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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
    Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File
    No. 333-124394
  STANDARD AERO HOLDINGS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

98-0432892(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)500-1780
    Wellington Avenue,

R3H 1B3Winnipeg, Manitoba,
    Canada

(Zip Code)(Address of principal executive
    office)   Registrants telephone number, including area code:
 (204) 987-8860
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  non-accelerated Rule 12b-2
 o o þ
  Rule 12b-2 o þ




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Item No.



PagePART IItem 1.


Business


1Item 1A.


Risk
    Factors


10Item 1B.


Unresolved Staff
    Comments


24Item 2.


Properties


25Item 3.


Legal
    Proceedings


25Item 4.


Submission of
    Matters to Vote of Security Holders


25PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


25Item 6.


Selected Financial
    Data


26Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


28Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


43Item 8.


Financial
    Statements and Supplementary Data


44Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


44Item 9A.


Controls and
    Procedures


44Item 9B.


Other
    Information


45PART IIIItem 10.


Directors and
    Executive Officers of the Registrant


46Item 11.


Executive
    Compensation


48Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholders Matters


55Item 13.


Certain
    Relationships and Related Transactions


57Item 14.


Principal
    Accountant Fees and Services


57PART IVItem 15.


Exhibits and
    Financial Statement Schedules


58Signatures


110




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Forward Looking Statement; Private Securities Litigation
    Reform Act Safe Harbor Statement
        
    our ability to design, implement and maintain controls and
    procedures designed to prevent material weaknesses, which could
    cause us to fail to meet our periodic reporting obligations or
    result in errors or restatements;
    general conditions in the military, regional or business
    aviation industry;
    military spending and outsourcing trends;
    the size and age of the installed base of engines that we
    service;
    inflation, interest rates, exchange rates, market and monetary
    fluctuations and other risks related to our international
    operations;
    the effect of, and changes in, regulation and government policy;
    our ability to increase market share and control expenses;
    our ability to keep pace with technological changes;
    the impact of general economic conditions on our customers;
    our ability to obtain new contracts and authorizations to
    service existing and new engines;
    returns on our investment in new engine programs; and
    our success at managing the risks of the foregoing.




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Item 1.
    Business.    12-month
  Our
    Company
        10-year 10-year
 1




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14-year
  10-year 2-year
  Business
    Segments
        Our MRO
    Services
  sub-standard
   2




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Engine platforms serviced.
  2006


Date Introduced/Revenues


Date First Serviced


Estimated ProductEngine

(In millions)


by us


Life-Cycle Stage


Primary ApplicationsAviationRolls-Royce T56

$
276.1



1954/1960



Declining


Military aircraft including C-130
    A-H Hercules; P-3 Orion;
    E-2C HawkeyeRolls-Royce AE3007

$
118.3



1996/1997



Mature


Embraer RJ135/140/145 regional
    jets; Cessna Citation X business jetsRolls-Royce Model 250

$
67.4



1967/1967



Mature


Wide range of commercial and
    military helicopters, including the Bell Jet Ranger and OH-58
    KiowaRolls-Royce AE2100

$
22.7



1991/1993



Growth


Military and regional aircraft
    including C-130J Hercules, C-27 Spartan, Saab 2000General Electric CF34

$
46.3



1995/2002



Growth


Bombardier regional and business
    jets; Embraer ERJ170/190 regional jetsPratt & Whitney Canada
    PT6A

$
86.1



1964/1986



Mature


Wide range of commercial and
    military turboprop aircraft, including Raytheon King Air series
    business turboprops; T-6A Texan military trainersPratt & Whitney Canada
    PW100

$
69.0



1984/1993



Mature


ATR 42/72, Embraer 120 and Dash 8
    series regional turboprops   Repair and overhaul process.
  
    Disassembly, cleaning, and parts
    inspection.  After we receive an engine for repair
    and overhaul, our technicians disassemble the unit into its
    parts, a process that requires special tooling and expertise.
    Each part is identified to ensure traceability throughout the
    MRO process. The parts are then cleaned and inspected in
    accordance with specifications for serviceable material
    condition, structural integrity, and dimensional tolerances. Our
    technicians record the condition of the parts, prepare work
    orders for repairable parts, and order replacement parts as
    required. The information we gather during inspection of the
    engine parts enables us to prepare a detailed cost estimate.
    Parts re-manufacturing and replacement.  The
    next phase of the MRO process involves the re-manufacturing of
    repairable parts, issue of replacement parts from our inventory,
    and procurement of any parts we do not routinely stock. We seek
    to remanufacture parts or offer used serviceable replacement
    parts to our customers as an alternative to new parts. Our parts
    re-manufacturing capabilities include extensive machining,
    welding, brazing, metalizing, heat treatment, metal reshaping,
    surface refinishing and coating processes. Repairs to individual
    parts are performed in accordance with OEM and
    government-approved specifications and may involve more than
    fifty discrete process steps to complete. Although we
    subcontract a small number of processes to third parties, the
    majority of the re-manufacturing work is done in our own 3




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facilities. Re-manufacturing parts in lieu of new parts
    generally lowers customer costs and increases our margins, when
    compared to an engine overhaul that consists exclusively of new
    parts. In addition, these re-manufacturing and service
    capabilities are integral to our competitive position because
    they enable us to maintain or increase the quality of work we
    perform and significantly reduce costs and turn around times. An
    on-line master schedule and visual scheduling boards are used to
    coordinate the production activities required to meet our turn
    around time commitments. On-line business systems are also used
    by technicians to record the completion of all production tasks
    in accordance with our quality system requirements, to collect
    labor costs, and to track the location of parts and assemblies
    throughout the MRO process.  
    Re-assembly, engine testing, and outbound
    logistics.  The engine is then reassembled, with
    technicians recording the completion of all tasks and
    documenting the results of inspections that impact engine
    performance. The engine is then installed in a test fixture and
    tested in accordance with OEM and government approved
    specifications to check for leakages, fuel efficiency, operating
    temperature range and power output. An engine, which has gone
    through a complete overhaul, must meet the OEMs
    performance and safety specifications. It is then classified as
    a zero time engine, meaning that it can operate for the same
    number of hours before the next major maintenance event as a new
    engine. Upon successfully completing all performance tests and
    final inspection criteria, the engine is packaged for outbound
    shipment to the customer. Engines are generally shipped via
    third party ground transportation carriers.  Engine leasing program.
  Repair and overhaul facilities.
  OEM
    Authorizations and Licenses
       4




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Customers
    and Significant Contracts
      
    time and material contracts, where we charge our customer a
    price based on the specific work to be performed;
    fixed price per maintenance or service event contracts, where
    pre-negotiated fixed prices are charged for specific MRO or
    redesign services; and
    fixed price per engine hour/cycle contracts, where a flat rate
    based on
    engine-hours/cycles
    used is charged for any and all MRO service requirements during
    the term of the contract.    Kelly Air Force Base T56 subcontract:
  SkyWest CF34 contract: CRJ-700 20-year
  Oklahoma City Air Logistics Center
    contract: 10-year
  Competitive
    Strengths
    Industry leading service provider.
 5




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Leading market positions.
  High barriers to entry.
  Regulated maintenance requirements provide demand for our MRO
    services.
  Well-positioned to benefit from current industry
    trends.
  Experienced management team with proven track
    record.
 6




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Business
    Strategy
    Win new business.
  Capitalize on our advanced facilities.
  Pursue selected acquisition opportunities.
  Competitive
    Environment
    
    Service divisions of OEMs.  We estimate that
    the service divisions of OEMs, including Rolls-Royce, General
    Electric, Pratt & Whitney Canada and Honeywell,
    comprise approximately one-half of the market for all MRO
    services. Service divisions of OEMs compete on the basis of
    their affiliations with OEMs, which may give them design
    authority, brand recognition, strong and long-term customer
    relationships beginning with the original sale of the engines,
    which may include a MRO service agreement, the ability to adapt
    quickly to customer requirements involving technical
    specification changes, a diverse product and service base,
    significant financial resources, control over product
    certification and control over sources of approved parts.
    Other independent MRO service providers.  Most
    of the independent MRO service providers that compete with us
    also operate under authorizations from OEMs, and include Vector
    Aerospace Corporation, BBA 7




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Aviation plc, MTU Aero Engines and Rolls Wood Group. We also
    compete with independent MRO service providers that do not have
    authorization from the OEMs or hold limited approvals or
    licensing agreements from the OEMs that only allow for the
    repair of certain components of engines such as Chromalloy Gas
    Turbines. These competitors may have strong and long-term
    customer relationships and greater financial resources than us.  
    In-house maintenance services.  While recently
    there has been an increasing trend among commercial airlines to
    outsource their engine MRO needs, some of the large commercial
    airlines maintain in-house MRO service divisions. These service
    divisions often provide MRO services externally but do not have
    the benefit of holding OEM authorizations to provide MRO
    services to third parties. These competitors include Lufthansa
    Technik, Air Canada Technical Services and the MRO division of
    Delta Airlines. In-house maintenance services have several
    competitive advantages, including captive engine fleets, and may
    have greater financial resources than us.  Sales and
    Marketing
        Employees
    Raw
    Materials
     8




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Research
    and Development, Patents, Trademarks and Licenses
          Governmental
    Regulation of the Aerospace and Defense Industry
  and/or and/or
      Environmental
    Matters
   9




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Item 1A.
    Risk
    Factors.  You should read the following risks described below together
    with the other information contained in this report. The risks
    described below are not the only risks facing us. Additional
    risks and uncertainties not currently known to us or that we
    currently deem to be immaterial may also materially adversely
    affect our business, financial condition or results of
    operations. Any of the following risks could materially
    adversely affect our business, financial condition or results of
    operations.
  A
    significant portion of our revenues are derived under a single
    contract that has been the subject of a dispute and that may be
    terminated in certain circumstances, some of which are beyond
    our control.
    A
    significant portion of our revenues are derived from contracts,
    directly or indirectly, with the U.S. military that are
    subject to U.S. Government contracting rules and
    regulations.
   10




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A
    decline in the operational tempo of the U.S. military would
    affect the frequency with which the engines used in military
    aircraft reach scheduled intervals for maintenance events, which
    would adversely affect our results of operations.
    Decreases
    in spending or outsourcing by our military end-users could
    materially reduce our revenues and adversely affect our
    financial condition.
      A
    significant portion of our revenues from regional and business
    aviation customers are derived from services we provide on
    behalf of OEMs as a subcontractor for services they provide to
    their customers. As a result, we could be adversely affected by
    changes in demand by OEMs or their customers.
   11




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We
    have incurred significant costs to obtain authorizations for new
    engine platforms, including the CF34 and AE3007, and to
    establish facilities for servicing such platforms. We may not
    realize all of the revenues or profit margins expected from
    these engine platforms now or in the future or recover the
    significant capital we have expended.
    
    The current CF34 engine MRO market is currently based on
    unscheduled maintenance events and General Electric-sponsored
    upgrade campaigns, which results in uncertainty in revenues. We
    do not anticipate scheduled MRO activity on this engine platform
    until 2007 when the first volume of expected scheduled
    maintenance events come due.
    Because customers of CF34 MRO services are limited in number and
    because the contracts for these services could be long term in
    nature, to the extent that these customers enter into contracts
    with other MRO providers, we could effectively be precluded from
    competing for this business for a significant period of time.
    The CF34 engine has proven to be significantly more reliable
    than most other small turbofan engines, with the first major
    required MRO event for CF34 engines occurring between 9,000 and
    18,000 cycles, depending on the model, as compared to
    4,000-6,000 hours/cycles for other turbofan engines. As a
    result, our service volumes for the CF34 engine may be lower
    than for other engines with higher scheduled maintenance
    frequencies.
    We are currently the only independent authorized MRO provider
    for the CF34 in North America. Our ability to win new business
    for this platform could be adversely affected by increased
    competitive pressure if General Electric authorizes additional
    independent service providers or if General Electric expands its
    existing in-house MRO capabilities.
    We depend on Rolls-Royce for a significant portion of our AE3007
    business as we provide services for Rolls-Royce on certain
    engines for which they have
    power-by-the-hour
    contracts with the end-user. Rolls-Royce maintains its own MRO
    facility and may elect to service a greater proportion of AE3007
    engines in-house or further change the pricing or level of
    workscopes that we receive.
    We have based our business plan, in part, on the assumption that
    the worldwide regional jet fleet and the associated maintenance
    requirements will continue to grow. Over time our anticipated
    returns from our regional jet business could be adversely
    affected if new production demand or passenger traffic results
    in lower than anticipated engine production in this market.
    Our regional airline customers and end users operate under
    service agreements with the major airlines. We depend on these
    regional airlines for a significant portion of our CF34 and
    AE3007 revenues. Our anticipated returns from our regional jet
    business may be impacted by the financial stability of the major
    airlines and their regional partners. We may be adversely
    affected by early termination of aircraft leases, inability to
    re-market surplus aircraft, reduction in aircraft utilization,
    early termination of MRO service agreements, deferral of
    maintenance requirements and inability of our airline customers
    to honor their financial commitments. 12




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The
    prices that we charge under our fixed-price contracts are
    predetermined and we bear the risk that our costs may exceed our
    estimates.
    Material
    weaknesses in our internal control over financial reporting have
    previously resulted in material misstatements in our financial
    statements that required us to restate certain of our historical
    financial statements. If we fail to maintain effective internal
    control over financial reporting at a reasonable assurance
    level, we may not be able to accurately report our financial
    results or prevent fraud.
  Form 10-K Form 10-K
  A
    significant portion of our revenues is generated from engine
    platforms that are mature or declining. If we are unable to
    offset the resulting declines in revenues as engines are
    retired, our results of operations will be adversely
    affected.
  P-3
 13




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Competition
    in our business is intense and concentrated given the market in
    which we participate and the range of services that we provide
    within that market.
    Service divisions of OEMs.
  Other independent MRO service providers.
    In-house maintenance services of the commercial
    airlines.
   14




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If we
    fail to obtain or maintain engine service authorizations from
    OEMs, our revenues, cash flows and profitability may be
    materially adversely affected.
      
    our failure to comply with applicable specifications provided to
    us by OEMs;
    a material breach by us under our OEM authorizations or
    termination or expiration of those authorizations;
    a change of control of our company without consent or approval
    from OEMs where required;
    our failure to obtain or comply with applicable governmental
    regulatory approvals; and
    a significant service failure for which we are found to be
    responsible.  A
    majority of our parts are procured from OEMs and their
    affiliates. If we are unable to purchase component parts or raw
    materials from these or other of our key suppliers, our business
    and results of operations may be materially adversely
    affected.
      
    destruction of our suppliers facilities or their
    distribution infrastructure or the failure of essential
    equipment at their facilities;
    a work stoppage or strike by our suppliers employees;
    failure of our suppliers to provide materials of requisite
    quality;
    a failure or shortage of supply of raw materials to our
    suppliers; and
    contractual amendments and disputes with respect to pricing and
    other terms with our suppliers.   15




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Our
    profitability will be adversely affected if we are unable to
    reduce costs or increase prices in response to fluctuations in
    demand for our services.
    We
    rely on intellectual property in our business and our business
    could be adversely affected if we lose our intellectual property
    rights.
    The
    regional and business aviation industry may experience
    disruptions as a result of terrorist threats or attacks and
    other exogenous factors beyond our control that could materially
    adversely affect our results of operations and financial
    condition in future periods.
        
