,
				(unaudited)		2004
ASSETS
Current assets:
	Cash and cash equivalents			$	6,750	$	4,071
	Accounts receivable, less allowance of $1,426 and
		$2,029 for doubtful accounts
			Trade		47,106		37,143
			Other		3,912		2,229
	Accounts receivable from affiliates, net				664		160
	Inventories				22,289		14,719
	Prepaid expenses and other				6,068		6,965
	Current portion notes receivable from affiliates				1,474		2,039
	Income taxes receivable				802		583
	Deferred tax asset				11,964		11,964
		Total current assets			101,029		79,873
Property and equipment, net					542,672		544,939
Assets held for sale					6,766		6,760
Notes receivable from affiliates					13,942		15,563
Capitalized loan acquisition costs					11,599		15,531
Other assets					12,088		10,975
Goodwill					5,494		5,494
			Total assets	$	693,590	$	679,135

(continued on the next page)

~~(continued on the next page)~~ -3-

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3CONSOLIDATED BALANCE SHEETS — continued At May 31, 2005 and February 28, 2005(in thousands, except share data)

EVERGREEN HOLDINGS, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share data)

					May 31, 2005
					(unaudited)		February 28, 2005


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	84,657	$	72,834
	Accrued liabilities				24,007		24,975
	Accrued interest				1,563		8,032
	Affiliate trade and notes payable				1,639		3,267
	Current portion of long-term debt				12,575		14,245

		Total current liabilities			124,441		123,353

Long-term debt					286,805		292,860
Deferred rentals payable					78		80
Deferred tax liabilities					97,983		95,151

		Total liabilities			509,307		511,444

		Minority interest			989		655


Stockholders' equity:
	Common stock, no par value; 20,000,000 shares authorized				7,568		7,568
		10,054,749 shares issued and outstanding
	Retained earnings				180,048		176,044

		Total stockholders' equity			187,616		183,612

			Total liabilities, minority interest, and stockholders' equity	$	697,912	$	695,711

				November 30,
				2004		February 29,
				(unaudited)		2004
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	67,070	$	43,204
	Accrued liabilities				24,951		20,597
	Accrued interest				1,337		7,735
	Affiliate trade and notes payable				3,168		2,377
	Current portion of long-term debt				16,052		11,580
		Total current liabilities			112,578		85,493
Long-term debt					292,146		299,937
Deferred rentals and other payables to affiliates					85		101
Deferred tax liabilities					103,690		104,664
		Total liabilities			508,499		490,195
		Minority interest			327		-
Stockholders' equity:
	Common stock, no par value; 20,000,000 shares authorized				7,568		7,568
		10,054,749 shares issued and outstanding
	Retained earnings				177,196		181,372
		Total stockholders' equity			184,764		188,940
			Total liabilities, minority interest, and stockholders' equity	$	693,590	$	679,135

See condensed notes to unaudited consolidated financial statements.

~~The accompanying condensed notes to unaudited consolidated financial statements are an integral part of these statements.~~ -4-

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4CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands)

EVERGREEN HOLDINGS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(in thousands)


				For the Three Months Ended May 31,

				2005			2004

Operating revenues:
	Flight revenue		$	118,482		$	87,269
	Sales of aircraft, parts, and other property and equipment			11,204			2,286
		(including sales to affiliates of $7,400 during the three months ended May 31, 2005)
	Ground handling and logistics services revenue			29,795			25,610
	Support services and other revenue			16,815			10,988

		Total operating revenues		176,296			126,153

Operating expenses:
	Flight costs			19,417			17,538
	Fuel			39,737			25,423
	Maintenance			17,922			17,723
	Aircraft and equipment			12,383			12,058
	Cost of sales of aircraft, parts, and other property and equipment			8,880			1,008
		(including cost of sales to affiliates of $7,400 during the three months ended May 31, 2005)
	Cost of ground handling and logistics services			24,787			21,755
	Cost of support services and other support costs			18,601			10,726
	Selling, general, and administrative expense			18,597			17,468

		Total operating expenses		160,324			123,699

		Income from operations		15,972			2,454

Non-operating income (expense):
	Interest expense			(9,373	)		(8,959	)
	Other non-operating income (expense), net			547			(3,569	)

Income (loss) before minority interest and income taxes				7,146			(10,074	)

		Minority interest		(334	)		(307	)

Income (loss) before income taxes				6,812			(10,381	)

		Income tax (expense) benefit		(2,808	)		3,721

Net income (loss)			$	4,004		$	(6,660	)

				For the Three Months				For the Nine Months
				Ended November 30,				Ended November 30,
				2004		2003		2004		2003
Operating revenue:
	Flight revenue		$	112,446	$	97,542	$	302,183	$	304,430
	Sales of aircraft, parts, and other assets			1,853		3,351		9,189		11,390
	Ground logistics services revenue			27,061		24,213		81,558		74,450
	Support services and other revenue			13,246		9,055		33,477		29,032
		Total operating revenue		154,606		134,161		426,407		419,302

See condensed notes to unaudited consolidated financial statements.

Operating expenses:
	Flight costs		19,766	18,617	55,749	58,556
	Fuel		35,647	25,099	89,998	76,283
	Maintenance		19,322	18,490	55,252	52,238
	Aircraft and equipment		12,657	12,855	36,986	37,810
	Cost of sales of aircraft, parts and other
		property and equipment	993	1,434	5,127	8,290
	Cost of ground logistic services		24,465	22,454	72,250	66,660
	Support services and other		16,122	10,203	37,454	28,746
	Selling, general, and administrative expenses		15,409	14,960	47,510	52,980
		Total operating expenses	144,381	124,112	400,326	381,563
		Income from operations	10,225	10,049	26,081	37,739

-5-

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Other (expense) income:
	Interest expense	(9,086	)	(8,796	)	(26,832	)	(27,268	)
	Other non-operating income (expense), net	21		(63	)	(3,450	)	4,258
Income (loss) before minority interest and income taxes		1,160		1,190		(4,201	)	14,729

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

	Minority interest			(325	)		(284	)		(948	)		(780	)
						For the Three Months Ended May 31,
Income (loss) before income taxes				835			906			(5,149	)		13,949
						2005			2004
	Income tax (expense) benefit			(737	)		(453	)		973			(5,597	)
Cash flows from operating activities:
~~Net income (loss)~~	Net income (loss)		$	98	$	$4,004	~~453~~	$	$(6,660	~~(4,176~~)	)	$	~~8,352~~
	Adjustments to reconcile net income (loss) to
			net cash provided by operating activities:
		Depreciation and amortization				16,846			16,369
		Deferred income taxes				2,832			(3,714	)
		Gain on disposal of property and equipment				(260	)		(323	)
		Deferred income and foreign currency exchange gain				(109	)		(25	)
		Write-off of unamortized loan acquisition costs				-			3,464
		Minority interest				334			307
	Changes in operating assets and liabilities:
		Accounts receivable				(7,718	)		(4,398	)
		Receivables from affiliates				(598	)		422
		Inventories				8,183			549
		Prepaid expenses and short-term notes receivable				(385	)		749
		Accounts payable and accrued liabilities				2,866			(4,341	)
		Income taxes payable				121			(78	)
			Net cash provided by operating activities			26,116			2,321
Cash flows from investing activities:
	Purchases of property, equipment, and overhauls					(21,179	)		(11,360	)
	Proceeds from disposal of property and equipment					538			605
	Payments received on notes receivable from affiliates					2,440			1,585
	Other assets					(1,763	)		(3,624	)
			Net cash used in investing activities			(19,964	)		(12,794	)
Cash flows from financing activities:
	Proceeds from long-term debt					355			222,247
	Payments on long-term debt and notes payable to affiliates					(8,081	)		(208,849	)
			Net cash (used in) provided by financing activities			(7,726	)		13,398
				Net (decrease) increase in cash		(1,574	)		2,925
Cash and cash equivalents, beginning of period						2,718			4,071
Cash and cash equivalents, end of period					$	1,144		$	6,996

~~The~~See ~~accompanying~~ condensed notes to unaudited consolidated financial statements ~~are an integral part of these statements~~.

5-6-

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~~EVERGREEN~~CONDENSED ~~HOLDINGS,~~NOTES ~~INC.~~TOUNAUDITED CONSOLIDATED ~~STATEMENTS~~FINANCIAL ~~OF CASH FLOWS (UNAUDITED)(in thousands)~~STATEMENTS

		For the Nine Months Ended November 30,
		2004		2003
Cash flows from operating activities:
Net (loss) income	$	(4,176	)	$	8,352
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization		48,622			45,655
Deferred income taxes		(974	)		2,926
Gain on sale of property and equipment		(999	)		(4,053	)
Deferred income and currency exchange loss (gain)		10			96
Impairment charges on aircraft		1,321			-
Non-cash amortization of loan acquisition costs		2,606			2,445
Write-off of unamortized loan acquisition costs		3,464			-
Minority interest		948			780
Changes in operating assets and liabilities:
Accounts receivable and receivables from affiliates		(11,584	)		8,064
Inventories		(7,238	)		(548	)
Prepaid expenses and short-term notes receivable		897			(4,479	)
Accounts payable and accrued liabilities		22,586			(15,118	)
Income taxes payable		(219	)		(566	)
Net cash provided by operating activities		55,264			43,554

NOTE 1 — OVERVIEW

Cash flows from investing activities:
Purchases of property, equipment and overhauls	(48,808	)	(45,560	)
Proceeds from disposal of property and equipment	1,801		9,589
Long-term notes receivable from affiliates and other assets	(1,418	)	(4,865	)
Net cash used in investing activities	(48,425	)	(40,836	)

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, "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.

Cash flows from financing activities:
Proceeds from long-term debt		222,247			283,825
Payments on long-term debt and notes payable to affiliates		(225,495	)		(126,654	)
Change in operating loans and short-term debt		-			(149,722	)
Change in affiliate notes payable and deferred charges		(912	)		(15,098	)
Net cash used in financing activities		(4,160	)		(7,649	)
Net increase (decrease) in cash and cash equivalents		2,679			(4,931	)
Cash and cash equivalents, beginning of period		4,071			5,638
Cash and cash equivalents, end of period	$	6,750		$	707

Business Segments

~~The~~We ~~accompanying~~conduct ~~condensed~~business in ~~notes~~six tomajor ~~unaudited~~business ~~consolidated~~segments ~~financial~~through ~~statements~~our ~~are~~wholly-owned ansubsidiaries: ~~integral part of these statements.~~

6• Evergreen International Airlines, Inc. ("Airlines") provides air cargo services for both international and domestic markets; • Evergreen Aviation Ground Logistics Enterprise, Inc. ("EAGLE") provides full-service aviation ground handling and logistics services, including mail handling, aviation hub management, aircraft handling, cargo handling, ground system management, ground equipment maintenance, ground equipment sales and leasing, aircraft line maintenance, terminal services, aircraft de-icing and washing, check-in and ticketing, baggage acceptance and seat selection, and passenger cabin cleaning; • Evergreen Helicopters, Inc. ("Helicopters") provides helicopter and small fixed-wing aircraft services throughout the world in connection with activities such as forest fire fighting, health services, aerial spraying, heavy lift construction, law enforcement, helicopter logging, petroleum support services, search and rescue, peacekeeping and relief support, helicopter skiing, and agriculture; • Evergreen Air Center, Inc. ("the Air Center" or "Air Center") an unlimited Class IV airframe repair station certified by the FAA, performs aircraft maintenance, repair and overhaul services, and aircraft storage services; • Evergreen Aircraft Sales and Leasing Co. (“EASL”) selectively buys, sells, leases, and brokers commercial aircraft, helicopters, and aircraft spare parts; and • Evergreen Agricultural Enterprises, Inc. (“Agriculture”) conducts farming operations, nursery and horticulture operations, and delivers nursery and processed agricultural products to wholesale and retail customers.

~~EVERGREEN~~Trust ~~HOLDINGS,~~Created ~~INC.CONDENSED~~February ~~NOTES~~28, ~~TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~1986

~~NOTE~~ Aviation 1also —holds ~~BASIS~~an approximate ~~FOR~~two-thirds ~~PRESENTATION~~beneficial interest in the Trust Created February 25, 1986 (the "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 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 McDonnell Douglas DC-9 ("DC-9") aircraft. The Trust leases these aircraft to Airlines.

The interim consolidated financial statements included in this report have been prepared by Evergreen Holdings, Inc. and its subsidiaries, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC. -7-

Table of Contents

AsControlling ~~used~~Shareholder inand ~~these~~Related ~~condensed notes to unaudited consolidated financial statements:~~ Parties

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

~~the~~• ~~terms~~Ventures ~~"Evergreen"~~Acquisition ~~and~~Company LLC ("~~Aviation"~~Ventures ~~refer~~Acquisition toCompany"); ~~Evergreen~~• ~~International~~Ventures ~~Aviation~~Holding, Inc. ("Ventures Holding"); • DMS Properties; and • Greenpatch Farms.

~~the~~ From ~~terms~~time ~~"Company~~to time," "we," ~~"us,"~~engage in transactions with Mr. Smith and ~~similar~~the ~~terms~~entities ~~refer~~owned toby, ~~Evergreen~~or ~~International~~controlled ~~Aviation~~by, ~~Inc~~Mr. ~~and~~Smith. ~~its~~See ~~consolidated~~"Note ~~subsidiaries,~~11 ~~collectively.~~- Related Party Transactions" below.

InSelected ~~the opinion of management, the interim consolidated~~ financial ~~statements included in this report contain all adjustments necessary to present fairly the financial position,~~ results by ofbusiness ~~operations,~~segment ~~and~~are ~~cash~~found ~~flows~~in of"Note ~~the~~2 ~~Company~~- ~~for~~Business ~~the~~Segments" ~~periods indicated~~below. ~~Such adjustments, other than adjustments that have been separately disclosed, are of a normal recurring nature.~~

~~The~~BASIS ~~Company~~FOR ~~conducts business in six major business segments through its wholly-owned subsidiaries:~~ PRESENTATION

~~Evergreen~~ The ~~International~~interim ~~Airlines~~consolidated financial statements included in this quarterly report have been prepared by Holdings and its subsidiaries, ~~Inc.~~without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("~~Airlines~~SEC");. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the SEC.

~~Evergreen~~ In ~~Aviation~~the ~~Ground~~opinion ~~Logistics~~of ~~Enterprises~~management, the ~~Inc~~interim consolidated financial statements included in this quarterly report contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company for the periods indicated. Such ~~("EAGLE");~~adjustments, other than adjustments that have been separately disclosed, are of a normal recurring nature.

~~Evergreen Helicopters, Inc. ("Helicopters");~~ Seasonality

~~Evergreen~~ Certain ~~Air~~aspects ~~Center~~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 ~~Inc~~as a result of increased volumes of mail and packages being processed by the U.S. ~~("Air~~Postal ~~Center");~~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.

~~Evergreen~~ Because ~~Aircraft~~certain ~~Sales~~aspects &of ~~Leasing~~our business Coare seasonal, the interim results presented in this report are not necessarily indicative of operating results for a full year. ~~(“EASL”);~~The interim consolidated financial statements included in this report should be read in conjunction with our consolidated financial statements and the accompanying notes that were included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2005, which was filed with the SEC on June 14, 2005.

~~Evergreen~~Reclassifications ~~Agricultural Enterprises, Inc. (“Agriculture”).~~

~~The~~Certain ~~Company’s~~amounts ~~business is seasonal, and accordingly, the interim results presented~~ in ~~this report are not necessarily indicative of operating results for a full year. The interim consolidated financial statements included in this report should be read in conjunction with~~ the Company’s ~~consolidated~~prior period's financial statements and ~~the accompanying~~ notes ~~that~~have ~~were~~been ~~included~~reclassified into ~~the~~conform ~~Company’s~~to ~~Annual Report on Form 10-K/A for~~ the ~~year~~current ~~ended~~period ~~February~~presentation. Previously ~~29,~~reported ~~2004,~~net ~~which~~loss ~~was~~or ~~filed~~net ~~with~~cash ~~the~~flows ~~SEC~~were onnot ~~September~~affected ~~30,~~by ~~2004~~these reclassifications.

~~Reclassifications~~-8-

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~~Certain~~RECENT ~~amounts~~ACCOUNTING in the Company’s prior years’ financial statements and notes have been reclassified to conform to the current year presentation. Previously reported net income or net cash flows were not affected by these reclassifications. PRONOUNCEMENT

7 In December 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.

~~EVERGREEN~~ The ~~HOLDINGS~~Company adopted FIN 46-R as of March 1, ~~INC~~2005.~~CONDENSED~~ ~~NOTES~~In ~~TOUNAUDITED~~connection ~~CONSOLIDATED~~with ~~FINANCIAL~~the ~~STATEMENTS~~adoption of FIN 46-R, management completed an assessment to determine if there were any variable interest entities ("VIE" or "VIEs") that the Company was required to consolidate. Management's assessment included an evaluation of leases, consisting primarily of building and aircraft leases, between the Company and certain related party entities including, but not limited to, Ventures Holding and Ventures Acquisition Company. As a result of the assessment, management determined that there were no VIEs that the Company was required to consolidate for the period ended May 31, 2005.

~~RECENT~~ As ~~ACCOUNTING~~discussed in ~~PRONOUNCEMENTS~~the section "Landsbanki Loan Agreement" in "Note 4 - Long-Term Debt Obligations" below, on July 11, 2005, Holdings, as Guarantor, and Ventures Acquisition Company, as Borrower, entered into a $32.0 million loan agreement with Landsbanki Íslands hf., as Lender, for the purpose of financing Ventures Acquisition Company's purchase of two Boeing 747 aircraft. As discussed in the section "Lease Transactions" in "Note 11 - Related Party Transactions" below, the two Boeing 747 aircraft will be leased by Ventures Acquisition Company to Airlines. Management is currently evaluating this transaction pursuant to the requirements of FIN 46-R, and believes that this transaction could result in a VIE transaction which may require consolidation by the Company.

~~FASB Interpretation No. 46~~-R 9-

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InNOTE ~~December~~2 ~~2003,~~— ~~the~~SELECTED ~~Financial Accounting~~FINANCIAL ~~Standards~~RESULTS ~~Board~~BY ~~(“FASB”)~~BUSINESS 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. SEGMENT

The ~~Company~~following ischarts ~~required to adopt~~present ~~FIN~~selected ~~46-R~~financial asinformation 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~~as ~~assessments~~further ~~have~~segregated ~~indicated~~by ~~that~~each ~~the Company may be the primary beneficiary~~ of certain related party variable interest entities including, but not limited to, Ventures Holding, Inc., and Ventures Acquisition Company LLC. The Company leases certain assets consisting primarily of buildings and aircraft from these entities. Upon the ~~Company’s~~major ~~adoption~~business ~~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~~segments. ~~Such inclusion is not expected to have a material impact on the Company’s consolidated financial statements.~~

EITF No. 4-10


Selected Financial Results by Business Segment - Unaudited
(in thousands)

				For the Three Months Ended May 31,

				2005		2004

Operating revenues:
	Airlines		$	106,222	$	80,504
	EAGLE			29,984		25,610
	Helicopters			14,464		8,413
	Air Center			14,075		7,749
	EASL			9,205		1,590
	Agriculture			2,346		2,287

		Total	$	176,296	$	126,153


Intercompany revenues: (1)
	Airlines		$	3,958	$	2,603
	EAGLE			594		346
	Helicopters			877		682
	Air Center			3,104		6,914
	EASL			1,291		394
	Agriculture			7		25

		Total	$	9,831	$	10,964

(1) Amounts are eliminated in consolidation

FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS No. 131”), requires that a public company separately report the financial and descriptive information about its reportable operating segments. Paragraph 17 of SFAS No. 131 sets forth the aggregation criteria used to determine whether an operating segment that does not otherwise meet the quantitative thresholds to be a reportable segment may be aggregated in accordance with paragraph 19 of SFAS No. 131. EITF Issue 4-10 "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds" ("EITF 4-10"), addresses the criteria for aggregating operating segments.


Operating expenses:
	Airlines		$	94,849	$	78,053
	EAGLE			27,691		24,361
	Helicopters			14,231		10,976
	Air Center			13,225		6,563
	EASL			8,463		1,531
	Agriculture			1,865		2,215

		Total	$	160,324	$	123,699

The Company currently reports its financial and operating results according to the Company’s six primary business segments. The financial and operating results for at least one of those primary business segments is comprised of one or more smaller business segments that have been aggregated with a larger business segment. Based upon the Company’s analysis of its current operations, the Company believes that such aggregations meet the criteria for aggregation under EITF 4-10 and paragraph 17 of SFAS No. 131. The Company will continue to monitor any changes in the nature and operations of each of its business segments and modify the Company’s method of aggregation as appropriate in order to remain in compliance with EITF 4-~~10 and SFAS No. 131.~~

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Selected Financial Results by Business Segment - Unaudited
(in thousands)

				For the Three Months Ended May 31,

				2005		2004

Income (loss) from operations:
	Airlines		$	11,375	$	2,451
	EAGLE			2,293		1,249
	Helicopters			233		(2,563	)
	Air Center			849		1,186
	EASL			742		59
	Agriculture			480		72

		Total	$	15,972	$	2,454

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Interest expense:
	Airlines		$	9,194	$	8,862
	EAGLE			106		51
	Helicopters			47		-
	Air Center			15		26
	EASL			5		8
	Agriculture			6		12

		Total	$	9,373	$	8,959

NOTE 2 — BUSINESS SEGMENTS


Depreciation and amortization:
	Airlines		$	14,083	$	14,297
	EAGLE			585		612
	Helicopters			1,713		999
	Air Center			332		311
	EASL			17		23
	Agriculture			116		127

		Total	$	16,846	$	16,369

The Company conducts business through its six major business segments:


Capital expenditures:
	Airlines		$	16,475	$	8,414
	EAGLE			205		156
	Helicopters			4,030		2,655
	Air Center			167		130
	EASL			-		-
	Agriculture			302		5

		Total	$	21,179	$	11,360

~~Airlines provides air cargo services for both international and domestic markets;~~ -11-

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EAGLE provides full-service aviation ground handling and logistics services, including mail handling, aviation hub management, aircraft handling, cargo handling, ground system management, ground equipment maintenance, ground equipment sales and leasing, aircraft line maintenance, terminal services, aircraft de-icing and washing, check-in and ticketing, baggage acceptance and seat selection, and passenger cabin cleaning;

Total Assets by Business Segment

(in thousands)

May 31, 2005

(unaudited)

February 28, 2005

Total assets:

Airlines

512,935

507,200

EAGLE

50,128

52,040

Helicopters

70,551

65,831

Air Center

25,252

23,314

EASL

11,775

20,854

Agriculture

27,271

26,472

Total

697,912

695,711

~~Helicopters~~NOTE ~~provides~~3 ~~helicopter~~– and small fixed-wing aircraft services throughout the world in connection with activities such as forest fire fighting, health services, aerial spraying, heavy lift construction, law enforcement, helicopter logging, petroleum support services, search and rescue, peacekeeping and relief support, helicopter skiing, and agriculture; LIQUIDITY

Air Center, an unlimited Class IV airframe repair station certified by the FAA, performs aircraft maintenance, repair and overhaul services, and aircraft storage services;

EASL selectively buys, sells, leases, and brokers commercial aircraft, helicopters, and aircraft spare parts; and

Agriculture — the Company operates a nursery and farming enterprise through Evergreen Agricultural Enterprises, Inc. which delivers nursery and agricultural products to wholesale and retail customers.

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following charts present selected financial information of the Company, as further segregated by each of the major business segments.

Selected Financial Results by Business Segment - Unaudited
(in thousands)
				For the Three Months				For the Nine Months
				Ended November 30,				Ended November 30,
				2004		2003		2004		2003
Operating revenues:
	Airlines		$	104,798	$	89,917	$	274,050	$	279,121
	EAGLE			27,064		24,489		81,579		74,736
	Air Center			10,429		7,103		26,001		23,306
	Helicopters			9,368		8,176		33,152		31,495
	EASL			1,437		2,334		7,316		5,261
	Agriculture			1,510		2,142		4,309		5,383
		Total	$	154,606	$	134,161	$	426,407	$	419,302

Intercompany revenues: (1)
	Airlines		$	2,951	$	2,623	$	8,355	$	9,196
	EAGLE			619		465		1,409		1,657
	Air Center			4,296		9,112		19,578		24,645
	Helicopters			282		456		1,568		1,165
	EASL			5,446		960		6,426		3,006
	Agriculture			56		169		106		207
		Total	$	13,650	$	13,785	$	37,442	$	39,876
(1) Amounts are eliminated in consolidation

(continued on next page)

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Selected Financial Results by Business Segment - Unaudited
(in thousands)
				For the Three Months				For the Nine Months
				Ended November 30,				Ended November 30,
				2004		2003		2004		2003
Operating expenses:
	Airlines		$	92,624	$	78,696	$	249,890	$	244,611
	EAGLE			26,859		24,356		79,712		74,438
	Air Center			9,634		5,811		23,220		18,886
	Helicopters			11,717		9,894		35,202		30,626
	EASL			1,472		2,470		7,283		6,166
	Agriculture			2,075		2,885		5,019		6,836
		Total	$	144,381	$	124,112	$	400,326	$	381,563

Income (loss) from operations:
	Airlines		$	12,174		$	11,221		$	24,160		$	34,510
	EAGLE			205			133			1,867			298
	Air Center			795			1,292			2,781			4,420
	Helicopters			(2,349	)		(1,718	)		(2,050	)		869
	EASL			(35	)		(136	)		33			(905	)
	Agriculture			(565	)		(743	)		(710	)		(1,453	)
		Total	$	10,225		$	10,049		$	26,081		$	37,739

Interest expense (income), net:
	Airlines		$	9,048		$	8,714	$	26,550	$	27,006
	EAGLE			25			72		112		270
	Air Center			15			2		57		(47	)
	Helicopters			10			3		79		20
	EASL			(25	)		-		-		-
	Agriculture			13			5		34		19
		Total	$	9,086		$	8,796	$	26,832	$	27,268

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EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Selected Financial Results by Business Segment - Unaudited
(in thousands)
				For the Three Months				For the Nine Months
				Ended November 30,				Ended November 30,
				2004		2003		2004		2003
Depreciation and amortization
of property and equipment
	Airlines		$	14,801	$	13,314	$	41,347	$	38,510
	EAGLE			607		632		1,829		1,866
	Air Center			313		247		928		788
	Helicopters			1,467		1,147		4,109		4,031
	EASL			8		46		38		117
	Agriculture			122		115		371		343
		Total	$	17,318	$	15,501	$	48,622	$	45,655

Capital expenditures:
	Airlines		$	16,711	$	8,167	$	38,869	$	31,099
	EAGLE			219		588		760		1,392
	Air Center			197		887		425		1,753
	Helicopters			3,098		745		8,333		11,187
	EASL			51		-		51		-
	Agriculture			185		61		370		129
		Total	$	20,461	$	10,448	$	48,808	$	45,560

(continued on next page)

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Total Assets by Business Segment
(in thousands)
					As of		As of
				November 30, 2004			February 29,
					(unaudited)		2004
	Total assets:
		Airlines		$	511,669	$	513,690
		EAGLE			52,128		48,588
		Air Center			19,149		16,503
		Helicopters			70,743		64,125
		EASL			11,708		7,676
		Agriculture			28,193		28,553
			Total	$	693,590	$	679,135

NOTE 3 — IMPAIRMENT OF ASSETS

Airlines and DHL were parties to an air freight services contract under which Airlines provided air freight services to various DHL locations along the west coast of the United States. Airlines substantially utilized its DC-9 aircraft fleet in performing the air freight services under the DHL contract.

The DHL contract expired by its own terms in August 2004, resulting in a substantial decrease in Airline's utilization of its DC-9 aircraft fleet. As a result of the decreased utilization, Airlines performed an assessment on each of the DC-9 aircraft in order to determine whether any impairment in asset value needed to be recorded on Airlines’ books in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144").

During the assessment, Airlines evaluated the amount of the future undiscounted net cash flow that was expected to be derived from each of the DC-9 aircraft. Management considered i) the impact of the completion of the DHL contract on the operating results for each of the DC-9 aircraft, ii) current trends and future prospects, and iii) the effects of obsolescence, customer demand, competition and other economic factors. The future undiscounted net cash flow of each DC-9 aircraft was then compared to the net carrying value of that aircraft on Airlines' books.

Based upon these analyses, Airlines determined that one owned DC-9 aircraft (the "Impaired DC-9") was impaired because the future undiscounted net cash flow for the aircraft was less than its net carrying value. Airlines obtained a third party appraisal of the fair value for the Impaired DC-9 and computed an impairment on the aircraft equal to the difference between the appraised fair value and the net carrying value. Based upon this analysis, Airlines determined that the amount of impairment on the Impaired DC-9 was $0.6 million. Accordingly, during the three months ended August 31, 2004, Airlines reduced the net carrying value of the Impaired DC-9 by $0.6 million and recorded an impairment expense in the amount of $0.6 million.

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended November 30, 2004, Airlines recorded an impairment expense of $0.7 million on certain previously capitalized modifications to a second DC-9 aircraft that had been utilized by Airlines for the DHL contract. For further information regarding the impairment, see "Note 4 - Expiration of Aircraft Lease" below.

The $0.6 million impairment expense for the Impaired DC-9, which was recorded during the three months ended August 31, 2004, and the $0.7 million impairment expense which was recorded during the three months ended November 30, 2004, are both included within the line item of "Aircraft and equipment" on the Company's consolidated statement of operations.

NOTE 4 — EXPIRATION OF AIRCRAFT LEASE

An aircraft lease for a DC-9 aircraft between Airlines and Ventures Acquisition Company LLC, an affiliated entity that is wholly-owned by Mr. Delford M. Smith, the controlling shareholder of the Company, (the "Lease Agreement") was scheduled to expire in January 2005. During the three months ended November 30, 2004, and in connection with the scheduled expiration of the Lease Agreement, Airlines incurred $2.5 million of maintenance expense pursuant to the return conditions of the Lease Agreement. Then, as part of a settlement for the expiration of the Lease Agreement, the Company agreed to purchase the aircraft for $0.5 million.

Upon agreeing to purchase the DC-9 aircraft, and in accordance with SFAS No. 144, Airlines performed an impairment analysis on certain previously capitalized modifications to the aircraft (the "Upgrades"). As a result of the impairment analysis, during the three months ended November 30, 2004, Airlines recorded a $0.7 million impairment charge on the Upgrades.

