##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2005
 OR
 o
    
    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 of Incorporation)
    
    (I.R.S. EmployerIdentification Number)
 145 Duncan Drive, Suite 100
San Antonio, Texas 78226
(Address of Principal Executive Offices and Zip Code)
 (210) 334-6105
(Registrants Telephone Number, Including Area Code)
 o þ
 o þ
 o þ




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##### 



INDEX
 PageNo.PART IFINANCIAL INFORMATIONItem 1.
    
    Financial StatementsUnaudited Condensed Consolidated Statement of Operations (Successor) for the three months and nine months ended September 30, 2005 and the period from August 25, 2004 to September 30, 2004.
    
    
    1Unaudited Condensed Combined Statements of Operations (Predecessor) for the period from July 1, 2004 to August 24, 2004 and the period from January 1, 2004 to August 24, 2004.Unaudited Condensed Consolidated Balance Sheets (Successor) as of September 30, 2005 and December 31, 2004
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows (Successor) for the nine months ended September 30, 2005 and the period from August 25, 2004 to September 30, 2004.
    
    
    3Unaudited Condensed Consolidated Statement of Cash Flows (Predecessor) for the period from January 1, 2004 to August 24, 2004Unaudited notes to Financial Statements
    
    
    4  24Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    25 - 53Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
    
    
    54Item 4.
    
    Controls and Procedures.
    
    
    55PART IIOTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    56Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.Item 4.
    
    Submission of Matters to a Vote of Security Holders.Item 6.
    
    Exhibits.
    
    
    56SIGNATURES
    
    
    57




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##### 



Standard Aero Holdings, Inc.
 Unaudited Condensed Consolidated Statement of Operations (Successor) /
 Unaudited Condensed Combined Statement of Operations (Predecessor)
 (In thousands of U.S. dollars)
 Three months
    
    August 25,
    
    
    
    
    
    
    Nine months
    
    August 25,
    
    
    January 1,ended
    
    2004 to
    
    
    July 1, 2004 to
    
    ended
    
    2004 to
    
    
    2004 toSeptember 30,
    
    September 30,
    
    
    August 24,
    
    September 30,
    
    September 30,
    
    
    August 24,2005
    
    2004
    
    
    2004
    
    2005
    
    2004
    
    
    2004(Successor)
    
    (Successor)
    
    
    (Predecessor)
    
    (Successor)
    
    (Successor)
    
    
    (Predecessor)Revenues
    
    $
    198,267
    
    
    $
    75,478
    
    
    
    $
    141,517
    
    
    $
    557,462
    
    
    $
    75,478
    
    
    
    $
    509,385Operating expensesCost of revenues
    
    
    165,735
    
    
    
    64,645
    
    
    
    
    121,390
    
    
    
    465,304
    
    
    
    64,645
    
    
    
    
    423,368Selling, general and
administrative expense
    
    
    12,032
    
    
    
    8,092
    
    
    
    
    7,877
    
    
    
    37,427
    
    
    
    8,092
    
    
    
    
    30,317Amortization of intangible assets
    
    
    2,346
    
    
    
    830
    
    
    
    
    459
    
    
    
    7,238
    
    
    
    830
    
    
    
    
    1,835Restructuring costs
    
    
    3,215
    
    
    
    
    
    
    
    
    
    
    
    
    3,215
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    183,328
    
    
    
    73,567
    
    
    
    
    129,726
    
    
    
    513,184
    
    
    
    73,567
    
    
    
    
    455,520Income from operations
    
    
    14,939
    
    
    
    1,911
    
    
    
    
    11,791
    
    
    
    44,278
    
    
    
    1,911
    
    
    
    
    53,865Interest expense
    
    
    8,938
    
    
    
    3,700
    
    
    
    
    1,000
    
    
    
    26,413
    
    
    
    3,700
    
    
    
    
    4,835Income (loss) before income taxes
    
    
    6,001
    
    
    
    (1,789
    )
    
    
    
    10,791
    
    
    
    17,865
    
    
    
    (1,789
    )
    
    
    
    49,030Income tax expense
    
    
    3,059
    
    
    
    229
    
    
    
    
    1,404
    
    
    
    5,646
    
    
    
    229
    
    
    
    
    15,822Net income (loss)
    
    
    2,942
    
    
    $
    (2,018
    )
    
    
    $
    9,387
    
    
    $
    12,219
    
    
    $
    (2,018
    )
    
    
    $
    33,208
 The accompanying notes are an integral part of these statements.
 1




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##### 



Standard Aero Holdings, Inc.
 Unaudited Condensed Consolidated Balance Sheet (Successor)
 (In thousands of U.S. dollars)
 September 30,
    
    December 31,2005
    
    2004(Successor)
    
    (Successor)AssetsCurrent assetsCash and cash equivalents
    
    $
    6,485
    
    
    $
    27,891Accounts receivable (less allowance for
doubtful accounts of $3,252 and $3,932 at
September 30, 2005 and December 31, 2004,
respectively)
    
    
    118,605
    
    
    
    111,992Inventories
    
    
    146,035
    
    
    
    146,875Prepaid expenses and other current assets
    
    
    4,921
    
    
    
    10,994Income taxes receivable
    
    
    7,587
    
    
    
    4,563Deferred income taxes
    
    
    3,284
    
    
    
    4,118Total current assets
    
    
    286,917
    
    
    
    306,433Deferred finance charges
    
    
    18,859
    
    
    
    21,215Deferred income taxes
    
    
    3,162
    
    
    
    3,856Property, plant and equipment, net
    
    
    139,852
    
    
    
    136,140Intangible assets, net
    
    
    227,771
    
    
    
    237,280Goodwill
    
    
    240,490
    
    
    
    240,490Total assets
    
    $
    917,051
    
    
    $
    945,414Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    86,166
    
    
    $
    106,419Other accrued liabilities
    
    
    19,220
    
    
    
    24,015Due to related party
    
    
    3,940
    
    
    
    2,808Unearned revenue
    
    
    8,499
    
    
    
    12,519Accrued warranty provision
    
    
    5,193
    
    
    
    6,907Income taxes payable
    
    
    7,277
    
    
    
    8,608Current portion of long-term debt
    
    
    9,789
    
    
    
    1,985Total current liabilities
    
    
    140,084
    
    
    
    163,261Deferred income taxes
    
    
    83,144
    
    
    
    84,522Long-term debt
    
    
    471,214
    
    
    
    487,261Total liabilities
    
    
    694,442
    
    
    
    735,044Commitments and contingencies(note 8)Stockholders equityCommon stock(1,000 shares authorized,
issued and outstanding, par value $0.01)
    
    
    
    
    
    
    Additional paid in capital
    
    
    215,000
    
    
    
    215,000Retained earnings / (deficit)
    
    
    7,537
    
    
    
    (4,682
    )Accumulated other comprehensive income
    
    
    72
    
    
    
    52Total stockholders equity
    
    
    222,609
    
    
    
    210,370Total liabilities and stockholders equity
    
    $
    917,051
    
    
    $
    945,414
 The accompanying notes are an integral part of these statements.
 2




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##### 



Standard Aero Holdings, Inc.
 Unaudited Condensed Consolidated Statement of Cash Flows (Successor)/
 Unaudited Condensed Combined Statements of Cash Flows (Predecessor)
 (In thousands of U.S. dollars)
 Nine monthsended
    
    August 25, 2004
    
    
    January 1, 2004September 30,
    
    to September
    
    
    to August 24,2005
    
    30, 2004
    
    
    2004(Successor)
    
    (Successor)
    
    
    (Predecessor)Cash provided from
Operating activitiesNet income (loss) for the period
    
    $
    12,219
    
    
    $
    (2,018
    )
    
    
    $
    33,208Adjustments to reconcile net income (loss) to net cash
provided by (used in)operating activitiesDepreciation and amortization
    
    
    18,964
    
    
    
    2,655
    
    
    
    
    14,229Amortization of deferred finance charges
    
    
    2,356
    
    
    
    221
    
    
    
    
    363Deferred income taxes
    
    
    150
    
    
    
    (3,479
    )
    
    
    
    (5,281
    )Loss on disposal of property, plant and equipment
    
    
    48
    
    
    
    
    
    
    
    
    Changes in assets and liabilitiesAccounts receivable
    
    
    (6,613
    )
    
    
    (7,197
    )
    
    
    
    (32,439
    )Inventories
    
    
    840
    
    
    
    9,378
    
    
    
    
    (30,414
    )Prepaid expenses and other current assets
    
    
    1,040
    
    
    
    (2,827
    )
    
    
    
    (1,670
    )Accounts payable and other current liabilities
    
    
    (30,782
    )
    
    
    3,273
    
    
    
    
    56,774Income taxes payable and receivable
    
    
    (4,355
    )
    
    
    (3,768
    )
    
    
    
    1,671Net cash provided by (used in) operating activities
    
    
    (6,133
    )
    
    
    (3,762
    )
    
    
    
    36,441Investing activitiesAcquisition of property, plant and equipment
    
    
    (7,054
    )
    
    
    (846
    )
    
    
    
    (8,194
    )Proceeds from disposals of property, plant, and equipment
    
    
    51
    
    
    
    
    
    
    
    
    112Acquisition of rental assets and spare engines
    
    
    (13,040
    )
    
    
    (225
    )
    
    
    
    (9,786
    )Proceeds from disposals of rental assets and spare engines
    
    
    6,828
    
    
    
    983
    
    
    
    
    6,393Acquisition of intangibles  licenses
    
    
    
    
    
    
    
    
    
    
    
    (123
    )Acquisition of MRO Division of Dunlop Standard Aerospace
group Limited, net of cash acquired
    
    
    
    
    
    
    (664,011
    )
    
    
    
    Net cash used in investing activities
    
    
    (13,215
    )
    
    
    (664,099
    )
    