    Downturns in commercial air travel may contribute to excess
    capacity in the MRO market and increased competition for MRO
    work. We may not have sufficient resources to compete
    effectively and our profit margins may be negatively impacted;
    Changes in passenger travel patterns may require commercial
    airlines to retire some of the aircraft that use engine
    platforms that we service; and
    Continued increases in fuel prices may result in the retirement
    of older engines that we service in favor of newer, more
    fuel-efficient models.    We
    will not be able to operate our business if we fail to comply
    with or obtain and maintain the necessary regulatory
    approvals.
   16




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
    periodically undergo extensive inspections and audits of our
    facilities and practices;
    obtain and maintain certifications from regulatory authorities
    to provide service for commercially operated aircraft
    engines; and
    obtain and maintain recognized quality approvals, such as
    ISO-9000 and ISO-9001.    Our
    operations depend on our facilities, which are subject to
    physical and other risks that could disrupt our
    business.
    Changes
    in foreign exchange rates could have adverse effects on our
    results of operations and financial condition.
      Our
    international operations are exposed to various risks, which
    could have a material adverse effect on our results of
    operations and financial condition.
   17




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non-U.S. subsidiaries
  
    the burden of complying with multiple and possibly conflicting
    laws and any unexpected changes in regulatory requirements;
    exchange controls, import and export restrictions and tariffs
    and other trade protection measures;
    political risks, including risks of loss due to civil
    disturbances, acts of terrorism, acts of war, guerilla
    activities and insurrection;
    unstable economic, financial and market conditions and increased
    expenses as a result of inflation, or higher interest rates;
    potentially adverse tax consequences from changes in tax laws,
    requirements relating to withholding taxes on remittances and
    other payments by subsidiaries and restrictions on our ability
    to repatriate dividends from our subsidiaries; and
    exposure to liabilities under the U.S. Foreign Corrupt
    Practices Act.    We may
    face large liability claims, which could have a material adverse
    effect on our results of operations and financial
    condition.
    
    the failure of an aircraft on which an engine for which we
    provided MRO services has been installed;
    the reliability and skills of the operators of our
    customers aircraft; and
    the type and amount of maintenance on aircraft and component
    systems performed by our customers.    Our
    operations may prove harmful to the environment, which could
    expose us to fines and damages and could require expensive
    remediation.
    
    the generation, storage, handling, use and transportation of
    hazardous materials;
    emissions and discharges to air, soil and water;
    the health and safety of our employees; and
    other environmental matters.   18




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Acquisitions
    and business combinations may prove risky for us.
    
    the incurrence of any debt or contingent liabilities and an
    increase in interest expense, amortization expense related to
    intangible assets, and possible goodwill impairment charges;
    our failure to discover liabilities of the acquired company for
    which we may be responsible as a successor owner or operator
    despite any investigation we make before the acquisition;
    our inability to integrate the operations, technology and
    personnel of the acquired company;
    the diversion of managements attention from our core
    operations as they attend to any transactional or business
    integration issues that may arise;
    our loss of key personnel of the acquired company; and
    our becoming subject to material liabilities as a result of
    failure to negotiate adequate indemnification rights.      Failure
    to retain certain of our executive officers or attract and
    retain the services of certain qualified employees may
    materially adversely affect our business and results of
    operations.
      We are
    controlled by Carlyle, whose interests in our business may
    differ from the interests of our other investors.
   19




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Our
    substantial indebtedness could adversely affect our ability to
    raise additional capital to fund our operations, limit our
    ability to react to changes in the economy or our industry and
    prevent us from fulfilling our obligations under our
    notes.
    
    our senior credit facilities, consisting of an eight-year term
    loan facility, under which we had outstanding indebtedness of
    $212.5 million, and a $50.0 million six-year revolving
    credit facility, under which we had $2.0 million
    outstanding indebtedness;
    $200.0 million in aggregate principal amount of our
    81/4% senior
    subordinated notes due 2014.    
    make it more difficult for us to satisfy our obligations with
    respect to our notes;
    increase our vulnerability to a downturn in general economic and
    industry conditions or in our business;
    require us to dedicate a substantial portion of our cash flow
    from operations to payments on our indebtedness, thereby
    reducing the availability of our cash flow to fund working
    capital, capital expenditures, research and development efforts,
    future business opportunities and other general corporate
    purposes;
    limit our flexibility in planning for, or reacting to market
    conditions, including changes in our business and the industry
    in which we operate and place us at a competitive disadvantage
    compared to other providers of MRO services that have less debt;
    restrict us from making strategic acquisitions or exploiting
    business opportunities;
    limit our ability to make capital expenditures that are
    important to our growth and to our ability to maintain our
    facilities in good working order and repair; and
    limit, among other things, our ability to borrow additional
    funds or dispose of assets.    If we
    default on our obligations to pay our indebtedness we may not be
    able to make payments on our notes.
   20




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To
    service our indebtedness, we require a significant amount of
    cash. Our ability to generate cash depends on many factors
    beyond our control.
          Despite
    current indebtedness levels, we, and our subsidiaries are able
    to incur substantially more debt, which would further exacerbate
    the risks associated with our substantial
    leverage.
    Our
    note holders right to receive payments on our notes and
    the guarantees is subordinated to the borrowings under our
    senior credit facilities and possibly all our future
    borrowings.
       21




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Our
    note holders ability to receive payments on their notes is
    junior to those lenders who have a security interest in our
    assets.
    Restrictive
    covenants in our senior credit facilities and the indenture
    governing our notes may restrict our ability to pursue our
    business strategies.
    
    incur, assume or guarantee additional indebtedness or contingent
    obligations;
    make restricted payments, including, without limitation, pay
    dividends or make distributions to our stockholders, make loans
    and redeem debt that is junior in right of payment to our notes;
    repurchase or redeem our stock;
    make investments;
    grant liens;
    make capital expenditures;
    enter into transactions with our affiliates;
    issue redeemable or preferred stock;
    enter into agreements that restrict dividends from subsidiaries;
    change our business;
    sell assets; and
    acquire the assets of, or merge or consolidate with, other
    companies or sell or otherwise dispose of substantially all of
    our assets.   22




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Certain
    subsidiaries are not subsidiary guarantors of our indebtedness
    under our notes.
      Our
    variable rate indebtedness subjects us to interest rate risk,
    which could cause our debt service obligations to increase
    significantly.
    Federal
    and state fraudulent transfer laws permit a court to void our
    notes and the guarantees, and, if that occurs, our note holders
    will not receive any payments on our notes.
    
    we or any of our guarantors were or was insolvent or rendered
    insolvent by reason of the incurrence of the
    indebtedness; or
    payment of the consideration left us or any of our guarantors
    with an unreasonably small amount of capital to carry on the
    business; or
    we or any of our guarantors intended to, or believed that we or
    it would, incur debts beyond our or its ability to pay as they
    mature.   23




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
    the sum of its debts, including contingent liabilities, was
    greater than the fair market value of all its assets; or
    the present fair market value of its assets was less than the
    amount that would be required to pay its probable liability on
    its existing debts and liabilities, including contingent
    liabilities, as they become absolute and mature; or
    it could not pay its debts as they become due.      We are
    a holding company and may not have access to sufficient cash to
    make payments on our notes.
      Item 1B.
    Unresolved
    Staff Comments.   24




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Item 2.
    Properties.    ApproximateArea (Square


Type of PropertyLocation

Feet)


Interest Held

UseWinnipeg, Canada


540,000


Owned/Leased

Repair and overhaulSan Antonio, TX


370,000


Leased

Repair and overhaulMaryville, TN


120,000


Owned

Repair and overhaulTilburg, the Netherlands


77,000


Owned

Repair and overhaulSingapore


23,000


Leased

Repair and overhaulVancouver, Canada


8,500


Leased

Sales, repair and field serviceSydney, Australia


8,000


Leased

Repair and overhaulConcord, NC


6,900


Leased

Sales, repair and field serviceSouthlake, TX


5,500


Leased

Sales, repair and field serviceMontreal, Canada


4,000


Leased

Sales, repair and field serviceOklahoma City, OK


3,000


Leased

Enterprise ServicesOgden, UT


2,700


Leased

Enterprise ServicesCalgary, Canada


1,200


Leased

Sales and field serviceSeattle, WA


1,000


Leased

Sales and field serviceVan Nuys, CA


700


Leased

Sales and field serviceGodstone, UK


300


Leased

SalesAllentown, PA


300


Leased

Sales and field serviceSalisbury, NC


300


Leased

SalesLafayette, LA


300


Leased

SalesFort Lauderdale, FL


290


Leased

Sales     Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities   25




---



##### Table of Contents



Item 6.
    Selected
    Financial Data    Year Ended


Year Ended


August 25



January 1 December 31,


December 31,


December 31,



August 24,


Year Ended December 31,2006


2005


2004



2004


2003


2002(Successor)









(Predecessor)(In thousands, except ratios)Statements of operations
    data:Revenues

$
778,844


$
760,707


$
284,116



$
509,385


$
545,029


$
461,173Operating ExpensesCost of revenues


661,542



661,430



249,710




423,368



456,058



382,484Selling, general and
    administrative expenses


49,976



52,339



20,974




30,317



37,942



34,268Amortization of intangible assets


8,585



9,385



3,262




1,835



2,752



2,752Restructuring costs






3,215
















Goodwill impairment






47,377
















Total operating expenses


720,103



773,746



273,946




455,520



496,752



419,504Income (loss) from operations


58,741



(13,039
)


10,170




53,865



48,277



41,699Interest expense


38,594



36,440



14,005




4,835



8,118



11,689Income (loss) before income taxes


20,147



(49,479
)


(3,835
)



49,030



40,159



29,980Income tax expense (benefit)


660



(298
)


66




15,822



15,163



12,310Net income (loss)

$
19,487


$
(49,181
)

$
(3,901
)


$
33,208


$
24,996


$
17,670Other financial and ratio
    data:Capital expenditures, net

$
9,662


$
13,542


$
6,385



$
11,710


$
16,417


$
29,194Depreciation and amortization


25,490



25,300



8,825




14,229



19,685



18,928Net cash provided by operating
    activities


53,331



20,859



19,760




36,966



66,655



495Net cash used in investing
    activities


(9,405
)


(13,485
)


(670,396
)



(11,598
)


(16,320
)


(28,895
)Net cash provided by (used in)
    financing activities


(52,252
)


(10,487
)


678,468




(11,841
)


(45,088
)


12,994Effect of exchange rate changes on
    cash and cash equivalents


1,317



(722
)


59




(525
)


(2,356
)


1,383   26




---



##### Table of Contents



At December 31,2006


2005



2004


2003


2002(Successor)



(Predecessor)(In thousands)Balance sheet data:Cash and cash equivalents

$
17,047


$
24,056



$
27,891


$
22,698


$
19,807Total assets


846,221



843,038




947,162



582,973



578,898Long term debt


420,295



470,000




487,261



171,419



168,202Total stockholders equity


181,504



161,979




211,151



245,417



257,080  27




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Basis of
    Presentation
      Overview
      
    the number of engines in operation (the installed
    base);
    the age of the installed base; and
    the utilization rate of the installed base.    time-and-materials
  Kelly Air
    Force Base Subcontract
   28




---



##### Table of Contents




    The amendment provides that each extension of KACs prime
    contract with the U.S. Air Force, Oklahoma City Air
    Logistic Center will result in the KAC subcontract being
    extended as well. As a result, the KAC subcontract has been
    extended until February 2010 and will be extended for additional
    years to February 2014 if and when annual option years are
    awarded to the prime contractor.
    The amendment provides that commencing in the governments
    fiscal year ending September 30, 2007, we will be subject
    to annual performance evaluations based on objective criteria.
    In the event that we fail to perform satisfactorily we will be
    required to pay liquidated damages to KAC. These liquidated
    damages are initially capped at $2.0 million in any year
    but may be as high as $4.0 million in certain circumstances
    if we fail to perform satisfactorily in successive years. Based
    on the past five years of performance on the contract, we
    estimate that we would have incurred an aggregate of
    approximately $500,000 of liquidated damages had the performance
    evaluation criteria been in place during those years.
    The amendment provides for a commitment by us to provide cost
    savings to KAC in the form of a reduction in the prices that we
    charge to KAC for MRO services. The revised terms will result in
    a pre-determined cost savings for the twelve months ended
    September 30, 2007. The cost savings to KAC for each
    12-month
    period thereafter will be determined by a formula that includes
    several variables.    Trends
    Affecting Our Business
  Military MRO. P-3
  P-3
   29