NOTE 5 — LIQUIDITY AND MANAGEMENT'S PLANS

Risk of Default on Debt Obligations

~~The~~We ~~Company~~finance ~~finances~~ a portion of ~~its~~our capital expenditures and operations through long-term debt obligations. In particular, Aviation has obtained long-term financing by means of i) the issuance of $215.0 million of 12% senior second secured notes (the “"Indenture Notes”") and ii) a $100.0 million three-year senior secured credit facility financing agreement (the “"Secured Credit Facility”"). In addition, ~~the~~we ~~Company~~have ~~has~~ various other long-term debt instruments which consist primarily of equipment purchase notes.

Substantially all of ~~the~~ ~~Company’s~~our assets are pledged as collateral under ~~the~~our ~~Company’s~~ various debt agreements. Furthermore, the Indenture Notes and the Secured Credit Facility both contain cross-default provisions whereby certain events of default under one or more of the ~~Company’s~~our debt obligations will result in an event of default under either, or both, the Indenture Notes and the Secured Credit Facility. See "Note 4 - Long-Term Debt Obligations" below. In the event that ~~the~~we ~~Company~~are is unable to cure such defaults or obtain waivers with respect to such defaults, ~~the~~we ~~Company is~~are at risk that ~~the~~our ~~Company’s~~ payment obligations under either, or both, the Indenture Notes and the Secured Credit Facility will be accelerated, thereby forcing ~~the~~us ~~Company~~ to either obtain alternative financing or seek legal protection from ~~its~~our creditors.

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EVERGREENNOTE HOLDINGS,4 INC.CONDENSED— NOTESLONG-TERM TOUNAUDITEDDEBT CONSOLIDATED FINANCIAL STATEMENTSOBLIGATIONS

The Company has taken measures to facilitate its ability to remain in compliance with its various debt covenants. In particular, the Company has focused on reducing its selling, general, and administrative expenses by controlling its legal and professional fees and managing payroll expenses in certain of the Company’s subsidiaries. In addition, the Company has significantly reduced its property insurance expense and non-essential maintenance expenses. As a result, the Company was in compliance of its debt covenants as of November 30, 2004. See “Note 6 — Long-Term Debt Obligations” below.

NOTE 6 — LONG-TERM DEBT OBLIGATIONS

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, ~~National Association~~N.A., as trustee.

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 and Evergreen Vintage Aircraft, Inc. ("Vintage"), a wholly-owned subsidiary of Holdings. 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. 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 Created February 25, 1986 (the “Trust”), an affiliated entity in which Aviation holds an approximate two-thirds beneficial interest. 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.

~~The~~To the extent of assets securing both the Indenture Notes ~~bear~~and ~~interest~~ the atSecured anCredit ~~annual~~Facility ~~fixed~~(as ~~rate~~defined ofin ~~12%.~~"Secured ~~Payments~~Credit ofFacility" ~~interest~~below), the Indenture Notes are effectively ~~due~~second ~~semi-annually~~in onpriority ~~May~~to 15our ~~and~~indebtedness ~~November~~under 15the ofSecured ~~each~~Credit ~~year~~Facility. ~~The~~However, ~~next~~to ~~payment~~ the extent of ~~accrued~~the ~~interest~~assets insecuring the Indenture Notes, the ~~amount~~Indenture ofNotes ~~$12~~are senior to our unsecured debt obligations.9 ~~million~~In ~~will~~addition, bethe ~~due~~Indenture Notes are fully and unconditionally ~~payable~~guaranteed, onboth ~~May~~jointly 15and severally, ~~2005.~~by ~~Payment~~Holdings, substantially all of Aviation’s subsidiaries, and the ~~accrued~~Trust. The ~~interest~~only ~~will~~subsidiaries beand affiliated entities that are not obligated as guarantors under the Indenture Notes are Agriculture, Vintage, ~~funded~~and ~~from~~the foreign subsidiaries of the Company~~’s operations~~.

The Indenture Notes ~~will~~bear ~~mature~~interest at onan ~~May~~annual ~~15,~~fixed ~~2010,~~rate atof ~~which time the $215~~12%.0 ~~million~~Payments ~~face value~~ of ~~the Indenture Notes, plus all accrued and unpaid~~ interest, ~~will become~~are due. ~~However,~~semi-annually ~~the~~on ~~Company~~May ~~may~~15 ~~elect to redeem the Indenture Notes prior to the maturity date. The Indenture Notes are redeemable after the dates~~ and atNovember ~~the~~15 ~~prices (expressed in percentages~~ of ~~principal~~each ~~amount on the redemption date) as set forth below:~~ 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. Payment of the accrued interest was funded 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. We intend to fund payment of the accrued interest 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:

If redeemed during the 12-month period commencing:

Redemption Price

	May 15, 2007	106 %
	May 15, 2008	103 %
	May 15, 2009 and thereafter	100 %

~~Further~~In ~~information~~addition, ~~regarding~~at any time prior ~~the~~to ~~financial~~May ~~covenants~~15, ~~contained~~2006, inwe may redeem, on one or more occasions, up to 35% of the principal amount of the Indenture Notes iswith ~~discussed~~the innet ~~Note~~cash 7proceeds ~~below.~~from sales of certain kinds of capital stock at a redemption price of 112%, plus accrued and unpaid interest at the redemption date.

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~~EVERGREEN~~ Repurchase ~~HOLDINGS,~~of ~~INC~~Notes Upon Certain Asset Sales or a Change in Control.~~CONDENSED~~ If ~~NOTES~~an ~~TOUNAUDITED~~Asset ~~CONSOLIDATED~~Sale ~~FINANCIAL~~or ~~STATEMENTS~~a Change in 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 the price set forth in the Indenture Notes.

Covenant Compliance. The Indenture Notes impose certain financial and non-financial covenant restrictions on Aviation and its restricted subsidiaries. Such covenant restrictions include, but are not limited to, restrictions on our ability to:

•		incur additional debt or create liens;
•		pay dividends or acquire shares of capital stock;
•		make payments on subordinated debt or make investments;
•		make distributions from restricted subsidiaries;
•		issue or sell capital stock of restricted subsidiaries;
•		issue guarantees;
•		sell or exchange assets, or make capital expenditures;
•		enter into transactions with shareholders and affiliates; and
•		effect mergers and other changes of control.

As of May 31, 2005, we were in compliance with these covenants.

If Aviation or any of its restricted subsidiaries violates any of these covenants and are unable to obtain waivers, we would be in default under the Indenture Notes and the debt could be accelerated.

Secured Credit Facility

On May 13, 2004, Aviation and certain of its subsidiaries entered into the Secured Credit Facility with Wells Fargo Foothill, Inc. and Ableco Finance LLC (collectively, “the Wells Fargo Lenders”). The Secured Credit Facility consists of two loans - a $50.0 million term loan and a $50.0 million revolving loan. The Secured Credit Facility is secured by substantially all of the assets of Aviation and its domestic subsidiaries, excluding the assets of Agriculture and Vintage.

AtInterest ~~the~~Rates. ~~closing~~The ofterm ~~the~~loan ~~Secured Credit~~bears ~~Facility,~~interest ~~approximately~~at ~~$83.0~~an ~~million~~annual rate of ~~the~~either ~~loan~~LIBOR ~~was~~plus ~~funded~~5.5% ~~The~~or ~~Company~~prime ~~utilized~~plus ~~$80~~3.80%, ~~million~~and of the ~~funds~~revolving toloan ~~fully~~bears ~~repay~~interest at ~~and~~an ~~terminate~~annual ~~certain~~rate ~~revolving~~of ~~credit~~either ~~obligations~~LIBOR ~~owed~~plus by3.0% ~~Aviation~~or toprime ~~PNC~~plus ~~Bank, N~~0.A5%. ~~(“PNC~~So ~~Bank”),~~long ~~while~~as we are not in default under the ~~remaining~~Secured Credit ~~$2.2~~Facility, ~~million~~we ofmay ~~loan~~elect ~~proceeds~~at ~~was~~any ~~used~~time to ~~pay~~have ~~for~~interest ~~part~~on ofall ~~the~~or ~~legal~~a ~~fees~~portion ~~and~~of ~~other~~the ~~transaction~~advances ~~costs~~on ~~incurred by~~ the ~~Company~~revolving ~~in connection~~loan ~~with~~or the ~~closing~~term loan ofcalculated under the ~~Secured~~applicable ~~Credit~~LIBOR ~~Facility~~interest rate option. ~~The~~LIBOR ~~Company~~interest ~~incurred~~rate aelections ~~total~~are available for LIBOR periods of 1, $2, 3, or 6 months.4 ~~million~~Interest on a LIBOR rate loan is payable on the last day of ~~legal~~the ~~and~~LIBOR ~~professional~~period (if the elected LIBOR period is ~~fees~~ inless ~~connection~~than ~~with~~three months) or on the ~~closing~~last day of ~~the~~each ~~Secured~~three ~~Credit~~month ~~Facility.~~interval ~~The~~(if ~~Company~~the ~~capitalized~~elected ~~those~~LIBOR ~~legal~~period ~~and~~is ~~professional~~six ~~fees~~months). asFor any portion of the term loan ~~acquisition~~or ~~costs~~revolving ~~and~~loan which is ~~amortizing~~not ~~the~~covered ~~loan~~by ~~acquisition~~a ~~costs~~LIBOR ~~over~~interest ~~the~~rate ~~term~~election, monthly payments of accrued interest are due on the ~~Secured~~first ~~Credit~~day ~~Facility~~of each month.

~~Interest~~Term ~~Rates~~Loan Advances. The ~~term loan bears interest at an annual rate of either LIBOR plus 5~~$50.~~5% or prime plus 3.~~0%, ~~and~~million ~~the~~term ~~revolving~~ loan ~~bears~~was ~~interest at~~fully anfunded ~~annual~~at ~~rate~~the closing of ~~either~~the ~~LIBOR~~Secured ~~plus~~Credit 3Facility.0% orNo ~~prime~~additional ~~plus~~advances ~~0.5%.~~are Sopermitted ~~long as the Company is not in default~~ under ~~the Secured Credit~~ ~~Facility,~~ the ~~Company~~term ~~may~~loan ~~elect~~ at any time, toand ~~have~~any ~~interest~~principal onamount ~~all or a portion~~ of the ~~advances~~term onloan ~~the~~which ~~revolving~~is ~~loan~~repaid or ~~the~~prepaid ~~term loan~~may ~~calculated~~not ~~under~~be ~~the applicable LIBOR interest rate option~~reborrowed. ~~LIBOR~~We ~~interest rate elections~~ are required ~~available~~to ~~for~~make ~~LIBOR~~payments ~~periods~~ of 1, 2,principal ~~3, or 6 months. Interest~~ on athe ~~LIBOR~~term ~~rate~~ loan isin ~~payable~~monthly oninstallments ~~the~~of ~~last~~$0.5 ~~day~~million. Payment of the ~~LIBOR~~monthly ~~period~~principal ~~(if~~installments ~~the~~commenced ~~elected~~on ~~LIBOR~~June ~~period~~1, is 2004 ~~less~~and ~~than~~will ~~three~~continue ~~months) or~~ on the ~~last~~first day of each ~~three~~succeeding calendar month ~~interval~~throughout ~~(if~~ the ~~elected~~term ~~LIBOR~~of ~~period~~the isSecured ~~six~~Credit ~~months)~~Facility. ~~For~~Then, ~~any~~unless ~~portion~~ paid ofin ~~the~~full ~~term~~earlier, ~~loan~~all oroutstanding ~~revolving~~principal ~~loan~~and ~~which~~accrued isand ~~not~~unpaid ~~covered~~interest byof athe ~~LIBOR~~term ~~interest~~loan ~~rate~~will ~~election,~~be ~~monthly payments~~due ofand ~~accrued~~payable ~~interest~~in ~~are~~full ~~due~~when on the ~~first~~Secured ~~day~~Credit ofFacility ~~each~~terminates ~~month~~in May 2007.

~~Term~~Revolving Loan Advances. ~~The~~ ~~$50.0~~During ~~million~~the term ~~loan was fully funded at the closing~~ of the Secured Credit Facility., Nowe ~~additional~~may receive advances ~~are~~of ~~permitted~~principal ~~under~~ on the ~~term~~revolving loan at any time. However, ~~and~~the ~~any~~outstanding principal ~~amount~~ of the ~~term~~revolving loan ~~which is repaid or prepaid~~ may not beat ~~reborrowed.~~any ~~The~~time ~~Company is~~be ~~required~~greater tothan ~~make~~an ~~payments~~amount ofwhich ~~principal~~is ondetermined ~~the~~by ~~term~~reference ~~loan~~to certain ineligible ~~monthly~~receivables ~~installments~~and ofeligible ~~$0.5~~inventory ~~million. Payment~~ of the ~~monthly~~Company. ~~principal~~ See ~~installments~~“Loan ~~commenced~~Balance ~~on June 1, 2004~~ and ~~will~~Availability” ~~continue~~below. We onmay ~~the~~also ~~first~~make ~~day~~payments of ~~each~~principal ~~succeeding~~on ~~calendar month throughout~~ the ~~term~~revolving of loan ~~the~~at ~~Secured~~any ~~Credit Facility~~time. ~~Then,~~All ~~unless paid in full earlier, all~~ outstanding principal and all accrued and unpaid interest of the ~~term~~ revolving 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, the Company 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. The Company 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. -14-

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16 Loan Balance and Availability. As of May 31, 2005, the outstanding balance of the Secured Credit Facility was $74.0 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 May 31, 2005, our availability under the Secured Credit Facility was $0.8 million.

~~EVERGREEN~~ Covenant ~~HOLDINGS~~Compliance. We are subject to certain financial and non-financial covenants under the Secured Credit Facility. In addition to other requirements that are set forth in such covenants, ~~INC~~we are required to maintain: i) either a qualified cash reserve balance or an undrawn availability on the revolving loan of not less than $5.~~CONDENSED~~0 ~~NOTES~~million ~~TOUNAUDITED~~("Minimum ~~CONSOLIDATED~~Availability ~~FINANCIAL~~Requirement"), ~~STATEMENTS~~ii) minimum thresholds with respect to certain consolidated and non-consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”), and iii) a minimum ratio with respect to fixed charge coverages.

~~Loan~~The ~~Balance~~following ~~and Availability.~~are Asthe ofrequired ~~November~~covenant ~~30,~~thresholds ~~2004,~~under the ~~outstanding balance of the~~ Secured Credit Facility ~~was~~for ~~$77.9 million. Taking into consideration~~ the ~~limitations~~twelve-month onperiod ~~the~~ended ~~Company’s~~May ~~ability to obtain additional advances of principal from the revolving loan (see “Revolving Loan Advances” above)~~31, ~~as of November 30, 2004, the Company’s availability under the Secured Credit Facility was $9.8 million.~~ 2005:

~~Covenant~~Consolidated ~~Compliance. The~~EBITDA ~~Company~~Covenant is— ~~subject~~The tocovenant ~~certain~~requires ~~financial~~a ~~and~~consolidated ~~non-financial~~EBITDA ~~covenants~~in ~~under the Secured Credit Facility. In particular, the Company must maintain: i) either~~ a ~~qualified~~minimum ~~cash~~amount ~~reserve balance or an undrawn availability on the revolving loan~~ of ~~not less than~~ $5100.0 million,. ~~ii)~~As ~~minimum~~of ~~thresholds~~May ~~with respect to certain consolidated and non-consolidated earnings before interest~~31, ~~taxes~~2005, ~~depreciation~~ ~~and~~we ~~amortization~~were ~~(“EBITDA”),~~in ~~and~~compliance ~~iii) a minimum ratio~~ with ~~respect~~this ~~to fixed charge coverages~~covenant.

~~The~~Airlines ~~following~~EBITDA ~~are~~Covenant ~~the~~— ~~required~~ The covenant ~~thresholds~~requires ~~under~~an ~~the~~EBITDA ~~Secured~~for ~~Credit~~Airlines ~~Facility~~in ~~for~~a ~~the~~minimum ~~nine-month~~amount ~~period~~of ~~ended~~$85.0 ~~November~~million. 30As of May 31, ~~2004:~~2005, Airlines was in compliance with this covenant.

~~Consolidated~~Fixed ~~EBITDA~~Charge Coverage Covenant — The covenant requires a ~~consolidated~~fixed ~~EBITDA~~charge coverage in a minimum ~~amount~~ratio of ~~$67~~1.015 ~~million~~to 1.00. As of ~~November~~May 3031, ~~2004~~2005, ~~the~~we ~~Company~~were ~~was~~ in compliance with this covenant.

~~Airlines~~ In ~~EBITDA~~addition, ~~Covenant~~the —amount ~~The~~of capital ~~covenant~~expenditures ~~requires~~that anmay ~~EBITDA~~be ~~for~~made ~~Airlines~~by us in aany ~~minimum~~fiscal ~~amount~~year is limited to $75.0 million, of which at least $5510.0 million must be financed from sources other than the Secured Credit Facility. As of ~~November~~May 3031, ~~2004~~2005, ~~the~~we ~~Company~~were ~~was~~ in compliance with ~~this~~the capital expenditures covenant.

~~Fixed~~ If ~~Charge~~Aviation ~~Coverage~~or ~~Covenant~~any —of ~~The~~its restricted ~~covenant~~subsidiaries ~~requires~~violates athese ~~fixed~~covenants ~~charge~~and ~~coverage~~are inunable ato ~~minimum~~obtain ~~ratio~~waivers offrom ~~1.00~~the toWells ~~1.00.~~Fargo AsLenders, ofwe ~~November~~would ~~30,~~be ~~2004,~~in default under the ~~Company~~Secured ~~was~~Credit inFacility ~~compliance~~and ~~with~~the ~~this~~debt ~~covenant~~could be accelerated.

In Notice ~~addition,~~and ~~the~~Waiver ~~amount~~of Specified Events of ~~capital~~ ~~expenditures~~Default ~~that~~under ~~may~~Secured Credit beFacility. ~~made~~On byJune ~~the~~1, ~~Company~~2005, inthe ~~any~~Wells ~~fiscal~~Fargo ~~year~~Lenders isnotified ~~limited~~us tothat ~~$75.0~~the ~~million,~~Wells ofFargo ~~which~~Lenders atbelieved ~~least~~that ~~$10.0~~we ~~million~~were ~~must~~in beviolation ~~financed~~of ~~from~~certain ~~sources~~covenants ~~other~~of ~~than~~ the Secured Credit Facility. As(the of"Specified ~~November~~Events ~~30,~~of ~~2004~~Default"), ~~the~~as ~~Company was in compliance with the capital expenditures covenant.~~ follows:

Ifi) ~~Aviation~~occurrence orof ~~any~~a default at the final maturity, on April 29, 2005, of ~~its restricted~~the ~~subsidiaries~~obligations ~~violates~~under ~~these~~the ~~covenants~~FINOVA ~~and~~Note ~~are~~(defined ~~unable~~below); ii) failure to ~~obtain~~maintain ~~waivers~~insurance ~~from~~on the ~~Wells~~Collateral ~~Fargo~~(as ~~Lenders,~~defined in the ~~Company~~Secured ~~would~~Credit be Facility); iniii) ~~default~~making an unpermitted investment toward the purchase of two Boeing 747 airplanes (the "Designated 747s"); and iv) unauthorized use of the proceeds from advances under the Secured Credit Facility ~~and~~to renovate the ~~debt~~Designated ~~could be accelerated~~747s.

~~Prior Loan Acquisition Costs~~-15-

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In The ~~connection~~Wells ~~with~~Fargo Lenders further notified us that, as a result of the ~~full~~Specified Events of Default, the Wells ~~repayment~~Fargo ~~and~~Lenders ~~termination~~had elected to charge the default rate of interest, which, as set forth in the ~~revolving~~Secured ~~credit~~Credit ~~obligations~~Facility, ~~owed~~is bya ~~Aviation~~per annum rate equal to ~~PNC~~2 ~~Bank,~~percentage points above the ~~Company~~per ~~incurred~~annum $0rate otherwise applicable.3 ~~million~~The default rate of ~~expense~~ ~~for~~interest ~~pre-payment~~was ~~penalties~~charged from ~~and~~April ~~legal~~29, ~~fees~~2005, ~~and~~the ~~recognized~~date on which the Wells Fargo Lenders asserted that a ~~write-off~~default ofhad ~~unamortized~~occurred ~~loan~~under ~~acquisition~~the ~~costs~~FINOVA Note, until June in14, 2005, the ~~amount~~date ofon ~~$3.5~~which ~~million~~the inWells ~~May~~Fargo ~~2004.~~Lenders, ~~The~~by ~~write-off~~execution of ~~unamortized~~the ~~loan~~Amendment ~~acquisition~~Number ~~costs~~Two is(as ~~included~~defined onbelow) waived the ~~Company’s~~Specified ~~consolidated~~Events ~~statement~~ of ~~operations~~Default. asAt ~~part~~April 29, 2005, the per annum rates of ~~“Other~~interest ~~non-operating~~on ~~expense~~the Secured Credit Facility ranged from 6.”09% to 8.75%.

17 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.

~~EVERGREEN~~ Amendment ~~HOLDINGS~~Number Three to Secured Credit Facility. On July 11, ~~INC~~2005, Ventures Acquisition Company purchased the Designated 747s.~~CONDENSED~~ ~~NOTES~~See ~~TOUNAUDITED~~"Landsbanki ~~CONSOLIDATED~~Loan ~~FINANCIAL~~Agreement" ~~STATEMENTS~~below. On the same day, we entered into an Amendment Number Three and Consent (the "Amendment Number Three") with the Wells Fargo Lenders. Amendment Number Three amends the Secured Credit Facility to allow Airlines to i) lease the Designated 747s from Ventures Acquisition Company (see "Lease Transactions" in "Note 11 - Related Party Transactions" below) and ii) reimburse Ventures Acquisition Company for certain out-of-pocket transaction costs incurred by Ventures Acquisition Company in connection with the purchase of the Designated 747s. In exchange, Mr. Smith pledged to Wells Fargo Foothill, Inc., as administrative agent and for the benefit of the Wells Fargo Lenders, all of his rights, title, and interest in Ventures Acquisition Company.

~~Amendment to~~ WCMA Loan Agreement

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~~Merrill Lynch”) for the purpose of obtaining an $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 3.000% 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.

OnAn ~~May 12, 2004, EASL and MLBFS executed an~~ amendment letter tofrom Merrill ~~the~~Lynch, ~~WCMA~~dated ~~Loan.~~May ~~The~~12, ~~amendment~~2004, ~~letter~~established ~~establishes~~ certain financial covenants for the WCMA Loan that are consistent with the financial covenants contained in the ~~Indenture Notes and~~ Secured Credit Facility. The amendment letter ~~establishes~~established 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 consolidated EBITDA 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 “Secured Credit Facility” above.

Covenant Compliance. As of ~~November~~May 3031, ~~2004~~2005, ~~the~~we ~~Company~~were ~~was~~ in compliance with the covenants contained in the WCMA Loan. See “Secured Credit Facility” above.

18FINOVA Note

~~EVERGREEN~~ In ~~HOLDINGS~~May 1997, ~~INC~~the Trust entered into a $30.~~CONDENSED~~0 ~~NOTES~~million ~~TOUNAUDITED~~Secured ~~CONSOLIDATED~~Loan ~~FINANCIAL~~Agreement ~~STATEMENTS~~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.

~~NOTE 7 — SUPPLEMENTAL FINANCIAL INFORMATION FOR GUARANTOR SUBSIDIARIES AND NON~~-~~GUARANTOR SUBSIDIARIES~~16-

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~~The~~ Effective ~~Indenture~~April ~~Notes~~29, ~~that~~2005, ~~were~~the ~~issued~~Trust byand ~~Aviation~~FINOVA ~~are~~executed ~~fully~~a ~~and~~Third ~~unconditionally~~Amendment ~~guaranteed,~~Agreement ~~both~~to ~~jointly~~amend and ~~severally,~~extend bythe ~~Holdings,~~FINOVA ~~substantially~~Note ~~all~~(the of"Third ~~Aviation’s~~Amendment"). The Third Amendment ~~subsidiaries~~extends (the ~~“Guarantor~~maturity ~~Subsidiaries”),~~date ~~and~~of the ~~Trust~~FINOVA (Note to September 29, 2005, with the ~~“Non-Wholly~~annual ~~Owned~~rate ~~Guarantor~~of ~~Affiliate”).~~interest ~~The~~remaining ~~only~~at 10.44%. ~~subsidiaries~~Monthly installments of principal and ~~affiliated~~interest ~~entities~~in ~~that~~the ~~are~~amount ~~not~~of ~~obligated~~$471,650 asare ~~guarantors~~scheduled ~~under~~through the ~~Indenture~~extended ~~Notes~~maturity ~~are~~date, resulting ~~Evergreen~~in ~~Agricultural Enterprises,~~a ~~Inc.,~~full ~~Evergreen~~amortization ~~Vintage~~of ~~Aircraft~~the ~~Inc~~remaining outstanding principal balance., All outstanding principal and ~~the~~accrued, ~~foreign~~but ~~subsidiaries~~unpaid interest, ofwill ~~the~~be ~~Company~~due ~~(collectively~~upon maturity, ~~the~~as ~~“Non-Guarantor Subsidiaries”)~~extended.

The ~~following~~FINOVA ~~supplemental~~Note ~~consolidated~~is ~~financial~~secured ~~statements~~by ~~separately~~means ~~present the results~~ of ~~operations~~a ~~for~~first ~~Evergreen~~priority ~~Holdings,~~security ~~Inc.,~~interest ~~Evergreen~~granted ~~International Aviation,~~to ~~Inc.,~~FINOVA ~~the~~in ~~wholly-owned~~one ~~Guarantor~~Boeing ~~Subsidiaries~~747 onaircraft aand ~~combined~~three ~~basis, the Non~~DC-~~Wholly~~9 ~~Owned~~aircraft owned ~~Guarantor~~by ~~Affiliate, and~~ the ~~Non-Guarantor~~ ~~Subsidiaries on a combined basis, with consolidating adjustments and total consolidated amounts~~Trust.

~~The~~Intervest ~~Company~~Note accounts for all investments in its subsidiaries utilizing the equity method of accounting. As a result, the net income and loss of each of the Company’s subsidiaries is reflected on the books of the Company as either an increase in, or reduction of, the Company’s equity in the earnings of each such subsidiary. For the purposes of reporting on a consolidated basis, eliminating entries are made by the Company at the holding company level in order to eliminate the balances of the Company’s investments in its subsidiaries against all intercompany balances and intercompany transactions.

19 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 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"). At May 31, 2005, the outstanding principal balance of the Intervest Note was $0.2 million.

~~EVERGREEN~~ The ~~HOLDINGS~~Intervest Note provides for an annual rate of interest equal to 1% in excess of the rate established for a Bank Prime Loan, ~~INC~~as published in the Federal Reserve Statistical Release H.~~CONDENSED~~15 ~~NOTES~~(the ~~TOUNAUDITED~~"Index"). The ~~CONSOLIDATED~~interest ~~FINANCIAL~~rate ~~STATEMENTS~~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% 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.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS - UNAUDITED
For the Three Months Ended November 30, 2004
(in thousands)
											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiaries			Guarantors			Eliminations			Total
Operating revenues		$	-		$	2,598		$	162,183		$	1,881		$	1,594		$	(13,650	)	$	154,606
Operating expenses			-			-			137,692			94			1,750			(10,564	)		128,972
Selling, general, and administrative expenses			34			3,111			14,903			-			447			(3,086	)		15,409
Operating (loss) income			(34	)		(513	)		9,588			1,787			(603	)		-			10,225
Interest income (expense)			139			(6	)		(9,023	)		(188	)		(8	)		-			(9,086	)
Other (expense) income, net			-			-			(14	)		-			35			-			21
Income (loss) before minority interest,			105			(519	)		551			1,599			(576	)		-			1,160
	income taxes, and equity in
	subsidiary earnings
Equity in earnings of subsidiaries			(7	)		1,397			-			-			-			(1,390	)		-
Income (loss) before minority interest			98			878			551			1,599			(576	)		(1,390	)		1,160
	and income taxes
Minority interest			-			(325	)		-			-			-			-			(325	)
Income (loss) before income taxes			98			553			551			1,599			(576	)		(1,390	)		835
Income tax (expense) benefit			-			(553	)		(349	)		-			181			(16	)		(737	)
	Net income (loss)	$	98		$	-		$	202		$	1,599		$	(395	)	$	(1,406	)	$	98

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.

20 Vintage's obligations under the Intervest Note and Construction Loan Agreement are secured by a security interest in i) the Evergreen Museum Land, the Evergreen Aviation Museum Building, and the tangible personal property owned by Vintage which is located on or in the Evergreen Museum Land and the Evergreen Aviation Museum Building, ii) a pledge of all rents arising out of the operation of the Evergreen Museum Land and the Evergreen Aviation Museum Building, and iii) the aircraft owned by Vintage. In addition, Mr. Smith has guaranteed payment of the amounts due under the Intervest Note and Construction Loan Agreement.