    
    
    (11,598
    )Financing activitiesRepayment of debt
    
    
    (56,243
    )
    
    
    (115
    )
    
    
    
    (1,112
    )Proceeds from issuance of debt
    
    
    48,000
    
    
    
    525,000
    
    
    
    
    Issuance of common stock
    
    
    
    
    
    
    215,000
    
    
    
    
    Deferred financing charges
    
    
    
    
    
    
    (23,714
    )
    
    
    
    Change in due to and (from) related companies
    
    
    6,185
    
    
    
    
    
    
    
    
    (10,729
    )Net cash provided by (used in) financing activities
    
    
    (2,058
    )
    
    
    716,171
    
    
    
    
    (11,841
    )Net (decrease) increase in cash and cash equivalents
    
    
    (21,406
    )
    
    
    48,310
    
    
    
    
    13,002Cash and cash equivalents  Beginning of period
    
    
    27,891
    
    
    
    
    
    
    
    
    22,698Cash and cash equivalents  End of period
    
    $
    6,485
    
    
    $
    48,310
    
    
    
    $
    35,700Supplemental cash flow informationCash paid during the nine months ended September 30, 2005
and 2004 periods for:Interest
    
    $
    28,698
    
    
    $
    1,341
    
    
    
    $
    4,000Income taxes
    
    
    12,150
    
    
    
    6,697
    
    
    
    
    18,234
 The accompanying notes are an integral part of these statements.
 3




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##### 



STANDARD AERO HOLDINGS INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1
    
    Nature of operationsThe CompanyStandard Aero Holdings, Inc. was incorporated on June 20, 2004 in the State of Delaware.
Standard Aero Holdings, Inc. and its subsidiaries (the Company or the Successor) commenced
operations on August 25, 2004.The Company is an independent provider of aftermarket maintenance repair and overhaul (MRO)
services for gas turbine engines used primarily for military, regional and business aircraft.
The Company repairs and overhauls a wide range of aircraft engines and provides its customers
with comprehensive, value-added maintenance solutions.The AcquisitionOn August 24, 2004, pursuant to a purchase agreement with Meggitt plc, the Company acquired from
Meggitt the MRO Division of Dunlop Standard Aerospace Group Limited (the Predecessor) for cash
consideration of $699.7 million, including direct costs of the Acquisition of $28.0 million.
This transaction is referred to as the Acquisition. The Company is a wholly owned subsidiary of
Standard Aero Acquisition Holdings, Inc., which is a corporation formed at the direction of The
Carlyle Group. Affiliates of The Carlyle Group own 98.2% of Standard Aero Acquisition Holdings,
Inc. common stock. The purchase price was financed by a $215.0 million equity investment from
the Companys parent company, Standard Aero Acquisition Holdings, Inc., $325.0 million of term
loans and $200.0 million of senior subordinated notes.The accompanying financial statements include the consolidated accounts of the Company and its
subsidiaries subsequent to the Acquisition and also include the combined accounts of the
Predecessor prior to the Acquisition. All significant intercompany accounts and transactions,
including profit and loss as a result of those transactions, have been eliminated in the
consolidation. The financial statements of the Predecessor are presented for comparative
purposes and include the combined historical financial statements of the MRO Division of Dunlop
Standard Aerospace Group Limited. As a result of the Acquisition, the combined financial
statements of the Predecessor Company are not fully comparable to the consolidated financial
statements of the Successor Company due to the different basis of accounting and change in
capital structures.The Company accounted for the Acquisition using the purchase method of accounting in accordance
with SFAS No. 141, Business Combinations and, accordingly, the Acquisition resulted in a new
basis of accounting for the CompanyThe excess of the cost of the Acquisition over the fair values of the net tangible and
intangible assets acquired of $240.5 million has been allocated to goodwill. All of the
goodwill has been allocated to the Aviation Maintenance, Repair and Overhaul reporting segment
of the Company. In accordance with SFAS No. 142, this goodwill will not be amortized but will
be reviewed annually for impairment in the fourth quarter. The majority of the goodwill will
not be deductible for income tax purposes. Of the $241.6 million of acquired intangible assets,
$97.3 million was assigned to trademarks that have indefinite lives, $98.0 million was assigned
to customer relationships that have an estimated weighted average useful life of 17.4 years,
$38.4 million was assigned to OEM authorizations and licenses that have an estimated weighted
average useful life of 14.2 years, and $7.9 million was assigned to technology and other that
have an estimated average useful life of 5 years.
 4




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##### 



STANDARD AERO HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 Basis of presentationThe unaudited condensed consolidated financial statements of the Successor and the unaudited
condensed combined consolidated financial statements of the Predecessor included herein have
been prepared in accordance with accounting principles generally accepted in the United States
for interim financial information. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, the unaudited consolidated
financial statements and the unaudited combined financial statements include all adjustments
necessary for a fair statement of the results of operations for the interim periods. Results
for the interim periods are not necessarily indicative of results that may be expected for the
fiscal year ending December 31, 2005. These interim financial statements should be read in
conjunction with the consolidated financial statements and footnotes of the Company as of
December 31, 2004 and for the period from August 25, 2004 to December 31, 2004 and the combined
financial statements and footnotes of the MRO Division of Dunlop Standard Aerospace Group
Limited as of December 31, 2003 and for the period from January 1, 2004 to August 24, 2004 and
the years ended December 31, 2003 and December 31, 2002.2
    
    Summary of significant accounting policiesThe consolidated and combined financial statements of the Company and the Predecessor,
respectively, have been prepared in accordance with accounting principles generally accepted in
the United States (US GAAP) and are reported in U.S. dollars.
 a)
    
    Revenue recognitionThe Companys revenues related to engine maintenance, repair and overhaul
services includes the provision of services and parts which are accounted for as a
single accounting unit. These revenues and related cost of revenues are recognized
when the services are completed or repaired parts are shipped to the customer. The
Companys standard terms and conditions provide that title and risk of loss passes to
the customer when the customer owned material is shipped to the customer. Amounts
received in advance from customers are recorded as unearned revenue.Lease income associated with the rental of engines or engine modules to customers is
recorded based on time incurred (i.e., on the number of hours flown) as reported to the
Company by the customer. Provisions for estimated loss on work orders in progress are provided in the period the
loss is probable and can be reasonably estimated.Certain of the Companys arrangements may include multiple elements consisting both of
engine repair and overhaul services and engine rentals. In these arrangements, the
service and rental elements are divided into separate units of accounting based on the
relative fair values of each unit and each unit is accounted for in accordance with the
policies noted above.
 5




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##### 



STANDARD AERO HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 b)
    
    Goodwill and intangible assetsIntangibles with definite lives of the Successor are being amortized over 1 to 20 years
with a weighted average of 12.6 years. Intangibles with definite lives of the Predecessor
were being amortized over 3 to 40 years with a weighted average of 31.5 years. Intangible
assets determined to have indefinite lives are tested for impairment annually and
intangibles with definite lives are tested for impairment if the situation indicates that
the asset might be impaired. Goodwill is tested for impairment annually in the fourth
quarter or if the situation indicates that the asset might be impaired.Intangible assets having definite lives are recorded at cost and amortized over their
estimated useful lives or terms of licenses, using the straight-line method, as summarized
below:
 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
    
    
 c)
    
    Income taxesThe Company recognizes deferred tax assets and liabilities using the liability method of
SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases of assets
and liabilities using enacted tax rates in effect for the year in which the differences
are expected to reverse. Deferred tax assets are reduced by a valuation allowance to
record the deferred tax assets at an amount expected more likely than not to be
recoverable. Deferred tax assets and liabilities are adjusted for the effects of changes
in tax laws and rates on the date of enactment.Investment tax credits are accounted as a reduction in the cost of the asset or as a
reduction in associated operating costs when it is likely that such credits will be
realized. These investment tax credits are used to reduce current and future taxes
payable.d)
    
    Share-based compensationThe Company does not have a share-based compensation plan. However, certain employees of
the Company participate in the Stock Option and Purchase Plan of the Companys parent,
Standard Aero Acquisition Holdings, Inc. Options granted by Standard Aero Acquisition
Holdings, Inc. had an exercise price equal to fair value of the underlying stock on the
date of the grant. The parent company accounts for stock-based employee compensation
using the intrinsic value method under Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees.The following table illustrates the effect on net income of the Successor if Standard Aero
Acquisition Holdings, Inc. had applied the fair value recognition provisions of Statement
of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
Compensation:
 January 1, 2005to September 30,(in thousands of U.S. dollars)
    
    2005Net income, as reported
    
    $
    12,219Deduct: Stock-based compensation expense calculated in
accordance with SFAS No. 123
    
    
    (380
    )Pro forma net income
    
    $
    11,839
 
 6




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##### 



STANDARD AERO HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 e)
    
    New accounting standardsIn December 2004, the Financial Accounting Standards Board (FASB) released Statement
123R, Share-Based Payments, that is a revision of FASB Statement No. 123, Accounting
for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting
for Stock Issued to Employees, and its related implementation guidance. Statement 123R
requires companies to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of those instruments,
except in certain circumstances. The standard is applicable to the Company as of the
beginning of the first interim or annual reporting period beginning after December 15,
2005. The Company intends to adopt the standard on a prospective basis as of January 1,
2006 and does not expect the adoption of the standard to have an impact on its financial
position or results of operations.In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections, a replacement of APB No. 20 and FASB Statement No. 3. SFAS No. 154
requires retrospective application to prior periods financial statements of a
voluntary change in accounting principle unless it is impracticable. APB Opinion No.
20, Accounting Changes, previously required that most voluntary changes in
accounting principle be recognized by including in net income of the period of the
change the cumulative effect of changing to the new accounting principle.In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets, an
amendment of APB Opinion No. 29. SFAS No. 153 is based on the principle that exchanges
of nonmonetary assets should be measured based on the fair value of the assets exchanged.
APB Opinion No. 29, Accounting for Nonmonetary
Transactions, provided an exception to its
basic measurement principle (fair value) for exchanges of similar productive assets.
Under APB Opinion No. 29, an exchange of a productive asset for a similar productive asset
was based on the recorded amount of the asset relinquished. SFAS No. 153 eliminates this
exception and replaces it with an exception of exchanges of nonmonetary assets that do not
have commercial substance.
 3
    