---



##### Table of Contents



10-year
  end-to-end
  Regional Jet Engine MRO.
     30




---



##### Table of Contents



Turboprop MRO.
  Very Light Jet market. point-to-point
    Financial
    statement presentation
    Revenues.
  Cost of revenues.
  Selling, general and administrative
    expense.
  Critical
    accounting policies
   31




---



##### Table of Contents



Revenue recognition.
    Reserve for warranty costs.
  Reserve for doubtful accounts receivable.
  Goodwill and intangible assets.
 32




---



##### Table of Contents



Impairment of long-lived assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets.
  Inventory. first-in part-by-part
  Income taxes. Accounting for Income
    Taxes.
    Results
    of Operations
     33




---



##### Table of Contents



August 25,


January 1,Year Ended


Year Ended


Year Ended


2004 to


2004 toDecember 31,


December 31,


December 31,


December 31,


August 24,2006


2005


2004(1)


2004


2004(Successor)


(Successor)


(Combined)


(Successor)


(Predecessor)(In thousands)Revenues

$
778,844


$
760,707


$
793,501


$
284,116


$
509,385Cost of revenues


661,542



661,430



673,078



249,710



423,368Gross Profit


117,302



99,277



120,423



34,406



86,017Selling, general and
    administrative expense


49,976



52,339



51,291



20,974



30,317Amortization of intangible assets


8,585



9,385



5,097



3,262



1,835Restructuring costs






3,215











Goodwill impairment






47,377











Income (loss) from operations


58,741



(13,039
)


64,035



10,170



53,865Interest expense


38,594



36,440



18,840



14,005



4,835Income (loss) before income taxes


20,147



(49,479
)


45,195



(3,835
)


49,030Income tax expense (benefit)


660



(298
)


15,888



66



15,822Net income (loss)

$
19,487


$
(49,181
)

$
29,307


$
(3,901
)

$
33,208     (1)
    
    Represents the combination of the Successor and Predecessor
    periods for comparative purposes only.  Year
    Ended December 31, 2006 compared to the Year Ended
    December 31, 2005
  Revenues.
  Gross profit.
  Selling, general and administration expense
    (SG&A).
 34




---



##### Table of Contents



Amortization of intangible
    assets.
  Restructuring costs.
  Goodwill impairment.
  Income (loss) from operations.
  Interest expense.
  Income tax expense. provision-to-return
  Year
    Ended December 31, 2005 compared to the Year Ended
    December 31, 2004
  Revenues.
  Gross profit.
 35




---



##### Table of Contents



Selling, general and administration expense
    (SG&A).
  Amortization of intangible
    assets.
  Restructuring costs.
  Goodwill impairment.
  Income (loss) from operations.
  Interest expense.
  Income tax expense.
 36




---



##### Table of Contents



Segment
    Results of Operations
    August 25,


January 1,Year Ended


Year Ended


Year Ended


2004 to


2004 toDecember 31,


December 31,


December 31,


December 31,


August 24,2006


2005


2004(1)


2004


2004(Successor)


(Successor)


(Combined)


(Successor)


(Predecessor)(In thousands)Revenues:Aviation MRO

$
733,978


$
751,526


$
786,455


$
282,376


$
504,079Enterprise Services


44,866



9,181



7,046



1,740



5,306Total revenue


778,844



760,707



793,501



284,116



509,385Segment Income (Loss) from
    Operations:Aviation MRO


68,174



6,725



101,425



39,170



62,255Enterprise Services


2,161



(3,896
)


(4,856
)


(1,746
)


(3,110
)Segment income from operations


70,335



2,829



96,569



37,424



59,145Corporate expenses


11,594



15,868



32,534



27,254



5,280Interest expense


38,594



36,440



18,840



14,005



4,835Income (loss) before income taxes


20,147



(49,479
)


45,195



(3,835
)


49,030Income tax expense (benefit)


660



(298
)


15,888



66



15,822Net income (loss)

$
19,487


$
(49,181
)

$
29,307


$
(3,901
)

$
33,208     (1)
    
    Represents the combination of the Successor and Predecessor
    periods for comparative purposes only.  Aviation
    MRO
  Year
    Ended December 31, 2006 compared to the Year Ended
    December 31, 2005
  Revenues.
  Segment income from operations.
 37




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##### Table of Contents



Year
    Ended December 31, 2005 compared to the Year Ended
    December 31, 2004
  Revenues.
  Segment income from operations.
  Enterprise
    Services
  Year
    Ended December 31, 2006 compared to the Year Ended
    December 31, 2005
  Revenues.
  Segment income (loss) from
    operations.
  Year
    Ended December 31, 2005 compared to the Year Ended
    December 31, 2004
  Revenues.
  Segment income (loss) from
    operations.
  Liquidity
    and capital resources
  Liquidity
    requirements
   38




---



##### Table of Contents




    our senior credit facilities, consisting of an eight-year term
    loan facility, under which we had outstanding indebtedness of
    $220.0 million, and a $50.0 million six-year revolving
    credit facility, under which $2.0 million was drawn at
    March 8, 2007; and
    $200.0 million in aggregate principal amount of our
    81/4% senior
    subordinated notes due 2014.    Senior
    credit facilities
  non-U.S. subsidiaries
      Senior
    credit agreement covenant compliance
   39




---



##### Table of Contents



40




---



##### Table of Contents



Year Ended


Year EndedDecember 31,


December 31,2006


2005(Millions)Net income

$
19.5


$
(49.2
)Add:Depreciation and amortization


25.5



25.3Interest expense


38.6



36.4Provision for income taxes


0.6



(0.3
)Non-recurring expenses(1)


8.4



6.9Non-recurring impairment(2)






77.1Management fee


1.5



1.6Adjusted EBITDA

$
94.1


$
97.8     (1)
    
    We incurred $8.4 million in costs associated with a charge
    under a fixed price per engine utilization contract,
    professional fees and other costs associated with the KAC
    contractual review and settlement and a fixed asset write-off
    during the period ended December 31, 2006. We incurred
    $3.9 million in employee severance costs during the period
    ended December 31, 2005, and $3.0 million in
    non-recurring professional fees associated with contractual
    review, potential acquisitions and the exchange offer of our
    senior subordinated notes.(2)
    
    We incurred $77.1 million in goodwill and intangible asset
    impairment in accordance with SFAS 144 and SFAS 142
    related to the potential loss of, or changes to, the Kelly Air
    Force Base subcontract during the period ended December 31,
    2005.  Senior
    subordinated notes
  1 4
 41




---



##### Table of Contents



Cash
    flows
    Year Ended


Year Ended


Year Ended


August 25 


January 1 December 31,


December 31,


December 31,


December 31,


August 24,2006


2005


2004


2004


2004(Successor)


(Successor)


(Combined)


(Successor)


(Predecessor)(In thousands)Net cash provided by (used in)
    operating activities

$
53,331


$
20,859


$
56,726


$
19,760


$
36,966Net cash used in investing
    activities


(9,405
)


(13,485
)


(681,994
)


(670,396
)


(11,598
)Net cash provided from (used in)
    financing activities


(52,252
)


(10,487
)


666,627



678,468



(11,841
)Effect of exchange rate changes on
    cash and cash equivalents


1,317



(722
)


(466
)


59



(525
)Net increase (decrease) in cash
    and cash equivalents


(7,009
)


(3,835
)

$
40,893


$
27,891


$
13,002   Net
    cash provided by (used in) operating activities
      Net
    cash used in investing activities
    Net
    cash provided by (used in) financing activities
     42




---



##### Table of Contents



Commitments
    Payments Due by PeriodLess Than


1-3


4-5


AfterTotal


1 Year


Years


Years


5 Years(In millions)Term loan(1)

$
301.4


$
16.2


$
32.4


$
32.4


$
220.4Equipment loan


0.5







0.1



0.1



0.3Senior subordinated notes(2)


332.0



16.5



33.0



33.0



249.5Capital commitments


2.1



1.2



0.3



0.2



0.4Operating lease obligations


43.9



11.4



20.8



10.8



0.9Total contractual obligations

$
679.9


$
45.3


$
86.6


$
76.5


$
471.5     (1)
    
    Includes required interest payments based on an interest rate at
    December 31, 2006 of 7.62%. Scheduled payments have been
    included in the interest payment calculation.(2)
    
    Includes required interest payments at 8.25%.  Inflation
    Seasonality
    Recent
    Accounting Pronouncements
      Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   43




---



##### Table of Contents



Interest rate risks.
  Currency risks. i.e.
  Item 8.
    Financial
    Statements and Supplementary Data.    Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
      Remediation
    of Material Weaknesses in Internal Control over Financial
    Reporting
   44




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
    Item 9B.
    Other
    Information.   45




---



##### Table of Contents



Item 10.
    Directors
    and Executive Officers of the Registrant.    Name

Age

PositionDavid Shaw


49


Chief Executive Officer and
    DirectorBradley Bertouille


44


Chief Financial OfficerPaul Soubry, Jr.


44


Chief Operating OfficerPeter J. Clare


41


DirectorAllan Holt


54


DirectorAdam Palmer


34


DirectorAndrew Shinn


33


DirectorThomas Corcoran


62


DirectorRalph Eberhart


60


DirectorDavid Squier


61


Director     David Shaw
  Bradley Bertouille
  Paul Soubry, Jr.
  Peter J. Clare
  Allan Holt
 46




---



##### Table of Contents



Adam Palmer
  Andrew Shinn
  Thomas Corcoran
  General Ralph E. Eberhart
  David Squier
  Committees
    of our Board of Directors
   47




---



##### Table of Contents



Code of
    Ethics
  Form 8-K.
  Item 11.
    Executive
    Compensation  Compensation
    Discussion and Analysis
        Executive
    Compensation Program Objectives and Overview
       48




---



##### Table of Contents



Current
    Executive Compensation Program Elements
  Base
    Salary
    Executive
    Bonus Plan
    Perquisites
   49




---



##### Table of Contents



Pension
    Plan
    Stock
    Option Plan
      
    Approximately 31% of the options are time vesting options that
    will vest on or prior to December 31, 2008. Notwithstanding
    the foregoing, such options will vest upon a change in control
    (as defined in the Plan).
    Approximately 47% of the options are performance vesting options
    that will vest on the day immediately preceding the seventh
    anniversary of the date of grant, provided the option holder
    remains continuously employed with the Company. However, all or
    a portion of such performance vesting options may be eligible
    for accelerated vesting over a five-year period, starting with
    2004, if certain performance targets relating to earnings and
    cash flow are met. Notwithstanding the foregoing, certain of
    such options that have not yet become eligible for accelerated
    vesting may vest upon a change in control if certain performance
    targets are met or at the sole discretion of the Compensation
    Committee.
    Approximately 22% of the options are performance vesting options
    that will vest between December 31, 2006 and
    December 31, 2008 if certain performance targets relating
    to earnings and cash flow are met. Notwithstanding the
    foregoing, such options may vest upon a change in control at the
    sole discretion of the Compensation Committee.   50




---



##### Table of Contents



Employment
    Agreements
  Potential Payments Upon Termination
    or
    Change-in-Control
  Compensation
    Committees Report on Executive
    Compensation1
    Form 10-K.
  Compensation
    Committee of
    the Board of Directors
  
  Compensation
    Committees Interlocks and Insider Participation
    Summary
    Compensation Table
       1
 51




---



##### Table of Contents



Change inPensionvalue andNonqualifiedNon-equity


DeferredName and










Stock


Option


Incentive Plan


Compensation


All OtherPrincipal Position

Year


Salary($)(1)


Bonus($)


Awards($)


Awards($)


Compensation($)


Earnings($)


Compensation($)


Total($)(a)

(b)


(c)


(d)


(e)


(f)


(g)


(h)


(i)


(j)David Shaw,


2006


$
550,476














$
605,524






$
52,253
(4)

$
1,208,253Chief Executive Officer(2)Bradley Bertouille,


2006



233,841















257,225







32,552
(5)


523,618Chief Financial Officer(2)Paul Soubry,


2006



396,467















394,727







39,197
(6)


830,391Chief Operating Officer(2)Edward Richmond,


2006



361,784























37,829
(7)


399,613President Enterprise Services and
    Sr. VP Strategy and Business Development(2)(3)     (1)
    
    Includes base salary and vacation payments. For a more
    comprehensive discussion of the named executive officers
    salaries, see  Base Salary.(2)
    
    Messrs. Shaw, Bertouille, Richmond and Soubrys
    compensation is Canadian dollars converted to US dollars at
    period average exchange rates.(3)
    
    Mr. Richmonds employment with us ended
    November 10, 2006.(4)
    
    Included in All Other Compensation for Mr. Shaw
    are: $16,755 representing our contribution under the Company
    defined contribution pension plan in 2006; $26,272 representing
    the amount paid by us for automobile related expenses in 2006;
    $3,303 representing amounts paid by us for insurance premiums in
    2006; $1,123 representing the amount paid by us for annual club
    dues in 2006; $1,887 representing the amount paid by us for tax
    return preparation in 2006; $2,312 representing the amount paid
    by us for reimbursement of income tax in 2006; and $601
    representing the amount paid by us for professional associations
    and personal expenses in 2006.(5)
    