~~EVERGREEN~~ The ~~HOLDINGS~~Construction Loan Agreement includes certain events of default, ~~INC.CONDENSED~~including: ~~NOTES~~i) ~~TOUNAUDITED~~the ~~CONSOLIDATED~~filing ~~FINANCIAL~~of ~~STATEMENTS~~certain mechanics' liens against the Evergreen Museum Land, ii) failure to comply with the Construction Loan Agreement, the Intervest Note, the Loan Documents or any requirement of any governmental authority, iii) certain events of bankruptcy, iv) impairment of the security interest in the Evergreen Museum Land, and v) failure to construct the theater in accordance with written plans and specifications or within specified time periods.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS - UNAUDITED
For the Three Months Ended November 30, 2003
(in thousands)
											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiaries			Guarantors			Eliminations			Total
Operating revenues		$	283		$	2,684		$	141,069		$	1,943		$	2,392		$	(14,210	)	$	134,161
Operating expenses			-			-			118,275			93			2,601			(11,817	)		109,152
Selling, general, and administrative expenses			6			5,158			12,588			-			256			(3,048	)		14,960
Operating income (loss)			277			(2,474	)		10,206			1,850			(465	)		655			10,049
Interest expense			-			(3	)		(8,464	)		(324	)		(5	)		-			(8,796	)
Other (expense) income, net			-			-			(62	)					-			(1	)		(63	)
Income (loss) before minority interest,			277			(2,477	)		1,680			1,526			(470	)		654			1,190
	income taxes, and equity in subsidiary earnings
Equity in earnings of subsidiaries			177			1,523			-			-			-			(1,700	)		-
Income (loss) before minority interest			454			(954	)		1,680			1,526			(470	)		(1,046	)		1,190
	and income taxes
Minority interest			-			(284	)		-			-			-			-			(284	)
Income (loss) before income taxes			454			(1,238	)		1,680			1,526			(470	)		(1,046	)		906
Income tax (expense) benefit			(1	)		731			(1,219	)		-			284			(248	)		(453	)
	Net income (loss)	$	453		$	(507	)	$	461		$	1,526		$	(186	)	$	(1,294	)	$	453

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

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~~EVERGREEN~~Landsbanki ~~HOLDINGS,~~Loan ~~INC.CONDENSED~~Agreement ~~NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS - UNAUDITED
For the Nine Months Ended November 30, 2004
(in thousands)
											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiaries			Guarantors			Eliminations			Total
Operating revenues		$	-		$	7,794		$	445,970		$	5,642		$	4,443		$	(37,442	)	$	426,407
Operating expenses			-			-			376,194			280			3,580			(27,238	)		352,816
Selling, general, and administrative expenses			63			11,694			44,050			-			1,722			(10,019	)		47,510
Operating (loss) income			(63	)		(3,900	)		25,726			5,362			(859	)		(185	)		26,081
Interest income (expense)			422			(17	)		(26,653	)		(545	)		(39	)		-			(26,832	)
Other (expense) income, net			-			(3,794	)		(9	)		-			353			-			(3,450	)
Income (loss) before minority interest,			359			(7,711	)		(936	)		4,817			(545	)		(185	)		(4,201	)
	income taxes, and equity in subsidiary earnings
Equity in earnings of subsidiaries			(4,535	)		2,680			-			-			-			1,855			-
(Loss) income before minority interest			(4,176	)		(5,031	)		(936	)		4,817			(545	)		1,670			(4,201	)
	and income taxes
Minority interest			-			(948	)		-			-			-			-			(948	)
(Loss) income before income taxes			(4,176	)		(5,979	)		(936	)		4,817			(545	)		1,670			(5,149	)
Income tax benefit (expense)			-			1,692			(901	)		-			140			42			973
	Net (loss) income	$	(4,176	)	$	(4,287	)	$	(1,837	)	$	4,817		$	(405	)	$	1,712		$	(4,176	)

On July 11, 2005, Holdings, as Guarantor, and Ventures Acquisition Company, as Borrower, entered into a $32.0 million Loan Agreement (the "Landsbanki Loan Agreement") with Landsbanki Íslands hf., as Lender, for the purpose of financing Ventures Acquisition Company's purchase of the Designated 747s.

22 The Landsbanki Loan Agreement bears interest at an annual rate of LIBOR plus 2.3%. The applicable LIBOR rate is determined by reference to LIBOR periods of 30 days. Interest shall accrue daily and is payable monthly, with the applicable LIBOR rate being determined at the beginning of each monthly payment period. However, if an Event of Default (as defined in the Landsbanki Loan Agreement) has occurred and continuing, then the Landsbanki Loan Agreement shall bear interest at a rate that is 2% per annum higher than the otherwise applicable rate. Monthly installments of principal and accrued interest in the amount of $680,000 per installment are due and payable on the 11th day of each month through the maturity date. The Landsbanki Loan Agreement will mature on July 11, 2010, at which time all outstanding principal and accrued, but unpaid, interest will be due and payable.

~~EVERGREEN~~ The ~~HOLDINGS,~~Landsbanki Loan ~~INC~~Agreement contains certain restrictions on Holdings' ability to i) effect mergers and other changes of control and ii) enter into transactions with its affiliates.~~CONDENSED~~ In ~~NOTES~~addition, ~~TOUNAUDITED~~the ~~CONSOLIDATED~~Landsbanki ~~FINANCIAL~~Loan ~~STATEMENTS~~Agreement provides that, among other events, a default under either of the leases of the Designated 747s (see "Lease Transactions" in "Note 11 - Related Party Transactions" below) shall consitute a default under the Lanksbanki Loan Agreement.

SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS - UNAUDITED
For the Nine Months Ended November 30, 2003
(in thousands)
										Non-
								100%			Wholly
								Owned			Owned
			Holdings		Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)		(Issuer)			Subsidiaries			Subsidiaries			Guarantors			Eliminations			Total
Operating revenues		$	1,480	$	10,527		$	434,938		$	5,704		$	6,954		$	(40,301	)	$	419,302
Operating expenses			-		4,786			348,785			280			5,598			(30,866	)		328,583
Selling, general, and administrative expenses			20		17,852			43,178			-			1,551			(9,621	)		52,980
Operating income (loss)			1,460		(12,111	)		42,975			5,424			(195	)		186			37,739
Interest expense			-		(1,272	)		(24,911	)		(1,066	)		(19	)		-			(27,268	)
Other income (expense), net			-		-			4,259						-			(1	)		4,258
Income (loss) before minority interest,			1,460		(13,383	)		22,323			4,358			(214	)		185			14,729
	income taxes, and equity in subsidiary earnings
Equity in earnings of subsidiaries			6,892		15,630			-			-			-			(22,522	)		-
Income (loss) before minority interest			8,352		2,247			22,323			4,358			(214	)		(22,337	)		14,729
	and income taxes
Minority interest			-		(780	)		-			-			-			-			(780	)
Income (loss) before income taxes			8,352		1,467			22,323			4,358			(214	)		(22,337	)		13,949
Income tax benefit (expense)			-		4,052			(10,138	)		-			559			(70	)		(5,597	)
	Net income (loss)	$	8,352	$	5,519		$	12,185		$	4,358		$	345		$	(22,407	)	$	8,352

As Guarantor, Holdings has guaranteed all obligations of Ventures Acquisition Company under the Landsbanki Loan Agreement. Holdings' obligations as Guarantor under the Landsbanki Loan Agreement are absolute and unconditional.

23-18-

Table of Contents

~~EVERGREEN~~NOTE ~~HOLDINGS,~~5 ~~INC.CONDENSED~~— ~~NOTES~~PREPAID ~~TOUNAUDITED~~EXPENSES ~~CONSOLIDATED~~AND ~~FINANCIAL STATEMENTS~~OTHER

SUPPLEMENTAL CONSOLIDATING BALANCE SHEET - UNAUDITED
At November 30, 2004
(in thousands)
											Non-
										100%			Wholly
										Owned			Owned
				Holdings			Evergreen			Guarantor			Guarantor		Non						Consolidated
				(Parent)			(Issuer)			Subsidiaries			Subsidiaries		Guarantors			Eliminations			Total
ASSETS
	Current assets:
		Cash and cash equivalents	$	-		$	5,110		$	1,530		$	-	$	110		$	-		$	6,750
		Accounts receivable, net		-			11			49,393			640		974			-			51,018
		Other current assets		(582	)		9,332			26,952			-		7,880			(321	)		43,261
	Total current assets			(582	)		14,453			77,875			640		8,964			(321	)		101,029
	Properties, net			1,735			3,375			489,833			11,825		38,175			(2,271	)		542,672
	Notes receivable from affiliates			14,316			(38	)		241			-		(577	)		-			13,942
	Investment in subsidiaries			201,126			254,070			-			-		-			(455,196	)		-
	Other assets including goodwill			-			13,772			16,020			-		6,155			-			35,947
Total assets			$	216,595		$	285,632		$	583,969		$	12,465	$	52,717		$	(457,788	)	$	693,590

Prepaid expenses and other at May 31, 2005 and February 28, 2005 consisted of the following:

LIABILITIES AND STOCKHOLDERS' EQUITY
					May 31, 2005
	Current liabilities:
(in thousands)					(unaudited)				February 28, 2005
		Accounts payable	$	-		$	5,487		$	61,034		$	-	$	548	$	1		$	67,070
Prepaid expenses				$	2,786			$	2,442
		Accrued liabilities and payables to affiliates		25			4,218			23,440			-		436		-			28,119
Notes receivable - current portion					211				170
		Accrued interest		-			1,208			30			95		4		-			1,337
	Total			$	2,997			$	2,612
		Current portion long-term debt		-			6,665			4,077			4,643		667		-			16,052
	Total current liabilities			25			17,578			88,581			4,738		1,655		1			112,578
	Long-term debt			71,838			74,505			119,804			-		25,999		-			292,146
	Deferred rentals and other payables to affiliates			-			-			(5,448	)		5,533		-		-			85
	Deferred tax liabilities			(40,032	)		(2,038	)		143,455			-		2,348		(43	)		103,690
	Total liabilities			31,831			90,045			346,392			10,271		30,002		(42	)		508,499
	Minority interest			-			327			-			-		-		-			327
	Stockholders' equity			184,764			195,260			237,577			2,194		22,715		(457,746	)		184,764
Total liabilities and stockholders' equity			$	216,595		$	285,632		$	583,969		$	12,465	$	52,717	$	(457,788	)	$	693,590

24NOTE 6 — OTHER ASSETS

~~EVERGREEN~~ Other ~~HOLDINGS~~assets at May 31, ~~INC.CONDENSED~~2005 ~~NOTES~~and ~~TOUNAUDITED~~February ~~CONSOLIDATED~~28, ~~FINANCIAL~~2005 ~~STATEMENTS~~consisted of the following:

SUPPLEMENTAL CONSOLIDATING BALANCE SHEET - UNAUDITED
					May 31, 2005
At Fiscal Year Ended February 29, 2004
(in thousands)					(unaudited)				February 28, 2005
(in thousands)
Non-current agricultural assets				$	4,358			$	3,762
											Non-
Deposits					7,347				5,933
										100%			Wholly
Notes receivable					1,043				1,204
										Owned			Owned
Finance fees, net of amortization					477				481
				Holdings			Evergreen			Guarantor			Guarantor		Non					Consolidated
Other assets					452				377
				(Parent)			(Issuer)			Subsidiaries			Subsidiaries		Guarantors		Eliminations			Total
	Total			$	13,677			$	11,757
ASSETS
	Current assets:
		Cash and cash equivalents	$	-		$	1,001		$	2,723		$	-	$	347	$	-		$	4,071
		Accounts receivable, net		-			13			38,210			-		1,149		-			39,372
		Other current assets		836			10,291			18,522			-		7,102		(321	)		36,430
	Total current assets			836			11,305			59,455			-		8,598		(321	)		79,873
	Properties, net			1,753			3,744			492,345			12,105		37,078		(2,086	)		544,939
	Notes receivable from affiliates			13,893			-			270			602		798		-			15,563
	Investment in subsidiaries			205,172			233,716			-			-		-		(438,888	)		-
	Other assets including goodwill			-			17,628			14,621			639		5,872		-			38,760
Total assets			$	221,654		$	266,393		$	566,691		$	13,346	$	52,346	$	(441,295	)	$	679,135

LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable	$	-		$	6,682	$	35,734		$	-	$	788	$	-		$	43,204
		Accrued liabilities and payables to affiliates		-			5,366		15,137			-		94		-			20,597
		Accrued interest		-			7,727		(1	)		-		9		-			7,735
		Income taxes payable		-			64		2,218			-		95		-			2,377
		Current portion long-term debt		-			66		5,652			5,059		803		-			11,580
	Total current liabilities			-			19,905		58,740			5,059		1,789		-			85,493
	Long-term debt			74,076			64,422		132,946			2,898		25,595		-			299,937
	Deferred rentals and other payables to affiliates			-			-		(4,698	)		4,799		-		-			101
	Deferred tax liabilities			(41,362	)		1,760		142,554			-		1,712		-			104,664
	Total liabilities			32,714			86,087		329,542			12,756		29,096		-			490,195
	Stockholders' equity			188,940			180,306		237,149			590		23,250		(441,295	)		188,940
Total liabilities and stockholders' equity			$	221,654		$	266,393	$	566,691		$	13,346	$	52,346	$	(441,295	)	$	679,135

NOTE 7 — SUPPORT SERVICES AND OTHER REVENUE

25 Support services and other revenue for the three months ended May 31, 2005 and May 31, 2004 consisted of the following:

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


			For the Three Months Ended May 31,

*(in thousands - unaudited)*			2005		2004

Support services - Airlines		$	912	$	343
Support services - Helicopters			928		700
Support services - Air Center			12,613		7,658
Sales of agricultural products			2,346		2,287
Support services - other			16		-

	Total	$	16,815	$	10,988

SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS - UNAUDITED
For the Nine Months Ended November 30, 2004
(in thousands)
											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiaries			Guarantors			Eliminations			Total
Net cash provided by (used in) operating activities		$	402		$	(9,162	)	$	62,802		$	3,318		$	(220	)	$	(1,876	)	$	55,264
Cash flows from investing activities:
	Purchases of property, equipment, and overhauls		-			(98	)		(47,038	)		-			(1,672	)		-			(48,808	)
	Proceeds from disposal of property & equipment		-			-			1,508			-			293			-			1,801
	Notes receivables & other assets		-			(2,346	)		(1,354	)		604			(198	)		1,876			(1,418	)
Net cash (used in) provided by investing activities			-			(2,444	)		(46,884	)		604			(1,577	)		1,876			(48,425	)
Cash flows from financing activities:
	Proceeds from long-term debt		-			222,247			-			-			-			-			222,247
	Payments on long-term debt		-			(218,154	)		(4,022	)		(3,314	)		(5	)		-			(225,495	)
	Other financing sources		(402	)		11,621			(13,089	)		(608	)		1,566			-			(912	)
Net cash (used in) provided by financing activities			(402	)		15,714			(17,111	)		(3,922	)		1,561			-			(4,160	)
Net increase (decrease) in cash			-			4,108			(1,193	)		-			(236	)		-			2,679
Cash, beginning of period			-			1,002			2,723			-			346			-			4,071
	Cash, end of period	$	-		$	5,110		$	1,530		$	-		$	110		$	-		$	6,750

-19-

Table of Contents

26NOTE 8 — COST OF SUPPORT SERVICES AND OTHER SUPPORT COSTS

~~EVERGREEN~~ Cost ~~HOLDINGS~~of support services and other revenue for the three months ended May 31, ~~INC.CONDENSED~~2005 ~~NOTES~~and ~~TOUNAUDITED~~May ~~CONSOLIDATED~~31, ~~FINANCIAL~~2004 ~~STATEMENTS~~consisted of the following:

SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS - UNAUDITED
					For the Three Months Ended May 31,
For the Nine Months Ended November 30, 2003
(in thousands - unaudited)					2005			2004
(in thousands)
Cost of support services and other support costs - Airlines				$	6,258		$	4,200
											Non-
Cost of support services - Helicopters					568			141
									100%			Wholly
Cost of support services - Air Center					10,371			4,720
									Owned			Owned
Cost of sales of agricultural products					1,365			1,601
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
Cost of support services - other					39			64
			(Parent)			(Issuer)			Subsidiaries			Subsidiaries			Guarantors			Eliminations			Total
	Total			$	18,601		$	10,726
Net cash provided by (used in) operating activities		$	8,194		$	(8,197	)	$	53,213		$	4,765		$	429		$	(14,850	)	$	43,554
Cash flows from investing activities:
	Purchases of property, equipment, and overhauls		-			(635	)		(44,732	)		-			(193	)		-			(45,560	)
	Proceeds from disposal of property & equipment		-			3,750			1,746			-			-			-			5,496
	Notes receivables & other assets		(8,194	)		(5,001	)		(3,013	)		1,488			(902	)		14,850			(772	)
Net cash (used in) provided by investing activities			(8,194	)		(1,886	)		(45,999	)		1,488			(1,095	)		14,850			(40,836	)
Cash flows from financing activities:
	Proceeds from long-term debt		-			281,596			2,281			-			(52	)		-			283,825
	Payments on long-term debt		-			(116,992	)		(4,897	)		(4,765	)		-			-			(126,654	)
	Other financing sources		-			(155,390	)		(9,060	)		(1,488	)		1,118			-			(164,820	)
Net cash provided by (used in) financing activities			-			9,214			(11,676	)		(6,253	)		1,066			-			(7,649	)
Net (decrease) increase in cash			-			(869	)		(4,462	)		-			400			-			(4,931	)
Cash, beginning of period			-			854			4,714			-			70			-			5,638
	Cash, end of period	$	-		$	(15	)	$	252		$	-		$	470		$	-		$	707

27NOTE 9 — OTHER NON-OPERATING INCOME (EXPENSE), NET

~~EVERGREEN~~ Other ~~HOLDINGS~~non-operating income (expense), ~~INC.CONDENSED~~net ~~NOTES~~for ~~TOUNAUDITED~~the ~~CONSOLIDATED~~three ~~FINANCIAL~~months ~~STATEMENTS~~ended May 31, 2005 and May 31, 2004 consisted of the following:

NOTE 8 — RELATED PARTY TRANSACTIONS


			For the Three Months Ended May 31,

*(in thousands - unaudited)*			2005		2004

Gain on sale of property and equipment			260		323
Foreign currency exchange gain			107		25
Other non-operating gain (loss)			180		(124	)
Write-off of unamortized loan acquisition costs			-		(3,463	)
Penalties and legal fees on loan prepayment			-		(330	)

	Total	$	547	$	(3,569	)

~~Sale of Aircraft~~-20-

Table of Contents

InNOTE ~~August~~10 ~~2004,~~— ~~EASL~~CASH ~~sold~~FLOWS aFROM ~~Lear~~INVESTING 35ACTIVITIES ~~jet~~- toOTHER Ventures Acquisition Company LLC for $2.7 million. EASL had purchased the Lear 35 jet in June 2004 for $ 2.7 million. Because EASL sold the Lear 35 jet at EASL's cost for the aircraft, EASL did not recognize a gain or a loss on the sale. ASSETS

Cash flows from investing activities - other assets during the three months ended May 31, 2005 and 2004 were as follows:


			For the Three Months Ended May 31,

*(in thousands - unaudited)*			2005			2004

Deposits on aircraft		$	(1,414	)	$	(512	)
Aircraft and parts held for sale			34			(16	)
Non-current agricultural assets			(596	)		-
Minority interest applied against note receivable from affiliate			-			(307	)
Payments received on notes receivable			140
Advances made on notes receivable			-			(454	)
Capitalized loan acquisition costs			(17	)		(3,464	)
Other			93			1,129

	Total	$	(1,763	)	$	(3,624	)

Mr. Delford M. Smith, our founder and the chairman of our board of directors, has control, either directly or indirectly, over 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:

	•	Ventures Acquisition Company LLC ("Ventures Acquisition Company");
	•	Ventures Holding, Inc. ("Ventures Holding");
	•	DMS Properties; and
	•	Greenpatch Farms.

Transactions Under Mr. Smith's Employment Agreement

During the three months ended May 31, 2005, the board of directors granted a $2.9 million bonus to Mr. Smith. Payment of the bonus was recorded by us as a part of selling, general, and administrative expenses. In accordance with the terms of the Employment Agreement, Mr. Smith utilized $2.0 million of the bonus to pay $1.4 million of principal and $0.6 million of accrued interest on obligations owed to us by Mr. Smith or his affiliates, and the remaining portion of the bonus was utilized to satisfy taxes payable by Mr. Smith or his affiliates as a result of the receipt of the bonus.

-21-

Table of Contents

Lease Transactions

~~The~~We ~~Company~~rent ~~rents~~ aircraft and buildings from entities that are owned by, or controlled by, Mr. Smith. During the three months ended ~~November~~May 3031, ~~2004~~2005 and ~~November~~May 3031, ~~2003~~2004, ~~the~~ ~~Company~~ we incurred rent expense for these leases in the aggregate amounts of $1.75 million and $1.97 million, respectively. ~~During the nine months ended November 30, 2004 and November 30, 2003, the Company incurred rent expense for these leases in the aggregate amounts of $5.1 million and $6.0 million, respectively.~~

On July 11, 2005, Airlines, as lessee, entered into two three-year Aircraft Leases with Ventures Acquisition Company, as lessor, for the Designated 747s. Rental payments of $345,000 per aircraft are due on the 11th day of each month throughout the terms of the leases. The Aircraft Leases are subject and subordinate to the terms of the Landsbanki Loan Agreement (see "Landsbanki Loan Agreement" in "Note 4 - Long-Term Debt Obligations" above), and Airlines' right to possession and use of the Designated 747s is subject to the right of Landsbanki Íslands hf., as the secured lender, to repossess the Designated 747s.

In addition, Aviation and Mr. Smith are co-beneficiaries of the Trust, which leases certain aircraft to Airlines. Specifically, Aviation and Mr. Smith share a beneficial interest in one of the assets of the Trust, a Boeing 747 aircraft. Mr. Smith holds a one-third beneficial interest in the Boeing 747, while Aviation holds the remaining two-thirds beneficial interest. Airlines leases the Boeing 747 from the Trust.

InDuring each of the three-month periods ~~for the three months~~ ended ~~November~~May 3031, ~~2004~~2005 and ~~November~~May 3031, ~~2003~~2004, Airlines incurred aircraft lease expense on the Boeing 747 in the amount of $1.58 million. Of these amounts in each three-month period, $0.56 million was attributable to Mr. ~~Smith's~~ one-third beneficial interest in the aircraft. In each of the periods for the nine months ended November 30, 2004 and November 30, 2003, aircraft rent expense incurred by the Airlines on the Boeing 747 was $4.4 million. Of these amounts in each nine-month period, $1.4 million was attributable to Mr. Smith's one-third beneficial interest in the aircraft.

ExpirationSale and Lease of Aircraft Lease

~~During~~Sale ~~the~~and ~~three~~Lease ~~months~~of ~~ended~~Puma ~~November~~Aircraft. During 30May 2005, EASL ~~2004~~sold two Aerospatiale Model SA 330J rotor-wing aircraft, ~~Airlines~~with ~~and~~corresponding aircraft parts (collectively, the "Puma Aircraft"), to Ventures Acquisition Company ~~LLC~~for ~~negotiated~~an aaggregate ~~settlement~~sales inprice ~~connection~~of $5.0 million. EASL's cost for the Puma Aircraft was also $5.0 million, thus EASL did not ~~with~~recognize any profit from the ~~scheduled~~sale. ~~expiration~~Immediately upon its purchase of anthe ~~aircraft~~Puma Aircraft from EASL, Ventures Acquisition Company agreed to lease ~~agreement. For~~the ~~further~~Puma ~~information,~~Aircraft ~~see~~to ~~"Note~~Helicopters 4under a three-year lease ~~Expiration~~agreement at a lease rate of ~~Aircraft~~$55,000 ~~Lease"~~per ~~above~~month, per aircraft.

28 Sale and Lease of Sikorsky CH-54 Aircraft. During May 2005, EASL sold a Sikorsky CH-54 rotor-wing aircraft, with corresponding aircraft parts (collectively, the "CH-54 Aircraft") to Ventures Acquisition Company for an aggregate sales price of $2.4 million. EASL's inventory cost for the CH-54 Aircraft was also $2.4 million, thus EASL did not recognize any profit from the sale. Ventures Acquisition Company has agreed to lease the CH-54 Aircraft to Helicopters under a three-year lease agreement at a lease rate of $120,000 per month.

~~EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~-22-

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Notes Receivable from Affiliates and Notes Payable to Affiliates

~~The~~We ~~Company~~ also ~~has~~have a number of notes receivable from, ~~and notes payable to,~~ Mr. Smith, Ventures ~~Holdings~~Holding, ~~Inc.,~~ and Ventures Acquisition Company ~~LLC (entities that are controlled by Mr~~. ~~Smith).~~ The chart below summarizes the ~~Company’s~~ various notes receivable from, ~~and notes payable to,~~ Mr. Smith, Ventures Holdings, Inc., or Ventures Acquisition Company ~~LLC~~ at ~~November~~May 3031, ~~2004~~ 2005 and February 2928, ~~2004~~2005:

			(in thousands)
					May 31, 2005
			November 30,			February 29,
(in thousands)					(unaudited)			February 28, 2005
			2004			2004
Notes receivable from Ventures Holdings				$	8,590		$	9,777
Notes receivable from Ventures Holdings, Inc.		$	9,683		$	10,672
	due in annual installments of $1,134 through March 31, 2013, with an annual interest rate of 4%
	(an entity controlled by Mr. Smith) due in annual installments
Notes receivable from Ventures Acquisition Company					991			1,128
	of $1,134 thousand, beginning March 31, 2004, with an annual interest rate of 4%
	due in annual installments of $146 through March 31, 2013, with an annual interest rate of 4%
Notes receivable from Ventures Acquisition Company LLC			1,117			1,233
Note receivable from Mr. Smith					4,094			4,661
	(an entity controlled by Mr. Smith) due in annual installments
	due in ten annual installments of $802 through March 31, 2013, with an annual interest rate of 4%
	of $146 thousand, beginning March 31, 2004, with an annual interest rate of 4%
	Net notes receivable from affiliates			$	13,675		$	15,566
Note receivable from Mr. Smith			4,616			5,095
	due in ten annual installments of $802 thousand,
	beginning March 31, 2004, with an annual interest rate of 4%
Notes receivable from Mr. Smith			-			602
	due in annual installments to be equal to the earnings distributed
	on aircraft N471, with an annual interest rate of 8%
Note payable to Ventures Acquisition Company LLC			-			(739	)
	(an entity controlled by Mr. Smith) due in monthly installments
	of $108 thousand, with an annual interest rate of 6%
	Net notes receivable from affiliates	$	15,416		$	16,863

Notes Receivable from Affiliates— During the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, the ~~Company received~~principal ~~$2.6~~balances ~~million~~ of ~~principal~~our ~~payments on~~ notes receivable from affiliates increased by $0.1 million of accrued interest receivable. During the same time period, ~~the principal~~we ~~balances~~received of$1.4 ~~the~~million ~~Company's~~of ~~notes~~principal payments ~~receivable~~and ~~from affiliates increased by~~ $0.46 million of accrued interest ~~receivable~~ payments. See "Transactions Under Mr. Smith's Employment Agreement" above.

~~Notes~~NOTE ~~Payable~~12 ~~to Affiliates~~— ~~During~~CONTINGENCIES ~~the~~AND ~~nine~~COMMITMENTS ~~months ended November 30, 2004, the Company made $0.7 million of principal payments on notes payable to affiliates.~~

29LEGAL PROCEEDINGS

~~EVERGREEN~~ We ~~HOLDINGS~~are currently involved in a number of legal proceedings. While the results of these proceedings cannot be predicted with certainty, ~~INC~~we believe, based on our examination of the subject matter of the proceedings, experience with similar proceedings, and discussion with legal counsel regarding possible outcomes, that the final outcome of such proceedings will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.~~CONDENSED~~ ~~NOTES~~As ~~TOUNAUDITED~~material ~~CONSOLIDATED~~developments ~~FINANCIAL~~related ~~STATEMENTS~~to pending litigation occur, we will reassess our potential liability and revise any estimates accordingly.

Bonus Compensation Paid to Mr. Smith

On March 26, 2004, the board of directors granted a $2.9 million bonus to Mr. Smith, in accordance with the terms of Mr. Smith’s employment agreement with the Company. Payment of the bonus was recorded by the Company as a part of selling, general, and administrative expenses.

Mr. Smith utilized $2.1 million of the bonus to pay to the Company $1.4 million of principal and $0.7 million of accrued interest on obligations owed to the Company by Mr. Smith or other entities affiliated with Mr. Smith.

NOTE 9 — EMPLOYEE BENEFIT PLAN

Effective March 1, 2002, the Company established the Evergreen Savings and Retirement Plan (the “Plan”). The Plan is a defined contribution plan covering all full-time employees of the Company who have been credited with one year of service, are age 21 or older, are not covered by a collective bargaining agreement, and are not a temporary employee. Under the Plan, the Company matches 50% of the first 8% of base compensation that a participant contributes to the Plan.

The Company also makes an annual basic contribution in an amount equal to 4% of the annual compensation of each participant who has completed the minimum required hours of service during the Plan year, net of plan forfeitures (the “4% Contribution”). In November 2004, the Company made a 4% Contribution in the amount of $2.7 million.

NOTE 10 — CONTINGENCIES

The Company is currently involved in a number of legal proceedings, as disclosed in the Company’s Annual Report on Form 10-K/A and as discussed below. As of the date of this report, there have been no material developments in these proceedings. While the results of these proceedings cannot be predicted with certainty, the Company believes, based on its examination of the subject matter of the proceedings, experience with similar proceedings, and discussion with legal counsel regarding possible outcomes, that the final outcome of such proceedings will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. As material developments related to pending litigation occur, the Company will reassess the Company’s potential liability and revise any estimates accordingly.

EVERGREEN HOLDINGS, INC.CONDENSED NOTES TOUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Banc of America

~~The~~We ~~Company~~are is a defendant in 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 ~~for~~in the State of North Carolina. Banc of America has alleged claims for breach of ~~contract~~ contract and quantum meruit, arising out of agreements in which Banc of America agreed to act as ~~the~~our ~~Company’s~~ financial agent in exchange for the payment of certain fees. The plaintiff has not yet specified an amount for damages. The Company filed a motion to dismiss for lack of jurisdiction, but on November 10, 2003, the court denied the motion. Subsequently, the Company filed an appeal on the denial of the motion to dismiss. On September 22, 2004, the parties held oral argument on the appeal before the North Carolina Court of Appeals. A ruling on the appeal is anticipated on or before January 17, 2005.

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

-23-

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Asiana Airlines

On January 28, 2000, we ~~the~~entered into ~~Company and~~a contract with Asiana Airlines (“Asiana”) ~~entered into a contract~~ whereby ~~the~~we ~~Company~~ 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~~ ~~the~~notified ~~Company~~us that Asiana would not make any further payments under the contract.

On September 19, 2001, ~~the~~ ~~Company~~we filed proceedings in the United States District Court for the District of Oregon against Asiana to recover amounts owed by Asiana to ~~the~~us ~~Company~~ pursuant to the contract. On February 28, 2003, a jury returned a verdict in our favor ~~of the Company~~ and ~~on April~~awarded ~~28, 2003, the court entered a judgment for~~ damages ~~in the amount~~ of $16.6 million, inand ~~favor of the Company.~~ Asiana subsequently filed ana ~~appeal~~motion offor ~~the~~ judgment ~~with~~as ~~the~~a ~~Ninth~~matter ~~Circuit~~of ~~Court~~law. The ofdistrict ~~Appeals,~~court ~~and~~denied the ~~parties~~motion ~~have filed opening~~ and ~~answering~~Asiana ~~briefs~~appealed ~~with~~ the ~~court.~~judgment ~~Oral~~to ~~argument on~~ the ~~appeal~~United ~~has~~States ~~not~~Ninth ~~yet~~Circuit ~~been~~Court ~~scheduled.~~of Appeals.