    Inventories
 September 30,
    
    December 31,2005
    
    2004(Successor)
    
    (Successor)(in thousands of U.S. dollars)Raw materials
    
    $
    70,812
    
    
    $
    74,897Work in process
    
    
    75,223
    
    
    
    71,978$
    146,035
    
    
    $
    146,875
 7




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##### 



STANDARD AERO HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 4
    
    Intangible assetsIntangible assets are comprised of:(in thousands of U.S. dollars)
 Gross carrying
    
    AccumulatedAt September 30, 2005 (Successor)
    
    amount
    
    Amortization
    
    Net BalanceDefinite lived intangible assets
subject to amortization:Customer relationships
    
    $
    98,000
    
    
    $
    8,789
    
    
    $
    89,211OEM authorizations and licenses
    
    
    38,350
    
    
    
    3,278
    
    
    
    35,072Technology and other
    
    
    7,900
    
    
    
    1,712
    
    
    
    6,188144,250
    
    
    
    13,779
    
    
    
    130,471Indefinite lived intangible assets not
subject to amortization:Trademarks
    
    
    97,300
    
    
    
    
    
    
    
    97,300Total intangible assets
    
    $
    241,550
    
    
    $
    13,779
    
    
    $
    227,771
 Gross carrying
    
    AccumulatedAt December 31, 2004 (Successor)
    
    amount
    
    amortization
    
    Net BalanceDefinite lived intangible assets
subject to amortization:Customer relationships
    
    $
    98,000
    
    
    $
    2,735
    
    
    $
    95,265OEM authorizations and licenses
    
    
    38,350
    
    
    
    1,008
    
    
    
    37,342Technology and other
    
    
    7,900
    
    
    
    527
    
    
    
    7,373144,250
    
    
    
    4,270
    
    
    
    139,980Indefinite lived intangible assets not
subject to amortization:Trademarks
    
    
    97,300
    
    
    
    
    
    
    
    97,300Total intangible assets
    
    $
    241,550
    
    
    $
    4,270
    
    
    $
    237,280
   
 8




---



##### 



STANDARD AERO HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 5
    
    Long-term debtLong-term debt is summarized as follows:
 September 30,
    
    December 31,2005
    
    2004(Successor)
    
    (Successor)(in thousands of U.S. dollars)Term loans
    
    $
    270,000
    
    
    $
    285,000Senior subordinated notes
    
    
    200,000
    
    
    
    200,000Obligations under capital leases
    
    
    3,003
    
    
    
    4,246Revolving credit facility
    
    
    8,000
    
    
    
    481,003
    
    
    
    489,246Less: Current portion
    
    
    9,789
    
    
    
    1,985Long-term debt
    
    $
    471,214
    
    
    $
    487,261
      9




---



##### 



6
    
    Employee benefit plansThe Company provides defined contribution pension plans and a defined benefit pension
plan covering substantially all of its employees. The Company does not provide any other
post retirement benefits or supplemental retirement plans.Cost for the defined contribution pension plans for the nine months ended September 30,
2005, the period August 25 to September 30, 2004, and the period January 1, 2004 to August
24, 2004 (predecessor) were $4.9 million, $0.8 million, and $3.7 million respectively.Costs for the defined benefit pension plans for the nine months ended September 30, 2005,
the period August 25 to September 30, 2004, and the period January 1, 2004 to August 24,
2004 (predecessor) were $0.3 million, $0.0 million, and $0.2 million respectively.7
    
    Restructuring NoteDuring the third quarter of 2005, the company incurred $3.2 million in severance costs. The
severance costs represent one-time termination payments for approximately 100 people. The
terminations were a result of managements decision to rationalize, integrate and align the
resources of the company. There are no further costs expected for this restructuring activity.
At September 30, 2005 there is a $1.9 million liability associated with these costs. This liability is
expected to be fully paid by January 31, 2006.8
    
    Commitments and contingenciesCommitmentsThe Company leases facilities, office equipment, machinery,
computers, and rental engines under
non-cancellable operating leases having initial terms of more than one year.Contingent liabilitiesThe Company is involved, from time to time, in legal actions and claims arising in the ordinary
course of business. While the ultimate result of these claims cannot presently be determined,
management does not expect that these matters will have a material adverse effect on the
financial condition, statement of operations or cash flows of the Company.The Company has facilities that are located on land that has been used for industrial purposes
for an extended period of time. The Company has not been named as a defendant to any
environmental suit. Although the Predecessor has, from time to time, been required to pay
fines in connection with violations of certain environmental requirements, management believes
that the Company is currently in substantial compliance with environmental laws. The Company
incurs capital and operating costs relating to environmental compliance on an ongoing basis.
Management does not, however, believe that the Company will be required under existing
environmental laws to expend amounts that would have a material
adverse effect on its financial
condition or results of operations as a whole.
 10




---



##### 



9
    
    Stock optionsCertain employees of the Company are eligible to participate in Standard Aero Acquisition
Holdings, Inc.s (SAAHI) Stock Option and Purchase Plan (the Plan) which was approved by the
Companys Board of Directors in December 2004. A total of 425,000 stock options have been
approved for issuance under this Plan. As of September 30, 2005, SAAHI has 195,020 stock
options outstanding, each of which may be used to purchase one share of SAAHI common stock.
The options have a ten year life and an exercise price of one hundred dollars per share, which
was equivalent to the exercise price at that date. Approximately 31% of the options are time
vesting options that will vest on or prior to December 31, 2008. 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
vest and become exercisable over a five-year period, starting with 2004, if certain performance
targets relating to earnings and debt repayment are met. 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 are met. In addition, these options vest upon
the occurrence of certain stated liquidity events, as defined in the Plan.Additional Stock Options were granted, under a new plan, to
several members of the board of Directors.
Under this plan options have a ten year life and an exercise price of one hundred dollars per
share. The options may be used to purchase one share of the SAAHI common stock and
vest over a one year period, in four equal amounts on a three month basis.The following is a summary of the stock option grants:
 Outstanding as of December 31, 2004
    
    
    206,071Granted
    
    
    3,000Exercised
    
    
    Cancelled
    
    
    14,051Outstanding as of September 30, 2005
    
    
    195,020Weighted average remaining life as of September 30, 2005
    
    
    5.2Options exercisable as of September 30, 2005
    
    
    17,479
 The Company has elected to apply the provisions of APB No. 25. For the period from August 25,
2004 to December 31, 2004, no stock option compensation expense was recognized in the
determination of net income in the accompanying statement of operations. The weighted average
fair value on the measurement date for the options granted in 2004 was $3,855 and the weighted
average fair value per share was 19 dollars per share. Had stock option compensation expense
been determined pursuant to the methodology of SFAS No. 123, the Company would have recorded an
after-tax compensation charge of approximately $0.4 million in the nine month period ending
September 30, 2005.The fair value of the options was estimated at the measurement date using the minimum value
method and assumed no dividends or volatility, a risk-free interest rate of 4.13% and an
expected option life of 6 years.10
    
    Related party transactionsAt September 30, 2005, the Company has an outstanding payable of $3.9 million to its parent,
Standard Aero Acquisition Holdings, Inc., for cash advanced by Standard Aero Acquisition
Holdings, Inc. The payable is non-interest bearing and has no repayment terms.The Carlyle Group charges the Company a monthly management fee of $125,000.
 11




---



##### 



11
    
    GuaranteesThe Company issues letters of credit, performance bonds, bid bonds or guarantees in the
ordinary course of its business. These instruments are generally issued in conjunction with
contracts or other business requirements. The total of these instruments outstanding at
September 30, 2005 was approximately $2.7 million (Successor) (2004  $2.1 million
(Successor)).In connection with the Acquisition, the Company and an affiliate of Meggitt entered into a
separation agreement. The separation agreement provides, among other things, that the Company
will indemnify Meggitt and its subsidiaries for liabilities relating to the MRO business and
that Meggitt Acquisition Limited will indemnify the Company for liabilities arising out of the
aerospace design and manufacturing business purchased by Meggitt. The separation agreement
also requires that the Company indemnify Meggitt and its subsidiaries for 50% of the
liabilities of Dunlop Standard Aerospace Group Limited and its subsidiaries assumed by Meggitt
in connection with the Acquisition that relate to any former business or activity of Dunlop
Standard Aerospace Group Limited other than the MRO business or the aerospace design and
manufacturing business. As at September 30, 2005, there are no indemnification claims known to
the Company. Since there are no outstanding claims and no previous history of claims, no
amount has been accrued in these consolidated financial statements.Warranty guaranteeReserves are recorded to reflect the Companys contractual liabilities relating to warranty
commitments to customers. Warranty coverage of various lengths and terms is provided to
customers depending on standard offerings and negotiated contractual agreements.Changes in the carrying amount of accrued warranty costs are summarized as follows:
 Balance at December 31, 2004 (Successor)
    
    
    
    (6,907
    )Warranty costs incurred
    
    
    
    1,811Warranty accrued
    
    
    
    (97
    )Balance at September 30, 2005 (Successor)
    
    
    $
    (5,193
    )
 12
    
    Subsequent EventThe Company generated approximately 36% and 31% of its revenues for the year ended December 31, 2004 and the
nine months ended September 30, 2005, respectively, by providing MRO services to the United States Air Force as a subcontractor to Kelly Aviation Center, L.P., or KAC, a joint venture between Lockheed Martin and General Electric.
The original subcontract was awarded in 1999 and ran through February
2006, and KAC
previously exercised an option to extend the subcontract for one year to February 2007.The Company believes that, under the terms of the KAC subcontract,
KAC is obligated to extend the subcontract through at least February 2009.
KAC has informed the Company that they disagree with the Companys interpretation of the
subcontract and that at this time they do not intend to make a decision whether to exercise
their option to extend the subcontract for periods beyond February 2007. In addition,
KAC recently has added Rolls-Royce, the manufacturer of the T56 engines that the Company services
under the subcontract and a competitor of the Company in the T56 MRO
business, as a minority partner of the joint venture. The Company is
unable to predict the impact, if any, that the addition of
Rolls-Royce to the joint venture will have on the Companys relationship with KAC.The Company is engaged in discussions with KAC in an attempt to resolve the dispute over the subcontract and intend to protect our rights under the subcontract.
There can be no assurance that any discussions that the Company may engage in with KAC or our other efforts will result in a satisfactory resolution of this dispute. The loss of the KAC subcontract could have a material adverse effect on the Company.
 