    Included in All Other Compensation for
    Mr. Bertouille are: $11,692 representing our contribution
    under the Company defined contribution pension plan in 2006;
    $15,614 representing the amount paid by us for automobile
    related expenses in 2006; $3,303 representing amounts paid by us
    for insurance premiums in 2006; $1,323 representing the amount
    paid by us for annual club dues in 2006; and $620 representing
    the amount paid by us for professional associations in 2006.(6)
    
    Included in All Other Compensation for
    Mr. Soubry are: $16,755 representing our contribution under
    the Company defined contribution pension plan in 2006; $14,442
    representing the amount paid by us for automobile related
    expenses in 2006; $3,303 representing amounts paid by us for
    insurance premiums in 2006; $2,232 representing the amount paid
    by us for annual club dues in 2006; $1,321 representing the
    amount paid by us for tax return preparation in 2006; and $1,144
    representing the amount paid by us for reimbursement of income
    tax in 2006.(7)
    
    Included in All Other Compensation for
    Mr. Richmond are: $16,755 representing our contribution
    under the Company defined contribution pension plan in 2006;
    $14,547 representing the amount paid by us for automobile
    related expenses in 2006; $3,028 representing amounts paid by us
    for insurance premiums in 2006; $331 representing the amount
    paid by us for annual club dues in 2006; $1,698 representing the
    amount paid by us for tax return preparation in 2006; and $1,470
    representing the amount paid by us for reimbursement of income
    tax in 2006. 52




---



##### Table of Contents



Grants of
    Plan-Based Awards
  Estimated Future Payouts UnderNon-Equity Incentive Plan Awards(1)Threshold


Target


MaximumName

Grant Date


($)


($)


($)(a)

(b)


(c)


(d)


(e)David Shaw


1/31/2006


$
0


$
825,714


$
913,790Bradley Bertouille


1/31/2006



0



350,762



388,177Paul Soubry


1/31/2006



0



594,701



658,136Ed Richmond


1/31/2006



0



542,676



600,561     (1)
    
    Named executive officers have annual incentive plan target
    opportunities based on a fixed percentage of their base salary.
    Under the terms of the incentive plan, threshold performance
    earns 0% of the target while the maximum payout is not capped,
    however the Company estimates the maximum payout to be 111% of
    the target.  Outstanding
    Equity Awards at Fiscal Year-End
  Option AwardsEquity Incentive PlanNumber of Securities


Number of Securities


Awards: Number of


OptionUnderlying Unexercised


Underlying Unexercised


Securities Underlying


Exercise


OptionOptions (#)


Options (#)


Unexercised Unearned


Price


ExpirationName

Exercisable


Unexercisable(1)


Options (#)(2)


($)


Date(a)

(b)


(c)


(d)


(e)


(f)David Shaw


15,409



21,020



10,408


$
100.00



12/17/2014Bradley Bertouille


4,623



6,306



3,122



100.00



12/17/2014Paul Soubry


4,623



6,306



3,122



100.00



12/17/2014Edward Richmond


















     (1)
    
    These awards are time vesting options that will vest no later
    than December 16, 2011, provided the named executive
    officer remains continuously employed with the Company. However,
    a portion of time vesting options may be eligible for
    accelerated vesting over a five-year period, starting with 2004,
    if certain performance targets relating to earnings and cash
    flow are met. Notwithstanding the foregoing, certain of such
    options that have not yet become eligible for accelerated
    vesting may vest upon a change in control if certain performance
    targets are met or at the sole discretion of the Compensation
    Committee.(2)
    
    These awards are performance vesting options that will vest
    between December 31, 2006 and December 31, 2008 if
    certain performance targets relating to earnings and cash flow
    are met. Notwithstanding the foregoing, such options may vest
    upon a change in control at the sole discretion of the
    Compensation Committee.  Potential
    Payments Upon Termination or
    Change-in-Control
     53




---



##### Table of Contents



Director
    Compensation
  out-of-pocket
  2006 Director
    Compensation
  Fees Earned


Optionor Paid


Awards


TotalName

in Cash ($)


($)(1)


($)(a)

(b)


(c)


(d)Peter J. Clare


None



None



NoneAllan Holt


None



None



NoneAdam Palmer


None



None



NoneAndrew Shinn


None



None



NoneThomas Corcoran


37,500



24,772



62,272Ralph Eberhart


112,500



24,772



137,272David Squier


None



49,500



49,500     (1)
    
    Each Director with an amount in this column was granted stock
    options with a calculated fair value of $44.00, representing a
    total grant date fair value of $99,000 and is reported as
    compensation for 2006. For a complete discussion of the
    assumptions and methodologies used to value the option awards
    listed in Column (c) above, please see the discussion of
    stock options and stock awards granted during 2006 contained in
    Note 12. Stock options to Standard Aero Holding
    Inc.s Financial Statements, included as part of this
    Annual Report on
    Form 10-K
    and incorporated herein by reference.   54




---



##### Table of Contents



2006 Director
    Stock Options Outstanding
  Number ofOptionsDirector

OutstandingPeter J. Clare


NoneAllan Holt


NoneAdam Palmer


NoneAndrew Shinn


NoneThomas Corcoran


1,500Ralph Eberhart


1,500David Squier


3,000   Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.      
    each person or group known to beneficially own more than 5% of
    the common stock;
    each of the named executive officers in the Summary Compensation
    Table;
    each of our directors;
    all of our directors and named executive officers as a group.      55




---



##### Table of Contents



Shares OwnedName of Beneficial Owner

Number(3)


PercentageTC Group III L.P.(1)


2,150,000



98.2
%Peter J. Clare(2)






Allan Holt(2)






Adam Palmer(2)






Andrew Shinn(2)






Thomas Corcoran


2,000



*Ralph Eberhart


1,500



*David Squier


5,500



*David Shaw


25,309



1.1
%Bradley Bertouille


6,373



*Edward Richmond(4)


3,250



*Paul Soubry Jr.


6,623



*All Directors and Named Executive
    Officers as a Group


50,555



2.3
%     *
    
    Denotes less than 1% beneficial ownership(1)
    
    TC Group III, L.P. is the sole general partner of Carlyle
    Partners III, L.P. and CP III Coinvestment, L.P. the
    record holders of 2,024,452 and 125,548 share of our common
    stock, respectively. TC Group III, L.L.C. is the sole
    general partner of TC Group III, L.P. TC Group, L.L.C. is
    the sole managing member of TC Group III, L.L.C. TCG
    Holdings, L.L.C. is the sole managing member of TC Group, L.L.C.
    Accordingly, (i) TC Group III, L.P. and TC
    Group III, L.L.C. each may be deemed to be a beneficial
    owner of shares of common stock owned of record by each of
    Carlyle Partners III, L.P. and CP III Coinvestment,
    L.P.; and (ii) TC Group, L.L.C. and TCG Holdings, L.L.C.
    each may be deemed to be a beneficial owner of shares of common
    stock owned of record by each of Carlyle Partners III,
    L.P., and CP III Coinvestment, L.P. William E. Conway, Jr.,
    Daniel A. DAniello and David M. Rubenstein are managing
    members of TCG Holdings, L.L.C. and, in such capacity, may be
    deemed to share beneficial ownership of shares of common stock
    beneficially owned by TCG Holdings, L.L.C. Such individuals
    expressly disclaim any such beneficial ownership. The principal
    address and principal offices of TCG Holdings, L.L.C. and
    certain affiliates is c/o The Carlyle Group, 1001
    Pennsylvania Avenue, N.W., Suite 220 South,
    Washington, D.C.
    20004-2505.(2)
    
    Messrs. Clare, Holt, Palmer and Shinn as employees of The
    Carlyle Group, do not directly or indirectly have or share
    voting or investment power or have or share the ability to
    influence voting or investment power over the shares shown as
    beneficially owned by TC Group III L.P.(3)
    
    Includes options issued under the Stock Option Plan of Standard
    Aero Acquisitions Holdings, Inc. and exercisable within
    60 days after December 31, 2006 of 15,409 shares
    for Mr. Shaw; 4,623 shares each for
    Messrs. Bertouille, and Soubry; 3,000 shares for
    Mr. Squier; 1,500 shares each for
    Messrs. Corcoran and Eberhart and 30,655 shares for
    all named executive officers and directors as a group.(4)
    
    Messr. Richmonds shares were repurchased on
    January 17, 2007. 56




---



##### Table of Contents



Equity
    Compensation Plan Information
    Number of SecuritiesRemaining Available forNumber of Securities





Future Issuance Underto be Issued Upon


Weighted-Average


Equity CompensationExercise of


Exercise Price of


Plans (ExcludingOutstanding Options,


Outstanding Options,


Securities Reflected inPlan Category

Warrants and Rights


Warrants and Rights


Column (a))Equity compensation plans approved
    by security holders


163,363


$
100.00



222,242Equity compensation plans not
    approved by security holders










Total


163,363


$
100.00



222,242   Item 13.
    Certain
    Relationships and Related Transactions.  Carlyle
    Management Agreement
  out-of-pocket
  Employment
    Agreements
    Stockholders
    Agreements
    
    impose restrictions on their transfer of Standard Aero
    Acquisitions Holdings, Inc. shares;
    require those stockholders to take certain actions upon the sale
    of Standard Aero Acquisitions Holdings, Inc.; and
    grant Carlyle the right to require other stockholders to
    participate pro rata in connection with a sale of shares by
    Carlyle.  Item 14.
    Principal
    Accountant Fees and Services.  Audit
    Fees
   57




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##### Table of Contents



Audit
    Related Fees
    Tax
    Fees
    All Other
    Fees
    Audit
    Committee Pre-Approval Policies and Procedures
    Item 15.
    Exhibits,
    Financial Statement Schedules.                 58




---



##### 



Index to
    Financial Statements
  
  PageSTANDARD AERO HOLDINGS,
    INC.Reports of
    Independent Registered Public Accounting Firm


60-62Consolidated
    Statements of Operations (Successor) for the years ended
    December 31, 2006 and December 31, 2005 and the period
    from August 25, 2004 to December 31, 2004


63Combined Statement
    of Operations (Predecessor) for the period from January 1,
    2004 to August 24, 2004


63Consolidated
    Balance Sheets as of December 31, 2006 and
    December 31, 2005


64Consolidated
    Statements of Stockholders Equity (Successor) for the
    years ended December 31, 2006 and December 31, 2005
    and the period from August 25, 2004 to December 31,
    2004


65Combined Statements
    of Divisional Equity (Predecessor) for the period from
    January 1, 2004 to August 24, 2004


65Consolidated
    Statements of Cash Flows (Successor) for the years ended
    December 31, 2006 and December 31, 2005 and the period
    from August 25, 2004 to December 31, 2004


66Combined Statement
    of Cash Flows (Predecessor) for the period from January 1,
    2004 to August 24, 2004


66Notes to Financial
    Statements


67-105EX-31.1EX-31.2EX-32.1EX-32.2   59




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm       McLean, Virginia
 March 8, 2007
 60




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
       Chartered Accountants
 Winnipeg, Manitoba, Canada
 March 31, 2005
 Form 10-K No. 333-124394) Form S-4 No. 333-124394) Form S-4 No. 333-124394)
 61




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  To the Stockholder and Board of Directors of
 Standard Aero Holdings, Inc.
    Chartered Accountants
 Winnipeg, Manitoba, Canada
 March 31, 2005
 Form S-4 No. 333-124394) Form S-4 No. 333-124394)
 62




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
    (A WHOLLY OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION
    HOLDINGS, INC.)
    CONSOLIDATED STATEMENTS OF OPERATIONS (SUCCESSOR) / COMBINED
    STATEMENT OF OPERATIONS (PREDECESSOR)  August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)Revenues

$
778,844


$
760,707


$
284,116



$
509,385Operating
    expensesCost of revenues


661,542



661,430



249,710




423,368Selling, general and
    administrative expense


49,976



52,339



20,974




30,317Amortization of intangible assets


8,585



9,385



3,262




1,835Restructuring costs






3,215








Goodwill impairment






47,377








Total operating
    expenses


720,103



773,746



273,946




455,520Income (loss) from
    operations


58,741



(13,039
)


10,170




53,865Interest expense


38,594



36,440



14,005




4,835Income (loss) before income
    taxes


20,147



(49,479
)


(3,835
)



49,030Income tax expense
    (benefit)


660



(298
)


66




15,822Net income (loss)

$
19,487


$
(49,181
)

$
(3,901
)


$
33,208    63




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
    (A WHOLLY OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION
    HOLDINGS, INC.)
    CONSOLIDATED BALANCE SHEETS  December 31,


December 31,2006


2005(In thousands)ASSETSCurrent assetsCash and cash equivalents

$
17,047


$
24,056Cash and cash equivalents
    (restricted)


35,200



Accounts receivable (less
    allowance for doubtful accounts of $2,050 and $2,987 at 2006 and
    2005, respectively)


114,405



120,456Inventories


140,560



134,011Prepaid expenses and other current
    assets


5,495



7,668Income taxes receivable


2,575



3,811Deferred income taxes


1,493



2,407Total current assets


316,775



292,409Deferred finance
    charges


14,880



18,272Deferred income taxes


7,384



7,920Property, plant and equipment,
    net


132,032



136,968Intangible assets,
    net


185,241



195,168Goodwill


189,909



192,301Total assets

$
846,221


$
843,038LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
82,764


$
75,301Other accrued liabilities


30,410



29,197Due to related party


3,940



3,940Unearned revenue


55,545



14,196Accrued warranty provision


4,446



3,986Income taxes payable


1,208



9,323Deferred income taxes


24



Current portion of long-term debt


27



2,574Total current
    liabilities


178,364



138,517Deferred income taxes


66,058



72,542Long-term debt


420,295



470,000Total liabilities


664,717



681,059Commitments and contingencies(note 8)Stockholders
    equityCommon stock(1,000 shares
    authorized, issued and outstanding, par value $0.01)






