UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________ FORM 10-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2005 OR TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-16079 AIR METHODS CORPORATION (Exact name of registrant as specified in its charter) Delaware 84-0915893 (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 7301 South Peoria, Englewood, Colorado 80112 (Address of principal executive offices and zip code) 303-792-7400 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Not Applicable Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.06 PAR VALUE PER SHARE (the "Common Stock") (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated Filer [ ] Accelerated Filer [ X ] Non-accelerated Filer [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes [ ] No [X ] State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $77,163,000 The number of outstanding shares of Common Stock as of February 24, 2006, was 11,615,590. TABLE OF CONTENTS To Form 10-K Page PART I ITEM 1. BUSINESS...............................................................................................................................1 General.....................................................................................................................................1 Contracts in Process.................................................................................................................3 Employees................................................................................................................................3 Government Regulation...........................................................................................................4 Internet Address.......................................................................................................................4 ITEM 1A. RISK FACTORS......................................................................................................................4 ITEM 1B. UNRESOLVED STAFF COMMENTS ..................................................................................9 ITEM 2. PROPERTIES ..........................................................................................................................9 Facilities...................................................................................................................................9 Equipment and Parts ................................................................................................................9 ITEM 3. LEGAL PROCEEDINGS ......................................................................................................10 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ..........................10 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...............................................................................................11 ITEM 6. SELECTED FINANCIAL DATA .........................................................................................12 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................................................14 Overview................................................................................................................................14 Results of Operations.............................................................................................................16 Liquidity and Capital Resources ............................................................................................22 Outlook for 2006....................................................................................................................26 Critical Accounting Policies ..................................................................................................26 New Accounting Standards....................................................................................................28 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ......28 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ......................................28 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............................................................29 ITEM 9A. CONTROLS AND PROCEDURES......................................................................................29 ITEM 9B. OTHER INFORMATION .....................................................................................................29 i PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ............................30 ITEM 11. EXECUTIVE COMPENSATION.........................................................................................33 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................................................................................39 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................................41 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.......................................................42 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES......................................... IV-1 SIGNATURES ........................................................................................................................................ IV-4 ii PART I ITEM 1. BUSINESS GENERAL Air Methods Corporation, a Delaware corporation, (Air Methods or the Company) was originally incorporated in Colorado in 1982 and now serves as the largest provider of air medical emergency transport services and systems throughout the United States of America. We provide air medical emergency transport services under two separate operating models: the Community-Based Model (CBM) and the Hospital-Based Model (HBM). In October 2002, we acquired 100% of the membership interest of Rocky Mountain Holdings, LLC (RMH), a Delaware limited liability company which conducted both CBM and HBM operations. RMH, Mercy Air Service, Inc. (Mercy Air), and LifeNet, Inc. (LifeNet) operate as wholly-owned subsidiaries of Air Methods. As of December 31, 2005, our CBM division provided air medical transportation services in 17 states, while our HBM division provided air medical transportation services to hospitals located in 26 states and Puerto Rico under operating agreements with original terms ranging from one to ten years. Under both CBM and HBM operations, we transport persons requiring intensive medical care from either the scene of an accident or general care hospitals to highly skilled trauma centers or tertiary care centers. Our Products Division designs, manufactures, and installs aircraft medical interiors and other aerospace or medical transport products. Financial information for each of our operating segments is included in the notes to our consolidated financial statements included in Item 8 of this report. Community-Based Model CBM services, also referred to as independent provider operations, are performed by our LifeNet Division and include medical care, aircraft operation and maintenance, 24-hour communications and dispatch, and medical billing and collections. CBM aircraft are typically based at fire stations or airports. CBM revenue consists of flight fees billed directly to patients, their insurers, or governmental agencies. Due to weather conditions and other factors, the number of flights is generally higher during the summer months than during the remainder of the year, causing revenue generated from operations to fluctuate accordingly. Following the acquisition of RMH in October 2002, its CBM operations were combined with our already existing