 12




---



##### 



13
    
    Comprehensive IncomeComprehensive income consists of two components, net income and other comprehensive income.
Other comprehensive income refers to revenue, expenses, gains and losses that under generally
accepted accounting principles are recorded as an element of shareholders equity but are
excluded from net income. The Companys other comprehensive income consists of deferred gains
and losses on certain derivative instruments accounted for as cash
flow hedges.
 Three months
    
    
    August 25,
    
    
    
    
    
    
    
    Nine months
    
    
    August 25,
    
    
    
    January 1,ended
    
    
    2004 to
    
    
    
    July 1, 2004 to
    
    
    ended
    
    
    2004 to
    
    
    
    2004 toSeptember 30,
    
    
    September 30,
    
    
    
    August 24,
    
    
    September 30,
    
    
    September 30,
    
    
    
    August 24,2005
    
    
    2004
    
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    
    2004(In thousands of U.S. dollars)
    
    (Successor)
    
    
    (Successor)
    
    
    
    (Predecessor)
    
    
    (Successor)
    
    
    (Successor)
    
    
    
    (Predecessor)Net Income
    
    $
    2,942
    
    
    $
    (2,018
    )
    
    
    $
    9,387
    
    
    $
    12,219
    
    
    $
    (2,018
    )
    
    
    $
    33,208Other comprehensive income:Change in unrealized
derivative gains
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    Total comprehensive income
    
    $
    2,976
    
    
    $
    (2,018
    )
    
    
    $
    9,387
    
    
    $
    12,239
    
    
    $
    (2,018
    )
    
    
    $
    33,208
 14
    
    Segment informationIn July 2005, as part of the Companys restructuring process, the activities of the Energy
Services segment were moved to the Aviation Maintenance Repair and Overhaul segment and will
now report to the senior management of that segment. Members of the senior management team of the Energy
Services segment were terminated or moved to other existing segments. As a result the company
has reduced its principal operating segments from three to two.Segment information in previous periods have been reclassified to reflect this
change .The Company has two principal operating segments, which are Aviation Maintenance
Repair and Overhaul and Redesign Services. The Aviation Maintenance Repair and Overhaul
segment provides gas turbine engine maintenance repair and overhaul services primarily for the
aviation market. The Redesign Services segment provides services related to the design and
implementation of lean manufacturing operational redesigns. These operating segments were
determined based on the nature of the products and services offered. Operating segments are
defined as components of an enterprise about which separate financial information is available
that is evaluated regularly by the chief operating decision-maker in deciding how to allocate
resources and in assessing performance. The Companys chief executive officer has been
identified as the chief operating decision-maker. The Companys chief operating decision-maker
directs the allocation of resources to operating segments based on profitability and cash flows
of each respective segment.Certain administrative and management services are shared by the segments and are
allocated based on direct usage, revenue and employee levels. Corporate management expenses
are not allocated to the segments.There are no revenues between segments.
 13




---



##### 



For the three months ended September 30, 2005 (Successor)
 Aviationmaintenancerepair and
    
    Redesignoverhaul
    
    Services
    
    Unallocated
    
    TotalRevenues
    
    
    $
    195,896
    
    
    $
    2,371
    
    
    $
    
    
    
    $
    198,267Income (loss)
before income taxes
    
    
    
    21,285
    
    
    
    (697
    )
    
    
    (14,587
    )
    
    
    6,001
 For the period August 25, 2004 to September 30, 2004 (Successor)
 Aviationmaintenancerepair and
    
    Redesignoverhaul
    
    Services
    
    Unallocated
    
    TotalRevenues
    
    
    $
    75,287
    
    
    $
    191
    
    
    $
    
    
    
    $
    75,478Income (loss)
before income taxes
    
    
    
    11,064
    
    
    
    (543
    )
    
    
    (12,310
    )
    
    
    (1,789
    )
 For the period July 1, 2004 to August 24, 2004 (Predecessor)
 Aviationmaintenancerepair and
    
    Redesignoverhaul
    
    Services
    
    Unallocated
    
    TotalRevenues
    
    
    $
    140,579
    
    
    $
    938
    
    
    $
    
    
    
    $
    141,517Income (loss)
before income taxes
    
    
    
    15,718
    
    
    
    (1,534
    )
    
    
    (3,393
    )
    
    
    10,791
 14




---



##### 



For the nine months ended September 30, 2005 (Successor)
 Aviationmaintenancerepair and
    
    Redesignoverhaul
    
    Services
    
    Unallocated
    
    TotalRevenues
    
    
    $
    554,457
    
    
    $
    3,005
    
    
    $
    
    
    
    $
    557,462Income (loss)
before income taxes
    
    
    
    58,704
    
    
    
    (3,379
    )
    
    
    (37,460
    )
    
    
    17,865
 For the period August 25, 2004 to September 30, 2004 (Successor)
 Aviationmaintenancerepair and
    
    Redesignoverhaul
    
    Services
    
    Unallocated
    
    TotalRevenues
    
    
    $
    75,287
    
    
    $
    191
    
    
    $
    
    
    
    $
    75,478Income (loss)
before income taxes
    
    
    
    11,064
    
    
    
    (543
    )
    
    
    (12,310
    )
    
    
    (1,789
    )
 For the period January 1, 2004 to August 24, 2004 (Predecessor)
 Aviationmaintenancerepair and
    
    Redesignoverhaul
    
    Services
    
    Unallocated
    
    TotalRevenues
    
    
    $
    504,079
    
    
    $
    5,306
    
    
    $
    
    
    
    $
    509,385Income (loss)
before income taxes
    
    
    
    62,255
    
    
    
    (3,110
    )
    
    
    (10,115
    )
    
    
    49,030
 
 15




---



##### 



15
    
    Guarantor InformationSeparate financial statements of the Guarantor Subsidiaries are not presented because
guarantees of the Notes are full and unconditional and joint and several. The Guarantor
Subsidiaries guarantee the senior subordinated notes issued in connection with the Acquisition.
The Guarantor Subsidiaries are 100% owned by the Company.
 Condensed Combining Statements of Operations (Successor)
For the three months ended September 30, 2005
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    176,693
    
    
    $
    22,633
    
    
    $
    (1,059
    )
    
    $
    198,267Operating ExpensesCost of revenues
    
    
    
    
    
    
    146,412
    
    
    
    20,382
    
    
    
    (1,059
    )
    
    
    165,735Selling, general and administrative
expense
    
    
    1,958
    
    
    
    8,934
    
    
    
    1,140
    
    
    
    
    
    
    
    12,032Amortization of intangible assets
    
    
    
    
    
    
    2,346
    
    
    
    
    
    
    
    
    
    
    
    2,346Restructuring costs
    
    
    
    
    
    
    2,014
    
    
    
    1,201
    
    
    
    
    
    
    
    3,215Total operating expenses
    
    
    1,958
    
    
    
    159,706
    
    
    
    22,723
    
    
    
    (1,059
    )
    
    
    183,328Income (loss) from operations
    
    
    (1,958
    )
    
    
    16,987
    
    
    
    (90
    )
    
    
    
    
    
    
    14,939Interest expense
    
    
    8,769
    
    
    
    87
    
    
    
    82
    
    
    
    
    
    
    
    8,938Income (loss) before income taxes
    
    
    (10,727
    )
    
    
    16,900
    
    
    
    (172
    )
    
    
    
    
    
    
    6,001Income tax expense (benefit)
    
    
    (3,758
    )
    
    
    6,788
    
    
    
    29
    
    
    
    
    
    
    
    3,059Income (loss) before equity earnings in
Subsidiaries.
    
    
    (6,969
    )
    
    
    10,112
    
    
    
    (201
    )
    
    
    
    
    
    
    2,942Equity in Earnings of subsidiaries
    
    
    9,911
    
    
    
    (249
    )
    
    
    
    
    
    
    (9,662
    )
    
    
    Net income (loss)
    
    $
    2,942
    
    
    $
    9,863
    
    
    $
    (201
    )
    
    $
    (9,662
    )
    
    $
    2,942
  16




---



##### 



Condensed Combining Statements of Operations (Successor)
For the period August 25 to September 30, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    67,591
    
    
    $
    8,907
    
    
    $
    (1,020
    )
    
    $
    75,478Operating ExpensesCost of revenues
    
    
    
    
    
    
    57,280
    
    
    
    8,385
    
    
    
    (1,020
    )
    
    
    64,645Selling, general and administrative
expense
    
    
    2,289
    
    
    
    4,393
    
    
    
    1,410
    
    
    
    
    
    
    
    8,092Amortization of intangible assets
    
    
    
    
    
    
    830
    
    
    
    
    
    
    
    
    
    
    
    830Total operating expenses
    
    
    2,289
    
    
    
    62,503
    
    
    
    9,795
    
    
    
    (1,020
    )
    
    
    73,567Income (loss) from operations
    
    
    (2,289
    )
    
    
    5,088
    
    
    
    (888
    )
    
    
    
    
    
    
    1,911Interest expense
    
    
    3,673
    
    
    
    20
    
    
    
    7
    
    
    
    
    
    
    
    3,700Income (loss) before income taxes
    
    
    (5,962
    )
    
    
    5,068
    
    
    
    (895
    )
    
    
    
    
    
    
    (1,789
    )Income tax expense (benefit)
    
    
    (2,311
    )
    
    
    2,876
    
    
    
    (336
    )
    
    
    
    
    
    
    229Income (loss) before equity earnings in
Subsidiaries.
    
