10-Q

UNITED STATES

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 September 30, 2014.

or

o	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: 000-24293

LMI AEROSPACE, INC.

(Exact name of registrant as specified in its charter)

Missouri	43-1309065
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

411 Fountain Lakes Blvd.
St. Charles, Missouri	63301
(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                    No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

On November 3, 2014, there were 12,698,070 shares of our common stock, par value $0.02 per share, outstanding.

LMI AEROSPACE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE FISCAL QUARTER ENDING SEPTEMBER 30, 2014

PART I.  FINANCIAL INFORMATION

		Page No.
Item 1.	Financial Statements (Unaudited).
	Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013.	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months and nine months ended September 30, 2014 and 2013.	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013.	5
	Notes to Condensed Consolidated Financial Statements.	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	28
Item 4.	Controls and Procedures.	28
	PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings.	29
Item1A.	Risk Factors.	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	33
Item 3.	Defaults Upon Senior Securities.	33
Item 4.	Mine Safety Disclosures.	33
Item 5.	Other Information.	33
Item 6.	Exhibits.	33
SIGNATURE PAGE		34
EXHIBIT INDEX		35

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

LMI Aerospace, Inc. Condensed Consolidated Balance Sheets (Amounts in thousands, except share and per share data) (Unaudited)
	September 30, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	2,460		$	1,572
Accounts receivable, net	64,739			72,853
Inventories	111,099			113,178
Prepaid expenses and other current assets	7,077			4,411
Deferred income taxes	3,228			2,693
Total current assets	188,603			194,707
Property, plant and equipment, net	96,477			103,375
Goodwill	113,223			113,223
Intangible assets, net	52,072			55,465
Other assets	13,851			13,281
Total assets	$	464,226		$	480,051
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	20,620		$	19,388
Accrued expenses	23,793			19,082
Current installments of long-term debt and capital lease obligations	3,142			5,242
Total current liabilities	47,555			43,712
Long-term liabilities:
Long-term debt and capital lease obligations, less current installments	269,571			285,369
Other long-term liabilities	2,997			3,915
Deferred income taxes	3,944			2,911
Total long-term liabilities	276,512			292,195
Shareholders’ equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 13,089,600, and 12,873,208 shares at September 30, 2014 and December 31, 2013, respectively	261			257
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date	—			—
Additional paid-in capital	94,941			92,692
Accumulated other comprehensive income (loss)	(89		)	(507		)
Treasury stock, at cost, 32,162 and 22,321 shares at September 30, 2014 and December 31, 2013, respectively	(401		)	(202		)
Retained earnings	45,447			51,904
Total shareholders’ equity	140,159			144,144
Total liabilities and shareholders’ equity	$	464,226		$	480,051

See accompanying notes to condensed consolidated financial statements.

3

LMI Aerospace, Inc. Condensed Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands, except share and per share data) (Unaudited)
	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
Sales and service revenue
Product sales	$	81,693		$	81,076		$	245,349		$	246,343
Service revenue	15,642			23,580			53,674			69,844
Net sales	97,335			104,656			299,023			316,187
Cost of sales and service revenue
Cost of product sales	61,535			63,579			195,170			192,309
Cost of service revenue	13,757			20,659			45,215			61,565
Cost of sales	75,292			84,238			240,385			253,874
Gross profit	22,043			20,418			58,638			62,313
Selling, general and administrative expenses	14,615			13,783			41,770			41,862
Contingent consideration write-off	—			—			—			(7,950		)
Intangible asset impairment	—			—			—			4,222
Restructuring expense	765			—			2,288			—
Income from operations	6,663			6,635			14,580			24,179
Other (expense) income:
Interest expense	(5,946		)	(4,328		)	(23,800		)	(12,485		)
Other, net	(75		)	49			205			449
Total other expense	(6,021		)	(4,279		)	(23,595		)	(12,036		)
Income (loss) before income taxes	642			2,356			(9,015		)	12,143
(Benefit) provision for income taxes	(754		)	281			(2,557		)	3,567
Net income (loss)	1,396			2,075			(6,458		)	8,576
Other comprehensive income (expense):
Change in foreign currency translation adjustment	(112		)	118			(18		)	(19		)
Reclassification adjustment for losses on interest rate hedges included in net earnings, net of tax of $0, $0, $157 and $0	—			—			278			—
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($89), $0 and ($93)	—			(153		)	—			(163		)
Total comprehensive income (loss)	$	1,284		$	2,040		$	(6,198	)	$	8,394
Amounts per common share:
Net income (loss) per common share	$	0.11		$	0.16		$	(0.51	)	$	0.68
Net income (loss) per common share assuming dilution	$	0.11		$	0.16		$	(0.51	)	$	0.67
Weighted average common shares outstanding	12,740,034			12,617,121			12,704,568			12,604,033
Weighted average dilutive common shares outstanding	12,887,363			12,718,807			12,704,568			12,710,396

See accompanying notes to condensed consolidated financial statements.

4

LMI Aerospace, Inc. Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited)
	Nine Months Ended   September 30,
	2014			2013
Operating activities:
Net (loss) income	$	(6,458	)	$	8,576
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization	17,002			15,230
Stock based compensation	1,442			1,204
Intangible asset impairment	—			4,222
Contingent consideration write-off	—			(7,950		)
Debt issuance cost write-off	8,464			—
Payments to settle interest rate derivatives	(793		)	—
Deferred taxes	147			3,091
Other noncash items	(87		)	(326		)
Changes in operating assets and liabilities:
Accounts receivable	8,187			(17,835		)
Inventories	2,079			(22,698		)
Prepaid expenses and other assets	2,003			233
Current income taxes	(2,899		)	(29		)
Accounts payable	785			(4,951		)
Accrued expenses	6,144			2,637
Net cash provided (used) by operating activities	36,016			(18,596		)
Investing activities:
Additions to property, plant and equipment	(10,302		)	(21,230		)
Proceeds from sale of property, plant, and equipment	981			1,942
Net cash used by investing activities	(9,321		)	(19,288		)
Financing activities:
Proceeds from issuance of debt	250,000			6,160
Principal payments on long-term debt and notes payable	(231,898		)	(4,766		)
Advances on revolving line of credit	60,000			112,000
Payments on revolving line of credit	(96,000		)	(78,000		)
Payments for debt issuance cost	(7,881		)	—
Other, net	(28		)	(304		)
Net cash (used) provided by financing activities	(25,807		)	35,090
Net increase (decrease) in cash and cash equivalents	888			(2,794		)
Cash and cash equivalents, beginning of period	1,572			4,347
Cash and cash equivalents, end of period	$	2,460		$	1,553
Supplemental disclosure of noncash transactions:
Purchase adjustment of acquisition	—			1,219
Defined contribution plan funding in Company stock	$	848		$	901

See accompanying notes to condensed consolidated financial statements.

5

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements.  The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair representation have been included.  Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the  Annual Report on Form 10-K of LMI Aerospace, Inc. (the "Company”) for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 17, 2014.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 these estimates.

Reclassification

Certain reclassifications have been made to prior period data within the footnotes in order to conform to current period presentation.

Recent Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The standard will supersede existing revenue recognition guidance, including industry-specific guidance, and will provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The provisions of this new guidance are effective as of the beginning of the Company’s first quarter of 2017. The Company is currently evaluating the transition method to be used and the impact of adoption of this standard on its consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The amendments in this update change the requirements for reporting discontinued operations. A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results and when the component or group of components meets the criteria to be classified as held for sale, is disposed by sale or is disposed of by other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). ASU 2014-8 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014.  The Company has no present activity that would be impacted by this new standard.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in

6

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for annual and interim periods thereafter. This ASU is not expected to have an impact on our financial statements or disclosures.

2. Accounts Receivable, Net

Accounts receivable, net consists of the following:

	September 30, 2014			December 31, 2013
Trade receivables	$	54,980		$	66,292
Unbilled revenue	7,368			4,671
Other receivables	2,636			2,070
	64,984			73,033
Less: Allowance for doubtful accounts	(245		)	(180		)
Accounts receivable, net	$	64,739		$	72,853

Under contract accounting, unbilled revenues arise when the sales or revenues based on performance attainment, though appropriately recognized, cannot be billed yet under terms of the contract as of the balance sheet date. Included in unbilled revenue at September 30, 2014 and December 31, 2013 are $424 and $2,034, respectively, related to unpriced change orders or claims that are subject to negotiation. The final resolution of these unpriced items could result in a change in the revenue recognized to date on the associated contracts.

Accounts receivable expected to be collected after one year is not material.

The Company records changes in contract estimates using the cumulative catch-up method in accordance with the Revenue Recognition topic of the FASB Accounting Standards Codification.  Cumulative catch-up adjustments had the following impacts to operating income for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Favorable adjustments	$	4,898		$	397		$	5,620		$	106
Unfavorable adjustments	(545		)	(522		)	(727		)	(1,155		)
Net favorable (unfavorable) operating income adjustments	$	4,353		$	(125	)	$	4,893		$	(1,049	)

The Company was engaged in a contract at December 31, 2013 where estimated costs exceeded total contract revenue. A change has been agreed to that resulted in the favorable settlement of an unpriced change order related to this contract. In addition, the Company secured more favorable future material pricing with respect to this contract as engineering changes to the related assemblies had stabilized. As a result, contract costs are no longer expected to exceed revenue and the remaining related loss reserve, which was originally recorded as an adjustment to goodwill on the Valent acquisition, was reversed in the quarter ended September 30, 2014, resulting in a favorable cumulative catch up adjustment. The impact of reversing the loss reserve was $4,602 and $5,267 for the three and nine months ended September 30, 2014 and was recorded in the cost of goods sold section of the Consolidated Statements of Comprehensive Income (Loss).

3. Inventories

Inventories consist of the following:

7

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

	September 30, 2014		December 31, 2013
Raw materials	$	17,569	$	17,099
Work in progress	21,729		21,605
Manufactured and purchased components	22,323		21,675
Finished goods	29,789		40,572
Product inventory	91,410		100,951
Capitalized contract costs (1)	19,689		12,227
Total inventories	$	111,099	$	113,178

(1) Net of a loss reserve on long-term production contracts of $0 and $2,057 as of September 30, 2014 and December 31, 2013 respectively.

Inventories include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which are not expected to be realized within one year.   The Company believes these amounts will be fully recovered over the life of the contracts. Anticipated losses on contracts are recognized, when required, and reported as a reduction of related contract costs recorded in inventory and as additional cost of sales. The Company was engaged in a contract at December 31, 2013 where estimated costs exceeded the total contract revenue. At December 31, 2013, a provision for the remaining estimated loss on this contract of $5,222 was reported as a reduction to inventory of $2,057 and an increase in accrued expenses of $3,165 in the Condensed Consolidated Balance Sheet. As discussed in Note 2, this loss reserve was reversed in the quarter ended September 30, 2014. At September 30, 2014 the Company is no longer engaged in any contracts that would require it to record a loss reserve.

4. Goodwill and Intangible Assets

Goodwill

The following table summarizes the net carrying amount of goodwill by segment at September 30, 2014 and December 31, 2013, respectively:

							Engineering
	Aerostructures						Services				Total
	September 30,			December 31,			September 30,		December 31,		September 30,			December 31,
	2014			2013			2014		2013		2014			2013
Balance at:
Gross Goodwill	$	141,953		$	141,953		$	50,741	$	50,741	$	192,694		$	192,694
Accumulated impairment loss	(79,471		)	(79,471		)	—		—		(79,471		)	(79,471		)
Net Goodwill	$	62,482		$	62,482		$	50,741	$	50,741	$	113,223		$	113,223

The December 2012 acquisition of Valent Aerostructures, LLC ("Valent") accounted for $56,288 of the net goodwill balance at September 30, 2014 and December 31, 2013. A goodwill impairment charge of $73,528 was recorded in the fourth quarter of 2013 related to the Valent acquisition. The fair value for the remaining net goodwill in the Aerostructures segment of $6,194 exceeded its carrying value at December 31, 2013. Net goodwill at September 30, 2014 and December 31, 2013 also included an impairment charge of $5,943, for an acquisition that was fully impaired.

The fair value of the net goodwill in Engineering Services exceeded its carrying value at December 31, 2013.

The carrying value of goodwill is assessed at least annually, during the fourth quarter, unless a triggering event occurs, and an impairment charge is recorded if appropriate.  In the quarter and nine months ended September 30, 2014, no triggering event occurred that would cause the Company to assess the carrying value of goodwill.

8

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles.  The carrying values were as follows:

	September 30, 2014			December 31, 2013
Trademarks	$	778		$	778
Customer intangible assets	68,991			68,991
Other	1,274			1,481
Accumulated amortization	(18,971		)	(15,785		)
Intangible assets, net	$	52,072		$	55,465

Intangibles amortization expense was $1,131 and $1,162 for the three months ended September 30, 2014 and 2013, respectively and $3,393 and $3,485 for the nine months ended September 30, 2014 and 2013, respectively. The accumulated amortization balances at September 30, 2014 and December 31, 2013, respectively, were $628 and $475 for trademarks, $17,675 and $14,555 for customer intangible assets, and $668 and $755 for other intangible assets.   Valent intangible assets are amortized on the straight-line method as this approximates the pattern of economic benefit of each intangible asset.  All other remaining intangible assets are not material.

The Company has experienced a slowdown in the demand for design engineering services over the past few quarters, which the Company believes is cyclical in nature.  This cyclical demand has led to lower than originally expected revenue. Despite the reduction in revenue, this segment realized growth in profitability in the first two quarters of 2014 as the Company removed, and continues its efforts to remove, costs from the segment.  The segment also generated significant cash flow during the first nine months of 2014. However, in the quarter ended September 30, 2014, the segment recognized significantly lower sales and gross margin when compared to each of the last four quarters. If the segment were to continue to recognize the revenues and margins experienced in the third quarter of 2014, it could lead to a triggering event and potential impairment for intangible assets and goodwill.

Further, our Valent acquisition has not achieved the sales and profitability we originally expected due, in substantial part, to delays in customer awards and longer ramp up times on new contracts as they migrate to full production.  Although we believe this lower sales growth is temporary, continued lower sales growth could lead to a triggering event and potential additional impairment to intangible assets and goodwill. See Note 7 to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2013 for additional discussion on the goodwill impairment charge recorded in the fourth quarter of 2013.

5. Other Assets

Other assets consist of the following:

	September 30, 2014		December 31, 2013
Debt issuance cost, net (1)	$	8,929	$	11,094
Asset held for sale (2)	2,925		—
Other	1,997		2,187
Total other assets	$	13,851	$	13,281

(1) In the nine months ended September 30, 2014, the Company refinanced its texisting long term indebtedness, which resulted in the settlement and termination of its then existing credit agreement. As a result of this refinancing and other retirements of debt, unamortized debt issuance costs of $124 and $8,464 were written off and recognized as interest expense in the three and nine months ending September 30, 2014. As part of the refinancing, the Company issued second priority senior secured notes and concurrently modified its revolving credit agreement. Debt issuance costs of $7,954 were incurred as a result of these transactions and are being amortized over the term of the notes and revolving credit agreement, which is five years.

9

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

(2) Represents the fair value, less costs to sell, of the Company aircraft. The aircraft was recorded in property, plant, and equipment, net in prior periods. The carrying value of the aircraft was reduced to its net realizable value of $2,925 with a charge of $421 in the quarter ended September 30, 2014, which is reflected in selling, general, and administration expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

6. Long-term Debt and Capital Lease Obligations

Long-term debt and capital lease obligations consist of the following:

	September 30, 2014		December 31, 2013
Second priority senior secured notes at a fixed rate of 7.375% at September 30, 2014	$	245,000	$	—
Term loan under credit agreement, variable	—		222,750
Revolver under credit agreement, variable	—		36,000
Missouri IRBs at fixed rate of 2.80% at September 30, 2014 and December 31, 2013	7,441		7,756
Capital leases, at fixed rates ranging from 2.04% to 7.73% at September 30, 2014 and December 31, 2013, respectively	13,605		14,572
Notes payable, principal and interest payable monthly, at fixed rates up to 3.60% at September 30, 2014 and December 31, 2013, respectively (1)	6,667		9,533
Total debt	$	272,713	$	290,611
Less current installments	3,142		5,242
Total long-term debt and capital lease obligations	$	269,571	$	285,369

(1) During the quarter ended September 30, 2014, the Company settled a mortgage in cash in the amount of $2,109.

On June 19, 2014, the Company issued $250,000 in second-priority senior secured notes maturing on June 19, 2019. During the quarter ended September 30, 2014, the Company repurchased and retired $5,000 of the outstanding notes at a premium of 1.125%, plus accrued interest. Obligations under these notes are secured by substantially all of the Company’s assets and bear interest at 7.375%, paid semi-annually in January and July, with interest payments commencing in January of 2015. Also, on June 19, 2014, the Company used the proceeds from the issuance of these notes to settle and terminate its existing term loan and also modified its revolving credit agreement.

The modified revolving credit agreement provides for a revolving credit facility of up to $90,000.  Under the agreement, the co-collateral agents may establish a reserve against the facility. At September 30, 2014, the reserve established was $15,000, which reduced the maximum availability to $75,000. Based on the amount of eligible assets at September 30, 2014, available borrowings were further reduced to $60,385. The maximum amount, less reserves, available for borrowing at levels below $30,000 are based on a sum of 45% of eligible receivables, 30% of eligible inventories and an additional amount of eligible equipment up to 20% of total borrowings under the facility. The maximum amount, less reserves, available for borrowing at levels above $30,000 are based on a sum of 75% of eligible receivables, 45% of eligible inventories and an additional amount of eligible equipment up to 20% of total borrowings under the facility. Borrowings under the facility are secured by a first lien on substantially all of the Company’s assets and bear interest at either the LIBOR rate plus a margin of 3.00% to 3.50% or the alternate base rate (“ABR”) which is the highest of the following plus a margin of 2.00% to 2.50%, respectively, with the applicable margins for the revolving credit facility subject to a grid based on the average availability ratio of the Company for the most recently completed quarter:

•Prime rate,

•Federal funds rate plus 0.5%, or,

•The adjusted Eurodollar rate for an interest period of one month plus 1%.

For the quarter ended September 30, 2014, the actual interest rate incurred for the revolving credit facility was 4.1%.

10

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

The Company is required to pay a commitment fee of between 0.375% and 0.5% per annum on the unused portion of the revolving credit facility, depending on the average revolver usage during the period as compared to the total available borrowings under the facility. At September 30, 2014, the commitment fee required was 0.5%.