Additional paid in
    capital


215,099



215,000Accumulated deficit


(33,595
)


(53,082
)Accumulated other comprehensive
    income






61Total stockholders
    equity


181,504



161,979Total liabilities and
    stockholders equity

$
846,221


$
843,038    64




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
    (A WHOLLY OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION
    HOLDINGS, INC.)
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (SUCCESSOR)
    /COMBINED STATEMENTS OF DIVISIONAL EQUITY
    (PREDECESSOR)  Divisional


Divisional


Due from


TotalShare


Retained


Related


DivisionalCapital


Earnings


Companies


Equity(In thousands)PredecessorBalance as of December 31,
    2003

$
163,952


$
85,209


$
(3,744
)

$
245,417Net income






33,208







33,208Net intercompany/interdivisional
    transfers










(10,729
)


(10,729
)Balance as of August 24, 2004

$
163,952


$
118,417


$
(14,473
)

$
267,896   AccumulatedOther


TotalCommon


Paid in


Accumulated


Comprehensive


StockholdersStock


Capital


Deficit


Income


Equity(In thousands)SuccessorBalance as of August 25, 2004

$



$



$



$



$
Issuance of 1,000 shares of
    common stock






215,000











215,000Comprehensive income (loss)Net loss










(3,901
)






(3,901
)Other comprehensive incomeUnrealized gain on cash flow
    hedge, net of tax














52



52Total comprehensive income (loss)










(3,901
)


52



(3,849
)Balance as of December 31,
    2004

$



$
215,000


$
(3,901
)

$
52


$
211,151Comprehensive income (loss)Net loss










(49,181
)






(49,181
)Other comprehensive incomeUnrealized gain on cash flow
    hedge, net of tax














9



9Total comprehensive income (loss)










(49,181
)


9



(49,172
)Balance as of December 31,
    2005

$



$
215,000


$
(53,082
)

$
61


$
161,979Stock based compensation






99











99Comprehensive income (loss)Net income










19,487







19,487Other comprehensive income
    Realized gain on cash flow hedge, net of tax














(61
)


(61
)Total comprehensive income (loss)










19,487



(61
)


19,426Balance as of December 31,
    2006

$



$
215,099


$
(33,595
)

$



$
181,504    65




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
    (A WHOLLY OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION
    HOLDINGS, INC.)
    CONSOLIDATED STATEMENTS OF CASH FLOWS (SUCCESSOR) / COMBINED
    STATEMENTS OF CASH FLOWS (PREDECESSOR)  August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)Cash provided fromOperating activitiesNet income (loss) for the period

$
19,487


$
(49,181
)

$
(3,901
)


$
33,208Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activitiesDepreciation and amortization


25,490



25,300



8,825




14,229Amortization of deferred finance
    charges


3,392



2,943



2,499




363Intangible asset impairment






29,700








Goodwill impairment






47,377








Deferred income taxes


(5,010
)


(13,100
)


(9,162
)



(5,281
)Loss on disposal of property, plant
    and equipment


528



68








Foreign exchange (gain)/loss


(1,317
)


722



(59
)



525Stock based compensation expense


99












Changes in assets and liabilitiesAccounts receivable, net


6,051



(9,964
)


(12,206
)



(32,439
)Inventories


(6,549
)


12,392



40,315




(30,414
)Prepaid expenses and other current
    assets


2,112



(1,718
)


349




(1,670
)Accounts payable and other current
    liabilities


13,535



(27,667
)


(4,820
)



56,774Income taxes payable and receivable


(4,487
)


3,987



(2,080
)



1,671Net cash provided by operating
    activities


53,331



20,859



19,760




36,966Investing activitiesAcquisition of property, plant and
    equipment


(5,245
)


(8,448
)


(4,529
)



(8,194
)Proceeds from disposals of
    property, plant, and equipment


257



57








112Acquisition of rental assets


(14,975
)


(16,028
)


(4,995
)



(9,786
)Proceeds from disposals of rental
    assets


10,558



10,934



3,139




6,393Acquisition of intangibles















(123
)Acquisition of MRO Division of
    Dunlop Standard Aerospace Group Limited, net of cash acquired










(664,011
)



Net cash used in investing
    activities


(9,405
)


(13,485
)


(670,396
)



(11,598
)Financing activitiesRepayment of debt


(50,000
)


(15,000
)


(40,000
)



Payments of capital lease
    obligations and other


(2,561
)


(1,672
)


(626
)



(1,112
)Proceeds from issuance of debt


309







525,000




Issuance of common stock










215,000




Deferred financing charges










(23,714
)



Change in due to/(from) related
    companies






6,185



2,808




(10,729
)Net cash (used in) provided by
    financing activities


(52,252
)


(10,487
)


678,468




(11,841
)Effect of exchange rate changes
    on cash and cash equivalents


1,317



(722
)


59




(525
)Net (decrease) increase in cash
    and cash equivalents


(7,009
)


(3,835
)


27,891




13,002Cash and cash
    equivalents  Beginning of period


24,056



27,891








22,698Cash and cash
    equivalents  End of period

$
17,047


$
24,056


$
27,891



$
35,700Supplemental cash flow
    informationCash paid during the period for:Interest

$
34,033


$
33,623


$
5,117



$
4,000Income taxes


10,754



11,544



9,905




18,234    66




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.



(A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)



NOTES TO
    FINANCIAL STATEMENTS  1
    Nature of
    operations  The
    Company
    Country ofName

IncorporationStandard Aero, Inc.


USAStandard Aero (US) Inc.


USAStandard Aero (San Antonio)
    Inc.


USAStandard Aero (Alliance) Inc.


USAStandard Aero (US) Legal Inc.


USAStandard Aero Materials Inc.


USAStandard Aero Canada Inc.


USAStandard Aero Redesign Services,
    Inc.


USAStandard Aero de Mexico


MexicoStandard Aero Limited


CanadaNot FM Canada Inc.


Canada3091781 Nova Scotia Company


Canada3091782 Nova Scotia Company


Canada3091783 Nova Scotia Company


CanadaStandard Aero (Australia) Pty
    Limited


AustraliaStandard Aero International Pty
    Limited


AustraliaStandard Aero (Asia) Pte Limited


SingaporeStandard Aero BV


NetherlandsStandard Aero (Netherlands) BV


Netherlands     The
    Acquisition
     67




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Predecessor
    Country ofName

IncorporationStandard Aero, Inc.


USAStandard Aero (San Antonio)
    Inc.


USAStandard Aero (Alliance) Inc.


USAStandard Aero Limited


CanadaStandard Aero de Mexico


MexicoStandard Aero (Australia) Pty
    Limited


AustraliaStandard Aero International Pty
    Limited


AustraliaStandard Aero BV


NetherlandsStandard Aero (Asia) Pte Limited


SingaporeStandard Aero (Netherlands) BV
    (formerly Dunlop Standard Aerospace (Nederland) BV)


NetherlandsStandard Aero (US) Legal Inc.
    (formerly Dunlop Standard Aerospace (US) Legal Inc.)


USAStandard Aero Materials Inc.
    (formerly Dunlop Aerospace Parts Inc.)


USANot FM Canada Inc.


CanadaStandard Aerospace BV


NetherlandsStandard Aero vof


Netherlands    68




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    2
    Summary
    of significant accounting policies    a) Principles
    of consolidation
    b) Translation
    of foreign currencies
    c) Use
    of accounting estimates
   69




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   d) Revenue
    recognition
    Time and material contracts

Time and material contracts are
    individual arrangements in which the engine is maintained,
    repaired
    and/or
    overhauled for the cost of the actual time and expenses incurred.Fixed price contracts

These contracts are arrangements
    with customers for maintenance, repair and overhaul services
    with a fixed price for each maintenance, repair and overhaul
    event.Pay by the hour (PBH) contracts

These contracts are long term
    arrangements with customers to provide maintenance, repair and
    overhaul services for a fixed price per hour based on engine
    utilization.               e) Cash
    and cash equivalents
    f) Cash
    and cash equivalents (restricted)
   70




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   g) Accounts
    receivable
    h) Inventories
  first-in,
  i) Property,
    plant and equipment
                j) Impairment
    of long-lived assets
    k) Goodwill
    and intangible assets
   71




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     Successor


PredecessorCustomer relationships


1 to 20 years



13 to 40 yearsOEM authorizations and licenses


4 to 17 years



3 to 10 yearsTechnology and other


5 years



   l) Income
    taxes
      m) Leases
    n) Pension,
    post-retirement and post-employment benefits
      o) Warranty
    costs
    p) Stock
    based compensation
   72




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    q) Derivative
    financial instruments
    marked-to-market
  r) Deferred
    finance charges
    s) Variable
    Interest Entities
       73




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   t) Comparative
    figures
    u) New
    accounting pronouncements
      v) Change
    in accounting principle
    3
    Inventories  December 31,2006


2005(In thousands)Raw materials

$
60,918


$
66,241Work in process


79,642



67,770$
140,560


$
134,011  74




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  4
    Property,
    plant and equipment  December 31,2006


2005(In thousands)Land

$
3,745


$
3,745Buildings


37,550



36,989Leasehold improvements


3,236



3,179Machinery and equipment


77,237



74,001Rental assets


40,114



35,693Construction in progress


1,126



712163,008



154,319Less: Accumulated depreciation


(30,976
)


(17,351
)Property, plant and
    equipment  net

$
132,032


$
136,968         5
    Goodwill
    and intangible assets    Gross Carrying


Accumulated





NetAt December 31, 2006

Amount


Amortization


Impairment


Balance(In thousands)Definite lived intangible assets
    subject to amortization:Customer relationships

$
98,000


$
17,545


$



$
80,455OEM authorizations and licenses


40,100



7,127







32,973Technology and other


7,900



3,687







4,213146,000



28,359







117,641Indefinite lived intangible assets
    not subject to amortization:Trademarks


67,600











67,600Total intangible assets

$
213,600


$
28,359


$



$
185,241   75




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Gross Carrying


Accumulated





NetAt December 31, 2005

Amount


Amortization


Impairment


Balance(In thousands)Definite lived intangible assets
    subject to amortization:Customer relationships

$
98,000


$
10,540


$



$
87,460OEM authorizations and licenses


38,350



4,035







34,315Technology and other


7,900



2,107







5,793144,250



16,682







127,568Indefinite lived intangible assets
    not subject to amortization:Trademarks


97,300







(29,700
)


67,600Total intangible assets

$
241,550


$
16,682


$
(29,700
)

$
195,168           (in thousands)2007

$
11,8182008

$
11,8172009

$
10,3852010

$
7,3122011

$
7,303     Maintenance Repair


Enterpriseand Overhaul


Services


Total(In thousands)Balance as at August 25, 2004

$
242,570


$



$
242,570Balance as at December 31,
    2004

$
242,570


$



$
242,570Impairment


(47,377
)






(47,377
)Reallocated from pre-acquisition
    contingent liabilities


(2,892
)






(2,892
)Balance as at December 31,
    2005

$
192,301


$



$
192,301Reallocated from pre-acquisition
    contingent liabilities


(2,392
)






(2,392
)Balance as at December 31,
    2006

$
189,909


$



$
189,909  76




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
          6
    Long-term
    debt    December 31,2006


2005(In thousands)Term loans

$
220,000


$
270,000Senior subordinated notes


200,000



200,000Obligations under capital leases


18



2,574Other


304



420,322



472,574Less: Current portion


27



2,574Long-term debt

$
420,295


$
470,000      77




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
           Capital Leases


Debt


Total(In thousands)2007

$
6


$
21


$
272008


6



22



282009


6



24



302010






27



272011






29



29Thereafter






420,181



420,181Total long-term debt

$
18


$
420,304


$
420,322     7
    Restructuring    8
    Commitments
    and contingencies  Commitments
   78




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     (In thousands)2007

$
11,3962008


10,6032009


10,2232010


9,9062011


871Thereafter


906Total future minimum payments

$
43,905     Contingent
    liabilities
      Kelly
    Aviation Centre Subcontract
      Form S-4
 79




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
         12-month
  9
    Income
    taxes    August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)CurrentDomestic

$
5,280


$
12,217


$
5,412



$
21,034Foreign


390



585



3,816




69Total current


5,670



12,802



9,228




21,103DeferredDomestic


(4,273
)


(8,147
)


(3,492
)



(2,097
)Foreign


(737
)


(4,953
)


(5,670
)



(3,184
)Total deferred


(5,010
)


(13,100
)


(9,162
)



(5,281
)Income tax expense (benefit)

$
660


$
(298
)

$
66



$
15,822  80




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)Domestic

$
21,394


$
(37,408
)

$
8,573



$
51,024Foreign


(1,247
)


(12,071
)


(12,408
)



(1,994
)Income (loss) before income taxes

$
20,147


$
(49,479
)

$
(3,835
)


$
49,030     August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)Income tax expense at the US
    statutory rate of 35%

$
7,052


$
(17,318
)

$
(1,342
)


$
17,161State taxes, net


1,213



936



522




1,621Effect of foreign income tax rates


186



2,564



847




(2,499
)Change in income tax rates


(1,957
)


(816
)







Change in state tax law


(2,334
)











Non-taxable income


(2,552
)


(1,211
)


(1,677
)



Foreign exchange


105



(1,216
)


1,375




(172
)Non-deductible expenses


181



142



208




123Goodwill impairment






16,582








Valuation allowance


1,695



299



94




155Tax credits


(710
)


(1,518
)







Provision-to-return
    adjustments and changes in tax reserves


(2,318
)


1,745








Other, net


99



(487
)


39




(567
)Income tax expense (benefit)

