-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N9ZP9erszByXRgfnJOdzONwQttBzSUbOZK8Li8gDE7r6oDOlmobE9P5h9w0zlyhW E6q8pZVOJFiym7lQvwm5ig== 0001011240-00-000043.txt : 20000516 0001011240-00-000043.hdr.sgml : 20000516 ACCESSION NUMBER: 0001011240-00-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LMI AEROSPACE INC CENTRAL INDEX KEY: 0001059562 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 431309065 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24293 FILM NUMBER: 635369 BUSINESS ADDRESS: STREET 1: 3600 MUELLER RD CITY: ST CHARLES STATE: MO ZIP: 63302 BUSINESS PHONE: 6369466525 MAIL ADDRESS: STREET 1: P O BOX 900 CITY: ST CHARLES STATE: MO ZIP: 63302 10-Q 1 FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 31, 2000. |_| 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: 0-24293 --------- LMI AEROSPACE, INC. (Exact name of registrant as specified in its charter) Missouri 43-1309065 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3600 Mueller Road St. Charles, Missouri 63302 (Address of Principal Executive Offices) (ZIP Code) (636) 946-6525 (Registrant's Telephone Number, Including Area Code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of class Number of Shares outstanding of Common Stock as of March 31, 2000 --------------- ---------------------------- Common Stock, par value $.02 per share 8,208,248 --------- LMI AEROSPACE, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDING MARCH 31, 2000 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets as of December 31, 1999 and March 31, 2000 Condensed Consolidated Statements of Income for the three months ending March 31, 1999 and 2000 Condensed Consolidated Statements of Cash Flows for the three months ending March 31, 1999 and 2000 Notes to Unaudited Condensed Consolidated Financial Statements Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K SIGNATURE PAGE EXHIBIT INDEX LMI Aerospace, Inc. Condensed Consolidated Balance Sheets (Amounts in thousands, except share and per share data) December 31, March 31, 1999 2000 (unaudited) ------------------------------- Assets Current assets: Cash and cash equivalents $ 5,908 $ 4,270 Investments -- 541 Trade accounts receivable 6,941 7,621 Inventories 15,311 15,168 Prepaid expenses 226 243 Other current assets 162 152 Income taxes receivable 794 897 Deferred income taxes 720 720 ------------------------------- Total current assets 30,062 29,612 Property, plant, and equipment, net 22,345 22,447 Other assets 2,262 2,188 ------------------------------- $ 54,669 $ 54,247 =============================== Liabilities and stockholders' equity Current liabilities: Accounts payable $ 4,020 $ 3,648 Accrued expenses 2,028 2,162 Current installments of long-term debt 2,597 2,594 ------------------------------- Total current liabilities 8,645 8,404 Long-term debt, less current installments 134 112 Deferred income taxes 1,404 1,404 ------------------------------- Total noncurrent liabilities 1,538 1,516 Stockholders' equity: Common stock of $.02 par value; authorized 28,000,000 shares; issued 8,734,422 at December 31, 1999 and at March 31, 2000 175 175 Additional paid-in capital 26,164 26,164 Treasury Stock, at cost, 521,175 and 526,174 shares in 1999 and 2000 (3,046) (3,060) Accumulated other comprehensive income -- 36 Retained earnings 21,193 21,012 ------------------------------- Total stockholders' equity 44,486 44,327 ------------------------------- $ 54,669 $ 54,247 =============================== See accompanying notes. LMI Aerospace, Inc. Condensed Consolidated Statements of Operations (Amounts in thousands, except per share data) (Unaudited) For the Three Months Ended March 31 1999 2000 ------------------------------------- Net sales $ 13,530 $ 14,761 Cost of sales 10,480 12,520 ------------------------------------- Gross profit 3,050 2,241 Selling, general, and administrative expenses 1,896 2,535 ------------------------------------- Income (loss) from operations 1,154 (294) Interest income 99 16 ------------------------------------- Income before income taxes 1,253 (278) Provision for income taxes 438 (97) ------------------------------------- Net income (loss) $ 815 $ (181) ===================================== Net income (loss) per common share $ .10 $ (0.02) ===================================== Net income (loss) per common share - assuming dilution $ .10 $ (0.02) ===================================== Weighted average common shares outstanding 8,315,786 8,208,467 ===================================== Weighted average dilutive stock options outstanding 132,639 -- ===================================== See accompanying notes.