~~Rural~~ On ~~Service~~June ~~Improvement~~20, ~~Act~~2005, a three-judge panel of ~~2002~~the United States Court of Appeals for the Ninth Circuit affirmed in all respects the judgment of the district court. In its decision, the Ninth Circuit rejected Asiana's arguments that the damage award should be reversed, holding that the District Court properly instructed the jury on the measure of Evergreen's damages and that Evergreen provided extensive evidence of its damages in accordance with Oregon law.

On ~~August~~July 1911, ~~2002~~ 2005, the ~~Company~~ ~~instituted~~Ninth ~~proceedings~~Circuit ~~against~~issued ~~the~~a ~~United~~mandate ~~States~~returning ofthe ~~America~~action into the ~~United States~~ District Court. ~~for~~It ~~the~~is ~~District~~anticipated ~~of Alaska for a declaration~~ that the ~~Rural~~District ~~Service~~Court ~~Improvement~~will, upon ~~Act~~conclusion of ~~2002~~proceedings, (order the ~~“Rural~~disbursement ~~Service~~to ~~Act”)~~Evergreen isof ~~unconstitutional. The Rural Service Act disqualifies~~ the ~~Company~~full ~~from~~amount ~~receiving equitable tender~~ of ~~Alaska~~damages, ~~non-priority~~in ~~bypass~~addition ~~mail~~to ~~unless~~costs ~~the Company meets~~and ~~certain~~interest, ~~passenger~~from ~~carriage~~the ~~requirements~~amount that ~~are~~Asiana ~~economically~~previously ~~impractical.~~deposited ~~The~~in ~~Company~~the ~~subsequently~~District ~~consolidated~~Court's ~~its~~bank ~~claims with a prior lawsuit that had been filed by Alaska Central Express, Inc~~account.~~, which asserted similar claims.~~

TheDucor U.S.Express government filed a motion for summary judgment. On September 29, 2003, the federal district court granted the U.S. government’s motion and dismissed the claim with prejudice. The Company has appealed the federal district court’s decision to the Ninth Circuit Court of Appeals. The Company filed its opening brief on February 13, 2004, and the U.S. government’s response brief was filed on April 30, 2004. Oral argument on the appeal has not yet been scheduled. Airlines

31 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 (the "Court"). Ducor sought damages of $41.7 million against Airlines in regard to certain agreements between the parties wherein Airlines was 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.

~~EVERGREEN~~ On ~~HOLDINGS~~July 6, ~~INC.CONDENSED~~2005, ~~NOTES~~the ~~TOUNAUDITED~~parties executed ~~CONSOLIDATED~~a ~~FINANCIAL~~Settlement ~~STATEMENTS~~Agreement whereby Ducor and Airlines i) agreed to file with the Court a stipulation of discontinuance of the Action with prejudice and ii) agreed to release and discharge the other from any and all claims and liabilities with respect to the Action.

TridairClaim Repairfor Losses under the Air Transportation Safety and ManufacturingSystem Stabilization Act

~~On February 11, 2003, Tridair~~We ~~Repair~~may ~~and~~be ~~Manufacturing,~~asked ~~Inc.~~to ~~(“Tridair”)~~return ~~filed~~all or a ~~complaint~~portion ~~against~~of the ~~Company~~$7.2 inmillion ~~the~~that ~~United~~we ~~States~~received ~~District~~in ~~Court~~fiscal ~~for~~ year ~~the~~2002 ~~Central~~for ~~District~~claims ofpursuant to ~~California (~~the ~~“California~~Air ~~Court”)~~Transportation ~~alleging~~Safety ~~fraud~~ and ~~breach~~System ofStabilization ~~contract~~Act. ~~The~~As ~~allegations~~ of ~~relate~~May to31, an2005, ~~aircraft~~we ~~salvage~~have ~~contract~~not ~~under~~received ~~which~~any ~~the~~further ~~Company~~correspondence and ~~agreed~~have tonot ~~perform~~participated ~~aircraft salvage services for Tridair~~ in ~~return~~ any ~~for~~further ~~payments~~negotiations toregarding bethis ~~made~~matter. byCurrently, ~~Tridair~~we todo ~~the~~not ~~Company.~~anticipate ~~Tridair~~that ~~subsequently~~we ~~transferred~~will ~~its~~be ~~litigation rights~~ required to ~~Diversified~~return ~~Aero Asset~~any ~~Management,~~of ~~Inc~~$7.2 ~~(“Diversified”),~~million. ~~which~~To ~~had~~the ~~previously~~extent ~~filed~~we aneed ~~complaint~~to ~~against~~actually ~~the~~pay ~~Air~~any ~~Center~~of ~~for~~these ~~similar~~amounts, ~~claims. Diversified~~we ~~amended~~believe ~~its~~that ~~complaint~~cash inon ~~order~~hand toand ~~seek~~amounts expected ~~$10.6~~to ~~million~~be inavailable ~~damages~~under ~~for~~our ~~fraud~~Secured ~~and~~Credit ~~breach~~Facility ofwill ~~contract.~~be sufficient.

On April 2, 2003, the Company filed a motion to dismiss for lack of jurisdiction, or in the alternative, to transfer the case to the federal district court in Arizona. As a result, the matter in the California Court was dismissed and the matter was transferred to the United States District of Arizona. On August 30, 2004, the Company filed a motion for summary judgment, and a hearing on the motion was held on October 4, 2004. On October 20, 2004 the Court entered an order dismissing Diversified's punitive damages claim, but denying all other aspects of the Company's motion for summary judgment. -24-

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JuryAIRCRAFT trialPURCHASE was originally scheduled for November 30, 2004. However, the trial was subsequently continued until February 1, 2005 by stipulation between the parties. COMMITMENTS

~~Pinal~~ As ~~County~~of May 31, ~~State~~2005, we ofhad ~~Arizona~~entered into agreements to purchase the following aircraft:

The Company currently leases real property from Pinal County, State of Arizona (“Pinal County”) for the Air Center’s facilities in Marana, Arizona. On July 22, 2003, Pinal County notified the Company that Pinal County would attempt to terminate the lease. Pinal County has alleged that, pursuant to the lease agreement, Air Center was required to perform certain maintenance on the leased property, and that the Air Center had not performed such maintenance.


*(in thousands)*
				Purchase		Deposit
	Aircraft	Quantity		Price		Paid
Boeing 747-230SF aircraft		2	$	32,000	$	2,000
Bell AB139 helicopter		1		7,950		1,500
Bell AB139 helicopters		3		25,000		-
Bell 206 L-4 helicopter		1		1,310		196
Bell 412EP IFT helicopter		2		12,670		2,534

Total			$	78,930	$	6,230

~~The~~On ~~Company~~July ~~subsequently~~11, ~~filed~~2005, anVentures Acquision ~~action~~Company inpurchased the ~~United~~Boeing ~~States~~747-230SF ~~District~~aircraft ~~Court~~ for ~~the~~$32.0 ~~District of Arizona requesting a declaratory judgment in the Company's favor~~million. ~~Specifically,~~ ~~the~~The ~~Company~~purchase ~~requested~~of ~~a declaration that~~ the ~~Company~~aircraft was ~~not~~financed inthrough ~~breach~~a ~~of the lease agreement and that Pinal County was not entitled to terminate the lease agreement~~$32. In0 ~~addition, the Company also requested~~million ~~that~~Loan ~~the~~Agreement ~~court~~between ~~enjoin~~Ventures ~~Pinal~~Acquisition ~~County from i) terminating the lease agreement and ii) taking any action to evict the~~ Company~~. Due~~, ~~to ongoing~~as ~~negotiations~~Borrower, ~~between the Company~~Holdings, ~~Pinal~~as ~~County and the Federal Aviation Administration~~Guarantor, ~~the summons~~ and ~~complaint~~Landsbanki ~~for~~Íslands ~~the declaratory action were never served on Pinal County~~hf. ~~Subsequently~~, ~~the~~as ~~Company instructed local counsel to file a motion dismissing~~Lender. ~~the~~See ~~case~~"Landsbanki ~~and,~~Loan asAgreement" ofin ~~November~~"Note 4, ~~2004,~~- ~~the~~Long-Term ~~case~~Debt ~~has~~Obligations" ~~been dismissed~~above.

32 Subject to finalization of financing or leasing arrangements, we expect to take delivery of one Bell AB139 helicopter, the Bell 206 L-4 helicopter, and the two Bell 412EP IFT helicopters during fiscal year 2006, with the remaining three Bell AB139 helicopters to be delivered in fiscal year 2007. 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.

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~-25-

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~~CAUTIONARY~~NOTE ~~STATEMENT~~13 ~~REGARDING~~— ~~FORWARD~~SUPPLEMENTAL FINANCIAL INFORMATION FOR GUARANTOR SUBSIDIARIES AND NON-~~LOOKING~~GUARANTOR ~~STATEMENTS~~SUBSIDIARIES

InThe ~~accordance~~Indenture ~~with~~Notes ~~the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we note~~ that ~~certain~~were issued ~~statements~~by inAviation ~~this Quarterly Report on Form 10-Q and elsewhere~~ are ~~forward-looking~~fully and ~~provide~~unconditionally ~~other~~guaranteed, ~~than~~both ~~historical~~jointly ~~information.~~and ~~The~~severally, ~~words~~by ~~“believe~~Holdings,” ~~“estimate,”~~substantially ~~“anticipate,”~~all ~~“project,”~~of ~~“intend,”~~Aviation’s subsidiaries ~~“expect,”~~(the “~~plan,”~~Guarantor ~~“forecast,~~Subsidiaries”), and ~~similar~~the ~~expressions~~Trust ~~are~~(the ~~intended~~“Non-Wholly toOwned ~~identify~~Guarantor ~~forward-looking statements~~Subsidiary”). ~~Such~~The ~~forward-looking~~only subsidiaries ~~statements are not guarantees of future performance~~ and ~~are~~affiliated ~~subject~~entities ~~to certain risks and uncertainties~~ that ~~could~~are ~~cause~~not ~~actual~~obligated ~~events~~as ~~and~~guarantors ~~results~~under tothe ~~differ~~Indenture ~~materially~~Notes ~~from those discussed herein. Because such forward-looking statements~~ are ~~necessarily~~Evergreen ~~dependent on assumptions~~Agricultural Enterprises, ~~data~~Inc., orEvergreen ~~methods~~Vintage ~~that~~Aircraft ~~may be incorrect or imprecise~~Inc., and ~~may~~the ~~not~~foreign besubsidiaries ~~realized,~~of the ~~statements contained~~Company in(collectively, ~~this~~the ~~Quarterly Report on Form 10~~“Non-~~Q or elsewhere should not be relied upon as predictions of future events~~Guarantor Subsidiaries”).

~~Our~~The ~~Annual~~Company ~~Report~~accounts ~~on Form 10-K/A~~ for ~~the~~all investments ~~fiscal~~in ~~year~~its ~~ended~~subsidiaries ~~February~~utilizing ~~29, 2004, which was filed with~~ the ~~SEC~~equity onmethod ~~September~~of ~~30, 2004, identifies important risks that could cause actual results to differ materially from assertions made by us in forward-looking statements~~accounting. ~~Such~~As ~~risks~~a ~~include~~result, ~~but~~the ~~are~~net ~~not~~income ~~limited~~and ~~to,~~loss ~~our~~of ~~future~~each ~~compliance with the terms~~ of ~~our debt agreements, general conditions in~~ the Company’s ~~aviation~~subsidiaries ~~industry,~~is ~~our~~reflected ~~ability~~on ~~to adequately maintain~~ the ~~economic~~books ~~viability~~ of ~~our fleet,~~ the ~~effect~~Company ofas ~~government~~either ~~laws~~an ~~and~~increase ~~regulations~~in, ~~the~~or ~~risks~~reduction ~~related to our operations in dangerous locations~~of, ~~and~~the ~~fluctuations~~Company’s equity in the ~~cost~~earnings of ~~fuel.~~each ~~These~~such ~~are~~subsidiary. ~~only~~For ~~some of~~ the ~~risks~~purposes ~~that~~of ~~may~~reporting ~~affect~~on ~~the~~a ~~forward-looking~~consolidated ~~statements~~basis, ~~contained~~eliminating inentries ~~this~~are ~~Quarterly~~made by ~~Report~~the onCompany ~~Form~~at ~~10-Q.~~the ~~For~~holding ~~further~~company ~~information~~level ~~regarding~~in ~~risks~~order ~~and~~to ~~uncertainties~~eliminate ~~associated~~the ~~with~~balances ~~our~~of ~~business, please see~~ the Company’s ~~other~~investments ~~reports~~in ~~and~~its ~~filings with~~subsidiaries ~~the~~against ~~SEC,~~all ~~including,~~intercompany ~~but~~balances ~~not~~and ~~limited~~intercompany ~~to, our Annual Report on Form 10-K/A for the year ended February 29, 2004~~transactions.

~~Readers~~The offollowing ~~this~~supplemental consolidated ~~Quarterly~~financial ~~Report~~statements onseparately ~~Form~~present ~~10-Q~~the ~~are~~results ~~cautioned~~of ~~not~~operations tofor ~~place~~Evergreen ~~undue~~Holdings, ~~reliance~~Inc., onEvergreen ~~the~~International Aviation, ~~forward-looking statements contained herein~~Inc., ~~which speak only as of~~ the ~~date~~wholly-owned ~~hereof.~~Guarantor WeSubsidiaries ~~assume~~on noa ~~obligation~~combined tobasis, ~~publicly~~the ~~update or revise our forward~~Non-~~looking~~Wholly ~~statements~~Owned ~~included~~Guarantor inSubsidiary, ~~this~~and ~~report,~~the Non-Guarantor ~~whether~~Subsidiaries ason a ~~result~~combined ~~of new information~~basis, ~~future~~with ~~events~~consolidating oradjustments ~~otherwise,~~and ~~except~~total asconsolidated ~~required by law~~amounts.


SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS - UNAUDITED
For the Three Months Ended May 31, 2005
(in thousands)


											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiary			Guarantors			Eliminations			Total

Operating revenues		$	-		$	3,750		$	178,178		$	1,846		$	2,353		$	(9,831	)	$	176,296
Operating expenses			-			-			145,563			93			1,365			(5,294	)		141,727
Selling, general, and administrative expenses			6			6,269			16,434			8			766			(4,886	)		18,597

Operating (loss) income			(6	)		(2,519	)		16,181			1,745			222			349			15,972

Interest income (expense)			130			(2	)		(9,423	)		(68	)		(10	)		-			(9,373	)
Other non-operating income (expense), net			-			-			559			-			(12	)		-			547

Income (loss) before minority interest,			124			(2,521	)		7,317			1,677			200			349			7,146
	income taxes, and equity in
	subsidiary earnings

Equity in earnings of subsidiaries			3,880			5,546			-			-			-			(9,426	)		-

Income (loss) before minority interest			4,004			3,025			7,317			1,677			200			(9,077	)		7,146
	and income taxes

Minority interest			-			(334	)		-			-			-			-			(334	)

Income (loss) before income taxes			4,004			2,691			7,317			1,677			200			(9,077	)		6,812

Income tax benefit (expense)			-			994			(3,718	)		-			(84	)		-			(2,808	)

	Net income (loss)	$	4,004		$	3,685		$	3,599		$	1,677		$	116		$	(9,077	)	$	4,004

~~OVERVIEW~~-26-

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Evergreen Holdings, Inc. (“Holdings”) is the parent company of Evergreen International Aviation, Inc. (“Evergreen” or “Aviation”) and its subsidiaries. Evergreen is a leading provider of worldwide air freight transportation, ground handling and logistics services, helicopter services, small aircraft sales and leasing, aircraft parts sales, and aircraft maintenance and repair services. Evergreen provides services to a broad base of customers, including the United States Air Force Air Mobility Command (“AMC”), the United States Postal Service (“U.S. Postal Service”), freight forwarders, domestic and foreign airlines, industrial manufacturers, and other government agencies. For the military fiscal year beginning October 1, 2005, Evergreen is the largest commercial provider of Boeing 747 wide-body air cargo services to the U.S. military based on entitlement.


SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS - UNAUDITED
For the Three Months Ended May 31, 2004
(in thousands)


											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiary			Guarantors			Eliminations			Total

Operating revenues		$	-		$	2,598		$	130,320		$	1,887		$	2,312		$	(10,964	)	$	126,153
Operating expenses			-			-			112,230			93			1,601			(7,693	)		106,231
Selling, general, and administrative expenses			15			5,811			14,549			-			658			(3,565	)		17,468

Operating (loss) income			(15	)		(3,213	)		3,541			1,794			53			294			2,454

Interest expense			144			(71	)		(8,823	)		(197	)		(12	)		-			(8,959	)
Other non-operating income, net			-			(3,794	)		25			-			200			-			(3,569	)

Income (loss) before minority interest,			129			(7,078	)		(5,257	)		1,597			241			294			(10,074	)
	income taxes, and equity in subsidiary earnings

Equity in earnings of subsidiaries			(6,789	)		(2,445	)		-			-			-			9,234			-

(Loss) income before minority interest			(6,660	)		(9,523	)		(5,257	)		1,597			241			9,528			(10,074	)
	and income taxes

Minority interest			-			-			(307	)		-			-			-			(307	)

(Loss) income before income taxes			(6,660	)		(9,523	)		(5,564	)		1,597			241			9,528			(10,381	)

Income tax benefit (expense)			-			2,571			1,358			-			(96	)		(112	)		3,721

	Net (loss) income	$	(6,660	)	$	(6,952	)	$	(4,206	)	$	1,597		$	145		$	9,416		$	(6,660	)

~~The Company conducts business through its six major business segments through its wholly~~-~~owned subsidiaries:~~ 27-

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Evergreen International Airlines, Inc. ("Airlines");


SUPPLEMENTAL CONSOLIDATING BALANCE SHEET - UNAUDITED
At May 31, 2005
(in thousands)


									Non-
								100%		Wholly
								Owned		Owned
				Holdings		Evergreen		Guarantor		Guarantor		Non						Consolidated
				(Parent)		(Issuer)		Subsidiaries		Subsidiary		Guarantors			Eliminations			Total

ASSETS
	Current assets:
		Cash and cash equivalents	$	-	$	61	$	1,032	$	-	$	51		$	-		$	1,144
		Accounts receivable, net		-		12		68,049		639		1,374			-			70,074
		Other current assets		236		1,149		19,910		-		9,270			-			30,565

	Total current assets			236		1,222		88,991		639		10,695			-			101,783

	Properties, net			1,722		3,213		491,360		11,639		41,919			(1,457	)		548,396
	Notes receivable from affiliates			12,700		5,217		220		-		(6,484	)		-			11,653
	Investment in subsidiaries			204,338		259,712		-		-		-			(464,050	)		-
	Other assets including goodwill			-		12,139		19,307		17		4,617			-			36,080

Total assets			$	218,996	$	281,503	$	599,878	$	12,295	$	50,747		$	(465,507	)	$	697,912

Evergreen Aviation Ground Logistics Enterprises, Inc. ("EAGLE");


LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable	$	-		$	5,748		$	78,425		$	-	$	484	$	-		$	84,657
		Accrued liabilities and payables to affiliates		-			5,704			19,598			18		326		-			25,646
		Accrued interest		-			1,508			40			-		15		-			1,563
		Current portion long-term debt		-			6,516			3,012			2,035		1,011		1			12,575

	Total current liabilities			-			19,476			101,075			2,053		1,836		1			124,441

	Long-term debt			76,967			64,622			121,300			-		23,917		(1	)		286,805
	Deferred rentals and other payables to affiliates			-			-			(5,379	)		5,457		-		-			78
	Deferred tax liabilities			(45,587	)		(1,204	)		142,334			-		2,440		-			97,983

	Total liabilities			31,380			82,894			359,330			7,510		28,193		-			509,307

	Minority interest			-			989			-			-		-		-			989

	Stockholders' equity			187,616			197,620			240,548			4,785		22,554		(465,507	)		187,616

Total liabilities and stockholders' equity			$	218,996		$	281,503		$	599,878		$	12,295	$	50,747	$	(465,507	)	$	697,912

~~Evergreen Helicopters, Inc. ("Helicopters");~~ -28-

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Evergreen Air Center, Inc. ("Air Center");


SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
At February 28, 2005
(in thousands)


									Non-
								100%		Wholly
								Owned		Owned
				Holdings		Evergreen		Guarantor		Guarantor		Non						Consolidated
				(Parent)		(Issuer)		Subsidiaries		Subsidiary		Guarantors			Eliminations			Total

ASSETS
	Current assets:
		Cash and cash equivalents	$	-	$	1,228	$	1,390	$	-	$	100		$	-		$	2,718
		Accounts receivable, net		-		9		60,861		639		846			-			62,355
		Other current assets		1,580		1,004		27,559		-		7,743			-			37,886

	Total current assets			1,580		2,241		89,810		639		8,689			-			102,959

	Properties, net			1,729		3,306		488,089		11,732		40,514			(1,808	)		543,562
	Notes receivable from affiliates			13,127		3,110		245		-		(2,389	)		-			14,093
	Investment in subsidiaries			200,406		254,503		-		-		-			(454,909	)		-
	Other assets including goodwill			-		12,909		18,007		-		4,181			-			35,097

Total assets			$	216,842	$	276,069	$	596,151	$	12,371	$	50,995		$	(456,717	)	$	695,711

Evergreen Aircraft Sales & Leasing Co. (“EASL”); and


LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable	$	-		$	5,327		$	66,484		$	-	$	1,021	$	2		$	72,834
		Accrued liabilities and payables to affiliates		-			4,790			22,642			-		810		-			28,242
		Accrued interest		-			7,961			28			29		14		-			8,032
		Current portion long-term debt		-			6,515			3,734			3,370		626					14,245

	Total current liabilities			-			24,593			92,888			3,399		2,471		2			123,353

	Long-term debt			78,640			57,320			133,169			-		23,731		-			292,860
	Deferred rentals and other payables to affiliates			-			-			(5,098	)		5,178		-		-			80
	Deferred tax liabilities			(45,410	)		(387	)		138,592			-		2,356		-			95,151

	Total liabilities			33,230			81,526			359,551			8,577		28,558		2			511,444

	Minority interest			-			655			-			-		-		-			655

	Stockholders' equity			183,612			193,888			236,600			3,794		22,437		(456,719	)		183,612

Total liabilities and stockholders' equity			$	216,842		$	276,069		$	596,151		$	12,371	$	50,995	$	(456,717	)	$	695,711

~~Evergreen Agricultural Enterprises, Inc. (“Agriculture”).~~ -29-

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As used herein, the terms “ Company,” “we,” “us,” and similar terms collectively refer to Evergreen International Aviation, Inc. and its consolidated subsidiaries.


SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS - UNAUDITED
For the Three Months Ended May 31, 2005
(in thousands)


											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiary			Guarantors			Eliminations			Total

Net cash (used in) provided by		$	(46	)	$	(2,838	)	$	33,719		$	1,352		$	(859	)	$	(5,212	)	$	26,116
	operating activities

Cash flows from investing activities:
	Purchases of property, equipment,		-			(11	)		(19,633	)		-			(1,535	)		-			(21,179	)
	and overhauls
	Proceeds from disposal of property		-			-			538			-			-			-			538
	and equipment
	Notes receivables & other assets		-			(2,867	)		(1,276	)		(17	)		(375	)		5,212			677

Net cash provided by (used in)			-			(2,878	)		(20,371	)		(17	)		(1,910	)		5,212			(19,964	)
	investing activities

Cash flows from financing activities:
	Proceeds from long-term debt		-			-			-			-			355			-			355
	Payments on long-term debt		-			(5,315	)		(1,431	)		(1,335	)		-			-			(8,081	)
	Other financing sources		46			9,864			(12,275	)		-			2,365			-			-

Net cash provided by (used in)			46			4,549			(13,706	)		(1,335	)		2,720			-			(7,726	)
	financing activities

Net (decrease) increase in cash			-			(1,167	)		(358	)		-			(49	)		-			(1,574	)

Cash, beginning of period			-			1,228			1,390			-			100			-			2,718

	Cash, end of period	$	-		$	61		$	1,032		$	-		$	51		$	-		$	1,144

~~General information about us can be found at www.evergreenaviation.com/corp.html. Our annual reports on Form 10~~-~~K, quarterly reports on Form 10~~30-Q, and current reports on Form 8-K, as well as any amendments to those reports, are available free of charge through our website as soon as reasonably practicable after we file such reports with, or furnish them to, the SEC. No information on our website is incorporated by reference into this Quarterly Report on Form 10-Q.

Table of Contents


SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS - UNAUDITED
For the Three Months Ended May 31, 2004
(in thousands)


											Non-
									100%			Wholly
									Owned			Owned
			Holdings			Evergreen			Guarantor			Guarantor			Non						Consolidated
			(Parent)			(Issuer)			Subsidiaries			Subsidiary			Guarantors			Eliminations			Total

Net cash (used in) provided by		$	2,248		$	(14,030	)	$	10,235		$	1,445		$	(31	)	$	2,454		$	2,321
	operating activities

Cash flows from investing activities:
	Purchases of property, equipment,		-			(10	)		(11,025	)		-			(325	)		-			(11,360	)
	and overhauls
	Proceeds from disposal of property		-			-			605			-			-			-			605
	and equipment
	Notes receivables & other assets		-			1,223			(573	)		(227	)		(9	)		(2,453	)		(2,039	)

Net cash provided by (used in)			-			1,213			(10,993	)		(227	)		(334	)		(2,453	)		(12,794	)
	investing activities

Cash flows from financing activities:
	Proceeds from long-term debt		-			222,247			-			-			-			-			222,247
	Payments on long-term debt		-			(205,553	)		(3,149	)		-			(147	)		-			(208,849	)
	Other financing sources		(2,248	)		1,059			2,192			(1,218	)		216			(1	)		-

Net cash provided by (used in)			(2,248	)		17,753			(957	)		(1,218	)		69			(1	)		13,398
	financing activities

Net (decrease) increase in cash			-			4,936			(1,715	)		-			(296	)		-			2,925

Cash, beginning of period			-			1,002			2,723			-			346			-			4,071

	Cash, end of period	$	-		$	5,938		$	1,008		$	-		$	50		$	-		$	6,996

~~CONSOLIDATED RESULTS OF OPERATIONS Results of Operations for the Three Months Ended November 30, 2004 and November 30, 2003~~ -31-

Table of Contents

~~The~~ITEM ~~following~~2. ~~table~~MANAGEMENT'S ~~sets~~DISCUSSION ~~forth~~AND ~~the~~ANALYSIS ~~results~~OF ofFINANCIAL ~~operations~~CONDITION ~~with~~AND ~~respect~~RESULTS toOF ~~our consolidated reportable segments for the three months ended November 30, 2004 and November 30, 2003:~~ OPERATIONS

~~RESULTS~~CAUTIONARY OFSTATEMENT ~~OPERATIONSUnaudited(in~~REGARDING ~~thousands)~~FORWARD-LOOKING STATEMENTS

				For the Three Months						2004 v. 2003
				ended November 30,						Increase (decrease)
				2004			2003			Increase		%
Operating revenue:
	Flight revenue		$	112,446		$	97,542		$	14,904		15.3	%
	Sales of aircraft, parts, and other assets			1,853			3,351			(1,498	)	(44.7	)
	Ground logistics services revenue			27,061			24,213			2,848		11.8
	Support services and other revenue			13,246			9,055			4,191		46.3
		Total operating revenue		154,606			134,161			20,445
Operating expenses:
	Flight costs			19,766			18,617			1,149		6.2
	Fuel			35,647			25,099			10,548		42.0
	Maintenance			19,322			18,490			832		4.5
	Aircraft and equipment			12,657			12,855			(198	)	(1.5	)
	Cost of sales of aircraft, parts, and other
		property and equipment		993			1,434			(441	)	(30.8	)
	Cost of ground logistics services			24,465			22,454			2,011		9.0
	Cost of support services and other			16,122			10,203			5,919		58.0
	Selling, general, and administrative expense			15,409			14,960			449		3.0
		Total operating expenses		144,381			124,112			20,269
		Income from operations		10,225			10,049			176
Other (expense) income
	Interest expense			(9,086	)		(8,796	)		(290	)	(3.3	)
	Other non-operating income, net			21			(63	)		84		133.3
Income before minority interest and income taxes				1,160			1,190			(30	)
	Minority interest			(325	)		(284	)		(41	)	(14.4	)
Income before income taxes				835			906			(71	)
	Income tax expense			(737	)		(453	)		(284	)	(62.7	)%
Net income			$	98		$	453		$	(355	)

This Quarterly Report on Form 10-Q 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 regard 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.

35 Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations. The risks and uncertainties to which our business is subject include, but are not limited to, those risks and uncertainties included under the heading "Risk Factors Relating to the Company" in our Annual Report on Form 10-K for the fiscal year ended February 28, 2005. Such risks and uncertainties include:

~~Operating~~• ~~Revenue~~ the financing agreements of Evergreen Aviation which include financial covenants that impose substantial restrictions upon us; • our access to additional financing; • volatility in aircraft values which may affect our ability to obtain financing secured by our aircraft; • the age of our aircraft fleet; • our dependence upon utilization of our Boeing 747 aircraft fleet to generate the majority of our flight revenue; • the price and availability of aircraft fuel; • our dependence upon revenue from the United States Air Force ("USAF") Air Mobility Command and the United States Postal Service ("U.S. Postal Service"); and • government regulation.

~~Total~~For ~~operating~~further ~~revenue~~information ~~for~~regarding the ~~three~~risks ~~months~~and ~~ended~~uncertainties ~~November~~associated 30with our business, ~~2004~~please ~~was~~see ~~$154.6~~the ~~million,~~Company's ~~which~~other ~~was~~reports aand ~~$20.4~~filings ~~million,~~with orthe ~~15.2%~~SEC, ~~increase~~including, ~~from~~but not ~~total~~limited ~~operating~~to, ~~revenues~~our ofAnnual ~~$134.2~~Report ~~million~~on Form 10-K for the ~~same~~fiscal ~~period~~year inended ~~2003~~February 28, 2005.