The revolving credit loan facility matures on the earlier of the fifth year anniversary date of June 19, 2019 or the date that is 91 days prior to the maturity date of the senior secured notes unless the notes are repaid, refinanced or otherwise satisfied in full. The maturity dates are subject to acceleration upon occurrence of an event of default. An event of default under the revolving credit agreement includes, among other things, failure to pay any material indebtedness, acceleration of payments by any lender prior to scheduled maturity, or judgments rendered against the Company requiring payments at or above certain levels.

The credit agreement contains a covenant that requires us to comply with a maximum first priority debt to EBITDA ratio on a quarterly basis. In addition, the agreement also contains certain restrictive covenants that limit and in some circumstances prohibit, our ability to, among other things, incur additional debt, sell, lease or transfer our assets, make investments, guarantee debt or obligations, create liens, and enter into certain merger, consolidation or other reorganization transactions.  These restrictive covenants prohibit the Company from paying dividends. These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand the current or future downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise, any of which could place us at a competitive disadvantage relative to our competitors that have less debt and are not subject to such restrictions.

At September 30, 2014, the Company was in compliance with all of its covenants and expected to be in compliance with its covenants in future periods.  If the Company fails to meet any covenants in the credit facility, the Company would not be in compliance with its credit agreement and the lenders would be entitled to exercise various rights, including causing the amounts outstanding under the revolving credit facility to become immediately due and payable.

7. Assets and Liabilities Measured at Fair Value

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

There were no transfers between levels during the three months ended September 30, 2014 and the year ended December 31, 2013.

The Company terminated and settled its interest rate derivatives on June 19, 2014 in conjunction with the settlement of its then existing credit agreement, which had a variable interest rate.

At September 30, 2014, the Company aircraft was listed for sale. The fair value of the aircraft was recorded in other assets in the Condensed Consolidated Balance Sheet at September 30, 2014.

11

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

	Assets/Liabilities at Fair Value as of September 30, 2014
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Asset:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—
Asset held for sale (2)	$	2,925	$	—	$	2,925	$	—
Liabilities:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—

	Assets/Liabilities at Fair Value as of December 31, 2013
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Asset:
Interest rate derivatives (1)	$	18	$	—	$	18	$	—
Liabilities:
Interest rate derivatives (1)	$	392	$	—	$	392	$	—

(1) The fair values of interest rate derivatives are the amount the Company would receive or pay to terminate the contracts, considering quoted market prices of comparable agreements. (Also see Note 8)

(2) Represents the fair value, less costs to sell, of the Company aircraft.

8. Derivative Financial Instruments

On June 19, 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement, which had a variable interest rate. This settlement resulted in a charge of $793 to interest expense in the Condensed Consolidated Statements of Comprehensive Income (Loss) in the nine months ended September 30, 2014. Prior to this termination and in compliance with the credit agreement, the Company purchased option and swap derivative contracts to hedge against the potential impact on earnings from an increase in market interest rates associated with the interest payments on its variable rate term credit facility.  The objective of the hedge transactions was to reduce the variability of cash flows due to changes in the designated benchmark interest rate on the term debt.  The derivatives were recognized in the Condensed Consolidated Balance Sheet as current assets and liabilities at fair value as follows:

Derivative Asset and Liability	Location in Condensed Consolidated Balance Sheet	September 30, 2014		December 31, 2013
Derivative designated as hedging instrument:
Interest rate purchased option fair value	Other current assets	$	—	$	18
Derivative designated as hedging instrument:
Interest rate swap fair value	Other long term liabilities	$	—	$	392

The Company designated and accounted for these swaps and purchased options as cash flow hedges of interest rate risk.  The Company reported the gain or loss, net of taxes, from the effective portion of the hedge as a component of Accumulated Other Comprehensive Income (“AOCI”) deferring it and reclassifying it into earnings in the same period or periods in which the hedged transaction affects earnings and in the same line item on the Condensed Consolidated Statements of Comprehensive Income (Loss) as the impact of the hedged transaction.  The cumulative amounts reported in AOCI related to these derivatives were reclassified from AOCI to interest expense on the Condensed Consolidated Statements of Comprehensive Income (Loss) in the quarter ended June 30, 2014. The Company did not use these derivative instruments for trading or speculative purposes.

The following amounts are included in OCI and earnings for the three and nine months ended September 30, 2014:

12

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in AOCI, net of tax, on Derivative (Effective Portion)		Amount of (Gain) Loss Reclassified from AOCI into Income (Effective Portion)
Three Months Ended September 30, 2014
Interest rate derivatives	$	—	$	—
Nine Months Ended September 30, 2014
Interest rate derivatives	$	—	$	793

9. Earnings Per Common Share

Basic net income per common share is based upon the weighted average number of common shares outstanding.  Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect of restricted stock, using the if-converted methods.  The following table shows a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share.

	Three months ended				Nine months ended
	September 30,				September 30,
	2014		2013		2014			2013
Numerators
Net income (loss)	$	1,396	$	2,075	$	(6,458	)	$	8,576
Denominators
Weighted average common shares - basic	12,740,034		12,617,121		12,704,568			12,604,033
Dilutive effect of restricted stock	147,329		101,686		—			106,363
Weighted average common shares - diluted	12,887,363		12,718,807		12,704,568			12,710,396
Basic earnings (loss) per share	$	0.11	$	0.16	$	(0.51	)	$	0.68
Diluted earnings (loss) per share	$	0.11	$	0.16	$	(0.51	)	$	0.67

For the nine months ended September 30, 2014, 145,710 shares are not included in the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive. These securities could be dilutive in future periods.

13

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

10. Stock-Based Compensation

On July 7, 2005, the Company’s shareholders approved the LMI Aerospace, Inc. 2005 Long-term Incentive Plan (the “Plan”). The Plan provides for the grant of non-qualified stock options, incentive stock options, shares of restricted stock, restricted stock units, stock appreciation rights, performance awards and other share-based grants and cash bonus awards to employees and directors.  All share-based grants or awards are subject to a time-based vesting schedule.

A summary of the activity for non-vested restricted stock awards under the Plan is presented below:

Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2014	219,751		$	19.74
Granted	172,611		14.07
Vested	(69,046	)	18.58
Forfeited	(34,091	)	17.95
Outstanding at September 30, 2014	289,225		$	16.85

Common stock compensation expense related to restricted stock awards granted under the Plan was $765 and $451 for the three months ended September 30, 2014 and 2013, respectively, and $1,442 and $1,204 for the nine months ended September 30, 2014 and 2013, respectively.

Total unrecognized compensation costs related to non-vested, share-based awards granted or awarded under the Plan were $2,560 and $1,857 at September 30, 2014 and December 31, 2013, respectively.  These costs are expected to be recognized over a weighted average period of 1.7 years and 1.2 years, respectively.

14

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

11. Business Segment Information

The Company is organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  Through its Aerostructures segment, the Company primarily fabricates, machines, finishes, integrates, assembles and kits formed close tolerance aluminum, specialty alloy and composite components and higher level assemblies for use by the aerospace and defense industries. It manufactures more than 40,000 products for integration into a variety of aircraft platforms manufactured by leading original equipment manufacturers and Tier 1 aerospace suppliers. Through its Engineering Services segment, the Company provides a complete range of design, engineering and program management services, supporting aircraft product lifecycles from conceptual design, analysis and certification through production support, fleet support and service life extensions via a complete turnkey engineering solution.

Corporate assets, liabilities and expenses related to the Company's corporate offices, except for interest expense and income taxes, primarily support, and are recorded in, the Aerostructures segment. The table below presents information about reported segments on the same basis used internally to evaluate segment performance:

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net sales:
Aerostructures	$	82,914		$	85,075		$	249,101		$	252,844
Engineering Services	14,714			20,206			51,235			65,373
Eliminations	(293		)	(625		)	(1,313		)	(2,030		)
	$	97,335		$	104,656		$	299,023		$	316,187
Income from operations:
Aerostructures	$	7,888		$	6,015		$	14,010		$	27,095
Engineering Services	(1,216		)	742			666			(2,933		)
Eliminations	(9		)	(122		)	(96		)	17
	$	6,663		$	6,635		$	14,580		$	24,179

12. Customer Concentration

Direct sales, through both of the Company’s business segments, to our largest customer, Spirit Aerosystems (“Spirit”), accounted for 34.4% and 28.4% of the Company’s total revenues for the three months ended September 30, 2014 and 2013, respectively. Direct sales to Spirit accounted for 33.7% and 28.8% of the Company's total revenues for the nine months ended September 30, 2014 and 2013, respectively. Accounts receivable balances related to Spirit were 33.1% and 27.8% of the Company’s total accounts receivable balance at September 30, 2014 and December 31, 2013, respectively.

Direct sales, through both of the Company’s business segments, to our second largest customer, Gulfstream Aerospace Corporation, a General Dynamics company (“Gulfstream”), accounted for 14.3% and 10.9% of the Company’s total revenues for the three months ended September 30, 2014 and 2013, respectively. Direct sales to Gulfstream accounted for 15.3% and 14.8% of the Company's total revenues for the nine months ended September 30, 2014 and 2013, respectively.  Accounts receivable balances related to Gulfstream were 11.6% and 8.5% of the Company’s total accounts receivable balance at September 30, 2014 and December 31, 2013, respectively.

Direct sales, through both of the Company’s business segments, to our third largest customer, The Boeing Company (“Boeing”), accounted for 10.0% and 12.8% of the Company’s total revenues for the three months ended September 30, 2014 and 2013, respectively. Direct sales to Boeing accounted for 10.9% and 15.2% of the Company's total revenues for the nine months ended September 30, 2014 and 2013, respectively.  Accounts receivable balances resulting from direct sales to Boeing were 5.7% and 5.7% of the Company’s total accounts receivable balance at September 30, 2014 and December 31, 2013, respectively.

15

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

13. Income Taxes

The Company recognized an income tax benefit, net for the three and nine months ended September 30, 2014 of $754 and $2,557, respectively. The Company recognized income tax expense for the three and nine months ended September 30, 2013 of $281 and $3,567, respectively. The Company's tax benefit in the three and nine months ended September 30, 2014 reflects the tax benefit of $295 and $2,877, respectively, anticipated with the decision to carry back the net operating loss recognized in 2013. The Company has established a valuation allowance on tax benefits generated in the current year, which is adjusted on a quarterly basis. The tax expense recorded in the current year periods reflects the taxes due in states where the Company generated taxable income and an increase in deferred tax liabilities related to an indefinite lived intangible asset.

14. Restructuring

During the fourth quarter of 2013, the Company committed to a restructuring plan that resulted in the closure of its Precise Machine facility located in Fort Worth, Texas. As a result, the Company recognized severance expense of $453 in the year ended December 31, 2013 related to the closure. A restructuring benefit of $18 and expense of $287 were recognized by the Company in the three and nine months ended September 30, 2014. These restructuring benefits and expenses were reflected in the selling, general, and administrative section on a separate line of the Condensed Consolidated Statements of Comprehensive Income (Loss). The Company completed this restructuring plan in the second quarter of 2014.

In addition, on January 23, 2014, the Company announced plans to relocate the work performed relative to machining operations at its Savannah, Georgia facility to other locations within the company. As a result, severance expense of $0 and $47 was recognized in the three and nine months ended September 30, 2014. These restructuring expenses were reflected in the selling, general, and administrative section on a separate line of the Consolidated Statements of Comprehensive Income (Loss). The Company completed this restructuring plan in the second quarter of 2014.

In the three and nine months ended September 30, 2014, the Company recognized additional severance expense of $783 and $1,954 relative to other employment separation activities. These activities are part of the Company's overall reorganization and cost reduction initiatives. These restructuring expenses were reflected in the selling, general, and administrative section on a separate line of the Consolidated Statements of Comprehensive Income (Loss).

Cash payments were made associated with these restructuring plans of $253 and $1,441 in the three and nine months ended September 30, 2014, respectively.

The following table summarizes the incurred and expected charges associated with these restructuring activities:

	Expense		Remaining		Total Expense
	Incurred through		Expense to be		Expected to be
	September 30, 2014		Incurred		Incurred
			(In Thousands)
Employee severance arrangement - Precise closure	$	615	$	—	$	615
Employee severance arrangement - Savannah	47		—		47
Other employee severance arrangements	1,954		—		1,954
Lease termination costs - Precise closure	124		—		124
Total	$	2,740	$	—	$	2,740

In addition to the restructuring expenses detailed in the table above, the Company incurred and recognized additional project expenses of approximately $364 as of September 30, 2014, associated with the integration of work previously performed at the Precise Machine facility. The Company also incurred and recognized approximately $500 in other project costs as of September 30, 2014, largely related to accelerated depreciation on property, plant and equipment at its Savannah facility. These expenses are recognized in the cost of sales and selling, general, and administrative expense in the Consolidated Statements of Comprehensive Income (Loss).

The following table summarizes restructuring activity related to the Precise Machine facility closure, the Savannah machining relocation, and other employee separation activities:

16

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

	Employee
	Severance
Accrued restructuring balance as of December 31, 2013	$	422
Accrual additions	2,281
Cash payments	(1,441		)
Accrued restructuring balance as of September 30, 2014	$	1,262

Accrued restructuring of $1,262 at September 30, 2014 is expected to be paid over the next three quarters.

15. Legal Contingencies

The Company has been named as a defendant in certain pending lawsuits in the normal course of business (the “Pending Lawsuits”). It is the policy of management to disclose the amount or range of reasonably possible losses. In the opinion of management, after consulting with legal counsel, any losses resulting from Pending Lawsuits should not have a material effect on the Company’s financial position, cash flows or results of operations.

As of September 30, 2014, the Company is the subject of proceedings by the Environmental Protection Agency (“EPA”) and Department of Justice ("DoJ") as a result of allegations of low pH wastewater releases at the facility of Ozark Mountain Technologies ("OMT"), a subsidiary of the Company located in Cuba, Missouri, (the "Waste Water Allegations") and could become the subject of proceedings by the EPA as a result of the Voluntarily Disclosed Matters (as defined in the Company's 2013 Form 10-K, Part I, Item 1. Business, Governmental Regulations and Environmental Compliance)related to OMT.

On May 6, 2014, the Company first received information from DoJ that indicated DoJ is prepared to move forward with a one count indictment naming OMT as a defendant with respect to the Waste Water Allegations. DoJ also advised that the alleged violations may subject the Company to fines. The full extent of the actions to be taken by DoJ related to the Waste Water Allegations remains uncertain, but it is probable the Company will incur losses related to these issues.

Based on more recent discussions with the DoJ, the Company believes that an updated reasonable range for the fines, penalties and related legal fees associated with the Waste Water Allegations is from $761 to $1,000. However, there are still significant uncertainties related to the final outcome and therefore, the Company recognized the minimum value of the range of possible outcomes in the quarter ended September 30, 2014, and has established a loss contingency of $761. The Company is continuing to work with the DoJ to reach a resolution of this matter. The extent of the actions, if any, to be taken by the EPA with respect to the Voluntarily Disclosed Matters remain uncertain and the losses, if any, cannot be estimated.

As further disclosed in the Company's 2013 Form 10-K, Item 3 - Legal Proceedings, the Company believes a proceeding by the Missouri Attorney General is contemplated with respect to alleged violations of certain state environmental regulations by OMT. After consulting with legal counsel and based on the discussions the Company has had with the Missouri Attorney General’s office, the Company has established a loss contingency of $175 which represents management’s current estimate of the penalty the Missouri Attorney General is contemplating assessing on the Company.

Legal expenses, fines, and penalties recorded relative to the above matters were $462 and $996 for the three and nine months ended September 30, 2014, respectively. These expenses are reflected in selling, general, and administrative expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

OMT became a subsidiary of the Company as a result of the Company’s acquisition of Valent in December 2012. The Company believes certain environmental representations set forth in the purchase agreement pursuant to which Valent acquired OMT, and the purchase agreement pursuant to which the Company acquired Valent, provide the Company with certain rights of indemnification with respect to the matters disclosed herein. The Company also has insurance policies that it believes covers various environmental

17

LMI Aerospace, Inc.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

September 30, 2014

issues at Valent and its subsidiaries, including OMT, and breaches by Valent and OMT of their respective environmental representations and warranties in each of the purchase agreements. As a result, the Company believes its rights of indemnification and insurance coverage may provide for a recovery of some of the costs associated with the matters disclosed herein. We cannot provide any assurance, however, that we will ultimately prevail in any claim for indemnification or secure insurance proceeds from our insurance policies.

16. Subsequent Events

On November 5, 2014, the Company committed to a restructuring plan (the “Plan”) that will result in relocation of the St. Charles machine part operations to other facilities within the Company. As part of the Plan, the St. Charles machine part operations are expected to cease in the second quarter of 2015. Necessary equipment and assets used in these machining operations will be relocated to other facilities.

The Company estimates that it will incur aggregate pre-tax charges of between $900 and $1,100 to implement the Plan, which includes (i) anticipated expenditures of between $300 and $400 in employee severance and retention costs and (ii) approximately $600 to $700 in other shut-down related expenditures. The Company expects to pay these charges in cash. The Company will record charges starting in the fourth quarter of 2014 continuing into the second quarter of 2015. The Plan is expected to generate over $1,500 in recurring annual savings.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. The Company makes forward-looking statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Quarterly Report on Form 10-Q, which represent the Company’s expectations or beliefs about future events and financial performance.  When used in this report, the words “expect,” “believe,” “anticipate,” “goal,” “plan,” “intend,” “estimate,” “may,” “will” or similar words are intended to identify forward-looking statements.  These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events or results.  Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “2013 Form 10-K”) and otherwise described in the Company’s periodic filings and current reports filed with the Securities and Exchange Commission (the “SEC”).

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.  In addition, actual results could differ materially from those suggested by the forward-looking statements.  Accordingly, investors are cautioned not to place undue reliance on the forward-looking statements.  Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the SEC.

This Quarterly Report on Form 10-Q should be read completely, in conjunction with our 2013 Annual Report on Form 10-K and with the understanding that the Company’s actual future results may be materially different from what the Company expects.  All forward-looking statements made by the Company in this Quarterly Report on Form 10-Q and in the Company’s other filings with the SEC are qualified by these cautionary statements.

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and assumptions.  (See Note 1 of the Condensed Consolidated Financial Statements included as part of this Quarterly Report on Form 10-Q.)