$
660


$
(298
)

$
66



$
15,822   Provision-to-return
 81




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    December 31,2006


2005(In thousands)}Deferred tax assets consist of the
    following:Accounts receivable

$
73


$
35Inventories


46



41Stock based compensation expense


35



Property, plant and equipment


2,302



2,972Accrued interest


6



17Other provisions


2,387



2,415Onerous contracts


111



448Tax credits


1,099



871Foreign exchange loss


99



220Capital loss carried forward


5,483



5,483Tax losses carryforward


5,948



5,23517,589



17,737Valuation allowance


(8,712
)


(7,410
)Deferred tax assets


8,877



10,327Deferred tax liabilities consist
    of the following:Accrued interest


(24
)


Property, plant and equipment


(15,447
)


(15,182
)Intangibles


(48,851
)


(55,928
)Deferred financing costs


(775
)


(276
)Other


(985
)


(1,156
)Deferred tax liabilities


(66,082
)


(72,542
)Net deferred tax liability

$
(57,205
)

$
(62,215
)      82




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    (in thousands)2014

$
6,3642015


9,5692025


1,373Total

$
17,306       (in thousands)2007

$
1302008


4192009


1792013


722014


402015


1952016


176Total

$
1,211       10
    Related
    party transactions  Successor
    transactions
      83




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Predecessor
    transactions
      January 1,2004 toAugust 24,2004(In thousands)Management cost allocations

$
2,602Interest expense


181Interest revenue


(398
)       August 242004(In thousands)Amounts due from affiliates

$
(25,628
)Amounts due to affiliates


6,266Amounts due to Dunlop Standard
    Aerospace Group Limited


4,889     11
    Employee
    benefit plans   84




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
         August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)Service cost  net of
    employee contributions

$
363


$
280


$
85



$
170Interest costs


182



147



42




84Expected return on plan assets


(180
)


(141
)


(38
)



(75
)Amortization of unrecognized net
    losses


20












Net pension expense

$
385


$
286


$
89



$
179   Assumptions
    December 31,2006


2005Discount rate


5.25
%


5.00
%Rate of compensation increase


3.50
%


3.50
%     August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)Discount rate


5.00
%


6.00
%


6.25
%



6.25
%Expected long-term rate of return
    on plan assets


6.25
%


6.25
%


6.25
%



6.25
%Rate of compensation increase


3.50
%


3.50
%


4.00
%



4.00
%      85




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      December 31,Defined benefitplan

2006


2005(In thousands)Change in benefit
    obligationBenefit obligation 
    beginning of year

$
3,235


$
2,285Service costs


363



280Interest cost


182



147Actuarial (gain)/loss


(156
)


603Benefits paid


(95
)


(192
)Foreign currency adjustment


(15
)


112Benefit obligation  end
    of year


3,514



3,235Change in plan assetsFair value of plan
    assets  beginning of year


2,677



2,204Actual return on plan assets


455



237Employer contributions


362



338Benefits paid


(95
)


(192
)Foreign currency adjustment


(25
)


90Fair value of plan
    assets  end of year


3,374



2,677Funded status of the
    plan


(140
)


(558
)Unrecognized net actuarial losses


78



518Accrued pension
    liability

$
(62
)

$
(40
)       December 31,


Target2006


2005


AllocationAsset categoryEquity securities


59
%


60
%


58
%Debt securities


36
%


35
%


37
%Other


5
%


5
%


5
%100
%


100
%


100
%      86




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Pension Plan(In thousands)2007

$
672008


882009


1112010


1382011


1692012  2016


1,520     12
    Stock
    options      Year EndedDecember 31,2006Opening balance


192,398Granted


3,000Exercised


Cancelled


(32,035
)Outstanding as of December 31


163,363Options exercisable as of
    December 31


56,868Weighted average exercise prices

$
100 per shareWeighted average life as of
    December 31Exercisable stock options


8.1 yearsOutstanding stock options


8.0 years  87




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Valuation
    and Expense Information Under SFAS 123(R)
    13
    Financial
    instruments and risk management  Risk
    management
            Interest
    rate risk   88




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Maximum


MinimumNotional

Period Hedged by Interest Rate Collar


Interest Rate(1)


Interest Rate(1)$75.0 million


September 27, 2005   March 26, 2006



4.25
%


2.00
%$75.0 million


March 27, 2006   December 27, 2006



5.25
%


2.40
%     (1)
    
    Maximum and minimum interest rates exclude the effect of the
    Companys credit spread on the variable rate debt.      Foreign
    currency risk      Fair
    value     89




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Credit
    risk      14
    Guarantees    Warranty
    guarantee      (In thousands)Balance at December 31, 2004

$
(6,907
)Warranty costs incurred


1,986Warranty accrued


935Balance at December 31, 2005

$
(3,986
)Warranty costs incurred


4,251Warranty accrued


(4,711
)Balance at December 31, 2006

$
(4,446
)   15
    Subsequent
    event   90




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  16
    Segment
    information and major customers      As of and
    for the year ended December 31, 2006 (Successor)
  AviationMaintenanceRepair andOverhaul


EnterpriseServices


Services


Unallocated


Total(In thousands)Revenues

$
733,978


$
44,866


$



$
778,844Income (loss) before income taxes


68,174



2,161



(50,188
)


20,147Depreciation and amortization


25,416



74







25,490Total assets


783,987



21,249



40,985



846,221Goodwill


189,909











189,909Capital and intangible expenditures


20,044



152



24



20,220   As of and
    for the year ended December 31, 2005 (Successor)
  AviationMaintenanceRepair andOverhaul


EnterpriseServices


Services


Unallocated


Total(In thousands)Revenues

$
751,526


$
9,181


$



$
760,707Income (loss) before income taxes


6,725



(3,896
)


(52,308
)


(49,479
)Depreciation and amortization


25,254



46







25,300Total assets


778,382



11,712



52,944



843,038Goodwill


192,301











192,301Capital and intangible expenditures


24,340



106



30



24,476  91




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  For the
    period August 25, 2004 to December 31, 2004
    (Successor)
  AviationMaintenanceRepair andOverhaul


EnterpriseServices


Services


Unallocated


Total(In thousands)Revenues

$
282,376


$
1,740


$



$
284,116Income (loss) before income taxes


39,170



(1,746
)


(41,259
)


(3,835
)Depreciation and amortization


8,812



13







8,825Capital and intangible expenditures


9,403



40



81



9,524   For the
    period January 1, 2004 to August 24, 2004
    (Predecessor)
  AviationMaintenanceRepair andOverhaul


EnterpriseServices


Services


Unallocated


Total(In thousands)Revenues

$
504,079


$
5,306


$



$
509,385Income (loss) before income taxes


62,255



(3,110
)


(10,115
)


49,030Depreciation and amortization


14,182



47







14,229Capital and intangible expenditures


17,973



101



29



18,103     December 31,2006


2005(In thousands)Property, plant and
    equipmentUnited States

$
16,117


$
16,188Canada


96,030



99,696Rest of the world


19,885



21,084$
132,032


$
136,968Intangible assetsUnited States

$
104,069


$
104,292Canada


77,442



86,602Rest of the world


3,730



4,274$
185,241


$
195,168  92




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    August 25,



January 1,Year Ended


Year Ended


2004 to



2004 toDecember 31,


December 31,


December 31,



August 24,2006


2005


2004



2004(Successor)


(Successor)


(Successor)



(Predecessor)(In thousands)United States

$
563,816


$
561,104


$
207,212



$
398,503Canada


100,493



90,226



40,976




46,735Rest of the world


114,535



109,377



35,928




64,147$
778,844


$
760,707


$
284,116



$
509,385   Significant
    customers    August 25,


January 1,Year Ended

Year Ended

2004 to


2004 toDecember 31,

December 31,

December 31,


August 24,2006

2005

2004


2004(Successor)

(Successor)

(Successor)


(Predecessor)Rolls-Royce North America Inc


17.4
%


15.1
%


14.7
%



21.4
%Kelly Aviation Center, L.P.


26.4
%


31.2
%


34.2
%



36.6
%     Significant
    receivables    Year ended

Year endedDecember 31,

December 31,2006

200520.9
%


39.9
%     Significant
    suppliers    17
    Guarantor
    information   93




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
     94




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Combining Statements of Operations (Successor)
    For the year ended December 31, 2006
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)Revenues

$



$
699,787


$
82,223


$
(3,166
)

$
778,844Operating expensesCost of revenues






585,910



78,798



(3,166
)


661,542Selling, general and
    administrative expense


6,049



38,293



5,634







49,976Amortization of intangible assets






8,585











8,585Total operating
    expenses


6,049



632,788



84,432



(3,166
)


720,103Income (loss) from
    operations


(6,049
)


66,999



(2,209
)






58,741Interest expense


35,559



1,583



1,452







38,594Income (loss) before income
    taxes


(41,608
)


65,416



(3,661
)






20,147Income tax expense
    (benefit)


(13,669
)


13,927



402







660Income (loss) before equity
    earnings insubsidiaries


(27,939
)


51,489



(4,063
)






19,487Equity in earnings (loss) of
    subsidiaries


47,426



(3,166
)






(44,260
)


Net income (loss)

$
19,487


$
48,323


$
(4,063
)

$
(44,260
)

$
19,487  95




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Combining Statements of Operations (Successor)
    For the year ended December 31, 2005
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)Revenues

$



$
667,648


$
99,834


$
(6,775
)

$
760,707Operating expensesCost of revenues






576,881



91,324



(6,775
)


661,430Selling, general and
    administrative expense


6,508



38,573



7,258







52,339Amortization of intangible assets






9,385











9,385Restructuring costs






2,014



1,201







3,215Goodwill impairment






47,377











47,377Total operating
    expenses


6,508



674,230



99,783



(6,775
)


773,746Income (loss) from
    operations


(6,508
)


(6,582
)


51







(13,039
)Interest expense


32,021



2,913



1,506







36,440Income (loss) before income
    taxes


(38,529
)


(9,495
)


(1,455
)






(49,479
)Income tax expense
    (benefit)


(8,959
)


10,156



(1,495
)






(298
)Income (loss) before equity
    earnings in subsidiaries


(29,570
)


(19,651
)


40







(49,181
)Equity in earnings (loss) of
    subsidiaries


(19,611
)


(351
)






19,962



Net income (loss)

$
(49,181
)

$
(20,002
)

$
40


$
19,962


$
(49,181
)  96




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Combining Statements of Operations (Successor)
    For the period August 25 to December 31, 2004
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)Revenues

$



$
254,826


$
33,897


$
(4,607
)

$
284,116Operating expensesCost of revenues






221,124



33,193



(4,607
)


249,710Selling, general and
    administrative expense


1,085



12,950



6,939







20,974Amortization of intangible assets






3,262











3,262Total operating
    expenses


1,085



237,336



40,132



(4,607
)


273,946Income (loss) from
    operations


(1,085
)


17,490



(6,235
)






10,170Interest expense


12,273



1,442



290







14,005Income (loss) before income
    taxes


(13,358
)


16,048



(6,525
)






(3,835
)Income tax expense
    (benefit)


(4,603
)


6,603



(1,934
)






66Income (loss) before equity
    earnings in subsidiaries


(8,755
)


9,445



(4,591
)






(3,901
)Equity in earnings (loss) of
    subsidiaries


4,854



(4,603
)






(251
)


Net income (loss)

$
(3,901
)

$
4,842


$
(4,591
)

$
(251
)

$
(3,901
)  97




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Combining Statement of Operations (Predecessor)
    For the period January 1, 2004 to August 24,
    2004
  Subsidiary


Subsidiary


CombiningGuarantors


Non-Guarantors


Adjustments


Total(In thousands)Revenues

$
470,367


$
43,345


$
(4,327
)

$
509,385Operating expensesCost of revenues


387,964



39,731



(4,327
)


423,368Selling, general and
    administrative expense


22,665



7,652







30,317Amortization of intangible assets


1,575



260







1,835Total operating
    expenses


412,204



47,643



(4,327
)


455,520Income (loss) from
    operations


58,163



(4,298
)






53,865Interest expense


4,367



468







4,835Income (loss) before income
    taxes


53,796



(4,766
)






49,030Income tax expense
    (benefit)


17,395



(1,573
)






15,822Net income (loss)

$
36,401


$
(3,193
)

$



$
33,208  98




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheet
    December 31, 2006
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)ASSETSCurrent assetsCash and cash equivalents

$
272


$
13,282


$
3,493


$



$
17,047Cash and cash equivalents
    (restricted)






35,200











35,200Accounts receivable, net






98,786



15,619







114,405Due from related party


51,938



214,283



499



(266,720
)


Inventories






110,342



30,218







140,560Prepaid expenses and other current
    assets


44



4,535



916







5,495Income taxes receivable






309



2,266







2,575Deferred income taxes






1,209



284







1,493Total current assets


52,254



477,946



53,295



(266,720
)


316,775Deferred finance
    charges


7,834



7,046











14,880Deferred income taxes






5,981



1,403







7,384Property, plant and equipment,
    net






112,147



19,885







132,032Intangible assets, net






181,511



3,730







185,241Due from related party






5,896







(5,896
)


Goodwill






189,909











189,909Investments in
    subsidiaries


746,366



35,451







(781,817
)


Total assets

$
806,454


$
1,015,887


$
78,313


$
(1,054,433
)

$
846,221LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$



$
75,146


$
7,618


$



$
82,764Other accrued liabilities


10,004



17,731



2,675







30,410Due to related party


194,370



63,369



12,921



(266,720
)


3,940Unearned revenue






51,095



4,450







55,545Accrued warranty provision






3,349



1,097







4,446Income taxes payable






1,051



157







1,208Deferred income taxes










24







24Current portion of long-term debt






27











27Total current
    liabilities


204,374



211,768



28,942



(266,720
)