~~Flight~~Readers ~~Revenue~~of — this ~~Flight~~Quarterly ~~revenue~~Report on ~~from~~Form ~~the~~10-Q ~~operations~~are ofcautioned ~~Airlines~~not ~~and~~to ~~Helicopters~~place ~~accounted~~undue ~~for~~reliance ~~$112.4~~on ~~million,~~the orforward-looking ~~approximately~~statements ~~70.4%~~contained herein, ofwhich ~~our~~speak ~~total operating~~only ~~revenue~~as ~~for~~ of the ~~three~~date ~~months~~hereof. ~~ended~~We ~~November~~assume ~~30,~~no ~~2004.~~obligation ~~Compared~~ to ~~the~~publicly ~~same~~update ~~three~~or revise our forward-~~month~~looking ~~period~~statements included in ~~2003~~this report, whether weas ~~experienced~~ a ~~$14.9 million~~result ~~increase~~of innew ~~our~~information ~~flight~~future ~~revenue~~events or otherwise, except as required by law.

• Airlines — During the three-month period ended November 30, 2004, Airlines earned $104.1 million of flight revenue, as compared to $89.7 million during the three months ended November 30, 2003. As a result, flight revenue earned by Airlines during the three months ended November 30, 2004 increased $14.4 million from the same three-month period in 2003. The increase in Airlines’ flight revenue was primarily attributable to i) greater utilization of our Boeing 747 fleet for commercial air cargo flights out of Asia and ii) increases in contract prices due to pass-throughs of fuel price escalations.OVERVIEW

~~AMC~~ Evergreen ~~Contracts~~Holdings, —Inc. ~~Flight~~("Holdings") is ~~revenue~~the ~~earned~~holding ~~under~~company ~~AMC~~of ~~contracts~~Evergreen ~~decreased~~International $7Aviation, Inc.5 ~~million~~("Aviation"), ~~for~~a ~~the~~leading ~~three~~provider ~~months~~of ~~ended~~integrated ~~November~~air cargo ~~30,~~transportation ~~2004,~~and asaviation ~~compared~~support toservices. ~~the~~Holdings, ~~same~~Aviation, ~~three-month~~and ~~period~~their inconsolidated ~~2003.~~subsidiaries A(collectively, ~~shift~~"Company", "we", in"us", ~~utilization~~or of "our") ~~Boeing~~provide ~~747~~global ~~fleet~~air ~~capacity~~cargo ~~from~~shipping, ~~AMC~~ground ~~contracts~~handling toand ~~commercial~~logistics ~~air~~services, ~~cargo~~helicopter ~~flights~~transportation ~~out~~services, small ofaircraft ~~Asia~~charters, ~~accounted~~and ~~for~~aircraft amaintenance ~~$15.2~~and ~~million~~repair ~~decline~~services. inOur ~~revenue~~diverse ~~from~~fleet ~~AMC~~of ~~contracts.~~commercial ~~However,~~aircraft weand ~~recognized~~helicopters agives ~~$7.7~~us the ~~million~~capability ~~increase~~and inflexibility ~~flight~~to ~~revenue~~provide as a ~~result~~wide array of ~~the~~air ~~better~~cargo ~~utilization~~ and ~~positioning~~transportation ofservices to our ~~aircraft on one-way flights~~customers.

~~Commercial Contracts — During the three~~-~~month period ended November 30, 2004, flight revenue from our commercial customers increased by $21.9 million as compared to the same three~~32-~~month period in 2003. Revenue earned from our Boeing 747 commercial flights increased $24.0 million, while revenue earned from our DC-9 commercial flights decreased by $2.1 million.~~

Table of Contents

~~Boeing~~BUSINESS ~~747 Fleet Commercial Contract Revenue — Increased utilization of our Boeing 747 fleet for commercial air cargo flights out of Asia resulted in a $24.0 million increase in flight revenues.~~OVERVIEW

~~DC-9~~Business Fleet Commercial Contract Revenue — The completion of a U.S. Postal Service contract and the completion of the DHL air freight services contract (see "Aircraft and Equipment Expense - Airlines" below) resulted in a $2.1 million decrease in revenue from our DC-9 commercial flights.Segments

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

~~The~~• ~~following~~Evergreen ~~table~~International ~~compares~~Airlines, ~~the~~Inc. ~~number~~("Airlines") ofprovides ~~block~~air ~~hours~~cargo ~~flown~~services byfor ~~our~~both international and domestic markets; • Evergreen Aviation Ground Logistics Enterprise, Inc. ("EAGLE") provides full-service aviation ground handling and logistics services, including mail handling, aviation hub management, aircraft ~~during~~handling, cargo handling, ground system management, ground equipment maintenance, ground equipment sales and leasing, aircraft line maintenance, terminal services, aircraft de-icing and washing, check-in and ticketing, baggage acceptance and seat selection, and passenger cabin cleaning; • Evergreen Helicopters, Inc. ("Helicopters") provides helicopter and small fixed-wing aircraft services throughout the ~~three~~world ~~months~~in ~~ended~~connection ~~November~~with 30activities such as forest fire fighting, ~~2004~~health toservices, aerial spraying, heavy lift construction, law enforcement, helicopter logging, petroleum support services, search and rescue, peacekeeping and relief support, helicopter skiing, and agriculture; • Evergreen Air Center, Inc. ("the ~~number~~Air ofCenter" ~~block~~or ~~hours~~"Air ~~flown~~Center") ~~during~~an unlimited Class IV airframe repair station certified by the ~~same~~FAA, ~~three-month~~performs ~~period~~aircraft inmaintenance, ~~2003~~repair and overhaul services, and aircraft storage services; • Evergreen Aircraft Sales and Leasing Co. (“EASL”) selectively buys, sells, leases, and brokers commercial aircraft, helicopters, and aircraft spare parts; and • Evergreen Agricultural Enterprises, Inc. (“Agriculture”) conducts farming operations, nursery and horticulture operations, and delivers nursery and processed agricultural products to wholesale and retail customers.

~~Block~~Trust ~~Hour~~Created ~~ComparisonFor~~February ~~the Three Months Ended November 30~~25, ~~2004 and November 30, 2003~~1986

					Increase
			November 30,	November 30,	(decrease)
			2004	2003	from 2003
Boeing 747 Hours
	AMC contracts		5,394	6,698	(1,304	)
	Other All-In contracts		2,056	536	1,520
		Total Boeing 747 hours	7,450	7,234	216
DC-9 Block Hours
	All-In contracts		-	93	(93	)
	ACMI contracts		-	843	(843	)
		Total DC-9 hours	-	936	(936	)
		Total block hours	7,450	8,170	(720	)

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 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.

~~• Helicopters — During the three months ended November 30, 2004, Helicopters earned $8.3 million of flight revenue, as compared to $7.8 million for the same three~~-month period in 2003, resulting in a $0.5 million increase in revenues. Flight revenue from heavy lift and fire suppression contracts decreased by $1.7 million. However, revenue from charters increased by $2.1 million and revenue from our Texas33-~~based flight operations increased by $0.1 million.~~

Table of Contents

~~Sales~~Controlling ofShareholder ~~Aircraft, Parts,~~ and ~~Other~~Related Assets — Revenue from sales of aircraft, parts, and other assets was $1.9 million for the three months ended November 30, 2004, as compared to $3.4 million for the three months ended November 30, 2003, resulting in a $1.5 million decrease in revenue. The decrease in revenue was primarily attributable to a decline in sales of aircraft parts and other assets due to decreased demand.Parties

~~During~~Mr. ~~the~~Delford ~~three~~M. ~~months ended November 30~~Smith, ~~2004,~~our ~~EASL sold two Bell 214ST helicopters to a third party for $5.0 million. EASL's cost~~founder ~~for~~and the ~~helicopters~~chairman ~~was~~of ~~also~~our ~~$5.0~~board ~~million~~of directors, ~~thus~~has ~~EASL~~control, ~~did~~either ~~not~~directly ~~recognized~~or ~~any~~indirectly, ~~profit~~over ~~from the sale~~85.1% ~~Furthermore,~~of ~~because~~ the ~~third~~outstanding ~~party~~shares ~~immediately~~of ~~leased~~Holdings ~~the~~common ~~helicopters~~stock. ~~back~~In ~~to Helicopters~~addition, ~~both the $5~~Mr.0 ~~million~~Smith ~~sale~~owns ~~and~~or ~~the~~controls ~~$5.0~~other ~~million~~entities, ~~cost~~or ofdoes ~~sales~~business ~~were eliminated~~under ~~through~~other ~~the~~trade ~~Company's~~names, including, ~~consolidation~~but ~~process~~not ~~for~~limited ~~financial~~to, ~~reporting~~the ~~purposes.~~following:

37• Ventures Acquisition Company LLC ("Ventures Acquisition Company"); • Ventures Holding, Inc. ("Ventures Holding"); • DMS Properties; and • Greenpatch Farms.

~~Ground~~From ~~Logistics~~time ~~Services Revenue~~to —time, ~~EAGLE~~we ~~earned~~engage in ~~$27.1~~transactions ~~million~~with ofMr. ~~revenue~~Smith ~~from~~and ~~ground logistics services during~~ the ~~three~~entities ~~months~~owned ~~ended~~by, ~~November~~or ~~30,~~controlled ~~2004~~by, asMr. ~~compared to $24~~Smith.2 ~~million~~See ~~for~~"Note ~~the~~11 ~~three~~- ~~months~~Related ~~ended~~Party ~~November~~Transactions" ~~30, 2003, resulting~~ in Item a1 ~~$2.9~~of ~~million~~this ~~increase~~quarterly ~~in revenue~~ report.

WeRECENT ~~expanded~~ACCOUNTING the volume of ground logistics services to British Airways, which resulted in a $1.6 million increase in revenue. We also increased the volume of ground logistics services provided to our other domestic and foreign commercial customers, resulting in a $1.3 million increase in revenue.PRONOUNCEMENT

~~Support~~In ~~Services~~December ~~and~~2003, ~~Other~~the Financial ~~Revenue~~Accounting —Standards ~~Support~~Board ~~services~~(“FASB”) ~~and~~issued ~~other~~FASB ~~revenue~~Interpretation ~~was $13~~No.2 ~~million~~46 ~~for~~(revised ~~the~~December ~~three~~2003), ~~months~~“Consolidation ~~ended~~of ~~November~~Variable Interest ~~30,~~Entities ~~2004,~~- asAn ~~compared~~Interpretation $9of ARB No.1 ~~million~~51” ~~for~~(“FIN 46-R”). FIN 46-R addresses how a company should apply the ~~three~~provisions ~~months~~of ~~ended~~Accounting ~~November~~Research 30Bulletin No. 51, ~~2003~~“Consolidated Financial Statements,” ~~resulting~~to incertain avariable $4interest entities.1 In ~~million~~particular, ~~increase~~FIN 46-R will apply in ~~revenue.~~those Ofsituations in which i) the ~~$4.1~~company ~~million~~does ~~increase,~~not ~~$3.6~~have ~~million~~a iscontrolling financial interest in the ~~attributable~~variable tointerest anentity ~~increase~~or inii) the ~~level~~variable ofinterest ~~aircraft~~entity ~~maintenance~~does ~~services~~not ~~provided~~have bysufficient equity at risk for the ~~Air~~variable ~~Center~~interest entity to ~~third~~finance ~~parties. An~~its activities without additional ~~increase~~ ofsubordinated ~~approximately~~financial $1support.3 ~~million~~In isthose ~~attributable~~situations, toFIN an46-R ~~increased~~requires ~~volume~~existing unconsolidated ofvariable ~~fuel~~interest ~~sales~~entities ~~and~~to ~~other~~be ~~aircraft~~consolidated ~~support~~by ~~services~~their primary ~~provided~~beneficiaries toif ~~third~~the variable interest entities do not effectively disperse risks among the parties involved.

The ~~increases~~Company ~~in aircraft support services revenue were partially offset by a $0.8 million decrease in Agriculture revenue. The~~adopted ~~decrease~~FIN in46-R ~~Agriculture~~as ~~revenue was partially attributable to a decrease in revenue from sales~~ of ~~hazelnuts~~March ~~during the three months ended November 30~~1, ~~2004~~2005. asIn ~~compared~~connection towith the ~~three~~adoption ~~months~~of ~~ended~~FIN ~~November 30~~46-R, ~~2003. During~~management ~~the~~completed ~~prior~~an ~~fiscal~~assessment ~~year,~~to ~~Agriculture~~determine ~~purchased~~if ~~and then~~there ~~resold~~were ~~the~~any ~~hazelnut~~variable ~~crop~~interest ofentities ~~Greenpatch~~("VIE" ~~Farms,~~or an"VIEs") ~~entity~~that ~~which~~the isCompany ~~wholly~~was ~~owned~~required byto Mrconsolidate. ~~Smith,~~Management's ~~the~~assessment ~~controlling~~included ~~shareholder~~an evaluation of ~~the Company.~~leases, ~~This~~consisting ~~resale~~primarily of ~~the~~building ~~Greenpatch~~and ~~Farms~~aircraft ~~hazelnut~~leases, ~~crop~~between ~~generated~~the ~~sales~~Company ~~revenue~~and ~~for~~certain ~~Agriculture~~related ~~during~~party ~~the three months ended~~entities ~~November 30~~including, ~~2003. However,~~but ~~during the current fiscal year, Agriculture did~~ not ~~purchase~~limited ~~the hazelnut crop~~to, ~~but~~Ventures ~~instead~~Holding ~~merely served~~and asVentures ~~the~~Acquisition ~~broker~~Company. ~~for~~As ~~the~~a ~~sale~~result of the ~~crop by Greenpatch Farms. Thus~~assessment, ~~Agriculture~~management determined ~~did~~that ~~not~~there ~~record~~were ~~revenue~~no ~~for~~VIEs ~~sales~~that of the ~~Greenpatch~~ ~~Farms~~Company ~~hazelnut~~was ~~crop~~required ~~during~~to ~~the~~consolidate ~~three~~for ~~months~~the period ended ~~November~~May 3031, ~~2004~~2005.

~~The~~As ~~decrease~~discussed in the section "Landsbanki Loan Agreement" in ~~Agriculture~~"Note 4 - Long-Term Debt Obligations" below, on July 11, 2005, Holdings, as Guarantor, and Ventures Acquisition Company, as Borrower, entered into a $32.0 million loan agreement with Landsbanki Íslands hf., as Lender, for the purpose of financing Ventures Acquisition Company's ~~revenue~~purchase ~~was~~of ~~also~~two ~~partially~~Boeing ~~attributable~~747 aircraft. As discussed in the section "Lease Transactions" in "Note 11 - Related Party Transactions" below, the two Boeing 747 aircraft will be leased by Ventures Acquisition Company to ~~decreased~~Airlines. ~~sales~~Management ofis ~~processed~~currently ~~agricultural~~evaluating this ~~products~~transaction ~~due~~pursuant to athe requirements of FIN 46-R, and believes that this transaction ~~change~~could result in ~~marketing~~a ~~strategy~~VIE transaction which may require consolidation by the Company.

~~Operating~~Available ~~Expenses~~Information

~~Total~~General ~~operating~~information ~~expenses~~about ~~for the~~us ~~three~~can ~~months~~be ~~ended~~found ~~November~~at 30www.evergreenaviation.com. Our Annual Reports on Form 10-K, ~~2004~~Quarterly ~~were~~Reports ~~$144.4~~on ~~million~~Form 10-Q, ~~which~~Current Reports ~~was~~on aForm ~~$20~~8-K, and amendments to those reports are available free of charge on our website at www.3evergreenaviation.com/invr.html ~~million~~as soon as reasonably practicable after such reports are filed with, or ~~16.4%~~furnished to, the ~~increase~~SEC. ~~from~~Information ~~$124.1~~on ~~million~~our ~~for~~website ~~the~~is ~~same~~not ~~three~~incorporated into this Form 10-~~month~~Q ~~period~~or inour ~~2003~~other securities filings, and is not a part of such filings.

Flight Costs — Flight costs were $19.7 million for the three months ended November 30, 2004, as compared to $18.6 million for the three months ended November 30, 2003, resulting in an increase of $1.1 million. -34-

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•RESULTS ~~Airlines~~OF —AOPERATIONS ~~$0.1~~FOR ~~million~~THE ~~increase~~THREE inMONTHS ~~flight~~ENDED ~~costs~~MAY ~~for~~31, ~~Airlines~~2005 AS ~~was~~COMPARED ~~primarily~~TO ~~driven~~THE byTHREE ~~the~~MONTHS ~~increased~~ENDED ~~travel~~MAY ~~costs that resulted from an increase in the number of commercial air cargo flights flown by us from Asia~~31, ~~as partially offset by reductions in both European overflys and a decrease in flight costs due to the completion of the DHL air freight services contract.~~2004

38 The following table sets forth the results of operations with respect to our consolidated reportable segments for the three months ended May 31, 2005 and May 31, 2004.

The increase in the number of our commercial air cargo flights from Asia resulted in a corresponding $0.9 million increase in travel and payroll expenses for flight crews. However, a decrease in the number of flights that we flew to and through Europe reduced our flight costs by $0.4 million. In addition, we recognized a $0.4 million reduction in flight costs due to the completion of the DHL air freight services contract. See also "Aircraft and Equipment Expense - Airlines" below.


				Three Months Ended May 31,

*(in millions - UNAUDITED)*				2005			2004			Change

Operating revenues:
	Flight revenue		$	118.5		$	87.3		$	31.2
	Sales of aircraft, parts and other property and equipment			11.2			2.3			8.9
	Ground handling and logistics services revenue			29.8			25.6			4.2
	Support services and other revenue			16.8			11.0			5.8

		Total operating revenues		176.3			126.2			50.1

Operating expenses:
	Flight costs			19.4			17.5			1.9
	Fuel			39.7			25.4			14.3
	Maintenance			17.9			17.7			0.2
	Aircraft and equipment			12.4			12.1			0.3
	Cost of sales of aircraft, parts, and other property and equipment			8.9			1.0			7.9
	Cost of ground handling and logistics services			24.8			21.8			3.0
	Cost of support services and other support costs			18.6			10.7			7.9
	Selling, general, and administrative expenses			18.6			17.5			1.1

		Total operating expenses		160.3			123.7			36.6

		Income from operations		16.0			2.5			13.5

Non-operating income (expense):
	Interest expense			(9.4	)		(9.0	)		(0.4	)
	Other non-operating income (expense), net			0.5			(3.6	)		4.1

Income (loss) before minority interest and income taxes				7.1			(10.1	)		17.2

		Minority interest		(0.3	)		(0.3	)		-

Income (loss) before income taxes				6.8			(10.4	)		17.2

		Income tax (expense) benefit		(2.8	)		3.7			(6.5	)

		Net income (loss)	$	4.0		$	(6.7	)	$	10.7

~~Fuel~~We ~~Expense~~recorded ~~— Fuel~~net ~~expense~~income ~~was~~ of $354.60 million for the three months ended ~~November~~May 3031, ~~2004~~2005, as compared to a net loss of $256.17 million ~~for~~during the three months ended ~~November~~ ~~30,~~May ~~2003~~31, ~~resulting in a $10~~ 2004.~~5 million increase in fuel expense.~~

~~• Airlines — Fuel expense for Airlines increased by $10.7 million. Industry~~-wide rising prices for aviation fuel accounted for $9.8 million of the increase in fuel expense. In addition, fuel consumption increased by $0.9 million due to an increase in the number of block hours flown by Airlines' Boeing 747 aircraft.35-

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• Helicopters — Helicopters experienced a $0.2 million decrease for helicopter fuel costs. The decrease in fuel costs was primarily attributable to a decrease in the volume of helicopter fuel sold by us to third parties, as partially off-set by industry-wide increases in aviation fuel prices.

Maintenance Expense — Our expense for aircraft maintenance was $19.3 million for the three months ended November 30, 2004, as compared to $18.5 million for the three months ended November 30, 2003, resulting in an increase of $0.8 million.

• Airlines — Maintenance expense for aircraft increased by $1.7 million, primarily as a result of $2.5 million of maintenance expense incurred in connection with the scheduled expiration of a lease for a DC-9 aircraft. For further information on the leased DC-9 aircraft and the scheduled expiration of the aircraft lease, see "Note 4 - Expiration of Aircraft Lease" in Part I, Item I of this Quarterly Report.

Partially offsetting the $2.5 million increase, amortization expense for capitalized engine overhaul costs declined $0.5 million and amortization expense for capitalized airframe maintenance costs decreased by $0.3 million as we continue to use more leased engines.

• Helicopters —The $0.9 million increase for helicopter maintenance expense is primarily attributable to additional start-up and configuration costs that were incurred in order to prepare our fleet for current year contracts.

Aircraft and Equipment Expense — Aircraft and equipment expense was $12.7 million for the three months ended November 30, 2004, as compared to $12.9 million for the three months ended November 30, 2003, resulting in a decrease of $0.2 million of expense.

• Airlines — Aircraft and equipment expense for Airlines decreased by $0.7 million for the three months ended November 30, 2004, as compared to the three months ended November 30, 2003.

Airlines was able to reduce its aircraft costs by $1.4 million as a result of i) a $0.9 million reduction in engine rental expense due to lower lease rates, ii) a $0.2 million reduction in aircraft insurance costs, and iii) a $0.3 reduction in depreciation of DC-9 aircraft components.

However, during the three months ended November 30, 2004, Airlines' aircraft and equipment expense increased by $0.7 million due to the impairment expense of a DC-9 aircraft that had been utilized in the DHL air freight services contract. For further information on the impairment expense, see "Note 3 - Impairment of Assets " in Part I, Item 1 of this Quarterly Report.

• Helicopters — Aircraft and equipment expense for Helicopters during the three months ended November 30, 2004 was $2.9 million, as compared to $2.4 million for the three months ended November 30, 2003, resulting in an increase of $0.5 million. The $0.5 million increase is primarily attributable to increased aircraft rental and insurance costs due to an increase in the number of our leased helicopters.

Cost of Sales of Aircraft, Parts, and Other Property — Cost of sales of aircraft, parts, and other property and equipment was $1.0 million for the three months ended November 30, 2004, as compared to $1.4 million for the three months ended November 30, 2003, resulting in a $0.4 million decrease in cost of sales. The $0.4 million decrease in cost of sales was primarily driven by lower inventory costs on sales of aircraft parts.

During the three months ended November 30, 2004, EASL sold two Bell 214ST helicopters to a third party for $5.0 million. EASL's cost for the helicopters was also $5.0 million, thus EASL did not recognized any profit from the sale. Furthermore, because the third party immediately leased the helicopters back to Helicopters, both the $5.0 million sale and the $5.0 million cost of sales were eliminated through the Company's consolidation process for financial reporting purposes.

Cost of Ground Logistics Services — Cost of ground logistics services was $24.5 million for the three months ended November 30, 2004, as compared to $22.5 million for the three months ended November 30, 2003, resulting in a $2.0 million increase in expense.

Labor expenses increased by $1.9 million primarily as a result of the expansion of ground logistics services provided by us to British Airways. Expenses for equipment and supplies also increased by $1.5 million due to expansion of services for British Airways and other new and existing customers.

During the three months ended November 30, 2004, EAGLE began recording its allocated share of corporate expenses from Holdings as part of EAGLE's selling, general and administrative expenses. Previously, the allocation of corporate expenses had been recorded as part of cost of ground logistics services. This reclassification of allocated corporate expenses from cost of ground logistics services to selling, general and administrative services resulted in a $1.4 decrease in the cost of ground logistics services during the three months ended November 30, 2004 as compared to the same three month period in 2003.

Other Support Costs — Other support costs were approximately $16.2 million for the three months ended November 30, 2004, as compared to $10.2 million for the same three-month period in 2003, resulting in an increase of $6.0 million in support costs. Of the increase, $3.7 million was attributable to an increase in support costs at the Air Center, $2.4 million was attributable to increased landing fees and ground handling expenses for Airlines, and $0.6 million was attributable to a reclassification by EASL of certain selling, general and administrative expenses as other support costs.

The increases in other support costs were partially offset by a $0.7 million decrease in Agriculture's cost of goods sold. The decrease in Agriculture's cost of goods sold was partially attributable to a decrease in sales of hazelnuts during the three months ended November 30, 2004 as compared to the three months ended November 30, 2003. During the prior fiscal year, Agriculture purchased and then re-sold the hazelnut crop of Greenpatch Farms, an entity which is wholly owned by Mr. Smith, the controlling shareholder of the Company. This resale of the Greenpatch Farms hazelnut crop generated cost of goods sold for Agriculture during the three months ended November 30, 2003. However, during the current fiscal year, Agriculture did not purchase the hazelnut crop, but instead merely served as the broker for the sale of the crop by Greenpatch Farms. Thus, because Agriculture did not purchase and resell the Greenpatch Farms hazelnut crop during the current fiscal year, Agriculture did not record any corresponding cost of goods sold.

The decrease in Agriculture's revenue was also partially attributable to decreased sales of processed agricultural products due to a change in marketing strategy.

Selling, General, and Administrative — Total selling, general, and administrative expense for the three months ended November 30, 2004 was $15.4 million, as compared to $15.0 million for the three months ended November 30, 2003, resulting in a $0.4 million increase in expense.

Of the increase, $1.4 million was attributable to a reclassification by EAGLE of allocated corporate expenses from cost of ground logistics services to selling, general and administrative services (see "Cost of Ground Logistics Services" above). The increase that is attributable to the EAGLE reclassification was partially offset by i) a $0.6 million reclassification by EASL of certain selling, general and administrative expenses as other support costs and ii) a $0.4 million reduction of payroll expenses, professional fees, and travel expenses.

Interest Expense

Interest expense for the three months ended November 30, 2004 was $9.1 million, as compared to interest expense of $8.8 million for the three months ended November 30, 2003. The $0.3 million increase in interest expense is primarily attributable to higher debt balances and increases in interest rates being charged by the Company’s lenders.

Income Tax Expense

Our income tax expense for the three months ended November 30, 2004 was $0.7 million, as compared to an income tax expense of $0.5 million for the three months ended November 30, 2003. The increase in income tax expense was due primarily to a change in the Company's effective tax rate for the three months ended November 30, 2004, as compared to the same period in 2003. The effective tax rate, on an annualized basis for the three months ended November 30, 2004 and November 30, 2003 was 78.8% and 50.0%, respectively. 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.

Results of Operations for the Nine Months Ended November 30, 2004 and November 30, 2003

The following table sets forth the results of operations with respect to our consolidated reportable segments for the nine months ended November 30, 2004 and November 30, 2003:

RESULTS OF OPERATIONSUnaudited(in thousands)

				For the Nine Months						2004 v. 2003
				ended November 30,						Increase (decrease)
				2004			2003			Increase		%
Operating revenue:
	Flight revenue		$	302,183		$	304,430		$	(2,247	)	(0.7	)%
	Sales of aircraft, parts, and other assets			9,189			11,390			(2,201	)	(19.3	)
	Ground logistics services revenue			81,558			74,450			7,108		9.5
	Support services and other revenue			33,477			29,032			4,445		15.3
		Total operating revenue		426,407			419,302			7,105
Operating expenses:
	Flight costs			55,749			58,556			(2,807	)	(4.8	)
	Fuel			89,998			76,283			13,715		18.0
	Maintenance			55,252			52,238			3,014		5.8
	Aircraft and equipment			36,986			37,810			(824	)	(2.2	)
	Cost of sales of aircraft, parts, and other			5,127			8,290			(3,163	)	(38.2	)
		property and equipment
	Cost of ground logistics services			72,250			66,660			5,590		8.4
	Cost of support services and other			37,454			28,746			8,708		30.3
	Selling, general, and administrative expense			47,510			52,980			(5,470	)	(10.3	)
		Total operating expenses		400,326			381,563			18,763
		Income from operations		26,081			37,739			(11,658	)
Other (expense) income
	Interest expense			(26,832	)		(27,268	)		436		1.6
	Other non-operating (expense) income, net			(3,450	)		4,258			(7,708	)	(181.0	)
(Loss) income before minority interest and income taxes				(4,201	)		14,729			(18,930	)
	Minority interest			(948	)		(780	)		(168	)	(21.5	)
(Loss) income before income taxes				(5,149	)		13,949			(19,098	)
	Income tax benefit (expense)			973			(5,597	)		6,570		117.4	%
Net (loss) income			$	(4,176	)	$	8,352		$	(12,528	)

Operating Revenue

Total operating ~~revenue~~revenues for the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005 ~~was~~were $~~426~~176.43 million, which was a $750.1 million, or 139.7%, increase from total operating revenues of $~~419~~126.3 2 million for the ~~same~~three ~~period~~months inended ~~2003~~May 31, 2004.

Flight Revenue — Flight revenue ~~from the operations of Airlines and Helicopters~~ accounted for $~~302~~118.25 million, or approximately 7067.12%, of our total operating revenue ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~ 2005. Compared to the ~~same~~three ~~nine-month~~months ~~period~~ended inMay ~~2003~~31, 2004, we experienced a $231.2 million, ~~decrease~~or 35.7%, increase in our flight revenue.

• Airlines — During the ~~nine-month~~three ~~period~~months ended ~~November~~May 3031, ~~2004~~2005, Airlines ~~earned~~generated $~~271~~105.80 million of flight revenue, as compared to $~~274~~79.18 million during the ~~nine~~three months ended ~~November~~May 3031, ~~2003~~2004, resulting in a ~~decrease~~$25.2 ofmillion increase. The increase was primarily attributable to a $221.30 million ~~decrease~~increase in revenues from USAF Air Mobility Command contracts.

~~AMC~~USAF Air Mobility Command Contracts — Flight revenue earned by Airlines under ~~AMC~~USAF Air Mobility Command contracts ~~decreased~~increased by $3421.70 million ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, as compared to the ~~same~~three ~~nine-month~~months ~~period~~ended May 31, 2004. During the three months ended May 31, 2004, our revenues from USAF Air Mobility Command contracts had declined because the USAF Air Mobility Command had shifted away from the use of commercial aircraft in ~~2003~~favor of using organic military transport for movements of cargo directly into Iraq. After May 31, 2004, the USAF Air Mobility Command shifted back to utilizing some commercial aircraft for movements of cargo.

ACommercial ~~decision~~Contracts by— During the ~~U.S.~~three ~~Air~~months ~~Force~~ended ~~Air~~May ~~Mobility~~31, ~~Command~~2005, toflight ~~shift~~revenue ~~away~~ from ~~the~~our ~~use of~~ commercial ~~aircraft~~customers inincreased ~~favor~~by ~~of using organic military transport aircraft for movements of cargo directly into Iraq accounted for~~ $124.32 million ofas ~~the~~compared ~~decline in revenue from our AMC contracts. A reduction in aircraft availability due~~ to ~~periodic~~the ~~maintenance~~three ~~and~~months ~~enhancement~~ended ~~modifications~~May ~~accounted~~31, ~~for an additional $19~~2004.4 ~~million~~Increased ~~reduction in revenue. Also, a shift in the~~ utilization of our Boeing 747 fleet ~~capacity~~for ~~from AMC contracts to~~ commercial ~~air cargo~~ flights out of Asia accounted for a $156.2 million ~~decline~~increase in commercial flight revenue. ~~from~~However, ~~AMC~~those ~~contracts.~~increases Inwere ~~addition,~~partially offset by a $0.2.0 million ~~of the~~ decrease in flight revenue ~~was~~from our DC-9 fleet due to athe ~~reduction~~completion, induring ~~negotiated~~our ~~rates~~previous onfiscal ~~AMC~~year, ~~contracts~~of an air cargo contract with DHL.