The Company believes that certain significant accounting estimates have the potential to have a more significant impact on the financial statements either because of the significance of the financial statements to which they relate or because they involve a higher degree of judgment and complexity.  A summary of such critical accounting estimates can be found in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the  2013 Form 10-K.

Overview

We are a leading supplier of structural assemblies, kits and components and design engineering services to the aerospace and defense markets.  We primarily sell our products and services to the large commercial, corporate and regional, and military aircraft markets.    We believe that OEMs and Tier 1 aerospace companies will continue the trend of selecting their suppliers based upon

18

the breadth of more complex and sophisticated design and manufacturing capabilities and value-added services and the ability of their suppliers to manage large production programs.

The Company is organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  Through its Aerostructures segment, the Company primarily fabricates, machines, finishes, integrates, assembles and kits formed close tolerance aluminum, specialty alloy and composite components and higher level assemblies for use by the aerospace and defense industries. It manufactures more than 40,000 products for integration into a variety of aircraft platforms manufactured by leading original equipment manufacturers and Tier 1 aerospace suppliers. Through its Engineering Services segment, the Company provides a complete range of design, engineering and program management services, supporting aircraft product lifecycles from conceptual design, analysis and certification through production support, fleet support and service life extensions via a complete turnkey engineering solution.

Results of Operations

Three months ended September 30, 2014 compared to three months ended September 30, 2013

Consolidated Operations

Cost of goods sold for the Aerostructures segment consists primarily of direct labor, materials, subcontract costs and manufacturing overhead, including indirect labor costs, depreciation, rent, supplies and other indirect costs.  Cost of goods for the Engineering Services segment consists primarily of direct labor, subcontract costs and overhead, including rent, maintenance, and indirect costs. Selling, general, and administrative expenses for both segments consist primarily of labor, rent, depreciation and amortization, professional services and other administrative expenses.

The following table is a summary of our operating results for the three months ended September 30, 2014 and 2013, respectively:

	Three Months Ended   September 30, 2014
	($ in millions)
	Aerostructures		Engineering Services			Elimination			Total
Net sales	$	82.9	$	14.7		$	(0.3	)	$	97.3
Cost of sales	62.5		13.1			(0.3		)	75.3
Gross profit	20.4		1.6			—			22.0
S, G, & A	12.5		2.8			—			15.3
Income from operations	$	7.9	$	(1.2	)	$	—		$	6.7

	Three Months Ended   September 30, 2013
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	85.1	$	20.2	$	(0.6	)	$	104.7
Cost of sales	67.8		16.9		(0.5		)	84.2
Gross profit	17.3		3.3		(0.1		)	20.5
S, G, & A	11.3		2.5		—			13.8
Income from operations	$	6.0	$	0.8	$	(0.1	)	$	6.7

Aerostructures Segment

Net Sales.  Net sales were $82.9 million for the third quarter of 2014, a 2.6% decrease from $85.1 million in the third quarter of 2013.  The following table specifies the amount of the Aerostructures segment’s net sales by category for the third quarter of 2014 and 2013 and the percentage of the segment’s total net sales for each period represented by each category:

19

	Three Months Ended September 30,
Category	2014		% of Total		2013		% of Total
	($ in millions)
Large commercial aircraft	$	41.6	50.2	%	$	41.6	48.9	%
Corporate and regional aircraft	21.4		25.8	%	20.5		24.1	%
Military	13.0		15.7	%	16.4		19.3	%
Other	6.9		8.3	%	6.6		7.7	%
Total	$	82.9	100.0	%	$	85.1	100.0	%

Overall, net sales of large commercial aircraft products were unchanged in the third quarter of 2014 when compared to the third quarter of 2013. The most significant increase in revenue in the category was attributable to higher production rates on the Boeing 737 platform, which generated $24.1 million in the third quarter of 2014 compared to $22.4 million in the third quarter of 2013. Due to the ramp up in production on the Boeing 787 platform, net sales increased to $3.5 million in the third quarter of 2014 from $1.9 million in the third quarter of 2013. These increases were partially offset by decreases in the sale of 767 wing modification products which generated revenue of $5.0 million in the third quarter of 2013 compared to $1.7 million in the third quarter of 2014. In addition, revenue on the Boeing 747 platform decreased from $4.4 million in the third quarter of 2013 to $2.8 million in the third quarter of 2014.

Net sales of components for corporate and regional aircraft increased 4.4% during the third quarter of 2014. The increase was primarily attributable to higher production rates on the Gulfstream G650 aircraft which generated $8.5 million in the third quarter of 2014 compared to $6.0 million in the third quarter of 2013. This increase in revenue was partially offset by sales on the Gulfstream G450/G550 program, which contributed $7.3 million in the third quarter of 2014 compared to $8.5 million in the third quarter of 2013.

Net sales of military products decreased 20.7% during the third quarter of 2014.  The decrease is primarily due to a reduction in Embraer KC390 program revenues which contributed $0.4 million in the third quarter of 2014 compared to $3.7 million in the third quarter of 2013.

Cost of Goods Sold.  Cost of goods sold for the third quarter of 2014 was $62.5 million compared to $67.8 million for the third quarter of 2013. In the third quarter of 2014, the Company reversed a loss reserve of $4.6 million due to prices increases received for engineering changes and improved hardware costs. This reduction in cost of goods sold in the third quarter of 2014 was partially offset by accelerated depreciation on assets requiring replacement in our Cuba, Missouri facility of $0.5 million in addition to unfavorable product mix.

Gross Profit.  Gross profit for the third quarter of 2014 was $20.4 million (24.6% of net sales) compared to $17.3 million (20.3% of net sales) in the third quarter of 2013. The increase in gross profit margin was primarily the result of a loss reserve reversal on a long-term contract. This increase was partially offset by the previously mentioned accelerated depreciation and unfavorable product mix.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses were $12.5 million (15.1% of net sales) for the third quarter of 2014 compared to $11.3 million (13.3% of net sales) for the third quarter of 2013.  The increase in selling, general and administrative expenses primarily related to increases of $0.4 million of restructuring expenses, $0.5 million of environmental expense, and $0.4 million of expense to reduce an asset held for sale to its realizable value in the third quarter of 2014.

Engineering Services Segment

Net Sales.  Net sales for the Engineering Services segment were $14.7 million for the third quarter of 2014 as compared to $20.2 million for the third quarter of 2013, a decrease of 27.2%.  The Engineering Services segment generates revenue primarily through the billing of employee time spent on customer projects.  The following table specifies the amount of the Engineering Services segment’s net sales by category for the third quarter of 2014 and 2013 and the percentage of the segment’s total net sales represented by each category.

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	Three Months Ended September 30,
Category	2014		% of Total		2013		% of Total
	($ in millions)
Large commercial aircraft	$	6.6	44.9	%	$	9.9	49.0	%
Corporate and regional aircraft	4.4		29.9	%	4.0		19.8	%
Military	2.7		18.4	%	4.8		23.8	%
Other	1.0		6.8	%	1.5		7.4	%
Total	$	14.7	100.0	%	$	20.2	100.0	%

Net sales of services for large commercial aircraft were $6.6 million in the third quarter of 2014, down 33.3% from $9.9 million in the third quarter of 2013. The decrease in this category was primarily attributable to a decline in sales relates to the Goodrich Nacelle program, which contributed $0.0 million in the third quarter of 2014 compared to $1.7 million in the third quarter of 2013. In addition, sales on the Airbus 350 platform decreased from $1.6 million in the third quarter of 2013 to $0.4 million in the third quarter of 2014.

Net sales of services related to corporate and regional aircraft were $4.4 million in the third quarter of 2014 compared to $4.0 million for the third quarter of 2013, an increase of 10.0%.  

Net sales of services for military programs were $2.7 million in the third quarter of 2014, down 43.8% from $4.8 million in the third quarter of 2013.  This decrease was primarily related to a $1.8 million reduction on the Boeing Tanker program as the program design phase is complete.

Net sales related to design and delivery of tooling on various programs supporting commercial aircraft were $1.0 million for the third quarter of 2014, down 33.3%, from $1.5 million in the third quarter of 2013.

Cost of Goods Sold. Cost of goods sold for the third quarter of 2014 was $13.1 million compared to $16.9 million for the third quarter of 2013.  The decrease in cost of goods sold was primarily due to reductions in direct labor, which is the result of lower demand for this segment.

Gross Profit.  Gross profit for the third quarter of 2014 was $1.6 million (10.9% of net sales) compared to $3.3 million (16.3% of net sales) in the third quarter of 2013.  The decrease in gross profit was primarily attributable to the decline in sales, as fixed costs are spread over lower volume. The third quarter of 2014 was also unfavorably impacted by a cumulative catch up adjustment of $0.4 million.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses for the third quarter of 2014 were $2.8 million, or 19.0% of net sales, compared to $2.5 million, or 12.4% of net sales, for the third quarter of 2013. The increase in selling, general and administrative expenses primarily related to increases of $0.4 million of restructuring expenses.

Non-segment Expenses

Interest Expense.  Interest expense was $5.9 million for the third quarter of 2014 and $4.3 million for the third quarter of 2013.  The increase in interest expense is primarily related to increased average interest rates. During the third quarter of 2014, the Company's primary borrowing source was senior notes accruing interest at 7.375%. During the third quarter of 2013, the Company's primary borrowing source was a term loan accruing interest at 4.75%.

Income Tax Expense.  During the third quarter of 2014, the Company recorded an income tax benefit of $0.8 million compared to expense of $0.3 million in the third quarter of 2013.  The Company's tax benefit in the three months ended September 30, 2014 reflects the tax benefit of approximately $0.3 million anticipated with the decision to carry back the net operating loss recognized in 2013 and a tax benefit of $0.5 million related to adjustment of the Company's valuation allowance on its 2014 tax benefit. The Company continues to record a valuation allowance on tax benefits generated in the current year period.

Results of Operations

Nine months endedSeptember 30, 2014 compared to nine months ended September 30, 2013

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Consolidated Operations

Cost of goods sold for the Aerostructures segment consists primarily of direct labor, materials, subcontract costs and manufacturing overhead, including indirect labor costs, depreciation, rent, supplies and other indirect costs.  Cost of goods for the Engineering Services segment consists primarily of direct labor, subcontract costs and overhead, including rent, maintenance, and indirect costs. Selling, general, and administrative expenses for both segments consist primarily of labor, rent, depreciation and amortization, professional services and other administrative expenses.

The following table is a summary of our operating results for the nine months ended September 30, 2014 and 2013, respectively:

	Nine Months Ended   September 30, 2014
	($ in millions)
	Aerostructures		Engineering Services		Elimination			Total
Net sales	$	249.1	$	51.2	$	(1.3	)	$	299.0
Cost of sales	198.5		43.1		(1.2		)	240.4
Gross profit	50.6		8.1		(0.1		)	58.6
S, G, & A	36.6		7.4		—			44.0
Income from operations	$	14.0	$	0.7	$	(0.1	)	$	14.6

	Nine Months Ended   September 30, 2013
	($ in millions)
	Aerostructures		Engineering Services			Elimination			Total
Net sales	$	252.8	$	65.4		$	(2.0	)	$	316.2
Cost of sales	199.9		56.0			(2.0		)	253.9
Gross profit	52.9		9.4			—			62.3
S, G, & A	25.8		12.3			—			38.1
Income from operations	$	27.1	$	(2.9	)	$	—		$	24.2

Aerostructures Segment

Net Sales.  Net sales were $249.1 million for the first nine months of 2014, a 1.5% decrease from $252.8 million in the first nine months of 2013. The following table specifies the amount of the Aerostructures segment’s net sales by category for the first nine months of 2014 and 2013, and the percentage of the segment’s total net sales for each period represented by each category:

	Nine months ended September 30,
Category	2014		% of Total		2013		% of Total
	($ in millions)
Large commercial aircraft	$	122.9	49.3	%	$	120.3	47.6	%
Corporate and regional aircraft	69.7		28.0	%	69.5		27.5	%
Military	36.8		14.8	%	43.9		17.4	%
Other	19.7		7.9	%	19.1		7.5	%
Total	$	249.1	100.0	%	$	252.8	100.0	%

Large commercial aircraft generated net sales of $122.9 million for the first nine months of 2014 compared to $120.3 million for the first nine months of 2013, an increase of 2.2%.  The most significant increase was attributable to higher production rates on the Boeing 737 platform which generated $72.0 million in the first nine months of 2014 compared to $65.2 million in the first nine months of 2013. Due to the ramp up in production on the Boeing 787 platform, net sales increased to $11.0 million in the first nine months of 2014 from $5.5 million in the first nine months of 2013. These increases were partially offset by decreases in the Boeing 747 and Boeing 767 wing modification products which generated $8.4 million and $5.1 million, respectively, in the first nine months of 2014 compared to $15.0 million and $9.4 million, respectively, in the first nine months of 2013

Net sales of components for corporate and regional aircraft were $69.7 million for the first nine months of 2014 compared to $69.5

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million for the first nine months of 2013, an increase of 0.3%.  Revenue increased on the Gulfstream G650 program which contributed $22.5 million in the first nine months of 2014 compared to $17.7 million in the first nine months of 2013. This increase was offset by decreases on the Gulfstream G450/550 and G500/600 programs, which generated revenue in the first nine months of 2014 of $24.5 million and $10.5 million, respectively, compared to $28.0 million and $11.7 million in the first nine months of 2013.

Military products generated $36.8 million of net sales for the first nine months of 2014 compared to $43.9 million for the first nine months of 2013, a decrease of 16.2%.  The decrease is primarily due to a reduction in Black Hawk helicopter and Embraer KC390 revenues, which contributed $16.5 million and $1.6 million, respectively, in the first nine months of 2014 compared to $20.6 million and $5.5 million, respectively, in the first nine months of 2013.

Other products generated $19.7 million in net sales in the first nine months of 2014 compared to $19.1 million in the first nine months of 2013, an increase of 3.1%.

Cost of Goods Sold.  Cost of goods sold for the first nine months of 2014 was $198.5 million compared to $199.9 million for the first nine months of 2013.   In the first nine months of 2014, the Company reversed a loss reserve of $5.3 million due to price increases received for engineering changes and improved hardware costs. This reduction in cost of goods sold was partially offset by accelerated depreciation of $1.0 million on assets disposed of at several facilities. Cost of goods sold was also unfavorably impacted by product sales mix, lower production levels and inefficiencies associated with facilities being restructured. The first nine months of 2013 was unfavorably impacted by $2.5 million of fair value step-up on acquired inventories from acquisitions.

Gross Profit.  Gross profit for the first nine months of 2014 was $50.6 million (20.3% of net sales) compared to $52.9 million (20.9% of net sales) in the first nine months of 2013. Accelerated depreciation and inefficiencies associated with restructuring activities unfavorably impacted gross profit margin in the first nine months of 2014. Gross profit margin was also unfavorably impacted by product sales mix and lower production levels. Gross profit margin was favorably impacted by the previously mentioned $5.3 million for a loss reserve reversal on a long-term contract in the first nine months of 2014. The first nine months of 2013 was unfavorably impacted by the previously mentioned $2.5 million of fair value step-up on acquired inventories from acquisitions.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses were $36.6 million (14.7% of net sales) for the first nine months of 2014 compared to $25.8 million (10.2% of net sales) for the first nine months of 2013. The difference in selling, general and administrative expenses primarily related to a favorable one-time write off of a contingent consideration liability of $8.0 million in the third quarter of 2013. In the first nine months of 2014, increases in restructuring expenses and environmental expenses of $1.8 million and $1.0 million, respectively, also contributed to the change in selling, general, and administrative expenses when compared to the prior-year period.

Engineering Services Segment

Net Sales.  Net sales for the Engineering Services segment were $51.2 million for the first nine months of 2014 as compared to $65.4 million for the first nine months of 2013, a decrease of 21.7%.  The Engineering Services segment generates revenue primarily through the billing of employee time spent on customer projects. The following table specifies the amount of the Engineering Services segment’s net sales by category for the first nine months of 2014 and 2013 and the percentage of the segment’s total net sales represented by each category:

	Nine months ended September 30,
Category	2014		% of Total		2013		% of Total
	($ in millions)
Large commercial aircraft	$	25.1	49.0	%	$	26.4	40.4	%
Corporate and regional aircraft	12.8		25.0	%	14.6		22.3	%
Military	7.2		14.1	%	16.9		25.8	%
Other	6.1		11.9	%	7.5		11.5	%
Total	$	51.2	100.0	%	$	65.4	100.0	%

Net sales of services for large commercial aircraft were $25.1 million in the first nine months of 2014, down 4.9% from $26.4 million in the first nine months of 2013. The decrease in this category was primarily attributable to a decline in sales related to the

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Goodrich Nacelle program, which contributed $1.4 million in the first nine months of 2014 compared to $3.8 million in the first nine months of 2013. In addition, sales related to the Boeing 747 program decreased $1.2 million over the prior-year period. These decreases were partially offset by an increase of $1.8 million in maintenance, repair, and overhaul services.

Net sales for services supporting corporate and regional aircraft were $12.8 million in the first nine months of 2014 compared to $14.6 million for the first nine months of 2013, a decrease of 12.3%. This decrease in sales was primarily related to reductions of $1.2 million in support of the Bombardier Learjet L-85 and $0.6 million on other Bombardier programs.

Net sales of services for military programs were $7.2 million in the first nine months of 2014, down 57.4% from $16.9 million in the first nine months of 2013.  This decrease was primarily from a $8.4 million reduction on the Boeing Tanker program due to project maturation. In addition, support of the Embraer KC-390 program declined, with revenues of $1.0 million in the first nine months of 2014 compared to $2.8 million in the first nine months of 2013. These decreases were partially offset by revenue on the Bell V280 Valor program of $1.3 million.

Net sales related to design and delivery of tooling on various programs supporting commercial aircraft were $6.1 million for the first nine months of 2014, down 18.7%, from $7.5 million in the first nine months of 2013. The decrease was primarily due to reductions on the 787 shipping fixture program, with revenues of $0.1 million in the first nine months of 2014 compared to $1.3 million in the first nine months of 2013. In addition, G500 and G600 tooling revenue decreased from $2.1 million in the first nine months of 2013 to $0.8 million in the first nine months of 2014. These decreases were partially offset by an increase in revenue to Nordam, from $0.2 million in the first nine months of 2013 to $1.8 million in the first nine months of 2014.