    
    (3,651
    )
    
    
    2,192
    
    
    
    (559
    )
    
    
    
    
    
    
    (2,018
    )Equity in Earnings of subsidiaries
    
    
    1,633
    
    
    
    (515
    )
    
    
    
    
    
    
    (1,118
    )
    
    
    Net income (loss)
    
    $
    (2,018
    )
    
    $
    1,677
    
    
    $
    (559
    )
    
    $
    (1,118
    )
    
    $
    (2,018
    )
 Condensed Combining Statement of Operations (Predecessor)
For the period July 1, 2004 to August 24, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningGuarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalRevenues
    
    $
    131,248
    
    
    $
    12,394
    
    
    $
    (2,125
    )
    
    $
    141,517Operating ExpensesCost of revenues
    
    
    112,680
    
    
    
    10,835
    
    
    
    (2,125
    )
    
    
    121,390Selling, general and administrative
    
    
    3,600
    
    
    
    4,277
    
    
    
    
    
    
    
    7,877Amortization of intangible assets
    
    
    489
    
    
    
    (30
    )
    
    
    
    
    
    
    459Total operating expenses
    
    
    116,769
    
    
    
    15,082
    
    
    
    (2,125
    )
    
    
    129,726Income (loss) from operations
    
    
    14,479
    
    
    
    (2,688
    )
    
    
    
    
    
    
    11,791Interest expense
    
    
    629
    
    
    
    371
    
    
    
    
    
    
    
    1,000Income (loss) before income taxes
    
    
    13,850
    
    
    
    (3,059
    )
    
    
    
    
    
    
    10,791Income tax expense (benefit)
    
    
    2,440
    
    
    
    (1,036
    )
    
    
    
    
    
    
    1,404Net income (loss)
    
    $
    11,410
    
    
    $
    (2,023
    )
    
    $
    
    
    
    $
    9,387
 17




---



##### 



Condensed Combining Statements of Operations (Successor)
For the nine months ended September 30, 2005
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    487,925
    
    
    $
    75,722
    
    
    $
    (6,185
    )
    
    $
    557,462Operating ExpensesCost of revenues
    
    
    
    
    
    
    401,545
    
    
    
    69,944
    
    
    
    (6,185
    )
    
    
    465,304Selling, general and administrative
expense.
    
    
    3,944
    
    
    
    28,440
    
    
    
    5,043
    
    
    
    
    
    
    
    37,427Amortization of intangible assets
    
    
    
    
    
    
    7,238
    
    
    
    
    
    
    
    
    
    
    
    7,238Restructuring costs
    
    
    
    
    
    
    2,014
    
    
    
    1,201
    
    
    
    
    
    
    
    3,215Total operating expenses
    
    
    3,944
    
    
    
    439,237
    
    
    
    76,188
    
    
    
    (6,185
    )
    
    
    513,184Income (loss) from operations
    
    
    3,944
    
    
    
    48,688
    
    
    
    (466
    )
    
    
    
    
    
    
    44,278Interest expense
    
    
    25,278
    
    
    
    743
    
    
    
    392
    
    
    
    
    
    
    
    26,413Income (loss) before income taxes
    
    
    (29,222
    )
    
    
    47,945
    
    
    
    (858
    )
    
    
    
    
    
    
    17,865Income tax expense (benefit)
    
    
    (10,228
    )
    
    
    16,529
    
    
    
    (655
    )
    
    
    
    
    
    
    5,646Income (loss) before equity earnings in
Subsidiaries.
    
    
    (18,994
    )
    
    
    31,416
    
    
    
    (203
    )
    
    
    
    
    
    
    12,219Equity in Earnings of subsidiaries
    
    
    31,213
    
    
    
    (431
    )
    
    
    
    
    
    
    (30,782
    )
    
    
    Net income (loss)
    
    $
    12,219
    
    
    $
    30,985
    
    
    $
    (203
    )
    
    $
    (30,782
    )
    
    $
    12,219
 Condensed Combining Statements of Operations (Successor)
For the period August 25 to September 30, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalRevenues
    
    $
    
    
    
    $
    67,591
    
    
    $
    8,907
    
    
    $
    (1,020
    )
    
    $
    75,478Operating ExpensesCost of revenues
    
    
    
    
    
    
    57,280
    
    
    
    8,385
    
    
    
    (1,020
    )
    
    
    64,645Selling, general and administrative
expense
    
    
    2,289
    
    
    
    4,393
    
    
    
    1,410
    
    
    
    
    
    
    
    8,092Amortization of intangible assets
    
    
    
    
    
    
    830
    
    
    
    
    
    
    
    
    
    
    
    830Total operating expenses
    
    
    2,289
    
    
    
    62,503
    
    
    
    9,795
    
    
    
    (1,020
    )
    
    
    73,567Income (loss) from operations
    
    
    (2,289
    )
    
    
    5,088
    
    
    
    (888
    )
    
    
    
    
    
    
    1,911Interest expense
    
    
    3,673
    
    
    
    20
    
    
    
    7
    
    
    
    
    
    
    
    3,700Income (loss) before income taxes
    
    
    (5,962
    )
    
    
    5,068
    
    
    
    (895
    )
    
    
    
    
    
    
    (1,789
    )Income tax expense (benefit)
    
    
    (2,311
    )
    
    
    2,876
    
    
    
    (336
    )
    
    
    
    
    
    
    229Income (loss) before equity earnings in
subsidiaries.
    
    
    (3,651
    )
    
    
    2,192
    
    
    
    (559
    )
    
    
    
    
    
    
    (2,018
    )Equity in Earnings of subsidiaries
    
    
    1,633
    
    
    
    (515
    )
    
    
    
    
    
    
    (1,118
    )
    
    
    Net income (loss)
    
    $
    (2,018
    )
    
    $
    1,677
    
    
    $
    (559
    )
    
    $
    (1,118
    )
    
    $
    (2,018
    )
 18




---



##### 



Condensed Combining Statement of Operations (Predecessor)
For the period January 1, 2004 to August 24, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningGuarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalRevenues
    
    $
    470,367
    
    
    $
    43,345
    
    
    $
    (4,327
    )
    
    $
    509,385Operating Expenses.Cost of revenues
    
    
    387,964
    
    
    
    39,731
    
    
    
    (4,327
    )
    
    
    423,368Selling, general and administrative
    
    
    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
 19




---



##### 



Condensed Consolidating Balance Sheet (Successor)
September 30, 2005
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalAssetsCurrent AssetsCash and cash equivalents
    
    $
    701
    
    
    $
    4,708
    
    
    $
    1,076
    
    
    $
    
    
    
    $
    6,485Accounts Receivable
    
    
    
    
    
    
    100,186
    
    
    
    18,419
    
    
    
    
    
    
    
    118,605Due from related party
    
    
    9,040
    
    
    
    88,958
    
    
    
    1,673
    
    
    
    (99,671
    )
    
    
    Inventories
    
    
    
    
    
    
    115,443
    
    
    
    30,592
    
    
    
    
    
    
    
    146,035Prepaid expenses and other current
assets
    
    
    170
    
    
    
    3,947
    
    
    
    804
    
    
    
    
    
    
    
    4,921Income taxes receivable
    
    
    
    
    
    
    3,350
    
    
    
    4,237
    
    
    
    
    
    
    
    7,587Deferred income taxes
    
    
    
    
    
    
    2,255
    
    
    
    1,029
    
    
    
    
    
    
    
    3,284Total current assets
    
    
    9,911
    
    
    
    318,847
    
    
    
    57,830
    
    
    
    (99,671
    )
    
    
    286,917Deferred finance charges
    
    
    10,081
    
    
    
    8,778
    
    
    
    
    
    
    
    
    
    
    
    18,859Deferred income taxes
    
    
    
    
    
    
    3,162
    
    
    
    
    
    
    
    
    
    
    
    3,162Property, plant and equipment, net
    
    
    
    
    
    
    119,775
    
    
    
    20,077
    
    
    
    
    
    
    
    139,852Intangible assets, net
    
    
    
    
    
    
    223,361
    
    
    
    4,410
    
    
    
    
    
    
    
    227,771Due from related party
    
    
    
    
    
    
    5,379
    
    
    
    
    
    
    
    (5,379
    )
    
    
    Goodwill
    
    
    
    
    
    
    240,490
    
    
    
    
    
    
    
    
    
    
    
    240,490Investments in subsidiaries
    
    
    750,359
    
    
    
    37,161
    
    
    
    
    
    
    
    (787,520
    )
    
    
    Total assets
    
    $
    770,351
    
    
    $
    956,953
    
    
    $
    82,317
    
    
    $
    (892,570
    )
    
    $
    917,051Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    56
    
    
    $
    77,944
    
    
    $
    8,166
    
    
    $
    
    
    
    $
    86,166Other accrued liabilities
    
    
    5,841
    
    
    
    11,132
    
    
    
    2,247
    
    
    
    
    
    
    
    19,220Unearned revenue
    
    
    
    
    
    
    7,888
    
    
    