~~Partially~~• ~~offsetting~~Helicopters ~~these~~— ~~decreases~~During the three months ended May 31, we2005, ~~recognized~~Helicopters agenerated $1213.4 million ~~increase~~of in flight revenue, ~~due~~as compared to i)$7.5 ~~better~~million ~~utilization~~during ~~and~~the ~~positioning~~three ofmonths ~~our~~ended ~~aircraft~~May on31, ~~one-way~~2004, ~~flights~~resulting ~~and~~in ~~ii)~~a ~~increases~~$5.9 million increase in ~~contract~~revenue. ~~prices~~Of ~~due~~the increase, $3.9 million was attributable to ~~pass~~new service contracts with the United Nations and additional long-~~throughs~~term contracts with the United States Navy. The remaining increase of ~~fuel~~$1.9 ~~price~~million ~~escalations~~was attributable to increased utilization of the Sikorsky S-64 "Skycrane" helicopter, particularly for construction and air-lift services.

~~Commercial Contracts — During the nine~~-~~month period ended November 30, 2004, flight revenue from our commercial customers increased by $32.4 million as compared to the same nine~~36-~~month period in 2003. Revenue earned from our Boeing 747 commercial flights increased $38.8 million, while revenue earned from our DC-9 commercial flights decreased by $6.4 million.~~

Table of Contents

~~Boeing~~ Sales ~~747~~of ~~Fleet~~Aircraft, ~~Commercial~~Parts, and ~~Contract~~Other ~~Revenue~~Property —and ~~Increased~~Equipment ~~utilization~~— ofRevenue ~~our~~from ~~Boeing~~sales ~~747~~of ~~fleet~~aircraft, ~~for~~parts, ~~commercial~~and ~~flights~~other ~~out~~property ofand ~~Asia~~equipment ~~resulted~~was ~~in an~~ $4211.4 2 million ~~increase~~during inthe ~~flight~~three ~~revenue.~~months ~~However,~~ended ~~the~~May ~~completion~~31, of2005, aas ~~Finnair~~compared ~~contract prior~~ to ~~the beginning of the current fiscal year resulted in a~~ $32.63 million ~~decrease in revenue~~ during the ~~nine~~three months ended ~~November~~May 3031, 2004, asresulting in ~~compared~~an to$8.9 ~~the~~million, ~~same~~or ~~nine-month~~387.0%, ~~period~~increase in ~~2003~~sales revenue.

43 Approximately $7.6 million of the increase in sales revenue was primarily attributable to the following sales by our EASL segment to Ventures Acquisition Company during the three months ended May 31, 2005:

DC-9 Fleet Commercial Contract Revenue — The completion of a U.S. Postal Service contract and the completion of the DHL contract (see "Aircraft and Equipment Expense - Airlines" below) resulted in a $6.4 million decrease in revenue from our DC-9 commercial flights.

	•	the sale of two Aerospatiale Model SA 330J rotor-wing aircraft, with corresponding aircraft parts (collectively, the "Puma Aircraft") for an aggregate sales price of $5.0 million; and

	•	the sale of a Sikorsky CH-54 rotor-wing aircraft, with corresponding aircraft parts (collectively, the "CH-54 Aircraft") for an aggregate sales price of $2.4 million.

~~The~~Because ~~following~~the ~~table~~sales ~~compares~~prices of the Puma ~~number~~Aircraft ofand ~~block~~the ~~hours~~CH-54 ~~flown~~Aircraft bywere ~~our~~the ~~aircraft~~same ~~during~~as ~~the~~EASL's ~~nine~~inventory ~~months~~costs ~~ended~~for ~~November~~the 30aircraft, ~~2004~~EASL todid not recognize any profit from the ~~number~~sales. ofVentures ~~block~~Acquisition ~~hours~~Company ~~flown~~will ~~during~~ lease the ~~same~~Puma ~~nine~~Aircraft and the CH-~~month~~54 ~~period~~Aircraft into Helicopters ~~2003~~under three-year lease agreements. See "Note 11 - Related Party Transactions - Sale and Lease of Aircraft" under Item 1 of this quarterly report.

~~Block~~ The ~~Hour~~remaining ~~ComparisonFor~~$1.3 ~~the~~million increase ~~Nine~~in ~~Months~~sales ~~Ended~~revenue ~~November~~was 30primarily attributable to increased sales of aircraft hulls, ~~2004~~engines, and ~~November~~engine ~~30,~~parts ~~2003~~in our Air Center segment.

					Increase
			November 30,	November 30,	(decrease)
			2004	2003	from 2003
Boeing 747 Hours
	AMC contracts		17,005	21,019	(4,014	)
	Other All-In contracts		4,037	1,475	2,562
		Total Boeing 747 hours for All-In contracts	21,042	22,494	(1,452	)
	ACMI contracts		146	9	137
		Total Boeing 747 hours	21,188	22,503	(1,315	)
DC-9 Block Hours
	All-In contracts		-	1,150	(1,150	)
	ACMI contracts		1,512	2,516	(1,004	)
		Total DC-9 hours	1,512	3,666	(2,154	)
		Total block hours	22,700	26,169	(3,469	)

Ground Handling and Logistics Services Revenue — Our EAGLE segment generated $29.8 million of revenue from ground handling and logistics services during the three months ended May 31, 2005, as compared $25.6 million during the three months ended May 31, 2004, resulting in a $4.2 million, or 16.4%, increase in revenue.

•Commercial ~~Helicopters~~Customers. —An ~~During~~increase ~~the~~in ~~nine~~volume ~~months~~of ~~ended~~services ~~November~~provided ~~30,~~by ~~2004,~~EAGLE ~~Helicopters~~to ~~earned~~its ~~$30.4~~domestic ~~million~~and ofinternational ~~flight~~commercial ~~revenue,~~customers asaccounted ~~compared~~for to $~~30.~~3.9 million ~~for~~of the ~~same~~increase ~~nine-month~~in ~~period~~EAGLE's inrevenues. ~~2003~~In particular, ~~resulting~~an expansion in athe volume of ground handling and logistics services provided by EAGLE to British Airways accounted for $03.15 million ~~increase~~of EAGLE's growth in revenue from its commercial customers.

~~Flight~~ Support ~~revenue~~Services ~~from~~and ~~charters~~Other Revenue — ~~increased~~Support byservices ~~$1.5 million~~ and ~~revenue~~other ~~from medical evacuation contracts increased by $0.1 million. However,~~ revenue ~~from~~was ~~heavy lift and fire suppression contracts decreased by~~ $016.8 million ~~and~~during ~~revenue~~the ~~from~~three ~~our~~months ~~Texas-based~~ended ~~flight~~May ~~operations~~31, ~~decreased~~2005, byas compared to $011.10 million. Induring ~~addition,~~ the ~~completion~~three ofmonths ~~the~~ended ~~NASA~~May ~~shuttle~~31, ~~disaster~~2004, ~~recovery~~resulting ~~contract prior to the beginning of the current fiscal year resulted~~ in a $05.68 million, ~~decrease~~or of52.7%, increase in revenue.

44• Air Center — An increase in the level of heavy aircraft maintenance, line maintenance, and aircraft storage services provided by the Air Center to third parties resulted in a $5.0 million increase in support services revenue. • Airlines —An increase in the volume of air and ground transportation logistics services provided to third parties by a division of our Airlines segment resulted in a $0.7 million increase in support services revenue. • Helicopters —An increase in the volume of non-flight helicopter support services provided to third parties by our Helicopters segment resulted in a $0.1 million increase in support services revenue.

Sales of Aircraft, Parts, and Other Assets — Revenue from sales of aircraft, parts, and other assets was $9.2 million for the nine months ended November 30, 2004 as compared to $11.4 million for the nine months ended November 30, 2003, resulting in a $2.2 million decrease in revenue. During the nine months ended November 30, 2004, EASL sold a Lear 35 jet to Ventures Acquisition Company LLC, an affiliate of the Company, for $2.7 million. Comparing the sale of the Lear 35 jet during the nine months ended November 30, 2004 to the sale of a Gulfstream II aircraft for $3.5 million during the same nine-month period in 2003, we recognized a $1.2 million increase in revenue from sales of aircraft. However, the increase in revenue attributable to aircraft sales was offset by a $3.4 million decrease in revenue due to decreased demand for aircraft part and other assets.37-

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During the nine months ended November 30, 2004, EASL sold two Bell 214ST helicopters to a third party for $5.0 million. EASL's cost for the helicopters was also $5.0 million, thus EASL did not recognized any profit from the sale. Furthermore, because the third party immediately leased the helicopters back to Helicopters, both the $5.0 million sale and the $5.0 million cost of sales were eliminated through the Company's consolidation process for financial reporting purposes.

Ground Logistics Services Revenue — EAGLE earned $81.6 million of revenue from ground logistics services during the nine months ended November 30, 2004, as compared $74.5 million during the nine months ended November 30, 2003, resulting in a $7.1 million increase in revenue.

We expanded the volume of ground logistics services provided to British Airways, which resulted in a $1.6 million increase in revenue. We also increased the volume of ground logistics services provided to our other domestic and foreign commercial customers, resulting in a $1.4 million increase in revenue.

In addition, we recognized a $4.0 million increase in revenues from our U.S. Postal Service contract. Of the increase, $1.4 million is attributable to an increase in the volume of ground handling services provided by us under the U.S. Postal Services contract. The remaining $2.6 million increase is attributable to an increase in the applicable labor rates for our SNET contracts with the U.S. Postal Service. The increase in labor rates was retroactive, effective as of August 27, 2003. As a result, during the nine months ended November 30, 2004, we recorded an accrual of contract revenue in the amount of $2.6 million and an accrual of payroll expenses in the amount of $2.6 million (see "Operating Expenses - Cost of Ground Logistics Services" below).

Support Services and Other Revenue — Support services and other revenue was $33.4 million for the nine months ended November 30, 2004, as compared $29.0 million for the nine months ended November 30, 2003, resulting in a $4.4 million increase in revenue. Of the $4.4 million increase, $2.9 million is attributable to an increase in the level of aircraft maintenance services provided by the Air Center to third parties. An additional increase of approximately $2.6 million is attributable to an increased volume of other aircraft support services provided to third parties.

The increases in aircraft support services revenue were partially offset by a $1.1 million decrease in Agriculture revenue. The decrease in Agriculture revenue was primarily attributable to a decrease in revenue from sales of hazelnuts during the nine months ended November 30, 2004 as compared to the nine months ended November 30, 2003. During the prior fiscal year, Agriculture purchased and then re-sold the hazelnut crop of Greenpatch Farms, an entity which is wholly owned by Mr. Smith, the controlling shareholder of the Company. This resale of the Greenpatch Farms hazelnut crop generated sales revenue for Agriculture during the nine months ended November 30, 2003. However, during the current fiscal year, Agriculture did not purchase the hazelnut crop, but instead merely served as the broker for the sale of the crop by Greenpatch Farms. Thus, Agriculture did not record revenue for sales of the Greenpatch Farms hazelnut crop during the nine months ended November 30, 2004.

The decrease in Agriculture's revenue was also partially attributable to i) a decrease in grass seed sales due to a lower crop yield and ii) decreased sales of processed agricultural products due to a change in marketing strategy.

Operating Expenses

Total operating expenses ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005 were $~~400~~160.3 million, which was a $1836.76 million, or 429.96%, increase from $~~381~~123.67 million ~~for~~of expense during the ~~same~~three ~~nine-month~~months ~~period~~ended inMay ~~2003~~31, 2004.

Flight Costs — Flight costs were $5519.74 million ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, as compared to $5817.65 million ~~for~~of ~~the~~expense ~~nine~~during the three months ended ~~November~~ 30May 31, ~~2003~~2004, resulting in a ~~decrease of~~ $21.9 million, or 10.7% increase in expense.

• Airlines — AFlight ~~$3.8 million reduction in flight~~ costs for Airlines ~~was~~increased ~~driven~~ by reductions in European overflys, reduced AMC commissions, lower payroll costs, and reduced travel costs. Reductions in our crew staffing levels due to reductions in the number of flights and block hours flown by our aircraft resulted in a $1.2 million ~~reduction in payroll costs and travel expenses. A decrease in the number of flights that we flew to and through Europe reduced our flight costs by $1.8 million~~, ~~and~~primarily as a ~~reduction~~result of ~~flights~~increased ~~under the AMC contract resulted in a $0.1 million reduction in AMC~~ commissions ~~expense.~~paid Inon ~~addition,~~USAF weAir ~~recognized~~Mobility aCommand $0contracts.~~7 million reduction in flight costs due to the completion of a DHL air freight services contract. See also "Aircraft and Equipment Expense - Airlines" below.~~

•Increases ~~Helicopters~~in —Expense. ~~Additional~~The increased flight ~~crew~~activity ~~costs~~for ~~and~~USAF ~~travel~~Air ~~expenses~~Mobility ~~associated~~Command ~~with~~contracts ~~the~~resulted in a $2.2 million increase in the ~~number~~amount of commissions that Airlines paid on those contracts. ~~for~~Also, ~~helicopter~~with ~~charters~~the ~~resulted~~increased inflight aactivity, crew costs and overfly charges increased by approximately $0.96 million. ~~increase~~Decreases in ~~flight~~Expense. ~~costs~~The ~~for~~completion of a DHL air freight services contract during the ~~nine~~prior ~~months~~fiscal ~~ended~~year ~~November~~resulted ~~30,~~in ~~2004,~~current asfiscal ~~compared~~year toreductions ~~the~~in ~~same~~travel ~~nine~~costs (by approximately $1.2 million) and DC-~~month~~9 ~~period~~crew incosts ~~2003~~(by approximately $0.4 million).

46• Helicopters — Flight costs for Helicopters increased by $0.7 million, primarily due to the additional flight crew costs, training costs, and travel expenses associated with an increase in the number of helicopter contracts for the current fiscal year, as compared to the prior fiscal year.

Fuel ~~Expense~~ — Fuel expense was $9039.07 million ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, as compared to $7625.34 million ~~for~~of ~~the~~expense ~~nine~~during the three months ended ~~November~~ 30May 31, ~~2003~~2004, resulting in a $1314.73 million, or 56.3%, increase in fuel expense.

• Airlines — Airlines' fuel expense increased by $1214.75 million. ~~Rising~~Approximately ~~prices for aviation fuel accounted for a~~ $1711.4 million of the increase in fuel expense. ~~The~~was ~~pegged~~attributable ~~contract~~to ~~fuel~~sharply ~~rate~~rising onprices ~~our~~for ~~AMC~~aviation ~~contracts~~fuel ~~increased~~within ~~from~~the ~~approximately~~commercial $0flight sector.95 ~~per~~Another ~~gallon to approximately~~ $13.001 ~~per~~million ~~gallon. However, an~~ increase in ~~our~~fuel ~~commercial~~expense ~~flight~~was ~~activity,~~attributable ~~where~~to ~~aviation~~an ~~fuel~~increase ~~prices~~in ~~are~~the ~~considerably~~number ~~higher,~~of ~~substantially~~block ~~drove~~hours ~~the~~flown ~~increase~~by inour ~~Airlines' fuel expense~~aircraft. ~~This~~In ~~increase~~comparison, in fuel expense ~~was~~for ~~partially~~USAF ~~offset~~Air byMobility aCommand ~~$4.7~~missions ~~million~~did ~~reduction~~not insignificantly ~~fuel~~fluctuate ~~consumption~~because ~~due~~the topegged acontract ~~reduction~~fuel inrate ~~the~~for ~~number~~military offlights ~~block~~is ~~hours~~more ~~flown~~favorable bythan ~~Airlines'~~for ~~aircraft~~commercial contracts.

• Helicopters — ~~Helicopters~~A ~~experienced a~~ $1.0.2 million ~~increase~~decrease ~~for~~in ~~helicopter~~Helicopters' fuel ~~costs.~~expense ~~The increase in fuel costs~~ was primarily attributable to i) ~~industry-wide~~a ~~increases~~change in our contracts whereby many of our customers now assume direct responsibility for the purchase of aviation fuel ~~prices~~ and (ii) anthe ~~increase~~classification inof the ~~volume~~cost of ~~helicopter~~certain fuel ~~sold~~sales by usHelicopters to ~~third~~the ~~parties~~line item "Cost of support services and other costs."

Maintenance ~~Expense~~ — ~~Expense~~Aircraft ~~for aircraft~~ maintenance expense was $5517.29 million ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, as compared to $5217.27 million ~~for~~of ~~the~~expense ~~nine~~during the three months ended ~~November~~May 3031, ~~2003~~2004, resulting in ana ~~increase of~~ $3.0.2 million, or 1.1%, increase in expense.

• Airlines — ~~Maintenance~~Amortization expense for ~~Airlines'~~our ~~aircraft~~DC-9 ~~increased~~fleet bydecreased ~~$1.2 million. Our amortization expense for capitalized airframe maintenance costs increased~~ by approximately $30.64 million due to ~~increased amortization of aircraft maintenance check costs. Maintenance expense also increased as~~ a ~~result~~decrease ofin ~~$2.5~~flight ~~million~~activity ~~of maintenance expense incurred~~ in ~~connection with~~ the ~~scheduled~~current ~~expiration~~fiscal ~~of a lease for a DC-9 aircraft~~year. ~~For~~The ~~further~~decrease ~~information~~in on the ~~leased~~ DC-9 ~~aircraft~~flight ~~and~~activity ~~the~~was ~~scheduled~~primarily ~~expiration~~attributable ofto the ~~aircraft~~termination ~~lease, see "Note 4 - Expiration~~ of ~~Aircraft~~the ~~Lease"~~DHL inair ~~Part~~freight I,contract ~~Item~~during Ithe ofprior ~~this~~fiscal ~~Quarterly Report~~year.

~~Offsetting~~• ~~the~~Helicopters ~~increases~~— inMaintenance ~~maintenance~~ expense, ~~amortization expense~~ for ~~capitalized~~Helicopters' ~~engine~~aircraft ~~overhaul~~increased ~~costs~~by ~~declined~~approximately $30.36 million. ~~due~~The toincrease ~~our~~was ~~continued~~primarily ~~use~~attributable ofto ~~leased~~an ~~engines.~~increase Inin ~~addition,~~start-up ~~our~~and ~~expense~~configuration ~~for~~costs ~~purchases~~incurred ofduring ~~aircraft~~the ~~component~~current ~~parts,~~fiscal ~~aircraft repairs~~year, ~~and~~as ~~other~~compared ~~expenses~~to ~~declined~~the byprior ~~approximately~~fiscal $1year.~~6 million.~~

~~• Helicopters — An increase of $1.8 million for helicopter maintenance expense was attributable to i) $1.4 million of additional start~~-~~up and configuration costs that were incurred in order to prepare our fleet for current year contracts and ii) a $0.4 million increase in the amortization of previously capitalized overhaul costs.~~38-

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Aircraft and Equipment Expense — Aircraft and equipment expense was $3712.04 million ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, as compared to $3712.81 million ~~for~~of expense during the ~~nine~~ three months ended ~~November~~May 3031, ~~2003~~2004, resulting in a ~~decrease of~~ $0.83 million, ofor 2.5%, increase in expense.

• Airlines — Aircraft and equipment expense for our Airlines segment decreased by $1.60 million ~~during~~primarily ~~the~~as ~~nine~~a ~~months~~result ~~ended~~of: ~~November~~i) 30a $0.3 million reduction in aircraft insurance costs, ~~2004~~ii) a $0.4 million reduction in engine rental expense due to lower lease rates and greater utilization of owned engines, asand ~~compared~~iii) a $0.3 million reduction in aircraft lease expense attributable to the ~~nine~~expiration ~~months~~of ~~ended~~a ~~November~~DC-9 ~~30,~~aircraft ~~2003~~lease.

47• Helicopters — A $1.3 million increase in aircraft and equipment expense for our Helicopters segment was primarily attributable to an increase in helicopter lease expenses. The increase in helicopter lease expense is primarily attributable to an increase in the number of aircraft resources that we need in order to service our long-term commercial contracts.

~~Airlines~~ Cost ~~was~~of ~~able~~Sales toof ~~reduce~~Aircraft, Parts, ~~its~~and ~~aircraft~~Other ~~costs~~Property byand ~~$2.9~~Equipment ~~million~~— asCost aof ~~result~~sales of i)aircraft, ~~a $1.9 million reduction in engine rental expense due to lower lease rates~~parts, ~~ii)~~and aother ~~$0.5~~property ~~million reduction in aircraft insurance costs,~~ and ~~iii)~~equipment a was $08.59 million ~~reduction~~during in the ~~depreciation~~three ofmonths ~~DC-9~~ended ~~aircraft~~May ~~components.~~31, ~~However~~2005, ~~that~~as ~~$1.5~~compared ~~million~~to ~~reduction in aircraft costs was partially offset by~~ $1.30 million of ~~impairment~~expense ~~charges~~during to the ~~net~~three ~~carrying~~months ~~value~~ended ofMay ~~two~~31, ~~DC-9~~2004, resulting ~~aircraft.~~in ~~For~~a ~~further~~$7.9 ~~information~~million, onor ~~the impairment expense~~790.0%, ~~see~~increase ~~"Note 3 - Impairment of Assets "~~ in ~~Part~~cost ~~I, Item 1~~ of ~~this Quarterly Report~~sales.

• Approximately ~~Helicopters — The~~ $07.86 million of the increase in ~~aircraft~~cost ~~and~~of ~~equipment~~sales ~~expense for Helicopters~~ was primarily attributable to asales $1by EASL of the Puma Aircraft and the CH-54 Aircraft to Ventures Acquisition Company during the three months ended May 31, 2005.0 ~~million~~See ~~increase~~"Operating inRevenue ~~helicopter~~- ~~lease~~Sales ~~expenses~~of Aircraft, asParts, ~~partially~~and ~~offset~~Other byProperty and aEquipment" ~~$0.2~~above ~~million~~and ~~decrease~~"Note in11 ~~depreciation~~- ~~expense~~Related Party Transactions - Sale and Lease of Aircraft" under Item 1 of this quarterly report.

~~Cost~~Because ofthe ~~Sales~~sales ofprices ~~Aircraft, Parts, and Other Property — Cost~~ of ~~sales~~the ofPuma Aircraft ~~aircraft, parts,~~ and ~~other~~the ~~property~~CH-54 ~~and~~Aircraft ~~equipment~~were ~~was $5.1 million for~~ the ~~nine~~same ~~months ended November 30, 2004,~~ as ~~compared~~ toEASL's ~~$8.3~~inventory ~~million~~costs for the ~~nine months ended November 30~~aircraft, ~~2003,~~EASL ~~resulting~~did innot recognize aany ~~$3.2~~profit ~~million~~from ~~decrease~~the ~~in cost of~~ sales. Of ~~the $3.2~~Ventures ~~million~~Acquisition ~~decrease,~~Company ~~$2.0~~will ~~million~~lease isboth ~~attributable to~~ the ~~difference~~Puma ~~between~~Aircraft i)and the ~~$2.7~~CH-54 ~~million~~Aircraft ~~cost of sales on a Lear 35 jet sold~~ to Helicopters ~~Ventures~~under ~~Acquisition~~three-year ~~Company~~lease ~~LLC~~agreements. See ~~during~~"Operating ~~the~~Revenue ~~nine~~- ~~months~~Sales ~~ended~~of ~~November~~Aircraft, 30Parts, ~~2004~~ and ~~ii)~~Other ~~the $4.7 million cost of sales on the sale~~Property ofand aEquipment" ~~Gulfstream~~above IIand ~~aircraft~~"Note ~~sold~~11 ~~during the same nine~~-~~month~~ ~~period~~Related inParty ~~2003.~~Transactions ~~The~~- ~~remaining~~Sale ~~$1.1~~and ~~million~~Lease ~~decrease in cost~~ of ~~sales~~Aircraft" ~~was~~under Item ~~primarily~~1 ~~driven by lower inventory costs on sales~~ of ~~aircraft~~this ~~parts~~quarterly ~~and other assets~~report.

~~During~~The ~~the~~remaining ~~three months ended November 30, 2004, EASL sold two Bell 214ST helicopters to a third party for~~ $5.0 ~~million~~.3 ~~EASL's cost for the helicopters was also $5.0~~ million~~, thus EASL did not recognized any profit from the sale. Furthermore, because the third~~ ~~party~~increase ~~immediately~~in ~~leased the helicopters back to Helicopters, both the $5.0 million sale and the $5.0 million~~ cost of sales ~~were eliminated~~is ~~through~~primarily ~~the~~attributable ~~Company's~~to ~~consolidation~~increased ~~process~~sales ~~for~~of ~~financial~~aircraft ~~reporting~~and ~~purposes~~engine part-outs.

Cost of Ground ~~Logistics~~Handling and Logistics Services — Cost of ground handling and logistics services was $7224.38 million ~~for~~during the ~~nine~~three months ended May ~~November 30~~31, ~~2004~~2005, as compared to $6621.78 million ~~for~~of expense during the ~~nine~~ three months ended ~~November~~May 3031, ~~2003~~2004, resulting in a $53.60 million, or 13.8%, increase in expense. The increase was primarily attributable to a $2.4 million increase in labor expense and a $0.8 million increase in equipment expense attributable to expansion of services provided by EAGLE to British Airways and other commercial customers.

Payroll expenses increased by $4.9 million as a result of i) an $1.9 million increase in labor expense due to the expansion of the ground logistics services provided by us to British Airways, ii) a $0.4 million charge for prior years' workmans compensation expense, and iii) a $2.6 million accrual of payroll expense. The accrual of payroll expense resulted from a notification from the U.S. Department of Labor regarding an increase in the applicable labor rates for our SNET contracts with the U.S. Postal Service. See "Operating Revenue - ~~Ground Logistics Services Revenue" above. The increase in labor rates was retroactive, effective as of August 27, 2003.~~39-

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~~Expenses~~Cost ~~for~~of ~~equipment~~Support Services and ~~supplies~~Other Support Costs — ~~also~~Cost ~~increased~~of bysupport services and other revenue was $218.16 million ~~due~~during the three months ended May 31, 2005, as compared to $10.7 ~~expansion~~million of ~~services~~expense ~~for~~during ~~new~~the ~~customers~~three months ended May 31, 2004, resulting in a $7.9 million, or 73.8%, increase in support costs. Cost of support services increased in the following areas:

~~During~~• ~~the~~approximately ~~three~~$1.6 ~~months~~million ~~ended November 30, 2004, EAGLE began recording its allocated share~~ of ~~corporate~~the ~~expenses~~increase ~~from~~was ~~Holdings~~attributable ~~as part~~to ofincreased ~~EAGLE's~~landing ~~selling,~~fees ~~general~~ and ~~administrative~~ground ~~expenses. Previously,~~handling ~~the allocation of corporate~~ expenses ~~had~~for ~~been~~Airlines; ~~recorded~~• ~~as part~~approximately of$5.6 ~~cost~~million of ~~ground~~the ~~logistics~~increase ~~services. This~~was ~~reclassification~~attributable ofto ~~allocated~~increased ~~corporate~~support ~~expenses~~costs ~~from~~for ~~cost~~providing ofheavy ~~ground~~aircraft ~~logistics services~~maintenance, toline ~~selling~~maintenance, ~~general~~ and ~~administrative~~aircraft storage services ~~resulted~~at inthe aAir ~~$1.4~~Center; ~~decrease~~and in• ~~the~~approximately ~~cost~~$0.9 million of ~~ground logistics services during~~ the ~~three~~increase ~~months~~was ~~ended~~attributable ~~November~~to ~~30,~~other ~~2004~~support ascosts ~~compared~~for to the ~~same~~provision ~~three~~of ~~month~~helicopter ~~period~~and intransportation ~~2003~~logistics support services.

48 Agriculture — In comparison to the above increases in other support costs, Agriculture's cost of goods sold decreased by $0.2 million during the three months ended May 31, 2005, as compared to the three months ended May 31, 2004, primarily as a result of decreased sales of nursery plants.

~~Other~~Selling, ~~Support~~General, ~~Costs~~ and Administrative — ~~Other~~Total ~~support~~selling, ~~costs~~general, ~~were~~and ~~$37.5~~administrative ~~million~~expense ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005 was $18.6 million, as compared to $2817.75 million ~~for~~of ~~the~~expense ~~same nine-month~~during ~~period~~the inthree ~~2003,~~months ~~resulting~~ended inMay an31, ~~increase~~2004, ofresulting ~~$8.8 million~~ in ~~support~~a ~~costs. Of the increase,~~ $51.1 million, ~~was~~or ~~attributable~~6.3% toincrease ~~increased~~in ~~support costs at the Air Center, $4~~expense.2 ~~million~~The increase was primarily attributable to ~~increased~~increases ~~landing~~in professional fees ~~and~~incurred ~~ground handling expenses~~ for ~~Airlines,~~legal ~~approximately $0.6 million was attributable to a reclassification by EASL of certain selling, general~~ and ~~administrative~~ ~~expenses~~consulting ~~as other support costs, and approximately $0~~services.~~7 million was attributable to increases in other support costs.~~

The increases in other support costs were partially offset by a $1.8 million decrease in Agriculture's cost of goods sold. The decrease in Agriculture's cost of goods sold was partially attributable to a decrease in sales of hazelnuts during the nine months ended November 30, 2004 as compared to the nine months ended November 30, 2003. During the prior fiscal year, Agriculture purchased and then re-sold the hazelnut crop of Greenpatch Farms, an entity which is wholly owned by Mr. Smith, the controlling shareholder of the Company. This resale of the Greenpatch Farms hazelnut crop generated cost of goods sold for Agriculture during the nine months ended November 30, 2003. However, during the current fiscal year, Agriculture did not purchase the hazelnut crop, but instead merely served as the broker for the sale of the crop by Greenpatch Farms. Thus, because Agriculture did not purchase and resell the Greenpatch Farms hazelnut crop during the current fiscal year, Agriculture did not record any corresponding cost of goods sold.40-

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The decrease in Agriculture's cost of goods sold was also partially attributable to i) lower grass seed sales and ii) decreased sales of processed agricultural products due to a change in marketing strategy.