Cost of Goods Sold.  Cost of goods sold consists primarily of labor and benefit costs and for the first nine months of 2014 was $43.1 million compared to $56.0 million for the first nine months of 2013.  A decrease in demand for engineering services in the first nine months of 2014 drove the decline in cost of good sold, when compared to the prior year period.

Gross Profit.  Gross profit for the first nine months of 2014 was $8.1 million (15.8% of net sales) compared to $9.4 million (14.4% of net sales) in the first nine months of 2013. The change in gross profit margin was primarily attributable to a $1.5 million unfavorable cumulative catch-up adjustment booked in the first nine months of 2013. Gross profit margin was also impacted by a reduction in sales in the first nine months of 2014.

Selling, General and Administrative Expenses.  Selling, general and administrative expenses for the first nine months of 2014 were $7.4 million, or 14.5% of net sales, compared to $12.3 million, or 18.8% of net sales, for the first nine months of 2013. The decrease in expense was primarily attributable to a one-time intangible asset impairment write-off of $4.2 million that was recognized in the second quarter of 2013 in addition to increases in restructuring expense of $0.5 million in the first nine months of 2014.

Non-segment Expenses

Interest Expense.  Interest expense was $23.8 million for the first nine months of 2014 and $12.5 million for the first nine months of 2013. The increase in interest expense was primarily due to a $8.5 million write-off of debt financing costs related to the termination of the Company's long term credit agreement and the modification of the Company's revolving credit agreement during the nine months ended September 30, 2014. Increased average interest rates also contributed to the increase in interest expense in the first nine months of 2014 due to the refinancing of the primary debt source from a term loan to higher interest rate notes.

Income Tax Expense.  During the first nine months of 2014, the Company recorded an income tax benefit of $2.6 million compared to $3.6 million of income tax expense in the first nine months of 2013. The Company's tax benefit in the nine months ended September 30, 2014 reflects the tax benefit of approximately $2.9 million anticipated with the decision to carry back the net operating loss recognized in 2013 offset by tax expense of $0.3 million. The Company continues to record a valuation allowance on tax benefits generated in the period. The tax expense reflects the taxes due in states where the Company generated income or where the tax liability is determined based on non-income related items such as gross sales.

Non-GAAP Financial Measures

When viewed with the financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and accompanying reconciliations, the Company believes earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA provide additional useful information to clarify and enhance the understanding of the factors and trends affecting past performance and future prospects. The Company defines these measures, explains how they are calculated and provides reconciliations of these measures to the most comparable GAAP measure in the tables below.

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EBITDA and Adjusted EBITDA, as presented in this Form 10-Q, are supplemental measures of performance that are not required by, or presented in accordance with, GAAP.  They are not measurements of financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP, or as alternatives to net cash provided by operating activities as measures of liquidity.  The presentation of these measures should not be interpreted to mean that future results will be unaffected by unusual or nonrecurring items.

The Company uses EBITDA and Adjusted EBITDA non-GAAP operating performance measures internally as complementary financial measures to evaluate the performance and trends of the business.  The Company presents EBITDA and Adjusted EBITDA because it believes that measures such as these provide useful information with respect to its ability to meet future debt service, capital expenditures, working capital requirements and overall operating performance.

EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of the Company’s results as reported under GAAP.  Some of these limitations are:

• They do not reflect the Company’s cash expenditures, future expenditures for capital expenditures or contractual commitments;

• They do not reflect changes in, or cash requirements for, working capital needs;

• They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on debt;

• Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

• They are not adjusted for all non-cash income or expense items that are reflected in the statement of cash flows;

• They do not reflect the impact on earnings of charges resulting from matters unrelated to ongoing operations; and

• Other companies in the Company’s industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA, Adjusted EBITDA and the related financial ratios should not be considered as measures of discretionary cash available to the Company to invest in the growth of the business or as a measure of cash that will be available to meet the Company’s obligations.  Furthermore, the definitions of EBITDA and adjusted EBITDA calculated here are different than those contained in the Company’s credit agreement.  You should compensate for these limitations by relying primarily on the GAAP results and using EBITDA and Adjusted EBITDA only supplementary.

However, in spite of the above stated limitations, the Company believes that EBITDA and Adjusted EBITDA are useful to an investor in evaluating the results of operations because these measures:

• Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

• Help investors to evaluate and compare the results of operations from period to period by removing the effect of the capital structure from operating performance; and

• Are used by the management team for various other purposes in presentations to the Board of Directors as a basis for strategic planning and forecasting.

Adjusted EBITDA excludes acquisition and integration charges, as applicable, and provides meaningful information about the operating performance of the businesses apart from the acquisition-related expenses, as well as interest and tax expenses.

The following financial items have been added back to net income when calculating EBITDA:

• Interest expense;

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• Income tax expense;

• Depreciation; and

• Amortization.

The following additional financial items have been added back to net income when calculating Adjusted EBITDA:

• Stock-based compensation;

• Acquisition and integration–related expenses;

• Contingent consideration write-off;

• Fair value step-up on acquired inventories;

• Restructuring expenses;

• Other (net).

Reconciliations of net income to EBITDA and Adjusted EBITDA were as follows:

	(In Thousands)						(In Thousands)
	Three Months Ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net income (loss)	$	1,396		$	2,075		$	(6,458	)	$	8,576
Depreciation and amortization (1)	5,998			5,496			17,002			15,230
Intangible Asset impairment (2)	—			—			—			4,222
Interest expense (3)	5,946			4,328			23,800			12,485
Income tax (benefit) expense	(754		)	281			(2,557		)	3,567
EBITDA	12,586			12,180			31,787			44,080
Stock-based compensation (4)	1,007			638			2,031			1,842
Acquisition and integration expenses (5)	64			207			557			969
Restructuring expenses (6)	765			—			2,288			—
Contingent consideration write-off (7)	—			—			—			(7,950		)
Fair Value step-up on acquired inventories	—			—			—			2,497
Other, net	537			(49		)	791			(449		)
Adjusted EBITDA	$	14,959		$	12,976		$	37,454		$	40,989

(1) Includes amortization of intangibles and depreciation expense.

(2) In the quarter ended June 30, 2013, a triggering event occurred which resulted in the impairment of the definite lived D3 trade name asset of $4,222.

(3) In the nine months ended September 30, 2014, interest expense includes $793 related to the termination of interest rate derivatives and $8,464 related to the write-off of debt issuance cost associated with the modification of the Company's revolving credit facility and the termination of its long-term credit agreement.

(4) Includes restricted stock compensation and defined benefit plan expense funded in stock.

(5) Includes accounting, legal, and other expenses for acquisitions and integration.

(6) Includes expenses associated with severance related to the Precise Machine facility closure, relocation of the Savannah, Georgia machining operations, and other employment separation activities.

(7) The nine months ended September 30, 2013 included a $7,950 benefit related to the write-off of contingent consideration associated with an acquisition.

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Liquidity and Capital Resources

On June 19, 2014, the Company issued $250.0 million in notes and modified its revolving credit agreement while concurrently terminating its long-term credit agreement. The Company believes that the borrowings under these new facilities will provide the financial flexibility necessary to achieve its long-range strategic goals.

The modified revolving credit facility provides for borrowings up to $90.0 million and matures June19, 2019.  Under the agreement, the co-collateral agents may establish a reserve against the facility. At September 30, 2014, the reserve established was $15.0 million, which reduced the maximum availability to $75.0 million. Based on the amount of eligible assets at September 30, 2014, available borrowings were further reduced to $60.4 million. As of September 30, 2014, a total of $0.0 million was outstanding under the credit facility and the Company had available borrowings of approximately $60.4 million. The credit agreement for our revolving credit facility requires us to comply with certain restrictive covenants that limit our ability to incur additional debt, guarantee debt or obligations, create liens, enter into certain merger, consolidation or other reorganization transactions, make investments, sell, and lease or transfer our assets and prohibit our ability to pay dividends. The Company was in compliance with all of its covenants as of September 30, 2014.

For more information on the Company's debt structure, please see Note 6 - Long-term Debt and Capital Lease Obligations in the Notes to the Condensed Consolidated Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.

During the first nine months of 2014, operating activities provided $36.0 million in cash, compared to $18.6 million of cash used by operating activities in the first nine months of 2013.  Net cash provided by operating activities for the first nine months of 2014 was favorably impacted by collection of a $13.5 million milestone payment on the KC-390 program and decreases in inventory of $2.1 million primarily related to a decrease in overall inventory spend. In addition, interest payments on the Company's outstanding $245 million in notes are due semi-annually, the first semi-annual payment due on January 15, 2015. As a result, cash flow related to interest increased $2.4 million in the nine months ended September 30, 2014 when compared to the first nine months of 2013. Net cash used by operating activities for the first nine months of 2013 was unfavorably impacted by increases in unbilled revenue, trade accounts receivable, capitalized contract costs and product inventories in addition to a decline in accounts payable. Increases of $17.8 million in unbilled revenue and $12.0 million in capitalized contract costs in 2013 reflected additional investments in tooling for the Gulfstream G500 program. Increases of $7.4 million in trade receivables in 2013 were due to continued sales growth. A $10.9 million increase in product inventories was necessary to meet expected delivery rate increases later in 2013 and into 2014.

Net cash used for investing activities was $9.3 million for the first nine months of 2014, compared to $19.3 million for the first nine months of 2013.  Cash used in the first nine months of 2014 included $4.2 million on machinery and equipment in support of new production contracts. Cash used in the first nine months of 2013 funded construction of a building in Tulsa, Oklahoma in support of a new program and the purchase a corporate aircraft.

The Company used free cash flow in the first nine months of 2014 to pay down debt of $17.9 million and to pay debt issuance costs of $7.9 million. This compares to net cash provided of $35.1 million in the first six months of 2013, which primarily resulted from borrowings against the Company's revolving credit facility of $28.0 million, proceeds from issuance of debt related to the Company financing of a building in Tulsa, Oklahoma and purchase of a corporate aircraft.

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Contractual Obligations and Commitments

For information concerning contractual obligations, see the caption “Contractual Obligations and Commitments” in “Item 7.  Management’s Discussion and Analysis of Financial Condition and Results” in the Company’s 2013 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

No material changes have taken place in the quantitative and qualitative information about market risk since the end of the most recent fiscal year.  For further information, see Part II, Item 7A of the Company’s 2013 Form 10-K.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined by Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 30, 2014. Based upon and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms and (b) is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

We are involved in various legal proceedings that arise in the ordinary course of our business, as well as other matters that are or could become material under SEC regulations. Information regarding these other matters is disclosed in Note 15 - Legal Contingencies in the Notes to the Condensed Consolidated Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. Other than as set forth in Note 15- Legal Contingencies in the Notes to the Condensed Consolidated Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q, during the period covered by this Quarterly Report on Form 10-Q, there were no material developments with respect to the matters previously reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 or in our Annual Report on Form 10-K for the year ended December 31, 2013.

Item 1A. Risk Factors.

This Form 10-Q should be read together with Part I, Item 1A “RISK FACTORS” in our 2013 Form 10-K, and in subsequent reports we have filed with the SEC, which describes various risks and uncertainties to which we are or may become subject. The following includes material changes to, and amends [and supplements], such risks and uncertainties previously disclosed in our 2013 Form 10-K and other period reports filed with the SEC. These risks and uncertainties could, directly or indirectly, adversely affect our business, financial condition, results of operations, cash flows, strategies and/or prospects.

Risks Related to the Company and Industry

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations, including the notes, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on the notes or any other indebtedness we may assume from time to time.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. Our current revolving credit facility restricts our ability to dispose of assets and use the proceeds from any such dispositions. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

Demand for our defense-related products depends upon government spending.

A material portion of our sales are derived from the military market. The military market is largely dependent upon government budgets, particularly the U.S. defense budget. The funding of government programs is subject to Congressional appropriation and the possibility of sequestration. Although multi-year contracts may be authorized in connection with major procurements, the U.S. Congress generally appropriates funds on a fiscal year basis even though a program may be expected to continue for several years. Consequently, programs, including those that require our components, may be only partially funded or may never enter full-scale production as expected. As a result, future U.S. defense spending may not be allocated to programs that would benefit our business or at levels that we had anticipated. A decrease in levels of defense spending or the government's termination of, or failure to fully fund, one or more of the contracts for the programs in which we participate would adversely impact our revenues and cash flow.

Most U.S. government contracts for which we subcontract can be terminated by the U.S. government either for its convenience or if the prime contractor defaults by failing to perform under the contract. In addition, the prime contractor typically has the

29

right to terminate our subcontract for its convenience or if we default by failing to perform under the subcontract. Termination for convenience provisions generally permit us to recover only our costs incurred or committed, plus settlement expenses and a reasonable profit, which may be different from what we bid or our historical profit rates, on the work completed prior to termination.

We are subject to the cyclical nature of the aerospace industry, and any future downturn in the aerospace industry or general economic conditions could cause our sales and operating income to decrease.

We derived the majority of our revenue from the sale of services and components for the aerospace industry. Consequently, our business is directly affected by certain characteristics of and trends in the aerospace industry or general economic conditions that affect our customers, such as:

• fluctuations in the aerospace industry’s business cycle;

• new programs in commercial, military, and general aviation have historically experienced significant delays and engineering changes which adversely impact our net sales, results of operations and cash flow;

• varying fuel and labor costs;

• intense price competition and regulatory scrutiny;

• certain trends, including a possible decrease in aviation activity, a decrease in outsourcing by aircraft manufacturers or the failure of projected market growth to materialize or continue;

• changes in military budgeting, sequestration and procurement for certain military aircraft;

• sequestration may result in excess capacity potentially putting additional pressure on prices; and

• military trend toward utilizing more Unmanned Aerial Vehicles, reducing the demand for more traditional military aircraft (e.g. Boeing F-18, General Dynamics F-16 and Lockheed Martin F-35).

In the event that these characteristics and trends adversely affect customers in the aerospace industry, they will reduce the overall demand for our products and services, thereby decreasing our sales and operating income.

Compliance with and changes in environmental, health and safety laws and other laws that regulate the operation of our business and industry standards could increase the cost of production and expose us to regulatory claims.

Our operations are subject to extensive and frequently changing federal, state and local laws and substantial regulation by government agencies, including the U.S. Environmental Protection Agency (“EPA”), the U.S. Occupational Safety and Health Administration (“OSHA”), the FAA, and the DoD. Among other matters, these agencies impose requirements that:

• regulate the operation, handling, transportation and disposal of hazardous materials generated or used by us during the normal course of our operations;

• govern the health and safety of our employees; and

• require that we meet standards and licensing requirements for aerospace components.

In particular, we use and generate hazardous waste in our operations. Consequently, we monitor hazardous waste management and applicable environmental permitting and reporting for compliance with applicable laws at our locations in the ordinary course of our business. We may be subject to potential material liabilities relating to any investigation and cleanup of any contamination at our locations or properties where we deliver hazardous waste for handling or disposal and to claims alleging personal injury. In addition, we have incurred, and expect to continue to incur, costs to comply with environmental laws and regulations. The adoption of new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new cleanup requirements could require us to incur costs and become subject to new or increased liabilities that could increase our operating costs and adversely affect the manner in which we conduct our business.

30

We are involved with the Attorney General of the State of Missouri with respect to allegations of violations of certain state environmental regulations by Ozark Mountain Technologies (“OMT”), our subsidiary located in Cuba, Missouri. We are involved with the EPA and Missouri Department of Natural Resources with respect to other possible instances of environmental non-compliance that we voluntary reported following our voluntary, comprehensive internal audit of OMT’s facility.

We are involved with the EPA and the U.S. Department of Justice (“DoJ”) with respect to an investigation into allegations of low pH wastewater releases at OMT’s facility (the “Waste Water Allegations”). On May 6, 2014, we received information from DoJ that DoJ is prepared to move forward with a one count indictment naming OMT as a defendant. DoJ has also advised that the alleged violations may subject us to fines. The Company continues to work with DoJ to reach a resolution of this matter. Any charges filed, monetary sanctions imposed or other actions taken by any of these agencies could result in a material adverse effect on us.

For more information on the matters discussed above, please see Note 15 - Legal Contingencies in the Notes to the Condensed Consolidated Financial Statements under Part 1, Item 1 of this Quarterly Report on Form 10-Q.

We are also subject to U.S. Export Regulations, including the Arms Export Control Act, associated International Traffic in Arms Regulations and Export Administration Regulations and the Foreign Corrupt Practices Act. Failure to comply with such regulations could result in substantial fines, significant time and costs related to training personnel for cause and corrective action, penalties and limit our ability to export certain products.

While we require FAA certifications only to a limited extent, we typically are required to maintain third-party registrations with respect to industry specification standards, such as AS9100 and NADCAP, for our quality systems and processes. In fact, many individual OEMs and Tier 1 suppliers require certifications or approvals of our work based on third-party registrations in order to engineer and serve the systems and components used in specific aircraft models. If material OEM certifications or approvals were to be revoked or suspended, OEMs might cease purchasing our products.

Moreover, if in the future new or more stringent governmental regulations are adopted, or industry oversight heightened, such action could result in our incurrence of significant additional costs and have an adverse effect on our financial condition or results of operation.

Risks Related to our Indebtedness

Our substantial level of indebtedness may adversely affect our cash flow and our ability to operate our business.

As of September 30, 2014, we had $272.7 million of total debt outstanding, including the notes of $245.0 million and $0.0 million of borrowings under our current revolving credit facility.

Our substantial level of indebtedness could have important consequences to you and significant effects on our business, including the following:

• we must use a substantial portion of our cash flow from operations to pay interest on the notes and our other indebtedness, which will reduce the funds available to use for operations and other purposes including our other financial obligations;

• our ability to obtain additional financing for working capital, capital expenditures, strategic acquisitions or general corporate purposes may be impaired;

• we could be at a competitive disadvantage compared to our competitors that may have proportionately less debt;

• our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited;

• our ability to fund a change of control offer may be limited; and

• we may be more vulnerable to economic downturns and adverse developments in our business.

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We expect to obtain the funds to pay our expenses and to repay our indebtedness primarily from our operations. Our ability to meet our expenses and make these payments therefore depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future, and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the notes, or to fund other liquidity needs. If we do not have enough funds, we may be required to refinance all or part of our then existing debt, sell assets or borrow more funds, which we may not be able to accomplish on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements may restrict us from pursuing any of these alternatives.

The indenture governing the notes imposes significant operating and financial restrictions, which may prevent us from pursuing certain business opportunities and taking certain actions that may be potentially profitable or in our best interests.

