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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 12 preceding months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  (X)    No  (    )

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be continued, to the best of registrant's knowledge, in definitive proxy or information statements incorporate by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   (X)

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

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

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

TABLE OF CONTENTS

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Table of Contents

PART I

Forward-Looking Statements

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

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

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GENERAL DESCRIPTION

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

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

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

BUSINESS SEGMENTS

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

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

Airlines

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

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

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

EAGLE

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

        The range of services provided by EAGLE includes:

Helicopters

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

Air Center

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

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

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        The range of services provided by the Air Center includes:

EASL

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

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

Agriculture

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

OTHER

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

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

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Related Parties and Affiliated Entities

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

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

PRICING FOR SERVICES AND PRODUCTS

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

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

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

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SEASONALITY

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

COMPETITION

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

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

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

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

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

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

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

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CIVIL RESERVE AIR FLEET PROGRAM

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

EMPLOYEES

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

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

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

REGULATION

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

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

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

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

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

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

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

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

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

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RISK FACTORS

Risk Factors Relating to the Company

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Risk Factors Relating to the Air Transportation Services Industry

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

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

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

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

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

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

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

AVAILABLE INFORMATION

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

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FLIGHT EQUIPMENT

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