Selling, General, and Administrative — Total selling, general, and administrative expense for the nine months ended November 30, 2004 was $47.5 million, as compared to $53.0 million for the nine months ended November 30, 2003, resulting in a $5.5 million decrease in expense.

Of the decrease, $2.1 million was primarily attributable to the increased amount of professional fees and travel expenses that we incurred in May 2003 in conjunction with the restructuring of our long-term debt and issuance of the Indenture Notes. Approximately $0.6 million of the decrease is attributable to a reclassification by EASL of certain selling, general and administrative expenses as other support costs. Current year reductions in payroll costs, professional fees, and travel expenses accounted for another $2.2 million of the decrease in expense.

In addition, $2.0 million of the decrease is attributable to an increase in the bad debt allowance for EAGLE during the nine months ended November 30, 2003. Based upon our analyses of the liquidity of EAGLE's accounts receivable, we have not recognized any similar increase in EAGLE's bad debt allowance for the nine months ended November 30, 2004.

The decreases in selling, general and administrative expense were partially off-set by a $1.4 million increase attributable to a reclassification by EAGLE of allocated corporate expenses from cost of ground logistics services to selling, general and administrative services (see "Cost of Ground Logistics Services" above).

Interest Expense

Interest expense ~~for~~during the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005 was $269.84 million, which was a $0.54 million, ~~decrease~~or ~~from $27~~4.34%, ~~million for~~increase ~~the~~from ~~same nine-month period in 2003. The~~ $09.50 million ~~reduction~~of in interest expense ~~was primarily attributable to~~ ~~interest charges that were incurred by us~~ during the ~~nine~~three months ended ~~November~~May 3031, ~~2003~~2004. inThe ~~connection~~increase ~~with~~was ~~the~~primarily attributable ~~restructuring~~to ofhigher ~~our long-term~~interest ~~debt~~rates ~~and~~being ~~issuance~~charged ofby the ~~Indenture~~Company's ~~Notes~~lenders induring ~~May~~the ~~2003,~~three asmonths ~~partially~~ended ~~offset~~May by31, ~~increased~~2005, ~~interest~~as ~~expense due~~ compared to ~~higher~~the ~~debt balances~~three ~~and~~months ~~increases~~ended inMay ~~interest~~31, ~~rates being charged by the Company's lenders~~2004.

Other Non-Operating Expense and Income

During the ~~nine~~three months ended May ~~November 30~~31, ~~2004~~2005, we ~~incurred~~recognized $30.5 million of other non-operating ~~expense~~income, ~~that~~which was ~~primarily attributable to loan prepayment penalties and~~ a ~~write-off of unamortized loan acquisition costs~~$4.1 ~~The~~million ~~write-off~~increase ~~of unamortized loan acquisition costs occurred~~ in ~~May~~income 2004 in conjunction with the full repayment and termination of our revolving line of credit with PNC Bank, N.A. (“PNC Bank”). In comparison, during the nine months ended November 30, 2003, we generated from $4.3.6 million of other non-operating ~~income~~expense ~~primarily~~during asthe athree ~~result~~months ofended aMay ~~$4.1 million gain on insurance settlement proceeds~~31, ~~which was used to repair damaged aircraft~~2004.

During the three months ended May 31, 2004, 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 $0.2 million of gains realized on the sale of real property rights and farming equipment in our Agriculture segment.

Income Tax Expense

Our income tax ~~benefit~~expense for the three ~~nine~~ months ended ~~November 30~~ May 31, ~~2004~~2005 was $12.0 8 million, as compared to an income tax ~~expense~~benefit of $53.6 7 million for the ~~nine~~three months ended ~~November~~ May 3031, ~~2003~~ 2004. The ~~decrease~~increase in income tax expense was ~~due~~attributable ~~primarily~~ to a pre-tax ~~loss~~income of $56.1 8 million for the ~~nine~~three months ended ~~November~~ 30May 31, ~~2004~~2005, as compared to a pre-tax loss ~~income~~ of $1410.04 million for the ~~same~~three ~~period~~months inended ~~2003. The effective tax~~May ~~rate~~31, on2004. anThe ~~annualized~~income ~~basis~~tax expense for the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, and the ~~November~~income ~~30,~~tax ~~2003,~~benefit ~~was~~for ~~18.9%~~the ~~and~~three ~~40.1%, respectively.~~months ~~The~~ended ~~change~~May in31, ~~the~~2004 ~~effective~~were ~~tax~~both ~~rate~~computed at isthe ~~primarily~~statutory ~~due~~rate toof ~~the~~34.0% ~~effect~~for offederal ~~permanent~~tax ~~differences~~and ina ~~proportion~~blended torate ~~the applicable~~of ~~taxable~~approximately ~~income~~4.13% for ~~the~~state ~~periods presented~~taxes.

The following table sets forth the calculation of our income tax benefit (expense) for the three months ended May 31, 2005 and May 31, 2004:


		Three Months Ended
		May 31,

*(in thousands)*		2005			2004

Income (loss) before income taxes	$	6,812		$	(10,381	)

Combined federal and state tax rates		38.13	%		38.13	%

"Expected" income tax benefit (expense)		(2,597	)		3,958

Other adjustments		(211	)		(237	)

Income tax (expense) benefit	$	(2,808	)	$	3,721

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LIQUIDITY

At ~~November~~May 3031, ~~2004~~2005, we had cash and cash equivalents of $61.71 million, as compared to cash and cash equivalents of $42.17 million at February 2928, ~~2004~~2005.

Cash Flows from Operating Activities

~~We generated $11.7 million more cash from operating activities during the nine months ended November 30, 2004 than during the same nine-month period in 2003.~~ During the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, we generated $5526.31 million of cash infrom our operating activities, as compared to ~~generating~~$2.3 million ~~cash~~ of ~~$43.6~~cash ~~million~~generated from operating activities during the ~~same~~three ~~period~~months inended ~~2003~~May 31, 2004.

During the Three Months InEnded ~~addition~~May to31, ~~recognizing~~2005 a—Net ~~loss~~income of $4.20 million, ~~for~~non-cash ~~the~~depreciation ~~nine~~and ~~months~~amortization ~~ended~~expenses ~~November~~of $16.8 30million, ~~2004,~~an ~~our~~$8.1 ~~cash~~million ~~flow~~decrease ~~from~~in ~~operations~~inventories, ~~was also reduced by~~ a $112.69 million increase in ~~outstanding~~ accounts ~~receivable~~payable, ~~from~~and ~~our~~a ~~customers. Increases in inventories utilized~~ $7.2.8 million ~~of cash~~increase ~~and a decrease~~ in deferred income taxes ~~and~~accounted ~~taxes~~for ~~payable~~most ~~used~~of ~~$1.0~~our ~~million~~positive of cash~~. Our~~ ~~cash~~ flow from ~~operations~~operating ~~also declined~~activities ~~due~~during tothe athree ~~$1.0~~months ~~million~~ended ~~increase~~May in31, ~~gains~~2005. Non-cash onminority ~~sales~~interest ofexpense ~~property~~ and ~~equipment,~~an ~~without~~increase ain ~~corresponding~~income ~~increase~~taxes inpayable also increased cash flow by approximately $0.5 million.

50 The positive cash flow from operating activities was partially reduced as a result of a $7.7 million increase in outstanding accounts receivable balances and $1.0 million of increases in prepaid assets and receivables from affiliates.

~~However,~~During ~~during~~ the ~~same~~Three ~~nine-month~~Months Ended ~~period~~May 31, ~~other~~2004 ~~operating~~—In ~~activities~~comparison, ~~provided~~during ~~approximately~~the ~~$80.3~~three ~~million~~months ofended ~~cash.~~May ~~Non~~31, 2004, non-cash depreciation and amortization expenses of $5116.24 million, and a $22.6 million increase in accounts payable balances accounted for a fportion of the cash flow. Also, in connection with the full repayment and termination of our line of credit with PNC Bank, we recognized a $3.5 million ~~non-cash~~ write-off of unamortized loan acquisition costs ~~that~~accounted for ~~were~~most ~~associated~~of ~~with~~our ~~that~~positive ~~line~~cash offlow ~~credit~~from operating activities. Payments onreceived on accounts receivable from affiliates, decreases in inventories and prepaid expense accounts, and a non-cash ~~impairment~~write-off ~~charges~~of ~~for~~unamortized ~~two~~loan ~~DC-9 aircraft~~acquisition ~~accounted~~costs ~~for~~also ~~the~~increased ~~remaining~~cash flow by approximately $32.0 million ~~of the cash flow~~.

The positive cash flow from operating activities was partially reduced primarily as a result of i) our $6.7 million net loss for the three months ended May 31, 2004, ii) a $4.4 million increase in outstanding accounts receivable balances, iii) a $4.3 million decrease in accounts payable, and iii) a $3.7 million increase in deferred income taxes.

Cash Flows from Investing Activities

During the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, we used $4820.40 million of cash for investing activities, as compared to a use of $4012.8 million ~~use~~ of cash during the ~~same~~three ~~nine~~months ~~month~~ended ~~period~~May in31, ~~2003~~2004.

~~Capital expenditures —~~ During the ~~nine~~Three ~~months~~Months Ended ~~ended~~May ~~November 30~~31, ~~2004,~~2005 we— Purchases ~~used~~of ~~$48.8~~aircraft ~~million~~parts ofand ~~cash~~airframes, ~~for~~scheduled ~~capital~~overhauls ~~expenditures~~ of ~~property~~engines, ~~equipment,~~ and ~~overhauls,~~ asupgrades ~~compared~~and toenhancements ~~$45.6~~for ~~million~~our ~~during~~aircraft ~~the~~resulted in ~~nine~~a ~~months ended November 30, 2003. The~~ $321.2 million ~~increase~~use inof ~~capital expenditures~~cash ~~was~~for ~~primarily~~capital ~~attributable~~expenditures. toWe ~~increases~~also inused i)approximately ~~purchases~~$1.4 million of ~~aircraft~~cash ~~parts~~for ~~and~~payment ~~airframes,~~of ~~ii)~~deposits ~~scheduled~~on aircraft ~~overhauls~~purchase ~~of engines,~~agreements and ~~iii)~~other ~~purchases~~non-fixed ofassets. ~~upgrades~~An ~~and~~increase ~~enhancements~~in ~~for~~non-current ~~our~~agricultural ~~aircraft. Total~~products ~~capital~~also ~~expenditures~~accounted for ~~the fiscal year ended~~an ~~February~~approximate ~~28, 2005 are expected to be between~~ $~~60.~~0.5 million ~~and~~use ~~$65.0~~of ~~million~~cash.

~~Disposal~~ The uses of ~~assets~~cash —were partially ~~During~~offset ~~the~~by ~~nine~~i) ~~months ended November 30, 2004, we received~~ $12.84 million inof cash ~~proceeds~~received ~~from~~as ~~the~~payments ~~disposal~~on ofnotes ~~assets, primarily~~receivable from ~~the~~affiliates, ~~sale~~ii) $0.5 million of ~~aircraft.~~cash ~~During~~received from the ~~same~~disposal ~~nine-month~~of ~~period~~property inand ~~2003~~equipment, weand ~~received~~iii) approximately $90.62 million ~~in cash proceeds from disposal~~ of ~~assets~~payments ~~and~~received ~~insurance settlements~~ on ~~damaged~~notes ~~aircraft~~receivable.

~~Notes~~ As ~~receivable~~of ~~and other assets — During~~ the ~~nine~~date ~~months~~of ~~ended~~this ~~November 30~~report, ~~2004, increases in capitalized loan acquisition costs and other assets resulted in a $1.4~~ ~~million~~we ~~use~~have ofentered ~~cash. In~~into ~~May~~agreements ~~2004,~~to wepurchase ~~paid~~seven $2helicopters.4 ~~million~~As of ~~legal and professional fees in connection with~~ the ~~closing~~date of ~~the~~this ~~Secured~~report, total ~~Credit~~commitments ~~Facility.~~for ~~We capitalized~~ the ~~legal~~purchase ~~and~~of ~~professional~~these ~~fees~~aircraft asis ~~loan~~$46.9 ~~acquisition~~million, ~~costs~~of ~~and~~which we$4.2 ~~are~~million ~~amortizing the costs over the term~~ of ~~the~~deposits ~~Secured~~have ~~Credit~~already ~~Facility~~been paid. We ~~also~~expect ~~used~~to ~~$0.5~~finance the ~~million~~purchase of ~~cash~~these inaircraft ~~payment~~primarily ofthrough ~~deposits.~~third-party ~~However,~~or weaffiliate ~~generated $1~~financing.5 ~~million of~~See ~~cash~~"Table ~~as a result~~ of ~~decreases~~Contractual inObligations" ~~other assets~~below.

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Table of Contents

During the Three Months Ended May 31, 2004 — Purchases of aircraft parts and airframes, scheduled overhauls of engines, and upgrades and enhancements for our aircraft resulted in a $11.4 million use of cash for capital expenditures. We also used approximately $3.6 million of cash for payment of capitalized loan acquisition costs and other non-fixed assets.

These uses of cash were slightly offset by i) $1.6 million of payments received on notes receivable from affiliates and ii) $0.6 million of cash received from the disposal of property and equipment during the three months ended May 31, 2004.

Cash Flows from Financing Activities

During the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, we used $47.27 million of cash in financing activities~~. In comparison~~, weas ~~used~~compared to $713.6 4 million of cash provided infrom financing activities during the ~~nine~~three months ended ~~November~~May 3031, ~~2003~~2004.

~~Proceeds~~During ~~from~~the Three Months ~~long-term~~Ended ~~debt~~May —31, 2005 —During the ~~nine~~three months ended ~~November~~May 3031, ~~2004~~2005, ~~the~~we ~~Company~~ received approximately $~~222~~0.24 million of cash proceeds from long-term ~~debt~~ financing, and used approximately $8.1 million of cash for payments on our Secured Credit Facility and various equipment purchase notes.

~~From~~During ~~March~~the 1,Three ~~2004~~Months Ended to May 1331, 2004, we—In ~~received~~comparison, ~~$106.5~~during ~~million~~the ofthree ~~cash~~months ~~advances~~ended ~~on our revolving line of credit with PNC Bank. On~~ May 1331, 2004, we ~~closed~~received onapproximately ~~the~~$222.2 million ~~Secured~~of ~~Credit~~cash ~~Facility~~proceeds ~~and~~from ~~received~~long-term afinancing, ~~cash~~and ~~advance~~used ofapproximately $83205.06 million. Weof ~~utilized~~cash ~~the~~for payments ~~majority~~on ofthose ~~this~~long-term ~~cash~~debt ~~advance~~obligations. In toaddition, ~~fully~~we ~~repay and~~also ~~terminate~~made ~~our~~cash ~~revolving~~payments ~~line~~ of ~~credit~~approximately ~~with PNC Bank~~$3.2 Wemillion ~~also~~on ~~received~~various ~~cash~~other long-term ~~advances~~instruments, ofwhich ~~$32.7~~consist ~~million~~primarily ~~from~~of ~~the~~equipment ~~Secured~~purchase ~~Credit Facility~~notes.

Further details of the Secured Credit Facility are found in “Capital Resources — Secured Credit Facility” below.

Payments on long-term debt — During the nine months ended November 30, 2004, we used $225.5 million of cash for payments on our long-term debt obligations.

From March 1, 2004 to May 13, 2004, we made payments of $99.3 million on the outstanding principal balance of our revolving line of credit with PNC Bank. On May 13, 2004, we utilized $80.8 million of the cash advance from the Secured Credit Facility to fully repay and terminate all obligations that we owed to PNC Bank under the revolving line of credit.

As of November 30, 2004, we made payments of $38.1 million on the outstanding balance owed by us under the Secured Credit Facility.

We also made payments of $7.3 million on various other long-term debt instruments, which consist primarily of equipment purchase notes.

CAPITAL RESOURCES

At ~~November~~May 3031, ~~2004~~2005, our total long-term debt balance was $~~308~~299.24 million, which was a $37.37 million decrease from our long-term debt balance of $~~311~~307.51 million at February 2928, ~~2004~~2005. Our long-term debt is comprised of a $215.0 million outstanding balance on the Indenture Notes, a $7774.90 million outstanding balance on the Secured Credit Facility, and outstanding balances of approximately $1510.34 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, ~~National Association~~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 and Evergreen Vintage Aircraft, Inc. ("Vintage"), a wholly-owned subsidiary of Holdings. 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. 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.

~~The~~To the extent of assets securing both the Indenture Notes ~~bear~~and ~~interest at~~the anSecured ~~annual~~Credit ~~fixed~~Facility ~~rate~~(see of"Secured ~~12%.~~Credit ~~Payments~~Facility" ofbelow), ~~interest~~the Indenture Notes are effectively ~~due~~second ~~semi-annually~~in onpriority ~~May~~to 15our ~~and~~indebtedness ~~November~~under 15the ofSecured ~~each~~Credit ~~year~~Facility. ~~The~~However, ~~next~~to ~~payment~~the extent of ~~accrued~~the ~~interest~~assets insecuring the Indenture Notes, the ~~amount~~Indenture ofNotes ~~$12~~are senior to our unsecured debt obligations.9 ~~million~~In ~~will~~addition, bethe ~~due~~Indenture Notes are fully and unconditionally ~~payable~~guaranteed, onboth ~~May~~jointly 15and severally, ~~2005.~~by ~~Payment~~Holdings, substantially all of Aviation’s subsidiaries, and the ~~accrued~~Trust. The ~~interest~~only ~~will~~subsidiaries beand affiliated entities that are not obligated as guarantors under the Indenture Notes are Agriculture, Vintage, ~~funded~~and ~~from~~the foreign subsidiaries of the Company~~’s operations~~.

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Interest Rate. The Indenture Notes ~~will~~bear interest ~~mature~~at onan ~~May~~annual ~~15,~~fixed ~~2010,~~rate atof ~~which~~12%. ~~time~~Payments ~~the~~of ~~$215.0~~interest ~~million~~are ~~face~~due ~~value~~semi-annually ofon ~~the~~May ~~Indenture~~15th ~~Notes,~~and ~~plus~~November ~~all~~15th ~~accrued~~of ~~and~~each ~~unpaid~~year. ~~interest, will~~On ~~become~~May ~~due.~~13, ~~However~~2005, we made the ~~Company~~semi-annual ~~may~~payment ~~elect~~of toaccrued ~~redeem~~interest on the Indenture Notes ~~prior~~in tothe amount of $12.9 million. We funded payment of the ~~maturity~~accrued ~~date~~interest from our operations. The ~~Indenture~~next ~~Notes~~semi-annual ~~are~~payment of accrued ~~redeemable~~interest ~~after~~on the ~~dates~~Indenture ~~and~~Notes, atin the ~~prices~~amount ~~(expressed~~of in$12.9 ~~percentages~~million, ofis ~~principal~~due ~~amount~~and payable on ~~the~~November ~~redemption~~15, ~~date)~~2005. asWe ~~set~~intend ~~forth~~to ~~below:~~fund payment of the accrued interest 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:

If redeemed during the 12-month period commencing:

Redemption Price

	May 15, 2007	106 %
	May 15, 2008	103 %
	May 15, 2009 and thereafter	100 %

OnIn ~~November~~addition, at any time prior to May 15, ~~2004~~2006, ~~the~~we ~~Company~~may redeem, on one or ~~made~~more ~~the~~occasions, ~~semi-annual~~up ~~payment~~to 35% of ~~accrued~~the ~~interest~~principal onamount of the Indenture Notes inwith the ~~amount~~net cash proceeds from sales of ~~$12.9~~certain ~~million.~~kinds ~~Payment~~of capital stock at a redemption price of ~~the~~112%, plus accrued ~~interest~~and ~~was funded~~unpaid ~~from~~interest at the ~~Company’s~~redemption ~~operations~~date.

~~The~~Repurchase ~~next~~of ~~semi-annual~~Notes Upon ~~payment~~Certain Asset Sales or a Change in Control. If an Asset Sale or a Change of ~~accrued~~ ~~interest~~Control on(as defined in the Indenture Notes) occurs, ineach ~~the~~holder ~~amount~~ of ~~$12.9~~Indenture ~~million,~~Notes will ishave ~~due~~the ~~and~~right ~~payable~~to onrequire ~~May~~us ~~15,~~to ~~2005.~~repurchase ~~Payment~~all or part of the ~~accrued~~ ~~interest~~holder's ~~will~~Indenture beNotes ~~funded~~at ~~from~~a ~~the~~price ~~Company’s~~set ~~operations.~~forth in the Indenture Notes.

•		incur additional debt or create liens;
•		pay dividends or acquire shares of capital stock;
•		make payments on subordinated debt or make investments;
•		make distributions from restricted subsidiaries;
•		issue or sell capital stock of restricted subsidiaries;
•		issue guarantees;
•		sell or exchange assets, or make capital expenditures;
•		enter into transactions with shareholders and affiliates; and
•		effect mergers and other changes of control.

As of May 31, 2005, we were in compliance with these covenants.

If Aviation or any of its restricted subsidiaries violates any of these covenants and are unable to obtain waivers, we would be in default under the Indenture Notes and the debt could be accelerated.

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Table of Contents

Secured Credit Facility

On May 13, 2004, ~~the Company~~we entered into the Secured Credit Facility with 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. The Secured Credit Facility is collateralized by substantially all of the assets of Aviation and its domestic subsidiaries, excluding the assets of Agriculture and Vintage.

At the closing of the Secured Credit Facility, approximately $83.0 million of the loan was funded. The Company utilized $80.8 million of the funds to fully repay and terminate the revolving credit obligations 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 the Company in connection with the closing of the Secured Credit Facility. The Company incurred a total of $2.4 million of legal and professional fees in connection with the closing of the Secured Credit Facility. The Company capitalized those legal and professional fees as loan acquisition costs and will amortize the costs over the term of the Secured Credit Facility.

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 the Company is not in default under the Secured Credit Facility, the Company 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. The Company is 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.

Loan Balance and Availability. As of November 30, 2004, the outstanding balance of the Secured Credit Facility was $77.9 million. Taking into consideration the limitations on the Company’s ability to obtain additional advances of principal from the revolving loan (see “Revolving Loan Advances” above), as of November 30, 2004, the Company’s availability under the Secured Credit Facility was $9.8 million.

Covenant Compliance. The Company is subject to certain financial and non-financial covenants under the Secured Credit Facility. In particular, the Company must maintain: i) either a qualified cash reserve balance or an undrawn availability on the revolving loan of not less than $5.0 million, 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 nine-month period ending November 30, 2004:

Consolidated EBITDA Covenant — The covenant requires a consolidated EBITDA in a minimum amount of $67.0 million. As of November 30, 2004, the Company was in compliance with this covenant.

Airlines EBITDA Covenant — The covenant requires an EBITDA for Airlines in a minimum amount of $55.0 million. As of November 30, 2004, the Company was in compliance with this covenant.

Fixed Charge Coverage Covenant — The covenant requires a fixed charge coverage in a minimum ratio of 1.00 to 1.00. As of November 30, 2004, the Company was in compliance with this covenant.

In addition, the amount of capital expenditures that may be made by the Company 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. If Aviation or any of its restricted subsidiaries violates these covenants and are unable to obtain waivers from the Wells Fargo Lenders, the Company would be in default under the Secured Credit Facility and the debt could be accelerated. As of November 30, 2004, the Company was in compliance with the capital expenditures covenant.

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.

~~Amendment~~ Interest toRates.The ~~WCMA~~term ~~Loan~~loan ~~Agreement~~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 ~~EASL~~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.

OnTerm ~~August 12, 2003, EASL entered into Working Capital Management Account~~ Loan ~~Agreement No~~Advances. ~~54F-07164 (the “WCMA Loan”) with Merrill Lynch Business~~ The ~~Financial Services, Inc. (“MLBFS”) for the purpose of obtaining a~~ $850.0 million ~~reducing~~term ~~revolver credit facility. The WCMA Loan provides for a reducing revolver~~ loan ~~which~~was isfully funded ~~from~~at athe ~~line~~closing of ~~credit.~~the ~~EASL~~Secured ~~may~~Credit ~~repay~~Facility. ~~the~~No ~~loan~~additional ~~balance~~advances inare ~~whole~~permitted under orthe interm ~~part~~ loan at any time ~~without penalty~~, and ~~may~~any ~~request~~principal aamount ~~re-borrowing~~ of ~~amounts~~the ~~repaid~~term onloan awhich ~~revolving~~is ~~basis.~~repaid ~~The~~or ~~WCMA~~prepaid ~~Loan~~may ~~does~~ not ~~require~~ be ~~monthly payments of principal~~reborrowed. ~~However,~~We onare required ~~the~~to ~~last~~make ~~business~~payments ~~day~~ of ~~each~~principal ~~calendar~~on ~~month,~~ the ~~maximum~~term ~~amount~~loan ofin ~~the~~monthly ~~line~~installments of ~~credit will~~$0.5 bemillion. ~~reduced~~Payment ~~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%~~monthly ~~and~~principal ~~monthly~~installments ~~payments~~commenced ofon ~~accrued~~June ~~interest~~1, ~~are~~2004 ~~due~~ and ~~payable~~will continue on the first ~~business~~ day of each succeeding calendar month. ~~The~~throughout ~~WCMA~~the term ~~Loan~~of ~~shall~~the ~~terminate~~Secured onCredit ~~August~~Facility. 31Then, ~~2008,~~unless atpaid ~~which~~in ~~time~~full earlier, all outstanding ~~unpaid~~ principal and ~~all~~ accrued and unpaid interest ~~shall~~of the term loan will be due and payable in full when the Secured Credit Facility terminates in May 2007.

OnRevolving ~~May~~Loan ~~12, 2004, EASL and MLBFS~~Advances. ~~executed~~ anDuring ~~amendment~~the ~~letter~~term toof the ~~WCMA~~Secured ~~Loan.~~Credit ~~The~~Facility, ~~amendment~~we ~~letter~~may ~~establishes~~receive ~~certain~~advances ~~financial~~of ~~covenants~~principal ~~for~~on the ~~WCMA~~revolving ~~Loan~~loan ~~that~~ at ~~are~~any ~~consistent~~time. ~~with~~However, the ~~financial~~outstanding ~~covenants~~principal ~~contained~~of in the ~~Indenture~~revolving ~~Notes~~loan ~~and~~may ~~Secured~~not ~~Credit~~at ~~Facility.~~any ~~The~~time ~~amendment~~be ~~letter establishes~~greater i)than aan ~~schedule~~amount ~~for~~which ~~fixed~~is ~~charge~~determined ~~coverage~~by ~~ratios,~~reference to becertain ~~measured~~eligible onreceivables aand ~~quarter-end~~eligible ~~basis,~~inventory ~~ii) a $75 million maximum limit on capital expenditures,~~ of ~~which,~~the atCompany. ~~least~~See ~~$10~~“Loan ~~million~~Balance ~~must be funded by indebtedness,~~ and ~~iii)~~Availability” abelow. ~~minimum~~We may ~~EBITDA~~also ~~consolidated~~make ~~that~~ payments ~~must~~of beprincipal ~~achieved~~on by the ~~Company~~revolving onloan aat ~~quarter-end~~any ~~basis~~time. ~~Specifically,~~All ~~the~~outstanding ~~amendment~~principal ~~letter~~and ~~adjusted~~all ~~the~~accrued ~~fixed charge coverage ratios~~ and ~~minimum~~unpaid ~~consolidated~~interest ~~EBITDA requirements~~ of the ~~WCMA~~revolving ~~Loan~~loan towill ~~correspond~~be ~~with~~due ~~the fixed charge coverage ratios~~ and ~~consolidated EBITDA~~payable ~~requirements~~in offull when the Secured Credit Facility. ~~See~~terminates ~~“Secured~~in ~~Credit~~May ~~Facility” above~~2007.

~~Covenant~~Loan ~~Compliance.~~Balance and Availability. As of ~~November~~May 3031, ~~2004~~2005, the ~~Company~~outstanding balance of the Secured Credit Facility was in$74.0 ~~compliance~~million. ~~with~~Taking into consideration the ~~covenants~~limitations on our ability to obtain additional advances of principal from the ~~WCMA~~revolving loan (see “Revolving Loan. ~~See~~Advances” above) and the Minimum Availability Requirement (see "Covenant Compliance" below), as of May 31, 2005, our availability under the Secured Credit Facility" ~~above~~was $0.8 million.

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Covenant Compliance. We are subject to certain financial and non-financial covenants under the Secured Credit Facility. In addition to other requirements that are set forth in such covenants, we are required to 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 May 31, 2005:

Consolidated EBITDA Covenant — The covenant requires a consolidated EBITDA in a minimum amount of $100.0 million. As of May 31, 2005, we were in compliance with this covenant.

Airlines EBITDA Covenant — The covenant requires an EBITDA for Airlines in a minimum amount of $85.0 million. As of May 31, 2005, we were in compliance with this covenant.

Fixed Charge Coverage Covenant — The covenant requires a fixed charge coverage in a minimum ratio of 1.15 to 1.00. As of May 31, 2005, we were in compliance with this covenant.

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 May 31, 2005, we were in compliance with the capital expenditures 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.

Notice and Waiver of Specified Events of Default under Secured Credit Facility. 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:

	i)		occurrence of a default at the final maturity, on April 29, 2005, of the obligations under the FINOVA Note (defined below);

	ii)		failure to maintain insurance on the Collateral (as defined in the Secured Credit Facility);

	iii)		making an unpermitted investment toward the purchase of two Boeing 747 airplanes (the "Designated 747s"); and

	iv)		unauthorized use of the proceeds from advances under the Secured Credit Facility to renovate the Designated 747s.

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 was charged from April 29, 2005, the date on which the Wells Fargo Lenders asserted that a default had occurred under the FINOVA Note, until June 14, 2005, the date on which the Wells Fargo Lenders, by execution of the Amendment Number Two (as defined below) waived the Specified Events of Default. At April 29, 2005, the per annum rates of interest on the Secured Credit Facility ranged from 6.09% to 8.75%.

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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.

Amendment Number Three to Secured Credit Facility. On July 11, 2005, Ventures Acquisition Company purchased the Designated 747s. See "Landsbanki Loan Agreement" below. On the same day, we entered into an Amendment Number Three and Consent (the "Amendment Number Three") with the Wells Fargo Lenders. Amendment Number Three amends the Secured Credit Facility to allow Airlines to i) lease the Designated 747s from Ventures Acquisition Company and ii) reimburse Ventures Acquisition Company for certain out-of-pocket transaction costs incurred by Ventures Acquisition Company in connection with the purchase of the Designated 747s. In exchange, Mr. Smith pledged to Wells Fargo Foothill, Inc., as administrative agent and for the benefit of the Wells Fargo Lenders, all of his rights, title, and interest in Ventures Acquisition Company

WCMA Loan Agreement

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. (“Merrill Lynch”) 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.