The indenture governing the notes imposes, and future debt agreements may impose, operating and financial restrictions on us. These restrictions limit or prohibit, among other things, our ability to:

• incur or guarantee additional indebtedness or issue certain preferred stock;

• make certain investments or acquisitions;

• issue stock of subsidiaries;

• grant or permit certain liens on our assets;

• enter into certain transactions with affiliates;

• pay dividends, redeem subordinated debt or make other restricted payments;

• merge, consolidate or transfer substantially all of our assets;

• transfer, sell or acquire assets, including capital stock of our subsidiaries; and

• change the business we conduct.

These covenants could adversely affect our ability to finance our future operations or capital needs, withstand a future downturn in our business or the economy in general, engage in business activities, including future opportunities that may be in our interest, and plan for or react to market conditions or otherwise execute our business strategies. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders or holders of such indebtedness could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness. Acceleration of our other indebtedness could result in a default under the terms of the Indenture. There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated.

Our current revolving credit facility contains financial covenants and other restrictive covenants that limit our flexibility. We may not be able to comply with these covenants, which could result in the amounts outstanding under our current revolving credit facility becoming immediately due and payable.

Our current revolving credit facility requires us to comply with certain financial covenants based on outstanding amounts. Accordingly, if our performance significantly worsens, we could become non-compliant with such covenants. If we fail to meet any covenants in our current revolving credit facility and cannot secure a waiver of such failure, the lenders under current revolving credit facility would be entitled to exercise various rights, including causing the amounts outstanding to become immediately due and payable.

In addition, our current revolving credit facility contains other restrictive covenants, including covenants that limit and in some circumstances prohibit, our ability to, among other things, incur additional debt, sell, lease or transfer our assets, pay dividends, make investments, loans, advances and acquisition, engage in sale-leaseback transactions, guarantee debt or obligations, create liens, enter into transactions with our affiliates and enter into certain merger, consolidation or other reorganization transactions. We would also be subject to requirements to make mandatory prepayments, with no reduction of the commitment amount, with the net proceeds of certain asset sales and debt issuances. These restrictions could limit our ability to obtain future financing,

32

make acquisitions or needed capital expenditures, withstand the current or future downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise, any of which could place us at a competitive disadvantage relative to our competitors that have less debt and are not subject to such restrictions.

Due to many factors beyond our control, we may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and meet our other ongoing liquidity needs, and we may be forced to take other actions to satisfy our obligations under our debt agreements, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations and to fund any future capital expenditures and meet our other ongoing liquidity needs depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions, fluctuations to such conditions, and to certain financial, business and other factors beyond our control. Our business may not generate sufficient cash flow from operations in the future and our currently anticipated levels of revenue and cash flow may not be realized, either or both of which could result in our being unable to repay the principal, premium, if any, and interest on our indebtedness, including borrowings under our new revolving credit facility and the notes.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including our indebtedness under our new revolving credit facility and the notes. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time and may require our lenders’ consent, which we may not be able to obtain. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous borrowing covenants, which could further restrict our business operations. In addition, any failure to make payments of principal and interest on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On July 31, 2014 Joseph DeMartino was appointed as the Chief Operating Officer of the Company.  In connection with his appointment, Mr. DeMartino was granted 4,582 shares of restricted Company common stock (the “Shares”).  The Shares are subject to certain vesting conditions, were granted as an inducement award pursuant to NASDAQ Listing Rule 5635(c)(4) and were granted in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended.  No commissions or other remuneration was paid in connection with the grant of the Shares.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

On November 5, 2014, the Company committed to a restructuring plan (the “Plan”) that will result in relocation of the St. Charles machine part operations to other facilities within the Company. As part of the Plan, the St. Charles machine part operations are expected to cease in the second quarter of 2015. Necessary equipment and assets used in these machining operations will be relocated to other facilities.

The Company estimates that it will incur aggregate pre-tax charges of between $900 and $1,100 to implement the Plan, which includes (i) anticipated expenditures of between $300 and $400 in employee severance and retention costs and (ii) approximately $600 to $700 in other shut-down related expenditures. The Company expects to pay these charges in cash. The Company will record charges starting in the fourth quarter of 2014 continuing into the second quarter of 2015. The Plan is expected to generate over $1,500 in recurring annual savings.

Item 6. Exhibits.

See Exhibit Index.

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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, in the County of St. Charles and State of Missouri on the 6th day of November, 2014.

LMI AEROSPACE, INC.

/s/ Daniel G. Korte

Daniel G. Korte

Chief Executive Officer

(Principal Executive Officer)

/s/ Clifford C. Stebe, Jr.

Clifford C. Stebe, Jr.

Chief Financial Officer and Secretary

(Principal Financial and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Restated Articles of Incorporation of the Registrant previously filed as Exhibit 3.1 to the Registrant’s Form S-1 (File No. 333-51357) filed on April 29, 1998 (the “Form S-1”) and incorporated herein by reference.
3.2	Amended and Restated By-Laws of the Registrant previously filed as Exhibit 3.2 to the Form S-1 and incorporated herein by reference.
3.3	Amendment to Restated Articles of Incorporation dated as of July 9, 2001 filed as Exhibit 3.3 to the Registrant’s Form 10-K for the fiscal year ended December 31, 2001 and filed April 1, 2002 and incorporated herein by reference.
3.4	Amendment to the Registrant’s Amended and Restated Bylaws filed as Exhibit 3.1 to the Registrant’s Form 8-K filed June 26, 2009 and incorporated herein by reference.
4.1	Indenture dated as of June 19, 2014, by and among the Company, the Guarantors named therein, and U.S. Bank National Association, as Indenture Trustee and as Collateral Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
4.2	Forms of 7.375% Senior Secured Notes due 2019 (included as exhibits to the Indenture identified in Exhibit 4.1 above) (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
4.3	Notes Collateral Agreement dated as of June 19, 2014, by and among the Company, the domestic Guarantors, and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
4.4	Notes Intellectual Property Security Agreement dated as of June 19, 2014, by and among the Company, certain Guarantors named therein, and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
4.5	Registration Rights Agreement dated as of June 19, 2014, by and among the Company, the Guarantors named therein and RBC Capital Markets, LLC, on behalf of itself and as representative of the other initial purchasers named therein (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
4.6	Intercreditor Agreement dated as of June 19, 2014, by and between Royal Bank of Canada, as First-Lien Collateral Agent, and U.S. Bank National Association, as Second-Lien Collateral Agent (incorporated by reference to Exhibit 4.6 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
10.1	Credit Agreement dated as of June 19, 2014, by and among the Company, the Guarantors named therein, the lenders party thereto, Royal Bank of Canada, as Administrative Agent and Co-Collateral Agent, and Wells Fargo Bank, National Association, as Syndication Agent and Co-Collateral Agent (including the forms of Revolver Collateral Agreement, Guarantee Agreement and Revolver Intellectual Property Security Agreement attached as exhibits thereto) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed on June 20, 2014).
10.2	Employment Agreement between LMI Aerospace, Inc. and Joseph DeMartino, dated July 31, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed on August 6, 2014).
10.3	Restricted Stock Agreement between LMI Aerospace, Inc. and Joseph DeMartino, dated July 31, 2014 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8‑K filed on August 6, 2014).

35

10.4	Amendment No. 1, dated as of September 18, 2014, to the Credit Agreement dated as of June 19, 2014, by and among the Company, the Guarantors named therein, the lenders party thereto, Royal Bank of Canada, as Administrative Agent and Co-Collateral Agent, and Wells Fargo Bank, National Association, as Syndication Agent and Co-Collateral Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8‑K filed on September 18, 2014).
31.1	Rule 13a-14(a) Certification of Daniel G. Korte, Chief Executive Officer filed herewith.
31.2	Rule 13a-14(a) Certification of Clifford C. Stebe, Jr., Chief Financial Officer filed herewith.
32.1	Certification of Daniel G. Korte, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.
32.2	Certification of Clifford C. Stebe, Jr., Chief Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith.
101.ins	Instance Document
101.sch	XBRL Taxonomy Extension Schema Document
101.cal	XBRL Taxonomy Extension Calculation Linkbase Document
101.def	XBRL Taxonomy Extension Definition Linkbase Document
101.lab	XBRL Taxonomy Extension Label Linkbase Document
101.pre	XBRL Taxonomy Extension Presentation Linkbase Document

36

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Daniel G. Korte, certify that:

1.I have reviewed this quarterly report on Form 10-Q of LMI Aerospace, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2014	/s/ Daniel G. Korte
	Daniel G. Korte Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Clifford C. Stebe, Jr., certify that:

1.I have reviewed this quarterly report on Form 10-Q of LMI Aerospace, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2014	/s/ Clifford C. Stebe, Jr.
	Clifford C. Stebe, Jr. Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report of LMI Aerospace, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel G. Korte, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2014	/s/ Daniel G. Korte
	Daniel G. Korte
	Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report of LMI Aerospace, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clifford C. Stebe, Jr., Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2014	/s/ Clifford C. Stebe, Jr.
	Clifford C. Stebe, Jr.
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

XML

Other Assets (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014		Sep. 30, 2014		Sep. 30, 2013	Dec. 31, 2013
Other Assets, Noncurrent [Abstract]
Deferred Finance Costs, Noncurrent, Net	$ 8,929,000	[1]	$ 8,929,000	[1]		$ 11,094,000	[1]
Other Assets Held-for-sale	2,925,000	[2]	2,925,000	[2]		0	[2]
Other Assets, Miscellaneous, Noncurrent	1,997,000		1,997,000			2,187,000
Other Assets, Noncurrent	13,851,000		13,851,000			13,281,000
Write off of Deferred Debt Issuance Cost	124,000		8,464,000		0
Debt Issuance Cost			7,954,000
Assets Held-for-sale, Other, Noncurrent	2,925,000		2,925,000
Depreciation Expense on Reclassified Assets	$ 421

[1] In the nine months ended September 30, 2014, the Company refinanced its texisting long term indebtedness, which resulted in the settlement and termination of its then existing credit agreement. As a result of this refinancing and other retirements of debt, unamortized debt issuance costs of $124 and $8,464 were written off and recognized as interest expense in the three and nine months ending September 30, 2014. As part of the refinancing, the Company issued second priority senior secured notes and concurrently modified its revolving credit agreement. Debt issuance costs of $7,954 were incurred as a result of these transactions and are being amortized over the term of the notes and revolving credit agreement, which is five years.

[2] (2) Represents the fair value, less costs to sell, of the Company aircraft. The aircraft was recorded in property, plant, and equipment, net in prior periods. The carrying value of the aircraft was reduced to its net realizable value of $2,925 with a charge of $421 in the quarter ended September 30, 2014, which is reflected in selling, general, and administration expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

XML

Subsequent Events (Details)	9 Months Ended
	Sep. 30, 2014
Subsequent Events [Abstract]
Restructuring and Related Activities, Description	The Company estimates that it will incur aggregate pre-tax charges of between $900 and $1,100 to implement the Plan, which includes (i) anticipated expenditures of between $300 and $400 in employee severance and retention costs and (ii) approximately $600 to $700 in other shut-down related expenditures. The Company expects to pay these charges in cash. The Company will record charges starting in the fourth quarter of 2014 continuing into the second quarter of 2015. The Plan is expected to generate over $1,500 in recurring annual savings.

XML

Business Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 segment	Sep. 30, 2013
Segment Reporting [Abstract]
Number of reportable segments			2
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	$ 97,335	$ 104,656	$ 299,023	$ 316,187
Income from operations	6,663	6,635	14,580	24,179
Aerostructures [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	82,914	85,075	249,101	252,844
Income from operations	7,888	6,015	14,010	27,095
Engineering Services [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	14,714	20,206	51,235	65,373
Income from operations	(1,216)	742	666	(2,933)
Eliminations [Member]
Information about reported segments on the basis used internally to evaluate segment performance [Abstract]
Net sales	(293)	(625)	(1,313)	(2,030)
Income from operations	$ (9)	$ (122)	$ (96)	$ 17

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Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerators [Abstract]
Net (loss) income	$ 1,396	$ 2,075	$ (6,458)	$ 8,576
Denominators [Abstract]
Weighted average common shares - basic (in shares)	12,740,034	12,617,121	12,704,568	12,604,033
Dilutive effect of restricted stock (in shares)	147,329	101,686	0	106,363
Weighted average common shares - diluted (in shares)	12,887,363	12,718,807	12,704,568	12,710,396
Basic earnings (loss) per share	$ 0.11	$ 0.16	$ (0.51)	$ 0.68
Diluted earnings (loss) per share	$ 0.11	$ 0.16	$ (0.51)	$ 0.67
Antidilutive securities excluded from computation of earnings per share (in shares)			145,710

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Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Information about reported segments on the basis used internally to evaluate segment performance

The table below presents information about reported segments on the same basis used internally to evaluate segment performance:

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net sales:
Aerostructures	$	82,914		$	85,075		$	249,101		$	252,844
Engineering Services	14,714			20,206			51,235			65,373
Eliminations	(293		)	(625		)	(1,313		)	(2,030		)
	$	97,335		$	104,656		$	299,023		$	316,187
Income from operations:
Aerostructures	$	7,888		$	6,015		$	14,010		$	27,095
Engineering Services	(1,216		)	742			666			(2,933		)
Eliminations	(9		)	(122		)	(96		)	17
	$	6,663		$	6,635		$	14,580		$	24,179

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Inventories (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories consist of the following:

	September 30, 2014		December 31, 2013
Raw materials	$	17,569	$	17,099
Work in progress	21,729		21,605
Manufactured and purchased components	22,323		21,675
Finished goods	29,789		40,572
Product inventory	91,410		100,951
Capitalized contract costs (1)	19,689		12,227
Total inventories	$	111,099	$	113,178

(1) Net of a loss reserve on long-term production contracts of $0 and $2,057 as of September 30, 2014 and December 31, 2013 respectively.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
(Benefit) provision for income taxes	$ (754)	$ 281	$ (2,557)	$ 3,567
Carry back of income tax benefit	$ 295		$ 2,877

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Assets and Liabilities Measured at Fair Value (Details) (Recurring Fair Value Measurement [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014		Dec. 31, 2013
Asset:
Interest rate derivatives	$ 0	[1]	$ 18	[1]
Assets Held-for-sale, Long Lived, Fair Value Disclosure	2,925	[2]
Liabilities:
Interest rate derivatives	0	[1]	392	[1]
Level 1 [Member]
Asset:
Interest rate derivatives	0	[1]	0	[1]
Assets Held-for-sale, Long Lived, Fair Value Disclosure	0	[2]
Liabilities:
Interest rate derivatives	0	[1]	0	[1]
Level 2 [Member]
Asset:
Interest rate derivatives	0	[1]	18	[1]
Assets Held-for-sale, Long Lived, Fair Value Disclosure	2,925	[2]
Liabilities:
Interest rate derivatives	0	[1]	392	[1]
Level 3 [Member]
Asset:
Interest rate derivatives	0	[1]	0	[1]
Assets Held-for-sale, Long Lived, Fair Value Disclosure	0	[2]
Liabilities:
Interest rate derivatives	$ 0	[1]	$ 0	[1]

[1] The fair values of interest rate derivatives are the amount the Company would receive or pay to terminate the contracts, considering quoted market prices of comparable agreements. (Also see Note 8)

[2] (2)Represents the fair value, less costs to sell, of the Company aircraft

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Goodwill and Intangible Assets, Goodwill (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended				9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2013 Valent Aerostructures, LLC [Member]	Dec. 31, 2013 Engineering Services [Member]	Dec. 31, 2013 Integrated Technologies, Inc. [Member]	Dec. 31, 2013 TASS, Inc. [Member]	Sep. 30, 2014 Tempco [Member]	Sep. 30, 2014 Aerostructures [Member]	Dec. 31, 2013 Aerostructures [Member]	Sep. 30, 2014 Aerostructures [Member] Valent Aerostructures, LLC [Member]	Dec. 31, 2013 Aerostructures [Member] Valent Aerostructures, LLC [Member]	Sep. 30, 2014 Engineering Services [Member]	Dec. 31, 2013 Engineering Services [Member]
Goodwill [Line Items]
Goodwill, Gross	$ 192,694	$ 192,694						$ 141,953	$ 141,953			$ 50,741	$ 50,741
Goodwill, Impaired, Accumulated Impairment Loss	(79,471)	(79,471)						(79,471)	(79,471)			0	0
Goodwill acquired	113,223	113,223		50,741	6,194			62,482	62,482	56,288	56,288	50,741	50,741
Goodwill, Impairment Loss			$ 73,528				$ 5,943

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Restructuring - Restructuring Reserve (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			$ 2,740
Restructuring Reserve [Roll Forward]
Accrual additions	765	0	2,288	0
Employee Severance [Member]
Restructuring Reserve [Roll Forward]
Accrued restructuring balance as of December 31, 2013			422
Accrual additions			2,281
Cash payments	(253)		(1,441)
Accrued restructuring balance as of September 30, 2014	1,262		1,262
Precise Machine [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			615
Precise Machine [Member] | Lease Termination [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			124
Relocation of Machining Operations from Savannah Facility [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			47
Other Expense [Member] | Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Cost Incurred to Date			$ 1,954

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Stock-Based Compensation (Details) (Restricted Stock Awards [Member], USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Restricted Stock Awards [Member]
Shares
Outstanding beginning balance (in shares)				219,751
Granted (in shares)				172,611
Vested (in shares)				(69,046)
Forfeited (in shares)				(34,091)
Outstanding ending balance (in shares)	289,225	219,751		289,225
Weighted Average Grant Date Fair Value
Outstanding beginning balance (in dollars per share)				$ 19.74
Granted (in dollars per share)				$ 14.07
Vested (in dollars per share)				$ 18.58
Forfeited (in dollars per share)				$ 17.95
Outstanding ending balance (in dollars per share)	$ 16.85	$ 19.74		$ 16.85
Compensation expense	$ 765		$ 451	$ 1,442	$ 1,204
Unrecognized compensation costs	$ 2,560	$ 1,857		$ 2,560
Costs are expected to be recognized over a weighted average period	1 year 8 months 0 days	1 year 2 months 12 days

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Inventories

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following:

	September 30, 2014		December 31, 2013
Raw materials	$	17,569	$	17,099
Work in progress	21,729		21,605
Manufactured and purchased components	22,323		21,675
Finished goods	29,789		40,572
Product inventory	91,410		100,951
Capitalized contract costs (1)	19,689		12,227
Total inventories	$	111,099	$	113,178

(1) Net of a loss reserve on long-term production contracts of $0 and $2,057 as of September 30, 2014 and December 31, 2013 respectively.