178,364Deferred income taxes


576



61,005



4,477







66,058Due to related party










5,896



(5,896
)


Long-term debt


420,000



295











420,295Total liabilities


624,950



273,068



39,315



(272,616
)


664,717Stockholders
    equityCommon stock


















Additional paid in
    capital


215,099



709,656



47,612



(757,268
)


215,099Accumulated deficit


(33,595
)


33,163



(8,614
)


(24,549
)


(33,595
)Total stockholders
    equity


181,504



742,819



38,998



(781,817
)


181,504Total liabilities and
    stockholders equity

$
806,454


$
1,015,887


$
78,313


$
(1,054,433
)

$
846,221  99




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheet
    December 31, 2005
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)ASSETSCurrent assetsCash and cash equivalents

$
557


$
20,519


$
2,980


$



$
24,056Accounts receivable, net






101,271



19,185







120,456Due from related party


34,635



114,679



3,451



(152,765
)


Inventories






103,986



30,025







134,011Prepaid expenses and other current
    assets


100



6,453



1,115







7,668Income taxes receivable






1,389



2,422







3,811Deferred income taxes






1,661



746







2,407Total current assets


35,292



349,958



59,924



(152,765
)


292,409Deferred finance
    charges


8,968



9,304











18,272Deferred income taxes






6,068



1,852







7,920Property, plant and equipment,
    net






115,884



21,084







136,968Intangible assets, net






190,894



4,274







195,168Due from related party






5,467







(5,467
)


Goodwill






192,301











192,301Investments in
    subsidiaries


698,940



38,617







(737,557
)


Total assets

$
743,200


$
908,493


$
87,134


$
(895,789
)

$
843,038LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
135


$
64,654


$
10,512


$



$
75,301Other accrued liabilities


9,980



16,018



3,199







29,197Due to related party


101,041



43,708



11,956



(152,765
)


3,940Unearned revenue






7,791



6,405







14,196Accrued warranty provision






2,782



1,204







3,986Income taxes payable






9,151



172







9,323Current portion of long-term debt






2,261



313







2,574Total current
    liabilities


111,156



146,365



33,761



(152,765
)


138,517Deferred income taxes


65



67,632



4,845







72,542Due to related party










5,467



(5,467
)


Long-term debt


470,000















470,000Total liabilities


581,221



213,997



44,073



(158,232
)


681,059Stockholders
    equityCommon stock


















Additional paid in
    capital


215,000



709,656



47,612



(757,268
)


215,000Accumulated deficit


(53,082
)


(15,160
)


(4,551
)


19,711



(53,082
)Accumulated other comprehensive
    income


61















61Total stockholders
    equity


161,979



694,496



43,061



(737,557
)


161,979Total liabilities and
    stockholders equity

$
743,200


$
908,493


$
87,134


$
(895,789
)

$
843,038  100




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash Flows (Successor)
    For the year ended December 31, 2006
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)Cash provided by (used
    in)Operating activitiesNet income (loss) for the period

$
19,487


$
48,323


$
(4,063
)

$
(44,260
)

$
19,487Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activitiesDepreciation and amortization






21,359



4,131







25,490Amortization of deferred finance
    charges


1,134



2,258











3,392Deferred income taxes


511



(6,088
)


567







(5,010
)Loss on disposal of property, plant
    and equipment






6



522







528Foreign exchange loss






(885
)


(432
)






(1,317
)Stock based compensation expense


99















99Equity in earnings of subsidiaries


(47,426
)


3,166







44,260



Changes in assets and liabilitiesAccounts receivable, net






2,485



3,566







6,051Inventories






(6,356
)


(193
)






(6,549
)Prepaid expenses and other current
    assets


(5
)


1,918



199







2,112Accounts payable and other accruedliabilities


(111
)


19,126



(5,480
)






13,535Income taxes payable and receivable






(4,628
)


141







(4,487
)Net cash provided by (used in)
    operating activities


(26,311
)


80,684



(1,042
)






53,331Investing activitiesAcquisitions of property, plant and
    equipment






(4,320
)


(925
)






(5,245
)Proceeds on disposal of property,
    plant and equipment






7



250







257Acquisition of rental assets






(11,116
)


(3,859
)






(14,975
)Proceeds on disposal of rental
    assets






8,934



1,624







10,558Acquisition of
    intangibles  licenses


















Net cash used in investing
    activities






(6,495
)


(2,910
)






(9,405
)Financing activitiesRepayment of debt


(50,000
)














(50,000
)Payment of capital lease
    obligations and other






(2,248
)


(313
)






(2,561
)Proceeds from issuance of debt






309











309Change in due to / (from) related
    companies


76,026



(80,372
)


4,346







Net cash (used in) provided by
    financing activities


26,026



(82,311
)


4,033







(52,252
)Effect of exchange rate changes
    on cash and cash equivalents






885



432







1,317Net (decrease) increase in cash
    and cash equivalents


(285
)


(7,237
)


513







(7,009
)Cash and cash
    equivalents  Beginning of period


557



20,519



2,980







24,056Cash and cash
    equivalents  End of period

$
272


$
13,282


$
3,493


$



$
17,047  101




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash Flows (Successor)
    For the year ended December 31, 2005
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)Cash provided by (used
    in)Operating activitiesNet income (loss) for the period

$
(49,181
)

$
(20,002
)

$
40


$
19,962


$
(49,181
)Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activitiesDepreciation and amortization






22,515



2,785







25,300Amortization of deferred finance
    charges


2,336



607











2,943Intangible asset impairment






29,700











29,700Goodwill impairment






47,377











47,377Deferred income taxes


65



(11,455
)


(1,710
)






(13,100
)Loss on disposal of property, plant
    and equipment






68











68Foreign exchange loss






623



99







722Equity in earnings of subsidiaries


19,611



351







(19,962
)


Changes in assets and liabilitiesAccounts receivable, net






(2,913
)


(7,051
)






(9,964
)Inventories






11,932



460







12,392Prepaid expenses and other current
    assets


3



(1,646
)


(75
)






(1,718
)Accounts payable and other accrued
    liabilities


(2,292
)


(27,819
)


2,444







(27,667
)Income taxes payable and receivable


4,729



(2,844
)


2,102







3,987Net cash provided by (used in)
    operating activities


(24,729
)


46,494



(906
)






20,859Investing activitiesAcquisitions of property, plant and
    equipment






(7,668
)


(780
)






(8,448
)Proceeds on disposal of property,
    plant and equipment






57











57Acquisition of rental assets






(11,464
)


(4,564
)






(16,028
)Proceeds on disposal of rental
    assets






9,434



1,500







10,934Net cash used in investing
    activities






(9,641
)


(3,844
)






(13,485
)Financing activitiesRepayment of debt


(15,000
)














(15,000
)Payment of capital lease
    obligations and other






(1,304
)


(368
)






(1,672
)Change in due to / (from) related
    companies


36,170



(32,928
)


2,943







6,185Net cash (used in) provided by
    financing activities


21,170



(34,232
)


2,575







(10,487
)Effect of exchange rate changes
    on cash and cash equivalents






(623
)


(99
)






(722
)Net (decrease) increase in cash
    and cash equivalents


(3,559
)


1,998



(2,274
)






(3,835
)Cash and cash
    equivalents  Beginning of period


4,116



18,521



5,254







27,891Cash and cash
    equivalents  End of period

$
557


$
20,519


$
2,980


$



$
24,056  102




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Consolidated
    Statement of Cash Flows (Successor)
    For the period from August 25, 2004 to December 31,
    2004
  Subsidiary


Subsidiary


CombiningParent


Guarantors


Non-Guarantors


Adjustments


Total(In thousands)Cash provided by (used
    in)Operating activitiesNet income (loss) for the period

$
(3,901
)

$
4,842


$
(4,591
)

$
(251
)

$
(3,901
)Adjustments to reconcile net income
    to net cash (used in) provided by operating activitiesDepreciation and amortization






7,807



1,018







8,825Amortization of deferred finance
    charges


1,048



1,451











2,499Deferred income taxes






(7,541
)


(1,621
)






(9,162
)Equity in earnings of subsidiaries


(4,854
)


4,603







251



Foreign exchange loss / (gain)


16



42



(117
)






(59
)Changes in assets and liabilitiesAccounts receivable, net


(4,678
)


(6,954
)


(574
)






(12,206
)Inventories






34,310



6,005







40,315Prepaid expenses and other current
    assets


(417
)


588



178







349Accounts payable and other accrued
    liabilities


12,407



(11,894
)


(5,333
)






(4,820
)Income taxes payable and receivable


(4,729
)


3,111



(462
)






(2,080
)Net cash (used in) provided by
    operating activities


(5,108
)


30,365



(5,497
)






19,760Investing activitiesAcquisitions of property, plant and
    equipment






(4,316
)


(213
)






(4,529
)Acquisitions of rental assets






(4,454
)


(541
)






(4,995
)Proceeds on disposal of rental
    assets






2,872



267







3,139Acquisition of MRO Division of
    Dunlop Standard Aerospace Group Limited, net of cash acquired


(699,711
)


26,899



8,801







(664,011
)Net cash provided by (used in)
    investing activities


(699,711
)


21,001



8,314







(670,396
)Financing activitiesRepayment of debt


(40,000
)














(40,000
)Payment of capital lease
    obligations and other






(413
)


(213
)






(626
)Proceeds from issuance of debt


525,000















525,000Issuance of common stock


215,000















215,000Deferred financing charges


(23,714
)














(23,714
)Change in due to / (from) related
    companies


32,665



(32,390
)


2,533







2,808Net cash (used in) provided by
    financing activities


708,951



(32,803
)


2,320







678,468Effect of exchange rate changes
    on cash and cash equivalents


(16
)


(42
)


117







59Net increase in cash and cash
    equivalents


4,116



18,521



5,254







27,891Cash and cash
    equivalents  Beginning of period


















Cash and cash
    equivalents  End of period

$
4,116


$
18,521


$
5,254


$



$
27,891  103




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Condensed
    Combining Statement of Cash Flows (Predecessor)
    For the period from January 1, 2004 to August 24,
    2004
  Subsidiary


Subsidiary


CombiningGuarantors


Non-Guarantors


Adjustments


Total(In thousands)Cash provided by (used
    in)Operating activitiesNet income (loss) for the period

$
36,401


$
(3,193
)

$



$
33,208Adjustments to reconcile net
    income to net cash provided by (used in) operating activitiesDepreciation and amortization


11,750



2,479







14,229Amortization of deferred finance
    charges


363











363Deferred income taxes


(5,889
)


608







(5,281
)Foreign exchange loss


222



303







525Changes in assets and liabilitiesAccounts receivable, net


(34,422
)


1,983







(32,439
)Inventories


(21,545
)


(8,869
)






(30,414
)Prepaid expenses and other current
    assets


(1,031
)


(639
)






(1,670
)Accounts payable and other accrued
    liabilities


47,796



8,978







56,774Income taxes payable and receivable


4,680



(3,009
)






1,671Net cash provided by (used in)
    operating activities


38,325



(1,359
)






36,966Investing activitiesAcquisition of property, plant and
    equipment


(8,025
)


(169
)






(8,194
)Proceeds on disposals of property,
    plant and equipment


112











112Acquisition of rental assets


(8,889
)


(897
)






(9,786
)Proceeds on disposal of rental
    assets


5,822



571







6,393Acquisitions of
    intangibles  licenses






(123
)






(123
)Net cash used in investing
    activities


(10,980
)


(618
)






(11,598
)Financing activitiesPayment of capital lease
    obligations and other


(793
)


(319
)






(1,112
)Change in due to / (from) related
    companies


(14,619
)


3,890







(10,729
)Net cash (used in) provided by
    financing activities


(15,412
)


3,571







(11,841
)Effect of exchange rate changes
    on cash and cash equivalents


(222
)


(303
)






(525
)Net increase in cash and cash
    equivalents


11,711



1,291







13,002Cash and cash
    equivalents  beginning of period


15,188



7,510







22,698Cash and cash
    equivalents  end of period

$
26,899


$
8,801


$



$
35,700  104




---



##### Table of Contents



STANDARD
    AERO HOLDINGS, INC.
  (A WHOLLY
    OWNED SUBSIDIARY OF STANDARD AERO ACQUISITION HOLDINGS, INC.)
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  18
    Selected
    quarterly results (unaudited)    2006First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Full Year(In thousands)Revenue

$
185,798


$
200,371


$
196,083


$
196,592


$
778,844Gross Profit


30,824



33,293



25,651



27,534



117,302Income before income taxes


5,652



7,835



5,070



1,590



20,147Net Income


3,774



7,243



5,678



2,792



19,487   2005First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(1)


Full Year(In thousands)Revenue

$
187,414


$
171,781


$
198,267


$
203,245


$
760,707Gross Profit


33,626



27,203



34,815



3,633



99,277Income (loss) before income taxes


9,426



3,185



7,880



(69,970
)


(49,479
)Net Income (loss)


6,558



3,146



4,195



(63,080
)


(49,181
)     (1)
    
    Results of operations includes impairments related to trademarks
    and goodwill of $29.7 million and $47.4 million,
    respectively. 105




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##### Table of Contents



Exhibit
    Index
  ExhibitNo.