LMI Aerospace, Inc. Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) For the Three Months Ended March 31 1999 2000 ----------------------------------- Operating activities Net income $ 815 $ (181) Adjustments to reconcile net income to net cash provided by operating activities: Net cash provided by operating activities: Depreciation and amortization 762 870 Changes in operating assets and liabilities: Trade accounts receivable (1,114) (680) Inventories (680) 143 Prepaid expenses and other assets (302) 44 Income taxes payable 319 (103) Accounts payable (328) (372) Accrued expenses (275) 129 ------------------------------------- Net cash used in operating activities (803) (150) Investing activities Additions to property, plant, and equipment, net (1,360) (1,140) Proceeds from sale of property, plant and equipment -- 194 Purchases of investments (210) (504) Proceeds from sale of investments, net 1,460 -- ------------------------------------- Net cash used in investing activities (110) (1,450) Financing activities Principal payments on long-term debt (45) (24) Treasury stock transactions, net (318) (14) Proceeds from exercise of stock options 6 -- ------------------------------------- Net cash used in financing activities (357) (38) Activities Net change in cash and cash equivalents (1,270) (1,638) Cash and cash equivalents, beginning of period 11,945 5,908 ------------------------------------- Cash and cash equivalents, end of period $ 10,675 $ 4,270 =====================================
See accompanying notes. LMI Aerospace, Inc. Notes to Condensed Consolidated Financial Statements (Dollar amounts in thousands, except share and per share data) (Unaudited) March 31, 2000 1. Accounting Policies Basis of Presentation LMI Aerospace, Inc. (the "Company") is a fabricator, finisher, and integrator of formed, close tolerance aluminum and specialty alloy components for use by the aerospace industry. The Company is a Missouri corporation with headquarters in St. Charles, Missouri. The Company maintains facilities in St. Charles, Missouri; Seattle, Washington; Tulsa, Oklahoma; Wichita, Kansas; and Irving, Texas. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair representation have been included. Operating results for the three months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ended December 31, 2000. These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 as filed with the SEC. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. The Company had recorded $481 in accounts receivable and inventory as of December 31, 1999 and $717 in accounts receivable and inventory at March 31, 2000 in excess of purchase order amounts for change orders or claims from customers which management believes are fully recoverable. During the quarter ended March 31, 2000, the company recorded a charge of $373 for exposure related to a customer implementing a reorganization plan. Investments The Company's investments in marketable equity securities are classified as "available-for-sale" and are carried at fair market value, with the unrealized gains and losses included, net of income taxes, in accumulated other comprehensive income in shareholders' equity. 2. Acquisitions On December 27, 1999, the Company acquired certain assets and liabilities of U.S. Hayakawa Industries, Inc. ("Hayakawa"), an aerospace sheet metal manufacturing and machining firm based in Mukilteo, Washington. Hayakawa had annual sales of approximately $3.5 million in 1999. The Company moved Hayakawa's sheet metal production work and most of its machining work to the Company's facility in Auburn, Washington, with the remainder of the machining work going to the Company's facility in Irving, Texas. The purchase price was approximately $1,600 in cash. The excess of the purchase price over the fair market value of the net assets acquired, totaling $352, was allocated to goodwill, and is being amortized over a 10-year period on a straight-line basis. 3. Inventories Inventories consist of the following: December 31, March 31, 1999 2000 ----------------------------------- Raw materials $ 4,140 $ 3,935 Work in process 4,053 4,151 Finished goods 7,118 7,082 ----------------------------------- $ 15,311 $ 15,168 =================================== 4. Property, Plant, and Equipment Property, plant, and equipment consist of the following: December 31, March 31, 1999 2000 ----------------------------------- Land $ 705 $ 705 Buildings 11,873 11,925 Machinery and equipment 24,522 24,566 Leasehold improvements 770 774 Construction in progress 114 903 Other assets 1,096 1,016 ----------------------------------- 39,080 39,889 Less accumulated depreciation (16,735) (17,442) ----------------------------------- $ 22,345 $ 22,447 =================================== 5. Long-Term Debt Long-term debt consists of the following: December 31, March 31, 1999 2000 ---------------------------------- Industrial Development Revenue Bond, interest payable monthly, at a variable rate $ 2,500 $ 2,500 Notes payable, principal and interest payable monthly, at fixed rates, ranging from 8.78% to 9.56% 215 194 Capital lease obligations 16 12 ---------------------------------- 2,731 2,706 Less current installments 2,597 2,594 ---------------------------------- $ 134 $ 112 ================================== On March 31, 1998, the Company obtained a $15,000 unsecured line of credit with a financial institution to fund various corporate needs. Interest is payable monthly based on a quarterly cash flow leverage calculation and the LIBOR rate. This facility matures on October 31, 2000 and requires compliance with certain non-financial and financial covenants including minimum tangible net worth and EBITDA. The credit facility prohibits the payment of cash dividends on common stock without the financial institution's prior written consent. At March 31, 2000, there are no borrowings under the line of credit. The Industrial Revenue Bond ("IRB") bears interest at a variable rate, which is based on the existing market rates for comparable outstanding tax-exempt bonds (5.6 percent and 4.1 percent at December 31, 1999 and March 31, 2000, respectively), not to exceed 12 percent. The IRB is secured by a letter of credit by a financial institution, which holds 100 percent participation in the letter of credit and has a security interest in certain equipment. The bond matures in November 2000. The Company entered into various notes payable for the purchase of certain equipment. The notes are payable in monthly installments including interest (ranging from 8.78 percent to 9.56 percent through November 2002). The notes payable are secured by equipment. 