    611
    
    
    
    
    
    
    
    8,499Accrued warranty provision
    
    
    
    
    
    
    3,209
    
    
    
    1,984
    
    
    
    
    
    
    
    5,193Income taxes payable
    
    
    
    
    
    
    7,223
    
    
    
    54
    
    
    
    
    
    
    
    7,277Due to related party
    
    
    63,845
    
    
    
    24,206
    
    
    
    15,560
    
    
    
    (99,671
    )
    
    
    3,940Current portion of long-term debt
    
    
    8,000
    
    
    
    1,382
    
    
    
    407
    
    
    
    
    
    
    
    9,789Total current liabilities
    
    
    77,742
    
    
    
    132,984
    
    
    
    29,029
    
    
    
    (99,671
    )
    
    
    140,084Deferred income taxes
    
    
    
    
    
    
    78,053
    
    
    
    5,091
    
    
    
    
    
    
    
    83,144Due to related party
    
    
    
    
    
    
    
    
    
    
    5,379
    
    
    
    (5,379
    )
    
    
    Long-term debt
    
    
    470,000
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    471,214Total liabilities
    
    
    547,742
    
    
    
    212,251
    
    
    
    39,499
    
    
    
    (105,050
    )
    
    
    694,442Stockholders equityCommon Stock
    
    
    
    
    
    
    
    
    
    
    Additional paid in capital
    
    
    215,000
    
    
    
    709,656
    
    
    
    47,612
    
    
    
    (757,268
    )
    
    
    215,000Retained earnings (deficit)
    
    
    7,537
    
    
    
    35,046
    
    
    
    (4,794
    )
    
    
    (30,252
    )
    
    
    7,537Accumulated other comprehensive
Income
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72Total stockholders equity
    
    
    222,609
    
    
    
    744,702
    
    
    
    42,818
    
    
    
    (787,520
    )
    
    
    222,609Total liabilities and stockholders
equity
    
    $
    770,351
    
    
    $
    956,953
    
    
    $
    82,317
    
    
    $
    (892,570
    )
    
    $
    917,051
 20




---



##### 



Condensed Combining Balance Sheet (Successor)
December 31, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalAssetsCurrent AssetsCash and cash equivalents
    
    $
    4,116
    
    
    $
    18,521
    
    
    $
    5,254
    
    
    $
    
    
    
    $
    27,891Accounts Receivable
    
    
    4,678
    
    
    
    95,180
    
    
    
    12,134
    
    
    
    
    
    
    
    111,992Due from related party
    
    
    13,352
    
    
    
    52,090
    
    
    
    3,910
    
    
    
    (69,352
    )
    
    
    Inventories
    
    
    
    
    
    
    116,390
    
    
    
    30,485
    
    
    
    
    
    
    
    146,875Prepaid expenses and other current assets
    
    
    469
    
    
    
    9,485
    
    
    
    1,040
    
    
    
    
    
    
    
    10,994Income taxes receivable
    
    
    4,729
    
    
    
    
    
    
    
    4,563
    
    
    
    (4,729
    )
    
    
    4,563Deferred income taxes
    
    
    
    
    
    
    2,670
    
    
    
    1,448
    
    
    
    
    
    
    
    4,118Total current assets
    
    
    27,344
    
    
    
    294,336
    
    
    
    58,834
    
    
    
    (74,081
    )
    
    
    306,433Deferred finance charges
    
    
    11,304
    
    
    
    9,911
    
    
    
    
    
    
    
    
    
    
    
    21,215Deferred income taxes
    
    
    
    
    
    
    3,856
    
    
    
    
    
    
    
    
    
    
    
    3,856Property, plant and equipment, net
    
    
    
    
    
    
    116,630
    
    
    
    19,510
    
    
    
    
    
    
    
    136,140Intangible assets, net
    
    
    
    
    
    
    232,461
    
    
    
    4,819
    
    
    
    
    
    
    
    237,280Due from related party
    
    
    
    
    
    
    5,117
    
    
    
    
    
    
    
    (5,117
    )
    
    
    Goodwill
    
    
    
    
    
    
    240,490
    
    
    
    
    
    
    
    
    
    
    
    240,490Investments in subsidiaries
    
    
    719,146
    
    
    
    37,592
    
    
    
    
    
    
    
    (756,738
    )
    
    
    Total assets
    
    $
    757,794
    
    
    $
    940,393
    
    
    $
    83,163
    
    
    $
    (835,936
    )
    
    $
    945,414Liabilities and divisional equityCurrent liabilitiesAccounts payable
    
    $
    5,058
    
    
    $
    92,689
    
    
    $
    8,672
    
    
    $
    
    
    
    $
    106,419Other accrued liabilities
    
    
    7,349
    
    
    
    12,978
    
    
    
    3,688
    
    
    
    
    
    
    
    24,015Due to related party
    
    
    50,017
    
    
    
    12,291
    
    
    
    9,852
    
    
    
    (69,352
    )
    
    
    2,808Unearned revenue
    
    
    
    
    
    
    9,126
    
    
    
    3,393
    
    
    
    
    
    
    
    12,519Accrued warranty provision
    
    
    
    
    
    
    3,784
    
    
    
    3,123
    
    
    
    
    
    
    
    6,907Income taxes payable
    
    
    
    
    
    
    13,126
    
    
    
    211
    
    
    
    (4,729
    )
    
    
    8,608Current portion of long-term debt
    
    
    
    
    
    
    1,304
    
    
    
    681
    
    
    
    
    
    
    
    1,985Total current liabilities
    
    
    62,424
    
    
    
    145,298
    
    
    
    29,620
    
    
    
    (74,081
    )
    
    
    163,261Deferred income taxes
    
    
    
    
    
    
    79,117
    
    
    
    5,405
    
    
    
    
    
    
    
    84,522Due to related party
    
    
    
    
    
    
    
    
    
    
    5,117
    
    
    
    (5,117
    )
    
    
    Long-term debt
    
    
    485,000
    
    
    
    2,261
    
    
    
    
    
    
    
    
    
    
    
    487,261Total liabilities
    
    
    547,424
    
    
    
    226,676
    
    
    
    40,142
    
    
    
    (79,198
    )
    
    
    735,044Stockholders equityCommon Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Additional paid in capital
    
    
    215,000
    
    
    
    709,656
    
    
    
    47,612
    
    
    
    (757,268
    )
    
    
    215,000Retained earnings (deficit)
    
    
    (4,682
    )
    
    
    4,061
    
    
    
    (4,591
    )
    
    
    530
    
    
    
    (4,682
    )Accumulated other comprehensive income
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52Total stockholders equity
    
    
    210,370
    
    
    
    713,717
    
    
    
    43,021
    
    
    
    (756,738
    )
    
    
    210,370Total liabilities and stockholders equity
    
    $
    757,794
    
    
    $
    940,393
    
    
    $
    83,163
    
    
    $
    (835,936
    )
    
    $
    945,414
 21




---



##### 



Condensed Consolidating Statement of Operations (Successor)
For the nine months ended September 30, 2005
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalCash provided by (used in)
Operating activitiesNet income (loss) for the period
    
    $
    12,219
    
    
    $
    30,985
    
    
    $
    (203
    )
    
    $
    (30,782
    )
    
    $
    12,219Adjustments to reconcile net income to net
Cashprovided by operating activitiesDepreciation and amortization
    
    
    
    
    
    
    16,822
    
    
    
    2,142
    
    
    
    
    
    
    
    18,964Amortization of deferred finance charges
    
    
    1,223
    
    
    
    1,133
    
    
    
    
    
    
    
    
    
    
    
    2,356Deferred income taxes
    
    
    
    
    
    
    45
    
    
    
    105
    
    
    
    
    
    
    
    150Loss on disposal of property, plant
and equipment
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    48Equity in earnings of subsidiaries
    
    
    (31,213
    )
    
    
    431
    
    
    
    
    
    
    
    30,782
    
    
    
    Changes in assets and liabilitiesAccounts receivable
    
    
    
    
    
    
    (328
    )
    
    
    (6,285
    )
    
    
    
    
    
    
    (6,613
    )Inventories
    
    
    
    
    
    
    947
    
    
    
    (107
    )
    
    
    
    
    
    
    840Prepaid expenses and other current assets
    
    
    (56
    )
    
    
    860
    
    
    
    236
    
    
    
    
    
    
    
    1,040Accounts payable and other accrued
Liabilities
    
    
    (6,510
    )
    
    
    (18,404
    )
    
    
    (5,868
    )
    
    
    
    
    
    
    (30,782
    )Income taxes payable and receivable
    
    
    4,729
    
    
    
    (9,253
    )
    
    
    169
    
    
    
    
    
    
    
    (4,355
    )Net cash provided by (used in) operating
activities
    
    
    (19,608
    )
    
    
    23,286
    
    
    
    (9,811
    )
    
    
    
    
    
    
    (6,133
    )Investing activitiesAcquisitions of property, plant and equipment
    
    
    
    
    
    
    (6,373
    )
    
    
    (681
    )
    
    
    
    
    
    
    (7,054
    )Proceeds on disposal of property, plant and
Equipment
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    51Acquisition of rental assets and spare engines
    
    
    
    
    
    
    (10,114
    )
    
    
    (2,926
    )
    
    
    
    
    
    
    (13,040
    )Proceeds on disposal of rental assets and
Spare engines
    
    
    
    
    
    
    5,528
    
    
    
    1,300
    
    
    
    
    
    
    
    6,828Acquisition of intangibles  licenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    
    
    
    
    (10,908
    )
    
    
    (2,307
    )
    
    
    
    
    
    
    (13,215
    )Financing activitiesRepayment of debt
    
    
    (55,000
    )
    
    
    (969
    )
    
    
    (274
    )
    
    
    
    
    