Inventories include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which are not expected to be realized within one year.   The Company believes these amounts will be fully recovered over the life of the contracts. Anticipated losses on contracts are recognized, when required, and reported as a reduction of related contract costs recorded in inventory and as additional cost of sales. The Company was engaged in a contract at December 31, 2013 where estimated costs exceeded the total contract revenue. At December 31, 2013, a provision for the remaining estimated loss on this contract of $5,222 was reported as a reduction to inventory of $2,057 and an increase in accrued expenses of $3,165 in the Condensed Consolidated Balance Sheet. As discussed in Note 2, this loss reserve was reversed in the quarter ended September 30, 2014. At September 30, 2014 the Company is no longer engaged in any contracts that would require it to record a loss reserve.

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Derivative Financial Instruments (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Derivative [Line Items]
Derivative, Loss on Derivative	$ 793

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Assets and Liabilities Measured at Fair Value (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

	Assets/Liabilities at Fair Value as of September 30, 2014
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Asset:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—
Asset held for sale (2)	$	2,925	$	—	$	2,925	$	—
Liabilities:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—

	Assets/Liabilities at Fair Value as of December 31, 2013
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Asset:
Interest rate derivatives (1)	$	18	$	—	$	18	$	—
Liabilities:
Interest rate derivatives (1)	$	392	$	—	$	392	$	—

(1) The fair values of interest rate derivatives are the amount the Company would receive or pay to terminate the contracts, considering quoted market prices of comparable agreements. (Also see Note 8)

(2) Represents the fair value, less costs to sell, of the Company aircraft.

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Long-term Debt and Capital Lease Obligations (Tables)

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Long-term debt

Long-term debt and capital lease obligations consist of the following:

	September 30, 2014		December 31, 2013
Second priority senior secured notes at a fixed rate of 7.375% at September 30, 2014	$	245,000	$	—
Term loan under credit agreement, variable	—		222,750
Revolver under credit agreement, variable	—		36,000
Missouri IRBs at fixed rate of 2.80% at September 30, 2014 and December 31, 2013	7,441		7,756
Capital leases, at fixed rates ranging from 2.04% to 7.73% at September 30, 2014 and December 31, 2013, respectively	13,605		14,572
Notes payable, principal and interest payable monthly, at fixed rates up to 3.60% at September 30, 2014 and December 31, 2013, respectively (1)	6,667		9,533
Total debt	$	272,713	$	290,611
Less current installments	3,142		5,242
Total long-term debt and capital lease obligations	$	269,571	$	285,369

(1) During the quarter ended September 30, 2014, the Company settled a mortgage in cash in the amount of $2,109.

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Derivative Financial Instruments, Fair Value by Balance Sheet Location (Details) (Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Interest Rate Contract [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Interest rate purchased option fair value	$ 0	$ 18
Interest Rate Swap [Member] | Other Noncurrent Liabilities [Member]
Derivatives, Fair Value [Line Items]
Interest rate swap fair value	$ 0	$ 392

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives Recognized in the Condensed Consolidated Balance Sheet

The derivatives were recognized in the Condensed Consolidated Balance Sheet as current assets and liabilities at fair value as follows:

Derivative Asset and Liability	Location in Condensed Consolidated Balance Sheet	September 30, 2014		December 31, 2013
Derivative designated as hedging instrument:
Interest rate purchased option fair value	Other current assets	$	—	$	18
Derivative designated as hedging instrument:
Interest rate swap fair value	Other long term liabilities	$	—	$	392

Derivatives Recognized in the AOCI and Earnings

The following amounts are included in OCI and earnings for the three and nine months ended September 30, 2014:

Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in AOCI, net of tax, on Derivative (Effective Portion)		Amount of (Gain) Loss Reclassified from AOCI into Income (Effective Portion)
Three Months Ended September 30, 2014
Interest rate derivatives	$	—	$	—
Nine Months Ended September 30, 2014
Interest rate derivatives	$	—	$	793

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Calculation of basic and diluted earnings per share

The following table shows a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share.

	Three months ended				Nine months ended
	September 30,				September 30,
	2014		2013		2014			2013
Numerators
Net income (loss)	$	1,396	$	2,075	$	(6,458	)	$	8,576
Denominators
Weighted average common shares - basic	12,740,034		12,617,121		12,704,568			12,604,033
Dilutive effect of restricted stock	147,329		101,686		—			106,363
Weighted average common shares - diluted	12,887,363		12,718,807		12,704,568			12,710,396
Basic earnings (loss) per share	$	0.11	$	0.16	$	(0.51	)	$	0.68
Diluted earnings (loss) per share	$	0.11	$	0.16	$	(0.51	)	$	0.67

For the nine months ended September 30, 2014, 145,710 shares are not included in the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive. These securities could be dilutive in future periods.

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Accounts Receivable, Net

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

Accounts receivable, net consists of the following:

	September 30, 2014			December 31, 2013
Trade receivables	$	54,980		$	66,292
Unbilled revenue	7,368			4,671
Other receivables	2,636			2,070
	64,984			73,033
Less: Allowance for doubtful accounts	(245		)	(180		)
Accounts receivable, net	$	64,739		$	72,853

Under contract accounting, unbilled revenues arise when the sales or revenues based on performance attainment, though appropriately recognized, cannot be billed yet under terms of the contract as of the balance sheet date. Included in unbilled revenue at September 30, 2014 and December 31, 2013 are $424 and $2,034, respectively, related to unpriced change orders or claims that are subject to negotiation. The final resolution of these unpriced items could result in a change in the revenue recognized to date on the associated contracts.

Accounts receivable expected to be collected after one year is not material.

The Company records changes in contract estimates using the cumulative catch-up method in accordance with the Revenue Recognition topic of the FASB Accounting Standards Codification.  Cumulative catch-up adjustments had the following impacts to operating income for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Favorable adjustments	$	4,898		$	397		$	5,620		$	106
Unfavorable adjustments	(545		)	(522		)	(727		)	(1,155		)
Net favorable (unfavorable) operating income adjustments	$	4,353		$	(125	)	$	4,893		$	(1,049	)

The Company was engaged in a contract at December 31, 2013 where estimated costs exceeded total contract revenue. A change has been agreed to that resulted in the favorable settlement of an unpriced change order related to this contract. In addition, the Company secured more favorable future material pricing with respect to this contract as engineering changes to the related assemblies had stabilized. As a result, contract costs are no longer expected to exceed revenue and the remaining related loss reserve, which was originally recorded as an adjustment to goodwill on the Valent acquisition, was reversed in the quarter ended September 30, 2014, resulting in a favorable cumulative catch up adjustment. The impact of reversing the loss reserve was $4,602 and $5,267 for the three and nine months ended September 30, 2014 and was recorded in the cost of goods sold section of the Consolidated Statements of Comprehensive Income (Loss).

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of the activity for non-vested restricted stock awards

A summary of the activity for non-vested restricted stock awards under the Plan is presented below:

Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2014	219,751		$	19.74
Granted	172,611		14.07
Vested	(69,046	)	18.58
Forfeited	(34,091	)	17.95
Outstanding at September 30, 2014	289,225		$	16.85

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Long-term Debt and Capital Lease Obligations (Details) (USD $)	9 Months Ended													9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended				9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Second Priority Senior Secured Notes [Member]	Jun. 19, 2014 Second Priority Senior Secured Notes [Member]	Dec. 31, 2013 Second Priority Senior Secured Notes [Member]	Sep. 30, 2014 Term Loan Under Credit Agreement, Variable [Member]	Dec. 31, 2013 Term Loan Under Credit Agreement, Variable [Member]	Sep. 30, 2014 Revolver Under Credit Agreement, Variable [Member]	Dec. 31, 2013 Revolver Under Credit Agreement, Variable [Member]	Sep. 30, 2014 Missouri IRBs [Member]	Dec. 31, 2013 Missouri IRBs [Member]	Sep. 30, 2014 Capital Leases [Member]	Dec. 31, 2013 Capital Leases [Member]	Sep. 30, 2014 Capital Leases [Member] Minimum [Member]	Dec. 31, 2013 Capital Leases [Member] Minimum [Member]	Sep. 30, 2014 Capital Leases [Member] Maximum [Member]	Dec. 31, 2013 Capital Leases [Member] Maximum [Member]	Sep. 30, 2014 Notes Payable [Member]		Dec. 31, 2013 Notes Payable [Member]	Sep. 30, 2014 Notes Payable [Member] Maximum [Member]	Dec. 31, 2013 Notes Payable [Member] Maximum [Member]
Debt Instrument [Line Items]
Long-term debt gross	$ 272,713,000	$ 290,611,000	$ 245,000,000	$ 250,000,000	$ 0	$ 0	$ 222,750,000	$ 0	$ 36,000,000	$ 7,441,000	$ 7,756,000	$ 13,605,000	$ 14,572,000					$ 6,667,000	[1]	$ 9,533,000
Less current installments	3,142,000	5,242,000
Long-term debt and capital lease obligations, less current installments	269,571,000	285,369,000
Fixed interest rate (in hundredths)			7.375%							2.80%	2.80%
Fixed interest rate, minimum (in hundredths)														2.04%	2.04%
Fixed interest rate, maximum (in hundredths)																7.73%	7.73%				3.60%	3.60%
Debt Instrument, Repurchase Amount			5,000,000
Premium Paid on Debt Repurchase			1.125%
Repayments of Bank Debt	$ 2,109

[1] (1) During the quarter ended September 30, 2014, the Company settled a mortgage in cash in the amount of $2,109.

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Legal Contingencies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Loss Contingencies [Line Items]
Expense Recognized Related to Environmental Issues	$ 462	$ 996
Environmental Protection Agency [Member] | Unfavorable Regulatory Action [Member]
Loss Contingencies [Line Items]
Reasonable minimum range fines penalties and legal fees	761	761
Reasonable maximum range fines penalties and legal fees	1,000	1,000
Loss contingency accrual	761	761
Missouri Attorney General [Member] | Unfavorable Regulatory Action [Member]
Loss Contingencies [Line Items]
Loss contingency accrual	$ 175	$ 175

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 2,460	$ 1,572
Accounts receivable, net	64,739	72,853
Inventories	111,099	113,178
Prepaid Expense and Other Assets, Current	7,077	4,411
Deferred income taxes	3,228	2,693
Total current assets	188,603	194,707
Property, plant and equipment, net	96,477	103,375
Goodwill	113,223	113,223
Intangible assets, net	52,072	55,465
Other assets	13,851	13,281
Total assets	464,226	480,051
Current liabilities:
Accounts payable	20,620	19,388
Accrued expenses	23,793	19,082
Current installments of long-term debt and capital lease obligations	3,142	5,242
Total current liabilities	47,555	43,712
Long-term liabilities:
Long-term debt and capital lease obligations, less current installments	269,571	285,369
Other long-term liabilities	2,997	3,915
Deferred income taxes	3,944	2,911
Total long-term liabilities	276,512	292,195
Shareholders’ equity:
Common stock, $0.02 par value per share; authorized 28,000,000 shares; issued 13,089,600, and 12,873,208 shares at September 30, 2014 and December 31, 2013, respectively	261	257
Preferred stock, $0.02 par value per share; authorized 2,000,000 shares; none issued at either date	0	0
Additional paid-in capital	94,941	92,692
Accumulated other comprehensive income (loss)	(89)	(507)
Treasury stock, at cost, 32,162 and 22,321 shares at September 30, 2014 and December 31, 2013, respectively	(401)	(202)
Retained earnings	45,447	51,904
Total shareholders’ equity	140,159	144,144
Total liabilities and shareholders' equity	$ 464,226	$ 480,051

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Derivative Financial Instruments, Derivative Type (Details) (Interest Rate Swap [Member], Cash Flow Hedging [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in AOCI, net of tax, on Derivative (Effective Portion)	$ 0	$ 0
Amount of (Gain) Loss Reclassified from AOCI into Income (Effective Portion)	$ 0	$ 793

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities:
Net (loss) income	$ (6,458)	$ 8,576
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation and amortization	17,002	15,230
Share-based Compensation	1,442	1,204
Asset Impairment Charges	0	4,222
Contingent consideration write-off	0	(7,950)
Write off of Deferred Debt Issuance Cost	8,464	0
Deferred Income Tax Expense (Benefit)	147	3,091
payments for hedge, operating activities	(793)	0
Other noncash items	(87)	(326)
Changes in operating assets and liabilities:
Accounts receivable	8,187	(17,835)
Inventories	2,079	(22,698)
Prepaid expenses and other assets	2,003	233
Current income taxes	(2,899)	(29)
Accounts payable	785	(4,951)
Accrued expenses	6,144	2,637
Net cash provided (used) by operating activities	36,016	(18,596)
Investing activities:
Additions to property, plant and equipment	(10,302)	(21,230)
Proceeds from sale of property, plant, and equipment	981	1,942
Net cash used by investing activities	(9,321)	(19,288)
Financing activities:
Proceeds from issuance of debt	250,000	6,160
Principal payments on long-term debt and notes payable	(231,898)	(4,766)
Advances on revolving line of credit	60,000	112,000
Payments on revolving line of credit	(96,000)	(78,000)
Payments of Debt Issuance Costs	(7,881)	0
Other, net	(28)	(304)
Net cash (used) provided by financing activities	(25,807)	35,090
Net increase (decrease) in cash and cash equivalents	888	(2,794)
Cash and cash equivalents, beginning of period	1,572	4,347
Cash and cash equivalents, end of period	2,460	1,553
Supplemental disclosure of noncash transactions:
Acquisition purchase price adjustment	0	1,219
Defined contribution plan funding in Company stock	$ 848	$ 901

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Accounts Receivable, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Receivables [Abstract]
Trade receivables	$ 54,980		$ 54,980		$ 66,292
Unbilled revenue	7,368		7,368		4,671
Other receivables	2,636		2,636		2,070
Accounts receivable, gross	64,984		64,984		73,033
Less: Allowance for doubtful accounts	(245)		(245)		(180)
Accounts receivable, net	64,739		64,739		72,853
Inventory Amount, Unpriced Change Orders for Long-term Contracts or Programs	424		424		2,034
Change in Accounting Estimate [Abstract]
Favorable adjustments	4,898	397	5,620	106
Unfavorable adjustments	(545)	(522)	(727)	(1,155)
Net operating income adjustments	4,353	(125)	4,893	(1,049)
Increase (Decrease) in Loss and Loss Adjustment Expense Reserve	$ 4,602		$ 5,267

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Subsequent Events Subsequent Events (Notes)

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Subsequent Events

On November 5, 2014, the Company committed to a restructuring plan (the “Plan”) that will result in relocation of the St. Charles machine part operations to other facilities within the Company. As part of the Plan, the St. Charles machine part operations are expected to cease in the second quarter of 2015. Necessary equipment and assets used in these machining operations will be relocated to other facilities.

The Company estimates that it will incur aggregate pre-tax charges of between $900 and $1,100 to implement the Plan, which includes (i) anticipated expenditures of between $300 and $400 in employee severance and retention costs and (ii) approximately $600 to $700 in other shut-down related expenditures. The Company expects to pay these charges in cash. The Company will record charges starting in the fourth quarter of 2014 continuing into the second quarter of 2015. The Plan is expected to generate over $1,500 in recurring annual savings.

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013		Sep. 30, 2014
Inventories [Abstract]
Raw materials	$ 17,099		$ 17,569
Work in progress	21,605		21,729
Manufactured and purchased components	21,675		22,323
Finished goods	40,572		29,789
Product inventory	100,951		91,410
Capitalized contract costs	12,227	[1]	19,689	[1]
Total inventories	113,178		111,099
Valuation Allowances and Reserves, Balance	2,057		0
Loss on Contracts	5,222
Billings in Excess of Cost	$ 3,165

[1] Net of a loss reserve on long-term production contracts of $0 and $2,057 as of September 30, 2014 and December 31, 2013 respectively

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Accounts Receivable, Net (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Schedule of accounts receivable, net

Accounts receivable, net consists of the following:

	September 30, 2014			December 31, 2013
Trade receivables	$	54,980		$	66,292
Unbilled revenue	7,368			4,671
Other receivables	2,636			2,070
	64,984			73,033
Less: Allowance for doubtful accounts	(245		)	(180		)
Accounts receivable, net	$	64,739		$	72,853

Impact of operating income

Cumulative catch-up adjustments had the following impacts to operating income for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Favorable adjustments	$	4,898		$	397		$	5,620		$	106
Unfavorable adjustments	(545		)	(522		)	(727		)	(1,155		)
Net favorable (unfavorable) operating income adjustments	$	4,353		$	(125	)	$	4,893		$	(1,049	)

The Company was engaged in a contract at December 31, 2013 where estimated costs exceeded total contract revenue. A change has been agreed to that resulted in the favorable settlement of an unpriced change order related to this contract. In addition, the Company secured more favorable future material pricing with respect to this contract as engineering changes to the related assemblies had stabilized. As a result, contract costs are no longer expected to exceed revenue and the remaining related loss reserve, which was originally recorded as an adjustment to goodwill on the Valent acquisition, was reversed in the quarter ended September 30, 2014, resulting in a favorable cumulative catch up adjustment. The impact of reversing the loss reserve was $4,602 and $5,267 for the three and nine months ended September 30, 2014 and was recorded in the cost of goods sold section of the Consolidated Statements of Comprehensive Income (Loss).

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements.  The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair representation have been included.  Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the  Annual Report on Form 10-K of LMI Aerospace, Inc. (the "Company”) for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 17, 2014.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 these estimates.

Reclassification

Certain reclassifications have been made to prior period data within the footnotes in order to conform to current period presentation.

Recent Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The standard will supersede existing revenue recognition guidance, including industry-specific guidance, and will provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The provisions of this new guidance are effective as of the beginning of the Company’s first quarter of 2017. The Company is currently evaluating the transition method to be used and the impact of adoption of this standard on its consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The amendments in this update change the requirements for reporting discontinued operations. A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results and when the component or group of components meets the criteria to be classified as held for sale, is disposed by sale or is disposed of by other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). ASU 2014-8 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014.  The Company has no present activity that would be impacted by this new standard.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for annual and interim periods thereafter. This ASU is not expected to have an impact on our financial statements or disclosures.