6. Commitments and Contingencies The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's financial position. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained herein, the following report contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled Management's Discussion and Analysis of Financial Conditions and Results of Operations. Overview LMI Aerospace, Inc. is a leader in fabricating, machining and integrating of formed close tolerance aluminum and specialty alloy components for use by the aerospace industry. The Company has been engaged in manufacturing components for a wide variety of aerospace applications. Components manufactured by the Company include leading edge wing slats, flaps and lens assemblies; cockpit window frame assemblies; fuselage skins and supports, and passenger and cargo door frames and supports. The Company maintains multi-year contracts with leading original equipment manufacturers and primary subcontractors of commercial, corporate, regional and military aircraft. Such contracts, which govern the majority of the Company's sales, designate the Company as the sole supplier of the aerospace components sold under the contracts. Customers include Boeing, Lockheed Martin, Northrop Grumman, Gulfstream, Learjet, Canadair, DeHavilland and PPG. The Company manufactures more than 15,000 parts for integration into such models as Boeing's 737, 747, 757, 767 and 777 commercial aircraft and F-15, F-18, C-17 military aircraft, Canadair's RJ regional aircraft, Gulfstream's G-IV and G-V corporate aircraft, and Lockheed Martin's F-16 and C-130 military aircraft. Quarter Ended March 31, 2000 vs. March 31, 1999 Net Sales. Net sales for the quarter were $14.8 million, up 9.1% from the first quarter of 1999. Shipments to customers for ultimate assembly into Boeing commercial aircraft represented 56.8% in 1999 of net sales for the quarter. During the quarter, shipments on the 737NG were $3.9 million, up $0.6 million from the first quarter of 1999. The Company's strategic plan to diversify its customer and aircraft base has begun to show some results. In the first quarter of 2000, shipments on Gulfstream's G-IV and G-V were $2.0 million, up $1.2 million from 1999. Also, new contracts for tools and parts on Lockheed Martin's F-16 contributed $0.8 million in 2000, up $0.5 million from 1999. Sales on Boeing military aircraft were down $0.7 million in the first quarter of 2000 to $0.5 million. Shut down of the F-15 production line accounted for $0.6 million of this decrease. Gross Profit. Gross profit during the first quarter of 2000 was $2.2 million (15.2% of net sales), down from $3.1 million (22.5% of net sales). Manufacturing costs were negatively impacted by start up costs on newer contracts, including components and assemblies for the under-wing fuselage of the 767 and winglets for the 737NG. The start-up of this new work has also required the Company to sub-contract certain components and tooling to meet customer delivery dates, driving up manufacturing costs by $0.4 million. Selling, General and Administrative Expenses. Selling, general and administrative ("SG&A") expenses increased in the first quarter of 2000 by $0.6 million. Included in SG&A is a one-time charge of $0.4 million to establish a reserve for exposure related to a customer implementing a reorganization plan. An increase in professional services accounted for $0.1 million. Liquidity and Capital Resources The Company decreased its cash reserves during the first quarter of 2000 by $1.1 million, net of investments in marketable equity securities purchased of $0.5 million. Cash flow used by operations was $0.2 million as the increased revenue during the quarter caused a growth in accounts receivable of $0.7 million. Accounts payable decreased by $0.4 million, mainly attributable to payments for property taxes. Capital expenditures were higher than expected as the Company replaced a bladder press in its Wichita facility at a total cost of $0.6 million. The old bladder press is being repaired and will likely be offered for sale during 2000. The Company also purchased four drop hammers for $0.2 million to support a new program. The Company expects to limit capital expenditures to $1.5 million for the balance of the year. Impact of Year 2000 The advent of the year 2000 posed certain technological challenges resulting from concern that computer technologies that recognized and processed calendar years by the last two digits rather than all four digits of each year (e.g. "98" for "1998") would not properly process the year 2000 and subsequent years. The risks to the Company and the Company's Year 2000 plan and related mitigation efforts had been described in the Company's most recent quarterly report on Form 10-Q for the quarter ended September 30, 1999. In late 1999, the Company completed its plan, including all remediation and testing of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company expensed less than $0.1 million during 1999 in connection with remediating its systems. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems or the products and services of third parties. However, because the Company's continued compliance in calendar 2000 is dependent on the continued compliance of third parties, there can be no assurance that the Company's efforts alone have resolved all Year 2000 issues or that key third parties will not experience Year 2000 compliance failures as calendar 2000 progresses. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) See Exhibit Index. (b) No current reports on Form 8-K have been filed by the Company during the quarter ended March 31, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LMI AEROSPACE, INC. Date: May 15, 2000 By: /s/ Lawrence E. Dickinson ----------------------------------------- Lawrence E. Dickinson Chief Financial Officer and Secretary EXHIBIT INDEX Exhibit Number Description -------------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 4,270 541 7,621 0 15,168 29,612 39,889 (17,442) 54,247 8,404 2,706 0 0 175 44,152 54,247 14,761 14,761 12,520 12,520 2,535 0 16 (278) (97) (181) 0 0 0 (181) (.02) (.02)
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