An amendment letter from Merrill Lynch, dated May 12, 2004, established certain financial covenants for the WCMA Loan that are consistent with the financial covenants contained in the Secured Credit Facility. The amendment letter established 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 May 31, 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 April 29, 2005, the Trust and FINOVA 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.

Vintage's obligations under the Intervest Note and Construction Loan Agreement are secured by a security interest in i) the Evergreen Museum Land, the Evergreen Aviation Museum Building, and the tangible personal property owned by Vintage which is located on or in the Evergreen Museum Land and the Evergreen Aviation Museum Building, ii) a pledge of all rents arising out of the operation of the Evergreen Museum Land and the Evergreen Aviation Museum Building, and iii) the aircraft owned by Vintage. In addition, Mr. Smith has guaranteed payment of the amounts due under the Intervest Note and Construction Loan Agreement.

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

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Landsbanki Loan Agreement

The Landsbanki Loan Agreement bears interest at an annual rate of LIBOR plus 2.3%. The applicable LIBOR rate is determined by reference to LIBOR periods of 30 days. Interest shall accrue daily and is payable monthly, with the applicable LIBOR rate being determined at the beginning of each monthly payment period. However, if an Event of Default (as defined in the Landsbanki Loan Agreement) has occurred and continuing, then the Landsbanki Loan Agreement shall bear interest at a rate that is 2% per annum higher than the otherwise applicable rate. Monthly installments of principal and accrued interest in the amount of $680,000 per installment are due and payable on the 11th day of each month through the maturity date. The Landsbanki Loan Agreement will mature on July 11, 2010, at which time all outstanding principal and accrued, but unpaid, interest will be due and payable.

The Landsbanki Loan Agreement contains certain restrictions on Holdings' ability to i) effect mergers and other changes of control and ii) enter into transactions with its affiliates. In addition, the Landsbanki Loan Agreement provides that, among other events, a default under either of the leases of the Designated 747s (see "Lease Transactions" in "Note 11 - Related Party Transactions" in Item 1 of this quarterly report) shall consitute a default under the Lanksbanki Loan Agreement.

Risk of Default on Debt Obligations

Substantially all of ~~the~~our assets ~~of the Company~~ 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 ~~the~~we ~~Company~~are is unable to cure such defaults or obtain waivers with respect to such defaults, we ~~the~~are ~~Company is~~ at risk that ~~the~~our ~~Company’s~~ payment obligations under either, or both, the Indenture Notes and the Secured Credit Facility will be accelerated, thereby forcing ~~the~~us ~~Company~~ to either obtain alternative financing or seek legal protection from ~~its~~our creditors.

~~Going Concern Qualification~~-49-

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InTable their audit report on the Company’s consolidated financial statements for the fiscal year ended February 29, 2004, PricewaterhouseCoopers LLP ("PwC"), the Company’s former independent registered public accounting firm, included an explanatory paragraph which noted that the Company has historically had violations of ~~certain~~Contractual of its debt covenants. Because of the various cross-default provisions that are contained in the Company’s long-term debt obligations, a failure by the Company to comply with the covenants of the Company’s long-term debt obligations could result in an acceleration of all the Company’s outstanding debt obligations. Due to the Company’s historical difficulty in meeting its debt covenants, there is substantial doubt as to the Company’s ability to continue as a going concern. Obligations

The ~~Company~~following ~~has~~table ~~taken measures~~summarizes our tocontractual ~~facilitate~~obligations its ability to remain in compliance with its various debt covenants. In particular, the Company has focused on reducing its selling, general, and administrative expenses by controlling its legal and professional fees and managing payroll expenses in certain of the Company’s subsidiaries. In addition, the Company has significantly reduced its property insurance expense and non-essential maintenance expenses. As a result, the Company was in compliance of its debt covenants as of ~~November~~May 3031, ~~2004.~~2005: ~~See “Capital Resources, Secured Credit Facility, Covenant Compliance” above.~~

The Company’s financial statements included in this Quarterly Report on Form 10-Q have been prepared under the assumption that the Company will continue as a going concern. The financial statements do not include any adjustments that might result if the Company were forced to discontinue operations.


Contractual Obligations
(in millions)

	Payments Due by End of Fiscal Year

		2006		2007		2008		2009		2010	After 2010			Total

Long-term debt obligations	$	10.3	$	8.8	$	64.3	$	0.9	$	215.1	$	-	$	299.4
including current maturities
and capital leases
Operating lease obligations ⁽¹⁾		16.9		18.0		11.3		7.5		5.3		5.8		64.8
Purchase obligations ⁽²⁾		18.1		24.6		-		-		-		-		42.7
Other obligations ⁽³⁾		2.2		3.0		3.0		3.0		3.0		3.8		18.0

Totals	$	47.5	$	54.4	$	78.6	$	11.4	$	223.4	$	9.6	$	424.9

⁽¹⁾		Total operating lease obligations of $64.8 million include $11.6 million of lease obligations to entities owned by, or controlled by Mr. Smith, the Company's controlling shareholder.

⁽²⁾		Purchase obligations consist of the purchase prices of $25.0 million for three Bell AB139 helicopters, $7.9 million for one Bell AB139 helicopter, $1.3 million for one Bell 206 L-4 helicopter, and $12.7 million for two Bell 412EP IFT helicopters, less deposits paid of $4.2 million.

⁽³⁾		Other obligations consist primarily of the annual salary and bonus to be paid to Mr. Smith pursuant to the Delford M. Smith Employment Agreement.

~~Contractual~~ITEM ~~Obligations~~3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~Our~~Interest ~~long-term~~Rate contractual obligations are comprised primarily of amounts owed by us under the Indenture Notes and the Secured Credit Facility. In addition, approximately 13.0% of our projected long-term contractual obligations are payments that will be due under various equipment and facility leases. The following table summarizes our contractual cash obligations as of November 30, 2004: Risk

		(in millions)
Thru		Long-term		Current		Lease		Other
February 28,		Debt		Maturities		Obligations	*	Obligations	**		Total
2005	$	-	$	4.8	$	6.4	$	0.8		$	12.0
2006		2.4		11.2		16.6		3.0			33.2
2007		72.0		-		8.0		3.0			83.0
2008		1.7		-		4.9		3.0			9.6
2009		0.9		-		3.9		3.0			7.8
Thereafter		215.2		-		8.3		-			223.5
Total	$	292.2	$	16.0	$	48.1	$	12.8		$	369.1

As of May 31, 2005, we had fixed rate debt of $219.7 million and variable rate debt of $79.7 million. Based on the outstanding balances at May 31, 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 $0.8 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.

*		Total operating lease obligations of $48.1 million include $8.6 million of lease obligations to entities owned by, or controlled by Mr. Smith, the Company's controlling shareholder.
**		Other obligations consist primarily of the annual bonus to be paid to Mr. Smith.

Foreign Currency Exchange Rate Risks

~~Employee~~ Although ~~Benefit~~some ~~Plan~~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.

~~Effective March 1, 2002, we established the Evergreen Savings and Retirement Plan (the “Plan”). The Plan is a defined contribution plan covering all our full~~-~~time employees who have been credited with one year of service, are age 21 or older, are not covered by a collective bargaining agreement, and are not a temporary employee. Under the Plan, we match~~ 50% of the first 8% of base compensation that a participant contributes to the Plan. We also make an annual basic contribution in an amount equal to 4% of the annual compensation of each participant who has completed the minimum required hours of service during the Plan year, net of plan forfeitures (the “4% Contribution”). In November 2004, we made a 4% Contribution in the amount of $2.7 million.-

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~~ITEM~~Commodity 3.Price ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~Risks

~~Risks~~We ~~Associated~~are ~~with~~exposed to commodity ~~Fluctuations~~price inrisk ~~Interest~~with ~~Rates~~respect —to Atthe ~~November~~purchase ~~30,~~of ~~2004~~aviation fuel. However, wefluctuations ~~had~~in ~~fixed~~the ~~rate~~price ~~debt~~ of ~~$222.8~~fuel ~~million~~have ~~with~~not had a ~~weighted~~significant impact ~~average~~on ~~fixed~~our ~~interest~~results ~~rate~~ of ~~11.89%.~~operations Wein ~~also~~recent ~~had~~years ~~variable~~because, ~~rate~~in ~~debt~~general, ofthe ~~$85.4~~fuel ~~million~~price ~~with~~adjustment aclauses ~~weighted~~in ~~average~~our ~~variable~~customer ~~interest rate~~contracts oflimit ~~6.05%.~~our ~~Based~~exposure ~~upon~~to ~~our~~increases ~~outstanding~~in ~~debt~~fuel ~~balances~~prices. We asdo ofnot ~~November~~enter 30into, ~~2004,~~or apurchase 1%any ~~increase~~fuel inunder, ~~interest~~long-term ~~rates~~fuel oncontracts, ~~our~~nor ~~variable rate debt~~do ~~would~~we ~~increase~~enter ~~our~~into ~~annual~~futures ~~interest~~or ~~expense~~swap ~~by approximately $1~~contracts.~~0 million.~~

57 We are not exposed to any other commodity price risk.

~~Risks~~ITEM ~~Associated with Fluctuations in Foreign Currency Exchange Rates — Although some of our revenues are derived from foreign customers, all revenues and substantially all expenses are denominated in U~~4.S. ~~dollars.~~CONTROLS WeAND ~~maintain only minimal balances in foreign bank accounts in order to facilitate payment of expenses.~~ PROCEDURES

~~Risks~~Disclosure ~~Associated~~Controls ~~with Fluctuations~~and inProcedures Commodity Prices — We are exposed to commodity price risks 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 because, in general, our contracts with customers limit our exposure to increases in fuel prices.

~~ITEM~~ The ~~4. CONTROLS~~Company's ~~AND~~management, ~~PROCEDURES~~with the participation of the Company's principal executive officer and principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are 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, and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

~~Disclosure~~ As ~~Controls~~a result of the Company's need to restate its financial statements for the fiscal year ended February 29, 2004, the Company retained a certified public accounting firm (the "Internal Audit Consultants") to provide certain internal audit services to the Company. The Internal Audit Consultants interfaced with the registered independent public accounting firm during both the audit of the Company's financial statements for the fiscal year ended February 28, 2005 and ~~Procedures~~the period covered by this report, and have performed analyses of major accounts included in the Company's financial statements. Although the Company was not able to file its Annual Report on Form 10-K for the fiscal year ended February 28, 2005 on the original due date, the Company believes that initiating the internal audit function improved the Company's effectiveness in recording, processing, summarizing and reporting financial information. In addition, the Company believes that the internal audit function, and the account analyses performed at, and for, both the fiscal year ended February 28, 2005 and the period covered by this report, will positively affect the Company's internal control over financial reporting, and will enhance the Company's ability to meet its future reporting requirements in a timely manner.

~~The~~Changes Company's management, with participation of the Company's principal executive officer and principal financial officer, have performed an evaluation of the Company's disclosure controls and procedures, (as defined in ~~Rules~~Internal ~~13a-15(e)~~Control ~~and~~Over ~~15d-15(e)~~Financial ~~under~~Reporting the Securities Exchange Act of 1934, as amended ("Exchange Act")) to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms.

~~Based~~ There ~~on that evaluation, the Company's principal executive officer and principal financial officer~~ have ~~concluded~~not ~~that,~~been asany ~~of November~~changes ~~30,~~in ~~2004,~~ the Company's ~~disclosure~~internal ~~controls~~control ~~and~~over ~~procedures~~financial ~~were not effective in ensuring that information required to be~~reporting ~~disclosed~~(as bysuch ~~the~~term ~~Company~~is defined in ~~the~~Rules ~~reports~~13a-15(f) ~~that~~and it15d-15(f) ~~files or submits~~ under the Exchange Act) isduring ~~recorded, processed, summarized, and reported within~~ the ~~time~~fiscal ~~periods~~quarter ~~specified~~ended byMay ~~the SEC's rules and forms. At this time~~31, ~~management~~2005 ~~has determined~~ that ~~the~~have ~~Company's current~~materially ~~system of disclosure controls and procedures may not be sufficient i) to ensure that data errors~~affected, ~~control problems,~~ or ~~acts~~are ofreasonably ~~fraud~~likely ~~are detected and ii)~~ to ~~confirm~~materially ~~that appropriate corrective action~~affect, ~~including~~the ~~process~~Company's ~~improvements,~~internal iscontrol ~~undertaken~~over infinancial ~~a timely manner~~reporting.

~~Deficiencies in the Company’s Controls and Procedures~~ -51-

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InPART connection with its audit of the Company’s financial statements for the fiscal year ended February 29, 2004, PwC delivered to the Company’s disclosure committee a letter identifying deficiencies that PwC considered to be material weaknesses in the effectiveness of the Company’s internal disclosure controls pursuant to standards established by the American Institute of Certified Public AccountantsII. OTHER A “material weakness” is a reportable condition in which the design or operation of one or more of the specific internal control components has a defect or defects that could have a material adverse effect on the Company’s ability to record, process, summarize and report financial data in the financial statements in a timely manner. The material weaknesses identified by PwC include the following weaknesses in certain divisions of the Company: INFORMATION

•ITEM ~~Failure to reconcile certain general ledger accounts on a timely and regular basis and lack of management review of certain reconciliations~~1. •LEGAL ~~Inconsistent application of accounting policies, including capitalization policies and procedures for determining unrecorded liabilities.~~PROCEEDINGS

58 The Company is currently involved in certain legal proceedings as discussed below.

• Failure of financial management in certain operating segments to properly supervise personnel, enforce and follow policies and procedures, and perform their assigned duties. • Lack of adequately staffed accounting departments.

Subsequent to the issuance of the Company’s fiscal year 2004 consolidated financial statements, the Company’s management determined that certain accounting errors had occurred during the Company’s year-end closing process, the correction of which necessitated a restatement of the Company’s consolidated financial statements for the fiscal year ending February 29, 2004. Based upon the results of management’s investigation of the accounting errors, the Company’s principal executive officer and principal financial officer concluded that the accounting errors resulted from material weaknesses in the Company’s disclosure controls and procedures as of February 29, 2004, particularly in the areas of account reconciliation and management review of journal entries. Detailed validation work was performed by the Company’s internal personnel in order to substantiate the financial information contained in the Company’s consolidated financial statements and related disclosures that are contained in the Company’s Annual Report on Form 10-K/A, which was filed with the SEC on September 30, 2004. Analyses were also performed in order to compare the reasonableness of current year amounts to prior year amounts.

Management's Response and Plan for Improvement

Management responded to the recommendations contained in the letter to the Disclosure Committee by developing a plan to implement the following controls and procedural enhancements which are designed to improve the Company 's system of disclosure controls:

• Capitalization and amortization of asset balances - i) regular detailed analyses of fixed assets and accumulated depreciation accounts should be performed by preparing detailed account reconciliations, and ii) on a timely basis, account reconciliations and other significant transactions should be reviewed by an appropriate member of management; • Recording and processing transactions - transactions must be supported by i) appropriate transaction documentation and ii) appropriate documentation of review by management; • Reconciliation of accounts - detailed reconciliations of subsidiary accounts to the general ledger must be performed on a regular basis, and quarterly accounting review procedures must be enhanced by requiring an appropriate member of management to perform an independent review of material general ledger accounts and reserves; • Management review of journal entries, account balances and financial statements - all material journal entries must be reviewed and approved by an appropriate member of management; • Internal audit function - an internal audit function should conduct audit procedures and test internal controls in order to ensure that the Company's policies and procedures for transactional recording, transactional review, segregation of duties, and review of significant transactions at the appropriate level of management are both effective and being followed; and

• Competent personnel - staffing should be enhanced to provide sufficient resources to accomplish the foregoing objectives.

Status of Management's Plan for Improvement

As of November 30, 2004, the Company has made the following progress in the implementation of its plan for improvement:

• Capitalization and amortization of asset balances - management is implementing policies and controls for regularly i) performing detailed analyses of fixed assets and accumulated depreciation accounts and ii) preparing detailed account reconciliations. In addition, detailed analyses, account reconciliations, and significant transactions are being independently reviewed in a timely manner by an appropriate member of management; • Recording and processing transactions - controls are being implemented which require transactions to be supported by i) appropriate transaction documentation and ii) documentation that the transaction has been reviewed and approved by an appropriate member of management; • Reconciliation of accounts - policies and controls are being implemented which require regular reconciliations of subsidiary accounts to the general ledger, with timely review by an appropriate member of management. Procedures regarding the quarterly accounting review are being enhanced by requiring independent reviews of account reconciliations, material general ledger accounts, and reserves; • Management review of journal entries, account balances and financial statements - controls and procedures are being implemented which require that all material journal entries are reviewed and approved by an appropriate member of management; • Internal audit function - the Company has engaged a registered public accounting firm, which is not affiliated with the Company's independent registered public accounting firm, to perform the internal audit function (the "Internal Auditor"). The Internal Auditor has conducted, and will continue to conduct, internal audit procedures and tests of internal controls to ensure that the Company's controls and procedures for transactional recording, transactional review, segregation of duties, and review of significant transactions at the appropriate level of management are both effective and being followed; and • Competent personnel - the Company has made, and will continue to make, appropriate staffing enhancements in order to provide sufficient resources to accomplish the Company's objectives of recording, processing, summarizing and reporting, on a timely basis, the financial information of the Company.

Management believes that the disclosure controls and procedures which have been, and are continuing to be, implemented are addressing the identified deficiencies in the Company's system of disclosure controls. Management will, on an ongoing basis, further monitor and assess the implementation of its plan to improve the effectiveness of the Company's disclosure controls and procedures, and will take action as appropriate.

Internal Control Over Financial Reporting

Except as described above, there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS.

The Company is currently involved in certain legal proceedings as discussed below.

Banc of America

~~The~~We ~~Company~~are is 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 ~~the~~our ~~Company’s~~ financial agent in exchange for the payment of certain fees. The plaintiff has not yet specified an amount for damages. The Company filed a motion to dismiss for lack of jurisdiction, but on November 10, 2003, the court denied the motion. Subsequently, the Company filed an appeal on the denial of the motion to dismiss. On September 22, 2004, the parties held oral argument on the appeal before the North Carolina Court of Appeals. A ruling on the appeal is anticipated on or before January 17, 2005.

We filed a motion to dismiss for lack of jurisdiction, but a ruling was issued on April 19, 2005 by the North Carolina Court of Appeals denying our motion. We are currently pursuing trial in the North Caroline Business Court and discovery is in the early stages.

Asiana Airlines

On January 28, 2000, ~~the~~ ~~Company~~we ~~and~~entered into a contract with Asiana Airlines (“Asiana”) ~~entered into a contract~~ whereby ~~the~~we ~~Company~~ 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 ~~the~~us ~~Company~~ that Asiana would not make any further payments under the contract.

On September 19, 2001, ~~the~~ ~~Company~~we filed proceedings in the United States District Court for the District of Oregon against Asiana to recover amounts owed by Asiana to ~~the~~us ~~Company~~ pursuant to the contract. On February 28, 2003, a jury returned a verdict in our favor ~~of the Company~~ and onawarded ~~April 28, 2003, the court entered a judgment for~~ damages ~~in the amount~~ of $16.6 million, inand ~~favor of the Company.~~ Asiana subsequently filed an ~~appeal~~a ofmotion ~~the~~for judgment ~~with~~as ~~the~~a ~~Ninth~~matter ~~Circuit~~of ~~Court~~law. The ofdistrict ~~Appeals,~~court ~~and~~denied the ~~parties~~motion ~~have filed opening~~ and Asiana ~~answering~~appealed ~~briefs with~~ the ~~court.~~judgment ~~Oral~~to ~~argument on~~ the ~~appeal~~United ~~has~~States ~~not~~Ninth ~~yet~~Circuit ~~been~~Court ~~scheduled.~~of Appeals.

On ~~August~~July 1911, ~~2002~~ 2005, the ~~Company instituted~~Ninth ~~proceedings~~Circuit ~~against~~issued ~~the~~a ~~United~~mandate ~~States~~returning ofthe ~~America~~action into the ~~United States~~ District Court. ~~for~~It ~~the~~is ~~District~~anticipated ~~of Alaska for a declaration~~ that the ~~Rural~~District ~~Service~~Court ~~Improvement~~will, upon ~~Act~~conclusion of ~~2002~~proceedings, (order the ~~“Rural~~disbursement ~~Service~~to ~~Act”)~~Evergreen isof ~~unconstitutional. The Rural Service Act disqualifies~~ the ~~Company~~full ~~from~~amount ~~receiving equitable tender~~ of ~~Alaska~~damages, ~~non-priority~~in ~~bypass~~addition ~~mail~~to ~~unless~~costs ~~the Company meets~~and ~~certain~~interest, ~~passenger~~from ~~carriage~~the ~~requirements~~amount that ~~are~~Asiana ~~economically~~previously ~~impractical.~~deposited ~~The~~in ~~Company~~the ~~subsequently~~District ~~consolidated~~Court's ~~its~~bank ~~claims with a prior lawsuit that had been filed by Alaska Central Express, Inc~~account.~~, which asserted similar claims.~~

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TheDucor U.S.Express government filed a motion for summary judgment. On September 29, 2003, the federal district court granted the U.S. government’s motion and dismissed the claim with prejudice. The Company has appealed the federal district court’s decision to the Ninth Circuit Court of Appeals. The Company filed its opening brief on February 13, 2004, and the U.S. government’s response brief was filed on April 30, 2004. Oral argument on the appeal has not yet been scheduled. Airlines

~~Tridair~~ On ~~Repair~~February ~~and~~25, ~~Manufacturing~~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 (the "Court"). Ducor sought damages of $41.7 million against Airlines in regard to certain agreements between the parties wherein Airlines was 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.

On ~~February~~July 116, ~~2003~~2005, ~~Tridair~~the parties ~~Repair~~executed ~~and Manufacturing, Inc. (“Tridair”) filed~~ a ~~complaint~~Settlement ~~against~~Agreement ~~the~~whereby ~~Company~~Ducor inand ~~the~~Airlines ~~United~~i) ~~States~~agreed ~~District~~to ~~Court~~file ~~for the~~with ~~Central District of California (~~the ~~“California~~ Court”) ~~alleging~~a ~~fraud~~stipulation ~~and~~of ~~breach~~discontinuance of ~~contract. The allegations relate~~the Action towith anprejudice ~~aircraft~~and ~~salvage~~ii) ~~contract under which the Company~~ agreed to ~~perform~~release ~~aircraft~~and ~~salvage~~discharge ~~services for Tridair in return for payments to be made by Tridair to~~ the ~~Company.~~other ~~Tridair~~from ~~subsequently~~any ~~transferred~~and ~~its~~all ~~litigation rights to Diversified Aero Asset Management, Inc. (“Diversified”), which had previously filed a complaint against the Air Center for similar~~ claims~~. Diversified~~ ~~amended~~and ~~its~~liabilities ~~complaint~~with inrespect ~~order~~ to ~~seek~~the ~~$10~~Action.~~6 million in damages for fraud and breach of contract.~~

OnITEM ~~April 2, 2003, the Company filed a motion to dismiss for lack of jurisdiction, or in the alternative, to transfer the case to the federal district court in Arizona~~6. As a result, the matter in the California Court was dismissed and the matter was transferred to the United States District of Arizona. On August 30, 2004, the Company filed a motion for summary judgment, and a hearing on the motion was held on October 4, 2004. On October 20, 2004 the Court entered an order dismissing Diversified's punitive damages claim, but denying all other aspects of the Company's motion for summary judgment. EXHIBITS

~~Jury~~A ~~trial~~list ~~was~~of ~~originally~~exhibits that are ~~scheduled~~filed ~~for~~as ~~November~~part 30of, ~~2004. However,~~or ~~the~~incorporated ~~trial~~by ~~was~~reference ~~subsequently~~into ~~continued~~this ~~until~~Quarterly ~~February~~Report 1,on ~~2005~~Form ~~by stipulation~~10-Q ~~between~~are ~~the~~set ~~parties~~forth below.

~~Pinal~~Exhibit ~~County,~~No. ~~State~~Description of ~~Arizona~~Document

10.1	*	Amendment Number Three and Consent, dated July 11, 2005, by and between the lenders identified on the signature pages thereof (the "Lenders"), Wells Fargo Foothill, Inc., as the arranger and administrative agent for the Lenders, and Evergreen International Aviation, Inc. and each of its Subsidiaries that are signatories thereto, as Borrowers.

10.2	*	Loan Agreement, dated July 11, 2005, between Ventures Acquisition Company, LLC, as Borrower, Evergreen Holdings, Inc., as Guarantor, and Landsbanki Íslands hf., as Lender.

10.3	*	Aircraft Lease, dated July 11, 2005, between Ventures Acquisition Company, LLC and Evergreen International Airlines, Inc. for a Boeing 747-230SF aircraft, manufacturer's serial number 23286.

10.4	*	Aircraft Lease, dated July 11, 2005, between Ventures Acquisition Company, LLC and Evergreen International Airlines, Inc. for a Boeing 747-230SF aircraft, manufacturer's serial number 23287.

31.1	*	Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	*	Certification of President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	*	Filed herewith.

The Company subsequently filed an action in the United States District Court for the District of Arizona requesting a declaratory judgment in the Company's favor. Specifically, the Company requested a declaration that the Company was not in breach of the lease agreement and that Pinal County was not entitled to terminate the lease agreement. In addition, the Company also requested that the court enjoin Pinal County from i) terminating the lease agreement and ii) taking any action to evict the Company. Due to ongoing negotiations between the Company, Pinal County and the Federal Aviation Administration, the summons and complaint for the declaratory action were never served on Pinal County. Subsequently, the Company instructed local counsel to file a motion dismissing the case and, as of November 4, 2004, the case has been dismissed.-53-

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Except as otherwise discussed herein above, there have been no other material developments in existing legal proceedings, nor any material new legal proceedings instituted by, or against, the Company. While the results of these proceedings cannot be predicted with certainty, the Company believes, based on its examination of the subject matter of the proceedings, experience with similar proceedings, and discussion with legal counsel regarding possible outcomes, that the final outcome of such proceedings will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. As material developments related to pending litigation occur, the Company will reassess the Company’s potential liability and revise any estimates accordingly.

ITEM 6. EXHIBITS.

(a) Exhibits

A list of exhibits that are filed as part of, or incorporated by reference into this Quarterly Report on Form 10-Q are set forth below.

Exhibit No. Description of Document

	31.1		Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EVERGREEN HOLDINGS, INC. (Registrant)

Date: January 18, 2005 /s/ Timothy G. Wahlberg Timothy G. WahlbergPresident



Date: July 15, 2005	/s/ Timothy G. Wahlberg Timothy G. Wahlberg Director and President (principal executive officer)


Date: July 15, 2005	/s/ John A. Irwin John A. Irwin Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)

~~Date: January 18, 2005 /s/ John A. Irwin John A. IrwinChief Financial Officer~~-54-

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EXHIBIT INDEX

Exhibit No.		Description of Document

31.1		Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.1	*	Amendment Number Three and Consent, dated July 11, 2005, by and between the lenders identified on the signature pages thereof (the "Lenders"), Wells Fargo Foothill, Inc., as the arranger and administrative agent for the Lenders, and Evergreen International Aviation, Inc. and each of its Subsidiaries that are signatories thereto, as Borrowers.
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.2	*	Loan Agreement, dated July 11, 2005, between Ventures Acquisition Company, LLC, as Borrower, Evergreen Holdings, Inc., as Guarantor, and Landsbanki Íslands hf., as Lender.
32.1		Certification of President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.3	*	Aircraft Lease, dated July 11, 2005, between Ventures Acquisition Company, LLC and Evergreen International Airlines, Inc. for a Boeing 747-230SF aircraft, manufacturer's serial number 23286.
10.4	*	Aircraft Lease, dated July 11, 2005, between Ventures Acquisition Company, LLC and Evergreen International Airlines, Inc. for a Boeing 747-230SF aircraft, manufacturer's serial number 23287.
31.1	*	Certification of President pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	*	Certification of President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	*	Filed herewith.

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EVERGREEN HOLDINGS, INC.

TABLE OF CONTENTS

NOTE 2 — BUSINESS SEGMENTS

NOTE 3 — IMPAIRMENT OF ASSETS

NOTE 4 — EXPIRATION OF AIRCRAFT LEASE

NOTE 5 — LIQUIDITY AND MANAGEMENT'S PLANS

Risk of Default on Debt Obligations

EVERGREENNOTE HOLDINGS,4 INC.CONDENSED— NOTESLONG-TERM TOUNAUDITEDDEBT CONSOLIDATED FINANCIAL STATEMENTSOBLIGATIONS

NOTE 6 — LONG-TERM DEBT OBLIGATIONS

Indenture Notes

Secured Credit Facility

NOTE 8 — RELATED PARTY TRANSACTIONS

NOTE 11 — RELATED PARTY TRANSACTIONS

Transactions Under Mr. Smith's Employment Agreement

Lease Transactions

ExpirationSale and Lease of Aircraft Lease

Notes Receivable from Affiliates and Notes Payable to Affiliates

29LEGAL PROCEEDINGS

Bonus Compensation Paid to Mr. Smith

NOTE 9 — EMPLOYEE BENEFIT PLAN

NOTE 10 — CONTINGENCIES

Banc of America

Asiana Airlines

TridairClaim Repairfor Losses under the Air Transportation Safety and ManufacturingSystem Stabilization Act

JuryAIRCRAFT trialPURCHASE was originally scheduled for November 30, 2004. However, the trial was subsequently continued until February 1, 2005 by stipulation between the parties. COMMITMENTS

Interest Expense

Income Tax Expense

RESULTS OF OPERATIONSUnaudited(in thousands)

Operating Revenue

Operating Expenses

Interest Expense

Other Non-Operating Expense and Income

Income Tax Expense

LIQUIDITY

CAPITAL RESOURCES

Indenture Notes

Secured Credit Facility

WCMA Loan Agreement

Risk of Default on Debt Obligations

Internal Control Over Financial Reporting

PART II. OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS.

Banc of America

Asiana Airlines

ITEM 6. EXHIBITS.

SIGNATURES

EXHIBIT INDEX

Filing Compare · EVERGREEN HOLDINGS INC