    
    (56,243
    )Proceeds from issuance of debt
    
    
    48,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,000Change in due to and (from) related companies
    
    
    23,193
    
    
    
    (25,222
    )
    
    
    8,214
    
    
    
    
    
    
    
    6,185Net cash provided by (used in) financing
Activities
    
    
    16,193
    
    
    
    (26,191
    )
    
    
    7,940
    
    
    
    
    
    
    
    (2,058
    )Net (decrease) increase in cash and cash
Equivalents
    
    
    (3,415
    )
    
    
    (13,813
    )
    
    
    (4,178
    )
    
    
    
    
    
    
    (21,406
    )Cash and cash equivalents  Beginning of
Period
    
    
    4,116
    
    
    
    18,521
    
    
    
    5,254
    
    
    
    
    
    
    
    27,891Cash and cash equivalents  End of period
    
    $
    701
    
    
    $
    4,708
    
    
    $
    1,076
    
    
    $
    
    
    
    $
    6,485
 22




---



##### 



Condensed Consolidating Statement of Operations (Successor)
For the period from August 25, 2004 to September 30, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningParent
    
    Guarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalCash provided by (used in)
Operating activitiesNet income (loss) for the period
    
    $
    (2,018
    )
    
    $
    1,677
    
    
    $
    (559
    )
    
    $
    (1,118
    )
    
    $
    (2,018
    )Adjustments to reconcile net income to net
cash provided byoperating activitiesDepreciation and amortization
    
    
    
    
    
    
    2,388
    
    
    
    267
    
    
    
    
    
    
    
    2,655Amortization of deferred finance charges
    
    
    1,057
    
    
    
    (836
    )
    
    
    
    
    
    
    
    
    
    
    221Deferred income taxes
    
    
    
    
    
    
    (3,344
    )
    
    
    (135
    )
    
    
    
    
    
    
    (3,479
    )Equity in earnings of subsidiaries
    
    
    (1,633
    )
    
    
    515
    
    
    
    
    
    
    
    (1,118
    )
    
    
    Changes in assets and liabilitiesAccounts receivable
    
    
    (4,678
    )
    
    
    (2,940
    )
    
    
    421
    
    
    
    
    
    
    
    (7,197
    )Inventories
    
    
    
    
    
    
    5,240
    
    
    
    4,138
    
    
    
    
    
    
    
    9,378Prepaid expenses and other current assets
    
    
    
    
    
    
    (2,878
    )
    
    
    51
    
    
    
    
    
    
    
    (2,827
    )Accounts payable and other accrued
Liabilities
    
    
    8,220
    
    
    
    750
    
    
    
    (5,697
    )
    
    
    
    
    
    
    3,273Income taxes payable and receivable
    
    
    (2,311
    )
    
    
    (1,369
    )
    
    
    (88
    )
    
    
    
    
    
    
    (3,768
    )Net cash used in operating activities
    
    
    (1,363
    )
    
    
    (797
    )
    
    
    (1,602
    )
    
    
    
    
    
    
    (3,762
    )Investing activitiesAcquisitions of property, plant and equipment
    
    
    
    
    
    
    (785
    )
    
    
    (61
    )
    
    
    
    
    
    
    (846
    )Proceeds on disposal of property, plant and
Equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisitions of rental assets and spare
engines
    
    
    
    
    
    
    (122
    )
    
    
    (103
    )
    
    
    
    
    
    
    (225
    )Proceeds on disposal of rental assets and
Spare engines
    
    
    
    
    
    
    977
    
    
    
    6
    
    
    
    
    
    
    
    983Acquisition of intangibles  licenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of MRO Division of Standard
Aerospace Group Limited
    
    
    (699,711
    )
    
    
    26,899
    
    
    
    8,801
    
    
    
    
    
    
    
    (664,011
    )Net cash provided by (used in) investing
activities
    
    
    (699,711
    )
    
    
    26,969
    
    
    
    8,643
    
    
    
    
    
    
    
    (664,099
    )Financing activitiesRepayment of debt
    
    
    
    
    
    
    (103
    )
    
    
    (12
    )
    
    
    
    
    
    
    (115
    )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 and (from) related companies
    
    
    
    
    
    
    (1,668
    )
    
    
    1,668
    
    
    
    
    
    
    
    Net cash (used in) provided by financing
Activities
    
    
    716,286
    
    
    
    (1,771
    )
    
    
    1,656
    
    
    
    
    
    
    
    716,171Net (decrease) increase in cash and cash
Equivalents
    
    
    15,212
    
    
    
    24,401
    
    
    
    8,697
    
    
    
    
    
    
    
    48,310Cash and cash equivalents  Beginning of
Period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents  End of period
    
    $
    15,212
    
    
    $
    24,401
    
    
    $
    8,697
    
    
    $
    
    
    
    $
    48,310
 23




---



##### 



Condensed Consolidating Statement of Operations (Predecessor)
For the period from January 1, 2004 to August 24, 2004
 Subsidiary
    
    Subsidiary
    
    CombiningGuarantors
    
    Non-Guarantors
    
    Adjustments
    
    TotalCash provided by (used in)
Operating activitiesNet income (loss) for the period
    
    $
    36,401
    
    
    $
    (3,193
    )
    
    $
    
    
    
    $
    33,208Adjustments to reconcile net income provided to net
cash provided byoperating activitiesDepreciation and amortization
    
    
    11,750
    
    
    
    2,479
    
    
    
    
    
    
    
    14,229Amortization of deferred finance charges
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    363Deferred income taxes
    
    
    (5,889
    )
    
    
    608
    
    
    
    
    
    
    
    (5,281
    )Changes in assets and liabilitiesAccounts receivable
    
    
    (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
    
    
    38,103
    
    
    
    (1,662
    )
    
    
    
    
    
    
    36,441Investing activitiesAcquisition of property, plant and equipment
    
    
    (8,025
    )
    
    
    (169
    )
    
    
    
    
    
    
    (8,194
    )Proceeds on disposals of property, plant and
equipment
    
    
    112
    
    
    
    
    
    
    
    
    
    
    
    112Acquisition of rental assets and spare engines
    
    
    (8,889
    )
    
    
    (897
    )
    
    
    
    
    
    
    (9,786
    )Proceeds on disposal of rental assets and spare engines
    
    
    5,822
    
    
    
    571
    
    
    
    
    
    
    
    6,393Acquisitions of intangibles  licenses
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    (123
    )Net cash used in investing activities
    
    
    (10,980
    )
    
    
    (618
    )
    
    
    
    
    
    
    (11,598
    )Financing activitiesRepayment of debt
    
    
    (793
    )
    
    
    (319
    )
    
    
    
    
    
    
    (1,112
    )Change in due to and (from) related companies
    
    
    (14,619
    )
    
    
    3,890
    
    
    
    
    
    
    
    (10,729
    )Net cash (used in) provided by financing activities
    
    
    (15,412
    )
    
    
    3,571
    
    
    
    
    
    
    
    (11,841
    )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
 24




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Special Note Regarding Forward Looking Statements
 Certain statements included in Managements Discussion and Analysis of Financial Condition and
Results of Operations, other than purely historical information, including estimates, projections,
statements relating to our business plans, objectives and expected operating results, and the
assumptions upon which those statements are based, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements
generally are identified by the words believes, project, expects, anticipates, estimates,
intends, strategy, plan, may, will, would, will be, will continue, will likely
result, and similar expressions. Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties which may cause actual results to differ
materially from the forward-looking statements, including those risks and uncertainties described
under the caption  Risk Factors. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future events or otherwise.
 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.
 25




---



##### 



Recent Developments
    Changes to Segment Reporting and Restructuring
 Disclosures about Segments of an Enterprise and Related Information
    
 26




---



##### 



Trends Affecting Our Business
      
 27




---



##### 



Effect of the Acquisition
     
 28




---



##### 



Financial statement presentation
  Revenues.
 Cost of revenues.
 Selling, general and administrative expense.
 Critical accounting policies
  Revenue recognition.
 Reserves for losses on fixed-price work orders.
 Reserve for warranty costs.
 29




---



##### 



Reserve for doubtful accounts receivable.
 Goodwill and intangible assets.
 Impairment of long-lived assets. Accounting for the Impairment or Disposal of Long-Lived Assets.
 Inventory.
 Income taxes. Accounting for Income
Taxes.
 30




---



##### 



Results of operations
 Three Months Ended September 30, 2005 compared with the Three Months ended September 30, 2004
comprised of the post-acquisition period August 25, 2004 to September 30, 2004 combined with the
predecessor period July 1, 2004 to August 24, 2004
  Three months
    
    Three monthsended
    
    ended
    
    August 25, 2004September 30,
    
    September 30,
    
    to September
    
    July 1, 2004 to(In thousands of dollars)
    
    2005
    
    2004
    
    30, 2004
    
    August 24, 2004(Successor)
    
    (Combined)
    
    (Successor)
    
    (Predecessor)Revenues
    
    $
    198,267
    
    
    $
    216,995
    
    
    $
    75,478
    
    
    $
    141,517Cost of revenues
    
    
    165,735
    
    
    
    186,035
    
    
    
    64,645
    
    
    
    121,390Gross profit
    
    
    32,532
    
    
    
    30,960
    
    
    
    10,833
    
    
    
    20,127Selling, general and administrative
expense
    
    
    12,032
    
    
    
    15,969
    
    
    
    8,092
    
    
    
    7,877Amortization of intangible assets
    
    
    2,346
    
    
    
    1,289
    
    
    
    830
    
    
    
    459Restructuring costs
    
    
    3,215
    
    
    
    
    
    
    
    
    
    
    
    Income from operations
    
    
    14,939
    
    
    
    13,702
    
    
    
    1,911
    
    
    
    11,791Interest expense
    
    
    8,938
    
    
    
    4,700
    
    
    