Description of Exhibit3
.1

Certificate of Incorporation of
    Standard Aero Holdings, Inc. (incorporated by reference to
    Exhibit 3.1 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).3
.2

Bylaws of Standard Aero Holdings,
    Inc. (incorporated by reference to Exhibit 3.17 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).4
.1

Senior Subordinated Note Indenture
    with respect to the
    81/4%
    Senior Subordinated Notes due 2014, between Standard Aero
    Holdings, Inc., Wells Fargo Bank Minnesota, National
    Association, as trustee, and the Guarantors listed on the
    signature pages thereto, dated as of August 20, 2004
    (incorporated by reference to Exhibit 4.1 of Standard Aero
    Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).4
.2

Supplemental Indenture, dated as of
    August 24, 2004, among Dunlop Standard Aerospace
    (Nederland) BV and Standard Aero BV, Standard Aero Holdings,
    Inc. and Wells Fargo Bank, National Association, as trustee
    (incorporated by reference to Exhibit 4.2 of Standard Aero
    Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).4
.3

Supplemental Indenture, dated as of
    August 24, 2004, among Dunlop Standard Aerospace
    (US) Inc., Dunlop Standard Aerospace (US) Legal Inc.,
    Standard Aero, Inc., Dunlop Aerospace Parts, Inc., Standard Aero
    (San Antonio) Inc., Standard Aero (Alliance) Inc., Standard Aero
    Canada, Inc., 3091781 Nova Scotia Company, 3091782 Nova Scotia
    Company, 3091783 Nova Scotia Company, Standard Aero Limited, Not
    FM Canada Inc., Standard Aero Holdings, Inc. and Wells Fargo
    Bank, National Association, as trustee (incorporated by
    reference to Exhibit 4.3 of Standard Aero Holdings,
    Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).4
.4

Supplemental Indenture, dated as of
    March 3, 2005, among Standard Aero (US), Inc. (f/k/a Dunlop
    Standard Aerospace (U.S.) Inc.); Standard Aero (US) Legal,
    Inc. (f/k/a Dunlop Standard Aerospace (US) Legal, Inc.);
    Standard Aero Inc.; Standard Aero Materials, Inc. (f/k/a Dunlop
    Aerospace Parts Inc.); Standard Aero (San Antonio) Inc.;
    Standard Aero (Alliance) Inc.; Standard Aero Canada, Inc.;
    3091781 Nova Scotia Company; 3091782 Nova Scotia Company;
    3091783 Nova Scotia Company; Standard Aero Limited; Not FM
    Canada Inc.; Standard Aero (Netherlands) B.V. (f/k/a Dunlop
    Standard Aerospace (Nederland) BV) and Standard Aero BV,
    Standard Aero Holdings, Inc. and Wells Fargo Bank, National
    Association, as trustee (incorporated by reference to
    Exhibit 4.4 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).4
.5

Supplemental Indenture, dated as of
    March 31, 2005, among Standard Aero (US), Inc. (f/k/a
    Dunlop Standard Aerospace (U.S.) Inc.); Standard Aero
    (US) Legal, Inc. (f/k/a Dunlop Standard Aerospace
    (US) Legal, Inc.); Standard Aero Inc.; Standard Aero
    Materials, Inc. (f/k/a Dunlop Aerospace Parts Inc.); Standard
    Aero (San Antonio) Inc.; Standard Aero (Alliance) Inc.; Standard
    Aero Canada, Inc.; 3091781 Nova Scotia Company; 3091782 Nova
    Scotia Company; 3091783 Nova Scotia Company; Standard Aero
    Limited; Not FM Canada Inc. and Standard Aero Redesign Services
    Inc., Standard Aero Holdings, Inc. and Wells Fargo Bank,
    National Association, as trustee (incorporated by reference to
    Exhibit 4.5 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.1

Credit Agreement, dated as of
    August 24, 2004, by and among Standard Aero Holdings, Inc.,
    the lenders party thereto, J.P. Morgan Securities Inc. and
    Lehman Brothers Inc., as joint lead arrangers, JPMorgan Chase
    Bank, as administrative agent, and Lehman Commercial Paper Inc.
    and Credit Suisse First Boston, as co-syndication agent
    (incorporated by reference to Exhibit 10.1 of Standard Aero
    Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.2

Guarantee and Collateral Agreement,
    dated as of August 24, 2004, made by Standard Aero
    Acquisition Holdings, Inc., Standard Aero Holdings, Inc. and
    certain of its subsidiaries in favor of JPMorgan Chase Bank, as
    administrative agent (incorporated by reference to
    Exhibit 10.2 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.3

CDN Guarantee and Collateral
    Agreement, dated as of August 24, 2004, made by Standard
    Aero Limited, Not FM Canada, 3091781 Nova Scotia Company,
    3091782 Nova Scotia Company, 3091783 Nova Scotia Company and
    6269044 Canada Inc. in favor of JPMorgan Chase Bank, as
    administrative agent (incorporated by reference to
    Exhibit 10.3 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.4

Management Agreement among Standard
    Aero Holdings, Inc. and TC Group, L.L.C. dated August 24,
    2004 (incorporated by reference to Exhibit 10.4 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4/A
    filed on May 9, 2005).10
.5

Service Agreement between Standard
    Aero Limited and David W. Shaw, dated as of October 1, 1998
    (incorporated by reference to Exhibit 10.5 of Standard Aero
    Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005). 106




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##### Table of Contents



ExhibitNo.

Description of Exhibit10
.6

Amendment to Service Agreement
    between Standard Aero Limited and David W. Shaw, dated as of
    March 10, 2004 (incorporated by reference to
    Exhibit 10.6 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.7

Employment Agreement between
    Standard Aero Limited and Paul Soubry, dated as of June 7,
    2002 (incorporated by reference to Exhibit 10.7 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.8

Amendment to Employment Agreement
    between Standard Aero Limited and Paul Soubry, dated as of
    March 10, 2004 (incorporated by reference to
    Exhibit 10.8 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.9

Employment Agreement between
    Standard Aero vof and Rene van Doorn, dated as of June 10,
    2002 (incorporated by reference to Exhibit 10.9 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.10

Amendment to Employment Agreement
    between Standard Aero vof and Rene van Doorn, dated as of
    March 10, 2004 (incorporated by reference to
    Exhibit 10.10 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.11

Employment Agreement between
    Standard Aero Limited and Bradley Bertouille, dated as of
    June 17, 2002 (incorporated by reference to
    Exhibit 10.11 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.12

Amendment to Employment Agreement
    between Standard Aero Limited and Bradley Bertouille, dated as
    of March 10, 2004 (incorporated by reference to
    Exhibit 10.12 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.13

Employment Agreement between
    Standard Aero Limited and Edward Richmond, dated as of
    June 17, 2002 (incorporated by reference to
    Exhibit 10.13 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.14

Amendment to Employment Agreement
    between Standard Aero Limited and Edward Richmond, dated as of
    March 10, 2004 (incorporated by reference to
    Exhibit 10.14 of Standard Aero Holdings, Inc.s
    Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.15

Stock Option and Purchase Plan of
    Standard Aero Acquisition Holdings, Inc (incorporated by
    reference to Exhibit 10.15 of Standard Aero Holdings,
    Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.16

Stockholders Agreement, dated as of
    December 22, 2004, by and between Standard Aero Acquisition
    Holdings, Inc., Carlyle Partners III, L.P. and David Shaw
    (incorporated by reference to Exhibit 10.16 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.17

Stockholders Agreement, dated as of
    December 22, 2004, by and between Standard Aero Acquisition
    Holdings, Inc., Carlyle Partners III, L.P. and Paul Soubry
    (incorporated by reference to Exhibit 10.17 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.18

Stockholders Agreement, dated as of
    December 22, 2004, by and between Standard Aero Acquisition
    Holdings, Inc., Carlyle Partners III, L.P. and Rene van
    Doorn (incorporated by reference to Exhibit 10.18 of
    Standard Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.19

Stockholders Agreement, dated as of
    December 22, 2004, by and between Standard Aero Acquisition
    Holdings, Inc., Carlyle Partners III, L.P. and Bradley
    Bertouille (incorporated by reference to Exhibit 10.19 of
    Standard Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.20

Stockholders Agreement, dated as of
    December 22, 2004, by and between Standard Aero Acquisition
    Holdings, Inc., Carlyle Partners III, L.P. and Edward
    Richmond (incorporated by reference to Exhibit 10.20 of
    Standard Aero Holdings, Inc.s Registration Statement on
    Form S-4
    filed on April 28, 2005).10
.21

T56 Engine and Accessories Support
    Subcontract
    No. LMKAC-98-0001
    between Standard Aero (San Antonio) Inc. and Lockheed Martin
    Kelly Aircraft Center, dated September 23, 1998
    (incorporated by reference to Exhibit 10.21 of Standard
    Aero Holdings, Inc.s Registration Statement on
    Form S-4/A
    filed on July 14, 2005).*10
.22

Amendment No. 24 to
    Subcontract
    No. LMKAC-98-0001
    between Standard Aero and Lockheed, dated as of May 2, 2002
    (incorporated by reference to Exhibit 10.22 of Standard
    Aero Holdings, Inc.s Registration Statement on Form S-4/A
    filed on May 9, 2005).*10
.23

Amendment No. 36 to
    Subcontract
    No. LMKAC-98-0001
    between Standard Aero and Lockheed dated as of November 24,
    2003 (incorporated by reference to Exhibit 10.23 of
    Standard Aero Holdings, Inc.s Registration Statement on
    Form S-4/A filed on July 14, 2005).* 107




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##### Table of Contents



ExhibitNo.

Description of Exhibit10
.24

Amendment No. 92 to
    Subcontract No. LMKAC-98-0001 between Standard Aero and
    Lockheed, dated as of July 11, 2006 (incorporated by
    reference for Exhibit 10.1  of Standard Aero Holdings,
    Inc.s Form 10-Q for the quarterly period ended
    June 30, 2006, filed August 14, 2006).*21
.1

List of Subsidiaries (incorporated
    by reference to Exhibit 21.1 of Standard Aero Holdings,
    Inc.s Registration Statement on Form S-4 filed on
    April 28, 2005).31
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 15d-14(a)
    (17 CFR 240.15d-14(a)).31
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 15d-14(a)
    (17 CFR 240.15d-14(a)).32
.1

Certification of Chief Executive
    Officer pursuant to
    Rule 15d-14(b)
    (17 CFR 240.15d-14(b))
    and 18 U.S.C. Section 1350.32
.2

Certification of Chief Financial
    Officer pursuant to
    Rule 15d-14(b)
    (17 CFR 240.15d-14(b))
    and 18 U.S.C. Section 1350.     *
    Portions have been omitted pursuant to a request for
    confidential treatment. 108




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##### Table of Contents



Schedule II
  Valuation and Qualifying Accounts
  Beginning











EndingBalance at


Charges to


Charges to





Balance atJanuary 1,


Costs


Other





August 24,Description

2004


and Expense


Accounts


Deductions


2004(Predecessor)Allowance for Doubtful accounts

$
(3,779
)

$
(1,020
)

$



$
1,305


$
(3,494
)Inventory Valuations


(8,670
)


(7,453
)






7,436



(8,687
)Provision for Loss contract






(2,700
)










(2,700
)Deferred Tax Valuation


(858
)


(42
)










(900
)   EndingAcquired at


Charges to


Charges to





Balance atAugust 25,


Costs


Other





December 31,Description

2004


and Expense


Accounts


Deductions


2004(Successor)Allowance for Doubtful accounts

$



$
(510
)

$
(3,494
)

$
72


$
(3,932
)Inventory Valuations






(2,336
)






2,304



(32
)Provision for Loss contract


(5,950
)


(299
)


472



1,294



(4,483
)Deferred Tax Valuation


(900
)


(687
)










(1,587
)   Beginning











EndingBalance


Charges to


Charges to





Balance atat January 1,


Costs


Other





December 31,Description

2005


and Expense


Accounts


Deductions


2005(Successor)Allowance for Doubtful accounts

$
(3,932
)

$
(612
)

$



$
1,557


$
(2,987
)Inventory Valuations


(32
)


(9,276
)






2,517



(6,791
)Provision for Loss contract


(4,483
)


(560
)


77



4,270



(696
)Deferred Tax Valuation


(1,587
)


(5,823
)










(7,410
)   Beginning











EndingBalance at


Charges to


Charges to





Balance atJanuary 1,


Costs


Other





December 31,Description

2006


and Expense


Accounts


Deductions


2006(Successor)Allowance for Doubtful accounts

$
(2,987
)

$
(1,097
)

$



$
2,034


$
(2,050
)Inventory Valuations


(6,791
)


(4,803
)


96



720



(10,778
)Provision for Loss contract(1)


(696
)


(118
)


(3,413
)


4,136



(91
)Deferred Tax Valuation


(7,410
)


(1,302
)










(8,712
)     (1)
    
    During the year, a $3.7 million loss provision was recorded
    relating to a PBH contract. 109




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##### Table of Contents



SIGNATURES    STANDARD AERO HOLDINGS,
    INC.Dated: March 13, 2007

/s/  David
    ShawName: David
    Shaw
    Title: Chief Executive Officer
               (principal
    executive officer)     /s/  David
    ShawDavid
    Shaw

Chief Executive Officer and
    Director (Principal Executive Officer)

March 13, 2007/s/  Peter
    J. ClarePeter
    J. Clare

Director

March 13, 2007/s/  Thomas
    CorcoranThomas
    Corcoran

Director

March 13, 2007/s/  Ralph
    EberhartRalph
    Eberhart

Director

March 13, 2007/s/  Allan
    HoltAllan
    Holt

Director

March 13, 2007/s/  Adam
    PalmerAdam
    Palmer

Director

March 13, 2007/s/  Andrew
    ShinnAndrew
    Shinn

Director

March 13, 2007/s/  David
    SquierDavid
    Squier

Director

March 13, 2007/s/  Bradley
    BertouilleBradley
    Bertouille

Chief Financial Officer
    (Principal Financial Officer)

March 13, 2007/s/  Brent
    FawkesBrent
    Fawkes

Chief Accounting Officer
    (Principal Accounting Officer)

March 13, 2007  110