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Shareholders’ equity:
Common stock, par value (in dollars per share)	$ 0.02	$ 0.02
Common stock, authorized shares (in shares)	28,000,000	28,000,000
Common stock, shares issued (in shares)	13,049,981	12,873,208
Preferred stock, par value (in dollars per share)	$ 0.02	$ 0.02
Preferred stock, authorized shares (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Treasury stock, at cost (in shares)	37,291	22,321

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Business Segment Information

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Business Segment Information

Business Segment Information

The Company is organized into two reportable segments: the Aerostructures segment and the Engineering Services segment.  Through its Aerostructures segment, the Company primarily fabricates, machines, finishes, integrates, assembles and kits formed close tolerance aluminum, specialty alloy and composite components and higher level assemblies for use by the aerospace and defense industries. It manufactures more than 40,000 products for integration into a variety of aircraft platforms manufactured by leading original equipment manufacturers and Tier 1 aerospace suppliers. Through its Engineering Services segment, the Company provides a complete range of design, engineering and program management services, supporting aircraft product lifecycles from conceptual design, analysis and certification through production support, fleet support and service life extensions via a complete turnkey engineering solution.

Corporate assets, liabilities and expenses related to the Company's corporate offices, except for interest expense and income taxes, primarily support, and are recorded in, the Aerostructures segment. The table below presents information about reported segments on the same basis used internally to evaluate segment performance:

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net sales:
Aerostructures	$	82,914		$	85,075		$	249,101		$	252,844
Engineering Services	14,714			20,206			51,235			65,373
Eliminations	(293		)	(625		)	(1,313		)	(2,030		)
	$	97,335		$	104,656		$	299,023		$	316,187
Income from operations:
Aerostructures	$	7,888		$	6,015		$	14,010		$	27,095
Engineering Services	(1,216		)	742			666			(2,933		)
Eliminations	(9		)	(122		)	(96		)	17
	$	6,663		$	6,635		$	14,580		$	24,179

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 03, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	LMI AEROSPACE INC
Entity Central Index Key	0001059562
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		12,698,070
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014

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Customer Concentration

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Customer Concentration

Customer Concentration

Direct sales, through both of the Company’s business segments, to our largest customer, Spirit Aerosystems (“Spirit”), accounted for 34.4% and 28.4% of the Company’s total revenues for the three months ended September 30, 2014 and 2013, respectively. Direct sales to Spirit accounted for 33.7% and 28.8% of the Company's total revenues for the nine months ended September 30, 2014 and 2013, respectively. Accounts receivable balances related to Spirit were 33.1% and 27.8% of the Company’s total accounts receivable balance at September 30, 2014 and December 31, 2013, respectively.

Direct sales, through both of the Company’s business segments, to our second largest customer, Gulfstream Aerospace Corporation, a General Dynamics company (“Gulfstream”), accounted for 14.3% and 10.9% of the Company’s total revenues for the three months ended September 30, 2014 and 2013, respectively. Direct sales to Gulfstream accounted for 15.3% and 14.8% of the Company's total revenues for the nine months ended September 30, 2014 and 2013, respectively.  Accounts receivable balances related to Gulfstream were 11.6% and 8.5% of the Company’s total accounts receivable balance at September 30, 2014 and December 31, 2013, respectively.

Direct sales, through both of the Company’s business segments, to our third largest customer, The Boeing Company (“Boeing”), accounted for 10.0% and 12.8% of the Company’s total revenues for the three months ended September 30, 2014 and 2013, respectively. Direct sales to Boeing accounted for 10.9% and 15.2% of the Company's total revenues for the nine months ended September 30, 2014 and 2013, respectively.  Accounts receivable balances resulting from direct sales to Boeing were 5.7% and 5.7% of the Company’s total accounts receivable balance at September 30, 2014 and December 31, 2013, respectively.

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Sales and service revenue
Product sales	$ 81,693	$ 81,076	$ 245,349	$ 246,343
Service revenue	15,642	23,580	53,674	69,844
Net sales	97,335	104,656	299,023	316,187
Cost of sales and service revenue
Cost of product sales	61,535	63,579	195,170	192,309
Cost of service revenue	13,757	20,659	45,215	61,565
Cost of sales	75,292	84,238	240,385	253,874
Gross profit	22,043	20,418	58,638	62,313
Selling, general and administrative expenses	14,615	13,783	41,770	41,862
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	0	0	0	(7,950)
Asset Impairment Charges	0	0	0	4,222
Restructuring expense	765	0	2,288	0
Income from operations	6,663	6,635	14,580	24,179
Other (expense) income:
Interest expense	(5,946)	(4,328)	(23,800)	(12,485)
Other, net	(75)	49	205	449
Total other expense	(6,021)	(4,279)	(23,595)	(12,036)
Income (loss) before income taxes	642	2,356	(9,015)	12,143
(Benefit) provision for income taxes	(754)	281	(2,557)	3,567
Net income (loss)	1,396	2,075	(6,458)	8,576
Other comprehensive income (expense):
Change in foreign currency translation adjustment	(112)	118	(18)	(19)
Reclassification adjustment for losses on interest rate hedges included in net earnings, net of tax of $0, $0, $157 and $0	0	0	278	0
Unrealized gain/(loss) arising during period from interest rate hedges, net of tax of $0, ($89), $0 and ($93)	0	(153)	0	(163)
Total comprehensive income (loss)	$ 1,284	$ 2,040	$ (6,198)	$ 8,394
Amounts per common share:
Net income (loss) per common share	$ 0.11	$ 0.16	$ (0.51)	$ 0.68
Net income (loss) per common share assuming dilution	$ 0.11	$ 0.16	$ (0.51)	$ 0.67
Weighted average common shares (in shares)	12,740,034	12,617,121	12,704,568	12,604,033
Weighted average dilutive common shares outstanding (in shares)	12,887,363	12,718,807	12,704,568	12,710,396

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Long-term Debt and Capital Lease Obligations

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Long-term Debt and Capital Lease Obligations

Long-term Debt and Capital Lease Obligations

Long-term debt and capital lease obligations consist of the following:

	September 30, 2014		December 31, 2013
Second priority senior secured notes at a fixed rate of 7.375% at September 30, 2014	$	245,000	$	—
Term loan under credit agreement, variable	—		222,750
Revolver under credit agreement, variable	—		36,000
Missouri IRBs at fixed rate of 2.80% at September 30, 2014 and December 31, 2013	7,441		7,756
Capital leases, at fixed rates ranging from 2.04% to 7.73% at September 30, 2014 and December 31, 2013, respectively	13,605		14,572
Notes payable, principal and interest payable monthly, at fixed rates up to 3.60% at September 30, 2014 and December 31, 2013, respectively (1)	6,667		9,533
Total debt	$	272,713	$	290,611
Less current installments	3,142		5,242
Total long-term debt and capital lease obligations	$	269,571	$	285,369

(1) During the quarter ended September 30, 2014, the Company settled a mortgage in cash in the amount of $2,109.

On June 19, 2014, the Company issued $250,000 in second-priority senior secured notes maturing on June 19, 2019. During the quarter ended September 30, 2014, the Company repurchased and retired $5,000 of the outstanding notes at a premium of 1.125%, plus accrued interest. Obligations under these notes are secured by substantially all of the Company’s assets and bear interest at 7.375%, paid semi-annually in January and July, with interest payments commencing in January of 2015. Also, on June 19, 2014, the Company used the proceeds from the issuance of these notes to settle and terminate its existing term loan and also modified its revolving credit agreement.

The modified revolving credit agreement provides for a revolving credit facility of up to $90,000.  Under the agreement, the co-collateral agents may establish a reserve against the facility. At September 30, 2014, the reserve established was $15,000, which reduced the maximum availability to $75,000. Based on the amount of eligible assets at September 30, 2014, available borrowings were further reduced to $60,385. The maximum amount, less reserves, available for borrowing at levels below $30,000 are based on a sum of 45% of eligible receivables, 30% of eligible inventories and an additional amount of eligible equipment up to 20% of total borrowings under the facility. The maximum amount, less reserves, available for borrowing at levels above $30,000 are based on a sum of 75% of eligible receivables, 45% of eligible inventories and an additional amount of eligible equipment up to 20% of total borrowings under the facility. Borrowings under the facility are secured by a first lien on substantially all of the Company’s assets and bear interest at either the LIBOR rate plus a margin of 3.00% to 3.50% or the alternate base rate (“ABR”) which is the highest of the following plus a margin of 2.00% to 2.50%, respectively, with the applicable margins for the revolving credit facility subject to a grid based on the average availability ratio of the Company for the most recently completed quarter:

•Prime rate,

•Federal funds rate plus 0.5%, or,

•The adjusted Eurodollar rate for an interest period of one month plus 1%.

For the quarter ended September 30, 2014, the actual interest rate incurred for the revolving credit facility was 4.1%.

The Company is required to pay a commitment fee of between 0.375% and 0.5% per annum on the unused portion of the revolving credit facility, depending on the average revolver usage during the period as compared to the total available borrowings under the facility. At September 30, 2014, the commitment fee required was 0.5%.

The revolving credit loan facility matures on the earlier of the fifth year anniversary date of June 19, 2019 or the date that is 91 days prior to the maturity date of the senior secured notes unless the notes are repaid, refinanced or otherwise satisfied in full. The maturity dates are subject to acceleration upon occurrence of an event of default. An event of default under the revolving credit agreement includes, among other things, failure to pay any material indebtedness, acceleration of payments by any lender prior to scheduled maturity, or judgments rendered against the Company requiring payments at or above certain levels.

The credit agreement contains a covenant that requires us to comply with a maximum first priority debt to EBITDA ratio on a quarterly basis. In addition, the agreement also contains certain restrictive covenants that limit and in some circumstances prohibit, our ability to, among other things, incur additional debt, sell, lease or transfer our assets, make investments, guarantee debt or obligations, create liens, and enter into certain merger, consolidation or other reorganization transactions.  These restrictive covenants prohibit the Company from paying dividends. These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand the current or future downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise, any of which could place us at a competitive disadvantage relative to our competitors that have less debt and are not subject to such restrictions.

At September 30, 2014, the Company was in compliance with all of its covenants and expected to be in compliance with its covenants in future periods.  If the Company fails to meet any covenants in the credit facility, the Company would not be in compliance with its credit agreement and the lenders would be entitled to exercise various rights, including causing the amounts outstanding under the revolving credit facility to become immediately due and payable.

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Other Assets (Notes)

9 Months Ended

Sep. 30, 2014

Other Assets, Noncurrent [Abstract]

Other Assets Disclosure [Text Block]

Other assets consist of the following:

	September 30, 2014		December 31, 2013
Debt issuance cost, net (1)	$	8,929	$	11,094
Asset held for sale (2)	2,925		—
Other	1,997		2,187
Total other assets	$	13,851	$	13,281

(1) In the nine months ended September 30, 2014, the Company refinanced its texisting long term indebtedness, which resulted in the settlement and termination of its then existing credit agreement. As a result of this refinancing and other retirements of debt, unamortized debt issuance costs of $124 and $8,464 were written off and recognized as interest expense in the three and nine months ending September 30, 2014. As part of the refinancing, the Company issued second priority senior secured notes and concurrently modified its revolving credit agreement. Debt issuance costs of $7,954 were incurred as a result of these transactions and are being amortized over the term of the notes and revolving credit agreement, which is five years.

(2) Represents the fair value, less costs to sell, of the Company aircraft. The aircraft was recorded in property, plant, and equipment, net in prior periods. The carrying value of the aircraft was reduced to its net realizable value of $2,925 with a charge of $421 in the quarter ended September 30, 2014, which is reflected in selling, general, and administration expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements.  The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair representation have been included.  Operating results for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  These financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the  Annual Report on Form 10-K of LMI Aerospace, Inc. (the "Company”) for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on March 17, 2014.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 these estimates.

Recent Accounting Standards

Recent Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The standard will supersede existing revenue recognition guidance, including industry-specific guidance, and will provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The provisions of this new guidance are effective as of the beginning of the Company’s first quarter of 2017. The Company is currently evaluating the transition method to be used and the impact of adoption of this standard on its consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity." The amendments in this update change the requirements for reporting discontinued operations. A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results and when the component or group of components meets the criteria to be classified as held for sale, is disposed by sale or is disposed of by other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). ASU 2014-8 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014.  The Company has no present activity that would be impacted by this new standard.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The provisions of this ASU are effective for annual periods beginning after December 15, 2016, and for annual and interim periods thereafter. This ASU is not expected to have an impact on our financial statements or disclosures.

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recognized an income tax benefit, net for the three and nine months ended September 30, 2014 of $754 and $2,557, respectively. The Company recognized income tax expense for the three and nine months ended September 30, 2013 of $281 and $3,567, respectively. The Company's tax benefit in the three and nine months ended September 30, 2014 reflects the tax benefit of $295 and $2,877, respectively, anticipated with the decision to carry back the net operating loss recognized in 2013. The Company has established a valuation allowance on tax benefits generated in the current year, which is adjusted on a quarterly basis. The tax expense recorded in the current year periods reflects the taxes due in states where the Company generated taxable income and an increase in deferred tax liabilities related to an indefinite lived intangible asset.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Basic net income per common share is based upon the weighted average number of common shares outstanding.  Diluted net income per common share is based upon the weighted average number of common shares outstanding, including the dilutive effect of restricted stock, using the if-converted methods.  The following table shows a reconciliation of the numerators and denominators used in calculating basic and diluted earnings per share.

	Three months ended				Nine months ended
	September 30,				September 30,
	2014		2013		2014			2013
Numerators
Net income (loss)	$	1,396	$	2,075	$	(6,458	)	$	8,576
Denominators
Weighted average common shares - basic	12,740,034		12,617,121		12,704,568			12,604,033
Dilutive effect of restricted stock	147,329		101,686		—			106,363
Weighted average common shares - diluted	12,887,363		12,718,807		12,704,568			12,710,396
Basic earnings (loss) per share	$	0.11	$	0.16	$	(0.51	)	$	0.68
Diluted earnings (loss) per share	$	0.11	$	0.16	$	(0.51	)	$	0.67

For the nine months ended September 30, 2014, 145,710 shares are not included in the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive. These securities could be dilutive in future periods.

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Assets and Liabilities Measured at Fair Value

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value

Assets and Liabilities Measured at Fair Value

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  A fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.  The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

There were no transfers between levels during the three months ended September 30, 2014 and the year ended December 31, 2013.

The Company terminated and settled its interest rate derivatives on June 19, 2014 in conjunction with the settlement of its then existing credit agreement, which had a variable interest rate.

At September 30, 2014, the Company aircraft was listed for sale. The fair value of the aircraft was recorded in other assets in the Condensed Consolidated Balance Sheet at September 30, 2014.

	Assets/Liabilities at Fair Value as of September 30, 2014
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Asset:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—
Asset held for sale (2)	$	2,925	$	—	$	2,925	$	—
Liabilities:
Interest rate derivatives (1)	$	—	$	—	$	—	$	—

	Assets/Liabilities at Fair Value as of December 31, 2013
Recurring Fair Value Measurements:	Total		(Level 1)		(Level 2)		(Level 3)
Asset:
Interest rate derivatives (1)	$	18	$	—	$	18	$	—
Liabilities:
Interest rate derivatives (1)	$	392	$	—	$	392	$	—

(1) The fair values of interest rate derivatives are the amount the Company would receive or pay to terminate the contracts, considering quoted market prices of comparable agreements. (Also see Note 8)

(2) Represents the fair value, less costs to sell, of the Company aircraft.

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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

On June 19, 2014, the Company terminated and settled its interest rate derivatives in conjunction with the settlement of its then existing credit agreement, which had a variable interest rate. This settlement resulted in a charge of $793 to interest expense in the Condensed Consolidated Statements of Comprehensive Income (Loss) in the nine months ended September 30, 2014. Prior to this termination and in compliance with the credit agreement, the Company purchased option and swap derivative contracts to hedge against the potential impact on earnings from an increase in market interest rates associated with the interest payments on its variable rate term credit facility.  The objective of the hedge transactions was to reduce the variability of cash flows due to changes in the designated benchmark interest rate on the term debt.  The derivatives were recognized in the Condensed Consolidated Balance Sheet as current assets and liabilities at fair value as follows:

Derivative Asset and Liability	Location in Condensed Consolidated Balance Sheet	September 30, 2014		December 31, 2013
Derivative designated as hedging instrument:
Interest rate purchased option fair value	Other current assets	$	—	$	18
Derivative designated as hedging instrument:
Interest rate swap fair value	Other long term liabilities	$	—	$	392

The Company designated and accounted for these swaps and purchased options as cash flow hedges of interest rate risk.  The Company reported the gain or loss, net of taxes, from the effective portion of the hedge as a component of Accumulated Other Comprehensive Income (“AOCI”) deferring it and reclassifying it into earnings in the same period or periods in which the hedged transaction affects earnings and in the same line item on the Condensed Consolidated Statements of Comprehensive Income (Loss) as the impact of the hedged transaction.  The cumulative amounts reported in AOCI related to these derivatives were reclassified from AOCI to interest expense on the Condensed Consolidated Statements of Comprehensive Income (Loss) in the quarter ended June 30, 2014. The Company did not use these derivative instruments for trading or speculative purposes.

The following amounts are included in OCI and earnings for the three and nine months ended September 30, 2014:

Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in AOCI, net of tax, on Derivative (Effective Portion)		Amount of (Gain) Loss Reclassified from AOCI into Income (Effective Portion)
Three Months Ended September 30, 2014
Interest rate derivatives	$	—	$	—
Nine Months Ended September 30, 2014
Interest rate derivatives	$	—	$	793

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

On July 7, 2005, the Company’s shareholders approved the LMI Aerospace, Inc. 2005 Long-term Incentive Plan (the “Plan”). The Plan provides for the grant of non-qualified stock options, incentive stock options, shares of restricted stock, restricted stock units, stock appreciation rights, performance awards and other share-based grants and cash bonus awards to employees and directors.  All share-based grants or awards are subject to a time-based vesting schedule.

A summary of the activity for non-vested restricted stock awards under the Plan is presented below:

Restricted Stock Awards	Shares		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2014	219,751		$	19.74
Granted	172,611		14.07
Vested	(69,046	)	18.58
Forfeited	(34,091	)	17.95
Outstanding at September 30, 2014	289,225		$	16.85

Common stock compensation expense related to restricted stock awards granted under the Plan was $765 and $451 for the three months ended September 30, 2014 and 2013, respectively, and $1,442 and $1,204 for the nine months ended September 30, 2014 and 2013, respectively.