    3,700
    
    
    
    1,000Income (loss) before income taxes
    
    
    6,001
    
    
    
    9,002
    
    
    
    (1,789
    )
    
    
    10,791Income tax expense
    
    
    3,059
    
    
    
    1,633
    
    
    
    229
    
    
    
    1,404Net income (loss)
    
    $
    2,942
    
    
    $
    7,369
    
    
    $
    (2,018
    )
    
    $
    9,387
 Revenues.
 Gross profit.
 31




---



##### 



Selling, general and administration expense.
 Amortization of intangible assets.
 Restructuring costs.
 Income from operations.
 Interest expense.
 32




---



##### 



Nine Months Ended September 30, 2005 compared with the Nine Months Ended September 30, 2004
comprised of the post-acquisition period August 25, 2004 to September 30, 2004 combined with the
predecessor period January 1, 2004 to August 24, 2004
  Nine months
    
    Nine monthsended
    
    ended
    
    August 25, 2004
    
    January 1, 2004September 30,
    
    September 30,
    
    to September
    
    to August 24,(In thousands of dollars)
    
    2005
    
    2004
    
    30, 2004
    
    2004(Successor)
    
    (Combined)
    
    (Successor)
    
    (Predecessor)Revenues
    
    $
    557,462
    
    
    $
    584,863
    
    
    $
    75,478
    
    
    $
    509,385Cost of revenues Cost of revenues
    
    
    465,304
    
    
    
    488,013
    
    
    
    64,645
    
    
    
    423,368Gross profit
    
    
    92,158
    
    
    
    96,850
    
    
    
    10,833
    
    
    
    86,017Selling, general and administrative
expense
    
    
    37,427
    
    
    
    38,409
    
    
    
    8,092
    
    
    
    30,317Amortization of intangible assets
    
    
    7,238
    
    
    
    2,665
    
    
    
    830
    
    
    
    1,835Restructuring costs
    
    
    3,215
    
    
    
    
    
    
    
    
    
    
    
    Income from operations
    
    
    44,278
    
    
    
    55,776
    
    
    
    1,911
    
    
    
    53,865Interest expense
    
    
    26,413
    
    
    
    8,535
    
    
    
    3,700
    
    
    
    4,835Income (loss) before income taxes
    
    
    17,865
    
    
    
    47,241
    
    
    
    (1,789
    )
    
    
    49,030Income tax expense
    
    
    5,646
    
    
    
    16,051
    
    
    
    229
    
    
    
    15,822Net income (loss)
    
    $
    12,219
    
    
    $
    31,190
    
    
    $
    (2,018
    )
    
    $
    33,208
 Revenues.
 Gross profit.
 33




---



##### 



Selling, general and administration expense.
 Amortization of intangible assets.
 Restructuring costs.
 Income from operations.
 Interest expense.
 34




---



##### 



Liquidity and capital resources
 Liquidity requirements
   
    
    our senior credit facilities, consisting of an eight-year term loan facility, under
which we had outstanding indebtedness of $270.0 million, and a $50.0 million six-year
revolving credit facility, under which we had $8.0 million outstanding indebtedness;
    
    $2.9 million in capital lease obligations; and
    
    $200.0 million in aggregate principal amount of our 81/4% senior subordinated notes due 2014.
 Senior credit facilities
     Notional Amount
    
    Term
    
    Floor Strike Rate
    
    Cap Strike Rate$75,000,000
    
    September 27, 2005 - March 26, 2006
    
    2.00% (plus applicable margin)
    
    4.25% (plus applicable margin)$75,000,000
    
    March 27, 2006  December 27, 2006
    
    2.40% (plus applicable margin)
    
    5.25% (plus applicable margin)
 35




---



##### 



Senior subordinated notes
    Covenant Compliance
   1 4
  36




---



##### 



January 1 
    
    October 1 
    
    
    Last 12 MonthsSeptember 30, 2005
    
    December 31, 2004
    
    
    September 30, 2005(In millions)
    
    Successor
    
    Successor
    
    
    SuccessorNet income
    
    $
    12.2
    
    
    $
    (2.7
    )
    
    
    $
    9.6Add:Depreciation and amortization
    
    
    19.0
    
    
    
    6.5
    
    
    
    
    25.4Interest expense, net
    
    
    26.4
    
    
    
    10.0
    
    
    
    
    36.4Provision for income taxes
    
    
    5.6
    
    
    
    (0.5
    )
    
    
    
    5.2Effect of write-up of inventory and work in progress (1)
    
    
    
    
    
    
    16.1
    
    
    
    
    16.1Non-recurring expenses (2)
    
    
    4.3
    
    
    
    0.1
    
    
    
    
    4.4Management fee
    
    
    1.1
    
    
    
    0.4
    
    
    
    
    1.5Adjusted EBITDA
    
    $
    68.6
    
    
    $
    29.9
    
    
    
    $
    98.6
  (1)
    
    As a result of the Acquisition and the requirements of purchase accounting, our assets and
liabilities, including the amounts recorded for inventory and work in process, were adjusted
to their fair market values as of the closing date.(2)
    
    We incurred $3.4 million in employee exit costs during the period ended September 30, 2005.
We have also incurred $0.8 million in costs associated with the exchange offer of our senior
subordinated notes and $0.1 million of other non-recurring costs.
 Cash
flows
 Nine months ended
    
    Nine months ended
    
    August 25, 2004 to
    
    January 1, 2004 to(In thousands of dollars)
    
    September 30, 2005
    
    September 30, 2004
    
    September 30, 2004
    
    August 24, 2004(Successor)
    
    (Combined)
    
    (Successor)
    
    (Predecessor)Net cash provided by (used in) operating activities
    
    
    (6,133
    )
    
    $
    32,679
    
    
    
    (3,762
    )
    
    $
    36,441Net cash used in investing activities
    
    
    (13,215
    )
    
    
    (675,697
    )
    
    
    (699,711
    )
    
    
    (11,598
    )Net cash provided from (used in) financing
activities
    
    
    (2,058
    )
    
    
    704,330
    
    
    
    716,171
    
    
    
    (11,841
    )Net increase (decrease) in cash and cash
equivalents
    
    
    (21,406
    )
    
    $
    25,312
    
    
    
    12,610
    
    
    $
    13,002
 Net cash (used in) provided by operating activities
   37




---



##### 



Net cash used in investing activities
  Net cash provided by (used in) financing activities
  1 4
 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.
 Risks Related to Our Notes
 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.
  
 
 
  38




---



##### 




    
    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.
  To service our indebtedness, we require a significant amount of cash. Our ability to generate cash
depends on many factors beyond our control.
    39




---



##### 



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.
     Our note holders ability to receive payments on their notes is junior to those lenders who have a
security interest in our assets.
 40




---



##### 



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.
  41




---



##### 



Certain subsidiaries are not included as subsidiary guarantors.
   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, you may not receive any payments on our notes.
  42




---



##### 




    
    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.
   
    
    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.
   43




---



##### 



We are a holding company and may not have access to sufficient cash to make payments on our
notes.
   Risks Related to Our Business
 44




---



##### 



A significant portion of our revenues are derived from long-term contracts, directly or indirectly,
with the U.S. military that are subject to U.S. Government contracting rules and regulations.
   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.
  45




---



##### 



A material weakness in our internal control over financial reporting resulted in material
misstatements in our financial statements that required us to restate our 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.
   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.
  A significant portion of our revenues from regional and business aviation customers derive 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 them or their
customers.
  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 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 new engine platforms now or in the future or
recover the significant capital we have expended.
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
    
    The CF34 is a new engine and the current market is primarily based on unscheduled
maintenance events and General Electric-sponsored upgrade campaigns. We do not anticipate
significant MRO activity on this platform until 2007 when the first significant 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 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 in our market 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.
  Competition in our business is intense and concentrated given the small market in which we
participate and the narrow range of services that we provide within that market.
  Service divisions of OEMs
 Other independent MRO service providers
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In-house maintenance services of the commercial airlines
  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.
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
    
    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.
  The prices that we charge under our fixed-price contracts are predetermined and we bear the risk
that our costs may exceed our estimates.
  The regional and business aviation industry may experience additional 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.
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
    
    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
    
    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
  
    
    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.
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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.
  
    
    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.
  
    
    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
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
    
    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.
   Any expansion by acquisition 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;
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
    
    the diversion of managements attention from our core operations as they attend to any
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 rely on intellectual property in our business and our business could be adversely affected if we
lose our intellectual property rights.
  We are controlled by Carlyle, whose interests in our business may differ from the interests of our
other investors.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Interest rate risks.
  Maximum
    
    MinimumNotional amount
    
    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)
 Currency risks.
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ITEM 4. CONTROLS AND PROCEDURES.
 Evaluation
of Disclosure Controls and Procedures
   Changes
in Internal Control over Financial Reporting
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PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
  
 ITEM 6. EXHIBITS.
 ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation of Standard Aero Holdings, Inc. (incorporated by reference to
Exhibit 3.1 of Standard Aero Holdings, Inc.s Registration Statement No. 333-124394).3.2
    
    Bylaws of Standard Aero Holdings, Inc. (incorporated by reference to Exhibit 3.17 of
Standard Aero Holdings, Inc.s Registration Statement No. 333-124394).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 No. 333-124394).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 No. 333-124394).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 No. 333-124394).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 No. 333-124394).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 No. 333-124394).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.
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SIGNATURES
  STANDARD AERO HOLDINGS, INC.Dated: November 14, 2005
    
    
    
    /s/ DAVID SHAWName:
    
    David ShawTitle:
    
    Chief Executive Officer(principal executive officer)Dated: November 14, 2005
    
    
    
    /s/ BRADLEY BERTOUILLEName:
    
    Bradley BertouilleTitle:
    
    Chief Financial Officer(principal financial and accounting officer)
 57