Total unrecognized compensation costs related to non-vested, share-based awards granted or awarded under the Plan were $2,560 and $1,857 at September 30, 2014 and December 31, 2013, respectively.  These costs are expected to be recognized over a weighted average period of 1.7 years and 1.2 years, respectively.

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Restructuring (Tables)

9 Months Ended

Sep. 30, 2014

Restructuring and Related Activities [Abstract]

Summary of incurred and expected restructuring charges

The following table summarizes the incurred and expected charges associated with these restructuring activities:

	Expense		Remaining		Total Expense
	Incurred through		Expense to be		Expected to be
	September 30, 2014		Incurred		Incurred
			(In Thousands)
Employee severance arrangement - Precise closure	$	615	$	—	$	615
Employee severance arrangement - Savannah	47		—		47
Other employee severance arrangements	1,954		—		1,954
Lease termination costs - Precise closure	124		—		124
Total	$	2,740	$	—	$	2,740

Schedule of restructuring activity

The following table summarizes restructuring activity related to the Precise Machine facility closure, the Savannah machining relocation, and other employee separation activities:

	Employee
	Severance
Accrued restructuring balance as of December 31, 2013	$	422
Accrual additions	2,281
Cash payments	(1,441		)
Accrued restructuring balance as of September 30, 2014	$	1,262

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Restructuring (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2014	Dec. 31, 2013
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost Remaining		$ 0
Restructuring activities, total expense to be incurred		2,740
Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Integration expense resulting from reorganization activities		364
Relocation of Machining Operations from Savannah Facility [Member]
Restructuring Cost and Reserve [Line Items]
Integration expense resulting from reorganization activities		500
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Payments for Restructuring	253	1,441
Employee Severance [Member] | Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost Remaining		0
Restructuring activities, total expense to be incurred		615
Employee Severance [Member] | Relocation of Machining Operations from Savannah Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost Remaining		0
Restructuring activities, total expense to be incurred		47
Employee Severance [Member] | Other Expense [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost Remaining		0
Restructuring activities, total expense to be incurred		1,954
Lease Termination [Member] | Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost Remaining		0
Restructuring activities, total expense to be incurred		124
Selling, General and Administrative Expenses [Member] | Employee Severance [Member] | Precise Machine [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring related expenses	(18)	287	453
Selling, General and Administrative Expenses [Member] | Employee Severance [Member] | Relocation of Machining Operations from Savannah Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring related expenses	0	47
Selling, General and Administrative Expenses [Member] | Employee Severance [Member] | Other Expense [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring related expenses	$ 783	$ 1,954

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Legal Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Legal Contingencies

Legal Contingencies

The Company has been named as a defendant in certain pending lawsuits in the normal course of business (the “Pending Lawsuits”). It is the policy of management to disclose the amount or range of reasonably possible losses. In the opinion of management, after consulting with legal counsel, any losses resulting from Pending Lawsuits should not have a material effect on the Company’s financial position, cash flows or results of operations.

As of September 30, 2014, the Company is the subject of proceedings by the Environmental Protection Agency (“EPA”) and Department of Justice ("DoJ") as a result of allegations of low pH wastewater releases at the facility of Ozark Mountain Technologies ("OMT"), a subsidiary of the Company located in Cuba, Missouri, (the "Waste Water Allegations") and could become the subject of proceedings by the EPA as a result of the Voluntarily Disclosed Matters (as defined in the Company's 2013 Form 10-K, Part I, Item 1. Business, Governmental Regulations and Environmental Compliance)related to OMT.

On May 6, 2014, the Company first received information from DoJ that indicated DoJ is prepared to move forward with a one count indictment naming OMT as a defendant with respect to the Waste Water Allegations. DoJ also advised that the alleged violations may subject the Company to fines. The full extent of the actions to be taken by DoJ related to the Waste Water Allegations remains uncertain, but it is probable the Company will incur losses related to these issues.

Based on more recent discussions with the DoJ, the Company believes that an updated reasonable range for the fines, penalties and related legal fees associated with the Waste Water Allegations is from $761 to $1,000. However, there are still significant uncertainties related to the final outcome and therefore, the Company recognized the minimum value of the range of possible outcomes in the quarter ended September 30, 2014, and has established a loss contingency of $761. The Company is continuing to work with the DoJ to reach a resolution of this matter. The extent of the actions, if any, to be taken by the EPA with respect to the Voluntarily Disclosed Matters remain uncertain and the losses, if any, cannot be estimated.

As further disclosed in the Company's 2013 Form 10-K, Item 3 - Legal Proceedings, the Company believes a proceeding by the Missouri Attorney General is contemplated with respect to alleged violations of certain state environmental regulations by OMT. After consulting with legal counsel and based on the discussions the Company has had with the Missouri Attorney General’s office, the Company has established a loss contingency of $175 which represents management’s current estimate of the penalty the Missouri Attorney General is contemplating assessing on the Company.

Legal expenses, fines, and penalties recorded relative to the above matters were $462 and $996 for the three and nine months ended September 30, 2014, respectively. These expenses are reflected in selling, general, and administrative expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

OMT became a subsidiary of the Company as a result of the Company’s acquisition of Valent in December 2012. The Company believes certain environmental representations set forth in the purchase agreement pursuant to which Valent acquired OMT, and the purchase agreement pursuant to which the Company acquired Valent, provide the Company with certain rights of indemnification with respect to the matters disclosed herein. The Company also has insurance policies that it believes covers various environmental issues at Valent and its subsidiaries, including OMT, and breaches by Valent and OMT of their respective environmental representations and warranties in each of the purchase agreements. As a result, the Company believes its rights of indemnification and insurance coverage may provide for a recovery of some of the costs associated with the matters disclosed herein. We cannot provide any assurance, however, that we will ultimately prevail in any claim for indemnification or secure insurance proceeds from our insurance policies.

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

The following table summarizes the net carrying amount of goodwill by segment at September 30, 2014 and December 31, 2013, respectively:

							Engineering
	Aerostructures						Services				Total
	September 30,			December 31,			September 30,		December 31,		September 30,			December 31,
	2014			2013			2014		2013		2014			2013
Balance at:
Gross Goodwill	$	141,953		$	141,953		$	50,741	$	50,741	$	192,694		$	192,694
Accumulated impairment loss	(79,471		)	(79,471		)	—		—		(79,471		)	(79,471		)
Net Goodwill	$	62,482		$	62,482		$	50,741	$	50,741	$	113,223		$	113,223

Finite and infinite lived intangible assets

Intangible assets primarily consist of trademarks and customer intangibles.  The carrying values were as follows:

	September 30, 2014			December 31, 2013
Trademarks	$	778		$	778
Customer intangible assets	68,991			68,991
Other	1,274			1,481
Accumulated amortization	(18,971		)	(15,785		)
Intangible assets, net	$	52,072		$	55,465

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Customer Concentration (Details)	3 Months Ended		9 Months Ended			12 Months Ended	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 30, 2014 Spirit [Member] Revenue [Member]	Sep. 30, 2013 Spirit [Member] Revenue [Member]	Sep. 30, 2014 Spirit [Member] Revenue [Member]	Sep. 30, 2013 Spirit [Member] Revenue [Member]	Sep. 30, 2014 Spirit [Member] Accounts Receivable [Member]	Dec. 31, 2013 Spirit [Member] Accounts Receivable [Member]	Sep. 30, 2014 Gulfstream [Member] Revenue [Member]	Sep. 30, 2013 Gulfstream [Member] Revenue [Member]	Sep. 30, 2014 Gulfstream [Member] Revenue [Member]	Sep. 30, 2013 Gulfstream [Member] Revenue [Member]	Dec. 31, 2013 Gulfstream [Member] Accounts Receivable [Member]	Sep. 30, 2014 Gulfstream [Member] Accounts Receivable [Member]	Sep. 30, 2014 Boeing [Member] Revenue [Member]	Sep. 30, 2013 Boeing [Member] Revenue [Member]	Sep. 30, 2014 Boeing [Member] Revenue [Member]	Sep. 30, 2013 Boeing [Member] Revenue [Member]	Sep. 30, 2014 Boeing [Member] Accounts Receivable [Member]	Dec. 31, 2013 Boeing [Member] Accounts Receivable [Member]
Revenue and Accounts Receivable, Major Customer [Line Items]
Percentage attributable to customer (in hundredths)	34.40%	28.40%	33.70%	28.80%	33.10%	27.80%	14.30%	10.90%	15.30%	14.80%	8.50%	11.60%	10.00%	12.80%	10.90%	15.20%	5.70%	5.70%

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Long-term Debt and Capital Lease Obligations, Line of Credit Facility (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 90,000,000	$ 90,000,000
Reserve Against line of Credit	15,000,000	15,000,000
Line of Credit Facility, Remaining Borrowing Capacity	75,000,000	75,000,000
Line of Credit Facility, Current Borrowing Capacity	$ 60,385,000	$ 60,385,000
Line of Credit Facility, Borrowing Capacity, Description	The maximum amount, less reserves, available for borrowing at levels below $30,000 are based on a sum of 45% of eligible receivables, 30% of eligible inventories and an additional amount of eligible equipment up to 20% of total borrowings under the facility. The maximum amount, less reserves, available for borrowing at levels above $30,000 are based on a sum of 75% of eligible receivables, 45% of eligible inventories and an additional amount of eligible equipment up to 20% of total borrowings under the facility.
Line of Credit Facility, Interest Rate During Period		4.10%
Commitment fee (in hundredths)		0.50%
Federal funds rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)		0.50%
One Month Eurodollar [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)		1.00%
Minimum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)		0.375%
Minimum [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)		3.00%
Minimum [Member] | Alternate Base Rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)		2.00%
Maximum [Member]
Line of Credit Facility [Line Items]
Commitment fee (in hundredths)		0.50%
Maximum [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)		3.50%
Maximum [Member] | Alternate Base Rate [Member]
Line of Credit Facility [Line Items]
Spread over reference rate (in hundredths)		2.50%

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax	$ 0	$ (89)	$ 0	$ (93)
Reclassification adjustment for losses on interest rate hedges included in net earnings, net of tax of $0, $0, $157 and $0	0	0	278	0
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI on Derivatives, Tax	$ 0	$ 0	$ 157	$ 0

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill

The following table summarizes the net carrying amount of goodwill by segment at September 30, 2014 and December 31, 2013, respectively:

							Engineering
	Aerostructures						Services				Total
	September 30,			December 31,			September 30,		December 31,		September 30,			December 31,
	2014			2013			2014		2013		2014			2013
Balance at:
Gross Goodwill	$	141,953		$	141,953		$	50,741	$	50,741	$	192,694		$	192,694
Accumulated impairment loss	(79,471		)	(79,471		)	—		—		(79,471		)	(79,471		)
Net Goodwill	$	62,482		$	62,482		$	50,741	$	50,741	$	113,223		$	113,223

The December 2012 acquisition of Valent Aerostructures, LLC ("Valent") accounted for $56,288 of the net goodwill balance at September 30, 2014 and December 31, 2013. A goodwill impairment charge of $73,528 was recorded in the fourth quarter of 2013 related to the Valent acquisition. The fair value for the remaining net goodwill in the Aerostructures segment of $6,194 exceeded its carrying value at December 31, 2013. Net goodwill at September 30, 2014 and December 31, 2013 also included an impairment charge of $5,943, for an acquisition that was fully impaired.

The fair value of the net goodwill in Engineering Services exceeded its carrying value at December 31, 2013.

The carrying value of goodwill is assessed at least annually, during the fourth quarter, unless a triggering event occurs, and an impairment charge is recorded if appropriate.  In the quarter and nine months ended September 30, 2014, no triggering event occurred that would cause the Company to assess the carrying value of goodwill.

Intangible Assets

Intangible assets primarily consist of trademarks and customer intangibles.  The carrying values were as follows:

	September 30, 2014			December 31, 2013
Trademarks	$	778		$	778
Customer intangible assets	68,991			68,991
Other	1,274			1,481
Accumulated amortization	(18,971		)	(15,785		)
Intangible assets, net	$	52,072		$	55,465

Intangibles amortization expense was $1,131 and $1,162 for the three months ended September 30, 2014 and 2013, respectively and $3,393 and $3,485 for the nine months ended September 30, 2014 and 2013, respectively. The accumulated amortization balances at September 30, 2014 and December 31, 2013, respectively, were $628 and $475 for trademarks, $17,675 and $14,555 for customer intangible assets, and $668 and $755 for other intangible assets.   Valent intangible assets are amortized on the straight-line method as this approximates the pattern of economic benefit of each intangible asset.  All other remaining intangible assets are not material.

The Company has experienced a slowdown in the demand for design engineering services over the past few quarters, which the Company believes is cyclical in nature.  This cyclical demand has led to lower than originally expected revenue. Despite the reduction in revenue, this segment realized growth in profitability in the first two quarters of 2014 as the Company removed, and continues its efforts to remove, costs from the segment.  The segment also generated significant cash flow during the first nine months of 2014. However, in the quarter ended September 30, 2014, the segment recognized significantly lower sales and gross margin when compared to each of the last four quarters. If the segment were to continue to recognize the revenues and margins experienced in the third quarter of 2014, it could lead to a triggering event and potential impairment for intangible assets and goodwill.

Further, our Valent acquisition has not achieved the sales and profitability we originally expected due, in substantial part, to delays in customer awards and longer ramp up times on new contracts as they migrate to full production.  Although we believe this lower sales growth is temporary, continued lower sales growth could lead to a triggering event and potential additional impairment to intangible assets and goodwill. See Note 7 to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2013 for additional discussion on the goodwill impairment charge recorded in the fourth quarter of 2013.

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Other Assets Other Assets (Tables)

9 Months Ended

Sep. 30, 2014

Other Assets, Noncurrent [Abstract]

Schedule of Other Assets, Non current [Table Text Block]

Other assets consist of the following:

	September 30, 2014		December 31, 2013
Debt issuance cost, net (1)	$	8,929	$	11,094
Asset held for sale (2)	2,925		—
Other	1,997		2,187
Total other assets	$	13,851	$	13,281

(1) In the nine months ended September 30, 2014, the Company refinanced its texisting long term indebtedness, which resulted in the settlement and termination of its then existing credit agreement. As a result of this refinancing and other retirements of debt, unamortized debt issuance costs of $124 and $8,464 were written off and recognized as interest expense in the three and nine months ending September 30, 2014. As part of the refinancing, the Company issued second priority senior secured notes and concurrently modified its revolving credit agreement. Debt issuance costs of $7,954 were incurred as a result of these transactions and are being amortized over the term of the notes and revolving credit agreement, which is five years.

(2) Represents the fair value, less costs to sell, of the Company aircraft. The aircraft was recorded in property, plant, and equipment, net in prior periods. The carrying value of the aircraft was reduced to its net realizable value of $2,925 with a charge of $421 in the quarter ended September 30, 2014, which is reflected in selling, general, and administration expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Intangible Assets [Abstract]
Trademarks	$ 778		$ 778		$ 778
Customer intangible assets	68,991		68,991		68,991
Other	1,274		1,274		1,481
Accumulated amortization	(18,971)		(18,971)		(15,785)
Intangible assets, net	52,072		52,072		55,465
Amortization expense on intangible assets	1,131	1,162	3,393	3,485
Trademarks [Member]
Intangible Assets [Abstract]
Accumulated amortization	(628)		(628)		(475)
Customer Intangible Assets [Member]
Intangible Assets [Abstract]
Accumulated amortization	(17,675)		(17,675)		(14,555)
Other [Member]
Intangible Assets [Abstract]
Accumulated amortization	$ (668)		$ (668)		$ (755)

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Restructuring

9 Months Ended

Sep. 30, 2014

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

During the fourth quarter of 2013, the Company committed to a restructuring plan that resulted in the closure of its Precise Machine facility located in Fort Worth, Texas. As a result, the Company recognized severance expense of $453 in the year ended December 31, 2013 related to the closure. A restructuring benefit of $18 and expense of $287 were recognized by the Company in the three and nine months ended September 30, 2014. These restructuring benefits and expenses were reflected in the selling, general, and administrative section on a separate line of the Condensed Consolidated Statements of Comprehensive Income (Loss). The Company completed this restructuring plan in the second quarter of 2014.

In addition, on January 23, 2014, the Company announced plans to relocate the work performed relative to machining operations at its Savannah, Georgia facility to other locations within the company. As a result, severance expense of $0 and $47 was recognized in the three and nine months ended September 30, 2014. These restructuring expenses were reflected in the selling, general, and administrative section on a separate line of the Consolidated Statements of Comprehensive Income (Loss). The Company completed this restructuring plan in the second quarter of 2014.

In the three and nine months ended September 30, 2014, the Company recognized additional severance expense of $783 and $1,954 relative to other employment separation activities. These activities are part of the Company's overall reorganization and cost reduction initiatives. These restructuring expenses were reflected in the selling, general, and administrative section on a separate line of the Consolidated Statements of Comprehensive Income (Loss).

Cash payments were made associated with these restructuring plans of $253 and $1,441 in the three and nine months ended September 30, 2014, respectively.

The following table summarizes the incurred and expected charges associated with these restructuring activities:

	Expense		Remaining		Total Expense
	Incurred through		Expense to be		Expected to be
	September 30, 2014		Incurred		Incurred
			(In Thousands)
Employee severance arrangement - Precise closure	$	615	$	—	$	615
Employee severance arrangement - Savannah	47		—		47
Other employee severance arrangements	1,954		—		1,954
Lease termination costs - Precise closure	124		—		124
Total	$	2,740	$	—	$	2,740

In addition to the restructuring expenses detailed in the table above, the Company incurred and recognized additional project expenses of approximately $364 as of September 30, 2014, associated with the integration of work previously performed at the Precise Machine facility. The Company also incurred and recognized approximately $500 in other project costs as of September 30, 2014, largely related to accelerated depreciation on property, plant and equipment at its Savannah facility. These expenses are recognized in the cost of sales and selling, general, and administrative expense in the Consolidated Statements of Comprehensive Income (Loss).

The following table summarizes restructuring activity related to the Precise Machine facility closure, the Savannah machining relocation, and other employee separation activities:

	Employee
	Severance
Accrued restructuring balance as of December 31, 2013	$	422
Accrual additions	2,281
Cash payments	(1,441		)
Accrued restructuring balance as of September 30, 2014	$	1,262

Accrued restructuring of $1,262 at September 30, 2014 is expected to be paid over the next three quarters.